EXHIBIT 10.79
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
THIS ACCOUNTS RECEIVABLE PURCHASE AGREEMENT dated as of December 9, 1996
(the "Agreement"), is between BRYLANE, L.P., a Delaware limited partnership (the
"Seller") and ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation ("ADS").
WHEREAS, the Seller desires to sell and ADS desires to purchase certain
accounts receivable arising under Xxxxxxxx'x Deferred Billing Program, which
includes the attendant right to present such receivable to the Credit Card
Issuer for payment on the applicable deferred billing date.
THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND, hereby agree as follows:
SECTION 1
AMOUNT AND TERMS
1.1. PURCHASE COMMITMENT OF ADS.
1.1.1. Purchase. ADS agrees, subject to the terms and conditions of
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this Agreement and provided that no Event of Termination (or any condition or
event which would constitute an Event of Termination with the giving of notice
or lapse of time, or both) (the definitions of those and other capitalized terms
used herein having the meanings provided in Section 8) then exists to purchase
Accounts from time to time on and after the date hereof but prior to December
31, 1999 (the "Termination Date") in respective amounts selected by the Seller
from time to time as provided in Section 1.2 hereof, provided that the aggregate
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amount at any one time outstanding shall not exceed the amount set forth in
Section 1.2.1.
1.1.2. Commitment. The maximum amount of all Accounts purchased from
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the Seller under this Agreement shall not exceed in the aggregate the sum of
$100,000,000 (the "Commitment") at any time.
1.2. PURCHASES.
1.2.1. Receivables Base. ADS shall, upon the terms and conditions
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set forth herein, purchase Accounts from the Seller from time to time in
principal amounts at any one time outstanding up to an amount that equals the
lesser of the Commitment or the Receivables Base. Subject to the terms and
conditions of the Agreement, the Seller may sell Accounts to ADS at any time or
from time to time from the date of the Agreement until the earlier of (a) the
Termination Date or (b) the End of the Commitment. Each Account shall be an
Eligible Account and shall be purchased at a price equal to the book value as
reflected on the Seller's books in accordance with GAAP less the Applicable
Purchase Discount for the applicable Individual
Program, as reflected on Exhibit 1.2.1. The Applicable Purchase Discount shall
be determined as of the date the initial Account is purchased under each
Individual Program.
1.2.2. Funding of Purchases. Each purchase shall be funded by ADS no
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more frequently than one time per week in federal funds or other immediately
available money of the United States, either in the form of (i) a Variable Rate
Funding (individually a "Variable Rate Funding" and collectively the "Variable
Rate Fundings"); or (ii) a Fixed Rate Funding (individually a "Fixed Rate
Funding" and collectively the "Fixed Rate Fundings"). Each Fixed Rate Funding
shall be in the initial principal amount of $1,000,000 or any larger amount
which is a whole multiple of $100,000. All ADS' costs of funding the Variable
Rate Fundings and the Fixed Rate Fundings shall be passed through from ADS to
Seller.
1.2.3. Availability of Funds. ADS will pay to the Seller the funds
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for each Purchased Account (the "Funds"), at an account designated by Seller, on
or before the Funding Date.
1.2.4. Funding Procedures. Except as otherwise provided herein,
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Accounts shall be purchased by ADS at the Seller's written request (a "Purchase
Request") which shall be delivered to ADS by 11:00 a.m. on the Request Date and
shall specify (i) the total amount of the Accounts to be purchased; (ii) the
Funding Date; and (iii) whether the Funding will be a Fixed Rate Funding (and if
so, the applicable Fixed Rate Period) or a Variable Rate Funding. The request
shall be accompanied by (i) a report regarding compliance by Seller with the
procedures of all Credit Card Issuers on all Eligible Accounts included in the
Receivables Base and (ii) a Funding Certificate.
1.3. COMMITMENT FEE. The Seller shall pay, on the date hereof, ADS a
commitment fee of $250,000 in consideration of the commitment of ADS to purchase
Accounts hereunder; provided, however, that Seller shall only pay this fee if
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ADS' funding source charges ADS a corresponding fee.
1.4. UNUSED FEE. As consideration for the commitment to purchase Accounts
made pursuant to this Agreement, the Seller shall pay ADS an unused fee computed
at the rate of twenty five basis points per annum on the average daily
difference between $100,000,000 and the aggregate balance of all Funds then
outstanding starting with the date of this Agreement, said fee to be computed on
the basis of the actual number of days elapsed over a year of 360 days and to be
payable monthly on the last Domestic Banking Day of each calendar month
commencing on January 31, 1997; provided, however, that Seller shall only pay
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this fee if ADS' funding source charges ADS a corresponding fee.
1.5. TRANSACTION FEES. The Seller shall pay to ADS a transaction fee of
$0.03 per each individual Customer Account purchased hereunder. Such fees will
be paid by Seller upon receipt of a monthly invoice. Seller shall pay, or
reimburse ADS promptly for any fees of Credit Card Issuers for processing the
Purchased Accounts.
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1.6. TRANSACTION COSTS. ADS will invoice Seller on the last day of each
month for its funding charges, specifying in reasonable detail the nature and
calculation thereof (which shall be conclusively correct absent manifest error),
and Seller shall pay such amounts promptly upon receipt thereof; provided,
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however, that ADS shall not charge to Seller any incremental borrowing costs
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that ADS incurs due to a default under its financing arrangements unless such
incremental costs are caused by an Event of Termination (or an event which would
constitute an Event of Termination with the giving of notice or lapse of time or
both) of the Seller hereunder.
SECTION 2
GENERAL TERMS
2.1. PAYMENTS OWING TO ADS. The Seller shall make all payments hereunder
to ADS, at its main office, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx, in
immediately available funds prior to 3:00 p.m., on the date such payments shall
become due in accordance with the terms hereof. For the purpose of computing
the available portion of the Commitment, ADS shall have the right, in its sole
discretion, to treat as outstanding Funds under the Agreement the unpaid amount
of any interest, fees, costs or expenses otherwise then due and payable under
the Transaction Documents, provided, however, that such interest, fees, costs or
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expenses shall not be deemed to be outstanding Funds for purposes of Section
1.4.
2.2. PAYMENT TO ADS OR SELLER ON NON-BANKING DAYS. Whenever any payment
to be made hereunder shall be stated to be due on a day other than a Domestic
Banking Day, such payment shall be made on the next succeeding Domestic Banking
Day and such extension of time shall in such case be included in the computation
of payment of interest hereunder, as the case may be.
2.3. FAILURE TO PAY. Whenever any payment due to ADS to be made hereunder
shall become due and payable, whether at the stated maturity thereof or earlier
upon acceleration or otherwise, and the Seller fails to make such payment, the
unpaid amount shall bear interest at the Prime Rate plus 115 basis points. If
the Funds used to purchase Accounts hereunder ever exceed the Total Facility,
the overpaid Funds that (a) relate to a Variable Rate Funding shall bear
interest at the Prime Rate plus 115 basis points or (b) that relate to a Fixed
Rate Funding shall bear interest at the applicable LIBO Rate for such funding
plus 115 basis points plus any applicable costs, premiums, fees or penalties
incurred by ADS; provided, however, that the entire amount of Funds paid shall
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bear such increased interest rate after the fourth such overpayment.
2.4. OVERPAYMENT. If the aggregate principal amount of all Purchased
Accounts exceeds the Total Facility at any time, the Seller shall immediately,
upon receipt of notice from ADS, purchase from ADS Accounts sufficient to reduce
the outstanding Purchased Accounts to an amount less than or equal to the Total
Facility. Upon any repurchase of an Account by the Seller as contemplated in
this Section 2.4, ADS shall, without further action, be deemed to transfer,
assign, set-over and otherwise convey to the Seller, without recourse,
representation or warranty, all the right, title and interest of ADS in such
repurchased Account, all monies due or
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to become due with respect thereto and all proceeds thereof. ADS shall, at the
Seller's expense, execute, or cause to be executed, such documents and
instruments of transfer or assignment and take, or cause to be taken, such other
actions as shall reasonably be requested by the Seller to effect the conveyance
of such account without any adverse claims pursuant to this Section.
SECTION 3
CONDITIONS OF FUNDING OF ACCOUNT PURCHASES
The obligation of ADS to purchase the Accounts from the Seller as provided
for hereunder shall be subject to the following conditions:
3.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE OF ACCOUNTS. Prior to the
initial purchase of Accounts hereunder, the Seller shall furnish to ADS all of
the following, each dated the date hereof (unless otherwise indicated) in form
and substance satisfactory to ADS:
(a) Service Agreement. A properly executed Service Agreement.
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(b) Financing Statements. Filed forms of UCC-1 Financing Statements
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reflecting the sale of Accounts hereunder and a UCC-11 lien search report
showing no prior existing liens on the Accounts;
(c) Processing Agreement. A fully executed Processing Agreement
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between ADS and each Credit Card Issuer ("Processor Agreement"), in a form
satisfactory to ADS, pursuant to which ADS (or Seller as the agent of ADS) will
be permitted to submit Purchased Accounts to each Credit Card Issuer for payment
in accordance with the Service Agreement;
(d) Certified Resolutions. A certified copy of the resolutions of
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the Board of Representatives of the Seller authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents;
(e) Opinion of Counsel. The favorable opinion of Xxxxxxx & XxXxxxxx,
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counsel for the Seller ("Counsel"), addressed to ADS and in the form reasonably
requested by ADS;
(f) Secretary's Certificate. A signed copy of a certificate of the
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Secretary or Assistant Secretary of the Seller which shall certify the names of
the officers of the Seller authorized to sign this Agreement and the other
Transaction Documents or certificates of the Seller to be executed and delivered
pursuant hereto, together with the true signatures of such officers. ADS may
conclusively rely upon such certificate until ADS shall receive a further
certificate of the Secretary or an Assistant Secretary of the Seller canceling
or amending the prior certificate and submitting the signatures of the officers
named in such further certificate;
(g) Commitment Fee. Payment of the $250,000 Commitment Fee, if
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applicable; and
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(h) Funding Certificate. A Funding Certificate regarding Accounts to
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be sold as of the day before such initial purchase of Accounts.
3.2. CONDITIONS PRECEDENT TO SUBSEQUENT PURCHASE OF ACCOUNTS. The
obligation of ADS to purchase Accounts hereunder after the initial purchase
shall be subject to the further condition precedent that, at the time of each
subsequent purchase of Accounts, (a) the Seller shall be in compliance with all
of the provisions, warranties (except with respect to Section 4.13.2, under
which the representation and warranty shall be deemed to be made for purposes of
this Section 3.2 only with respect to the Accounts being purchased) and
conditions contained in this Agreement (or, if not in compliance with the
representations and warranties hereunder, such non-compliance is disclosed to
ADS before the Seller requests Funds and ADS waives the non-compliance), (b) a
new Funding Certificate has been delivered to ADS and (c) there shall exist no
Event of Termination (or an event that, with the passage of time or giving of
notice, or both, would constitute an Event of Termination). Each request for
ADS to purchase Accounts hereunder shall be deemed to be a representation and
warranty by the Seller on the date of such purchase of Accounts that the
representations and warranties contained in Section 4 are true and correct
(except that with respect to Section 4.13.2, the representation and warranty
shall be deemed to be made for purposes of this Section 3.2 only with respect to
the Accounts being purchased pursuant to such Request), and that the Seller is
in compliance with the covenants contained in Sections 5 and 6.
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to ADS, which representations and
warranties will survive the execution and delivery of this Agreement, as
follows:
4.1. ORGANIZATION AND GOOD STANDING. The Seller has been duly organized
and is validly existing as a limited partnership in good standing under its laws
of its jurisdiction, with power and authority to own the properties and to
conduct its business as such properties are presently owned and such business is
presently conducted.
4.2. DUE QUALIFICATION. The Seller is duly qualified to do business and
is in good standing, and has obtained all necessary licenses and approvals, in
all jurisdictions in which the failure to maintain such qualification, licenses
and approvals would materially adversely affect (a) the interests of ADS
hereunder, (b) the ability of the Seller to perform its obligations hereunder or
(c) the enforceability of this Agreement.
4.3. POWER AND AUTHORITY; DUE AUTHORIZATION. The Seller has all necessary
power, authority and legal right to (a) execute, deliver and perform this
Agreement, and the other Transaction Documents (to which the Seller is a party)
to be executed and delivered in connection herewith and (b) carry out the terms
of the Transaction Documents to which the
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Seller is a party. The Seller has duly authorized, by all necessary partnership
action, the execution, delivery, and performance of this Agreement and the other
Transaction Documents to which the Seller is a party.
4.4. BINDING OBLIGATIONS. This Agreement constitutes, and each other
Transaction Document to which the Seller is a party, when duly executed and
delivered will constitute, a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
4.5. NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which the Seller is a
party and the fulfillment of the terms hereof, and the Seller's deferred billing
program and all corresponding agreements, billing statements, credit
applications, and related documents with Customers regarding the deferred
billing program, do not and will not (a) conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, (i) the limited partnership agreement of the
Seller, or (ii) any material indenture, loan agreement, mortgage, deed of trust,
or other agreement or instrument to which the Seller is a party or by which it
is bound, including without limitation the agreements between Seller and each
Credit Card Issuer, or (b) result in the creation or imposition of any Lien
(other than a Permitted Lien) upon Accounts of the Seller which Lien has a
material impact on the enforceability of the Transaction Documents or the
collectibility of Accounts pursuant to the terms of any such material indenture,
loan agreement, mortgage, deed of trust, or other agreement or instrument, other
than the Transaction Documents, or (c) violate any federal, state or local law
or any order, rule, or regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties, other than a violation that would not materially adversely affect
(x) the interests of ADS hereunder, (y) the ability of the Seller to perform its
obligations hereunder or (z) the enforceability of this Agreement.
4.6. NO PROCEEDINGS. There are no proceedings or investigations pending,
or, to Seller's knowledge, threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (a)
asserting the invalidity of this Agreement or any other Transaction Document,
(b) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any other Transaction Document, or (c) seeking any
determination or ruling that might materially and adversely affect (i) the
performance by the Seller of its obligations under this Agreement or (ii) the
validity or enforceability of this Agreement or any of the Transaction
Documents.
4.7. GOVERNMENT APPROVALS. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the Seller
of this Agreement or any other Transaction Document except for filings needed to
perfect the Lien of ADS contemplated by this Agreement.
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4.8. FINANCIAL CONDITION. (a) The balance sheets of the Seller at
February 3, 1996, and the related statements of income and partnership equity of
the Seller for the fiscal year then ended certified by Coopers & Xxxxxxx,
independent accountants, copies of which have been furnished to ADS, and the
unaudited balance sheets of the Seller at October 5, 1996, and the related
statements of income and shareholders' equity of the Seller for the fiscal
quarter then ended, fairly present the financial position of the Seller as at
such date and the results of operations of the Seller for the period ended on
such date, all in accordance with generally accepted accounting principles
consistently applied, and (b) since October 5, 1996, to the best of the Seller's
knowledge, there has been no material adverse change in any such position,
business or operations except that borrowings for the Xxxxxxxx'x transaction
shall not be deemed to be adverse.
4.9. LITIGATION. No injunction, decree or other decision has been issued
or made by any court, government or agency or instrumentality thereof that
prevents, and, to the best of the Seller's knowledge, no threat by any person
has been made to attempt to obtain, any such decision (a) that involves this
Agreement or the other Transaction Documents, or the transactions contemplated
hereby or thereby or (b) that the Seller reasonably believes will involve
liabilities in excess of 10% of the Seller's net worth at the time of
determination.
4.10. XXXXXXXX'X DEFERRED BILLING PROGRAM. Seller represents and warrants
the narrative description of Xxxxxxxx'x Deferred Billing Program as set forth on
Exhibit 4.10 is complete and accurate.
4.11. TAX RETURNS AND PAYMENTS; WITHHOLDING TAXES. The Seller has filed
all tax returns required by law to be filed and has paid all taxes, assessments
and other governmental charges levied upon any of its properties, assets, income
or franchises (including without limitation all United States and foreign
withholding taxes), other than those not yet delinquent and those being
contested in good faith for which adequate reserves have been established in
accordance with generally accepted accounting principles. The charges, accruals
and reserves on the books of the Seller in respect to income taxes for all
fiscal periods are adequate in the opinion of the Seller, and the Seller knows
of no unpaid material assessment for additional income taxes for any fiscal
period or of any basis therefor.
4.12. ACCURATE REPORTS. No material information, exhibit, financial
statement, document, book, record or report (excluding projections) furnished or
to be furnished by the Seller to ADS in connection with this Agreement was or
will be inaccurate in any material respect as of the date it was or will be
dated or (except as otherwise disclosed to ADS at such time) as of the date so
furnished, or contained or will contain any material misstatement of fact or
omitted or will omit to state a material fact or any fact necessary to make the
statements contained therein not materially misleading. As to any financial
projections furnished by Seller to ADS, Seller represents that the same were
prepared in good faith upon assumptions believed at the time to be reasonable.
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4.13. TITLE TO ACCOUNTS; LIENS.
4.13.1. The Seller has title to, ownership or other interests or
rights sufficient to permit the sale of the Accounts (including all material,
trademarks, service marks, trade names, copyrights and licenses) free and clear
of any Lien and as otherwise necessary to the performance of the Agreement.
Immediately upon the sale and transfer of an Account hereunder, ADS shall have
acquired title to such Account free of all Liens created by or through the
Seller.
4.13.2. As of the date of purchase, each Account will have received
Preliminary Authorization from the applicable Credit Card Issuer and when ADS
(or the Seller as ADS' agent pursuant to the Service Agreement) presents each
Account to a Credit Card Issuer, whether directly or pursuant to the Processor
Agreements, such Credit Card Issuer will accept each Account.
4.13.3. No financing or continuation statement which names the Seller
as debtor has been filed under the Uniform Commercial Code relating to the
Accounts and the Seller has not agreed or consented to cause or to permit in the
future (upon the happening of a contingency or otherwise) any of the Accounts,
whether now owned or hereafter acquired, to be subject to any Lien, except the
Permitted Liens.
4.13.4. As of the date of this Agreement, the Seller has taken or
caused to be taken all actions necessary in order to establish ADS'
precautionary security interests in the Accounts as valid and perfected Liens,
prior to all other Liens.
4.14. CHARACTERIZATION OF TRANSACTIONS. It is the intention of the Seller
that the transactions contemplated herein shall constitute sales of the Accounts
from the Seller to ADS and that the full beneficial interest in and title to the
Accounts not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. The
Seller will treat the transactions contemplated herein as sales of the Accounts
for accounting, tax and other purposes.
4.15. ADS RIGHT TO SUBMIT ACCOUNTS PURSUANT TO PROCESSOR AGREEMENTS. ADS
shall have, with the merchant identification number provided to ADS under the
Service Agreement, the sole right, either individually or through its agent
under the Servicing Agreement, to submit Accounts for acceptance to the Credit
Card Issuers and their processing agents pursuant to the Processor Agreements.
SECTION 5
AFFIRMATIVE COVENANTS
Until all sums due and owing under this Agreement to ADS have been paid in
full and the Seller no longer has any right to require ADS to purchase Accounts
hereunder, the Seller covenants and agrees as follows:
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5.1. COMPLIANCE WITH LAWS, ETC. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders regarding its
operations, except when failure to comply will not have a material adverse
effect on (a) the interest of ADS hereunder, (b) the ability of the Seller to
perform its obligations hereunder or (c) the enforceability of this Agreement.
5.2. PRESERVATION OF CORPORATE EXISTENCE. The Seller shall preserve and
maintain its limited partnership existence, rights, franchises and privileges in
the jurisdiction of its organization, and qualify and remain qualified in good
standing in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would materially
adversely affect (a) the interests of ADS hereunder, (b) the ability of the
Seller to perform its obligations hereunder or (c) the enforceability of this
Agreement.
5.3. MAINTENANCE OF ACCOUNTS. The Seller shall at all times have title
to, and ownership or other interests in sufficient to permit the sale of the
Accounts (including all material, trademarks, service marks, trade names,
copyrights, licenses and rights in respect of the foregoing) necessary to the
performance of this Agreement.
5.4. MAINTENANCE OF MINIMUM NET WORTH. The Seller shall maintain a
minimum Net Worth in excess of 90% of the Seller's Net Worth at February 1,
1997, before giving effect to any inventory adjustments relating to the
acquisition of Chadwicks.
5.5. REPORTING REQUIREMENTS OF THE SELLER. From the date hereof until the
later of termination of the Commitment or the payment of all amounts owing
hereunder, the Seller shall, unless ADS shall otherwise consent in writing,
furnish to ADS:
(a) Quarterly Financial Statements. As soon as available and in any
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event within 60 days after the end of each of the first three quarters of each
fiscal year of the Seller, copies of the Seller's quarterly financial reports,
on Form 10-Q, as filed with the Securities and Exchange Commission (or if the
Seller is no longer required to file such Form 10-Q, the Seller shall furnish
such financial reports containing the information typically found on Form 10-Q)
accompanied by a certificate of the chief financial officer or chief accounting
officer of the Seller to the effect that such statements have been prepared in
accordance with generally accepted accounting principles, and except for year
end adjustments, footnotes and disclosures fairly present the Consolidated
financial position of the Seller as of such date and the Consolidated results of
operations of the Seller for the period ended on such date.
(b) Annual Financial Statements. As soon as available and in any
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event within 120 days after the end of each fiscal year of the Seller, a copy of
the Seller's Annual Report, on Form 10-K, as filed with the Securities and
Exchange Commission (or if the Seller is no longer required to file such Form
10-K, the Seller shall furnish such financial reports containing information
typically found on Form 10-K) and as reported on by nationally recognized
independent public accountants.
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(c) Compliance Certificate. As soon as available and in any event
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within 60 days after the last day of each of the first three fiscal quarters or
120 days after the end of each fiscal year of the Seller, a certificate of the
Seller's chief financial officer to the effect that no Terminations or Events of
Termination have occurred hereunder, or, if such Terminations or Events of
Termination have occurred, a statement explaining the factual circumstances
surrounding the Termination or Event of Termination and the steps Seller is
taking, if any, to cure such Termination or Event of Termination.
(d) Reports to Holders and Exchanges. Copies of any reports which
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the Seller sends to any of its security holders, and any reports or registration
statements that the Seller files with the Securities and Exchange Commission or
any national securities exchange other than registration statements relating to
employee benefit plans and registrations of securities for selling security
holders.
5.6. PAYMENT OF TAXES AND CLAIMS. The Seller shall promptly pay and
discharge all taxes and assessments levied and assessed or imposed upon its
properties or upon its income (including without limitation all United States
and foreign withholding taxes) as well as all material claims which, in the case
of any such tax, assessment or claim if unpaid, might by law become a Lien upon
the Accounts; provided, however, that nothing herein contained shall require the
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Seller to pay any such taxes, assessments or claims so long as the Seller shall
in good faith contest the validity and stay the execution and enforcement
thereof.
SECTION 6
NEGATIVE COVENANTS
During the term of this Agreement, unless ADS has otherwise agreed in
writing, the Seller covenants and agrees as follows:
6.1. NEGATIVE PLEDGE. The Seller shall not, without the prior written
consent of ADS, which consent may be withheld in ADS' sole discretion, create,
incur, assume or permit to continue any Liens on the Accounts purchased
hereunder, whether now owned or hereafter acquired, except Permitted Liens.
6.2. MERGERS, ACQUISITIONS, SALES, ETC.
6.2.1. The Seller shall not be a party to any merger or
consolidation, except for (a) any such merger or consolidation of the Seller
with a Subsidiary that enters into an agreement with ADS upon such merger or
consolidation, or (b) any such merger or consolidation in which the Seller is
the surviving entity.
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6.2.2. The Seller shall not sell, transfer, convey or lease all or
substantially all of its assets, including the stock of any Subsidiary except:
(a) for a sale, transfer, conveyance, lease, abandonment or other
disposition from the Seller with or to a Subsidiary or in the ordinary course of
business; or
(b) the sale, transfer, conveyance, lease or other disposition
of assets in the ordinary course of business.
6.3. FINANCIAL COVENANTS. The Seller shall not fail to comply with the
financial covenants set forth in Article V of the Senior Credit Agreement.
6.4. XXXXXXXX'X DEFERRED BILLING PROGRAM. Seller shall maintain the
Xxxxxxxx'x Deferred Billing Program described on Exhibit 4.10, and the
Xxxxxxxx'x Deferred Billing Program shall not be amended, modified, supplemented
or otherwise changed without the prior written consent of ADS.
SECTION 7
EVENTS OF TERMINATION
7.1. EVENTS OF TERMINATION. The following are "Events of Termination":
(a) Service Agreement and Processing Assignment. Seller shall fail
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to comply with the terms of the Service Agreement (including without limitation
the failure of the Seller to forward Accounts to the Credit Card Issuer for
payment or the failure of a Credit Card Issuer to fund Accounts when properly
submitted to the Credit Card Issuer by the Seller) or the Credit Card Issuer
shall fail to accept an Account in accordance with the Processor Agreement or
the Credit Card Issuer shall fail to comply with the requirements of the
Processor Agreement;
(b) Payments and Fees. The Seller shall default in the payment of
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any sums owing hereunder, including without limitation amounts owing under
Section 1.6 hereof; provided such default shall continue for a period of 10
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Domestic Business Days;
(c) Representations and Warranties. Any representation or warranty
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(other than any representation or warranty contained in Section 4.13.2) made by
the Seller in this Agreement or in connection with any purchase of Accounts
hereunder, or in any report, Funding Certificate, financial statement or other
instrument furnished in connection with this Agreement or the Funds hereunder
shall prove to have been false or misleading in any material respect on the date
made;
(d) Negative Covenants. The Seller shall fail to observe or perform
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any covenant, condition or agreement in Section 5.4 or Section 6 of this
Agreement;
(e) Other Covenants. The Seller shall fail to observe or perform any
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covenant, condition or agreement (other than those mentioned in Section 5.4,
Section 6 or Section 7.3) to
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be observed or performed pursuant to the terms hereof and such default shall
continue unremedied for 30 days after written notice thereof to the Seller by
ADS, or the Seller fails to comply with the covenants contained in Section 5.4
or Section 6;
(f) Acceleration of Debt. The holder of any Indebtedness other than
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amounts owing hereunder in an amount greater than $10,000,000 in the aggregate
shall accelerate the maturity of such Indebtedness;
(g) Judgments. One or more judgments from which no appeal may be
---------
taken or with respect to which the time to appeal has expired for the payment of
money aggregating in excess of 10% of the current assets of the Seller (as
measured pursuant to the Form 10-Q most recently filed with the Securities and
Exchange Commission before the date of the judgment) shall be rendered against
the Seller and the same shall remain undischarged for a period of 30 consecutive
days during which the execution shall not be effectively stayed;
(h) Bankruptcy, Etc. Proceedings seeking appointment of a receiver,
---------------
custodian, trustee or liquidator of the Seller shall be commenced against the
Seller without authorization, consent or application, and shall have not been
alleviated within 60 days of such commencement or the Seller shall (a) make an
assignment for the benefit of, or enter into any composition or arrangement
with, creditors; (b) (i) apply for or consent (by admission of material
allegations of a petition or otherwise) to the appointment of a receiver,
custodian, trustee or liquidator of the Seller of any substantial part of the
properties of the Seller, or (ii) authorize such application or consent, (c)
(i) authorize or file a voluntary petition in bankruptcy, suffer an order for
relief under any federal bankruptcy law, or apply for or consent (by admission
of material allegations of a petition or otherwise) to the application of any
bankruptcy, reorganization, arrangement, readjustment of debt, insolvency,
dissolution, liquidation or other similar law of any jurisdiction, or (ii)
authorize such application or consent, or proceedings to such end shall be
instituted against the Seller without its authorization, application or consent
and shall have not been alleviated within 60 days of the institution thereof;
(d) permit or suffer all or any part of its properties to be sequestered,
attached, or subjected to a Lien through any legal proceeding or distraint which
is not alleviated within 60 days of the commencement thereof; or (e) generally
not pay its debts as such debts become due;
(i) Reorganization, Receiver, Etc. An order, judgment or decree
-----------------------------
shall be entered without the application, approval or consent of the Seller by
any court of competent jurisdiction, approving a petition seeking reorganization
of the Seller or appointing a receiver, trustee or liquidator of the Seller or
of all or a substantial part of the assets thereof, and such order, judgment or
decree shall continue unstayed and in effect for any period of 60 days;
(j) Put Default. The Seller shall have failed to repurchase (or make
-----------
reimbursement in respect of, if applicable) any Account that the Seller is
obligated to repurchase (or make reimbursement for) under Section 7.3, within
the time period specified in Section 7.3;
(k) Unfunded Accounts. The level of Unfunded Accounts experienced in
-----------------
the four most recently completed Individual Programs that generated Accounts in
excess of $1,000,000
12
as of any date of determination ever exceeds (as the average of all four of such
Individual Programs) 7.5% of the total amounts of Accounts purchased by ADS
arising under such four Individual Programs.
7.2. RIGHTS UPON TERMINATION EVENT. At any time after an Event of
Termination, ADS shall have the right to do any or all of the following: (a)
declare its obligation to purchase Accounts to be terminated, whereupon the same
shall forthwith terminate and (b) make a demand for payment upon the Seller,
whereupon all fees, costs and all such other amounts owing under the Transaction
Documents shall become forthwith due and payable, without presentment, demand,
protest or other notice of any kind, all of which is hereby expressly waived by
the Seller, notwithstanding anything contained in the Transaction Documents to
the contrary.
7.3. PUT RIGHT FOR CERTAIN BREACHES OF REPRESENTATIONS AND WARRANTIES.
7.3.1. In the event of a breach of the representation and warranty
contained in Section 4.13.2 in respect of any Account, then as the sole and
exclusive remedy for such breach, ADS shall have the right to require the Seller
to repurchase ("put") such non-conforming Account in accordance with the
following terms:
(a) As to any Unfunded Account which has not been accepted by
the Credit Card Issuer or otherwise paid by the 10th day after the
Deferred Billing Maturity Date (the "Put Date"), ADS shall have the
right commencing on the 11th day after the Put Date to put to Seller
such Unfunded Account; provided that (i) such right shall only be
--------
available to the extent that the Unfunded Accounts in respect of an
Individual Program on the applicable Put Date, exceed, in the
aggregate, the Applicable Purchase Discount of the original amount of
all Accounts purchased under such Individual Program, and then only to
the extent of the excess; and (ii) ADS' put right with respect to the
Unfunded Accounts relating to an Individual Program shall in all
events be limited to 5% of the amount of all Accounts purchased under
an Individual Program; and
(b) As to any Deferred Billing Account which is or becomes (i) a
Chargeback Account or (ii) a Return Account after the Deferred Billing
Maturity Date, the Seller shall be required promptly either (x) in
accordance with such Credit Card Issuer's standard procedures, to
reimburse such Credit Card Issuer for the payment previously made for
such Account so as to fully discharge ADS' obligation in respect
thereof, or (y) if ADS is required to make such reimbursement to the
Credit Card Issuer, to reimburse ADS in full on the day the Chargeback
Account or Return Account is required to be funded.
7.3.2. The Seller shall be required to repurchase any Account that is
subject to repurchase under this Section 7.3 (or, if applicable, reimburse the
Credit Card Issuer or ADS, as the case may be, in the circumstances contemplated
by Section 7.3.1.(b) above) at its face value within two Domestic Banking days
after receiving ADS' written notice that ADS is putting such Account to the
Seller pursuant to this Section 7.3.
13
7.3.3. ADS shall (a)upon any repurchase of an Account pursuant to the
Put Right, and (b) for all Unfunded Accounts whose aggregate book value is less
than the Applicable Purchase Discount for the applicable Individual Program,
without further action, be deemed to transfer, set-over and otherwise convey to
the Seller, without recourse, representation or warranty, all right, title and
interest in the repurchased Accounts, all monies due or to become due with
respect thereto and in all proceeds thereof. ADS shall, at the Seller's
expense, execute, or cause to be executed, such documents and instruments of
transfer or assignment and take, or cause to be taken, such other actions as
shall reasonably be requested by the Seller to effect the conveyance of such
account without adverse claims pursuant to this Section.
7.3.4. If the Seller fails to repurchase any Account (or make
reimbursement, if applicable) as provided in this Section 7.3, then such failure
shall constitute an Event of Termination hereunder entitling ADS to exercise all
of its rights as provided hereunder upon the occurrence of an Event of
Termination.
7.4. ALTERNATIVE CHARACTERIZATION. The parties intend that the
transactions consummated herein shall be sales, but as a precautionary measure
in the event for any reason the transactions are not so treated or
characterized, then Seller agrees that ADS will have, and there is hereby
granted to and created in favor of ADS, a security interest under the UCC, and
otherwise in accordance with applicable law, in and to the following:
7.4.1. All Accounts now or hereafter owned or generated by the
Seller, which have been purchased by ADS including, without limitation, (i) all
moneys due and to become due under any Account, (ii) any damages arising out of
or for breach or default in respect of any Account, and (iii) all other amounts
from time to time paid or payable under or in connection with any such Account.
7.4.2. To the extent not otherwise included, all books, records and
ledger cards and all Proceeds or products of any of the foregoing; provided,
---------
however, that any excess Proceeds remaining after the corresponding Obligations
-------
have been paid to ADS shall no longer be Accounts.
7.4.3. In respect of the Accounts or any part thereof, ADS shall have
such rights and remedies as are provided by the UCC and such other rights and
remedies in respect thereof which ADS may have at law or in equity or under the
Transaction Documents, including without limitation the right to resubmit the
Accounts to the Credit Card Issuers pursuant to the Processor Agreements and
receive the funds therefore. In addition to all of the rights and remedies
given to ADS by this Service Agreement, ADS shall have all of the rights and
remedies of a secured party under the UCC.
7.5. END OF THE COMMITMENT. At the End of the Commitment (whether by
maturity, acceleration, cancellation or otherwise), the Seller shall pay to ADS
the aggregate amount of all outstanding Obligations, including, without
limitation, all unpaid fees and costs, to the extent then matured (whether by
acceleration or otherwise).
14
SECTION 8
DEFINITIONS
8.1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified:
"Account" means and includes all accounts (whether or not earned by
-------
performance), contract rights, chattel paper, instruments, documents, general
intangibles and all other forms of obligations owing to the Seller from
Customers, pursuant to Xxxxxxxx'x Deferred Billing Program whether secured or
unsecured, whether now existing or hereafter created, and specifically assigned
to ADS under the Transaction Documents, all guaranties and other security
therefor, and all other rights and remedies of an unpaid lienor or secured party
in respect of the Accounts. Each Account arises from a credit card billing
designated by the Customer and will be presented to the Credit Card Issuer on
the applicable deferred billing date in accordance with Xxxxxxxx'x Deferred
Billing Program.
"Affiliate" with respect to any Person shall mean each Person that
---------
directly or indirectly (through one or more intermediaries or otherwise),
controls, is controlled by, or is under common control with such Person.
"Agreement" is defined in the preamble.
---------
"Applicable Purchase Discount" means the purchase discount for
Accounts under any Individual Program as set forth on Exhibit 1.2.1.
"Xxxxxxxx'x Deferred Billing Program" is set forth on Exhibit 4.10.
-----------------------------------
"Chargeback Account" means an Account that was previously accepted by
------------------
a Credit Card Issuer which acceptance is subsequently reversed giving rise to a
reimbursement obligation from the Seller or ADS in favor of the Credit Card
Issuer.
"Closing" shall mean the closing of the transactions described herein
-------
at such location which shall be mutually agreed to among the parties.
" Commitment" is set forth at Section 1.1.2.
----------
"Counsel" is identified at Section 3.1(d).
-------
"Credit Card Issuers" means American Express, Discover and financial
-------------------
institutions that are members of the VISA/MasterCard system and their processing
agents.
"Customer" means any Person who is obligated as an account debtor or
--------
other obligor on, under, or in connection with any Account.
15
"Defaulted Account" means an Account that is generated by a Customer
-----------------
who is currently in default of the payment terms of such Customer's agreement
with a Credit Card Issuer.
"Deferred Billing Maturity Date" means the date on which Accounts
------------------------------
under a program are scheduled to be presented to the Credit Card Issuers.
"Domestic Banking Days" shall mean days other than Saturdays, Sundays
---------------------
and other legal holidays or days on which the principal office of The Huntington
National Bank is closed.
"Eligible Account" means each Account of the Seller which, at the time
----------------
of determination, meets all the following qualifications: (a) the Seller has
lawful and absolute title to such Account, subject only to the Lien of ADS given
by this Agreement; such Lien constitutes a perfected Lien in the Account prior
to the rights of any other Person and such Account is not subject to any other
Lien whatsoever except Permitted Liens; (b) the Seller has the full unqualified
right to xxxxx x Xxxx in such Account to ADS as security and collateral for the
Obligations; (c) the Seller received Preliminary Authorization from the Credit
Card Issuer on the date the Account was created; (d) the Account arose from the
sale of goods by the Seller in the ordinary course of business pursuant to a
transaction with a Customer, which goods have been shipped or delivered to the
Customer under such Account; and such sale was an absolute sale and not on
consignment, approval or a sale-and-return basis (other than Seller's normal
return policy); (e) no notice of the bankruptcy, receivership, reorganization,
insolvency, or financial embarrassment of the Customer has been received by the
Seller; (f) the Account is a valid, legally enforceable obligation of the
Customer, and is not subject to any dispute, offset, counterclaim, or other
defense on the part of such Customer; (g) it is not a Defaulted Account; (h) the
terms of the Account require payment pursuant to the Xxxxxxxx'x Deferred Billing
Program of the Seller on a date that is before the Termination Date; (i) the
Customer on the Account is not (1) the United States of America or any foreign
government, or any department, agency or instrumentality thereof (unless the
Seller and ADS shall have fully complied with the Assignment of Claims Act of
1940, as amended, or any other applicable law governing government Accounts,
with respect to such Account), (2) the Seller, or any Affiliate of Seller or,
(3) located outside the United States or Canada; (j) the Account is denominated
and payable only in United States dollars in the United States; (k) the Account
is not an Unfunded Account if the total volume of Unfunded Accounts exceeds the
Applicable Purchase Discount of any Individual Program; and (l) ADS, acting in
its sole reasonable discretion, has not notified the Seller the Account may not
be considered as an Eligible Account.
"End of the Commitment" means the earlier of the Termination Date or
---------------------
the date on which ADS exercises its rights under Section 7.2(a) following an
Event of Termination.
"Events of Termination" are defined at Section 7.
---------------------
16
"Final Authorization" means the approval and acceptance for payment of
-------------------
an Account by the Credit Card Issuer on the applicable Deferred Billing Maturity
Date.
"Financial Statements" means the financial statements described in
--------------------
Section 4.8 hereof and, after the initial Funds are made under the Agreement,
the most recent financial statements of the Seller that have been furnished to
ADS.
"Fixed Rate Funding" means a funding of purchases of Accounts at a
------------------
LIBO Rate for a Fixed Rate Period.
"Fixed Rate Period" means exactly one, two or three months; provided,
----------------- ---------
however, that no Fixed Rate Period may end on a date later than the Termination
-------
Date.
"Funding" means a transaction in which ADS transfers Funds to Seller
-------
to purchase Accounts.
"Funds" means the monies paid by ADS to Seller to purchase Accounts.
-----
"Funding Certificate" means a certificate, in the form required by ADS
-------------------
that computes the Receivables Base, together with any memo of returns and
credits, remittance report, schedule of Eligible Accounts showing each Customer
transaction giving rise to an Eligible Account and such other supporting
documents and materials which ADS, in its sole reasonable discretion, may
require to be delivered with such certificate. The Funding Certificate shall be
in the form of an electronic transmission delivered by Seller to ADS, with
authorization as determined by ADS in its sole discretion; provided, however,
-----------------
that ADS can demand the Funding Certificate to be delivered in writing at any
time.
"Funding Date" means the date Funds will be made available to Seller,
------------
which will be at least (a) two Domestic Banking Days after ADS receives a
Purchase Request from the Seller for a Variable Rate Funding or (b) four London
Banking Days after ADS receives a Purchase Request from the Seller for a Fixed
Rate Funding.
"GAAP" means generally accepted accounting principles applied on a
----
basis consistent with the accounting principles reflected in the Financial
Statements.
"Indebtedness" means, for any Person (a) all indebtedness or other
------------
obligations of such Person for borrowed money or for the deferred purchase price
of property or services (except for unsecured trade payables or accruals
incurred in the ordinary course of business on normal and reasonable terms), (b)
all indebtedness or other obligations of any other Person for borrowed money or
for the deferred purchase price of property or services, the payment or
collection of which such Person has guaranteed (except by reason of endorsement
for deposit or collection in the ordinary course of business) or in respect of
which such Person is liable, contingently or otherwise, including, without
limitation, by way of agreement to purchase, to provide funds for payment, to
supply funds to or otherwise to invest in such other Person, or otherwise to
assure a creditor against loss, (c) all indebtedness or other obligations of any
other
17
Person for borrowed money or for the deferred purchase price of property or
services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien, upon or in
property (including, without limitation, Accounts) owned by such Person, whether
or not such Person has assumed or become liable for the payment of such
indebtedness or other obligations to the extent of the fair market value of the
property covered by such Lien, (d) all direct obligations of such Person in
respect of letters of credit, and (e) all Lease obligations which have been or
should be, in accordance with generally accepted accounting principles,
capitalized on the books of such Person as lessee.
"Individual Program" means any program under the Xxxxxxxx'x Deferred
------------------
Billing Program offered to Customers in a specific catalog distributed by the
Seller.
"Liabilities", as applied to any Person, shall mean (a) all items
-----------
(except items of capital stock, of capital surplus, of general contingency
reserves or of retained earnings and amounts attributable to minority interest,
if any) which in accordance with generally accepted accounting principles would
be included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Liabilities are to be
determined, including specifically capitalized lease obligations and (b) all
obligations secured by any Lien or conditional sale or other title retention
agreement to which any property or asset owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed
(excluding non-capitalized leases which may amount to title retention
agreements).
"LIBO Rate" shall mean, as of the date of each Fixed Rate Funding made
---------
available before the Termination Date, the rate of interest (rounded upward, if
necessary, to the next highest 1/16th of 1%) at which ADS was offered deposits
in United States dollars at 11:00 a.m., London time, in the London Interbank
LIBO Market on the second London Banking Day preceding the date of such Fixed
Rate Funding for delivery on the date of such LIBO Rate Loan, for deposits for a
like period as such Fixed Rate Funding and in an amount equal to the amount of
such Fixed Rate Funding plus 80 basis points. The minimum amount of a Fixed
Rate Funding for purposes of establishing the LIBO Rate shall be $1,000,000.
"Lien" means any mortgage, deed of trust, lien, charge or security
----
interest (including, without limitation, a purchase money security interest as
such term is defined in Section 9-107 of the UCC) or pledge of, any property or
asset, whether now owned or hereafter acquired, and includes the acquisition of,
or agreement to acquire, any property or asset subject to any conditional sale
agreement or other title retention agreement, including a Lease on terms
tantamount thereto or on terms otherwise substantially equivalent to a purchase.
"London Banking Day" means any Domestic Banking Day on which
------------------
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Net Worth" shall be construed in accordance with generally accepted
---------
accounting principles consistent with those applied in the preparation of the
financial statements of the Seller.
18
"Obligations" means (a) the obligations of the Seller to ADS under the
-----------
Agreement, (b) the obligations of the Seller to ADS under the remaining
Transaction Documents, (c) all costs and expenses incurred by ADS in the
collection or the enforcement of any such obligations of the Seller, including,
without limitation, reasonable attorneys' fees and legal expenses, and (d) all
future advances made by ADS for the maintenance, protection or preservation of
the Accounts or any portion thereof.
"Permitted Liens" shall mean any of the following:
---------------
(a) Liens securing taxes, assessments, fees or other governmental
charges or levies, or securing the claims of materialmen, mechanics, carriers,
warehousemen, landlords and other similar Persons;
(b) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance,
social security and other similar laws;
(c) Reservations, exceptions, easements, leases and other similar
title exceptions or encumbrances affecting real property, provided they do not
in the aggregate materially interfere with their use in the ordinary course of
the Seller's business; and
(d) Liens in favor of ADS.
"Person" shall mean and include an individual, partnership,
------
corporation, trust, unincorporated organization, a government or any department
or agency thereof or any other entity.
"Preliminary Authorization" means the authorization of $1.00 that the
-------------------------
Seller obtains from the Credit Card Issuer on the date it receives an order from
a customer, which authorization confirms the validity of the credit card
designated by the Customer as the method of payment.
"Prime Rate" means the interest rate publicly announced from time to
----------
time by The Huntington National Bank as representing its prime rate. The prime
rate is not intended to be the lowest rate of interest charged by The Huntington
National Bank in connection with extensions of credit to debtors.
"Proceeds" has the meaning assigned to that term in the UCC.
--------
"Processor Agreements" means the Processing Agreement between ADS and
--------------------
each institution that processes Accounts for the Credit Card Issuers.
"Purchase Request" means a request from the Seller to ADS to purchase
----------------
Accounts accompanied by all the information required by Section 1.2.4.
19
"Purchased Account" means Accounts that have been purchased by ADS
-----------------
that are not yet due to be accepted by a Credit Card Issuer.
"Receivables Base" means the book value of Eligible Accounts as
----------------
reflected on the "Servicing Agent's" records under the Servicing Agreement, net
of all credits, returns, discounts and allowances.
"Request Date" shall mean the date a Funding Request is delivered to
------------
ADS.
"Requirement of Law" means, for any Person, any term, condition, or
------------------
provision of any law, rule, judgment, regulation, order, writ, injunction or
decree of any court or government, domestic or foreign and any ruling of any
arbitrator to which such Person is a party or by which such Person or any of its
assets or property is bound or affected or from which such Person derives
benefits, and, if such Person is a corporation, its charter documents and by-
laws.
"Return Account" means an Account that was previously accepted by a
--------------
Credit Card Issuer in respect of which the Customer returns to Seller all or a
portion of the purchased items, which return results in a credit to that
customer's credit card account, and a corresponding reimbursement obligation to
the Credit Card Issuer.
"Seller" is defined in the preamble.
------
"Senior Credit Agreement" is the Credit Agreement dated as of December
-----------------------
9, 1996 with Xxxxxx Guaranty Trust Company of New York as agent and Xxxxxxx
Xxxxx Capital Corporation as Documentation Agent; as the same may be amended or
modified from time to time.
"Service Agreement" means the Service Agreement between the Seller and
-----------------
ADS attached hereto as Exhibit 8.
"Subsidiary" means any Person of which the Seller shall own, at the
----------
time as of which any determination is being made, directly or indirectly through
a Subsidiary, such number of the outstanding shares of capital stock or other
evidences of beneficial interest having ordinary voting power to elect a
majority of the Board of Directors, or other similar governing body, of such
Person.
"Termination Date" is defined at Section 1.1.1.
----------------
"Total Facility" means the lesser of the Receivables Base or the
--------------
Commitment.
"Transaction Documents" means the Agreement, the Service Agreement,
---------------------
the Processor Agreements, and any financing statements or other agreements,
reports, documents, certificates or instruments required or contemplated hereby
or thereby or otherwise delivered to ADS in connection herewith or therewith
signed by the Seller or any Affiliate relating thereto.
20
"UCC" means the Uniform Commercial Code as in effect on the date of
---
the Agreement and as the same may be supplemented or amended from time to time
hereafter, of any state or states having jurisdiction from time to time pursuant
to Section 9-103 thereof with respect to all or any portion of the Accounts.
"Unfunded Account" means an Account which is rejected by a Credit Card
----------------
Issuer on the date of presentation.
"Variable Rate Funding" means a Funding of a purchase of Accounts with
---------------------
Funds provided to ADS at the Prime Rate.
8.2. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
8.3. RULES OF CONSTRUCTION. All accounting terms used in the Transaction
Documents not otherwise specifically defined in the Transaction Documents shall
be construed in accordance with GAAP. Any other term not specifically defined
in the Transaction Documents shall be construed in accordance with the meaning
for such terms under the UCC in effect from time to time in the State of Ohio.
The meaning of any defined term used in the Transaction Documents shall apply
equally to the singular, plural and other forms of the term defined.
SECTION 9
MISCELLANEOUS
9.1. TERM OF AGREEMENT; SUCCESSORS AND ASSIGNS.
9.1.1. This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the purchase of Accounts by ADS and shall continue in full force
and effect until the End of the Commitment or the payment of the Obligations,
whichever is later. Whenever in this Agreement any of the parties hereto are
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
9.1.2. Notwithstanding any other provision hereof, this Agreement may
be terminated by the Seller at any time upon 30 days prior notice upon the
occurrence of a "Change of Control" as defined in the Senior Credit Agreement,
in which case (a) this Agreement shall terminate upon the payment of all the
outstanding Obligations and (b) Seller shall no longer be entitled to sell
Accounts under the Commitment.
9.2. NOTICES. Notices, demands and communications shall be deemed to have
been properly given to the Seller when faxed to Brylane, L.P., at (212) 613-
9567, Attention: Chief Financial Officer or deposited in the United States
mail, registered or certified, postage prepaid,
21
and addressed to the Seller at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Chief Financial Officer and Chadwicks, 00 Xxxxxx Xxxxx, Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000, Fax (000) 000-0000, Attention: Chief Financial
Officer, or hand delivered to the same address. Any communication to ADS shall
be deemed properly given if faxed, hand delivered or similarly mailed as
follows:
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
(000) 000-0000
Attention: Xxxxxx X. Xxxxxx
9.3. NO IMPLIED WAIVERS. No delay on the part of ADS or the Seller in
exercising any right, power or privilege granted hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof. The rights
and remedies herein expressly specified are cumulative and not exclusive of any
other rights and remedies which ADS or the Seller would otherwise have.
9.4. AMENDMENTS, MODIFICATIONS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement nor consent to any
departure by the Seller or ADS therefrom, shall in any event be effective unless
the same shall be in writing and signed by ADS or the Seller, respectively, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No notice or demand on the Seller in
any case shall entitle the Seller, to any other or further notice or demand in
similar or other circumstances.
9.5. APPLICABLE LAW. This Agreement shall be deemed to be contracts made
under the local laws of the State of Ohio, and for all purposes shall be
construed in accordance with the laws of such state.
9.6. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
9.7. EXPENSES. All fees, costs or expenses, including reasonable fees and
expenses of outside legal counsel, incurred by ADS in connection with either the
preparation, administration, amendment or modification of the Agreement
(including, without limitation, (a) all expenses incurred in obtaining all
necessary judicial and other approvals of the transactions contemplated hereby
or (b) all expenses incurred in conducting any examinations or appraisals which
the Agent, in its sole discretion, deem necessary or appropriate) shall be paid
by the Seller on demand. All fees, costs or expenses, including reasonable fees
and expenses of outside legal counsel, incurred by ADS in connection with the
enforcement of the Agreement shall be paid by the Seller on demand.
22
9.8. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto were upon the
same instrument. Complete sets of counterparts shall be lodged with the Seller
and ADS.
9.9. ENTIRE AGREEMENT. The Transaction Documents set forth the entire
understanding between the parties concerning the subject matter thereof and
incorporate all prior negotiations and understandings. There are no covenants,
promises, agreements, conditions or understandings, either oral or written,
between them relating to the subject matter of the Agreement other than those
set forth in the Transaction Documents. No representation or warranty has been
made by or on behalf of either party to the Agreement (or any officer, director,
employee or agent thereof) to induce the other party to enter into the Agreement
or to abide by or consummate any transactions contemplated by any term of the
Agreement, except representations and warranties, if any, expressly set forth or
referred to in the Transaction Documents. Nothing expressed or implied in any
of the Transaction Documents is intended or shall be construed to confer upon or
give any Person other than the parties hereto and their successors or assigns,
any rights or remedies under or by reason of the Transaction Documents.
9.10. HEADINGS. Headings of the sections of this Agreement are for
convenience only and shall not affect the construction of this Agreement.
9.11. EFFECTIVE DATE. This Agreement shall become effective upon the
later of the execution of a counterpart hereof by each of the parties.
9.12. CONFESSION OF JUDGMENT. The Seller hereby authorizes any attorney
at law to appear for the Seller, in any action on the Agreement, at any time
thereafter, as herein provided, in any court of record in or of the State of
Ohio, or elsewhere, to waive the issuing and service of process against the
Seller and to confess judgment in favor of the holder of the Agreement or the
party entitled to the benefits of the Agreement against the Seller for the
amount that may be due, with interest at the rate herein mentioned and costs of
suit, and to waive and release all errors in said proceedings and judgment, and
all petitions in error, and right of appeal from the judgment rendered.
9.13. TIME. Unless otherwise stated, all time references set forth herein
are stated in Columbus, Ohio time.
9.14. WAIVER OF JURY TRIAL. ADS AND THE SELLER HEREBY VOLUNTARILY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN
ADS AND THE SELLER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THE SELLER AND ADS IN CONNECTION WITH
THE AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED HERETO OR THERETO.
THIS PROVISION IS A MATERIAL INDUCEMENT TO ADS TO ENTER INTO THE FINANCING
TRANSACTIONS WITH SELLER. IT SHALL
23
NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY ADS' ABILITY TO PURSUE ITS
REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT
PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO.
9.15. TERMINATION OF INTERESTS. Upon payment and performance in full of
the Obligations, and all reasonable costs and expenses incurred by ADS in the
realization upon the Accounts, including without limitation, reasonable
attorneys' fees and legal expenses, this Agreement shall terminate and be of no
further force and effect, and in such event, ADS shall, at the expense of the
Seller, take all action necessary to terminate the rights and interests in favor
of ADS created under this Agreement. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
9.16. CONFIRMATION BY ADS. ADS hereby confirms that ADS will treat the
transactions contemplated hereby as purchases of the Accounts for accounting,
tax and other purposes.
The parties hereto have caused this Agreement to be duly executed by their
respective duly authorized officers as of the date first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By:_______________________________
Name:_____________________________
Its:______________________________
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
BRYLANE, L.P.
By:_______________________________
Name:_____________________________
Its:______________________________
24
EXHIBIT 1.2.1
APPLICABLE PURCHASE DISCOUNT SCHEDULE (QUARTERLY)
1. THE INITIAL APPLICABLE PURCHASE DISCOUNT SHALL BE 2.5%.
2. THEREAFTER, IF THE AVERAGE ROLLING THEN THE APPLICABLE PURCHASE DISCOUNT
12 MONTH UNFUNDED ACCOUNTS ARE: FACTOR IS:
Less than 2.5% 2.5%
2.5% to 2.749% 2.75%
2.75% to 2.99% 3.0%
3.0% to 3.49% 3.5%
3.5% to 3.99% 4.0%
4.0% to 4.49% 4.5%
4.5% to 4.99% 5.0%
5.0% to 5.49% 5.5%
5.5% to 5.99% 6.0%
6.0% to 6.49% 6.5%
6.5% or Greater 7.0%
3. SELLER SHALL DELIVER TO ADS EACH MONTH A REPORT DETAILING THE AVERAGE ROLLING
12 MONTH UNFUNDED ACCOUNTS.
25
EXHIBIT 4.10
XXXXXXXX'X DEFERRED BILLING PROGRAM
Xxxxxxxx'x frequently offers its customers a "Deferred Billing
Program" pursuant to which no finance charges will be incurred from the time an
order is placed out of a given catalog until a date specified in that catalog
(the "Deferred Billing Maturity Date"). The Deferred Billing Maturity Date will
not exceed 180 days from the date the catalog is initially mailed. When a
customer chooses to utilize the Deferred Billing Program, the customer will not
be billed until the Deferred Billing Maturity Date, but does provide a credit
card as the medium for payment for the items ordered (a "Deferred Billing
Account"). At the time of sale, an authorization ("Preliminary Authorization")
of $1.00 is obtained from the Credit Card Issuer to verify the customer's credit
card account, but this amount is not billed to the customer. Subsequently, on
the Deferred Billing Maturity Date that is specified in the applicable catalog,
the Deferred Billing Account received from the customer is submitted to the
Credit Card Issuer. At that point, the Credit Card Issuer either purchases the
Deferred Billing Account ("Final Authorization") or rejects the same, under
circumstances discussed below. The charge for the purchased items will then
appear on the customer's next monthly xxxx from the Credit Card Issuer.
There are certain circumstances under which the Credit Card Issuer
will (i) decline to accept a Deferred Billing Account when presented for payment
on a Deferred Billing Maturity Date or (ii) have the right to subsequently
"charge back" a Deferred Billing Account it has previously accepted. These are
as follows:
1. If the customer's credit card has expired or been cancelled between the
date of the authorization of the Deferred Billing Account and the Deferred
Billing Maturity Date, the Credit Card Issuer will decline that Deferred
Billing Account. Card cancellations frequently arise when the customer
reports that the card has been lost or stolen during the intervening
period.
2. If, on the applicable Deferred Billing Maturity Date, a credit card is near
or over its authorized charge limit, the Credit Card Issuer will on that
date decline the Deferred Billing Account. In such cases, Xxxxxxxx'x
practice is to resubmit the account until accepted and finally to "force"
it through by presentation without an authorization. In substantially all
cases of this type, the Deferred Billing Account will ultimately be
accepted.
3. As an example, if goods are shipped to but not received by a customer, when
the customer receives the statement from the Credit Card Issuer which
reflects the transaction, the customer will refuse payment on the basis
that the goods were not delivered or perhaps not even ordered in the first
instance. In most circumstances of this type, Xxxxxxxx'x will accept the
customer's rejection since shipping loss is borne by Xxxxxxxx'x. Since it
has already purchased the Deferred Billing Account, the Credit Card Issuer
will then "charge-back" the transaction to Xxxxxxxx'x.
26
4. If a customer returns an item to Xxxxxxxx'x prior to the Deferred Billing
Maturity Date, the Deferred Billing Account will be offset by the return
amount. If an item is returned after the Deferred Billing Maturity Date,
Xxxxxxxx'x would be required to reimburse the Credit Card Issuer for the
transaction.
27
EXHIBIT 8
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Service Agreement"), is made on December 9,
1996, by and between BRYLANE, L.P., a Delaware limited partnership (the
"Servicing Agent"), and ALLIANCE DATA SYSTEMS CORPORATION, a Delaware
corporation ("ADS").
RECITALS:
WHEREAS, on even date herewith, ADS committed to make available one hundred
million dollars ($100,000,000) to purchase accounts receivable from the
Servicing Agent pursuant to the Accounts Receivable Purchase Agreement between
Brylane, L.P. and ADS dated as of the date hereof, as may be amended from time
to time (the "Receivables Agreement"); and
WHEREAS, Brylane, L.P. will sell accounts receivable generated under the
Xxxxxxxx'x Deferred Billing Program under the Receivables Agreement, and ADS
will purchase such Accounts as defined in Section 1; and
WHEREAS, ADS desires to employ Servicing Agent to perform various servicing
functions in connection with the Accounts purchased by ADS.
NOW THEREFORE, for and in consideration of the commitment to purchase
Accounts from Brylane, L.P. and the benefits to be received therefrom, the
parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. Certain capitalized words and terms as used in this
-----------
Service Agreement shall have the meanings given to them in the Uniform
Commercial Code and the Receivables Agreement unless otherwise indicated herein
or the context or use indicates another or different meaning or intent. All
defined terms shall be equally applicable to both the singular and plural forms
of any of the words and terms herein defined. In addition, the following
capitalized words shall have the following meanings when used herein:
"Accounts" means and includes all accounts (whether or not earned by
performance), contract rights, chattel paper, instruments, documents, general
intangibles and all other forms of obligations owing to Brylane, L.P. from the
Customer, pursuant to Xxxxxxxx'x Deferred Billing Program whether secured or
unsecured, whether now existing or hereafter created, and specifically assigned
to ADS under the Transaction Documents, all guaranties and other security
therefor and all other rights and remedies of an unpaid lienor or secured party
in respect of the Accounts.
"Collection Agent" has the meaning assigned to that term in Section 2.3.1.
28
"Obligations" means (a) the obligation of the Servicing Agent to repay fees
and charges due and payable under the Receivables Agreement and (b) all costs
and expenses incurred by ADS in the realization upon the Accounts, including
without limitation reasonable attorneys' fees and legal expenses.
"Processing Agreements" means the Processing Agreements dated as of the date
hereof among ADS, Servicing Agent and each Processing Agent.
"Processing Agent" means First USA and any assignee and any additional
processing agent which processes Accounts for the Servicing Agent.
"Requirements of Law" means the Uniform Commercial Code, and all laws
applicable to seizure, recovery and liquidation of secured assets to satisfy an
outstanding obligation.
"Successor Notice" has the meaning assigned to that term in Section 2.3.1.
"Transaction Documents" means this Service Agreement, the Receivables
Agreement, the Processing Agreements and all other instruments or agreements
required or contemplated hereby or thereby.
"Uniform Commercial Code" means Chapters 1301 through 1309 of the Ohio
Revised Code.
Section 2. Provisions Applicable to Servicing the Accounts. The parties
-----------------------------------------------
agree that the following provisions shall be applicable to the Accounts and the
Servicing Agent agrees that during the term of this Service Agreement the
Servicing Agent shall undertake the following servicing activities by and on
behalf of ADS:
2.1. Administrative Matters; Books and Records. The Servicing
-----------------------------------------
Agent shall provide the administrative recordkeeping and accounting services to
ADS regarding the Accounts, as provided herein.
2.1.1. Servicing Agent shall obtain for ADS, with cooperation
from ADS, a separate merchant identification number from each Processing Agent.
2.1.2. Servicing Agent shall obtain for ADS, with cooperation
from ADS, separate Processing Agreements from each Processing Agent.
2.1.3. Servicing Agent shall arrange, with cooperation from
ADS, to have each Processing Agent make all Account payments directly to an ADS-
owned account (not through Servicing Agent), and any payments received by
Servicing Agent will be held in trust and promptly forwarded to ADS.
29
2.1.4. The Servicing Agent shall not hold its right, title or
interest in, or maintain its records relating to, any Accounts or invoice any
Customer with respect to any Accounts in any name other than its own authorized
name.
2.1.5. ADS may at any time cause the Servicing Agent to verify with
any Customer the status of any Account payable by such Customer. The Servicing
Agent shall direct the Customer to furnish a written response to the request for
verification to a post office box at a post office located in Columbus, Ohio,
which post office box shall be controlled by ADS. The Servicing Agent from time
to time will execute and deliver such instruments and take all such action as
ADS may reasonably request in order to effectuate the purposes of this Section
2.1.5.
2.2. Funding of Accounts. The Servicing Agent shall submit all
-------------------
Accounts to the appropriate Credit Card Issuer or Processing Agent in accordance
with the Xxxxxxxx'x Deferred Billing Program. On the applicable Deferred
Billing Maturity Date, Servicing Agent shall submit the Accounts to the Credit
Card Issuer on behalf of ADS. Failure of the Servicing Agent to submit the
Accounts to the Credit Card Issuer on the applicable Deferred Billing Maturity
Date shall entitle ADS to exercise its rights under the Processing Assignments.
Servicing Agent shall instruct and cause each Credit Card Issuer and the
Processing Agent to forward the funds for each Account to ADS at a deposit
account of ADS maintained at The Huntington National Bank.
2.3. Collection.
----------
2.3.1. The servicing, administering and collection of the Unfunded
Accounts (including all cash collections, if any) shall be conducted by such
Person ("Collection Agent") so designated by ADS from time to time in accordance
with this Section 2.3.1. The Servicing Agent is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Collection Agent,
until ADS provides the Servicing Agent with notice ("Successor Notice") of ADS'
decision to designate a Collection Agent other than the Servicing Agent. The
Servicing Agent agrees that it shall terminate its activities hereunder as
Collection Agent on the day following receipt of any Successor Notice.
2.3.2. At any time following the termination of the Servicing Agent's
activities as Collection Agent as described in Section 2.3.1, ADS may designate
as Collection Agent any Person (including ADS) to succeed the Servicing Agent or
any successor Collection Agent, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Collection Agent pursuant to the terms hereof. The Collection Agent (other than
the Servicing Agent) may, with the prior written consent of ADS, subcontract
with any other Person for servicing, administering or collecting the Accounts,
provided that the Collection Agent shall remain liable for the performance of
the duties and obligations of the Collection Agent pursuant to the terms hereof.
2.3.3. The Collection Agent shall, as soon as practicable following
receipt, deposit in a deposit account at The Huntington National Bank the
collections of any Unfunded Accounts less, in the event the Servicing Agent is
not the Collection Agent, all
30
reasonable and appropriate out-of-pocket costs and expenses of such Collection
Agent of servicing, collecting and administering such Accounts. The Collection
Agent's authorization hereunder shall terminate as of the date upon which all of
the Obligations have been paid in full.
2.3.4. The Collection Agent shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Unfunded Account from
time to time, all in accordance with applicable Requirements of Law with
reasonable care and diligence; provided, however, that, if the Servicing Agent
-----------------
is not the Collection Agent, then the Collection Agent shall not contact any
Customer in the name of ADS unless an Event of Termination has occurred. Each
of the Servicing Agent and ADS hereby appoints as its agent the Collection Agent
to enforce its respective rights and interests in and under the Unfunded
Accounts. The Collection Agent shall not extend the maturity or adjust the
outstanding balance of any Unfunded Account; provided, however, the Servicing
-----------------
Agent, while it is Collection Agent, may (a) extend the maturity or adjust the
outstanding balance of any Defaulted Account as the Servicing Agent may
determine to be appropriate to maximize collections thereof or (b) extend,
demand or modify the terms of any Unfunded Account which is not a Defaulted
Account. The Collection Agent shall not adjust the outstanding balance of any
Unfunded Account to reflect any reductions or cancellations in the Unfunded
Account; provided, however, the Servicing Agent, while it is Collection Agent,
-----------------
may adjust the outstanding balance of any Unfunded Account to reflect any
reductions or cancellations in the Unfunded Account to which ADS has consented
in writing. The Servicing Agent shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Servicing Agent, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Unfunded Accounts.
2.3.5. The Collection Agent, and the Servicing Agent if the Servicing
Agent is no longer the Collection Agent, shall immediately notify ADS of any
adverse change of which the Collection Agent, or the Servicing Agent if the
Servicing Agent is no longer the Collection Agent, has knowledge which affects
the eligibility of any Unfunded Account owing by a Customer.
2.3.6. If ADS is the Collection Agent, then, with respect to its
conduct as Collection Agent, ADS shall not be liable to the Servicing Agent for
(a) loss of, damage to, or delay in the collection or processing of any items
related to Unfunded Accounts. Other than resulting from its gross negligence or
willful misconduct, and (b) the negligence of third parties with respect to the
collection or processing of any items related to Unfunded Accounts; provided
--------
that ADS has exercised reasonable care in selecting such third parties that
collect or process hereunder. In no event shall ADS have any liability for
consequential, special or indirect damages, even if ADS has been advised of the
possibility of such damages.
2.3.7. The Collection Agent shall be solely responsible for the
payment of any charges due to checks returned for insufficient funds; provided,
---------
however, that the Servicing Agent shall reimburse ADS or any third party
-------
Collection Agent for such charges incurred.
2.3.8. The right to collect Unfunded Accounts related to a particular
Funding will cease to exist upon payment of the Obligations related to such
Funding.
31
2.4. Right of the Servicing Agent to Use the Servicing Agent's Name.
--------------------------------------------------------------
ADS hereby authorizes the Servicing Agent to use the name of the Servicing Agent
when corresponding with or talking to any Customer.
Section 3. Preservation and Protection of Security Interests. Even though
-------------------------------------------------
the transactions evidenced by the Receivables Agreement are intended to be sales
of Accounts to ADS in the Receivables Agreement, Brylane has granted to ADS a
security interest in the Accounts to ADS in order to protect ADS if the
transaction is ever deemed to be a financing rather than a sale. The Servicing
Agent shall faithfully preserve and protect ADS' security interest in the
Accounts and shall, at its own cost and expense, cause such security interest to
be perfected and continue perfected so long as the Obligations or any portion
thereof are outstanding and unpaid and the Commitment under the Receivables
Agreement is in effect, and for such purpose the Servicing Agent shall from time
to time at the request of ADS file or record, or cause to be filed or recorded,
such instruments, documents and notices, including without limitation financing
and continuation statements, as ADS may deem necessary or advisable from time to
time in order to preserve, perfect and continue perfected said security interest
prior to the rights of any secured party or lien creditor. The Servicing Agent
shall do all such other acts and things and shall execute and deliver all such
other instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as ADS may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said security interest as a perfected lien in the Accounts prior to
the rights of any secured party or lien creditor.
Section 4. Representations and Warranties. The Servicing Agent hereby
------------------------------
represents and warrants to ADS that the Servicing Agent maintains by and on
behalf of ADS a master list of all Customers of the Servicing Agent (the "Master
File"). The Master File contains the complete and accurate name and address of
each Customer, the date of each purchase that creates an Account, the dollar
value of each Account, the payment history for each Account and other
information that ADS may request to be included from time to time. The
Servicing Agent maintains the Master File on computer tape or disk. An updated
Master File shall be delivered to ADS on any date ADS so requests. The Master
File delivered to ADS shall be accurate and complete as of the date of its
delivery.
Section 5. Affirmative Covenants. On and after the date of this Service
---------------------
Agreement, and for so long as any Obligation is outstanding:
5.1. The Servicing Agent shall keep accurate and adequate records and
books of account in which complete entries will be made in accordance with GAAP,
reflecting all financial transactions relating to the Accounts, and sufficient
to identify the Accounts.
32
5.2. (a) The Servicing Agent shall maintain its chief executive
office, and the office where its information system, is located at the addresses
set forth below:
MIS Office Chief Executive Office
Chadwicks of Boston Brylane, L.P.
00 Xxxxxx Xxxxx 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
(b) The Servicing Agent shall not move its chief executive office
except to such new location as it may establish in accordance with Section 6.5
below.
5.3. (a) The only original books of account and records of the
Servicing Agent relating to the Accounts are, and will continue to be, kept at
the offices of the Servicing Agent set forth in Section 6.2(a) above.
(b) The location where such books of account and records are kept
shall not be changed by the Servicing Agent except in accordance with Section
6.2(a) above.
5.4. If the Servicing Agent has knowledge that any Event of Termination
has occurred, the Servicing Agent shall give prompt notice in writing of such
happening to ADS.
5.5. The Servicing Agent shall make no changes in the procedures for
assigning Customers to or deleting Customers from the Master File of the
Servicing Agent or for otherwise maintaining such computer records of Accounts
as described in Section 5 hereof.
5.6. The Servicing Agent shall:
5.6.1. Promptly perform, on request of ADS, such acts as ADS may
determine to be necessary or advisable under the UCC to give notice of ADS'
ownership of the Accounts and to create, perfect, maintain, preserve, protect
and continue the perfection of any lien provided for in the Transaction
Documents including placing notations on the Servicing Agent's books of account
to disclose ADS' ownership of the Accounts and ADS and their officers, employees
and authorized agents, or any of them, are hereby irrevocably appointed by the
Servicing Agent as the agents and the attorneys-in-fact of the Servicing Agent,
to do all acts and things which ADS may deem necessary or advisable to establish
and give effective notice of ADS' ownership of the Accounts and to preserve,
perfect and continue perfected liens.
5.6.2. Not (a) grant, create or permit to exist any lien on, of or in
any of the Accounts, (b) permit any levy or attachment to be made against any of
the Accounts or (c) execute or file, or allow to be filed, any financing
statement or other document or certificate constituting notice of the existence
of any lien covering any of the Accounts except financing statements naming ADS
as secured party.
33
5.6.3. Subject to Section 2.3, not (a) extend, amend or otherwise
modify the terms of any Account, (b) amend, modify or waive any term or
condition of any contract related thereto or (c) redate any invoice or sale or
make sales on extended dating beyond that customary in the Servicing Agent's
industry. Upon the occurrence of an Event of Termination, ADS shall have the
right to extend, amend or otherwise modify the terms of any Account.
5.7. Additional Information. The Servicing Agent shall furnish to ADS
----------------------
promptly after ADS' request therefor, such other information respecting the
business, properties or condition of operations, financial or otherwise, of the
Servicing Agent as may be reasonably requested by ADS.
5.8. Audits. The Servicing Agent shall at any time and from time to
------
time during regular business hours and, so long as no Event of Termination has
occurred and is continuing, upon at least two Domestic Banking Days notice,
permit ADS, or its agents or representatives, (a) to examine and make copies of
and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) related to the Agreement in the possession
or under the control of the Servicing Agent, (b) to visit the offices and
properties of the Servicing Agent for the purpose of examining such materials
described in clause (a) next above, and to discuss matters relating to the
Servicing Agent's performance hereunder or the Servicing Agent's business,
operations and financial condition with any of the officers or employees of the
Servicing Agent having knowledge of such matters and who are then available, and
(c) to discuss the Servicing Agent's affairs directly with the Servicing Agent's
independent certified public accountants, with notice to the Servicing Agent and
provided that the Servicing Agent shall be entitled to notice of and to
participate in such discussions.. The Servicing Agent agrees to use its best
efforts to make such officers and employees available at such time.
5.9. Power of Attorney. In addition to any other power of attorney
-----------------
granted to ADS by the Servicing Agent under the Transaction Documents, the
Servicing Agent appoints ADS and its respective designees as its attorney, with
power, upon and during the continuance of an Event of Termination, (a) to
endorse the Servicing Agent's name on any checks, notes, acceptances, money
orders, or other forms of payment or security that come into ADS' possession,
(b) to sign the Servicing Agent's name on any invoice or xxxx of lading relating
to any Accounts, on drafts against Customers, on assignments of Accounts, on
notices of assignment, financing statements and other public records, on
verifications of Accounts and on notices to Customers, (c) to send requests for
verifications of Accounts to Customers, and (d) to do all things necessary to
carry out the provisions of the Transaction Documents. The Servicing Agent
ratifies and approves all acts of such attorney. Neither ADS nor the attorney
will be liable for any acts or omissions nor for any error of judgment or
mistake of fact or law except to the extent such act or omission constitutes
gross negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until the Obligations have been fully satisfied.
Section 6. Negative Covenants.
------------------
6.1. On and after the date of this Service Agreement and so long as the
Obligations are outstanding, the Servicing Agent shall not change its name
unless, before the effective date of
34
such change, the Servicing Agent delivers to ADS such financing statements
executed by the Servicing Agent that ADS may request to reflect such name
change, together with such other documents and instruments that ADS may request
in connection with such name change.
6.2. The Servicing Agent shall not establish any different location for
its chief executive office or for the place where the original books of account
and records of the Servicing Agent relating to the Accounts are kept until (a)
it shall have given to ADS written notice, 45 days before doing so, of its
intention to establish such new location, clearly describing each such new
location and providing any other information in connection therewith that ADS
may reasonably request, and (b) with respect to each such new location, it shall
have taken such action, satisfactory to ADS (including without limitation all
action required by Section 3 of this Service Agreement), as may be necessary to
maintain the security interest of ADS in the Accounts at all times fully
perfected and in full force and effect.
Section 7. Remedies for Event of Termination. If an Event of Termination
---------------------------------
occurs, ADS may exercise all remedies available at law or by agreement,
including without limitation, the Transaction Documents.
Section 8. Termination. ADS may, at any time, terminate the various
------------
servicing functions of the Servicing Agent, by giving prior written notice to
Brylane, L.P., as Servicing Agent, and may designate a new Servicing Agent.
Brylane, L.P. agrees that it shall terminate its activities hereunder as
Servicing Agent on the day following receipt of any Successor Notice, and also
agrees that it will cooperate with the transition of serving functions to the
successor servicing agent, provided, however, that Brylane, L.P. shall remain
------------------
subject to all rights, obligations, representations, warranties and covenants
made herein, to the extent applicable, whether or not serving as Servicing
Agent.
Section 9. Amendments, Waivers. No amendment, modification or waiver to
-------------------
this Service Agreement shall be binding unless in writing and signed by the
party to be charged.
Section 10. Governing Law. This Service Agreement is being executed and
-------------
delivered in the State of Ohio and, except to the extent that the laws of any
other jurisdiction are mandatorily applicable, shall in all respects be
interpreted in accordance with the laws of the State of Ohio applicable to
contracts to be performed in the State of Ohio.
Section 11. Counterparts. This Service Agreement may be signed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument.
Section 12. Entire Agreement. This Service Agreement sets forth the entire
----------------
understanding of the parties hereto and supersedes any and all prior agreements,
arrangements, and understandings relating to the subject matter hereof. No
representation, promise, inducement, or statement of intent has been made by any
party which is not embodied in this Service Agreement, and no party shall be
bound by or be liable for any alleged representation, promise, inducement or
statement of intention not embodied herein.
35
Section 13. Enforceability. Any provision of this Service Agreement which
--------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 14. Captions. Captions and section headings used in this Service
--------
Agreement are for convenience only and shall not affect the construction of this
Service Agreement.
Section 15. Confession of Judgment. The Servicing Agent hereby authorizes
----------------------
any attorney at law to appear for it, in an action on this Service Agreement, as
herein provided, in any court of record in or of the State of Ohio, or
elsewhere, to waive the issuing and service of process against the Servicing
Agent and to confess judgment in favor of the holder of the Service Agreement
against the Servicing Agent for the amount that may be due, with interest at the
rate therein mentioned and costs of suit, and to waive and release all errors in
said proceedings and judgment, and all petitions in error, and right of appeal
from the judgment rendered.
Section 16. Waiver of Jury Trial. ADS AND THE SERVICING AGENT HEREBY
--------------------
VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN ADS AND THE SERVICING AGENT ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
SERVICING AGENT AND ADS IN CONNECTION WITH THE SERVICE AGREEMENT OR ANY OTHER
AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH
OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT TO ADS TO ENTER INTO THE FINANCING TRANSACTIONS WITH SERVICING AGENT.
IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY ADS' ABILITY TO
PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO.
Section 17. Successors and Assigns. This Service Agreement and all
----------------------
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the purchase of the
Accounts by ADS and the execution and delivery of the Receivables Agreement and
shall continue in full force and effect until the termination of the Commitment
or until payment in full of the Obligations, whichever is later. Whenever in
this Service Agreement any of the parties hereto are referred to, such reference
shall be deemed to include the successors and assigns of such party; and all
terms and provisions of this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
36
The parties hereto have caused this Service Agreement to be duly executed by
their respective duly authorized officers as of the day and year first above
written.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
BRYLANE, L.P.
By:
-------------------------------------
Name:
-----------------------------------
Its: General Partner
ALLIANCE DATA SYSTEMS CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
37
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Service Agreement"), is made on December 9,
1996, by and between BRYLANE, L.P., a Delaware limited partnership (the
"Servicing Agent"), and ALLIANCE DATA SYSTEMS CORPORATION, a Delaware
corporation ("ADS").
RECITALS:
WHEREAS, on even date herewith, ADS committed to make available one hundred
million dollars ($100,000,000) to purchase accounts receivable from the
Servicing Agent pursuant to the Accounts Receivable Purchase Agreement between
Brylane, L.P. and ADS dated as of the date hereof, as may be amended from time
to time (the "Receivables Agreement"); and
WHEREAS, Brylane, L.P. will sell accounts receivable generated under the
Xxxxxxxx'x Deferred Billing Program under the Receivables Agreement, and ADS
will purchase such Accounts as defined in Section 1; and
WHEREAS, ADS desires to employ Servicing Agent to perform various servicing
functions in connection with the Accounts purchased by ADS.
NOW THEREFORE, for and in consideration of the commitment to purchase
Accounts from Brylane, L.P. and the benefits to be received therefrom, the
parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. Certain capitalized words and terms as used in
------------
this Service Agreement shall have the meanings given to them in the Uniform
Commercial Code and the Receivables Agreement unless otherwise indicated herein
or the context or use indicates another or different meaning or intent. All
defined terms shall be equally applicable to both the singular and plural forms
of any of the words and terms herein defined. In addition, the following
capitalized words shall have the following meanings when used herein:
"Accounts" means and includes all accounts (whether or not earned by
performance), contract rights, chattel paper, instruments, documents, general
intangibles and all other forms of obligations owing to Brylane, L.P. from the
Customer, pursuant to Xxxxxxxx'x Deferred Billing Program whether secured or
unsecured, whether now existing or hereafter created, and specifically assigned
to ADS under the Transaction Documents, all guaranties and other security
therefor and all other rights and remedies of an unpaid lienor or secured party
in respect of the Accounts.
"Collection Agent" has the meaning assigned to that term in Section 2.3.1.
"Obligations" means (a) the obligation of the Servicing Agent to repay fees
and charges due and payable under the Receivables Agreement and (b) all costs
and expenses incurred by ADS in
the realization upon the Accounts, including without limitation reasonable
attorneys' fees and legal expenses.
"Processing Agreements" means the Processing Agreements dated as of the
date hereof among ADS, Servicing Agent and each Processing Agent.
"Processing Agent" means First USA and any assignee and any additional
processing agent which processes Accounts for the Servicing Agent.
"Requirements of Law" means the Uniform Commercial Code, and all laws
applicable to seizure, recovery and liquidation of secured assets to satisfy an
outstanding obligation.
"Successor Notice" has the meaning assigned to that term in Section 2.3.1.
"Transaction Documents" means this Service Agreement, the Receivables
Agreement, the Processing Agreements and all other instruments or agreements
required or contemplated hereby or thereby.
"Uniform Commercial Code" means Chapters 1301 through 1309 of the Ohio
Revised Code.
Section 2. Provisions Applicable to Servicing the Accounts. The parties
-----------------------------------------------
agree that the following provisions shall be applicable to the Accounts and the
Servicing Agent agrees that during the term of this Service Agreement the
Servicing Agent shall undertake the following servicing activities by and on
behalf of ADS:
2.1. Administrative Matters; Books and Records. The Servicing Agent shall
-----------------------------------------
provide the administrative recordkeeping and accounting services to ADS
regarding the Accounts, as provided herein.
2.1.1. Servicing Agent shall obtain for ADS, with cooperation from ADS, a
separate merchant identification number from each Processing Agent.
2.1.2. Servicing Agent shall obtain for ADS, with cooperation from ADS,
separate Processing Agreements from each Processing Agent.
2.1.3. Servicing Agent shall arrange, with cooperation from ADS, to have
each Processing Agent make all Account payments directly to an ADS-owned account
(not through Servicing Agent), and any payments received by Servicing Agent will
be held in trust and promptly forwarded to ADS.
2.1.4. The Servicing Agent shall not hold its right, title or interest in,
or maintain its records relating to, any Accounts or invoice any Customer with
respect to any Accounts in any name other than its own authorized name.
-2-
2.1.5. ADS may at any time cause the Servicing Agent to verify with any
Customer the status of any Account payable by such Customer. The Servicing
Agent shall direct the Customer to furnish a written response to the request for
verification to a post office box at a post office located in Columbus, Ohio,
which post office box shall be controlled by ADS. The Servicing Agent from time
to time will execute and deliver such instruments and take all such action as
ADS may reasonably request in order to effectuate the purposes of this Section
2.1.5.
2.2. Funding of Accounts. The Servicing Agent shall submit all Accounts
-------------------
to the appropriate Credit Card Issuer or Processing Agent in accordance with the
Xxxxxxxx'x Deferred Billing Program. On the applicable Deferred Billing
Maturity Date, Servicing Agent shall submit the Accounts to the Credit Card
Issuer on behalf of ADS. Failure of the Servicing Agent to submit the Accounts
to the Credit Card Issuer on the applicable Deferred Billing Maturity Date shall
entitle ADS to exercise its rights under the Processing Assignments. Servicing
Agent shall instruct and cause each Credit Card Issuer and the Processing Agent
to forward the funds for each Account to ADS at a deposit account of ADS
maintained at The Huntington National Bank.
2.3. Collection.
-----------
2.3.1. The servicing, administering and collection of the Unfunded
Accounts (including all cash collections, if any) shall be conducted by such
Person ("Collection Agent") so designated by ADS from time to time in accordance
with this Section 2.3.1. The Servicing Agent is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Collection Agent,
until ADS provides the Servicing Agent with notice ("Successor Notice") of ADS'
decision to designate a Collection Agent other than the Servicing Agent. The
Servicing Agent agrees that it shall terminate its activities hereunder as
Collection Agent on the day following receipt of any Successor Notice.
2.3.2. At any time following the termination of the Servicing Agent's
activities as Collection Agent as described in Section 2.3.1, ADS may designate
as Collection Agent any Person (including ADS) to succeed the Servicing Agent or
any successor Collection Agent, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Collection Agent pursuant to the terms hereof. The Collection Agent (other than
the Servicing Agent) may, with the prior written consent of ADS, subcontract
with any other Person for servicing, administering or collecting the Accounts,
provided that the Collection Agent shall remain liable for the performance of
the duties and obligations of the Collection Agent pursuant to the terms hereof.
2.3.3. The Collection Agent shall, as soon as practicable following
receipt, deposit in a deposit account at The Huntington National Bank the
collections of any Unfunded Accounts less, in the event the Servicing Agent is
not the Collection Agent, all reasonable and appropriate out-of-pocket costs and
expenses of such Collection Agent of servicing, collecting and administering
such Accounts. The Collection Agent's authorization hereunder shall terminate
as of the date upon which all of the Obligations have been paid in full.
-3-
2.3.4. The Collection Agent shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Unfunded Account from
time to time, all in accordance with applicable Requirements of Law with
reasonable care and diligence; provided, however, that, if the Servicing Agent
--------
is not the Collection Agent, then the Collection Agent shall not contact any
Customer in the name of ADS unless an Event of Termination has occurred. Each
of the Servicing Agent and ADS hereby appoints as its agent the Collection Agent
to enforce its respective rights and interests in and under the Unfunded
Accounts. The Collection Agent shall not extend the maturity or adjust the
outstanding balance of any Unfunded Account; provided, however, the Servicing
-----------------
Agent, while it is Collection Agent, may (a) extend the maturity or adjust the
outstanding balance of any Defaulted Account as the Servicing Agent may
determine to be appropriate to maximize collections thereof or (b) extend,
demand or modify the terms of any unfunded account which is not a defaulted
account. The Collection Agent shall not adjust the outstanding balance of any
Unfunded Account to reflect any reductions or cancellations in the Unfunded
Account; provided, however, the Servicing Agent, while it is Collection Agent,
-----------------
may adjust the outstanding balance of any Unfunded Account to reflect any
reductions or cancellations in the Unfunded Account to which ads has consented
in writing. The Servicing Agent shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Servicing Agent, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Unfunded Accounts.
2.3.5. The Collection Agent, and the Servicing Agent if the Servicing
Agent is no longer the Collection Agent, shall immediately notify ADS of any
adverse change of which the Collection Agent, or the Servicing Agent if the
Servicing Agent is no longer the Collection Agent, has knowledge which affects
the eligibility of any Unfunded Account owing by a Customer.
2.3.6. If ADS is the Collection Agent, then, with respect to its conduct
as Collection Agent, ADS shall not be liable to the Servicing Agent for (a) loss
of, damage to, or delay in the collection or processing of any items related to
Unfunded Accounts. other than resulting from its gross negligence or willful
misconduct, and (b) the negligence of third parties with respect to the
collection or processing of any items related to Unfunded Accounts; provided
--------
that ADS has exercised reasonable care in selecting such third parties that
collect or process hereunder. In no event shall ADS have any liability for
consequential, special or indirect damages, even if ADS has been advised of the
possibility of such damages.
2.3.7. The Collection Agent shall be solely responsible for the payment of
any charges due to checks returned for insufficient funds; provided, however,
-----------------
that the Servicing Agent shall reimburse ADS or any third party Collection Agent
for such charges incurred.
2.3.8. The right to collect Unfunded Accounts related to a particular
Funding will cease to exist upon payment of the Obligations related to such
Funding.
2.4. Right of the Servicing Agent to Use the Servicing Agent's Name. ADS
--------------------------------------------------------------
hereby authorizes the Servicing Agent to use the name of the Servicing Agent
when corresponding with or talking to any Customer.
-4-
Section 3. Preservation and Protection of Security Interests. Even though
-------------------------------------------------
the transactions evidenced by the Receivables Agreement are intended to be sales
of Accounts to ADS in the Receivables Agreement, Brylane has granted to ADS a
security interest in the Accounts to ADS in order to protect ADS if the
transaction is ever deemed to be a financing rather than a sale. The Servicing
Agent shall faithfully preserve and protect ADS' security interest in the
Accounts and shall, at its own cost and expense, cause such security interest to
be perfected and continue perfected so long as the Obligations or any portion
thereof are outstanding and unpaid and the Commitment under the Receivables
Agreement is in effect, and for such purpose the Servicing Agent shall from time
to time at the request of ADS file or record, or cause to be filed or recorded,
such instruments, documents and notices, including without limitation financing
and continuation statements, as ADS may deem necessary or advisable from time to
time in order to preserve, perfect and continue perfected said security interest
prior to the rights of any secured party or lien creditor. The Servicing Agent
shall do all such other acts and things and shall execute and deliver all such
other instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as ADS may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said security interest as a perfected lien in the Accounts prior to
the rights of any secured party or lien creditor.
Section 4. Representations and Warranties. The Servicing Agent hereby
------------------------------
represents and warrants to ADS that the Servicing Agent maintains by and on
behalf of ADS a master list of all Customers of the Servicing Agent (the "Master
File"). The Master File contains the complete and accurate name and address of
each Customer, the date of each purchase that creates an Account, the dollar
value of each Account, the payment history for each Account and other
information that ADS may request to be included from time to time. The
Servicing Agent maintains the Master File on computer tape or disk. An updated
Master File shall be delivered to ADS on any date ADS so requests. The Master
File delivered to ADS shall be accurate and complete as of the date of its
delivery.
Section 5. Affirmative Covenants. On and after the date of this Service
---------------------
Agreement, and for so long as any Obligation is outstanding:
5.1. The Servicing Agent shall keep accurate and adequate records and books
of account in which complete entries will be made in accordance with GAAP,
reflecting all financial transactions relating to the Accounts, and sufficient
to identify the Accounts.
5.2. (a) The Servicing Agent shall maintain its chief executive office,
and the office where its information system, is located at the addresses set
forth below:
MIS Office Chief Executive Office
Chadwicks of Boston Brylane, L.P.
00 Xxxxxx Xxxxx 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
-5-
(b) The Servicing Agent shall not move its chief executive office except
to such new location as it may establish in accordance with Section 6.5 below.
5.3. (a) The only original books of account and records of the Servicing
Agent relating to the Accounts are, and will continue to be, kept at the offices
of the Servicing Agent set forth in Section 6.2(a) above.
(b) The location where such books of account and records are kept shall
not be changed by the Servicing Agent except in accordance with Section 6.2(a)
above.
5.4. If the Servicing Agent has knowledge that any Event of Termination
has occurred, the Servicing Agent shall give prompt notice in writing of such
happening to ADS.
5.5. The Servicing Agent shall make no changes in the procedures for
assigning Customers to or deleting Customers from the Master File of the
Servicing Agent or for otherwise maintaining such computer records of Accounts
as described in Section 5 hereof.
5.6. The Servicing Agent shall:
5.6.1. Promptly perform, on request of ADS, such acts as ADS may determine
to be necessary or advisable under the UCC to give notice of ADS' ownership of
the Accounts and to create, perfect, maintain, preserve, protect and continue
the perfection of any lien provided for in the Transaction Documents including
placing notations on the Servicing Agent's books of account to disclose ADS'
ownership of the Accounts and ADS and their officers, employees and authorized
agents, or any of them, are hereby irrevocably appointed by the Servicing Agent
as the agents and the attorneys-in-fact of the Servicing Agent, to do all acts
and things which ADS may deem necessary or advisable to establish and give
effective notice of ADS' ownership of the Accounts and to preserve, perfect and
continue perfected liens.
5.6.2. Not (a) grant, create or permit to exist any lien on, of or in any
of the Accounts, (b) permit any levy or attachment to be made against any of the
Accounts or (c) execute or file, or allow to be filed, any financing statement
or other document or certificate constituting notice of the existence of any
lien covering any of the Accounts except financing statements naming ADS as
secured party.
5.6.3. Subject to Section 2.3, not (a) extend, amend or otherwise modify
the terms of any Account, (b) amend, modify or waive any term or condition of
any contract related thereto or (c) redate any invoice or sale or make sales on
extended dating beyond that customary in the Servicing Agent's industry. Upon
the occurrence of an Event of Termination, ADS shall have the right to extend,
amend or otherwise modify the terms of any Account.
5.7. Additional Information. The Servicing Agent shall furnish to ADS
----------------------
promptly after ADS' request therefor, such other information respecting the
business, properties or condition
-6-
of operations, financial or otherwise, of the Servicing Agent as may be
reasonably requested by ADS.
5.8. Audits. The Servicing Agent shall at any time and from time to time
------
during regular business hours and, so long as no Event of Termination has
occurred and is continuing, upon at least two Domestic Banking Days notice,
permit ADS, or its agents or representatives, (a) to examine and make copies of
and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) related to the Agreement in the possession
or under the control of the Servicing Agent, (b) to visit the offices and
properties of the Servicing Agent for the purpose of examining such materials
described in clause (a) next above, and to discuss matters relating to the
Servicing Agent's performance hereunder or the Servicing Agent's business,
operations and financial condition with any of the officers or employees of the
Servicing Agent having knowledge of such matters and who are then available, and
(c) to discuss the Servicing Agent's affairs directly with the Servicing Agent's
independent certified public accountants, with notice to the Servicing Agent and
provided that the Servicing Agent shall be entitled to notice of and to
participate in such discussions.. The Servicing Agent agrees to use its best
efforts to make such officers and employees available at such time.
5.9. Power of Attorney. In addition to any other power of attorney
-----------------
granted to ADS by the Servicing Agent under the Transaction Documents, the
Servicing Agent appoints ADS and its respective designees as its attorney, with
power, upon and during the continuance of an Event of Termination, (a) to
endorse the Servicing Agent's name on any checks, notes, acceptances, money
orders, or other forms of payment or security that come into ADS' possession,
(b) to sign the Servicing Agent's name on any invoice or xxxx of lading relating
to any Accounts, on drafts against Customers, on assignments of Accounts, on
notices of assignment, financing statements and other public records, on
verifications of Accounts and on notices to Customers, (c) to send requests for
verifications of Accounts to Customers, and (d) to do all things necessary to
carry out the provisions of the Transaction Documents. The Servicing Agent
ratifies and approves all acts of such attorney. Neither ADS nor the attorney
will be liable for any acts or omissions nor for any error of judgment or
mistake of fact or law except to the extent such act or omission constitutes
gross negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until the Obligations have been fully satisfied.
Section 6. Negative Covenants.
------------------
6.1. On and after the date of this Service Agreement and so long as
the Obligations are outstanding, the Servicing Agent shall not change its name
unless, before the effective date of such change, the Servicing Agent delivers
to ADS such financing statements executed by the Servicing Agent that ADS may
request to reflect such name change, together with such other documents and
instruments that ADS may request in connection with such name change.
6.2. The Servicing Agent shall not establish any different location
for its chief executive office or for the place where the original books of
account and records of the Servicing Agent relating to the Accounts are kept
until (a) it shall have given to ADS written notice, 45 days before doing so, of
its intention to establish such new location, clearly describing each such new
-7-
location and providing any other information in connection therewith that ADS
may reasonably request, and (b) with respect to each such new location, it shall
have taken such action, satisfactory to ADS (including without limitation all
action required by Section 3 of this Service Agreement), as may be necessary to
maintain the security interest of ADS in the Accounts at all times fully
perfected and in full force and effect.
Section 7. Remedies for Event of Termination. If an Event of
---------------------------------
Termination occurs, ADS may exercise all remedies available at law or by
agreement, including without limitation, the Transaction Documents.
Section 8. Termination. ADS may, at any time, terminate the various
-----------
servicing functions of the Servicing Agent, by giving prior written notice to
Brylane, L.P., as Servicing Agent, and may designate a new Servicing Agent.
Brylane, L.P. agrees that it shall terminate its activities hereunder as
Servicing Agent on the day following receipt of any Successor Notice, and also
agrees that it will cooperate with the transition of serving functions to the
successor servicing agent, provided, however, that Brylane, L.P. shall remain
-------- -------
subject to all rights, obligations, representations, warranties and covenants
made herein, to the extent applicable, whether or not serving as Servicing
Agent.
Section 9. Amendments, Waivers. No amendment, modification or waiver
-------------------
to this Service Agreement shall be binding unless in writing and signed by the
party to be charged.
Section 10. Governing Law. This Service Agreement is being executed
-------------
and delivered in the State of Ohio and, except to the extent that the laws of
any other jurisdiction are mandatorily applicable, shall in all respects be
interpreted in accordance with the laws of the State of Ohio applicable to
contracts to be performed in the State of Ohio.
Section 11. Counterparts. This Service Agreement may be signed in
------------
any number of counterparts, all of which taken together shall constitute one and
the same instrument.
Section 12. Entire Agreement. This Service Agreement sets forth the
----------------
entire understanding of the parties hereto and supersedes any and all prior
agreements, arrangements, and understandings relating to the subject matter
hereof. No representation, promise, inducement, or statement of intent has been
made by any party which is not embodied in this Service Agreement, and no party
shall be bound by or be liable for any alleged representation, promise,
inducement or statement of intention not embodied herein.
Section 13. Enforceability. Any provision of this Service Agreement
--------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
Section 14. Captions. Captions and section headings used in this
--------
Service Agreement are for convenience only and shall not affect the construction
of this Service Agreement.
-8-
Section 15. Confession of Judgment. The Servicing Agent hereby
----------------------
authorizes any attorney at law to appear for it, in an action on this Service
Agreement, as herein provided, in any court of record in or of the State of
Ohio, or elsewhere, to waive the issuing and service of process against the
Servicing Agent and to confess judgment in favor of the holder of the Service
Agreement against the Servicing Agent for the amount that may be due, with
interest at the rate therein mentioned and costs of suit, and to waive and
release all errors in said proceedings and judgment, and all petitions in error,
and right of appeal from the judgment rendered.
Section 16. Waiver of Jury Trial. ADS AND THE SERVICING AGENT HEREBY
--------------------
VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN ADS AND THE SERVICING AGENT ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
SERVICING AGENT AND ADS IN CONNECTION WITH THE SERVICE AGREEMENT OR ANY OTHER
AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH
OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT TO ADS TO ENTER INTO THE FINANCING TRANSACTIONS WITH SERVICING AGENT.
IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY ADS' ABILITY TO
PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO.
Section 17. Successors and Assigns. This Service Agreement and all
----------------------
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the purchase of the
Accounts by ADS and the execution and delivery of the Receivables Agreement and
shall continue in full force and effect until the termination of the Commitment
or until payment in full of the Obligations, whichever is later. Whenever in
this Service Agreement any of the parties hereto are referred to, such reference
shall be deemed to include the successors and assigns of such party; and all
terms and provisions of this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
-9-
The parties hereto have caused this Service Agreement to be duly
executed by their respective duly authorized officers as of the day and year
first above written.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
BRYLANE, L.P.
By:
-----------------------------------
Name:
---------------------------------
Its: General Partner
ALLIANCE DATA SYSTEMS CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Its:
----------------------------------
-10-
