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GUARANTY AND SECURITY AGREEMENT
GUARANTY AND SECURITY AGREEMENT, dated as of May 3, 1999 (as the same
may from time to time be amended, supplemented or otherwise modified, this
"AGREEMENT"), between Belk Accounts Receivable LLC, a North Carolina limited
liability company (the "GUARANTOR"), The Xxxx Center, Inc., a North Carolina
corporation, as servicer (the "SERVICER"), Xxxx, Inc. (the "Debtor") and
NationsBank, N.A., a national banking association ("NATIONSBANK"), as agent for
Enterprise Funding Corporation (the "COMPANY") and the Bank Investors party to
the Note Purchase Agreement from time to time (in such capacity, the "AGENT")
and as a Bank Investor.
W I T N E S S E T H:
WHEREAS, the Debtor has issued the Note to the Agent, on
behalf of the Company and the Bank Investors, and will be obligated to the
holders of such Note to pay the principal of and interest on such Note in
accordance with the terms thereof;
WHEREAS, the Guarantor, an indirect, wholly-owned Subsidiary
of the Debtor; and
WHEREAS, in consideration for the Debtor's promise to
contribute or lend (directly or indirectly) to the Guarantor certain loan
proceeds received by the Debtor pursuant to the Note Purchase Agreement, the
Guarantor is willing to (i) guarantee the payment and performance by the Debtor
of its obligations under the Note, and (ii) grant a security interest in the
Collateral to the Agent, for the benefit of the Company and the Bank Investors,
to secure the payment and performance by the Guarantor of its obligations under
this Guaranty and Security Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used herein, capitalized terms
defined in the Note Purchase Agreement and not otherwise defined herein are used
herein as so defined.
"AGREEMENT" has the meaning specified in the preamble hereto.
"COLLATERAL" shall have the meaning assigned to it in Section
2.1 hereof.
"DEBTOR COLLATERAL" shall have the meaning assigned to it in
Section 2.1.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever for the purpose of security,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing.
"NOTE PURCHASE AGREEMENT" shall mean that certain Note
Purchase Agreement, dated as of May 3, 1999, by and among the Debtor, the
Servicer, the Company, the Agent and NationsBank, as a Bank Investor, as
amended, supplemented or otherwise modified from time to time.
"TERMINATION EVENT" shall mean the events specifically in
Section 6.1(a) hereof.
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ARTICLE II
GRANT OF SECURITY INTERESTS
SECTION 1.2 GRANT OF SECURITY INTEREST. In order to secure the
Guarantor's obligations to Agent, on behalf of the Company and the Bank
Investors, pursuant to this Agreement and the other Transaction Documents, the
Guarantor hereby grants to the Agent, on behalf of the Company and the Bank
Investors, a security interest in and continuing Lien on all of the Guarantor's
right, title and interest in, to and under the following, in each case, whether
now owned or existing or hereafter acquired or arising, and wherever located
(all of which being hereinafter collectively called the "COLLATERAL"): all
accounts, contract rights, general intangibles, chattel paper, instruments,
documents, money, cash, deposit accounts, certificates of deposit, goods,
letters of credit, securities, investment property, financial assets or security
entitlements, which Collateral includes, but is not limited to, all Receivables
existing on the Cut-Off Date and thereafter, together with Related Security,
Collections and Proceeds with respect thereto, now or hereafter existing.
In order to secure the Debtor's obligations to Agent, on
behalf of the Company and the Bank Investors, pursuant to this Agreement, the
Note Purchase Agreement and the other Transaction Documents, the Debtor hereby
grants to the Agent, on behalf of the Company and the Bank Investors, a security
interest in and continuing Lien on all of the Debtor's right, title and interest
in, to and under the following, in each case whether now owned or existing or
hereafter acquired or arising, and wherever located (all of which being
hereinafter called the "Debtor Collateral"): all Receivables existing on the
Cut-Off Date and thereafter, together with Related Security, Collections and
Proceeds with respect thereto, now or hereafter existing.
SECTION 1.3 PROTECTION OF SECURITY INTEREST.
(1) Each of the Guarantor and the Debtor agrees that it will,
and the Debtor agrees that it will cause the Bank to, from time to time, at its
expense, promptly execute and deliver all instruments and documents and take all
actions as may be necessary or as the Agent may reasonably request in order to
perfect or protect the Agent's security interest in the Collateral and the
Debtor Collateral or to enable the Agent, the Company or the Bank Investors to
exercise or enforce any of their respective rights hereunder. Without limiting
the foregoing, each of the Guarantor and the Debtor will, and the Debtor will
cause the Bank to, upon the request of the Agent, the Company or any of the Bank
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Investors, in order to accurately reflect this grant of a security interest,
execute and file such financing or continuation statements or amendments thereto
or assignments thereof as may be requested by the Agent, the Company or any of
the Bank Investors. Each of the Guarantor and the Debtor shall, and the Debtor
shall cause the Bank to, upon request of the Agent, the Company or any of the
Bank Investors, obtain such additional search reports as the Agent, the Company
or any of the Bank Investors shall reasonably request. To the fullest extent
permitted by applicable law, the Agent shall be permitted to sign and file
continuation statements and amendments thereto and assignments thereof without
the Guarantor's or the Debtor's signature; PROVIDED, HOWEVER, that the Agent
shall not file any continuation, amendment or assignment of a financing
statement, which absent the provisions of this Agreement would otherwise require
the Guarantor's or the Debtor's signature, unless the Agent shall have requested
the Guarantor or the Debtor as applicable, to take such action (or cause such
action to be taken) pursuant to this Section 2.2(a) and the Guarantor or the
Debtor as applicable, shall have failed to do so with in a reasonable period of
time after such request. Carbon, photographic or other reproduction of this
Agreement or any financing statement shall be sufficient as a financing
statement.
Each of the Guarantor and the Debtor (with respect to Debtor
Receivables) agrees that it will, and the Debtor agrees that it will cause the
Bank to, at its expense, on or prior to the Closing Date indicate clearly and
unambiguously in its master data processing records and on any storage
containers containing Records that the Receivables created in connection with
the Accounts have been pledged to the Agent, for the benefit of the Company and
the Bank Investors, pursuant to this Agreement by affixing thereon the following
legend: "THE RECEIVABLES IN THESE FILES HAVE BEEN PLEDGED TO NATIONSBANK, N.A.,
AS AGENT, FOR THE BENEFIT OF ENTERPRISE FUNDING CORPORATION AND THOSE CERTAIN
BANK INVESTORS PURSUANT TO THE GUARANTY AND SECURITY AGREEMENT DATED AS OF MAY
3, 1999, AS AMENDED FROM TIME TO TIME, AMONG XXXX ACCOUNTS RECEIVABLE LLC, XXXX,
INC., THE XXXX CENTER, INC., AND NATIONSBANK, N.A." Each of the Guarantor and
the Debtor (with respect to Debtor Receivables) further agrees to deliver or to
cause the Servicer to deliver to the Agent a computer file or microfiche list
containing a true and complete list of all such Receivables, identified by
account number and by Receivable balance as of the Cut-Off Date. Each of the
Guarantor and the Debtor (with respect to Debtor Receivables) agrees to deliver
or to cause the Servicer to deliver to the Agent within five (5) Business Days
of the request therefor by the Agent a computer file or microfiche list showing
a true and complete balance of all Receivables, including all Receivables
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created on or after the Cut-Off Date, in existence as of the last day of the
prior Collection Period, identified by account number and by Receivable balance
as of such day. The Servicer agrees, on behalf of the Guarantor and the Debtor
(with respect to Debtor Receivables), at its own expense, by the end of each
Collection Period to indicate clearly and unambiguously in its master data
processing records and any storage containers containing Records that the
Receivables have been pledged to the Agent, for the benefit of the Company and
the Bank Investors, pursuant to this Agreement.
Neither the Guarantor nor the Debtor shall, nor shall the
Debtor permit the Bank to, change its respective name, identity or corporate
structure (within the meaning of Section 9-402(7) of the UCC as in effect in the
States of New York, Georgia and North Carolina) nor relocate its respective
chief executive office or any office where Records are kept unless it shall
have: (i) given the Agent at least fifteen (15) days prior notice thereof and
(ii) prepared at Guarantor's or the Debtor's expense and delivered to the Agent
all financing statements, instruments and other documents necessary to preserve
and protect the Agent's security interest in the Collateral and the Debtor
Collateral or reasonably requested by the Agent in connection with such change
or relocation. Any filings under the applicable UCC or otherwise that are
occasioned by such change in name or location shall be made at the expense of
the Guarantor or the Debtor, as applicable.
(2) The Servicer shall direct all Obligors to cause all
Collections to be mailed directly to a Post Office Box or remitted to retail
store locations owned by the Debtor or a Designated Seller. Each Post Office Box
shall be under the exclusive dominion and control of the Agent which is hereby
granted to the Agent by the Servicer. The Servicer shall be permitted to collect
Collections from any Post Office Box for so long as neither a Servicer Default
nor any other Termination Event has occurred hereunder. The Servicer shall not
terminate a Post Office Box or add any new Post Office Box unless the Agent
shall have received thirty (30) days' prior written notice of such termination
or addition and the Agent shall have received a Post Office Box Agreement with
respect to each new Post Office Box, executed by the Servicer and the
appropriate United States Postal Service official.
(3) Unless the Servicer is denied access to such Post Office
Box pursuant to the respective Post Office Box Agreement or otherwise through no
fault of the Servicer, the Servicer shall deposit all Collections received at a
Post Office Box in a Servicer Account promptly, but in any event within two (2)
Business Days of receipt. In the event any Servicer Account shall be proposed to
be closed, the Servicer shall remove all Collections held in such Servicer
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Account to another Servicer Account. Each Servicer Account shall be under the
exclusive ownership and control of the Agent which is hereby granted to the
Agent by the Servicer. The Servicer shall be permitted to give instructions to
any Servicer Account Bank for so long as neither a Servicer Default nor any
other Termination Event has occurred hereunder. The Servicer shall not terminate
any bank as a Servicer Account Bank or add any bank as a Servicer Account Bank
unless the Agent shall have received fifteen (15) days' prior written notice of
such termination or addition and the Agent shall have received a Servicer
Account Agreement executed by each new Servicer Account Bank or an existing
Servicer Account Bank with respect to each new Servicer Account, as applicable.
(4) Unless the Servicer is denied access, either pursuant to
the respective Post Office Box Agreement or otherwise through no fault of the
Servicer, to the Post Office Box where such Collections are held, the Servicer
shall deposit all Collections into the Guarantor Account or, if required by this
Agreement, into the Collection Account within ten (10) days of the initial
receipt of such Collections by the Servicer.
SECTION 1.4 REPORTS. On each Determination Date, the Servicer
shall prepare and forward to the Agent and the Administrative Agent (i) a
Servicer Report as of the end of the last day of the immediately preceding
Collection Period, and (ii) such other information as the Agent or the
Administrative Agent may reasonably request.
SECTION 1.5 COLLECTION ACCOUNT. There shall be established on
the day of the initial Advance under the Note Purchase Agreement and maintained,
for the benefit of the Company and the Bank Investors, with the Agent, a
segregated account (the "COLLECTION Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Company and the Bank Investors. Upon the occurrence and during the continuance
of (i) a Servicer Default or (ii) a Termination Event (other than one arising
under Section 6.1(o) or (p)), the Servicer shall remit as promptly as possible
and in any event prior to the close of business on the tenth day following
receipt to the Collection Account all Collections received with respect to any
Receivables; if no such event has occurred and is continuing, the Servicer, to
the extent it holds such funds, shall be permitted to retain such funds, or
deliver such funds to the Debtor or the Guarantor, as applicable. Funds on
deposit in the Collection Account (other than investment earnings) shall be
invested by the Agent in Eligible Investments that will mature so that such
funds will be available prior to the Remittance Date following such investment.
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On the date following the Termination Date on which the Net Investment and all
other Aggregate Unpaids have been paid in full, any funds remaining on deposit
in the Collection Account shall be released and paid to the Guarantor.
SECTION 1.6 GUARANTY AND PAYMENT OBLIGATIONS.
(a) In consideration for the Debtor's promise pursuant to the
Note Purchase Agreement to contribute or lend (directly or indirectly) to the
Guarantor certain loan proceeds received by the Debtor pursuant to the Note
Purchase Agreement, the Guarantor unconditionally guarantees to the Agent, for
the benefit of the Company and the Bank Investors, (i) the full and prompt
payment when due of all of the payment obligations of the Debtor, of every kind
and nature now or hereafter existing, or due or to become due, under the Note
Purchase Agreement and the Note, and (ii) the full and prompt payment when due
of all of the payment obligations of the Debtor, of every kind and nature now or
hereafter existing, or due or to become due, under the Fee Letter and all other
Transaction Documents (the "OBLIGATIONS").
(b) The Guarantor shall also pay all reasonable costs and
expenses including, without limitation, all court costs and attorney's fees and
expenses paid or incurred by the Agent in connection with (i) the collection of
all or any part of the Obligations from the Guarantor and (ii) the prosecution
or defense of any action by or against the Agent in connection with the
Obligations whether involving the Debtor, the Guarantor or any other party
including a trustee in bankruptcy, except, in each case, to the extent resulting
from the gross negligence or willful misconduct of the Company, any Bank
Investor or the Agent.
(c) All amounts payable to the Agent by the Guarantor pursuant
to clauses (i) and (ii) above shall be remitted on demand in immediately
available funds to the Agent for the account of the Company and the Bank
Investors.
(d) In the event that payments made by the Guarantor to the
Agent shall be subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to the Guarantor or its
trustee in bankruptcy by the Company, any Bank Investor or any other Person
entitled thereto, the Guarantor hereby agrees to indemnify and hold each such
Person, as applicable, harmless in respect of any such reversed payment.
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(e) The Guarantor agrees that its obligations under this
Agreement shall be unconditional, irrespective of (i) the validity,
enforceability, discharge (other than by payment in full), disaffirmance,
settlement or compromise (by any Person, including a trustee in bankruptcy) of
(A) the Obligations, or (B) the Note Purchase Agreement or the Note, (ii) the
absence of any attempt to collect the Obligations from the Debtor or any
guarantor, (iii) the waiver or consent by the Agent, the Company or any Bank
Investor with respect to any provision of any instrument evidencing the
Obligations, (iv) any change of the time, manner or place of payment or
performance, or any other term of any of the Obligations, (v) any law,
regulation or order of any jurisdiction affecting any term of any of the
Obligations or rights of the Agent, the Company or any Bank Investor with
respect thereto, (vi) the failure by the Agent, on behalf of the Company and the
Bank Investors, to take any steps to perfect and maintain perfected its interest
in the Collateral or the Debtor Collateral or any other security or collateral
related to the Obligations or (vii) any other circumstances which might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
including without limitation any right to require or claim that resort be had to
the Debtor or any other Person or to any collateral in respect of the
Obligations, whether arising under North Carolina General Statutes Section 26-7
and 26-9 or otherwise. The Guarantor agrees that none of the Agent, the Company
or any Bank Investor shall be under any obligation to xxxxxxxx any assets in
favor of or against or in payment of any or all of the Obligations. The
Guarantor waives all set-offs and counterclaims and all presentments, demands
for performance, notices of dishonor and notices of acceptance of this
Agreement. The Guarantor agrees that its obligations under this Agreement shall
be irrevocable.
SECTION 1.7 LIQUIDATION SETTLEMENT PROCEDURES. Following the
date on which the Net Investment shall be reduced to zero and all other
Aggregate Unpaids have been paid in full, (i) the Servicer shall recompute the
Noteholder's Percentage as zero, (ii) the Agent, on behalf of the Company and
the Bank Investors, shall be considered to have released all of the Company's
and the Bank Investors' right, title and interest in and to the Collateral and
the Debtor Collateral, (iii) the Servicer shall pay to the Debtor or the
Guarantor, as applicable, any remaining Collections set aside and held by the
Servicer and (iv) the Agent, on behalf of the Company and the Bank Investors,
shall execute and deliver to the Debtor, at the Debtor's expense, such documents
or instruments as are necessary to terminate the Company's and the Bank
Investors' respective interests in the Collateral and the Debtor Collateral. Any
such documents shall be prepared by or on behalf of the Debtor or the Guarantor,
as applicable.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 1.8 REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants to the Agent, the Company and the Bank
Investors that:
(1) CORPORATE EXISTENCE AND POWER. The Guarantor is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted. The Guarantor is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect.
(2) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.
The execution, delivery and performance by the Guarantor of this Agreement, the
Receivables Purchase Agreements to which the Guarantor is a party and the other
Transaction Documents to which the Guarantor is a party are within the
Guarantor's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
Official Body or official thereof (except as contemplated by Section 2.2
hereof), and do not contravene, or constitute a default under, any provision of
applicable law, rule or regulation or of the articles of organization or
operating agreement of the Guarantor or of any agreement, judgment, injunction,
order, writ, decree or other instrument binding upon the Guarantor or result in
the creation or imposition of any Adverse Claim on the assets of the Guarantor
or any of its Subsidiaries (except as contemplated by Section 2.2 hereof or any
other provision of this Agreement or any other Transaction Document).
(3) BINDING EFFECT. Each of this Agreement, the Receivables
Purchase Agreements to which the Guarantor is a party and the other Transaction
Documents to which the Guarantor is a party constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally.
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(4) PERFECTION. The Guarantor shall be the owner of all of the
Receivables (other than Debtor Receivables), free and clear of all Adverse
Claims (except as permitted by this Agreement or the other Transaction
Documents). All financing statements and other documents required to be recorded
or filed in order to perfect and protect the Agent's security interest in the
Collateral against all creditors of and purchasers from the Debtor, any
Designated Seller, the Guarantor and the Bank have been, or will, within ten
(10) days of the date hereof be, duly filed in each filing office necessary for
such purpose and all filing fees and taxes, if any, payable in connection with
such filings have been, or will, within ten (10) days of the date hereof be,
paid in full.
(5) ACCURACY OF INFORMATION. All information heretofore
furnished by the Guarantor to the Company, any Bank Investors, the Agent or the
Administrative Agent for purposes of or in connection with this Agreement, the
Note Purchase Agreement or any transaction contemplated hereby or thereby is,
and all such information hereafter furnished by the Guarantor to the Company,
any Bank Investors, the Agent or the Administrative Agent will be, true and
accurate in every material respect, on the date such information is stated or
certified.
(6) TAX STATUS. The Guarantor has filed all tax returns
(federal, state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges.
(7) ACTION, SUITS.
(x) Except as set forth in Exhibit A hereof (as such
exhibit may be amended from time to time), there are no actions, suits
or proceedings pending, or to the knowledge of the Guarantor
threatened, against or affecting the Guarantor or its properties, in or
before any court, arbitrator or other body, (i) asserting the
invalidity of any Transaction Document, (ii) seeking to prevent the
consummation of any of the transactions contemplated by any Transaction
Document, (iii) seeking any determination or ruling that, in the
judgment of the Guarantor, would materially and adversely affect the
performance of its obligations under any Transaction Document to which
it is a party or materially and adversely affect the collectibility of
the Receivables as a whole, or (iv) seeking any determination or ruling
that would materially and adversely affect the validity or
enforceability of any Transaction Document.
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(y) Except as set forth in Exhibit A hereof (as such
exhibit may be amended from time to time), there are no actions, suits
or proceedings pending, or to the knowledge of the Guarantor
threatened, against or affecting the Bank or the Bank's respective
properties, in or before any court, arbitrator or other body, (i)
asserting the invalidity of any Transaction Document, (ii) seeking to
prevent the consummation of any of the transactions contemplated by any
Transaction Document, (iii) seeking any determination or ruling that,
in the judgment of the Guarantor, would materially and adversely affect
the performance of the Bank's obligations under any Transaction
Document to which it is a party or materially and adversely affect the
collectibility of the Receivables as a whole, or (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of any Transaction Document.
(z) Except as set forth in Exhibit A hereof (as such
exhibit may be amended from time to time), there are no outstanding
judgments in any court against the Guarantor or the Bank (for which any
such party is solely responsible or is responsible jointly with other
Persons) in excess of $1,000,000 individually.
(8) USE OF PROCEEDS. No proceeds of any Advance will be used
by the Guarantor to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(9) PLACE OF BUSINESS. The principal place of business and
chief executive office of the Guarantor are located at the address of the
Guarantor indicated in Section 7.1 hereof and the offices where the Guarantor
keeps all its Records, are located at the address(es) described on Exhibit B or
such other locations notified to the Agent in accordance with Section 2.2 hereof
in jurisdictions where all action required by Section 2.2 hereof has been taken
and completed.
(10) GOOD TITLE. Upon the filing of the appropriate financing
statements as required by this Agreement and/or the Note Purchase Agreement, the
Agent on behalf of the Company and the Bank Investors shall have or acquire a
first priority perfected security interest in the Receivables existing on the
date of the Closing Date and thereafter and in the Related Security and
Collections with respect thereto free and clear of any Adverse Claim.
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(11) TRADENAMES, ETC. As of the date hereof: (i) the Guarantor
has no subsidiaries or divisions; and (ii) the Guarantor has, within the last
five (5) years, not operated under any tradename, and, within the last five (5)
years, has not changed its name, merged with or into or consolidated with any
other corporation or been the subject of any proceeding under Xxxxx 00, Xxxxxx
Xxxxxx Code (Bankruptcy).
(12) NATURE OF RECEIVABLES. Each Receivable (x) represented by
the Guarantor or the Servicer to be an Eligible Receivable (including in any
Servicer Report or other report delivered pursuant to Section 2.3 hereof) or (y)
included in the calculation of the Net Receivables Balance, in fact satisfies at
such time the definition of "Eligible Receivable" set forth herein and is an
"eligible asset" as defined in Rule 3a-7 under the Investment Company Act, of
1940, as amended.
(13) COVERAGE REQUIREMENT; AMOUNT OF RECEIVABLES. The
Guarantor's Percentage is not less than the Minimum Guarantor's Percentage. As
of the Cut-Off Date, the aggregate Outstanding Principal Balance of the
Receivables in existence was $299,867,436.32, the aggregate balance of Finance
Charges was $13,773,645.67, and the Net Receivable Balance was $299,867,436.32.
(14) RATIOS. The Default Ratio and the Delinquency Ratio have
not exceeded 8% and 7.5%, respectively, for the 3 months prior to the Cut-Off
Date.
(15) NO TERMINATION EVENT. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event.
(16) NOT AN INVESTMENT COMPANY. The Guarantor is not, and is
not controlled by, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from all provisions of such Act.
(17) ERISA. Each of the Guarantor and its ERISA Affiliates is
in compliance in all material respects with ERISA and no lien exists in favor of
the Pension Benefit Guaranty Corporation on any of the Receivables.
(18) SERVICER ACCOUNTS. The names and addresses of all the
Servicer Account Banks, together with the account numbers of the Servicer
Accounts at such Servicer Account Banks, are specified in Exhibit C hereto (or
at such other Servicer Account Banks and/or with such other Servicer Accounts as
have been notified to the Agent and for which Servicer Account Agreements have
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been executed in accordance with Section 2.2(c) hereof and delivered to the
Agent). Only Collections are deposited into the Servicer Accounts.
(19) BULK SALES. No transaction contemplated by any
Receivables Purchase Agreement requires compliance with any bulk sales act or
similar law.
(20) TRANSFERS UNDER RECEIVABLES PURCHASE AGREEMENT. Each
Receivable which has been transferred to the Guarantor by the Bank has been
purchased by the Guarantor from the Bank pursuant to, and in accordance with,
the terms of the applicable Receivables Purchase Agreement.
SECTION 1.9 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer represents and warrants to the Agent, the Company and the Bank
Investors that:
(1) CORPORATE EXISTENCE AND POWER. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted. The Servicer is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect.
(2) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.
The execution, delivery and performance by the Servicer of this Agreement and
the other Transaction Documents to which it is a party are within the Servicer's
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official (except as contemplated by Section 2.2), and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the charter or Bylaws of the Servicer or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Servicer or result in the creation or imposition of any lien on assets of the
Servicer or any of its Subsidiaries (except as contemplated by Section 2.2 or
any other provision of this Agreement or any other Transaction Document).
(3) BINDING EFFECT. This Agreement and each other Transaction
Document to which the Servicer is a party constitutes the legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
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subject to applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally.
(4) ACCURACY OF INFORMATION. All information heretofore
furnished by the Servicer in writing to the Guarantor, the Debtor, the Company,
any Bank Investor, the Agent or the Administrative Agent for purposes of or in
connection with this Agreement or the Note Purchase Agreement or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by the Servicer to the Guarantor, the Debtor, the Company, any Bank Investor,
the Agent or the Administrative Agent will be, true and accurate in every
material respect, on the date such information is stated or certified.
(5) TAX STATUS. The Servicer has filed all tax returns
(federal, state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges.
(6) ACTION, SUITS.
(x) Except as set forth in Exhibit A hereof (as such
exhibit may be amended from time to time), there are no actions, suits
or proceedings pending, or to the knowledge of the Servicer threatened,
against or affecting the Servicer or its properties, in or before any
court, arbitrator or other body, (i) asserting the invalidity of any
Transaction Document, (ii) seeking to prevent the consummation of any
of the transactions contemplated by any Transaction Document, (iii)
seeking any determination or ruling that, in the judgment of the
Servicer, would materially and adversely affect the performance of the
Servicer's obligations under any Transaction Document to which it is a
party or materially and adversely affect the collectibility of the
Receivables as a whole, or (iv) seeking any determination or ruling
that would materially and adversely affect the validity or
enforceability of any Transaction Document.
(y) Except as set forth in Exhibit A hereof (as such
exhibit may be amended from time to time), there are no outstanding
judgments in any court against the Servicer (for which either the
Servicer is solely responsible or the Servicer is responsible jointly
with other Persons) in excess of $1,000,000 individually.
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(7) COLLECTIONS AND SERVICING. Since August 22, 1997, there
has been no material adverse change in the ability of the Servicer to service
and collect the Receivables and no material adverse change has occurred in the
overall rate of collections of Receivables.
(8) NOT AN INVESTMENT COMPANY. The Servicer is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or is exempt from all provisions of such Act.
(9) ERISA. The Servicer is in compliance in all material
respects with ERISA.
(10) SERVICER ACCOUNTS. The names and addresses of all the
Servicer Account Banks, together with the account numbers of the Servicer
Accounts at such Servicer Account Banks, are specified in Exhibit C (or at such
other Servicer Account Banks and/or with such other Servicer Accounts as have
been notified to the Guarantor and the Agent and for which Servicer Account
Agreements have been executed in accordance with Section 2.2(c) hereof and
delivered to the Agent). Only Collections are deposited into the Servicer
Accounts.
(11) POST OFFICE BOXES. The names and addresses of all the
Post Office Boxes are specified in Exhibit D (or at such other Post Office Boxes
as have been notified to the Guarantor and the Agent and for which Post Office
Box Agreements have been executed in accordance with Section 2.2(b) hereof and
delivered to the Agent). All Obligors have been directed to make payment to a
Post Office Box or to retail store locations owned by the Debtor or a Designated
Seller.
(12) CREDIT GUIDELINES. Since November 21, 1997, there have
been no material changes in the Credit Guidelines other than as permitted
hereunder. Since such date, no material adverse change has occurred in the
overall rate of collection of the Receivables.
SECTION 1.10 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES
BY THE GUARANTOR AND SERVICER. On each day that an Advance is made under the
Note Purchase Agreement, the Guarantor and the Servicer shall be deemed to have
certified that all of their respective representations and warranties described
in Sections 3.1 and 3.2 hereof are correct on and as of such day as though made
on and as of such day, provided that the representations set forth in Section
3.1(g) and 3.2(f)(x) hereof shall be deemed made only on and as of the Closing
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Date and on each January 1, April 1, July 1 and October 1 of each calendar year
(whether or not any such date is an Advance Date).
ARTICLE IV
COVENANTS
SECTION 1.11 AFFIRMATIVE COVENANTS OF THE GUARANTOR. At all
times from the date hereof to the later to occur of (i) the Termination Date or
(ii) the date on which the Net Investment and all other Aggregate Unpaids have
been paid in full, in cash, unless the Agent shall otherwise consent in writing:
(1) FINANCIAL REPORTING. The Guarantor will maintain a system
of accounting established and administered substantially in accordance with
GAAP, and furnish to the Agent:
(1) NOTICE OF TERMINATION EVENTS OR POTENTIAL
TERMINATION EVENTS. As soon as possible and in any event within two (2)
Business Days after the Guarantor has actual knowledge of the
occurrence of each Termination Event or each Potential Termination
Event, a statement of the Chief Financial Officer of the Guarantor
setting forth details of such Termination Event or Potential
Termination Event, and within five (5) Business Days after such notice,
an additional notice detailing the action which the Guarantor or the
Debtor proposes to take with respect thereto.
(2) CHANGE IN CREDIT GUIDELINES. Within ten (10) days
after the date any material change in or amendment to the Credit
Guidelines is made, a copy of the Credit Guidelines then in effect
indicating such change or amendment.
(3) CREDIT GUIDELINES. Promptly upon the request of
the Agent, a complete copy of the Credit Guidelines then in effect.
(4) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which the
Guarantor or any ERISA Affiliate of the Guarantor files under ERISA
with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the Guarantor or
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any ERISA Affiliate of the Guarantor receives from the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor.
(5) OTHER INFORMATION. Such other information
(including non-financial information) as the Agent or the
Administrative Agent may from time to time reasonably request with
respect to the Guarantor or any Subsidiary of the Guarantor.
(2) CONDUCT OF BUSINESS. The Guarantor will carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as it is intended to be conducted as of the Closing
Date and do all things necessary to remain duly incorporated or organized,
validly existing and in good standing as a limited liability company in its
jurisdiction of organization and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
(3) COMPLIANCE WITH LAWS. The Guarantor will comply with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it or its respective properties may be subject except where the
failure to comply would not have a Material Adverse Effect.
(4) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. The
Guarantor will furnish to the Agent from time to time such information with
respect to the Receivables as the Agent may reasonably request. The Guarantor
will, at any time and from time to time during regular business hours permit the
Agent, or its agents or representatives, (i) to examine and make copies of and
take abstracts from all Records and (ii) to visit the offices and properties of
the Guarantor for the purpose of examining such Records, and to discuss matters
relating to Receivables or the Guarantor's performance hereunder and under the
other Transaction Documents to which Guarantor is a party with any of the
officers, directors, employees or independent public accountants of the
Guarantor having knowledge of such matters.
(5) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Guarantor
will maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the identification as of each Cycle Date of each new
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Receivable and all Collections of and adjustments to each existing Receivable).
The Guarantor will give the Agent notice of any material change in the
administrative and operating procedures of the Guarantor referred to in the
previous sentence.
(6) PERFORMANCE AND COMPLIANCE WITH ACCOUNTS. The Guarantor,
at its expense, will timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by the
Guarantor under the Accounts related to the Receivables.
(7) CREDIT GUIDELINES. The Guarantor will comply in all
material respects with the Credit Guidelines in regard to each Receivable and
the related Account.
(8) COLLECTIONS. The Guarantor shall, or shall cause the
Servicer to, direct all Obligors to cause all Collections to be mailed directly
to a Post Office Box or delivered to retail store locations owned by the Debtor
or a Designated Seller.
(9) COLLECTIONS RECEIVED. The Guarantor shall hold in trust,
and remit, immediately, but in any event not later than three (3) Business Days
of its receipt thereof, to the Servicer all Collections received from time to
time by the Guarantor.
(10) INVENTORY FINANCINGS. The Guarantor shall specifically
exclude from the property subject to any Adverse Claim granted on inventory any
and all accounts receivable generated by sales of such inventory and the
proceeds thereof, and shall provide evidence, in each case satisfactory to the
Agent, that any and all accounts receivable generated by sales of such inventory
and the proceeds thereof shall have been excluded from any such Adverse Claims.
(11) YEAR 2000. The Guarantor has taken all action deemed
reasonably necessary by the Guarantor to assure that the Guarantor's computer
based systems are able to operate and effectively process data, including dates,
on and after January 1, 2000. At the request of the Agent, the Guarantor will
provide the Agent with assurances reasonably acceptable to the Agent of the
Guarantor's year 2000 compatibility.
SECTION 1.12 NEGATIVE COVENANTS OF THE GUARANTOR. During the
term of this Agreement, unless the Agent shall otherwise consent in writing:
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(1) NO SALES, LIENS, ETC. Except as otherwise provided herein
or in the other Transaction Documents, the Guarantor will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon (or the filing of any financing statement) or with
respect to (x) any of the Collateral, (y) any goods, the sale of which may give
rise to a Receivable or any Receivable or related Account, or (z) any account
which concentrates in a Servicer Account Bank to which any Collections of any
Receivables are sent (other than such Servicer Account Bank's rights of set-off
with respect to fees, expenses and NSF charges related to such account), or
assign any right to receive income in respect thereof. Except as otherwise
provided herein or in the other Transaction Documents, the Guarantor will not
sell, assign (by operation of law or otherwise) or otherwise dispose of or
create any Adverse Claim upon (or the filing of any financing statement) or with
respect to any account which contains proceeds of Receivables, or assign any
right to receive income in respect thereof.
(2) NO EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
otherwise permitted in this Article IV or in Section 5.2 hereof, the Guarantor
will not extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Account related thereto. The
Guarantor will not take any action to permit the reduction of the amount due
under any Receivable as a result of any discount, credit, rebate, dispute,
repossessed or returned goods, chargeback allowance or billing adjustment except
with the prior written consent of the Agent or except in accordance with the
Credit Guidelines.
(3) PERFORMANCE OF ACCOUNT AGREEMENTS. The Guarantor shall not
fail to comply with and perform its obligations under the applicable Account
Agreements relating to the Accounts and the Credit Guidelines except insofar as
any such failure to comply or perform would not materially and adversely affect
the rights of the Company, the Agent, or any Bank Investor in the Receivables or
the collectibility of the Receivables. The Guarantor shall not change the terms
and provisions of the Account Agreements or the Credit Guidelines in any respect
(including, without limitation, the calculation of the amount, and the timing,
of uncollectible Receivables) except to the extent (i) such change is made
applicable to the comparable segment of the consumer revolving credit accounts
owned by the Guarantor, the Debtor or the Bank that have characteristics the
same as, or substantially similar to, the Accounts that are the subject of such
change or (ii) if the Guarantor, the Debtor or the Bank does not own such a
comparable segment, the Guarantor will not make any such change with the intent
to materially benefit itself over the Company, the Agent, or any Bank Investor,
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and such change does not materially and adversely affect the rights of the
Company, the Agent or any Bank Investor in the Receivables or the collectibility
of the Receivables. References to the Receivables in this paragraph shall be
deemed to refer to the Receivables in the aggregate.
(4) NO CHANGE IN BUSINESS OR CREDIT GUIDELINES. The Guarantor
will not make any change in the character of its business or in the Credit
Guidelines, which change would, in either case, impair the collectibility of any
Receivable or otherwise result in a Material Adverse Effect.
(5) NO MERGERS, ETC. The Guarantor will not (i) consolidate or
merge with or into any other Person or (ii) sell, lease or transfer all or
substantially all of its assets to any other Person, except in accordance with
the Transaction Documents and except for distributions to members; PROVIDED,
HOWEVER, that the Guarantor may merge with another Person if (w) such Person is
the Debtor or a Subsidiary of the Debtor, (x) the Guarantor is the Person
surviving such merger or the Person surviving such merger agrees to be bound by
the obligations of the Guarantor under this Agreement and the other Transaction
Documents, and (y) immediately following such merger, no Termination Event or
Potential Termination Event shall have occurred and be continuing.
(6) CHANGE IN PAYMENT DIRECTIONS TO OBLIGORS. The Guarantor
will not make any change in its directions to Obligors regarding payments to be
made to a Post Office Box, unless (i) such directions are to deposit such
payments to another Post Office Box or to retail store locations owned by the
Debtor or any Designated Seller, and (ii) the Agent shall have received written
notice of such change at least thirty (30) days prior thereto and the Agent
shall have received a Post Office Box Agreement with respect to the new Post
Office Box.
(7) DEPOSITS TO SERVICER ACCOUNTS. The Guarantor will not
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Servicer Account cash or cash proceeds other than Collections of
Receivables.
(8) CHANGE OF NAME, ETC. The Guarantor will not change its
name, identity or structure or the location of its chief executive office,
unless at least 10 days prior to the effective date of any such change the
Guarantor delivers to the Agent such documents, instruments or agreements,
executed by the Guarantor, as are necessary to reflect such change and to
continue the perfection of the Agent's security interests in the Collateral.
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(9) AMENDMENT TO RECEIVABLES PURCHASE AGREEMENTS. The
Guarantor will not amend, waive, modify, or supplement any Receivables Purchase
Agreement to which the Guarantor is a party, except with the prior written
consent of the Agent and the Administrative Agent; nor shall the Guarantor take
any other action under any such Receivables Purchase Agreement that shall have a
material adverse affect on the Agent, the Company or any Bank Investor or which
violates the terms of this Agreement.
(10) ERISA MATTERS. The Guarantor will not (i) engage or
permit any of its respective ERISA Affiliates to engage in any prohibited
transaction (as defined in Section 4975 of the Code and Section 406 of ERISA)
for which an exemption is not available or has not previously been obtained from
the U.S. Department of Labor; (ii) permit to exist any accumulated funding
deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of the
Code) or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that the Guarantor, or any ERISA Affiliate of the Guarantor is required to make
under the agreement relating to such Multiemployer Plan or any law pertaining
thereto; (iv) terminate any Benefit Plan so as to result in any liability; or
(v) permit to exist any occurrence of any reportable event described in Title IV
of ERISA which represents a material risk of a liability to the Guarantor, or
any ERISA Affiliate of the Guarantor under ERISA or the Code.
(11) AMENDMENTS TO ARTICLES OF ORGANIZATION. Without the prior
written consent of the Agent, the Guarantor shall not amend Section 4.1, 4.2,
6.3, 10.1 or 11.9 of its Articles of Organization.
SECTION 1.13 COVENANTS OF THE SERVICER. At all times from the
date hereof to the later to occur of (i) the Termination Date or (ii) the date
on which the Net Investment and all other Aggregate Unpaids have been paid in
full, in cash, the Servicer covenants that, unless the Agent shall otherwise
consent in writing:
(1) COMPLIANCE WITH REQUIREMENTS OF LAW. The Servicer shall
duly satisfy its obligations in all material respects on its part to be
fulfilled under or in connection with each Receivable and the related Account,
will maintain in effect all material qualifications required under Requirements
of Law in order to service properly each Receivable and the related Account and
will comply in all material respects with all other Requirements of Law in
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connection with servicing each Receivable and the related Account the failure to
comply with which would have a Material Adverse Effect.
(2) NO RESCISSION OR CANCELLATION. The Servicer shall not
permit any rescission or cancellation of a Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority or in the
ordinary course of its business and in accordance with the Credit Guidelines.
(3) PROTECTION OF COMPANY'S RIGHTS. Except as otherwise
permitted by this Article IV or Section 5.2, the Servicer shall take no action,
nor omit to take any action, which would impair the rights of the Agent in any
Receivable.
(4) ALL CONSENTS REQUIRED. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the Servicer
of this Agreement and the Note Purchase Agreement, the performance by the
Servicer of the transactions contemplated by this Agreement and the Note
Purchase Agreement and the fulfillment by the Servicer of the terms hereof and
thereof, have been obtained.
(5) CUSTODIAN. The Servicer will, at its own cost and expense,
(i) maintain the books and records with respect to the Accounts and the
Receivables and copies of all documents relating to each Account as custodian
for the Agent and (ii) clearly and unambiguously xxxx such books and records
that indicate the Receivables have been pledged to the Agent, for benefit of the
Company and the Bank Investors, pursuant to this Agreement.
(6) NO EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
otherwise permitted in this Article IV or Section 5.2, the Servicer will not
extend, amend or otherwise modify the terms of any Receivable, or amend, modify
or waive any term or condition of any Account related thereto except as ordered
by a court of competent jurisdiction or other Governmental Authority or in the
ordinary course of its business and in accordance with the Credit Guidelines.
(7) NO CHANGE IN BUSINESS. The Servicer will not make any
change in the character of its business which would impair the collectibility of
the Receivables taken as a whole or otherwise result in a Material Adverse
Effect. The Servicer shall not reduce the amount due under any Receivable as a
result of any discount, credit, rebate, dispute, repossessed or returned goods,
chargeback allowance or billing adjustment except in accordance with the Credit
Guidelines.
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(8) NO MERGERS, ETC. The Servicer will not (i) consolidate or
merge with or into any other Person, or (ii) sell, lease or transfer all or
substantially all of its assets to any other Person; PROVIDED that the Servicer
may consolidate with or merge into Belk Store Services, Inc, the Debtor or a
Subsidiary of the Debtor.
(9) CHANGE IN PAYMENT DIRECTIONS TO OBLIGORS. The Servicer
will not make any change in the directions to Obligors regarding payments to be
made to a Post Office Box or to retail store locations owned by the Debtor or
any Designated Seller unless (i) such directions are to deposit such payments to
another Post Office Box or to retail store locations owned by the Debtor or any
Designated Seller, and (ii) the Agent shall have received written notice of such
change at least thirty (30) days prior thereto and the Agent shall have received
a Post Office Box Agreement with respect to the new Post Office Box.
(10) DEPOSITS TO SERVICER ACCOUNT, DEBTOR ACCOUNT AND
COLLECTION ACCOUNT. The Servicer will not deposit or otherwise credit, or cause
or permit to be so deposited or credited, to any Servicer Account cash or cash
proceeds other than Collections of Receivables. The Servicer shall require the
Bank, the Debtor, the Guarantor and each Designated Seller to remit to the
Servicer all Collections received by the Bank, the Debtor, the Guarantor or such
Designated Seller promptly, but in any event within three (3) Business Days or,
alternatively, the Servicer may in the ordinary course of its servicing
activities as of each Cycle Date net any such amounts due from the Guarantor,
the Bank, the Debtor or any Designated Seller against amounts due from the
Servicer to the Guarantor, the Bank, the Debtor or such Designated Seller, and
any such amounts so netted shall be included as Collections on any reports or
certificates delivered hereunder by the Servicer. Any Collections received by
the Servicer from the Guarantor, the Bank, the Debtor or any Designated Seller
shall be deposited promptly, but in any event within two (2) Business Days of
receipt, in a Servicer Account. The Servicer shall deposit all Collections into
the Guarantor Account or, if required by this Agreement, into the Collection
Account, within ten (10) days of the initial receipt of such Collections by the
Servicer, the Guarantor, the Bank, the Debtor or any Designated Seller. The
Servicer will not change its name, identity or structure or the location of its
chief executive office, unless at least 10 days prior to the effective date of
any such change the Servicer delivers to the Agent new or revised Servicer
Account Agreements executed by the Servicer Account Banks and new revised Post
Office Box Agreements with respect to the Post Office Boxes which reflect such
change and enable the Agent to continue to exercise its rights contained in
Section 2.2 hereof.
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(11) YEAR 2000. The Servicer has taken all action deemed
reasonably necessary by the Servicer to assure that the Servicer's and its
Subsidiaries' computer based systems are able to operate and effectively process
data, including dates, on and after January 1, 2000. At the request of the
Agent, the Servicer will provide the Agent with assurances reasonably acceptable
to the Agent of the Servicer's year 2000 compatibility.
SECTION 1.14 AFFIRMATIVE COVENANTS OF THE DEBTOR. At all times
from the date hereof to the later to occur of (i) the Termination Date or (ii)
the date on which the Net Investment and all other Aggregate Unpaids have been
paid in full, in cash, unless the Agent shall otherwise consent in writing:
(1) FINANCIAL REPORTING. The Debtor will cause the Bank to
maintain a system of accounting established and administered substantially in
accordance with GAAP, and will further cause the Bank to furnish to the Agent:
(1) NOTICE OF TERMINATION EVENTS OR POTENTIAL
TERMINATION EVENTS. As soon as possible and in any event within two (2)
Business Days after the Bank has actual knowledge of the occurrence of
each Termination Event or each Potential Termination Event, a statement
of the Chief Financial Officer of the Bank setting forth details of
such Termination Event or Potential Termination Event, and within five
(5) Business Days after such notice, an additional notice detailing the
action which the Bank, the Guarantor or the Debtor proposes to take
with respect thereto.
(2) CHANGE IN CREDIT GUIDELINES. Within ten (10) days
after the date any material change in or amendment to the Credit
Guidelines is made, a copy of the Credit Guidelines then in effect
indicating such change or amendment.
(3) CREDIT GUIDELINES. Promptly upon the request of
the Agent, a complete copy of the Credit Guidelines then in effect.
(4) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which the Bank or
any ERISA Affiliate of the Bank files under ERISA with the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Bank or any ERISA Affiliate of the
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Bank receives from the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor.
(5) OTHER INFORMATION. Such other information
(including non-financial information) as the Agent or the
Administrative Agent may from time to time reasonably request with
respect to the Bank or any Subsidiary of the Bank.
(2) CONDUCT OF BUSINESS. The Debtor will cause the Bank to
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is intended to be conducted as
of the Closing Date and do all things necessary to remain duly incorporated or
organized, validly existing and in good standing as a national banking
association in its jurisdiction of organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.
(3) COMPLIANCE WITH LAWS. The Debtor will cause the Bank to
comply with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its respective properties may be subject except
where the failure to comply would not have a Material Adverse Effect.
(4) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. The
Debtor will, and will cause the Bank to, furnish to the Agent from time to time
such information with respect to the Receivables as the Agent may reasonably
request. The Debtor will, at any time and from time to time during regular
business hours permit the Agent, or its agents or representatives, (i) to
examine and make copies of and take abstracts from all Records and (ii) to visit
the offices and properties of the Debtor or the Bank for the purpose of
examining such Records, and to discuss matters relating to Receivables or the
Debtor's or the Bank's performance hereunder and under the other Transaction
Documents to which Debtor or the Bank is a party with any of the officers,
directors, employees or independent public accountants of the Debtor or the
Bank, as applicable, having knowledge of such matters.
(5) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Debtor will,
and will cause the Bank to, maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the
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identification as of each Cycle Date of each new Receivable and all Collections
of and adjustments to each existing Receivable). The Debtor will, and will
cause the Bank to, give the Agent notice of any material change in the
administrative and operating procedures of the Debtor or the Bank referred to in
the previous sentence.
(6) PERFORMANCE AND COMPLIANCE WITH ACCOUNTS. The Debtor, at
its expense, will, or will cause the Bank to, timely and fully perform and
comply with all material provisions, covenants and other promises required to be
observed by the Debtor or the Bank under the Accounts related to the
Receivables.
(7) CREDIT GUIDELINES. The Debtor will, and will cause the
Bank to, comply in all material respects with the Credit Guidelines in regard to
each Receivable and the related Account.
(8) COLLECTIONS. The Debtor shall, or shall cause the Servicer
to, direct all Obligors to cause all Collections to be mailed directly to a Post
Office Box or delivered to retail store locations owned by the Debtor or a
Designated Seller.
(9) COLLECTIONS RECEIVED. The Debtor shall, and shall cause
the Bank to, hold in trust, and remit, immediately, but in any event not later
than three (3) Business Days of its receipt thereof, to the Servicer all
Collections received from time to time by the Debtor or the Bank, as applicable.
(10) INVENTORY FINANCINGS. The Debtor shall, and will cause
the Bank to, specifically exclude from the property subject to any Adverse Claim
granted on inventory any and all accounts receivable generated by sales of such
inventory and the proceeds thereof, and shall provide evidence, in each case
satisfactory to the Agent, that any and all accounts receivable generated by
sales of such inventory and the proceeds thereof shall have been excluded from
any such Adverse Claims.
(11) YEAR 2000. The Debtor has taken, and has caused the Bank
to take, all action deemed reasonably necessary by the Debtor to assure that the
Debtor's and the Bank's and their Subsidiaries' computer based systems are able
to operate and effectively process data, including dates, on and after January
1, 2000. At the request of the Agent, the Debtor will provide the Agent with
assurances reasonably acceptable to the Agent of the Debtor's or the Bank's, as
applicable, year 2000 compatibility.
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SECTION 1.15 NEGATIVE COVENANTS OF THE DEBTOR. During the term
of this Agreement, unless the Agent shall otherwise consent in writing:
(1) NO SALES, LIENS, ETC. Except as otherwise provided herein
or in the other Transaction Documents, the Debtor will not, nor will it permit
the Bank to, sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon (or the filing
of any financing statement) or with respect to (x) any of the Collateral or
Debtor Collateral, (y) any goods, the sale of which may give rise to a
Receivable or any Receivable or related Account, or (z) any account which
concentrates in a Servicer Account Bank to which any Collections of any
Receivables are sent (other than such Servicer Account Bank's rights of set-off
with respect to fees, expenses and NSF charges related to such account), or
assign any right to receive income in respect thereof. Except as otherwise
provided herein or in the other Transaction Documents, the Debtor will not, nor
will it permit the Bank to, sell, assign (by operation of law or otherwise) or
otherwise dispose of or create any Adverse Claim upon (or the filing of any
financing statement) or with respect to any account which contains proceeds of
Receivables, or assign any right to receive income in respect thereof.
(2) NO EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
otherwise permitted in this Article IV or in Section 5.2 hereof, the Debtor will
not, nor will it permit the Bank to, extend, amend or otherwise modify the terms
of any Receivable, or amend, modify or waive any term or condition of any
Account related thereto. The Debtor will not, nor will it permit the Bank to,
take any action to permit the reduction of the amount due under any Receivable
as a result of any discount, credit, rebate, dispute, repossessed or returned
goods, chargeback allowance or billing adjustment except with the prior written
consent of the Agent or except in accordance with the Credit Guidelines.
(3) PERFORMANCE OF ACCOUNT AGREEMENTS. The Debtor shall not,
nor shall it permit the Bank to fail to comply with and perform its obligations
under the applicable Account Agreements relating to the Accounts and the Credit
Guidelines except insofar as any such failure to comply or perform would not
materially and adversely affect the rights of the Company, the Agent, or any
Bank Investor in the Receivables or the collectibility of the Receivables. The
Debtor shall not, nor shall it permit the Bank to, change the terms and
provisions of the Account Agreements or the Credit Guidelines in any respect
(including, without limitation, the calculation of the amount, and the timing,
of uncollectible Receivables) except to the extent (i) such change is made
applicable to the comparable segment of the consumer revolving credit accounts
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owned by the Guarantor, the Debtor or the Bank that have characteristics the
same as, or substantially similar to, the Accounts that are the subject of such
change or (ii) if the Guarantor, the Debtor or the Bank does not own such a
comparable segment, the Debtor will not, nor will it permit the Bank to, make
any such change with the intent to materially benefit itself over the Company,
the Agent, or any Bank Investor, and such change does not materially and
adversely affect the rights of the Company, the Agent or any Bank Investor in
the Receivables or the collectibility of the Receivables. References to the
Receivables in this paragraph shall be deemed to refer to the Receivables in the
aggregate.
(4) NO CHANGE IN BUSINESS OR CREDIT GUIDELINES. The Debtor
will not, nor will it permit the Bank to, make any change in the character of
its business or in the Credit Guidelines, which change would, in either case,
impair the collectibility of any Receivable or otherwise result in a Material
Adverse Effect.
(5) NO MERGERS, ETC. The Debtor will not permit the Bank to
(i) consolidate or merge with or into any other Person or (ii) sell, lease or
transfer all or substantially all of its assets to any other Person, except in
accordance with the Transaction Documents.
(6) CHANGE IN PAYMENT DIRECTIONS TO OBLIGORS. The Debtor will
not, nor will it permit the Bank to, make any change in its directions to
Obligors regarding payments to be made to a Post Office Box, unless (i) such
directions are to deposit such payments to another Post Office Box or to retail
store locations owned by the Debtor or any Designated Seller, and (ii) the Agent
shall have received written notice of such change at least thirty (30) days
prior thereto and the Agent shall have received a Post Office Box Agreement with
respect to the new Post Office Box.
(7) DEPOSITS TO SERVICER ACCOUNTS. The Debtor will not, nor
will it permit the Bank to, deposit or otherwise credit, or cause or permit to
be so deposited or credited, to any Servicer Account cash or cash proceeds other
than Collections of Receivables.
(8) CHANGE OF NAME, ETC. The Debtor will not, nor will it
permit the Bank to, change its name, identity or structure or the location of
its chief executive office, unless at least 10 days prior to the effective date
of any such change the Debtor or the Bank, as applicable, delivers to the Agent
such documents, instruments or agreements, executed by the Debtor or the Bank,
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as applicable, as are necessary to reflect such change and to continue the
perfection of the Agent's security interests in the Collateral and the Debtor
Collateral.
(9) AMENDMENT TO RECEIVABLES PURCHASE AGREEMENTS. The Debtor
will not, nor will it permit the Bank to, amend, waive, modify, or supplement
any Receivables Purchase Agreement to which the Debtor or the Bank is a party,
except with the prior written consent of the Agent and the Administrative Agent;
nor shall the Debtor take, or permit the Bank to take, any other action under
any such Receivables Purchase Agreement that shall have a material adverse
affect on the Agent, the Company or any Bank Investor or which violates the
terms of this Agreement.
(10) ERISA MATTERS. The Debtor will not permit the Bank to (i)
engage or permit any of its respective ERISA Affiliates to engage in any
prohibited transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not previously been
obtained from the U.S. Department of Labor; (ii) permit to exist any accumulated
funding deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of
the Code) or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that the Bank or any ERISA Affiliate of the Bank is required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; or (v) permit
to exist any occurrence of any reportable event described in Title IV of ERISA
which represents a material risk of a liability to the Bank or any ERISA
Affiliate of the Bank under ERISA or the Code.
ARTICLE V
ADMINISTRATION AND COLLECTIONS
SECTION 1.16 APPOINTMENT OF SERVICER. The servicing,
administering and collection of the Receivables shall be conducted by such
Person so designated from time to time in accordance with this Section 5.1 (the
"SERVICER"). Until the Agent gives notice to Belk Center of the designation of a
new Servicer, Belk Center is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Servicer pursuant to the terms hereof and of
the Note Purchase Agreement. The Servicer may not delegate any of its rights,
duties or obligations hereunder, or designate a substitute Servicer, without the
prior written consent of the Agent, and provided that the Servicer shall
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continue to remain solely liable for the performance of the duties as Servicer
hereunder notwithstanding any such delegation hereunder. The Agent may, and upon
the direction of the Majority Investors the Agent shall, after the occurrence of
a Servicer Default or any other Termination Event (other than an event described
in either Section 6.1(o) or 6.1(p)) designate as Servicer any Person (including
itself) to succeed Belk Center or any successor Servicer, on the condition in
each case that any such Person so designated shall agree to perform the duties
and obligations of the Servicer pursuant to the terms hereof. The Agent may
notify any Obligor of its interest in the Receivables.
SECTION 1.17 DUTIES OF SERVICER.
(1) The Servicer shall take or cause to be taken all such
action as may be necessary or advisable to collect each Receivable from time to
time, all in accordance with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit Guidelines.
Each of the Debtor, the Guarantor and the Agent, on behalf of the Company and
the Bank Investors, hereby appoints as its agent the Servicer, from time to time
designated pursuant to Section 5.1 hereof, to enforce the Accounts and the
Receivables with respect to collections and to service the Accounts and the
Receivables pursuant to the Credit Guidelines. To the extent permitted by
applicable law, each of the Debtor and the Guarantor (to the extent not then
acting as Servicer hereunder) hereby grants to any Servicer appointed hereunder
an irrevocable power of attorney to take any and all steps in the Debtor's
and/or the Guarantor's name and on behalf of the Debtor or the Guarantor
necessary or desirable, in the reasonable determination of the Servicer, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Debtor's and/or the Guarantor's name on checks and
other instruments representing Collections and enforcing such Receivables and
the related Accounts. The Guarantor shall deliver to the Servicer and the
Servicer shall hold in trust for the Guarantor, the Debtor, the Company, the
Agent and the Bank Investors, in accordance with their respective interests, all
Records which evidence or relate to Receivables or Related Security.
Notwithstanding anything to the contrary contained herein, upon and during the
continuance of a Servicer Default or Termination Event, the Agent shall have the
absolute and unlimited right to direct the Servicer (whether the Servicer is
Belk Center or any other Person) to commence or settle any legal action to
enforce collection of any Receivable or to foreclose upon or repossess any
Related Security. The Servicer shall not make the Agent, the Company or any of
the Bank Investors a party to any litigation without the prior written consent
of such Person.
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(2) The Servicer shall, as soon as practicable following
receipt thereof, turn over to the Guarantor any collections received by the
Servicer of any indebtedness of any Person which is not on account of a
Receivable. If the Servicer is not the Debtor or an Affiliate of the Debtor, the
Servicer, by giving three Business Days' prior written notice to the Agent, may
revise the percentage used to calculate the Servicing Fee so long as the revised
percentage will not result in a Servicing Fee that exceeds 110% of the
reasonable and appropriate out-of-pocket costs and expenses of such Servicer
incurred in connection with the performance of its obligations hereunder as
documented to the reasonable satisfaction of the Agent, PROVIDED, HOWEVER, that
at any time after the Noteholder's Percentage equals or exceeds 100%, any
compensation to the Servicer in excess of the Servicing Fee initially provided
for herein shall be an obligation of the Guarantor and shall not be included in
the amounts described in Section 2.4(a)(ii) of the Note Purchase Agreement. The
Servicer, if other than the Debtor or an Affiliate of the Debtor, shall as soon
as practicable upon demand, deliver to the Debtor or the Guarantor, as
applicable, all Records in its possession which evidence or relate to
indebtedness of an Obligor which is not a Receivable.
(3) By May 31, 1999 and on or before 45 days after the end of
each fiscal year of the Servicer beginning with the fiscal year ending January
29, 2000, the Servicer shall cause a firm of independent public accountants (who
may also render other services to the Servicer, the Debtor, the Guarantor, the
Bank or any Affiliates of any of the foregoing) or another qualified party
designated by the Agent to furnish a report to the Agent to the effect that they
have compared the information contained in the Servicer Reports delivered during
such fiscal year then ended with the information contained in the Accounts and
the Servicer's records and computer systems for such period, and that, on the
basis of such comparison, nothing came to the attention of such firm that caused
them to believe the Servicer failed to accurately record the information
contained in the Servicer Reports from the Accounts and the Servicer's records
and computer systems.
(4) Notwithstanding anything to the contrary contained in this
Article V, the Servicer, if not the Debtor or any Affiliate of the Debtor, shall
have no obligation to collect, enforce or take any other action described in
this Article V with respect to any indebtedness that does not relate to the
Collateral other than to deliver to the Debtor the collections and documents
with respect to any such indebtedness as described in Section 5.2(b) hereof.
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(5) In consideration of acting as Servicer hereunder, the
Servicer shall be entitled to retain from Collections received by it on any day
all late fees, NSF or returned check charges and all other similar charges and
fees received by it. To the extent that they constitute part of Collections, the
Servicer shall account for such amounts received and retained by it in respect
of a Collection Period on each related Servicer Report delivered by it
hereunder.
SECTION 1.18 RIGHTS AFTER DESIGNATION OF NEW SERVICER. At any
time following the designation of a new Servicer (other than the Debtor or any
Affiliate of the Debtor) pursuant to Section 5.1 hereof:
(1) The Guarantor and the Servicer shall, at the
Agent's request, (A) assemble all of the Records, and shall make the
same available to the Agent or its designee at a place selected by the
Agent or its designee, and (B) segregate all cash, checks and other
instruments (in each case known to the Guarantor or the Servicer to
represent payment on Receivables and not other indebtedness) received
by it from time to time to the extent constituting Collections of
Receivables in a manner acceptable to the Agent and shall, promptly
upon receipt, remit all such cash (including the cash proceeds of
collected checks representing payments in respect of Receivables if
such checks represented payments on Receivables and other
indebtedness), checks and instruments (in each case known to the
Guarantor or the Servicer to represent payment on Receivables and not
other indebtedness), duly endorsed or with duly executed instruments of
transfer, to the Agent or its designee.
(2) The Guarantor and the Servicer hereby authorize
the Agent to take any and all steps in the Guarantor's or the
Servicer's name and on behalf of the Guarantor or the Servicer,
respectively, necessary or desirable, in the determination of the
Agent, to collect all amounts due under any and all Receivables,
including, without limitation, endorsing the Guarantor's or the
Servicer's name on checks and other instruments representing
Collections and enforcing such Receivables and the related Accounts.
SECTION 1.19 SERVICER DEFAULT. The occurrence of any one or
more of the following events shall constitute a Servicer Default:
(1) the Servicer or, to the extent that the Debtor or any
Affiliate of the Debtor is then acting as Servicer, the Debtor or such
Affiliate, as applicable, shall fail (i) to observe or perform any term,
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covenant or agreement hereunder or under the Note Purchase Agreement (other than
as referred to in clauses (ii) or (iii) of this Section 5.4(a)) or under any of
the other Transaction Documents to which such Person is a party or by which such
Person is bound, and such failure shall remain unremedied for fifteen (15) days
from the date the Debtor, the Guarantor, the Servicer or any Affiliate of either
had actual knowledge of such failure or (ii) to make any payment or deposit
required to be made by it hereunder or under the Note Purchase Agreement or the
other Transaction Documents when due, provided, however, that if such failure is
not the result of factors under the payor's control, then such failure should
have continued unremedied for one (1) Business Day, or (iii) to observe or
perform any term, covenant or agreement under Sections 4.3(b), 4.3(f) or 4.4(g);
or
(2) any representation, warranty, certification or statement
made by the Servicer, the Debtor or any Affiliate of the Debtor (in the event
that the Debtor or such Affiliate is then acting as the Servicer) in this
Agreement or the Note Purchase Agreement or in any certificate or report
delivered by it pursuant to any of the foregoing shall prove to have been
incorrect in any material respect when made or deemed made; or
(3) failure of the Servicer or any of its Subsidiaries to pay
when due any amounts due under any agreement under which any Indebtedness
greater than $1,000,000 is governed; or the default by the Servicer or any of
its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any Indebtedness greater than $1,000,000
was created or is governed, if such default permits the creditor to accelerate
such Indebtedness; or any Indebtedness of the Servicer or any of its
Subsidiaries greater than $1,000,000 shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to
the scheduled date of maturity thereof; or
(4) any Event of Bankruptcy shall occur with respect to the
Servicer or any of its Subsidiaries; or
(5) there shall have occurred any material adverse change in
the operations of the Servicer since the end of the last fiscal year ending
prior to the date of its appointment as Servicer hereunder or any other event
shall have occurred which, in the commercially reasonable judgment of the Agent,
materially and adversely affects the Servicer's ability to either collect the
Receivables or to perform under this Agreement.
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SECTION 1.20 RESPONSIBILITIES OF THE GUARANTOR. Anything
herein to the contrary notwithstanding, the Guarantor shall, and/or the Debtor
shall cause the Bank to, (i) perform all of the Guarantor's or the Bank's
obligations under the Accounts related to the Receivables to the same extent as
if interests in such Receivables had not been sold pursuant to the applicable
Receivables Purchase Agreement and had not been pledged hereunder and the
exercise by the Agent, the Company and the Bank Investors of their rights
hereunder and under the applicable Receivables Purchase Agreement shall not
relieve the Guarantor or the Bank from such obligations and (ii) pay when due
any taxes, including without limitation, any sales taxes payable in connection
with the Receivables and their creation and satisfaction. Neither the Agent, the
Company nor any of the Bank Investors shall have any obligation or liability
with respect to any Receivable or related Accounts, nor shall it be obligated to
perform any of the obligations of the Guarantor or the Bank thereunder.
ARTICLE VI
TERMINATION EVENTS
SECTION 1.21 TERMINATION EVENTS. The occurrence of any one or
more of the following events shall constitute a Termination Event:
(1) the Debtor, the Guarantor, the Bank or the Servicer shall
fail to make any payment or deposit to be made by it hereunder or under the Note
Purchase Agreement, the Note or any Receivables Purchase Agreement when due
hereunder or thereunder, PROVIDED, however, that if such failure is not the
result of factors within such Person's control, such failure shall have
continued unremedied for one (1) Business Day, PROVIDED FURTHER, that in the
case of any fees payable pursuant to Section 2.6 of the Note Purchase Agreement,
such fee shall not be paid within one (1) Business Day of the date when due; or
(2) any representation, warranty, certification or statement
made by the Debtor, the Servicer or the Guarantor in this Agreement, the Note
Purchase Agreement or any other Transaction Document to which it is a party or
in any other document delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made or deemed made, PROVIDED,
HOWEVER, that in the case of any breach of the representation set forth in
Section 3.1(l) hereof which does not have a material adverse effect on the
Agent's security interest in the Collateral taken as a whole, such breach shall
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not constitute a Termination Event if the Debtor shall have made any payment
required as a result thereof pursuant to Section 2.7(b) of the Note Purchase
Agreement; or
(3) the Debtor or the Guarantor shall default in the
performance of any covenant or undertaking (other than those covered by clause
(a) above) (i) to be performed or observed under Sections 5.1(a)(iii),
5.1(a)(iv), 5.1(c), 5.2(a) or 5.2(b) of the Note Purchase Agreement or Sections
4.1(a)(i), 4.1(a)(ii), 4.1(c), 4.1(f), 4.1(g), 4.2(a)(x), 4.2(c), 4.2(d) or
4.2(e) of this Agreement or (ii) to be performed or observed under any other
provision hereof and such default in the case of this clause (ii) shall continue
for twenty (20) days after the earlier of the date the Agent gave notice of such
default to the Debtor, the Guarantor or the Servicer, as applicable, and the
date on which the Debtor, the Guarantor or the Servicer had knowledge of such
default; or
(4) any material adverse change in the operations of the
Servicer or any other event which materially affects the Servicer's ability to
either collect the Receivables or perform its obligations under this Agreement
or the Note Purchase Agreement; or
(5) any Event of Bankruptcy shall occur with respect to the
Debtor, the Guarantor, the Bank, any Designated Seller or the Servicer; or
(6) the Agent, on behalf of the Company and/or the Bank
Investors, shall, for any reason, fail or cease to have a valid and perfected
first priority security interest in the Collateral or the Debtor Collateral free
and clear of any Adverse Claims; or
(7) a Servicer Default shall have occurred; or
(8) any Receivables Purchase Agreement shall have terminated
without the prior written consent of the Agent (not to be unreasonably
withheld); or
(9) subject to Sections 5.2(b) of the Note Purchase Agreement
and 4.2(e) and 4.3(h) of this Agreement, the Debtor, the Guarantor or the
Servicer shall enter into any transaction or merger whereby it is not the
surviving entity; or
(10) (i) the Debtor's Percentage is less than the Minimum
Debtor's Percentage as of the last day of any two consecutive Collection
Periods, (ii) the Noteholder's Percentage equals or exceeds 100% at any time; or
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(iii) the Net Investment plus the aggregate Interest Component of all
outstanding Related Commercial Paper shall exceed the Facility Limit for more
than two (2) consecutive Business Days after the Guarantor or the Debtor had
knowledge of such occurrence; or
(11) the Payment Rate averaged for any three consecutive
Collection Periods is less than 16.00%; or
(12) the Net Portfolio Yield averaged for any three
consecutive Collection Periods is less than 1.00%; or
(13) the Delinquency Ratio averaged for any three consecutive
Collection Periods is greater than 7.50%; or
(14) the Default Ratio averaged for any three consecutive
Collection periods is greater than 8.00%; or
(15) the Liquidity Provider or the Credit Support Provider
shall have given notice that an event of default has occurred and is continuing
under any of its respective agreements with the Company; or
(16) the Commercial Paper issued by the Company shall not be
rated at xxxxx "X0" by Standard & Poor's and at least "P2" by Xxxxx'x.
SECTION 1.22 TERMINATION.
(1) If a Termination Event shall have occurred and be
continuing, the Agent may, or at the direction of the Majority Investors shall,
by notice to the Guarantor, the Debtor and the Servicer declare the Termination
Date to have occurred; PROVIDED, HOWEVER, that in the case of any event
described in Section 6.1(e), 6.1(f), 6.1(j)(ii) or 6.1(j)(iii) above, the
Termination Date shall be deemed to have occurred automatically upon the
occurrence of such event. Upon any such declaration or automatic occurrence, the
Agent may, and shall at the direction of the Majority Investors, declare all the
Note and all amounts due under this Agreement and the Note Purchase Agreement to
then be due and payable.
(2) At all times after the declaration or automatic occurrence
of the Termination Date pursuant to Section 6.2(a) other than as a result of the
occurrence of a Termination Event described in 6.1(o) or 6.1(p), the Carrying
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Costs may (at the option of the Agent) thereafter be calculated on the basis of
the Adjusted LIBOR Rate giving effect to a margin of 2.80% (as described in the
definition of Adjusted LIBOR Rate) for all existing and future funding periods.
(3) If the Note is declared due and payable in accordance with
this Section, the Agent may, and shall at the direction of the Majority
Investors, do any one or more of the following:
(1) take all necessary action to foreclose upon the
Collateral and the Debtor Collateral;
(2) retain in satisfaction of any amounts owing from
the Debtor or the Guarantor all amounts otherwise payable to the Debtor
or the Guarantor pursuant to this Agreement to the extent necessary to
pay in full all amounts (including principal and interest) due and
payable under the Note, this Agreement and the Note Purchase Agreement;
(3) pursue any available remedy by proceeding at law
or in equity including complete or partial foreclosure of the Lien upon
the Collateral and the Debtor Collateral and sale of the Collateral or
the Debtor Collateral or any portion thereof or rights or interest
therein as may appear necessary or desirable (i) to collect amounts
owed pursuant to the Note and any other payments then due and
thereafter to become due under the Note, this Agreement or the Note
Purchase Agreement, or (ii) to enforce the performance and observance
of any obligation, covenant, agreement or provision contained in this
Agreement or the Note Purchase Agreement to be observed or performed by
the Debtor or the Guarantor; or
(4) exercise all other rights and remedies of a
secured party provided under the UCC of the applicable jurisdiction and
other applicable laws, all of which rights shall be cumulative.
SECTION 1.23 PROCEEDS. The proceeds from the sale, disposition
or liquidation of the Collateral and/or the Debtor Collateral pursuant to
Section 6.2 above shall be applied to cover all reasonable expenses of the Agent
in connection with the Collateral and the Debtor Collateral (including
reasonable attorneys' fees and expenses) and then to the satisfaction of all
obligations of the Debtor and the Guarantor under the Note, this Agreement and
the Note Purchase Agreement, and any remaining proceeds shall be remitted to the
Guarantor. Section 1.1
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ARTICLE VII
MISCELLANEOUS
Section 1.24 NOTICES, ETC. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or telecopy number set forth below or at
such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified in this Section 7.1 and confirmation is
received, (ii) if given by mail, three (3) Business Days following such posting,
postage prepaid, via U.S. certified or registered mail, (iii) if given by
overnight courier, one (1) Business Day after deposit thereof with a national
overnight courier service, or (iv) if given by any other means, when received at
the address specified in this Section 7.1.
If to the Company:
Enterprise Funding Corporation
c/o Global Securitization Services, LLC
00 Xxxx 00xx Xx., Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(with a copy to the Administrative Agent)
If to the Guarantor:
Xxxx Accounts Receivable LLC
c/o Belk, Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000, Ext. 4273
Telecopy: (000) 000-0000
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If to Belk Center
The Belk Center, Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000, extension 7000
Telecopy: (000) 000-0000
Attn: Oakley Xxxxx
If to the Agent:
NationsBank N.A.
Bank of America Corporate
Center - 10th Floor
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx
Global Asset Backed
Securitization
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
NationsBank, N.A.
ABA 000-000-000
For the Account of: Global Investment Bank
Operations
Account No. 1093601650000
Attn.: Xxxxxxx Xxxxxxxx
SECTION 1.25 WAIVERS; AMENDMENTS. (a) No failure or delay on
the part of the Agent, the Company, the Administrative Agent, or any Bank
Investor in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided
by law.
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Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Guarantor, the Servicer, the Company the Debtor and the Majority Investors. In
the event the Agent requests the Company's or a Bank Investor's consent pursuant
to the foregoing provisions and the Agent does not receive a consent (either
positive or negative) from the Company or such Bank Investor within 10 Business
Days of the Company's or Bank Investor's receipt of such request, then the
Company or such Bank Investor (and its percentage interest hereunder) shall be
disregarded in determining whether the Collateral Agent shall have obtained
sufficient consent hereunder.
SECTION 1.26 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Debtor, the Agent, the Company, the Guarantor, the Bank
Investors, the Servicer and their respective successors and permitted assigns
and shall inure to the benefit of the Debtor, the Servicer, the Agent, the
Company, the Guarantor, the Bank Investors and their respective successors and
permitted assigns including the Liquidity Support Provider; PROVIDED that
neither the Servicer nor the Guarantor shall assign any of its rights or
obligations hereunder without the prior written consent of the Agent acting upon
written instruction of each of the Company and the Bank Investors. The Guarantor
and the Servicer hereby acknowledge that the Company has granted a security
interest in all of its rights hereunder to the Collateral Agent. In addition,
the Guarantor and the Servicer hereby acknowledge that the Company may at any
time and from time to time assign all or a portion of its rights hereunder to
the Liquidity Provider pursuant to the Liquidity Agreement. Except as expressly
permitted hereunder or in the agreements establishing the Company's commercial
paper program, the Company shall not assign any of its rights or obligations
hereunder without the prior written consent of the Guarantor. No Bank Investor
may assign, participate, grant a security interest in or otherwise transfer any
of its rights and/or obligations hereunder without the prior written consent of
the Guarantor, such consent not to be unreasonably withheld.
SECTION 1.27 SEVERABILITY CLAUSE. Any provisions of this
Agreement which are 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, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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SECTION 1.28 GOVERNING LAW; SUBMISSION TO JURISDICTION;
INTEGRATION.
(1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE DEBTOR HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF NORTH CAROLINA AND OF ANY NORTH CAROLINA STATE COURT SITTING
IN MECKLENBURG COUNTY, NORTH CAROLINA FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. The Guarantor hereby irrevocably waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. Nothing in this Section 7.5 shall affect the right of the
Company to bring any action or proceeding against the Debtor or its property in
the courts of other jurisdictions.
(2) This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire Agreement among the parties hereto
with respect to the subject matter hereof superseding all prior oral or written
understandings.
(3) The Guarantor, the Debtor and the Servicer each hereby
appoints Xxxxxx X. Xxxxx as the authorized agent upon whom process may be served
in any action arising out of or based upon this Agreement, the other Transaction
Documents to which such person is a party or the transactions contemplated
hereby or thereby that may be instituted in the United States District Court for
the Western District of North Carolina and of any North Carolina State court
sitting in Mecklenburg County, North Carolina by the Company, the Agent, any
Bank Investor, the Collateral Agent or any assignee of any of them.
SECTION 1.29 NO BANKRUPTCY PETITION AGAINST THE COMPANY. The
Guarantor and each of the other parties hereto covenant and agree that, and each
such Person agrees that it shall cause any successor Servicer appointed pursuant
to Section 5.1 of this Agreement to covenant and agree that, prior to the date
which is one year and one day after the payment in full of the later of (i) all
amounts due under the Note or (ii) all Commercial Paper issued by the Company
(or, if the Net Investment (or any portion thereof) has been assigned to a
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Conduit Assignee, one year and one day after the payment in full of all
Commercial Paper issued by such Conduit Assignee); it will not institute
against, or join any other Person in instituting against the Company or any
Conduit Assignee any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
SECTION 1.30 SETOFF. The Servicer hereby irrevocably and
unconditionally waives all right of setoff that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of the Guarantor at any time held by or in the possession of the
Servicer.
Section 1.31 NO RECOURSE AGAINST THE COMPANY. Notwithstanding
anything to the contrary contained in this Agreement, the obligations of the
Company under this Agreement and all other Transaction Documents are solely the
corporate obligations of the Company and shall be payable solely from the assets
of the Company in excess of funds necessary to pay matured and maturing
Commercial Paper.
SECTION 1.32 FURTHER ASSURANCES. Each of the Servicer and the
Guarantor agrees to do such further acts and things and to execute and deliver
to the Company, the Bank Investors, the Administrative Agent, or the Agent such
additional assignments, agreements, powers and instruments as are required by
the Agent to carry into effect the purposes of this Agreement or to better
assure and confirm unto the Agent, the Company or the Bank Investors its rights,
powers and remedies hereunder.
SECTION 1.33 COUNTERPARTS. This Agreement may be executed
(which execution may be by facsimile) in any number of copies, and by the
different parties hereto on the same or separate counterparts, each of which
shall be deemed to be an original instrument.
SECTION 1.34 HEADINGS. Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Guaranty and Security Agreement as of the date first written
above.
XXXX ACCOUNTS RECEIVABLE LLC,
as Guarantor
By:
--------------------------------------
Name:
Title:
THE XXXX CENTER, INC.,
as Servicer
By:
--------------------------------------
Name:
Title:
XXXX, INC.,
as Debtor
By:
--------------------------------------
Name:
Title:
NATIONSBANK, N.A., as Agent
and a Bank Investor
By:
--------------------------------------
Name:
Title:
