Document:

exv10w1

 

EXHIBIT 10.1

EXECUTION COPY

HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

Seller,

HSBC PRIVATE LABEL ACQUISITION CORPORATION (USA)

Purchaser,

and

HSBC FINANCE CORPORATION

(successor by merger to Household Finance Corporation)

RECEIVABLES SALE AND PURCHASE,

ASSIGNMENT AND ASSUMPTION

AGREEMENT

Dated as of December 29, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

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

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          RECEIVABLES SALE AND PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (the
“Agreement”), dated as of December 29, 2004, by and among HOUSEHOLD RECEIVABLE
ACQUISITION COMPANY, a Delaware corporation (“HRAC” or the “Seller”), HSBC
Private Label Acquisition Corporation (USA), a Delaware corporation, (“HSBC
PLAC” or the “Purchaser”), and HSBC FINANCE CORPORATION, a Delaware corporation
(“HBFC”) (successor by merger to Household Finance Corporation).

W I T N E S S E T H:

          WHEREAS, Seller is engaged, in part, in the business of buying and selling
receivables generated in connection with the Saks private label program, which
Saks accounts were either acquired or originated by Household Bank (SB), N.A.
(the “Bank”), certain of such receivables having been sold to Seller by the
Bank;

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

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

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

          SECTION 1. DEFINITIONS. All capitalized terms used herein or in any document,
made or delivered pursuant hereto, and not defined herein or therein, shall
have the meaning ascribed thereto in the Master Pooling and Servicing
Agreement, dated as of August 21, 1997, among HRSI Funding, Inc. III, as
Successor Transferor, Household Finance Corporation (as a result of a merger,
HSBC Finance Corporation is successor thereto), as Successor Servicer, and
Wells Fargo Bank, National Association, as trustee on behalf of the Saks Credit
Card Master Trust, and all amendments and supplements thereto; in addition, the
following words and phrases shall have the following meanings:

          “Account” shall mean each revolving credit account established by the Bank
under its Saks private label credit card program which is subject to the Bank
RPA.

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

 

 

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

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

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

          “Bank RPA” shall mean the Receivables Purchase Agreement (as has been or
may be amended from time to time), dated as of April 15, 2003, between HRAC and
the Bank.

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

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

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

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

          “Receivables” shall mean all amounts shown on Seller’s records as amounts
due and payable as of the Closing Date on any Account issued by the Bank under
the Saks private label credit program, which were purchased by Seller pursuant
to the Bank RPA, other than Securitized Receivables. The Receivables shall
include principal, finance charge, all administrative and transaction fees and
insurance/debt cancellation proceeds. The Receivables shall not include any
Accrued Interest or Accrued Fees.

          “Receivables Purchase Agreements” shall mean the receivables purchase
agreements listed on Schedule A.

          “Securitized Receivables” shall mean the Receivables which are owned by
the Trust.

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

          “Trust” shall mean Saks Credit Card Master Trust.

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

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

     (b) Subject to the terms of this Agreement, on the Closing Date,
Seller agrees to assign its rights under each of the Receivables Purchase
Agreements and to be released from its obligations under each of the
Receivables Purchase Agreements and Purchaser agrees to assume all of
Seller’s obligations under each of the Receivables Purchase Agreements.
On and after the Closing Date, Purchaser agrees that it will be bound by
the provisions set forth in each of the Receivables Purchase Agreements,
and hereby assumes and will perform in accordance with its terms all the
obligations which by the terms set forth in each of the Receivables
Purchase Agreements were required to be performed by Seller prior to this
Agreement and which Seller would be required to perform on or after this
Agreement had Seller not entered into this Agreement.

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

     (d) In connection with the Sale, Seller agrees (i) to record and
file, at its own expense, any financing statements, or if a financing
statement relating to the Receivables and Transfer Assets is already on
record, an assignment of the financing statement (and continuation
statements with respect to such financing statements when applicable) or
a new financing statement with respect to the Receivables and Transfer
Assets which meets the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect and maintain
perfection of the Sale of such Receivables and Transfer Assets from
Seller to Purchaser, (ii) that such financing statements or assignments
shall name Seller, as seller, and Purchaser, as purchaser, of the
Receivables and Transfer

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Assets and (iii) to deliver a file-stamped copy of such financing
statements or assignments or other evidence of such filings to Purchaser
as soon as is practicable after filing.

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

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

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

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

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

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

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

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

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

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

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

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

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

     (k) With respect to each Receivable, all material consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any governmental authority required to be obtained,
effected or given by the Bank in connection with the creation of such
Receivable or the execution, delivery and performance by the Bank of its
obligations under the credit card agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and
are in full force and effect.

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

     (m) Each Receivable is the legal, valid and binding payment
obligation of the obligor thereof, enforceable against such obligor in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors’ rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).

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

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

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

     (q) Seller confirms that all the representations and warranties of
Seller under each of the Receivables Purchase Agreements are true and
correct as to Seller.

          SECTION 5. INDEMNIFICATION BY SELLER AND HBFC.

     (a) Seller and HBFC agree to jointly defend, indemnify and hold
harmless Purchaser and its respective employees, agents and
representatives against any and all liabilities, judgments, damages,
claims, demands, costs, expenses or losses (including reasonable
attorney’s fees) (i) incurred by reason of any representation or warranty
made by Seller in connection with this Agreement having been untrue or
incorrect in any respect when made or deemed made, (ii) incurred by
reason of any breach by Seller of any covenant or agreement made herein,
or (iii) relating to the Receivables prior to the Closing Date, provided
that in no event shall Seller or HBFC be obligated under this Section 5
to indemnify Purchaser against (i) liability, loss, cost or expenses to
the extent that it results from Purchaser’s negligent or willful acts or
omissions or the negligent or willful acts or omissions of Purchaser’s
agents or assignees or (ii) any credit loss suffered on any Receivable
not attributable to the actions of Seller or any merchant for whom the
Bank issues an Account.

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

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

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

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

          SECTION 7. CONDITIONS OF SALE.

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

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

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

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

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

          SECTION 9. TAXES.

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

     (b) Seller shall be liable for and pay any taxes related to the
Receivables and Transfer Assets that accrue or otherwise relate to any
taxable

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year or period (or portion thereof) ending or deemed to end on or
prior to the Closing Date.

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

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

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

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

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

     (d) Purchaser confirms that all representations and warranties of
Seller under each of the Receivables Purchase Agreements are true and
correct as to Purchaser.

          SECTION 11. INDEMNIFICATION BY PURCHASER.

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

9

 

or by reason of any action or proceeding being instituted
by any person based upon an allegation or assertion which, if true, would
indicate the existence of any of the foregoing circumstances.

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

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

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

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

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

	 	 	 	 	 
	

	 	If to Seller:
	 	Household Receivables Acquisition Company
	

	 	 	 	2700 Sanders Road
	

	 	 	 	Prospect Heights, IL 60070
	 
	 	 	 	 
	

	 	If to Purchaser:
	 	HSBC Private Label Acquisition Corporation (USA)
	

	 	 	 	2700 Sanders Road
	

	 	 	 	Prospect Heights, IL 60070

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

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

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

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

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

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

11

 

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

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

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

[Remainder of Page Intentionally Left Blank]

12

 

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

	 	 	 	 	 
	 	 	HOUSEHOLD RECEIVABLES ACQUISITION
	 	 	COMPANY, as Seller
	 
	 	 	 	 
	

	 	By:
	 	/s/ S.H. Smith
	

	 	 	 	

	

	 	 	 	Name: S.H. Smith
	

	 	 	 	Title: Vice President & Assistant Treasurer
	 
	 	 	 	 
	 	 	HSBC FINANCE CORPORATION
	 	 	(successor by merger to Household Finance
	 	 	Corporation) (with respect to Section 5 only)
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edgar D. Ancona
	

	 	 	 	

	

	 	 	 	Name: Edgar D. Ancona
	

	 	 	 	Title: Executive Vice President — Treasurer
	 
	 	 	 	 
	 	 	HSBC PRIVATE LABEL ACQUISITION
	 	 	CORPORATION (USA), as Purchaser
	 
	 	 	 	 
	

	 	By:
	 	/s/ J.W. Hoff
	

	 	 	 	

	

	 	 	 	Name: J.W. Hoff
	

	 	 	 	Title: Treasurer & Chief Financial Officer

ACKNOWLEDGEMENT:

the signatory listed below hereby evidences its acknowledgement of the agreements,
assignments and assumptions set forth herein:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

	 	 	 
	By:

	 	/s/ Sue Dignan
	

	 	

	

	 	Name: Sue Dignan
	

	 	Title: Assistant Vice President

 

 

Schedule A

	1.	 	RECEIVABLES PURCHASE AGREEMENTS
	 
	 	 	Receivables Purchase Agreement (as has been or may be amended from time
to time), dated as of April 15, 2003, between Household Receivables
Acquisition Company and Household Bank (SB), N.A.
	 
	 	 	Receivables Purchase Agreement (as has been or may be amended from time
to time), dated as of April 15, 2003, between Household Receivables
Acquisition Company and HRSI Funding, Inc. III.exv10w2

 

EXHIBIT 10.2

EXECUTION COPY

HRSI FUNDING, INC. III,

Seller,

HSBC FUNDING (USA) INC. VI,

Purchaser

and

HSBC FINANCE CORPORATION

(successor by merger to Household Finance Corporation)

RECEIVABLES SALE AND PURCHASE,

ASSIGNMENT AND ASSUMPTION

AGREEMENT

Dated as of December 29, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

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

i

 

          RECEIVABLES SALE AND PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (the
“Agreement”), dated as of December 29, 2004, by and between HRSI FUNDING, INC.
III, a Delaware corporation (“HRSI III” or the “Seller”), HSBC Funding (USA)
Inc. VI, a Delaware corporation, (“HSBC VI” or the “Purchaser”) and HSBC
FINANCE CORPORATION, a Delaware corporation (“HBFC”) (successor by merger to
Household Finance Corporation).

W I T N E S S E T H:

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

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

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

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

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

          “Account” shall mean each revolving credit account acquired or originated
by the Bank under its Saks private label credit card program which is subject
to the HRSI III RPA.

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

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

 

 

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

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

          “Class D Certificate” shall mean the Class D Certificate issued pursuant
to the Series 2001-2 Supplement, dated as of July 17, 2001, among Saks Credit
Corporation, Saks Incorporated and Wells Fargo Bank, National Association, as
Trustee.

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

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

          “HRSI III RPA” shall mean the Receivables Purchase Agreement (as has been
or may be amended from time to time), dated as of April 15, 2003, between HRAC
and HRSI III.

          “Liabilities” shall mean Seller’s interest in any outstanding credit
balances associated with all Accounts as of the Closing Date contained in
Section 2 of this Agreement and Seller’s obligations under the HRSI III RPA,
the Master Pooling and Servicing Agreement, the Exchangeable Transferor
Certificate, the Class D Certificate and the Transfer and Assumption Agreement.

          “Master Pooling and Servicing Agreement” shall mean the Master Pooling and
Servicing Agreement, dated as of August 21, 1997, among HRSI Funding, Inc. III,
as Successor Transferor, Household Finance Corporation (as a result of a
merger, HSBC Finance Corporation is the successor thereto), as Successor
Servicer and Wells Fargo Bank, National Association, not in its individual
capacity but as trustee on behalf of the Saks Credit Card Master Trust, and all
amendments and supplements thereto

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

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

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

2

 

          “Securitized Receivables” shall mean the Receivables which are owned by
the Trust.

          “Transfer and Assumption Agreement” shall mean the Transfer and Assumption
Agreement, dated as of April 15, 2003, among Saks Credit Corporation, Saks
Incorporated, the Bank, Household Finance Corporation (as a result of a merger,
HSBC Finance Corporation is the successor thereto), HRAC and HRSI III, and all
amendments and supplements thereto.

          “Trust” shall mean Saks Credit Card Master Trust.

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

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

     (b) Subject to the terms of this Agreement, on the Closing Date,
Seller agrees to assign its rights under each of the HRSI III RPA, the
Master Pooling and Servicing Agreement, the Exchangeable Transferor
Certificate (as defined in the Master Pooling and Servicing Agreement),
the Class D Certificate and the Transfer and Assumption Agreement and to
be released from its obligations under each of the HRSI III RPA, the
Master Pooling and Servicing Agreement, the Exchangeable Transferor
Certificate, the Class D Certificate and the Transfer and Assumption
Agreement and Purchaser agrees to assume all of Seller’s obligations
under the HRSI III RPA, Master Pooling and Servicing Agreement, the
Exchangeable Transferor Certificate, the Class D Certificate and Transfer
and Assumption Agreement. On and after the Closing Date, Purchaser agrees
that it will be bound by the provisions of the HRSI III RPA, the Master
Pooling and Servicing Agreement, the Exchangeable Transferor Certificate,
the Class D Certificate and the Transfer and Assumption Agreement, and
hereby assumes and will perform in accordance with its terms all the
obligations which by the terms of the HRSI III RPA, the Master Pooling
and Servicing Agreement, the Exchangeable Transferor Certificate, the
Class D Certificate and the Transfer and Assumption Agreement were
required to be performed by Seller prior to this Agreement and which
Seller would be required to perform on or after this Agreement had Seller
not entered into this Agreement.

     (c) In consideration of the payment by Purchaser of the Purchase
Price, receipt of which is hereby acknowledged by Seller, and Purchaser’s

3

 

assumption of all of Seller’s obligations under the HRSI III RPA, the
Master Pooling and Servicing Agreement, the Transfer and Assumption
Agreement, the Class D Certificate and the Exchangeable Transferor
Certificate as of the Closing Date, Seller does hereby grant, bargain,
sell, convey, transfer and deliver unto Purchaser, its successors and
assigns, all of Seller’s right, title and interest in and to all assets,
accounts, investment property, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, and advices of credit and all proceeds thereof
belonging to Seller, including all of Seller’s right, title and interest
in, to and under the HRSI III RPA, the Master Pooling and Servicing
Agreement, the Transfer and Assumption Agreement, the Class D Certificate
and Exchangeable Transferor Certificate and receivables and other
purchased assets under the Master Pooling and Servicing Agreement
(collectively all such assets hereinafter referred to as the
“Securitization Assets”).

     (d) In connection with the Sale, Seller agrees (i) to record and
file, at its own expense, any financing statements, or if a financing
statement relating to the Receivables and Securitization Assets is
already on record, an assignment of the financing statement (and
continuation statements with respect to such financing statements when
applicable) or a new financing statement with respect to the Receivables
and Securitization Assets which meets the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to
perfect and maintain perfection of the Sale of such Receivables and
Securitization Assets from Seller to Purchaser, (ii) that such financing
statements or assignments shall name Seller, as seller, and Purchaser, as
purchaser, of the Receivables and Securitization Assets and (iii) to
deliver a file-stamped copy of such financing statements or assignments
or other evidence of such filings to Purchaser as soon as is practicable
after filing.

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

4

 

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

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

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

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

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

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

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

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

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

5

 

     (h) To Seller’s knowledge, it is not in material breach of the HRSI
III RPA, Master Pooling and Servicing Agreement, or Transfer and
Assumption Agreement or other agreement that affects the transactions
contemplated herein.

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

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

     (k) With respect to each Receivable, all material consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any governmental authority required to be obtained,
effected or given by the Bank in connection with the creation of such
Receivable or the execution, delivery and performance by the Bank of its
obligations under the credit card agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and
are in full force and effect.

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

     (m) Each Receivable is the legal, valid and binding payment
obligation of the obligor thereof, enforceable against such obligor in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors’ rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).

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

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

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

6

 

     (q) Seller confirms that all representations and warranties of
Seller under each of the HRSI III RPA, the Master Pooling and Servicing
Agreement and the Transfer and Assumption Agreement are true and correct
as to Seller.

          SECTION 5. INDEMNIFICATION BY SELLER AND HBFC.

     (a) Seller and HBFC agree to jointly and severally defend, indemnify
and hold harmless Purchaser and its respective employees, agents and
representatives against any and all liabilities, judgments, damages,
claims, demands, costs, expenses or losses (including reasonable
attorney’s fees) (i) incurred by reason of any representation or warranty
made by Seller in connection with this Agreement having been untrue or
incorrect in any respect when made or deemed made, (ii) incurred by
reason of any breach by Seller of any covenant or agreement made herein,
or (iii) relating to the Receivables prior to the Closing Date, provided
that in no event shall Seller or HBFC be obligated under this Section 5
to indemnify Purchaser against (i) liability, loss, cost or expenses to
the extent that it results from Purchaser’s negligent or willful acts or
omissions or the negligent or willful acts or omissions of Purchaser’s
agents or assignees or (ii) any credit loss suffered on any Receivable
not attributable to the actions of Seller or any merchant for whom the
Bank issues Accounts.

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

     (c) Purchaser may at any time notify Seller and HBFC of its
intentions to settle or compromise any claim, suit or action against
Purchaser which may be indemnifiable under this Section (and in the defense
of which Seller or HBFC has not previously elected to participate), and
Purchaser may settle or compromise any such claim, suit or action unless
Seller or HBFC notifies Purchaser in writing (within thirty (30) days after
Purchaser as given written notice of its intention to settle or compromise)
that Seller or HBFC intends to conduct the defense of such claim, suit or
action and that Seller and HBFC agrees to further indemnify and hold
Purchaser harmless from any liability, loss, cost or expense to Purchaser
in excess of that which Purchaser would have incurred had the settlement
or

7

 

compromise been effected on the terms proposed by Purchaser. Any such
settlement or compromise of, or any final judgment or decree entered on
or in any claim, suit or action which Purchaser has defended or
participated in the defense of in accordance herewith, shall be deemed to
have been consented to by, and shall be binding upon, Seller and HBFC as
fully as if Seller and HBFC had assumed the defense thereof and a final
judgment or decree had been entered in such suit or action, or with
regard to such claim, by a court of competent jurisdiction for the amount
of such settlement, compromise, judgment or decree, including without
limitation court costs and reasonable attorney’s fees.

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

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

          SECTION 7. CONDITIONS OF SALE.

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

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

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

8

 

which together shall constitute one and the same instrument.
On the Closing Date, the following actions shall be taken:

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

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

          SECTION 9. TAXES.

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

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

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

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

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

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

     (c) This Agreement, and the consummation of the transactions
contemplated herein, constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms,
except as

9

 

enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditor’s rights in
general and as such enforceability may be limited general principles of
equity (whether considered in a proceeding at law or in equity).

     (d) Purchaser confirms that all representations and warranties of
Seller under each of the HRSI III RPA, the Master Pooling and Servicing
Agreement, and Transfer and Assumption Agreement are true and correct as
to Purchaser.

          SECTION 11. INDEMNIFICATION BY PURCHASER.

     (a) Purchaser agrees to defend, indemnify, and hold harmless Seller
and its respective employees, agents, and representatives against any and
all liabilities, judgments, damages, claims, demands, costs, expenses or
losses (including reasonable attorney’s fees) arising after the Closing
Date and incurred by reason of any representation or warranty made by
Purchaser in connection with this Agreement, having been untrue or
incorrect in any respect when made or deemed made, or by reason of the
breach by Purchaser of any covenant or agreement made herein, or by
reason of any negligent or willful acts of Purchaser, or by reason of any
action or proceeding being instituted by any person based upon an
allegation or assertion which, if true, would indicate the existence of
any of the foregoing circumstances.

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

     (c) Seller may at any time notify Purchaser of its intention to
settle or compromise any claim, suit or action against Seller which may
be indemnifiable under this Section (and in the defense of which
Purchaser has not previously elected to participate), and Seller may
settle or compromise any such claim, suit or action unless Purchaser
notifies Seller in writing (within thirty (30) days after Seller has
given Purchaser written notice of its intention to settle or compromise)
that Purchaser intends to conduct the defense of such claim, suit or
action and that Purchaser agrees to further indemnify Seller and hold
Seller harmless from any liability, loss, cost or expense to Seller in
excess of that which Seller would have

10

 

incurred had the settlement or compromise been effected on the terms
proposed by Seller. Any such settlement or compromise of, or any final
judgment or decree entered on or in, any claim, suit or action which Seller
has defended or participated in the defense of in accordance herewith shall
be deemed to have been consented to by, and shall be binding upon, Purchaser as fully
as if Purchaser had assumed the defense thereof, and a final judgment or
decree had been entered in such suit or action, or with regard to such
claim, by a court of competent jurisdiction for the amount of such
settlement, compromise, judgment or decree, including without limitation
court costs and reasonable attorney’s fees.

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

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

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

	 	 	 	 	 
	

	 	If to Seller:
	 	HRSI Funding, Inc. III
	

	 	 	 	1111 Town Center Drive
	

	 	 	 	Las Vegas, NV 89144
	 
	 	 	 	 
	

	 	If to Purchaser:
	 	HSBC Funding (USA) Inc. VI
	

	 	 	 	1111 Town Center Drive
	

	 	 	 	Las Vegas, NV 89144

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

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

11

 

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

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

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

          SECTION 19. INDEPENDENT CONTRACTOR. In performing their responsibilities
pursuant to this Agreement, Seller shall not be deemed to be the agent of
Purchaser and Purchaser shall not be deemed to be the agent of Seller and each
party shall at all times take whatever measures as are necessary to ensure that
its status shall be that of an independent contractor and in no circumstances
shall either party be deemed to be the partner, agent or employee of the other.
This Agreement is not intended to create, nor does it create and shall not be
construed to create, a relationship of principal and agent, partner or joint
venturer or an association for profit between Purchaser and Seller. Any amounts
ever owing by Purchaser and Seller pursuant to this Agreement represent contractual
obligations only and are not a loan or debt.

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

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

          SECTION 22. NONPETITION COVENANT. Notwithstanding any prior termination of
this Agreement, HRSI III shall not, prior to the date which is one year and one
day after the final payment or discharge of all securities issued by the Saks
Credit Card Master Trust, acquiesce, petition or otherwise invoke or cause HSBC
VI to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against HSBC VI under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, conservator,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of HSBC VI or any substantial part of its property or ordering the
winding-up or liquidation or the affairs of HSBC VI.

12

 

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

	 	 	 	 	 
	 	 	HRSI FUNDING, INC. III, as Seller
	 
	 	 	 	 
	

	 	By:
	 	/s/ S.H. Smith
	

	 	 	 	

	

	 	 	 	Name: S.H. Smith
	

	 	 	 	Title: Vice President & Assistant Treasurer
	 
	 	 	 	 
	 	 	HSBC FINANCE CORPORATION
	 	 	(successor by merger to Household Finance
	 	 	Corporation) (with respect to Section 5 only)
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edgar D. Ancona
	

	 	 	 	

	

	 	 	 	Name: Edgar D. Ancona
	

	 	 	 	Title: Executive Vice President — Treasurer
	 
	 	 	 	 
	 	 	HSBC FUNDING (USA) INC. VI,
	 	 	as Purchaser
	 
	 	 	 	 
	

	 	By:
	 	/s/ S.H. Smith
	

	 	 	 	

	

	 	 	 	Name: S.H. Smith
	

	 	 	 	Title: Vice President & Assistant Treasurer

ACKNOWLEDGEMENT:

the signatory listed below hereby evidences its acknowledgement of the
agreements, assignments and assumptions set forth herein:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

	 	 	 
	By:

	 	/s/ Sue Dignan
	

	 	

	

	 	Name: Sue Dignan
	

	 	Title: Assistant Vice President

13

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