RECEIVABLES SALE AND PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT

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

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          RECEIVABLES SALE AND PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (the “ Agreement ”), dated as of December 29, 2004, by and between HRSI FUNDING, INC. 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.

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          “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

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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.

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          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,