EXHIBIT 10.29
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TRANSFER AND ADMINISTRATION AGREEMENT
by and among
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CSI FUNDING INC.,
as Transferor,
COMPUCOM SYSTEMS, INC.,
individually and as Collection Agent,
ENTERPRISE FUNDING CORPORATION,
as Company,
and
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NATIONSBANK, N.A.,
as Agent
Dated as of April 1, 1996
as
Amended and Restated as of November 3, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS............................................................... 1
SECTION 1.1. Certain Defined Terms...................................... 1
SECTION 1.2. Other Terms................................................ 25
SECTION 1.3. Computation of Time Periods................................ 25
ARTICLE II
TRANSFERS AND SETTLEMENTS................................................. 26
SECTION 2.1. Facility................................................... 26
SECTION 2.2. Transfers; Company Certificate; Eligible Receivables....... 26
SECTION 2.3. Selection of Tranche Periods and Tranche Rates............. 29
SECTION 2.4. Discount, Fees and Other Costs and Expenses................ 30
SECTION 2.5. Non-Liquidation Settlement and Reinvestment Procedures..... 30
SECTION 2.6. Liquidation Settlement Procedures.......................... 31
SECTION 2.7. Fees....................................................... 32
SECTION 2.8. Protection of Ownership Interest of the Company............ 33
SECTION 2.9. Deemed Collections; Application of Payments................ 34
SECTION 2.10. Payments and Computations, Etc............................. 35
SECTION 2.11. Reports.................................................... 35
SECTION 2.12. Collection Account......................................... 36
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................ 37
SECTION 3.1. Representations and Warranties............................. 37
SECTION 3.2. Reaffirmation of Representations and Warranties by the
Transferor................................................ 41
ARTICLE IV
CONDITIONS PRECEDENT...................................................... 42
SECTION 4.1. Conditions to Closing....................................... 42
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ARTICLE V
COVENANTS................................................................. 45
SECTION 5.1. Affirmative Covenants of each of Transferor and the
Collection Agent......................................... 45
SECTION 5.2. Negative Covenants......................................... 50
ARTICLE VI
ADMINISTRATION AND COLLECTIONS............................................. 53
SECTION 6.1. Appointment of Collection Agent............................. 53
SECTION 6.2. Duties of Collection Agent.................................. 53
SECTION 6.3. Rights After Designation of New Collection Agent............ 55
SECTION 6.4. Responsibilities of each of the Transferor and CompuCom..... 56
ARTICLE VII
TERMINATION EVENTS........................................................ 58
SECTION 7.1 Termination Events......................................... 58
SECTION 7.2. Termination................................................ 61
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS................................ 63
SECTION 8.1. Indemnities................................................ 63
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses................. 65
SECTION 8.3. Other Costs, Expenses and Related Matters.................. 67
SECTION 8.4. Reconveyance Under Certain Circumstances................... 68
ARTICLE IX
THE AGENT AND THE BANK COMMITMENT......................................... 69
SECTION 9.1 Authorization and Action................................... 69
SECTION 9.2. Agent's Reliance, Etc...................................... 70
SECTION 9.3. Credit Decision............................................ 71
SECTION 9.4. Indemnification of the Agent............................... 72
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SECTION 9.5. Successor Agent............................................ 72
SECTION 9.6. Payments by the Agent...................................... 73
SECTION 9.7. Bank Commitment; Assignment to Bank Investors.............. 73
ARTICLE X
MISCELLANEOUS............................................................. 78
SECTION 10.1. Term of Agreement.......................................... 78
SECTION 10.2. Waivers; Amendments........................................ 78
SECTION 10.3. Notices.................................................... 78
SECTION 10.4. Governing Law; Submission to Jurisdiction; Integration..... 80
SECTION 10.5. Severability; Counterparts................................. 80
SECTION 10.6. Successors and Assigns..................................... 81
SECTION 10.7. [RESERVED]................................................. 81
SECTION 10.8. Confidentiality............................................ 81
SECTION 10.9. No Bankruptcy Petition Against the Company................. 82
SECTION 10.10 Limited Recourse; Waiver of Setoff......................... 82
SECTION 10.11. Grant of Security Interest................................. 83
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EXHIBITS
EXHIBIT A Form of Contract
EXHIBIT B Credit and Collection Policy
EXHIBIT C Form of Investor Report
EXHIBIT D Form of Transfer Certificate
EXHIBIT E Form of Settlement Statement
EXHIBIT F List of Actions and Suits
EXHIBIT G Schedule of Locations of Records
EXHIBIT H List of Subsidiaries, Divisions
and Tradenames
EXHIBIT I [Reserved]
EXHIBIT J Form of Secretary's Certificate
EXHIBIT K Form of Company Certificate
EXHIBIT L Lockbox Banks and Accounts
EXHIBIT M Form of Lockbox Agreement
EXHIBIT N Certain Definitions
EXHIBIT O Inventory Financing Agreement
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TRANSFER AND ADMINISTRATION AGREEMENT
This TRANSFER AND ADMINISTRATION AGREEMENT, dated as of April 1, 1996, as
AMENDED AND RESTATED as of November 3, 1997 (from time to time, this
"Agreement"), among CSI FUNDING INC., a Delaware corporation, as transferor (in
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such capacity, the "Transferor"), COMPUCOM SYSTEMS, INC., a Delaware
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corporation, individually and as collection agent (in such capacity, the
"Collection Agent"), ENTERPRISE FUNDING CORPORATION, a Delaware corporation (the
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"Company") and NATIONSBANK, N.A., as agent for the benefit of the Company and
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the Bank Investors (the "Agent").
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PRELIMINARY STATEMENT
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WHEREAS, the parties hereto wish to amend and restate the Transfer and
Administration Agreement dated as of April 1, 1996, as amended to the date
hereof;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Adverse Claim" means a lien, security interest, charge or encumbrance, or
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other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"Advisory Fee" means the fee payable by the Transferor to the Agent
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pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"Affiliate" means, with respect to any Person, any other Person directly or
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indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of the controlled Person,
whether through ownership of voting stock, by contract or otherwise.
"Affiliated Obligor" means any Obligor which is an Affiliate of another
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Obligor.
"Agent" means NationsBank, N.A., in its capacity as agent for the Company
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and the Bank Investors, and any successor thereto appointed pursuant to Article
IX.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of (i)
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the aggregate accrued and unpaid Discount with respect to all Tranche Periods at
such time, (ii) the Net Investment at such time, and (iii) all other amounts
owed (whether due or accrued) hereunder by Transferor to the Company at such
time.
"Assignment" shall have the meaning specified in Section 9.7(a).
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"Assignment Amount" with respect to a Bank Investor shall mean an amount
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equal to the lesser of (i) such Bank Investor's Pro Rata Share of the Net
Investment plus any amounts which remain unpaid pursuant to Section 9.7(d)
hereof and (ii) such Bank Investor's unused Commitment.
"Bank Investors" means NationsBank, N.A., and any assignee thereof pursuant
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to Article IX.
"Base Rate" or "BR" means, a rate per annum equal to the greater of (i) the
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prime rate of interest announced by the Liquidity Provider from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Liquidity Provider) and (ii) the rate
equal to the weighted average of the rates on overnight Federal funds
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transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by the
Liquidity Provider from three Federal funds brokers of recognized standing
selected by it plus, in the case of this clause (ii), 1.50%.
"Business Day" means any day excluding Saturday, Sunday and any day on
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which banks in New York, New York, Charlotte, North Carolina or Dallas, Texas
are authorized or required by law to close, and, when used with respect to the
determination of any Eurodollar Rate or any notice with respect thereto, any
such day which is also a day for trading by and between banks in United States
dollar deposits in the London interbank market.
"BR Tranche" means a Tranche as to which Discount is calculated at the Base
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Rate.
"BR Tranche Period" means, with respect to a BR Tranche, prior to the
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Termination Date, a period of up to 30 days requested by the Transferor and
agreed to by the Company or the Liquidity Provider, as the case may be,
commencing on a Business Day requested by the Transferor and agreed to by the
Company or the Liquidity Provider, as the case may be, and after the Termination
Date, a period of one day. If such BR Tranche Period would end on a day which
is not a Business Day, such BR Tranche Period shall end on the next succeeding
Business Day.
"Capitalized Lease" of a Person means any lease of property by such Person
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as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with generally accepted accounting principles.
"CD Rate" shall mean, with respect to any CD Tranche Period, a rate which
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is .75% in excess of a rate per annum equal to the sum (rounded upward to the
nearest 1/100 of 1%) of (A) the rate obtained by dividing (x) the Certificate of
Deposit Rate for such CD Tranche Period by (y) a percentage equal to 100% minus
the stated maximum rate for all reserve requirements as specified in Regula-
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tion D (including without limitation any marginal, emergency, supplemental,
special or other reserves) that would be applicable during such Tranche Period
to a negotiable certificate of deposit in excess of $100,000, with a maturity
approximately equal to such Tranche Period, of any member bank of the Federal
Reserve System plus (B) the then daily net annual assessment rate (rounded
upward, if necessary, to the nearest 1/100 of 1%) as estimated by the Liquidity
Provider for determining the current annual assessment payable by the Liquidity
Provider to the Federal Deposit Insurance Corporation for insuring such
certificates of deposit.
"CD Tranche" means a Tranche as to which Discount is calculated at the CD
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Rate.
"CD Tranche Period" means, with respect to a CD Tranche, prior to the
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Termination Date, a period of up to one month requested by the Transferor and
agreed to by the Company or the Liquidity Provider, as the case may be,
commencing on a Business Day requested by the Transferor and agreed to by the
Company or the Liquidity Provider, as the case may be, and after the
Termination Date, a period of one day. If such CD Tranche Period would end on a
day which is not a Business Day, such CD Tranche Period shall end on the next
succeeding Business Day.
"Certificate of Deposit Rate" means, with respect to any CD Tranche Period,
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the average of the bid rates determined by the Liquidity Provider to be bid
rates per annum, at approximately 10:00 a.m. (New York City time) on the
Business Day before the first day of the CD Tranche Period for which such CD
Rate is to be applicable, of two or more New York certificate of deposit dealers
of recognized standing selected by the Liquidity Provider for the purchase in
New York from the Liquidity Provider at face value of certificates of deposit of
the Liquidity Provider in an aggregate amount approximately comparable to the
amount of the CD Tranche to which such CD Rate is to be applicable and with a
maturity approximately equal to the applicable CD Tranche Period.
"Closing Date" means November 3, 1997.
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"Collateral Agent" has the meaning specified in Section 10.6(b).
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"Collections" means, with respect to any Receivable, all cash collections
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and other cash proceeds of such Receivable, including, without limitation, all
Finance Charges, if any, and cash proceeds of Related Security with respect to
such Receivable, and any Deemed Collections of such Receivable.
"Collection Account" means the account no. 653035022, established by the
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Transferor and maintained at NationsBank, N.A.
"Collection Agent" means at any time the Person then authorized pursuant to
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Section 6.1 to service, administer and collect Receivables.
"Commercial Paper" means the promissory notes of the Company issued by the
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Company in the commercial paper market.
"Commitment" means for each Bank Investor, the commitment of such Bank
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Investor to make acquisitions from the Transferor or the Company in accordance
herewith in an amount not to exceed the dollar amount set forth opposite such
Bank Investor's signature on the signature page hereto under the heading
"Commitment".
"Commitment Termination Date" means November 2, 1998, or such later date to
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which the Commitment Termination Date may be extended by the Transferor, the
Agent and the Bank Investors.
"Company Certificate" means the certificate issued to the Company pursuant
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to Section 2.2 hereof.
"CompuCom" means CompuCom Systems, Inc., a Delaware corporation, and its
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successors and assigns.
"Concentration Amount" means for any Designated Obligor, (a) 2% of the
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aggregate Outstanding Balance of Eligible Receivables at such time; provided,
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however, that with respect to any Designated Obligor and its affiliates whose
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long term unsecured debt obligations are rated at least "A1" by Moody's and at
least "A+" by Stan-
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dard & Poor's and with respect to which rating neither Moody's nor Standard &
Poor's shall have made a public announcement anticipating a downgrading of such
Designated Obligor's long term unsecured debt obligations to a rating less than
the aforementioned ratings ("A1/A+ Rated Obligors"), 5% of the aggregate
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Outstanding Balance of all Eligible Receivables at such time; or (b) such other
amount with respect to a Designated Obligor determined by the Company in the
reasonable exercise of its good faith judgment and disclosed in a written notice
delivered to the Transferor.
"Contract" means an agreement or invoice in substantially the form of one
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of the forms set forth in Exhibit A or otherwise approved by the Company, and
any documents related thereto, pursuant to or under which an Obligor shall be
obligated to pay CompuCom for merchandise purchased or services rendered.
"CP Rate" means, with respect to any CP Tranche Period, the rate equivalent
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to the rate (or if more than one rate, the weighted average of the rates) at
which Commercial Paper having a term equal to such CP Tranche Period may be sold
by any placement agent or commercial paper dealer entering into a commercial
paper dealer agreement with the Company; provided, however, that if the rate (or
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rates) as agreed between any such agent or dealer and the Company is a discount
rate, then the rate (or if more than one rate, the weighted average of the
rates) resulting from the Company's converting such discount rate (or rates) to
an interest-bearing equivalent rate per annum.
"CP Tranche" means a Tranche as to which Discount is calculated at a CP
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Rate.
"CP Tranche Period" means, with respect to a CP Tranche, a period of days
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not to exceed 120 days commencing on a Business Day requested by the Transferor
and agreed to by the Company pursuant to Section 2.3. If such CP Tranche Period
would end on a day which is not a Business Day, such CP Tranche Period shall end
on the next succeeding Business Day.
"Credit and Collection Policy" shall mean CompuCom=s credit and collection
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policy or policies and
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practices, relating to Contracts and Receivables existing on the date hereof and
referred to in Exhibit B attached hereto, as modified from time to time in
compliance with Section 5.2(c).
"Credit Support Agreement" means the agreement between the Company and the
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Credit Support Provider evidencing the obligation of the Credit Support Provider
to provide credit support to the Company in connection with the issuance by the
Company of Commercial Paper.
"Credit Support Provider" means the Person or Persons who provide credit
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support to the Company in connection with the issuance by the Company of
Commercial Paper.
"Current Maturities of Long-term Debt" means that amount of principal due
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to be repaid within one-year, for debts that were incurred for a time period of
greater than one-year.
"Dealer Fee" means the fee payable by the Transferor to the Agent, pursuant
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to Section 2.4 hereof, the terms of which are set forth in the Fee Letter.
"Debt to Tangible Net Worth Ratio" has the meaning specified in the
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NationsBank FSA as in effect on [the date hereof] (without regard to any
amendments, supplements or modifications thereto after [the date hereof]).
"Deemed Collections" means any Collections on any Receivable deemed to have
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been received by the Transferor pursuant to Section 2.9(a) or (b).
"Defaulted Receivable" means a Receivable: (i) as to which any payment, or
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part thereof, remains unpaid for 91 days or more from the original due date for
such Receivable; (ii) as to which an Event of Bankruptcy has occurred with
respect to the Obligor thereof; (iii) which has been identified by the
Collection Agent as uncollectible; or (iv) which, consistent with the Credit and
Collection Policy, should be written off as uncollectible.
"Delinquency Ratio" means, with respect to any date of determination, the
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ratio (expressed as a percent-
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age) computed by dividing (i) the aggregate Outstanding Balance of all
Delinquent Receivables as of such date by (ii) the aggregate Outstanding Balance
of all Receivables as of such date less Defaulted Receivables as of such date.
"Delinquent Receivable" means a Receivable: (i) as to which any payment,
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or part thereof, remains unpaid for more than 30 days from the original due date
for such Receivable and (ii) which is not a Defaulted Receivable.
"Designated Obligor" means, at any time, each Obligor; provided, however,
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that any Obligor shall cease to be a Designated Obligor upon notice to the
Transferor from the Company exercising its reasonable discretion, delivered at
any time.
"Dilution Ratio" means, for any period of determination, the ratio
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(expressed as a percentage) computed by dividing (i) the aggregate balance of
Receivables subject to any credits, rebates, discounts, disputes, warranty
claims, repossessed or returned goods, charge back allowances and other dilutive
factors, and any other billing or other adjustment by the Transferor or the
Collection Agent, provided to Obligors in respect of Receivables during the
preceding month by (ii) the aggregate Outstanding Balance of all Receivables
which were originated during the month one month preceding the period of
determination.
"Dilution Reserve" means, at any time, an amount equal to the product of
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(i) 1.5, (ii) the highest Dilution Ratio as of the last day for any of the
preceding twelve (12) calendar months and (iii) the sum of the Net Investment,
the Loss Reserve, the Discount Reserve and the Servicing Fee Reserve at such
time.
"Discount" means, with respect to any Tranche Period:
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(TR x TNI x AD)
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360
Where:
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TR = the Tranche Rate applicable to such Tranche Period.
TNI = the portion of the Net Investment allocated to such Tranche Period.
AD = the actual number of days during such Tranche Period.
provided, however, that no provision of this Agreement shall require the payment
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or permit the collection of Discount in excess of the maximum permitted by
applicable law; and provided, further, that Discount shall not be considered
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paid by any distribution if at any time such distribution is rescinded or must
be returned for any reason.
"Discount Reserve" means, at any time, an amount equal to:
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TD + LY
Where:
TD = the sum of the unpaid Discount for all Tranche Periods; and
LY = the Liquidation Yield.
"Early Collection Fee" means, for any Tranche Period (such Tranche
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Period to be determined without regard to the last sentence in Section 2.3(a))
during which the portion of the Net Investment that was allocated to such
Tranche Period is reduced, the excess, if any, of (i) the additional Discount
that would have accrued during such Tranche Period if such reductions had not
occurred, minus (ii) the income received by the Company from investing the
proceeds of such reductions.
"Eligible Investments" shall mean (a) negotiable instruments or
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securities represented by instruments in bearer or registered or in book-entry
form which evidence (i) obligations fully guaranteed by the United States of
America; (ii) time deposits in, or bankers acceptances issued by, any depositary
institution or trust company incorporated under the laws of the United
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States of America or any state thereof and subject to supervision and
examination by Federal or state banking or depositary institution authorities;
provided, however, that at the time of investment or contractual commitment to
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invest therein, the certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depositary institution or trust company shall have a
credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, in
the case of the certificates of deposit or short-term deposits, or a rating not
lower than one of the two highest investment categories granted by Moody's and
by S&P; (iii) certificates of deposit having, at the time of investment or
contractual commitment to invest therein, a rating from Moody's and S&P of at
least "P-1" and "A-1", respectively; (iv) investments in money market funds
rated in the highest investment category or otherwise approved in writing by the
applicable rating agencies, (b) demand deposits in any depositary institution or
trust company referred to in (a)(ii) above, (c) commercial paper (having
original or remaining maturities of no more than 30 days) having, at the time of
investment or contractual commitment to invest therein, a credit rating from
Moody's and S&P of at least "P-1" and "A-1", respectively, (d) Eurodollar time
deposits having a credit rating from Moody's and S&P of at least "P-1" and "A-
1", respectively, and (e) repurchase agreements involving any of the Eligible
Investments described in clauses (a)(i), (a)(iii) and (d) hereof so long as the
other party to the repurchase agreement has at the time of investment therein, a
rating from Moody's and S&P of at least "P-1" and "A-1", respectively.
"Eligible Receivable" means, at any time, any Receivable:
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(i) which is subject to a valid sale and
assignment from CompuCom to the Transferor pursuant to the
Receivables Purchase Agreement and with respect to which the
Transferor has agreed to transfer, or has transferred to the
Company, a perfected ownership interest or a perfected
security interest pursuant to this Agreement thereto, free
and clear
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of all liens;
(ii) the Obligor, which shall be a United States
resident, is not an Affiliate of any of CompuCom, the
Transferor or the Company, is a Designated Obligor, and is
not a government or a governmental subdivision or agency;
(iii) which is required to be paid in full not
more than 30 days of the original billing date therefor and
does not represent a payment obligation by an Obligor to
Client Link Inc.;
(iv) which is not a Defaulted Receivable at the
time of the initial creation of an interest in such
Receivable;
(v) which is an "eligible asset" as defined in
Rule 3a-7 under the Investment Company Act of 1940, as
amended;
(vi) which is not more than 30 days delinquent at
the time of initial creation of an interest in such
Receivable;
(vii) which is an "account" within the meaning of
Section 9-106 of the UCC of all applicable jurisdictions;
(viii) which is denominated and payable only in
United States dollars in the United States;
(ix) which arises under a Contract which,
together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of
the related Obligor enforceable against such Obligor in
accordance with its terms and is not subject to offset,
counterclaim or other defense;
(x) which, together with the Contract related
thereto, does not contravene
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in any material respect any laws, rules or regulations
applicable thereto;
(xi) which (a) satisfies all applicable
requirements of the Credit and Collection Policy and (b)
complies with such other reasonable criteria and
requirements as the Transferor or the Company may from time
to time specify to CompuCom following five (5) days' notice;
(xii) which was generated in the ordinary course
of CompuCom's business and represents amounts payable in
respect of goods delivered or services performed;
(xiii) the Obligor of which has been directed to
make all payments to a Lockbox, with respect to which there
shall be a Lockbox Agreement in effect; and
(xiv) as to which the Company has not notified
the Transferor that the Company has reasonably determined
that such Receivable, or class of Receivables, is not
acceptable for purchase hereunder because of the nature of
the business of the Obligor, or because of a potential
conflict of interest between the interests of CompuCom or
the Transferor and the Company.
"Estimated Maturity Period" shall mean, at any time, the period,
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rounded upward to the nearest whole number of days, equal to the weighted
average number of days until due of the Receivables as calculated by the
Collection Agent in good faith and set forth in the most recent Monthly Report,
such calculation to be based on the assumptions that (a) each Receivable within
a particular aging category, (as set forth in the Investor Report) will be paid
on the last day of such aging category and (b) the last day of the last such
aging category coincides with the last date on which any Outstanding Balance of
any Receivables would be written off as uncollectible or charged against any
applicable reserve or similar account in accordance with the objective
requirements of the Credit and Collection Policy and CompuCom's
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normal accounting practices applied on a basis consistent with those reflected
in CompuCom's financial statements; provided, however, that if the Company shall
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reasonably disagree with any such calculation, the Company may recalculate the
Estimated Maturity Period, and such recalculation, in the absence of manifest
error, shall be conclusive.
"Eurodollar Rate" means, with respect to any Eurodollar Tranche Period, a
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rate which is .625% in excess of a rate per annum equal to the sum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) of (A) the rate obtained
by dividing (i) the applicable LIBOR Rate by (ii) a percentage equal to 100%
minus the reserve percentage used for determining the maximum reserve
requirement as specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is applicable
to the Liquidity Provider during such Eurodollar Tranche Period in respect of
eurocurrency or eurodollar funding, lending or liabilities (or, if more than one
percentage shall be so applicable, the daily average of such percentage for
those days in such Eurodollar Tranche Period during which any such percentage
shall be applicable) plus (B) the then daily net annual assessment rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) as estimated by the Liquidity
Provider for determining the current annual assessment payable by the Liquidity
Provider to the Federal Deposit Insurance Corporation in respect of eurocurrency
or eurodollar funding, lending or liabilities.
"Eurodollar Tranche" means a Tranche as to which Discount is calculated at
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the Eurodollar Rate.
"Eurodollar Tranche Period" means, with respect to a Eurodollar Tranche,
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prior to the Termination Date, a period of up to one month requested by the
Transferor and agreed to by the Company or the Liquidity Provider , as the case
may be, commencing on a Business Day requested by the Transferor and agreed to
by the Company; provided, however, that if such Eurodollar Tranche Period would
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expire on a day which is not a Business Day, such Eurodollar Tranche Period
shall expire on the next succeeding Business Day; provided, further, that if
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such Eurodollar Tranche Period would expire on (a) a day which is not a
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Business Day but is a day of the month after which no further Business Day
occurs in such month, such Eurodollar Tranche Period shall expire on the next
preceding Business Day or (b) a Business Day for which there is no numerically
corresponding day in the applicable subsequent calendar month, such Eurodollar
Tranche Period shall expire on the last Business Day of such month.
"Event of Bankruptcy", with respect to any Person, shall mean (i) that such
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Person shall generally not be able to pay its debts as such debts become due or
shall admit in writing its inability to pay its debts generally or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a corporation, such Person or any Subsidiary shall
take any corporate action to authorize any of the actions set forth in the
preceding clause (i).
"Facility Fee" means the fee payable by the Transferor to the Company
------------
pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"Fee Letter" means the letter agreement dated the date hereof between the
----------
Transferor and the Company, as amended, supplemented or otherwise modified and
in effect from time to time.
"Facility Limit" means $175,000,000.
--------------
"Finance Charges" means, with respect to a Contract, any finance, interest,
---------------
late or similar charges owing by an Obligor pursuant to such Contract.
"Fixed Charge Coverage Ratio" means a fraction, the numerator of which is
---------------------------
the sum of Net Income, Depreciation and Amortization (each as defined in GAAP)
and the denominator of which is Current Maturities of Long-term
14
Debt.
"Guaranty" of a Person means any agreement by which such Person assumes,
--------
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any other creditor
of such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liability of such Person in connection with any
application for a letter of credit.
"Incremental Transfer" means a Transfer which is made pursuant to Section
--------------------
2.2(a).
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
------------
money, (ii) obligations representing the deferred purchase price of property
other than accounts payable arising in the ordinary course of such Person's
business on terms customary in the trade, (iii) obligations, whether or not
assumed, secured by liens or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments, (v) Capitalized
Lease obligations and (vi) obligations for which such Person is obligated
pursuant to a Guaranty.
"Indemnified Amounts" has the meaning specified in Section 8.1.
-------------------
"Indemnified Parties" has the meaning specified in Section 8.1.
-------------------
"Interest Coverage Ratio" means a fraction, the numerator of which is Net
-----------------------
Income before Interest Expense and taxes and the denominator of which is
Interest Expense.
"Interest Expense" means amounts due in the current period to the Company's
----------------
lenders for the use of borrowed funds, exclusive of principal.
15
"Inventory Financing Agreements" shall mean those certain agreements
------------------------------
between CompuCom and each of IBM Credit Corporation, Compaq Computer
Corporation, Hewlett-Packard Company and Apple Computer, Inc., all of which are
attached hereto as Exhibit O, pursuant to which such parties claim an interest
in inventory the sale of which may give rise to accounts receivable, including
the Receivables.
"Investor Report" means a report, in substantially the form of Exhibit C or
---------------
in such other form as is mutually agreed to by CompuCom and the Company,
furnished by the Collection Agent to the Company and the Agent pursuant to
Section 2.11.
"Law" shall mean any law (including common law), constitution, statute,
---
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"LIBOR Rate" shall mean, with respect to any Eurodollar Tranche Period, the
----------
rate at which deposits in dollars are offered to the Liquidity Provider in the
London interbank market at approximately 11:00 a.m. (London time) two Business
Days before the first day of such Eurodollar Tranche Period in an amount
approximately equal to the Eurodollar Tranche to which the Eurodollar Rate is to
apply and for a period of time approximately equal to the applicable Eurodollar
Tranche Period.
"Liquidation Yield" means, at any time, an amount equal to:
-----------------
(RVF x LBR x NI) x (EM x 1.5)
----------
360
Where:
RVF = the Rate Variance Factor.
LBR = the Base Rate which is applicable to the liquidation period of the Net
Investment at such time.
NI = the Net Investment.
16
EM = the Estimated Maturity Period of the Receivables.
"Liquidity Provider Agreement" means the agreement between the Company
----------------------------
and the Liquidity Provider evidencing the obligation of the Liquidity Provider
to provide liquidity support to the Company in connection with the issuance by
the Company of Commercial Paper.
"Liquidity Provider" means the Person or Persons who will provide
------------------
liquidity support to the Company in connection with the issuance by the Company
of Commercial Paper.
"Lockbox" means an account maintained by the Collection Agent at a
-------
Lock-Box Bank for the purpose of receiving Collections from Receivables.
"Lockbox Agreement" means an agreement among the Collection Agent, the
-----------------
Agent and a Lockbox Bank in substantially the form of Exhibit M hereto.
"Lockbox Bank" means each of the banks set forth in Exhibit L hereto
------------
and such banks as may be added thereto or deleted therefrom pursuant to Section
2.8 herein.
"Loss Percentage" means on any day the greatest of (i) 5 times the
---------------
highest Loss-to-Liquidation Ratio as of the last day of the 12 calendar months
preceding the then current month, (ii) 3 times the highest Concentration Amount
of all Designated Obligors (exclusive of A1/A+ Rated Obligors) and (iii) 10
percent.
"Loss Reserve" means, on any day, an amount equal to:
------------
LP x (NI + DR + SFR)
Where:
LP = the Loss Percentage at the close of business of
the Collection Agent on such day.
NI = the Net Investment at the close of business of
the Collection Agent on such day.
17
DR = the Discount Reserve at the close of business
of the Collection Agent on such day.
SFR = the Servicing Fee Reserve at the close of business
of the Collection Agent on such day.
Notwithstanding the foregoing, the Loss Reserve shall at all times be at least
equal to $17,500,000.
"Loss-to-Liquidation Ratio" means, for any period of determination, the
-------------------------
ratio (expressed as a percentage) computed by dividing (i) the aggregate
Outstanding Balance of all Receivables which became Defaulted Receivables during
such period, by (ii) the aggregate amount of cash Collections (excluding Deemed
Collections) received by the Collection Agent during such period.
"Majority Investors" has the meaning specified in Section 9.1(a).
------------------
"Maximum Net Investment" means $175,000,000.
----------------------
"Maximum Percentage Factor" means 98%.
-------------------------
"Moody's" means Moody's Investors Service, Inc.
-------
"NationsBank FSA" means that certain Amended and Restated Credit
---------------
Agreement dated as of November 3, 1997, among CompuCom Systems, Inc., as
Borrower, the Lenders from time to time party thereto, and NationsBank of Texas,
N.A., as administrative agent for the Lenders, as the same may from time to time
be amended, supplemented or otherwise modified and in effect.
"Net Asset Test" shall mean, in connection with any assignment by the
--------------
Company to the Bank Investors of an interest in the Net Investment pursuant to
Section 9.7 hereof, that on the day immediately prior to the day on which such
assignment is to take effect, the Net Receivables Balance shall be greater than
the Net Investment.
"Net Income" has the meaning specified in the NationsBank FSA as in
----------
effect on the date hereof (without regard to any amendments, supplements or
modifications thereto after the date hereof).
18
"Net Investment" means the sum of the amounts paid to the Transferor for
--------------
each Incremental Transfer less the aggregate amount of Collections received and
applied by the Company to reduce such Net Investment pursuant to Section 2.6 or
Section 2.9; provided that the Net Investment shall be restored in the amount of
--------
any Collections so received and applied if at any time the distribution of such
Collections is rescinded or must otherwise be returned for any reason provided
--------
further that the Net Investment may be increased by the amount described in
- -------
Section 9.7(g) as described therein.
"Net Receivables Balance" means, at any time, (a) the Outstanding Balance
-----------------------
of the Eligible Receivables at such time reduced by (b) the sum of (i) the
aggregate Outstanding Balance of all Eligible Receivables which are Defaulted
Receivables, (ii) the aggregate Outstanding Balance of all Eligible Receivables
of each Obligor with respect to which 50% or more of such Obligor's Receivables
are more than ninety (90) days past due, (iii) for a particular Obligor on any
date of determination, the amount (if positive) by which either (x) if the
aggregate amount due and owing by CompuCom to such Obligor exceeds the aggregate
amount due and owing by such Obligor to CompuCom, then the amount due and owing
by such Obligor to CompuCom or (y) if the aggregate amount due and owing by an
Obligor to CompuCom exceeds the aggregate amount due and owing by CompuCom to
such Obligor, then the amount due and owing by CompuCom to such Obligor, (iv)
credits which are aged more than ninety (90) days (this clause (iv) calculated
in the aggregate for all Designated Obligors) minus (B) for each Designated
-----
Obligor, the amount by which (x) the aggregate Outstanding Balance of Eligible
Receivables related to such Designated Obligor exceeds (y) the Concentration
Amount with respect to such Designated Obligor.
"Obligor" means a Person obligated to make payments for the provision of
-------
goods and services pursuant to a Contract.
"Official Body" shall mean any government or political subdivision or any
-------------
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitra-
19
tor, in each case whether foreign or domestic.
"Other Transferor" means any Person other than the Transferor that has
----------------
entered into a receivables purchase agreement or transfer and administration
agreement with the Company.
"Outstanding Balance" of any Receivable at any time shall mean the then
-------------------
outstanding principal amount thereof including any accrued and outstanding
Finance Charges related thereto.
"Percentage Factor" shall mean the percentage computed at any time of
-----------------
determination as follows:
NI + LR + DLR + DR + SFR
------------------------
NRB
Where:
NI = the Net Investment at the time of such computation.
LR = the Loss Reserve at the time of such computation.
DLR = the Dilution Reserve at the time of such computation.
DR = the Discount Reserve at the time of such computation.
SFR = the Servicing Fee Reserve at the time of such computation.
NRB the Net Receivables Balance at the time of such computation.
Notwithstanding the foregoing computation, the Percentage Factor shall
not exceed one hundred percent (100%). The Percentage Factor shall be calculated
by the Collection Agent on the day of the initial Incremental Transfer
hereunder. Thereafter, until the Termination Date, the Collection Agent shall
daily recompute the Percentage Factor and report such recomputations to the
Company weekly in the Investor Report or as requested by
20
the Company. The Percentage Factor shall remain constant from the time as of
which any such computation or recomputation is made until the time as of which
the next such recomputation shall be made, notwithstanding any additional
Receivables arising, any Incremental Transfer made pursuant to Section 2.2(a) or
any reinvestment Transfer made pursuant to Section 2.2(b) and 2.5 during any
period between computations of the Percentage Factor. The Percentage Factor, as
calculated at the close of business on the Business Day immediately preceding
the Termination Date, shall remain constant at all times thereafter until such
time as the Company shall have received the Aggregate Unpaids, at which time the
Percentage Factor shall be recomputed in accordance with Section 2.6.
"Person" means any corporation, natural person, firm, joint venture,
------
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Potential Termination Event" means an event which but for the lapse of
---------------------------
time or the giving of notice, or both, would constitute a Termination Event
which is impossible to cure.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC.
--------
"Program Fee" means the fee payable by the Transferor to the Company
-----------
pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"Pro Rata Share" means, for a Bank Investor, the Commitment of such Bank
--------------
Investor divided by the sum of the Commitments of all Bank Investors.
"Purchased Interest" means the Company's interest in the Receivables
------------------
acquired by the Liquidity Provider through purchase pursuant to the terms of the
Liquidity Provider Agreement.
"Rate Variance Factor" means the number, computed from time to time in good
--------------------
faith by the Company, that reflects the largest potential variance (from minimum
to maximum) in selected interest rates over a period
21
of time selected by the Company from time to time, set forth in a written notice
by the Company to the Transferor and the Collection Agent.
"Receivable" means the indebtedness owed to CompuCom by any Obligor
----------
(without giving effect to the sale thereof under the Receivables Purchase
Agreement or hereunder), which shall have been sold to the Transferor pursuant
to the Receivables Purchase Agreement, under a Contract whether constituting an
account, chattel paper, instrument or general intangible, arising in connection
with the sale of merchandise or services by CompuCom, and includes the right to
payment of any Finance Charges and other obligations of such Obligor with
respect thereto. Notwithstanding the foregoing, once a Receivable has been
deemed collected pursuant to Section 2.9 hereof, it shall no longer constitute a
Receivable hereunder.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement,
------------------------------
dated as of April 1, 1996, as amended and restated as of November 3, 1997,
between CompuCom and the Transferor, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Records" means all Contracts and other documents, books, records and other
-------
information (including, without limitation, computer programs, tapes, discs,
punch cards, data processing software and related property and rights)
maintained by the Collection Agent with respect to Receivables and the related
Obligors.
"Reinvestment Termination Date" means the second Business Day after the
-----------------------------
delivery by the Company to the Transferor of written notice that the Company has
elected to commence the amortization of its interest in the Net Investment.
"Related Security" means with respect to any Receivable:
----------------
(i) the merchandise (including returned merchandise, subject to the
applicable provisions of Section 9-306 of the UCC and/or the Inventory
Financing Agreements), if any, the sale of which by CompuCom gave rise to
such
22
Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, pursuant to the Contract related to such Receivable, together
with all financing statements signed by an Obligor describing any
collateral securing such Receivable;
(iii) all guarantees, insurance or other agreements or arrangements
of any kind from time to time supporting or securing payment of such
Receivable pursuant to the Contract related to such Receivable;
(iv) all Records; and
(v) all proceeds (as defined in Section 9-306 of the UCC) of the
foregoing.
"Release" means the Partial Release of Liens and Security Interests,
-------
executed on November 3, 1997 by NationsBank of Texas, N.A., whereby NationsBank
of Texas, N.A. released certain liens and security interests which cover the
property of CompuCom.
"Section 8.2 Costs" has the meaning specified in Section 8.2(d).
-----------------
"Servicing Fee" shall mean the fee payable monthly by the Company to the
-------------
Collection Agent, with respect to a Tranche, in an amount equal to 0.50% per
annum on the amount of the Net Investment allocated to such Tranche pursuant to
Section 2.3. Such fee shall accrue from the date of the initial purchase of an
ownership interest in the Receivables to the later of the Termination Date or
the date on which the Net Investment is reduced to zero. On or prior to the
Termination Date, such fee shall be payable only from Collections pursuant to,
and subject to the priority of payments set forth in, Section 2.5. After the
Termination Date, such fee shall be payable only from Collections pursuant to,
and subject to the priority of payments set forth in, Section 2.6.
23
"Servicing Fee Reserve" means at any time an amount equal to the product of
---------------------
(A) the aggregate Outstanding Balance of Receivables at such time, (B) the
Servicing Fee percentage and (C) a fraction having as the numerator, the sum of
(x) 1.5 times the Estimated Maturity Period plus (y) 30, and as the denominator,
----
360.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services.
----------------- ---
"Subsidiary" of a Person means any corporation more than 50% of the
----------
outstanding voting securities of which shall at any time be owned or controlled,
directly or indirectly, by such Person or by one or more Subsidiaries of such
Person or any similar business organization which is so owned or controlled.
"Termination Date" means the earliest of (i) that Business Day designated
----------------
by the Transferor to the Company as the Termination Date at any time following
60 days' written notice to the Company, (ii) the date of termination of the
commitment of the Liquidity Provider under the Liquidity Provider Agreement,
(iii) the date of termination of the commitment of the Credit Support Provider
under the Credit Support Agreement, (iv) the day on which the Agent delivers to
the Transferor a notice of termination pursuant to the occurrence of a
Termination Event, (v) November 2, 1998, (vi) two (2) Business Days prior to the
Commitment Termination Date or (vii) unless the Transferred Interest shall have
been assigned (or concurrently is so assigned) to the Bank Investors pursuant to
Section 9.7 hereof, the day on which a Reinvestment Termination Date shall
occur.
"Termination Event" means an event described in Section 7.1.
-----------------
"Tranche" means a portion of the Net Investment allocated to a Tranche
-------
Period pursuant to Section 2.3.
"Tranche Period" means a CP Tranche Period, a BR Tranche Period, a CD
--------------
Tranche Period or a Eurodollar Tranche Period.
"Tranche Rate" means the CP Rate, the Base Rate, the CD Rate or the
------------
Eurodollar Rate.
24
"Transaction Costs" has the meaning specified in Section 8.3(a).
-----------------
"Transaction Documents" means this Agreement, the Receivables Purchase
---------------------
Agreement, and all documents related thereto.
"Transfer" means a conveyance, transfer and assignment by the Transferor to
--------
the Company of a portion of the Transferred Interest hereunder pursuant to
Section 2.2.
"Transfer Certificate" has the meaning specified in Section 2.2(a).
--------------------
"Transfer Date" means, with respect to each Transfer, the Business Day on
-------------
which such Transfer is made.
"Transfer Price" means with respect to any Incremental Transfer, the amount
--------------
paid to the Transferor by the Company as described in the Transfer Certificate.
"Transferred Interest" means, at any time of determination, an undivided
--------------------
percentage ownership interest in (i) each and every then outstanding Receivable,
(ii) all Related Security with respect to each such Receivable, (iii) all
Collections with respect thereto, and (iv) other Proceeds of the foregoing,
equal to the Percentage Factor at such time, and only at such time (without
regard to prior calculations). To the extent that the Transferred Interest
shall decrease as a result of a recalculation of the Percentage Factor, the
Company shall be considered to have reconveyed to the Transferor an undivided
percentage ownership interest in the Receivables, together with Related Security
and Collections, in an amount equal to such decrease.
"UCC" means, with respect to any state, the Uniform Commercial Code as from
---
time to time in effect in such state.
SECTION .1. Other Terms. All accounting terms not specifically defined
-----------
herein shall be construed in accordance with generally accepted accounting
princi-
25
ples. All terms used in Article 9 of the UCC in the State of New York,
and not specifically defined herein, are used herein as defined in such Article
9.
SECTION .2. Computation of Time Periods. Unless otherwise stated in
---------------------------
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
26
ARTICLE I
TRANSFERS AND SETTLEMENTS
SECTION I.1. Facility. Upon the terms and subject to the conditions
--------
herein set forth, the Transferor may, at its option, convey, transfer and assign
to the Company, and the Company may accept such conveyance, transfer and
assignment from the Transferor, without recourse except as provided herein,
undivided percentage ownership interests in the Receivables and the Related
Security and Collections with respect thereto from time to time.
SECTION I.2. Transfers; Company Certificate; Eligible Receivables. (a)
----------------------------------------------------
Incremental Transfers. Upon the terms and subject to the conditions herein set
- ---------------------
forth, the Transferor may, at its option, convey, transfer and assign to the
Company, and the Company may accept such conveyance, transfer and assignment
from the Transferor, without recourse except as provided herein, undivided
percentage ownership interests in the Receivables, together with Related
Security and Collections with respect thereto (each, an "Incremental Transfer")
--------------------
from time to time prior to the occurrence of the Termination Date for an
aggregate Transfer Price not to exceed the Maximum Net Investment; provided that
--------
the Company shall not accept any such transfer if it is unable to obtain funds
therefor in the commercial paper market or under the Liquidity Provider
Agreement. The Transferor shall by notice given by telecopy offer to convey,
transfer and assign to the Company undivided percentage ownership interests in
the Receivables and the Related Security and Collections with respect thereto at
least three (3) Business Days prior to the proposed date of transfer.
Each such notice shall specify the desired Transfer Price (which shall be
at least $5,000,000 or integral multiples of $1,000,000 in excess thereof) and
the desired date of such Incremental Transfer, together with the desired Tranche
Period (or range) related thereto as required by Section 2.3. The Company, if
it accepts such offer, shall accept such offer to convey, transfer and assign
interests in the Receivables and related property by notice given to the
Transferor by
27
telephone or telecopy. Each notice of proposed Transfer shall be irrevocable and
binding on the Transferor and the Transferor shall indemnify the Company against
any loss or expense incurred by the Company, either directly or through the
Liquidity Provider Agreement as a result of any failure by the Transferor to
complete such Incremental Transfer including, without limitation, any loss or
expense incurred by the Company, either directly or pursuant to the Liquidity
Provider Agreement, by reason of the liquidation or reemployment of funds
acquired by the Company or the Liquidity Provider (including, without
limitation, funds obtained by issuing commercial paper or promissory notes or
obtaining deposits as loans from third parties) for the Company to fund such
Incremental Transfer.
On the date of the initial Incremental Transfer, the Company shall deliver
written confirmation to the Transferor of the Transfer Price, the Tranche
Period(s) and the Tranche Rate(s) relating to such Transfer and the Transferor
shall deliver to the Company the Transfer Certificate in the form of Exhibit D
hereto (the "Transfer Certificate"). The Company shall indicate the amount of
--------------------
the initial Incremental Transfer together with the date thereof on the grid
attached to the Transfer Certificate. On the date of each subsequent
Incremental Transfer, the Company shall send written confirmation to the
Transferor of the Transfer Price, the Tranche Period(s), the Transfer Date and
the Tranche Rate(s) applicable to such Incremental Transfer. The Company shall
indicate the amount of the Incremental Transfer together with the date thereof
as well as any decrease in the Net Investment on the grid attached to the
Transfer Certificate. The Transfer Certificate shall evidence the Incremental
Transfers. As soon as is practicable following each Incremental Transfer, the
Company shall deposit to the Transferor's account at the location indicated in
Section 10.3, in immediately available funds, an amount equal to the Transfer
Price for such Incremental Transfer.
(b) Reinvestment Transfers. On each Business Day occurring after the
----------------------
initial Incremental Transfer and prior to the Termination Date, the Transferor
hereby agrees to convey, transfer and assign to the Company, and in
consideration of the Transferor's agree-
28
ment to maintain at all times prior to the Termination Date a Net Receivables
Balance in an amount at least sufficient to maintain the Percentage Factor at an
amount not greater than the Maximum Percentage Factor, the Company hereby agrees
to purchase from the Transferor undivided percentage ownership interests in the
Receivables and the Related Security and Collections with respect thereto, to
the extent that Collections are available for such Transfer in accordance with
Section 2.5, such that after giving effect to such Transfer, the amount of the
Company's Net Investment at the close of the Company's business on such Business
Day shall be equal to the amount of the Company's Net Investment at the close of
the Company's business on the Business Day immediately preceding such Business
Day plus the Transfer Price of any Incremental Transfer made on such day, if
any. The Company may deliver a Reinvestment Termination Notice to the Transferor
(with a copy thereof to the Collection Agent) at any time.
(c) All Transfers. Each Transfer shall constitute a purchase of an
-------------
undivided percentage ownership interest in the Receivables then existing and
which arises at any time after the date of such Transfer. The Company's
aggregate undivided percentage ownership interest in the Receivables and the
Related Security and Collections with respect thereto shall equal the Percentage
Factor in effect from time to time.
(d) Company Certificate. The Transferor shall issue to the Company
-------------------
the Company Certificate, in the form of Exhibit K, on or prior to the date
hereof.
(e) Percentage Factor. The Percentage Factor shall be initially
-----------------
computed as of the opening of business of the Collection Agent on the date of
the initial Incremental Transfer hereunder. Thereafter, until the Termination
Date, the Percentage Factor shall be automatically recomputed by the Collection
Agent as of the close of business of the Collection Agent on each day (other
than a day after the Termination Date). The Percentage Factor shall remain
constant from the time as of which any such computation or recomputation is made
until the time as of which the next such recomputation, if any, shall be made.
The Percentage Factor, as computed as of the day immediately preceding the
Termination
29
Date, shall remain constant at all times on and after such Termination Date
until the date on which the Net Investment shall become zero.
SECTION .1. Selection of Tranche Periods and Tranche Rates.
----------------------------------------------
(a) At all times hereafter, but prior to the occurrence of a
Termination Event, the Transferor shall, subject to the Company's approval and
the limitations described below, request Tranche Periods and allocate a portion
of the Net Investment to each selected Tranche Period, so that the aggregate
amounts allocated to outstanding Tranche Periods at all times shall equal the
Net Investment. The Transferor shall give the Company irrevocable notice by
telephone of the new requested Tranche Period(s) at least three (3) Business
Days prior to the expiration of any then existing Tranche Period; provided,
--------
however, that the Company may select, in its sole discretion, any such new
- -------
Tranche Period if (i) the Transferor fails to provide such notice on a timely
basis or (ii) the Company determines, in its sole discretion, that the Tranche
Period requested by the Transferor is unavailable or for any reason commercially
undesirable. The Company confirms that it is its intention to allocate all or
substantially all of the Net Investment to one or more CP Tranche Periods;
provided that the Company may determine, from time to time, in its sole
- --------
discretion, that funding such Net Investment by means of one or more CP Tranche
Periods is not desirable for any reason. If the Liquidity Provider acquires a
Transferred Interest with respect to the Receivables and related property
pursuant to the terms of the Liquidity Provider Agreement, the Liquidity
Provider may exercise the right of selection granted to the Company hereby. The
Tranche Rate applicable to any such Purchased Interest may be the BR Rate, the
CD Rate or the Eurodollar Rate, as determined by the Liquidity Provider. In the
case of any Tranche Period outstanding upon the occurrence of a Termination
Event or on the date of the assignment of the Transferred Interest to the Bank
Investors pursuant to Section 9.7, such Tranche Period shall end on the date of
such occurrence.
(b) At all times on and after the occurrence of a Termination Event,
the Company or the Liquidi-
30
ty Provider, as applicable, shall select all Tranche Periods and Tranche Rates
applicable thereto; provided, that if the Bank Investors are assigned the
--------
Transferred Interest pursuant to Section 9.7, one Tranche Period, with a Tranche
Rate determined pursuant to the letter agreement referred to in Section 9.7,
with successive periods of one day, shall thereafter exist.
SECTION .2. Discount, Fees and Other Costs and Expenses. Notwithstanding
-------------------------------------------
the limitation on recourse under Section 2.1, the Transferor shall pay, as and
when due in accordance with this Agreement, all fees hereunder, Discount, all
amounts payable pursuant to Article VIII hereof, if any, and the Servicing Fee.
On the last day of each Tranche Period, the Transferor shall pay to the Company
an amount equal to the accrued and unpaid Discount for such Tranche Period
together with an amount equal to the discount accrued on the Company's
Commercial Paper notes to the extent such notes were issued in order to fund the
Transferred Interest in an amount in excess of the Transfer Price of an
Incremental Transfer; provided that any such excess amount will not exceed
--------
$100,000 in connection with any such Incremental Transfer. The Transferor shall
pay to the Company, on each day on which Commercial Paper is issued by the
Company, the Dealer Fee. Discount shall accrue with respect to each Tranche on
each day occurring during the Tranche Period related thereto. Nothing in this
Agreement shall limit in any way the obligations of the Transferor to pay the
amounts set forth in this Section 2.4.
SECTION .3. Non-Liquidation Settlement and Reinvestment Procedures. On
------------------------------------------------------
each day after the date of any Incremental Transfer, but prior to the
Termination Date, and provided that no Potential Termination Event shall have
occurred and be continuing, the Collection Agent shall out of the Percentage
Factor of the Collections received and distributed to the Transferor on or prior
to such day and not previously applied or accounted for: (i) set aside and hold
in trust for the Company (or deposit into the Collection Account if so required
pursuant to Section 2.12) an amount equal to all Discount and the Servicing Fee
accrued through such day and not so previously set aside or paid and (ii) apply
the balance of such Percentage Factor of Collections remaining after application
of the Collections as provided in clause (i)
31
of this Section 2.5 to the Transferor, for the benefit of the Company to the
purchase of additional undivided percentage interests in the Receivables
pursuant to Section 2.2(b). On the last day of each Tranche Period, from the
amounts set aside as described in clause (i) of the first sentence of this
Section 2.5, the Collection Agent shall deposit to the Company's account, an
amount equal to the accrued and unpaid Discount for such Tranche Period and
shall deposit to its account an amount equal to the accrued and unpaid Servicing
Fee for such Tranche Period. As provided in Section 6.2(b), the Collection Agent
shall remit to the Transferor, as soon as practicable after receipt, such
portion of Collections not allocated to the Company.
SECTION .4. Liquidation Settlement Procedures. If on the Termination
---------------------------------
Date, the Percentage Factor is greater than the Maximum Percentage Factor, then
the Transferor shall immediately pay to the Company from previously received
Collections distributed to the Transferor, an amount equal to the amount such
that, when applied in reduction of the Net Investment, will result in a
Percentage Factor less than or equal to the Maximum Percentage Factor. Such
amount shall be applied by the Company to the reduction of the Net Investment of
Tranche Periods selected by the Company. On the Termination Date and on each
day thereafter, and on and after the date on which the Agent delivers to the
Transferor notice that a Potential Termination Event has occurred, the
Collection Agent shall set aside and hold in trust for the Company (or deposit
into the Collection Account if so required pursuant to Section 2.12) all
Collections received by the Transferor on such day. On the Termination Date or
the day on which the Agent delivers to the Transferor notice that a Potential
Termination Event has occurred, the Collection Agent shall deposit to the
Company's account any remaining amounts set aside pursuant to Section 2.5(i)
above. On the last day of each Tranche Period to occur on or after the
Termination Date or during the continuance of a Potential Termination Event, the
Collection Agent shall deposit to the Company's account, the amounts set aside
pursuant to the preceding sentence, together with any remaining amounts set
aside pursuant to Section 2.5(i) prior to the Termination Date or the day on
which a Potential Termination Event occurs but not to exceed the sum of (i) the
accrued Discount for such Tranche Period, (ii) the portion of the Net Investment
allocated to such Tranche
32
Period, and (iii) the aggregate of all other Aggregate Unpaids then owed
(whether due or accrued) hereunder by Transferor to the Company. On such day,
the Collection Agent shall deposit to its account, from the amounts set aside
pursuant to the preceding sentence which remain after payment in full of the
aforementioned amounts, the accrued Servicing Fee for such Tranche Period.
If there shall be insufficient funds on deposit for the Collection Agent to
distribute funds in payment in full of the aforementioned amounts, the
Collection Agent shall distribute funds first, in payment of the accrued
-----
Discount, second, in payment of all fees and expenses payable to the Company
------
hereunder, third, if the Transferor is not the Collection Agent, to the
-----
Collection Agent's account, in payment of the Servicing Fee payable to the
Collection Agent, fourth, in reduction of the Net Investment allocated to such
------
Tranche Period, fifth, in payment of all other amounts payable to the Company
-----
and sixth, if the Transferor is the Collection Agent, to its account as
-----
Collection Agent, in payment of the Servicing Fee payable to the Transferor as
Collection Agent. Following the date on which the Net Investment has been
reduced to zero, all accrued Discount and Servicing Fees have been paid in full
and all other Aggregate Unpaids have been paid in full, (i) the Collection Agent
shall recompute the Percentage Factor, (ii) the Company shall be considered to
have reconveyed to the Transferor any interest in the Receivables and related
property (including the Transferred Interest), (iii) the Collection Agent shall
pay to Transferor any remaining Collections set aside and held by the Collection
Agent pursuant to the second sentence of this Section 2.6 and (iv) the Company
shall execute and deliver to the Transferor, at the Transferor's expense, such
documents or instruments as are necessary to terminate the Company's interest in
the Receivables and related property. Any such documents shall be prepared by
or on behalf of the Transferor.
SECTION .5. Fees. Notwithstanding any limitation on recourse contained
----
in this Agreement, the Transferor shall pay the following non-refundable fees:
(a) On the last day of each month, to the
33
Company, the Program Fee and the Facility Fee as set forth in the Fee Letter.
(b) On the date of execution hereof, to the Agent, the Advisory Fee
as set forth in the Fee Letter.
SECTION .6. Protection of Ownership Interest of the Company. (a) Each
-----------------------------------------------
of the Transferor and the Collection Agent agrees that from time to time, at its
expense, it will 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 Transferred Interest or to enable the Agent to
exercise or enforce any of its rights hereunder. Without limiting the
foregoing, each of the Transferor and CompuCom will, upon the request of the
Agent, in order to accurately reflect this purchase and sale transaction, (1)
execute and file such financing or continuation statements or amendments thereto
or assignments thereof (as permitted pursuant to Section 10.6 hereof) as may be
requested by the Company, the Agent or any of the Bank Investors and (2) mark
its master data processing records and other documents with a legend describing
the purchase hereunder of the Transferred Interest. The Transferor shall, upon
request of the Agent, obtain such additional search reports as the Agent shall
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 Transferor's signature. Carbon, photographic or
other reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement. Neither the Transferor nor CompuCom shall
change its 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 and Texas) or
relocate its chief executive office or any office where Records are kept unless
it shall have: (i) given the Agent at least thirty (30) days prior notice
thereof and (ii) prepared at Transferor's expense and delivered to the Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Transferred Interest or requested by the Agent in connection with
such change or relocation. Any filings under the UCC or otherwise that are
occasioned by such change in
34
name or location shall be made at the expense of Transferor.
(b) The Collection Agent shall instruct all Obligors to cause
all Collections to be deposited directly to a Lockbox. Any Lockbox maintained by
a Lockbox Bank pursuant to the related Lock-Box Agreement shall be under the
exclusive ownership and control of the Agent which is hereby granted to the
Agent by the Transferor. The Collection Agent shall be permitted to give
instructions to the Lockbox Banks for so long as no Termination Event has
occurred hereunder. The Collection Agent shall not add any bank as a Lockbox
Bank to those listed on Exhibit L attached hereto unless such bank has entered
into a Lockbox Agreement. The Collection Agent shall, prior to adding any bank
as a Lockbox Bank, obtain prior written consent of the Agent (such consent not
to be unreasonably withheld). The Collection Agent shall not terminate any bank
as a Lockbox Bank unless the Agent shall have received fifteen (15) days' prior
notice of such termination; provided, however, that at all times hereafter there
-------- -------
must be at least one (1) Lockbox Bank. If the Transferor or the Collection
Agent receives any Collections, the Transferor or the Collection Agent, as
applicable, shall immediately, but in any event within 2 Business Days of
receipt, remit such Collections to a Lockbox.
SECTION .7. Deemed Collections; Application of Payments. (a) If
-------------------------------------------
on any day the Outstanding Balance of a Receivable is either (x) reduced as a
result of any defective, rejected or returned goods or services, any cash
discount, credit, rebate, allowance or other dilution factor, any billing
adjustment or other adjustment, or (y) reduced or canceled as a result of a
setoff or offset in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction),
the Transferor shall be deemed (for the limited purposes of this Agreement) to
have received on such day a collection of such Receivable in the amount of such
reduction or cancellation, and the Transferor shall pay to the Collection Agent
an amount equal to the Percentage Factor of such reduction or cancellation, and
such amount shall be applied by the Collection Agent as a Collection in
accordance with Section 2.5 or 2.6, as applicable. The Net Investment shall be
35
reduced by the amount of such payment actually received by the Company.
(b) If on any day any of the representations or warranties in
Article III is no longer true with respect to a Receivable, the Transferor shall
be deemed to have received on such day a Collection of such Receivable in full
and the Transferor shall on such day pay to the Collection Agent an amount equal
to the aggregate Percentage Factor of the Outstanding Balance of such Receivable
and such amount shall be allocated to the Company and applied by the Collection
Agent as a Collection allocable to the Transferred Interest in accordance with
Section 2.5 or 2.6, as applicable. The Net Investment shall be reduced by the
amount of such payment actually received by the Company.
(c) Any payment by an Obligor in respect of any indebtedness
owed by it to the Transferor or CompuCom shall, except as otherwise specified by
such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Company, be applied as a Collection of any Receivable of such
Obligor included in the Transferred Interest (starting with the oldest such
Receivable) to the extent of any amounts then due and payable thereunder before
being applied to any other receivable or other indebtedness of such Obligor.
SECTION .1. Payments and Computations, Etc. All amounts to be paid
------------------------------
or deposited by the Transferor or the Collection Agent hereunder shall be paid
or deposited in accordance with the terms hereof no later than 12:00 noon (New
York City time) on the day when due in immediately available funds; if such
amounts are payable to the Company (or any assign thereof) they shall be paid or
deposited in the account of the Agent indicated by the Agent from time to time
in writing. The Transferor shall, to the extent permitted by law, pay to the
Company upon demand, interest on all amounts not paid or deposited when due to
the Company hereunder at a rate equal to 2% per annum plus the Base Rate. All
computations of discount, interest and all per annum fees hereunder shall be
made on the basis of a year of 360 days for the actual number of days (including
the first but excluding the last day) elapsed. Any computations of amounts
payable by the Transferor hereunder to the Company, the Liquidity
36
Provider or the Credit Support Provider shall be binding absent manifest error.
SECTION .2. Reports. (a) Prior to the 15th day of each month, the
-------
Collection Agent shall prepare and forward to the Agent (i) an Investor Report
as of the end of the last day of the immediately preceding month, (ii) if
requested in writing by the Company or the Agent, a listing by Obligor of all
Receivables together with an aging of such Receivables and (iii) such other
information as the Company or the Agent may reasonably request.
(b) On or prior to the third Business Day of each calendar week,
the Collection Agent shall prepare and forward to the Agent a certification as
to the Net Receivables Balance and the Percentage Factor in the form of Exhibit
E hereto (calculated as of the last Business Day of the prior week).
SECTION .3. Collection Account. There shall be established on the
------------------
day of the initial Incremental Transfer hereunder and maintained, for the
benefit of the Company, 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. The Collection Agent shall
remit daily within twenty-four (24) hours of receipt to the Collection Account
all amounts received by the Collection Agent with respect to the Receivables;
provided, however, the Collection Agent shall be permitted to make payments to
- -------- -------
the Company on the last day of each Tranche Period instead of depositing funds
into the Collection Account on a daily basis for so long as, and only for so
long as no default has occurred in the performance by the Collection Agent of
its obligations hereunder and no other Termination Event has occurred hereunder.
Funds on deposit in the Collection Account (other than investment earnings)
shall be invested by the Collection Agent in Eligible Investments that will
mature so that such necessary funds will be available prior to the last day of
each successive Tranche Period following such investment. On the last day of
each calendar month, all interest and earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account shall be retained in the
Collection Account and be available to make any payments required to be made
hereunder (including Discount) to the Company. On the date on which the Net
37
Investment is zero and all amounts payable hereunder have been paid to the
Company, any funds remaining on deposit in the Collection Account shall be paid
to the Transferor.
38
ARTICLE I
REPRESENTATIONS AND WARRANTIES
SECTION I.1. Representations and Warranties. Each of the Transferor
------------------------------
and CompuCom, as applicable as to itself and not as to the other, represents and
warrants to the Company that:
(a) Corporate Existence and Power. Each of the Transferor and
-----------------------------
CompuCom 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 all jurisdictions in which the failure to
obtain such licenses or approvals would materially and adversely affect its
business as it is now conducted.
(b) Corporate and Governmental Authorization; Contravention.
-------------------------------------------------------
The execution, delivery and performance by each of the Transferor and CompuCom
of this Agreement, the Receivables Purchase Agreement, the Fee Letter, the
Company Certificate and the Transfer Certificate are within each of their
respective 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 2.8),
and do not contravene, or constitute a material default under, any provision of
applicable law or regulation or of the Certificate of Incorporation or Bylaws of
the Transferor or CompuCom, as applicable, or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Transferor or
CompuCom or result in the creation or imposition of any lien on assets of the
Transferor or CompuCom, respectively, or any of its respective Subsidiaries
(except as contemplated by Section 2.8).
(c) Binding Effect. Each of this Agreement, the Receivables
--------------
Purchase Agreement, the Fee Letter and the Company Certificate constitutes and
the Transfer Certificate upon payment by the Company of the Transfer Price set
forth therein will constitute the legal, valid
39
and binding obligation of the Transferor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors.
(d) Perfection. Immediately preceding each Transfer hereunder,
----------
the Transferor shall be the owner of the Receivables, free and clear of all
liens, encumbrances, security interests, preferences or other security
arrangement of any kind or nature whatsoever. On or prior to the sale of the
Receivables by CompuCom to the Transferor pursuant to the Receivables Purchase
Agreement, and each Transfer hereunder and each recomputation of the Transferred
Interest, all financing statements and other documents required to be recorded
or filed in order to perfect and protect the Transferred Interest against all
creditors of and purchasers from the Transferor or CompuCom, as applicable
(other than any financing statements or assignments of financing statements
contemplated by the Transaction Documents) will have been duly filed in each
filing office necessary for such purpose and all filing fees and taxes, if any,
payable in connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore
-----------------------
furnished by the Transferor and CompuCom (including without limitation, the
Investor Reports, any reports delivered pursuant to Section 2.11 and the
Transferor's financial statements) to the Company or the Agent for purposes of
or in connection with this Agreement or any transaction contemplated hereby is,
and all such information hereafter furnished by the Transferor and CompuCom to
the Company or the Agent will be, true and accurate in every material respect,
on the date such information is stated or certified.
(f) Tax Returns. The Transferor 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.
(g) Action, Suits. Except as set forth in Exhibit F, there are
-------------
no actions, suits or proceedings pending, or to the knowledge of the Transferor
threat-
40
ened, against or affecting the Transferor or CompuCom or any Affiliate thereof
or their respective properties, in or before any court, arbitrator or other
body, which may materially adversely affect the financial condition of the
Transferor, CompuCom or their Subsidiaries taken as a whole or materially
adversely affect the ability of each of the Transferor or CompuCom to perform
its obligations under this Agreement.
(h) Use of Proceeds. No proceeds of any Transfer will be used
---------------
by the Transferor to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Place of Business. The principal place of business and
-----------------
chief executive office of the Transferor are located at the address of the
Transferor indicated in Section 10.3 hereof and the offices where the Transferor
keeps all its Records, are located at the address(es) described on Exhibit G or
such other locations notified to the Company in accordance with Section 2.8 in
jurisdictions where all action required by Section 2.8 has been taken and
completed.
(j) Good Title. Upon each Transfer and each recomputation of
----------
the Transferred Interest, the Company shall acquire a valid and perfected first
priority undivided percentage ownership interest to the extent of the
Transferred Interest or a first priority perfected security interest in the
Receivables and the Related Security and Collections with respect thereto free
and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof: (i) the
----------------
Transferor's chief executive office is located at the address for notices set
forth in Section 10.3 hereof; (ii) the Transferor has only the subsidiaries and
divisions listed on Exhibit H hereto; and (iii) the Transferor has, within the
last five (5) years, operated only under the tradenames identified in Exhibit H
hereto, 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 Title 11, United States Code (Bankruptcy), except as
disclosed in Exhibit H hereto.
41
(l) Nature of Receivables. Each Receivable included as an
---------------------
Eligible Receivable on any report or statement delivered to or for the benefit
of the Company pursuant hereto shall satisfy the definition of "Eligible
Receivable" hereunder.
(m) Coverage Requirement; Amount of Receivables. The Percentage
-------------------------------------------
Factor does not exceed the Maximum Percentage Factor. As of September 30, 1997,
the aggregate Outstanding Balance of the Receivables in existence was
$322,716,000 and the Net Receivables Balance was $287,814,000.
(n) Credit and Collection Policy. Since November 21, 1995,
----------------------------
there have been no material changes in the Credit and Collection Policy; since
such date, no material adverse change has occurred in the overall rate of
collection of the Receivables.
(o) Collections and Servicing. Since November 21, 1995, there
-------------------------
has been no material adverse change in the ability of CompuCom to service and
collect the Receivables.
(p) No Termination Event. No event has occurred and is
--------------------
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event.
(q) Not an Investment Company. The Transferor 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.
(r) ERISA. Each of the Transferor and the CompuCom is in
-----
compliance in all material respects with ERISA and no lien in favor of the
Pension Benefit Guaranty Corporation on any of the Receivables exists.
(s) Lockboxes. The names and addresses of all the Lockbox
---------
Banks, together with the account numbers of the Lockboxes at such Lockbox Banks,
are specified in Exhibit L hereto (or at such other Lockbox Banks and/or with
such other Lockboxes as have been notified to the Purchaser and the Agent and
for which Lockbox Agree-
42
ments have been executed and delivered to the Collateral Agent). All Obligors
have been instructed to make payment to Lockboxes and only Collections are
deposited into the Lockboxes.
(t) Binding Effect of Receivables and Contract. Each
------------------------------------------
Receivable and related Contract constitutes a legal, valid and binding
obligation of the Obligor enforceable against the Obligor, subject to the effect
of bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally (whether considered in a proceeding at law or in equity).
(u) No Restriction on Transfer. No Contract requires the prior
--------------------------
written consent of an Obligor or contains another restriction relating to the
transfer or assignment of rights of payment under such Contract which is legally
enforceable (other than a consent or waiver of such restriction that has been
obtained prior to the Closing Date).
SECTION I.2. Reaffirmation of Representations and Warranties by the
------------------------------------------------------
Transferor. On each day that a Transfer is made hereunder, the Transferor and
- ----------
CompuCom, as applicable, by accepting the proceeds of such Transfer, whether
delivered to the Transferor pursuant to Section 2.2(a) or Section 2.2(b), shall
be deemed to have certified that all representations and warranties described in
Section 3.1 are correct on and as of such day as though made on and as of such
day. Each Incremental Transfer shall be subject to the further condition
precedent that prior to the date of such Incremental Transfer, the Collection
Agent shall have delivered to the Agent, in form and substance satisfactory to
the Agent, a completed Investor Report dated within three (3) days prior to the
date of such Incremental Transfer, together with a listing by Obligor, if
requested, and such additional information as may be reasonably requested by the
Agent; and each of the Transferor and CompuCom shall be deemed to have
represented and warranted that such conditions precedent have been satisfied.
43
ARTICLE II
CONDITIONS PRECEDENT
SECTION II.1. Conditions to Closing. On or prior to the date of
---------------------
execution hereof, the Transferor and CompuCom, as applicable, shall deliver to
the Company the following documents, instruments and fees all of which shall be
in a form and substance acceptable to the Company:
(a) A copy of the Resolutions of the Board of Directors of the
Transferor certified by its Secretary approving the Agreement and the other
documents to be delivered by the Transferor hereunder.
(b) The Articles of Incorporation of the Transferor certified by
the Secretary of State or other similar official of the Transferor's
jurisdiction of incorporation.
(c) A Good Standing Certificate for the Transferor issued by the
Secretary of State or a similar official of the Transferor's jurisdiction of
incorporation and certificates of qualification as a foreign corporation issued
by the Secretaries of State or other similar officials of each jurisdiction
where such qualification is material to the transactions contemplated by this
Agreement.
(d) A Certificate of the Secretary of the Transferor certifying
(i) the names and signatures of the officers authorized on its behalf to execute
this Agreement, the Company Certificate, the Transfer Certificate, the Fee
Letter and any other documents to be delivered by it hereunder (on which
certificates the Company may conclusively rely until such time as the Company
shall receive from the Transferor a revised certificate meeting the requirements
of this clause (d)(i)) and (ii) that attached thereto is a true, correct and
complete copy of the Transferor's By-Laws.
(e) Copies of proper amendments to financing statements (Form
UCC-3), naming the Transferor as the debtor in favor of the Agent or other
similar instruments or documents as may be necessary or in the reason
44
able opinion of the Company desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Company's ownership interest
in the Receivables.
(f) Copies of proper termination statements (Form UCC-3), if
any, necessary to terminate all security interests and other rights of any
person in Receivables previously granted by either the Transferor or CompuCom,
it being understood that Form UCC-3 releases need not be provided by NationsBank
of Texas, N.A. in connection with the Release.
(g) Certified copies of request for information or copies (Form
UCC-11) (or a similar search report certified by parties acceptable to the
Agent) dated a date reasonably near the date of the initial Incremental Transfer
listing all effective financing statements which name either of Transferor or
CompuCom (under its present name and any previous name) as debtor and which are
filed in jurisdictions in which the filings were made pursuant to item (e) above
together with copies of such financing statements (none of which shall cover any
Receivables or Contracts).
(h) Executed copies of the Lock-Box Agreements and the
Receivables Purchase Agreement, and documents related thereto.
(i) Opinions of Morgan, Lewis & Bockius LLP, special counsel to
the Transferor and CompuCom regarding, among other things, enforceability,
security interest matters and true sale and nonconsolidation matters, in form
and substance satisfactory to the Company and its counsel.
(j) A certificate of the Transferor in substantially the form of
Exhibit J hereto executed by the Secretary or Assistant Secretary of the
Transferor.
(k) A computer tape setting forth all Receivables and the
Outstanding Balances thereon and such other information as the Company may
reasonably request.
(l) An executed copy of the Fee Letter.
45
(m) The Transfer Certificate, duly executed by the Transferor.
(n) The Company Certificate, duly executed by the Transferor and
appropriately completed.
(o) The Advisory Fee in accordance with Section 2.7(b).
(p) An Investor Report for September 30, 1997.
(q) Written confirmation, in form and substance acceptable to
the Agent, from Compaq Computer Corporation, that any security interest in
inventory granted to such Person by CompuCom does not extend to accounts
receivable created upon the sale of inventory in which such Person has a
security interest.
(r) The Release, in form and substance acceptable to the Agent,
from NationsBank of Texas, N.A., which provides that any security interest in
inventory granted to such Person by CompuCom does not extend to accounts
receivable created upon the sale of inventory in which such Person has a
security interest.
(s) Such other documents as the Company shall reasonably request.
46
ARTICLE III
COVENANTS
SECTION III.1. Affirmative Covenants of each of Transferor and the
---------------------------------------------------
Collection Agent. 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 is zero
and all Aggregate Unpaids shall have been paid in full, unless the Company shall
otherwise consent in writing:
(a) Financial Reporting. The Transferor and the Collection Agent
-------------------
will each maintain, for itself and each Subsidiary, a system of accounting
established and administered in accordance with generally accepted accounting
principles, and the Transferor shall furnish to the Agent:
(i) Annual Reporting. Within ninety (90) days after the close
----------------
of each of CompuCom's fiscal years, audited financial statements, prepared in
accordance with generally accepted accounting principles on a consolidated
basis for CompuCom and its Subsidiaries, including balance sheets as of the
end of such period, related statements of operations, shareholder's equity and
cash flows, accompanied by an audit report certified by independent certified
public accountants, acceptable to the Agent, which report shall be unqualified
as to going concern and scope of audit and shall state that such consolidated
financial statements present fairly the financial position of CompuCom and its
Subsidiaries at the dates indicated and the results of their operations and
their cash flow for the periods indicated is in conformity with generally
accepted accounting principles, prepared in accordance with generally accepted
auditing standards and any management letter prepared by said accountants.
(ii) Quarterly Reporting. Within forty-five (45) days after the
-------------------
close of
47
the first three quarterly periods of each of CompuCom's fiscal years, for
CompuCom and its Subsidiaries, consolidated unaudited balance sheets as at the
close of each such period and consolidated related statements of operations,
shareholder's equity and cash flows for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its chief financial
officer.
(iii) Compliance Certificate. Together with the financial
----------------------
statements required hereunder, a compliance certificate signed by its chief
financial officer, vice president (finance) or treasurer stating that no
Termination Event or Potential Termination Event exists, or if any Termination
Event or Potential Termination Event exists, stating the nature and status
thereof and showing the computation of, and showing compliance with, each of
the financial ratios and restrictions set forth in Section 5.3.
(iv) Shareholders Statements and Reports. Promptly upon the
-----------------------------------
furnishing thereof to the shareholders of CompuCom, copies of all financial
statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies
--------------
of all annual, quarterly, monthly or other regular reports (including all
reports on Form 8-K) which CompuCom or any subsidiary files with the
Securities and Exchange Commission.
(vi) Change in Credit and Collection Policy and Debt Ratings.
-------------------------------------------------------
Within ten (10) days after the date any material change in or amendment to the
Credit and Collection Policy is made, a copy of the Credit and Collection
Policy then in effect indicating such change or amendment. Within five (5)
days after the date of any change in CompuCom's public or private debt
ratings, if any, a written certification of CompuCom's public and private debt
ratings
48
after giving effect to any such change.
(vii) Credit and Collection Policy. Within ninety (90) days
----------------------------
after the close of each of its fiscal years, a complete copy of the Credit and
Collection Policy then in effect.
(b) The Transferor will notify the Agent in writing of any of the
following immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken by the Person(s) affected with
respect thereto:
(i) Notice of Termination Events or Potential Termination
-----------------------------------------------------
Events. As soon as possible, and in any event within two (2) days after the
-------
date on which the Transferor becomes aware of, or should have known of, the
occurrence of each Termination Event or each Potential Termination Event, a
statement of the chief financial officer or chief accounting officer of the
Transferor setting forth details of such Termination Event or Potential
Termination Event and the action which the Transferor proposes to take with
respect thereto.
(ii) Litigation. The institution of any litigation, arbitration
----------
proceeding or governmental proceeding against (x) the Transferor or (y)
CompuCom which in the case of CompuCom may result in a Material Adverse
Effect.
(iii) Judgment. The entry of any judgment or decree against (x)
--------
the Transferor or (y) CompuCom or any of its Subsidiaries if, in the case of
this clause (y), the aggregate amount of all judgments or decrees then
outstanding against CompuCom or any of its Subsidiaries exceeds $5,000,000
after deducting (A) the amount with respect to which CompuCom or any of its
Subsidiaries is insured and (B) the amount for which CompuCom or such
Subsidiary is otherwise indemnified if the terms of such indemnification are
satisfactory to the
49
Company.
(iv) Other Information. Such other information including non-
-----------------
financial information) as the Agent may from time to time reasonably request.
(c) Conduct of Business. Each of the Transferor and CompuCom will,
-------------------
and will cause each of its Subsidiaries to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
Each of the Transferor and CompuCom, as applicable, will conduct its business
substantially in compliance with the factual assumptions set forth in the
opinion of Morgan, Lewis & Bockius LLP of even date herewith regarding true sale
and nonconsolidation matters.
(d) Compliance with Laws. Each of the Transferor and CompuCom will,
--------------------
and will cause each of its Subsidiaries to, comply in all material respects with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
(e) Furnishing of Information and Inspection of Records. Each of the
---------------------------------------------------
Transferor and the Collection Agent will furnish to the Company from time to
time such information with respect to the Receivables as the Company may
reasonably request, including, without limitation, listings identifying the
Obligor and the Outstanding Balance for each Receivable. Each of the Transferor
and the Collection Agent will at any time and from time to time during regular
business hours upon commercially reasonable notice in advance permit the
Company, or its agents or representatives, (i) to examine and make copies of and
abstracts from all Records and (ii) to visit the offices and properties of each
of the Transferor and the Collection Agent for the purpose of examining such
Records, and to discuss matters relating to Receivables or each of the
Transferor's and the Collection
50
Agent's performance hereunder with the appropriate officers, directors,
employees or independent public accountants of each of the Transferor and the
Collection Agent having knowledge of such matters.
(f) Keeping of Records and Books of Account. Each of the Transferor
---------------------------------------
and the Collection Agent 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 daily
identification of each new Receivable and all Collections of and adjustments to
each existing Receivable). Each of the Transferor and the Collection Agent will
give the Company notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(g) Performance and Compliance with Receivables and Contracts. Each
---------------------------------------------------------
of the Transferor and CompuCom, at its expense, will timely and fully perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables.
(h) Credit and Collection Policies. Each of the Transferor and
------------------------------
CompuCom will comply in all material respects with the Credit and Collection
Policy in regard to each Receivable and the related Contract.
(i) Collections. Each of the Transferor and CompuCom shall instruct
-----------
all Obligors to remit all Collections directly to a Lockbox.
(j) Separate Business. The Transferor shall at all times (i) to the
-----------------
extent the Transferor's office is located in the offices of CompuCom or any
Affiliate of CompuCom, pay fair market rent for its executive office space
located in the offices of CompuCom or any Affiliate of CompuCom, (ii) maintain
the Transferor's books, financial statements, accounting records and other
corporate documents and records sepa-
51
rate from those of CompuCom or any other entity, (iii) not commingle the
Transferor's assets with those of CompuCom or any other entity, (iv) act solely
in its corporate name and through its own authorized officers and agents, (v)
make investments directly or by brokers engaged and paid by the Transferor or
its agents (provided that if any such agent is an Affiliate of CompuCom it shall
--------
be compensated at a fair market rate for its services), (vi) separately manage
the Transferor's liabilities from those of CompuCom or any Affiliates of
CompuCom and pay its own liabilities, including all administrative expenses,
from its own separate assets, and (vii) pay from the Transferor's assets all
obligations and indebtedness of any kind incurred by the Transferor. The
Transferor shall abide by all corporate formalities, including the maintenance
of current minute books, and the Transferor shall cause its financial statements
to be prepared in accordance with generally accepted accounting principles in a
manner that indicates the separate existence of the Transferor and its assets
and liabilities. The Transferor shall (i) not incur indebtedness other than in
connection with the transactions contemplated by this Agreement and incidental
indebtedness not to exceed $9,500 in the aggregate, (ii) not assume the
liabilities of CompuCom or any Affiliate of CompuCom, and (iii) not make loans
to or guarantee the liabilities of CompuCom or any Affiliate of CompuCom. The
officers and directors of the Transferor (as appropriate) shall make decisions
with respect to the business and daily operations of the Transferor independent
of and not dictated by any controlling entity.
(k) Delivery of Documents from Apple Computer, Inc. CompuCom shall
-----------------------------------------------
deliver to the Company, no later than January 1, 1998, written confirmation, in
form and substance acceptable to Agent, from Apple Computer, Inc., that any
security interest in inventory granted to such Person by CompuCom does not
extend to accounts receivable created upon the sale of inventory in which such
Person has a security interest.
SECTION III.2. Negative Covenants. During the term of this Agreement,
------------------
unless the Company shall otherwise consent in writing:
(a) No Sales, Liens, Etc. Except as
--------------------
52
otherwise provided herein, the Transferor 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, the Receivables or upon or with respect to any Lockbox, or assign any right
to receive income in respect thereof.
(b) No Extension or Amendment of Receivables. Except as otherwise
----------------------------------------
permitted in Section 6.2, each of the Transferor and the Collection Agent will
not extend, amend or otherwise modify the terms of any Receivable, or amend,
modify or waive any term or condition of any Contract related thereto.
(c) No Change in Business or Credit and Collection Policy. Each of
-----------------------------------------------------
the Transferor and the Collection Agent will not make any change in the
character of its business or in the Credit and Collection Policy, which change
would, in either case, materially impair the collectibility of any Receivable.
(d) Use of Proceeds. No proceeds of any Transfer will be used by the
---------------
Transferor to purchase or carry any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) in violation of Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System.
(e) No Mergers, Etc. Each of the Transferor and CompuCom 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 with respect to clause (i) above, CompuCom may merge with another Person if
CompuCom is the surviving corporation provided that no Termination Event or
Potential Termination Event shall result directly or indirectly therefrom.
(f) Change in Payment Instructions to Obligors. Each of the
------------------------------------------
Transferor and the Collection Agent will not add or terminate, or make any
change to, any Lockbox except in accordance with Section 2.8(b) herein.
(g) Deposits to Lockboxes. Each of the
---------------------
53
Transferor and the Collection Agent will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lockbox cash or cash
proceeds other than Collections of Receivables.
(h) Change of Name, Etc. Neither the Transferor nor CompuCom will
--------------------
change its name, identity or corporate structure (within the meaning of Section
9-402(7) of the UCC), nor relocate its chief executive office or any office
where Records are kept, unless it shall have: (i) given the Agent at least
thirty (30) days' prior written notice thereof and (ii) delivered to the Company
all UCC financing statements, instruments and other documents (including, but
not limited to, new or revised Lockbox Agreements) requested by the Agent in
connection with such change or relocation.
(i) Changes to Receivables Purchase Agreement. The Transferor shall
-----------------------------------------
not agree to any amendment of or supplement to, or waiver of any provision of,
the Receivables Purchase Agreement without the prior written consent of the
Company.
(j) Dividend Restriction. The Transferor shall not pay, declare or
--------------------
make any dividends or distributions in respect of its common stock unless, after
giving effect thereto: (i) the Transferor would not become insolvent, (ii) there
would not have been a material adverse effect on the Transferor or its financial
condition or (iii) the payment, declaration or making of any such dividends or
distributions would not cause a Termination Event.
(k) Voluntary Petition. To the extent permitted by law, neither the
------------------
Transferor nor CompuCom will file a petition to commence a voluntary case under
the U.S. Bankruptcy Code (Title 11 USC) in any court of appropriate jurisdiction
within the Tenth Circuit of the United States.
54
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
SECTION IV.1. Appointment of Collection Agent. The servicing,
-------------------------------
administering and collection of the Receivables shall be conducted by such
Person (the "Collection Agent") so designated from time to time in accordance
----------------
with this Section 6.1. Until the Agent gives notice to CompuCom of the
designation of a new Collection Agent, CompuCom is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Collection Agent
pursuant to the terms hereof. The Agent may, only upon the occurrence of a
default in the performance of the Collection Agent's obligations hereunder or
any other Termination Event designate as Collection Agent any Person (including
itself) to succeed CompuCom or any successor Collection Agent, on the condition
in each case that any such Person so designated shall agree to perform the
duties and obligations of the Collection Agent pursuant to the terms hereof.
Upon the occurrence of a Potential Termination Event or Termination Event, the
Agent may notify any Obligor of the Transferred Interest.
55
SECTION IV.2. Duties of Collection Agent.
--------------------------
(a) The Collection Agent 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 and Collection
Policy. Each of the Transferor, the Company and the Bank Investors hereby
appoints as its agent the Collection Agent, from time to time designated
pursuant to Section 6.1, to enforce its respective rights and interests in and
under the Receivables, the Related Security and the Contracts. The Collection
Agent shall set aside for the account of the Transferor and the Company their
respective allocable shares of the Collections received by the Collection Agent
in accordance with Sections 2.5 and 2.6. The Collection Agent shall segregate
and deposit to the Company's account the Company's allocable share of
Collections received by the Collection Agent when required pursuant to Article
II hereof. So long as no Termination Event shall have occurred and be
continuing, the Collection Agent may, in accordance with the Credit and
Collection Policy, extend the maturity of Receivables, but not beyond sixty (60)
days, and extend the maturity or adjust the Outstanding Balance as the
Collection Agent may determine to be appropriate to maximize Collections
thereof; provided, however, that such extension or adjustment shall not alter
-------- -------
the status of such Receivable as a Delinquent Receivable or a Defaulted
Receivable. The Collection Agent shall hold in trust for the Transferor and the
Company in accordance with their respective interests, all Records which
evidence or relate to Receivables or Related Security. Notwithstanding anything
to the contrary contained herein, the Agent shall have the right, acting in its
reasonable discretion, to direct the Collection Agent (whether the Collection
Agent is CompuCom 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.
(b) The Collection Agent shall hold, for the benefit of the
Transferor, Collections received minus the Percentage Factor of such
-----
Collections. On the last day of each Tranche Period, the Collection Agent shall
56
deduct from such Collections and pay to the Company in reduction of the Net
Investment any amounts due under Section 2.9 hereof and unpaid from the
Transferor and turn the remainder of such Collections over to the Transferor.
In addition, the Collection Agent shall, as soon as practicable following
receipt thereof, turn over to the Transferor any collections of any indebtedness
of any Obligor which is not a Receivable. If CompuCom is not the Collection
Agent, the Collection Agent, by giving three (3) 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 Collection Agent incurred in connection with the performance of its
obligations hereunder as documented to the reasonable satisfaction of the
Company. The Collection Agent, if other than CompuCom, shall as soon as
practicable upon demand, deliver to CompuCom all Records in its possession which
evidence or relate to indebtedness of an Obligor which is not a Receivable.
(c) On or before 90 days after the end of each fiscal year of the
Collection Agent, beginning with the fiscal year ending December 31, 1997, the
Collection Agent shall cause either the Business Credit Field Exam Group of
NationsBank of Texas N.A. or such other Person as may be approved by Agent (who
may also render other services to the Collection Agent or the Transferor) to
furnish a report to the Agent to the effect that they have (i) compared the
information contained in the Investor Reports delivered during such fiscal year
with the information contained in the Contracts and the Collection Agent's
records and computer systems for such period, and that, on the basis of such
examination and comparison, such firm is of the opinion that the information
contained in the Investor Reports reconciles with the information contained in
the Contracts and the Collection Agent's records and computer system and that
the servicing of the Receivables has been conducted in compliance with this
Agreement, (ii) conducted a confirmation of a sample, based on a sample size
provided by the Agent or otherwise agreed to by the Agent, of the Receivables
and verified that the Collection Agent's records and computer system used in
servicing the Receivables contained correct information with regard to due dates
and outstanding
57
balances, (iii) verified that the Receivables treated by the Collection Agent as
Eligible Receivables and the calculation of the Net Receivables Balance in fact
satisfied the requirements of the definition thereof contained herein, except,
in each case for (a) such exceptions as such firm shall believe to be immaterial
(which exceptions need not be enumerated) and (b) such other exceptions as shall
be set forth in such statement, and (iv) obtained no knowledge of any
Termination Event or Potential Termination Event, or if, in the opinion of such
accountants, any Termination Event or Potential Termination Event shall exist,
stating the nature and status thereof
SECTION IV.3. Rights After Designation of New Collection Agent. At any
------------------------------------------------
time following the designation of a Collection Agent (other than CompuCom)
pursuant to Section 6.1:
(i) The Agent may direct that payment of all amounts
payable under the Receivables be made directly to the Company or
its designee.
(ii) Each of the Transferor and the Collection Agent shall,
at the Company's request and at the Transferor's expense, give
notice of the Company's ownership of the Receivables to each
Obligor and direct that payments in respect thereof be made
directly to the Agent or its designee.
(iii) Each of the Transferor and the Collection Agent shall (A)
assemble all of the Records, and shall make the same available to
the Agent at a place selected by the Agent or its designee, and
(B) segregate all cash, checks and other instruments received by
it from time to time constituting Collections of Receivables in a
manner acceptable to the Agent and shall, promptly upon receipt,
remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Agent or its
designee.
(iv) Each of the Transferor and the Collection Agent hereby
authorizes the
58
Agent to take any and all steps in each of the Transferor's and
the Collection Agent's name and on behalf of each of the
Transferor and CompuCom necessary or desirable, in the
determination of the Agent, to collect all amounts due under the
Receivables, including, without limitation, endorsing the
Transferor's name on checks and other instruments representing
Collections and enforcing such Receivables and the related
Contracts.
SECTION IV.4. Responsibilities of each of the Transferor and
----------------------------------------------
CompuCom. Anything herein to the contrary notwithstanding, each of the
- --------
Transferor and CompuCom shall (i) perform all of its obligations under the
Contracts related to the Receivables to the same extent as if interests in such
Receivables had not been sold hereunder and the exercise by the Company of its
rights hereunder shall not relieve each of the Transferor and CompuCom 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 Company nor any Bank Investor shall have any
obligation or liability with respect to any Receivable or related Contracts, nor
shall it be obligated to perform any of the obligations of the Transferor or
CompuCom thereunder.
59
ARTICLE V
TERMINATION EVENTS
SECTION V.1. Termination Events. The occurrence of any one or more of the
------------------
following events shall constitute a Termination Event:
(a) (i) the Transferor, the Collection Agent or CompuCom shall fail
to perform or observe any term, covenant or agreement hereunder (other than as
referred to in clause (ii) of this Section 7.1(a) or the covenant set forth in
Section 5.1(k)) and such failure shall remain unremedied for ten (10) days, or
(ii) the Collection Agent shall fail to make any payment or deposit to be made
by it hereunder or under any other document delivered pursuant hereto when due
or the Collection Agent shall fail to observe or perform any term, covenant or
agreement on the Collection Agent's part to be performed under Section 2.8(b)
hereof; or
(b) any representation, warranty, certification or statement made by
either of the Transferor, the Collection Agent or CompuCom in this Agreement or
in any other document delivered pursuant hereto shall prove to have been
incorrect in any material respect when made or deemed made (provided that any
--------
such breach with respect to a Receivable shall not constitute a Termination
Event hereunder if such breach shall have been cured by the Transferor pursuant
to Section 2.9 or 8.4); or
(c) either of the Transferor or CompuCom shall default in the
performance of any payment or undertaking (other than those covered by clause
(a) above) or to be performed or observed under any other provision hereof or in
the Receivables Purchase Agreement or under any other document delivered
pursuant hereto or thereto; or
(d) failure of either of the Transferor or CompuCom, as initial
Collection Agent, or any of their Subsidiaries to pay when due any amounts due
under any agreement under which any Indebtedness greater than $10,000,000 is
governed; or the default by either of the Transferor or CompuCom or any of their
Subsidiaries in the performance of any term, provision or condition
60
contained in any agreement under which any Indebtedness greater than $10,000,000
was created or is governed, regardless of whether such event is an "event of
default" or "default" under any such agreement; or any Indebtedness greater than
$10,000,000 shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof; or
(e) any Event of Bankruptcy shall occur with respect to the
Transferor, the Collection Agent, CompuCom or any Subsidiary of either the
Transferor, the Collection Agent or CompuCom; or
(f) the Transferor shall, for any reason, fail to have a valid
ownership interest in the Receivables and the Related Security and Collections
with respect thereto; or
(g) either CompuCom or the Transferor shall enter into any
transaction or merger whereby it is not the surviving entity; or
(h) there shall have occurred and be continuing any event or
condition which materially affects the Transferor's, CompuCom's or the
Collection Agent's ability to either collect the Receivables or to perform under
this Agreement or the Receivables Purchase Agreement; or
(i) the Liquidity Provider or the Credit Support Provider shall have
given notice that an event of default has occurred and is continuing under its
agreements with the Company; or
(j) the Commercial Paper issued by the Company shall not be rated at
least "A-2" by Standard & Poor's and at least "P-2" by Moody's; or
(k) (i) the Percentage Factor exceeds the Maximum Percentage Factor
unless the Transferor reduces the Net Investment on the next day, bringing the
Percentage Factor to less than or equal to 98% or (ii) the Percentage Factor
equals or exceeds 100% at any time or (iii) the Receivables Purchase Agreement
shall have terminated pursuant to Section 8.1 thereof; or
61
(l) the Dilution Ratio averaged for any three-month period exceeds
7%; or
(m) the Loss to Liquidation Ratio averaged for any three-month period
exceeds 1.50%; or
(n) the Delinquency Ratio averaged for any three-month period exceeds
15.0%; or
(o) CompuCom's Leverage Ratio (as such term is defined in Exhibit N
herein) exceeds (i) 4.25 to 1 at the end of any fiscal quarter ending prior to
and including December 31, 2000 and (ii) 3.75 to 1 at the end of any fiscal
quarter thereafter; or
(p) CompuCom's Fixed Charge Coverage Ratio (as such term is defined
in Exhibit N herein) falls below 1.25 to 1 at the end of any fiscal quarter; or
(q) CompuCom's Tangible Net Worth (as such term is defined in Exhibit
N herein) falls below an amount equal to the sum of (i) $130,000,000, plus (ii)
75% of cumulative Net Income (as such term is defined in Exhibit N herein) for
the period from, but not including March 31, 1997 through the date of
calculation (but excluding from the calculation of such cumulative Net Income
the effect, if any, of any fiscal quarter (or portion of a fiscal quarter not
then ended) of CompuCom for which Net Income was a negative number), plus (iii)
75% of the Net Cash Proceeds (as such term is defined in Exhibit N herein)
received by CompuCom as a result of any offering of Equity (as such term is
defined in Exhibit N herein) or pursuant to any conversion or exchange of
convertible Indebtedness (as such term is defined in Exhibit N herein) or
preferred Capital Stock (as such term is defined in Exhibit N herein) or into
common Capital Stock of CompuCom, plus (iv) an amount equal to the net worth of
any Person (as such term is defined in Exhibit N herein) that becomes a
Subsidiary (as such term is defined in Exhibit N herein) of CompuCom or is
merged into or consolidated with CompuCom or any Subsidiary of CompuCom or
substantially all of the assets of which are acquired by CompuCom or any
Subsidiary of CompuCom to the extent the purchase price paid therefor is paid in
equity
62
securities of CompuCom or any Subsidiary of CompuCom; or
(r) CompuCom's Asset Coverage Ratio (as such term is defined in
Exhibit N herein) falls below 1.10 to 1 at the end of any fiscal quarter; or
(s) CompuCom's ratio of Funded Debt (as such term is defined in
Exhibit N herein) to Capital (as such term is defined in Exhibit N herein)
exceeds 0.65 to 1 at the end of any fiscal quarter; or
(t) if all or any part of the capital stock of the Transferor held
(beneficially or otherwise) by CompuCom or the Subordinated Note (as defined in
the Receivables Purchase Agreement) shall be pledged or otherwise be subject to
a security interest in favor of any Person, and NationsBank of Texas, N.A. or
any such other Person shall commence any action to foreclose on any such pledge
or security interest.
SECTION V.2. Termination. (a) If an event or condition specified in
-----------
Section 7.1 (other than an event or condition specified in Sections 7.1(i) and
(j)) occurs, the Agent may, by notice to the Transferor, declare a Termination
Event to have occurred and declare all outstanding Tranche Periods to be ended
and designate the Base Rate plus 2% to be applicable to the Net Investment. If
an event or condition specified in Section 7.1(i) or (j) occurs, the Agent may,
by notice to the Transferor, declare a Termination Event to have occurred and
declare all outstanding Tranche Periods to be ended and shall designate the Base
Rate to be applicable to the Net Investment. In addition, if a Termination
Event shall be declared, the Transferor hereby requests that the Company assign
the Transferred Interest and all of its rights hereunder (other than its rights
to receive payments in respect of Discount accrued to the date of such
assignment and other fees, costs, expenses and indemnities due the Company
hereunder) to the Bank Investors. If an event or condition shall have occurred
which constitutes a Potential Termination Event, the Agent may, by notice to the
Transferor, declare such event or condition a Potential Termination Event.
(b) In addition, if any Termination Event occurs hereunder (i) the
Agent shall promptly notify the
63
Transferor in writing whether it has declared a Termination Event or a Potential
Termination Event and whether it will be exercising the remedies specified in
this Section 7.2, (ii) the Company and the Agent shall have all of the rights
and remedies provided to a secured creditor or a purchaser of accounts under the
UCC by applicable law in respect thereto, (iii) the Maximum Net Investment shall
be reduced as of each calendar date thereafter equal to the Net Investment as of
such date, and (iv) no Commercial Paper will thereafter be issued.
64
ARTICLE VI
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION VI.1. Indemnities. Without limiting any other rights which the
-----------
Company or the Bank Investors may have hereunder or under applicable law, the
Transferor and CompuCom hereby agree to indemnify the Company, the Bank
Investors, the Agent, the Liquidity Provider and the Credit Support Provider
and any permitted assigns and their respective officers, directors and employees
(collectively, "Indemnified Parties") from and against any and all damages,
-------------------
losses, claims, liabilities, costs and expenses, including reasonable attorneys'
fees (which such attorneys may be employees of the Bank Investors, the Liquidity
Provider, the Credit Support Provider or the Agent) and disbursements (all of
the foregoing being collectively referred to as "Indemnified Amounts") awarded
-------------------
against or incurred by any of them arising out of or as a result of this
Agreement or the ownership, either directly or indirectly, by the Company or the
Bank Investors of the Transferred Interest excluding, however, (i) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of an Indemnified Party or (ii) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables. Without
limiting the generality of the foregoing, CompuCom and Transferor shall
indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(a) any representation or warranty made by CompuCom, the Collection
Agent or the Transferor (or any of their respective officers) under or in
connection with this Agreement, the Receivables Purchase Agreement, any Investor
Report or any other information or report delivered by either of them pursuant
hereto, which shall have been false or incorrect in any material respect when
made or deemed made;
(b) the failure by CompuCom, the Collection Agent or the Transferor
to comply with any applicable and material law, rule or regulation with respect
to any Receivable or the related Contract, or the nonconformity of any
Receivable or the related Contract with
65
any such applicable and material law, rule or regulation;
(c) the failure to vest and maintain in the Transferor an undivided
percentage ownership interest in the Receivables free and clear of any Adverse
Claim or the failure to vest and maintain vested in the Company an undivided
percentage ownership interest, to the extent of the Transferred Interest, or a
first priority perfected security interest, in the Receivables and the Related
Security and Collections with respect thereto, free and clear of any Adverse
Claim;
(d) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, any part of which is included in the Transferred
Interest;
(e) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable, any part of which
is included in the Transferred Interest (including, without limitation, a
defense based on such Receivable or the related Contract not being legal, valid
and binding obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of merchandise or
services related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(f) any failure of CompuCom or the Transferor, as Collection Agent or
otherwise, to perform its duties or obligations in accordance with the
provisions of Article VI; or
(g) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort arising
out of or in connection with merchandise or services which are the subject of
any Receivable;
provided, however, that if the Company enters into agreements for the purchase
- -------- -------
of interests in receivables from one or more Other Transferors, the Company
shall allocate such Indemnified Amounts which are in connection with the
66
Liquidity Provider Agreement, the Credit Support Agreement or the credit support
furnished by the Credit Support Provider to the Transferor and CompuCom and each
Other Transferor; and provided, further, that if such Indemnified Amounts are
-------- -------
attributable to the Transferor and CompuCom and not attributable to any Other
Transferor, the Transferor and CompuCom shall be solely liable for such
Indemnified Amounts or if such Indemnified Amounts are attributable to Other
Transferors and not attributable to the Transferor and CompuCom, such Other
Transferors shall be solely liable for such Indemnified Amounts.
SECTION VI.2. Indemnity for Taxes, Reserves and Expenses. (a) If after
------------------------------------------
the date hereof, the adoption of any Law or bank regulatory guideline or any
amendment or change in the interpretation of any existing or future Law or bank
regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of Law):
(i) shall subject any Indemnified Party to any tax, duty
or other charge with respect to this Agreement, the Transferred
Interest, the Receivables or payments of amounts due hereunder,
or shall change the basis of taxation of payments to any
Indemnified Party of amounts payable in respect of this
Agreement, the Transferred Interest, the Receivables or payments
of amounts due hereunder or its obligation to advance funds under
the Liquidity Provider Agreement or the credit support furnished
by the Credit Support Provider or otherwise in respect of this
Agreement, the Transferred Interest or the Receivables (except
for changes in the rate of general corporate, franchise, net
income or other income tax imposed on such Indemnified Party);
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board
67
of Governors of the Federal Reserve System) against assets of,
deposits with or for the account of, or credit extended by, any
Indemnified Party or shall impose on any Indemnified Party or on
the United States market for certificates of deposit or the
London interbank market any other condition affecting this
Agreement, the Transferred Interest, the Receivables or payments
of amounts due hereunder or its obligation to advance funds under
the Liquidity Provider Agreement or the credit support provided
by the Credit Support Provider or otherwise in respect of this
Agreement, the Transferred Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and
expenses, and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement,
the Transferred Interest, the Receivables or payments of amounts
due hereunder or its obligation to advance funds under the
Liquidity Provider Agreement or the credit support furnished by
the Credit Support Provider or otherwise in respect of this
Agreement, the Transferred Interests or the Receivables,
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the Transferred Interest, the
Receivables, the obligations hereunder, the funding of any purchases hereunder,
the Liquidity Provider Agreement or the Credit Support Agreement, by an amount
deemed by such Indemnified Party to be material, then, within ten (10) days
after demand by the Agent, the Transferor or CompuCom shall pay to the Agent
such additional amount or amounts as will compensate such Indemnified Party for
such increased cost or reduction.
(b) If any Indemnified Party shall have determined that after the
date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any
68
directive regarding capital adequacy (in the case of any bank regulatory
guideline, whether or not having the force of law) of any such Official Body,
has or would have the effect of reducing the rate of return on capital of such
Indemnified Party (or its parent) as a consequence of such Indemnified Party's
obligations hereunder or with respect hereto to a level below that which such
Indemnified Party (or its parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Indemnified Party to be
material, then from time to time, within ten (10) days after demand by the
Agent, the Transferor and CompuCom shall pay to the Agent such additional amount
or amounts as will compensate such Indemnified Party (or its parent) for such
reduction.
(c) The Agent will promptly notify each of the Transferor and
CompuCom of any event of which it has knowledge, occurring after the date
hereof, which will entitle an Indemnified Party to compensation pursuant to this
Section. A notice by the Agent claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it on behalf of an
Indemnified Party hereunder shall be conclusive in the absence of manifest
error. In determining such amount, the Agent and any applicable Indemnified
Party may use any reasonable averaging and attributing methods.
(d) Anything in this Section 8.2 to the contrary notwithstanding, if
the Company enters into agreements for the acquisition of interests in
receivables from one or more Other Transferors, the Company shall allocate the
liability for any amounts under this Section 8.2 incurred by the Company
("Section 8.2 Costs") to the Transferor and CompuCom and each Other Transferor;
- -------------------
and provided, further, that if such Section 8.2 Costs are attributable to the
-------- -------
Transferor and CompuCom and not attributable to any Other Transferor, the
Transferor and CompuCom shall be solely liable for such Section 8.2 Costs or if
such Section 8.2 Costs are attributable to Other Transferors and not
attributable to the Transferor and CompuCom, such Other Transferors shall be
solely liable for such Section 8.2 Costs.
SECTION .1. Other Costs, Expenses and Related
---------------------------------
69
Matters. (a) Each of the Transferor and CompuCom agrees, upon receipt of a
- -------
written invoice, to pay or cause to be paid, and to hold the Company, the Agent
and the Bank Investors harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountants' and other third parties' fees and expenses, any filing fees and
expenses incurred by officers or employees of the Company, the Agent and any
Bank Investor) incurred by or on behalf of the Company, the Agent and the Bank
Investors (i) in connection with the negotiation, execution, delivery and
preparation of this Agreement and any documents or instruments delivered
pursuant hereto and thereto and the transactions contemplated hereby and thereby
(including, without limitation, the perfection or protection of the Transferred
Interest) and (ii) from time to time (x) relating to any amendments, waivers or
consents under this Agreement, (y) arising in connection with the Company's, any
Bank Investor's, the Agent's or any agent of the Company's enforcement or
preservation of rights (including, without limitation, the perfection and
protection of the Transferred Interest under this Agreement), or (z) arising in
connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving this Agreement; (all of such amounts, collectively,
"Transaction Costs"); provided, however, that the parties hereto hereby agree to
----------------- -------- -------
cooperate to minimize such costs and to avoid duplication of efforts.
(b) The Transferor and CompuCom shall pay the Company on demand any
Early Collection Fee due on account of the reduction of a Tranche on a day prior
to the last day of its Tranche Period.
SECTION .2. Reconveyance Under Certain Circumstances. The Transferor
----------------------------------------
agrees to accept the reconveyance from the Company or the Bank Investors of the
Transferred Interest if the Agent notifies the Transferor of a material breach
of any representation or warranty made or deemed made pursuant to Article III of
this Agreement and the Transferor shall fail to cure such breach within 15 days
(or, in the case of the representations and warranties in Sections 3.1(d) and
3.1(j), 3 days) of such notice. The reconveyance price shall be paid by the
Transferor to the Company or the Agent in
70
immediately available funds on such 15th day (or 3rd day, if applicable) in an
amount equal to the Aggregate Unpaids.
71
ARTICLE I
THE AGENT AND THE BANK COMMITMENT
72
SECTION I.1. Authorization and Action.
------------------------
(a) The Company and each Bank Investor hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. In furtherance, and
without limiting the generality, of the foregoing, the Company and each Bank
Investor hereby appoints the Agent as its agent to execute and deliver all
further instruments and documents, and take all further action that the Agent
may deem necessary or appropriate or that the Company or a Bank Investor may
reasonably request in order to perfect, protect or more fully evidence the
interests transferred or to be transferred from time to time by the Transferor
hereunder, or to enable any of them to exercise or enforce any of their
respective rights hereunder, including, without limitation, the execution by the
Agent as secured party/assignee of such financing or continuation statements, or
amendments thereto or assignments thereof, relative to all or any of the
Receivables now existing or hereafter arising, and such other instruments or
notices, as may be necessary or appropriate for the purposes stated hereinabove.
The Company and the Bank Investors may direct the Agent to take any such
incidental action hereunder. With respect to other actions which are incidental
to the actions specifically delegated to the Agent hereunder, the Agent shall
not be required to take any such incidental action hereunder, but shall be
required to act or to refrain from acting (and shall be fully protected in
acting or refraining from acting) upon the direction of the Company or a Bank
Investor; provided, however, that Agent shall not be required to take any action
-------- -------
hereunder if the taking of such action, in the reasonable determination of the
Agent, shall be in violation of any applicable law, rule or regulation or
contrary to any provision of this Agreement or shall expose the Agent to
liability hereunder or otherwise. Upon the occurrence and during the continuance
of any Termination Event or Potential Termination Event, the Agent shall take no
action hereunder (other than ministerial actions or such actions as are
specifically provided for herein) without the prior consent of the Majority
Investors. Unless otherwise provided herein, the Agent shall not authorize the
release of any property conveyed to the Agent by the Company or the Transferor
hereunder without
73
the prior consent of all Bank Investors. The Agent shall not, without the prior
written consent of all Bank Investors, agree to (i) amend, modify or waive any
provision of this Agreement in any way which would (A) reduce or impair
Collections or the payment of Discount or fees payable under the related fee
letter or delay the scheduled dates for payment of such amounts, (B) increase
the Servicing Fee, (C) modify any provisions of this Agreement relating to the
timing of payments required to be made by the Transferor or the application of
the proceeds of such payments, or (D) the appointment of any Person (other than
the Agent) as successor Collection Agent. The Agent shall not agree to any
amendment of this Agreement which increases the dollar amount of a Bank
Investor's Commitment without the prior consent of such Bank Investor. In
addition, the Agent shall not agree to any amendment of this Agreement not
specifically contemplated by the two preceding sentences without the consent of
the related Majority Investors. "Majority Investors" shall mean, at any time,
------------------
Persons consisting of Bank Investors which hold Commitments aggregating in
excess of 51% of the Maximum Net Investment as of such date. 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 ten (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 Agent shall have obtained sufficient
consent hereunder.
(b) The Agent shall exercise such rights and powers vested in it by
this Agreement, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
SECTION I.2. Agent's Reliance, Etc. Neither the Agent nor any of its
----------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limiting the foregoing, the Agent: (i) may consult with legal counsel
(including counsel for the Transferor or CompuCom), inde-
74
pendent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) shall
make no warranty or representation to the Company or any Bank Investor and shall
not be responsible to the Company or any Bank Investor for any statements,
warranties or representations made in or in connection with this Agreement;
(iii) shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of this Agreement on
the part of the Transferor, the Collection Agent or CompuCom or to inspect the
property (including the books and records) of the Transferor, the Collection
Agent or CompuCom; (iv) shall not be responsible to the Company or any Bank
Investor for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, or any other instrument or document
furnished pursuant hereto; and (v) shall incur no liability under or in respect
of this Agreement by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION I.3. Credit Decision. The Company and each Bank Investor
---------------
acknowledges that it has, independently and without reliance upon the Agent, any
of the Agent's Affiliates' any (other) Bank Investor or the Company (in the case
of any Bank Investors) and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and, if it so determines, to accept the transfer of any undivided
ownership interest in Receivables hereunder. The Company and each Bank Investor
also acknowledges that it will, independently and without reliance upon the
Agent, any of the Agent's Affiliates, any (other) Bank Investor or the Company
(in the case of any Bank Investors) and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement.
SECTION I.4. Indemnification of the Agent. The Bank Investors agree to
----------------------------
indemnify the Agent (to the
75
extent not reimbursed by the Transferor), ratably in accordance with their Pro
Rata Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement;
provided that the Bank Investors shall not be liable for any portion
- --------
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
the Bank Investors agree to reimburse the Agent, ratably in accordance with
their Pro Rata Shares, promptly upon demand for any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the Bank
Investors hereunder and to the extent that the Agent is not reimbursed for such
expenses by the Transferor.
SECTION I.5. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to each Bank Investor, the Company and the Transferor and
may be removed at any time with cause by the Majority Investors. Upon any such
resignation or removal, the Bank Investors acting jointly shall appoint a
successor Agent. Each Bank Investor agrees that it shall not unreasonably
withhold or delay its approval of the appointment of a successor Agent. If no
such successor Agent shall have been so appointed by the Bank Investors, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Investors' removal of
the retiring Agent, then the retiring Agent may, on behalf of the Bank
Investors, appoint a successor Agent which successor Agent shall be either (i) a
commercial bank organized under the laws of the United States or of any state
thereof and have a combined capital and surplus of at least $50,000,000 or (ii)
an Affiliate of such a bank. Upon the acceptance of any appointment as Agent
hereunder
76
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
SECTION I.6. Payments by the Agent. Unless specifically allocated to a
---------------------
Bank Investor pursuant to the terms of this Agreement, all amounts received by
the Agent on behalf of the Bank Investors shall be paid by the Agent to the Bank
Investors (at their respective accounts specified in their respective
Assignments) in accordance with their respective related pro rata interests in
--- ----
the Net Investment on the Business Day received by the Agent, unless such
amounts are received after 12:00 noon (New York time) on such Business Day, in
which case the Agent shall use its reasonable efforts to pay such amounts to the
Bank Investors on such Business Day, but, in any event, shall pay such amounts
to the Bank Investors in accordance with their respective related pro rata
--- ----
interests in the Net Investment not later than the following Business Day.
SECTION I.7. Bank Commitment; Assignment to Bank Investors.
---------------------------------------------
(a) Bank Commitment. At any time on or prior to the Commitment
---------------
Termination Date, in the event that the Company does not effect an Incremental
Transfer as requested under Section 2.2, then, at any time thereafter, the
Transferor shall have the right to require the Company to assign its interest in
whole to the Bank Investors pursuant to an assignment and assumption agreement
(an "Assignment") in accordance with this Section 9.7. In addition, at any time
----------
on or prior to the Commitment Termination Date, (i) upon the occurrence of a
Termination Event or (ii) the Company elects to give notice of a Reinvestment
Termination Date, the Transferor hereby requests and directs that the Company
assign its interest in whole to the Bank Investors pursuant to this Section 9.7,
and the Transferor agrees to pay the amounts described in Section 9.7(d) below.
Provided that (i) the Net Asset Test is satisfied and (ii) the Transferor shall
77
have paid to the Company all amounts due as described in Section 9.7(d) (which
amount may be deemed paid by the Transferor through an increase in the Net
Investment), upon any such election by the Company or any such request by the
Transferor, the Company shall make such assignment and the Bank Investors shall
accept such assignment and shall assume all of the Company's obligations
hereunder. In connection with any assignment from the Company to the Bank
Investors pursuant to this Section 9.7, each Bank Investor shall, on the date of
such assignment, pay to the Company an amount equal to its Assignment Amount.
In addition, at any time on or prior to the Commitment Termination Date, the
Transferor shall have the right to request funding under this Agreement directly
from the Bank Investors; provided that at such time all conditions precedent set
--------
forth herein for an Incremental Transfer shall be satisfied, and provided
--------
further that, in connection with such funding by the Bank Investors, the Bank
- -------
Investors accept the assignment of all of the Company's interest in the Net
Investment and assume all of the Company's obligations hereunder.
(b) Assignment. Upon any assignment pursuant to Section 9.7(a), the
----------
Company shall deliver to each Bank Investor an Assignment, duly executed,
assigning to each such Bank Investor a pro rata interest in the Net Investment
--- ----
plus amounts unpaid pursuant to Section 9.7(d) (which amounts may be applied to
increase the Net Investment), and the Company shall promptly execute and deliver
all further instruments and documents, and take all further action, that the
assignee may reasonably request, in order to protect, or more fully evidence the
assignee's right, title and interest in and to such interest and to enable the
Agent, on behalf of such assignee, to exercise or enforce any rights hereunder.
Upon any such assignment, (i) the assignee shall have all of the rights and
obligations of the Company hereunder with respect to such interest for all
purposes of this Agreement (it being understood that the Bank Investors, as
assignees, shall (x) be obligated to effect Incremental Transfers under Section
2.2 in accordance with the terms thereof unless a Termination Event has
occurred, notwithstanding that the Company was not so obligated and (y) not have
the right to elect the commencement of the amortization of the Net Investment
pursuant to the definition of "Termination Date", notwithstanding that the
78
Company had such right) and (ii) the Company shall relinquish its rights with
respect to such interest for all purposes of this Agreement. No such assignment
shall be effective unless a fully executed copy of the related Assignment shall
be delivered to the Agent and Transferor. All reasonable costs and expenses of
the Company and assignee incurred in connection with any assignment hereunder
shall be borne by the Transferor and not by the Company or any such assignee.
No Bank Investor may assign all or any portion of its interest in the Net
Investment, the Receivables, Collections, Related Security and Proceeds with
respect thereto and its rights and obligations hereunder to any Person unless
approved in writing by the Agent. No Bank Investor shall assign any portion of
its Commitment hereunder without also simultaneously assigning an equal portion
of its interest in the Liquidity Provider Agreement.
(c) Effects of Assignment. By executing and delivering an
---------------------
Assignment, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment, the assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other instrument or document
furnished pursuant hereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any such other instrument
or document; (ii) the assignor makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Transferor or
the performance or observance by the Transferor of any of its obligations under
this Agreement, or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement and
such other instruments, documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
to purchase such interest; (iv) such assignee will, independently and without
reliance upon the Agent, or any of its Affiliates, or the assignor and based on
such agreements, documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes
79
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto and to enforce
its respective rights and interests in and under this Agreement, the Receivables
and the Related Security; (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as the assignee of the assignor;
and (vii) such assignee agrees that it will not institute against the Company
any proceeding of the type referred to in Section 10.9 prior to the date which
is one year and one day after the payment in full of all Commercial Paper issued
by the Company.
(d) Transferor's Obligation to Pay Certain Amounts. The Transferor
----------------------------------------------
shall pay to the Company, prior to any assignment by the Company to the Bank
Investors pursuant to this Section 9.7, an aggregate amount equal to all
Discount accrued with respect to each Tranche Period, all Discount to accrue
through the end of each outstanding Tranche Period plus all other Aggregate
Unpaids (other than the Net Investment). To the extent that such Discount
relates to interest or discount on Commercial Paper issued to fund the Net
Investment, if the Transferor fails to make payment of such amounts at or prior
to the time of assignment by the Company to the Bank Investors, such amount
shall be paid by the Bank Investors to the Company as additional consideration
for the interests assigned to the Bank Investors, and the amount of the "Net
Investment" hereunder held by the Bank Investors shall be increased by an amount
equal to the additional amount so paid by the Bank Investors.
(e) Administration of Agreement After Assignment; Discount. After
------------------------------------------------------
any assignment by the Company to the Bank Investors pursuant to this Section
9.7, all rights of the Collateral Agent set forth herein shall be deemed to be
afforded to the Agent on behalf of the Bank Investors instead of either such
party. After any such assignment, Discount hereunder shall be determined in
accordance with the terms of the Fee Letter dated the date hereof (as such
letter may be amended from time to time) between the Transferor and the Agent.
80
(f) Payments. After any assignment by the Company to the Bank
--------
Investors pursuant to this Section 9.7, all payments to be made hereunder by the
Transferor or the Collection Agent to the Bank Investors shall be made to the
Agent's account as such account shall have been notified to the Transferor and
the Collection Agent.
(g) Downgrade of Bank Investor. If the short-term debt rating of a
--------------------------
Bank Investor shall be A-2 or P-2 from Standard & Poor's or Moody's,
respectively, with negative credit implications, such Bank Investor, upon
request of the Agent, shall, within thirty (30) days of such request, assign its
rights and obligations hereunder to another financial institution (which
institution's short-term debt shall be rated at least A-2 and P-2 from Standard
& Poor's and Moody's, respectively, and which shall not be so rated with
negative credit implications). If the short-term debt rating of a Bank Investor
shall be A-3 or P-3, or lower, from Standard & Poor's or Moody's, respectively,
such Bank Investor, upon request of the Agent, shall, within five (5) Business
Days of such request, assign its rights and obligations hereunder to another
financial institution (which institution's short- term debt shall be rated at
least A-2 and P-2 from Standard & Poor's and Moody's, respectively, and which
shall not be so rated with negative credit implications). In either such case,
if any such Bank Investor shall not have assigned its rights and obligations
under this Agreement within the applicable time period described above, the
Company shall have the right to require such Bank Investor to accept the
assignment of such Bank Investor's Pro Rata Share of the Net Investment, and
such assignment shall occur in accordance with the applicable provisions of this
Section 9.7. Such Bank Investor shall be obligated to pay to the Company, in
connection with such assignment, in addition to the Pro Rata Share of the Net
Investment, an amount equal to a pro rata portion of the interest component of
all outstanding Commercial Paper issued to fund the Net Investment, as
reasonably determined by the Agent.
81
ARTICLE II
MISCELLANEOUS
SECTION II.1. Term of Agreement. This Agreement shall terminate following
-----------------
the Termination Date when the Net Investment has been reduced to zero, all
accrued Discount has been paid in full and all other Aggregate Unpaids have been
paid in full; provided, however, that (i) the rights and remedies of the Company
-------- -------
with respect to any representation and warranty made or deemed to be made by
each of Transferor, the Collection Agent and CompuCom pursuant to this
Agreement, (ii) the indemnification and payment provisions of Article VIII, and
(iii) the agreement set forth in Section 10.9, shall be continuing and shall
survive any termination of this Agreement for a period of three (3) years
following such date in the case of clauses (i) and (ii) above.
SECTION II.2. Waivers; Amendments. No failure or delay on the part of the
-------------------
Company 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. Any provision of this Agreement may be amended if, but only if, such
amendment is in writing and is signed by the parties hereto.
SECTION II.3. Notices. Except as provided below, all communications and
-------
notices provided for hereunder shall be in writing (including bank wire, telex,
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 and confirmation is received,
(ii) if given by mail 3 Business Days following such posting, or (iii) if given
by any other means, when received at the address
82
specified in this Section. However, anything in this Section to the contrary
notwithstanding, the Transferor hereby authorizes the Company to effect
Transfers, Tranche Period and Tranche Rate selections based on telephonic
notices made by any Person which the Company in good faith believes to be acting
on behalf of the Transferor. The Transferor and the Company agree to deliver
promptly to the other a written confirmation of each telephonic notice signed by
an authorized officer of such party. However, the absence of such confirmation
shall not affect the validity of such notice.
If to the Company:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center--South Tower
225 Liberty Street
New York, New York 10218
Telephone: (212) 236-7200
Telecopy: (212) 236-7584
(with a copy to the Agent)
If to the Transferor:
CSI Funding Inc.
7171 Forest Lane
Dallas, Texas 75230
Telecopy: (972) 856-5395
Payment Information:
NationsBank of Texas, N.A.
ABA: 111000025
Account 1291795475
If to the Agent:
NationsBank, N.A.
NationsBank Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Investment Banking
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
Payment Information:
ABA: 053000196
83
Attention: Camille Zerbinos
Reference: CompuCom Expenses
SECTION II.4. Governing Law; Submission to Jurisdiction; Integration.
------------------------------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE TRANSFEROR, THE COLLECTION AGENT
AND COMPUCOM HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. Each of the Transferor, the Collection Agent and CompuCom
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 10.4 shall affect the right of the Company to bring any action or
proceeding against the Transferor, the Collection Agent and CompuCom or their
property in the courts of other jurisdictions.
(b) 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.
SECTION II.5. Severability; Counterparts. This Agreement may be executed
--------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. 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
84
or render unenforceable such provision in any other jurisdiction.
SECTION II.6. Successors and Assigns.
----------------------
(a) This Agreement shall be binding on the parties hereto and their
respective successors and assigns; provided, however, that neither the
-------- -------
Transferor, the Collection Agent nor CompuCom may assign any of its rights or
delegate any of its duties hereunder without the prior written consent of the
Company. No provision of this Agreement shall in any manner restrict the ability
of the Company to assign, participate, grant security interests in, or otherwise
transfer any portion of the Transferred Interest.
(b) Each of the Transferor and CompuCom hereby agrees and consents to
the assignment by the Company from time to time of all or any part of its rights
under, interest in and title to this Agreement and the Transferred interest to
any Liquidity Provider or the Bank Investors. In addition, each of the
Transferor and CompuCom hereby agrees and consents to the complete assignment by
the Company of all of its rights (but not its obligations) under, interest in
and title to this Agreement and the Transferred Interest to NationsBank, N.A.,
in its capacity as collateral agent (in such capacity, the "Collateral Agent")
----------------
for any Liquidity Provider, any Credit Support Provider and the holders of
Commercial Paper from time to time.
SECTION II.7. [RESERVED]
SECTION II.8. Confidentiality. (a) Each of the Transferor, the
---------------
Collection Agent and CompuCom hereby consents to the disclosure of any non-
public information with respect to it to (i) either the Agent or the Company by
the other and (ii) the Liquidity Provider, the Credit Support Provider, any Bank
Investor, or any nationally recognized rating agency providing a rating for the
Company's commercial paper.
(b) Each of the Transferor and the Company shall maintain, and shall
cause each of its officers, employees and agents to maintain, the
confidentiality of this Agreement, all documents related hereto and all other
confidential proprietary information with respect
85
to, on the one hand, the Company, the Agent, any Bank Investor, the Liquidity
Provider or the Credit Support Provider, and, on the other hand, CompuCom and
the Transferor, and each of their respective businesses obtained by them in
connection with the structuring, negotiation and execution of the transactions
contemplated herein, except for information that has become publicly available
and has been disclosed to (i) legal counsel, accountants and other professional
advisors to the Company and the Transferor by the other, (ii) as required by
law, regulation or legal process and (iii) in connection with any legal or
regulatory proceeding to which the Transferor or the Company, as applicable, is
subject. Both the Company and the Agent, on the one hand, and the Transferor and
CompuCom, on the other hand, hereby consent to the disclosure of information in
the manner and to the Persons set forth in clauses (i) through (iii) above.
SECTION .1. No Bankruptcy Petition Against the Company. Each of the
------------------------------------------
Transferor, the Collection Agent and CompuCom hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
outstanding Commercial Paper or other indebtedness of the Company, it will not
institute against, or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION .2. Limited Recourse; Waiver of Setoff.
----------------------------------
(a) Notwithstanding anything to the contrary contained herein, the
obligations of the Company under this Agreement are solely the corporate
obligations of the Company and shall be payable at such time as funds are
received from the Transferor, CompuCom and other transferors or from any party
to any agreement with the Company in accordance with the terms thereof in excess
of funds necessary to pay matured and maturing Commercial Paper and, to the
extent funds are not available to pay such obligations, the claims relating
thereto shall continue to accrue. Each party hereto agrees that the payment of
any claim (as defined in Section 101 of Title 11 of the Bankruptcy Code) of any
such party shall be
86
subordinated to the payment in full of all Commercial Paper. No recourse shall
be had for the payment of any amount owing in respect of any obligation of, or
claim against, the Company arising out of or based upon this Agreement against
any stockholder, employee, officer, director or incorporator of the Company or
any Affiliate thereof or against any stockholder, employee, officer, director,
incorporator or Affiliate of the Agent; provided, however, that the foregoing
-------- -------
shall not relieve any such person or entity from any liability they might
otherwise have as a result of fraudulent actions or omissions taken by them.
(b) Each of the Transferor and CompuCom hereby agrees to waive any
right of setoff which it may have or to which it may be entitled against the
Company and its assets.
SECTION .3. Grant of Security Interest. The Transferor does hereby grant
--------------------------
to the Agent, on behalf of the Company and the Bank Investors, a security
interest in all of the Transferor's right, title and interest in, to and under
the Receivables, together with Related Security and Collections with respect
thereto, and in all of the Transferor's rights under the Receivables Purchase
Agreement and that this Agreement shall constitute a security agreement under
applicable law.
87
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amended and Restated Transfer and Administration Agreement as of the date
first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: /S/ STEWART CUTLER
----------------------------
Name: Stewart Cutler
Title: Vice President
CSI FUNDING INC.,
as Transferor
By: /s/ DANIEL CELONI
----------------------------
Name: Daniel Celoni
Title: Treasurer
COMPUCOM SYSTEMS, INC.,
individually and
as Collection Agent
By: /s/ M. LAZANA SMITH
----------------------------
Name: M. Lazana Smith
Title: SVP-CFO
NATIONSBANK, N.A., as Agent
and as Bank Investor
Commitment:
$97,500,000.00 By: /s/ STAN MEIHAUS
---------------------------
Name: Stan Meihaus
Title: Vice President
BANK HAPOALIM, B.M.,
as Bank Investor
Commitment:
$30,000,000.00 By: /s/ JONATHAN KULKA
----------------------------
Name: Jonathan Kulka
Title: FVP
By: /s/ PETER DOVAS
----------------------------
Name: Peter Dovas
Title: VP
CREDIT LYONNAIS NEW YORK BRANCH,
as Bank Investor
Commitment:
$30,000,000.00 By: /s/ DAVID C. FINK
----------------------------
Name: David C. Fink
Title: First Vice President
CORESTATES BANK, N.A.,
as Bank Investor
Commitment:
$17,500,000.00 By: /s/ SCOTT HUFFMAN
----------------------------
Name: Scott Huffman
Title: Vice President
EXHIBIT N
---------
CERTAIN DEFINITIONS
(All defined terms contained in this Exhibit N shall only be used in connection
with Sections 7.1 (o), (p), (q), (r) and (s).)
Capitalized terms used in this Exhibit N which are also defined herein, are used
as so defined herein.
"Account" has the meaning assigned to such term in the UCC.
-------
"Accounts and Inventory Report" means a report, signed by an Authorized
-----------------------------
Signatory, in substantially the form of Exhibit E of the Credit Agreement,
appropriately completed.
"Acquisition" means any transaction pursuant to which the Borrower or any
-----------
of its Subsidiaries, (i) whether by means of a capital contribution or purchase
or other acquisition of stock or other securities or other equity participation
or interest, (A) acquires more than 50% of the equity interest in any Person
pursuant to a solicitation by the Borrower or such Subsidiary of tenders of
equity securities of such Person, or through one or more negotiated block,
market, private or other transactions, or a combination of any of the foregoing,
or (B) makes any corporation a Subsidiary of the Borrower or such Subsidiary, or
causes any corporation, other than a Subsidiary of the Borrower or such
Subsidiary, to be merged into the Borrower or such Subsidiary (or agrees to be
merged into any other corporation other than a wholly-owned Subsidiary
(excluding directors' qualifying shares) of the Borrower or such Subsidiary), or
(ii) purchases all or substantially all of the business or assets of any Person
or of any operating division of any Person.
"Administrative Lender" means NationsBank of Texas,
---------------------
N-1
N.A., a national banking association, as administrative agent for Lenders, or
such successor administrative agent appointed pursuant to Section 10.1(b) of the
Credit Agreement.
"Administrative Lender Fee Letter" has the meaning specified in Section
--------------------------------
2.4(c) of the Credit Agreement.
"Advance" means a Facility A Advance, a Facility B Advance or a Swing Line
-------
Advance and "Advances" means Facility A Advances, Facility B Advances and Swing
--------
Line Advances.
"Affiliate" means, as applied to any Person, any other Person that,
---------
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, that Person.
"Agreement Date" means the date of the Credit Agreement.
--------------
"Applicable Environmental Laws" means applicable laws pertaining to health
-----------------------------
or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
------
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal
Act amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA").
----
"Applicable Law" means (a) in respect of any Person, all provisions of
--------------
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
--------------
the laws of the
N-2
United States of America, including without limitation 12 USC '' 85 and 86,
as amended from time to time, and any other statute of the United States of
America now or at any time hereafter prescribing the maximum rates of
interest on loans and extensions of credit, and the laws of the State of
Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other
---------
statute of the State of Texas; provided that the parties hereto agree that
the provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas,
1925, as amended, shall not apply to Advances, this Agreement, the Notes or
any other Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum
----------------------------
percentages, applicable in the following situations:
Applicability
-------------
(a) Initial Pricing Period 1.000%
1.250%
0.750%
(b) Subsequent Pricing Period
(1) The Fixed Charge Coverage Ratio is greater than 0.750%
or equal to 2.50 to 1 1.000%
0.625%
(2) The Fixed Charge Coverage Ratio is less than 0.875%
2.50 to 1 but greater than or equal to 2.00 to 1 1.125%
0.750%
(3) The Fixed Charge Coverage Ratio is less than 1.000%
2.00 to 1 but greater than or equal to 1.50 to 1 1.250%
0.875%
(4) The Fixed Charge Coverage Ratio is less than 1.250%
1.50 to 1 1.500%
1.125%
N-3
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a quarterly basis according to the
performance of the Borrower as tested by using the Fixed Charge Coverage Ratio
calculated as of the end of each fiscal quarter during the Subsequent Pricing
Period; provided, that each adjustment in the LIBOR Basis shall be effective
--------
with respect to LIBOR Advances (i) made following receipt by the Administrative
Lender of the financial statements required to be delivered pursuant to Section
6.2 or 6.3 of the Credit Agreement, as applicable, for each such fiscal
quarter, and the corresponding Compliance Certificate required pursuant to
Section 6.4 of the Credit Agreement, on the date of making such LIBOR Advance
and (ii) outstanding on the date of receipt of such financial statements and
Compliance Certificate referred to in clause (i) immediately preceding, on the
date which is two Business Days following the date of receipt of such financial
statements and Compliance Certificate. If such financial statements and
Compliance Certificate are not received by the Administrative Lender by the date
required, effective as of the first Business Day following notification thereof
from the Administrative Lender to the Borrower, the Applicable LIBOR Rate Margin
shall be determined as if the Fixed Charge Coverage Ratio is less than 1.50 to 1
until such time as such financial statements and Compliance Certificate are
received.
"Asset Coverage Ratio" means, for the Borrower and its Subsidiaries
--------------------
determined in accordance with GAAP on a consolidated basis, at the time in
question, the ratio of (a) the sum of (i) Cash and Cash Equivalents, plus (ii)
Accounts, plus (iii) Inventory to (b) the sum of (i) outstanding obligations in
respect of Facility A and Swing Line Advances, Reimbursement Obligations and
other Indebtedness, plus (ii) the Net Exposure Under Securitization, plus (iii)
accounts payable and accrued liabilities in the ordinary course of business.
"Assignees" means any assignee of a Lender pursuant to an Assignment
---------
Agreement and shall have the meaning
N-4
ascribed thereto in Section 11.6 of the Credit Agreement.
"Assignment Agreement" has the meaning specified in of the Credit Agreement.
--------------------
"Authorized Signatory" means such senior personnel of the Borrower as may be
--------------------
duly authorized and designated in writing by the Borrower to execute documents,
agreements and instruments on behalf of the Borrower, and to request Advances
and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate Basis.
-----------------
"Base Rate Basis" means, for any day, a per annum interest rate equal to the
---------------
higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such day
or (b) the Prime Rate on such day. The Base Rate Basis shall be adjusted
automatically without notice as of the opening of business on the effective date
of each change in the Prime Rate to account for such change.
"Borrower" has the meaning specified in the introductory provision of the
--------
Credit Agreement.
"Business Day" means a day on which commercial banks are open (a) for the
------------
transaction of business in Dallas, Texas, and, (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
U.S. dollar deposits) in London, England.
"Capital" means, for any date of calculation, for the Borrower and its
-------
Subsidiaries, on a consolidated basis determined in accordance with GAAP, the
sum of (a) Funded Debt plus (b) Net Worth.
"Capital Expenditures" means, for any period, expenditures made by the
--------------------
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the cost
N-5
of the item, but excluding capital expenditures made with insurance proceeds to
the extent used to replace or repair damaged fixed assets, plant and equipment)
computed in accordance with GAAP, consistently applied.
"Capital Stock" means, as to any Person, the equity interests in such Person,
-------------
including, without limitation, the shares of each class of capital stock in any
Person that is a corporation, and each class of partnership interest (including,
without limitation, general, limited and preference units) in any Person that is
a partnership.
"Capitalized Lease Obligations" means that portion of any obligation of the
-----------------------------
Borrower or any Subsidiary of the Borrower as lessee under a lease which at the
time are recorded as capitalized lease obligations on the balance sheet of the
Borrower or such Subsidiary prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each
-------------------------
Subsidiary of the Borrower (i) cash (which, after the occurrence of an Event of
Default, shall exclude any cash proceeds of Accounts), (ii) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities of not more than six months
from the date of acquisition, (iii) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper issued by any Lender or the parent corporation of any Lender,
and commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., a New York corporation, or P-1
or the equiva-
N-6
lent thereof by Moody's Investors Service, Inc., and in each case maturing
within six months after the date of acquisition, and (vi) a readily redeemable
"money market mutual fund" advised by a bank described in clause (iii) hereof,
or an investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, that has and maintains an investment policy limiting its
investments primarily to instruments of the types described in clauses (i)
through (v) hereof and having on the date of such Investment total assets of at
least One Hundred Million Dollars ($100,000,000.00).
"CFI" means CSI Funding, Inc., a Delaware corporation and wholly-owned
---
Subsidiary of the Borrower, as purchaser under the RPA.
"CFI Note" means the "Subordinated Note" as defined by the RPA, and any and
--------
all renewals, extensions, modifications, amendments, supplements or restatements
thereof.
"Change of Control" means the occurrence of any of the following events after
-----------------
the Agreement Date: (a) any Person or any Persons acting together which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the
-----
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
------------
successor provision thereto, other than the Group whose nominees constituted a
majority of the board of directors of the Borrower as of the close of business
on the Agreement Date, together with any Affiliates or Related Persons thereof,
shall beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
30% of the aggregate voting power of all classes of Capital Stock of the
Borrower entitled to vote generally in the election of directors of the
Borrower; or (b) any Person or Group, other than any Person or Group whose
nominees constituted a majority of the board of directors of the Borrower as of
the close of business on the Agreement Date, together with any Affiliates or
Related Persons thereof, shall succeed in having sufficient of its or their
nominees elected to the Board of Directors of the Borrower, such that such
nominees, when added to any existing director
N-7
remaining on the Board of Directors of the Borrower after such election who is
an Affiliate or Related Person of such Group, shall constitute a majority of the
Board of Directors of the Borrower.
"ClientLink Note" means that certain promissory note, dated September 5, 1996,
---------------
in the original principal amount of $2,500,000 executed and delivered by
ClientLink, Inc. and payable to the order of the Borrower, and any and all
renewals, extensions, modifications, amendments, supplements or restatements
thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Collateral" means any collateral granted at any time by any Person to the
----------
Administrative Lender for the benefit of the Lenders to secure the Obligations;
provided, however, that on the Agreement Date or as soon as practical thereafter
the Administrative Lender shall release any Liens held by the Administrative
Lender insofar as such Liens cover the Receivables and provided, further, that
upon the occurrence of the Inventory Release Event, the Administrative Lender
shall also release any Liens held by the Administrative Lender insofar as such
Liens cover the Inventory of the Borrower or any of its Subsidiaries.
"Collateral Document" means any document under which Collateral is granted and
-------------------
any document related thereto.
"Commitment Fee" has the meaning specified in Section 2.4(a) of the Credit
--------------
Agreement.
"Commitments" means, collectively, the Facility A Commitment and the Facility
-----------
B Commitment, as reduced from time to time pursuant to Section 2.6 of the
Credit Agreement.
"Compliance Certificate" means a certificate, signed by an Authorized
----------------------
Signatory, in substantially the form of Exhibit G to the Credit Agreement,
appropriately completed.
N-8
"Control" or "Controlled By" or "Under Common Control" means possession,
------- ------------- --------------------
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 10% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not an
----------------
individual, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Credit Agreement" means the Amended and Restated Credit Agreement, dated
----------------
November 3, 1997, among CompuCom Systems, Inc., certain Lenders (as such term is
defined in this Exhibit N), and NationsBank of Texas, N.A. as Administrative
Lender (as such term is defined in this Exhibit N), as amended, modified,
supplemented or restated from time to time.
"Creditor" means a creditor of the Borrower or any Subsidiary of the Borrower
--------
and shall not include any Affiliate of any such creditor.
"Current Maturities" means, with respect to any Person, the principal portion
------------------
payable by such Person on Long Term Debt during the twelve-month period
immediately succeeding the date of determination.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
------------------
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from
N-9
time to time in effect.
"Deed of Trust" means any Deed of Trust or Mortgage, as applicable, relating
-------------
to the real property of the Borrower purchased with the proceeds of the Facility
B Advances, in a form acceptable to the Administrative Lender, as amended,
modified, renewed, supplemented or restated from time to time.
"Default" means an Event of Default and/or any of the events specified in
-------
Section 8.1 of the Credit Agreement, regardless of whether there shall have
occurred any passage of time or giving of notice that would be necessary in
order to constitute such event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
------------
respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Prime Rate plus 2.00% or (b) with respect to LIBOR Advances, the lesser of
(i) the Highest Lawful Rate or (ii) the LIBOR Basis plus 2% in excess of the
Applicable Rate Margin then in effect.
"Determining Lenders" means, on any date of determination, any combination of
-------------------
the Lenders having in excess of 50.0% of the aggregate amount of the Advances
(which for purposes of the calculation shall include for each Lender an amount
equal to the product of such Lender's Specified Percentage multiplied by the
aggregate principal amount of Swing Line Advances outstanding) then outstanding;
provided, however, that if there are no Advances outstanding hereunder,
"Determining Lenders" shall mean any combination of Lenders whose Specified
--------------------
Percentages aggregate in excess of 50.0%.
"Dividend" means, as to any Person, (a) any declaration or payment of any
--------
dividend (other than a stock dividend) on, or the making of any distribution on
account of, any shares of Capital Stock of, or other similar interest in, such
Person and (b) any purchase, redemption, or other acquisition or retirement for
value of any shares of Capital Stock of, or similar interest in,
N-10
such Person.
"Dollar" or "$" means the lawful currency of the United States of America.
------ -
"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
-------------------
Foreign Subsidiary.
"EBIT" means, for any period, determined in accordance with GAAP on a
----
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense.
"EBITDA" means, for any period, determined in accordance with GAAP on a
------
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) EBIT
plus (b) depreciation, amortization and other non-cash charges (to the extent
included in determining EBIT).
"EFC" means Enterprise Funding Corporation, a Delaware corporation, as
---
purchaser of an undivided interest in a portion of the Receivables, as provided
by the TAA.
"Equipment" has the meaning assigned to such term in the UCC.
---------
"Equity" means shares of capital stock or partnership, profits, capital or
------
member interest, or options, warrants or any other right to subscribe for or
otherwise acquire capital stock or a partnership, profits, capital or member
interest, of the Borrower or any Subsidiary of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and any
N-11
regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a) a
-----------
Reportable Event (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC pursuant to regulations issued under Section 4043 of
ERISA), (b) the withdrawal of any such Person or any member of its Controlled
Group from a Plan subject to Title IV of ERISA during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or the imposition of any liability under Title IV of ERISA
other than PBGC premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1 of the
----------------
Credit Agreement, provided that any requirement for notice or lapse of time has
been satisfied.
"Existing Credit Agreement" has the meaning specified in the Background
-------------------------
provision hereof.
"Facility A Advance" means an Advance made pursuant to Section 2.1(a) of the
------------------
Credit Agreement.
"Facility A Commitment" means $125,000,000.00, as reduced pursuant to Section
---------------------
2.6 of the Credit Agreement .
"Facility A Maturity Date" means October 30, 2002, or the earlier date of
------------------------
termination in whole of the Facility A Commitment pursuant to Section 2.6 or 8.2
of the Credit Agreement.
N-12
"Facility A Notes" means the promissory notes of Borrower evidencing Facility
----------------
A Advances hereunder, substantially in the form of Exhibit A of the Credit
Agreement, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Facility B Advance" means an Advance made pursuant to Section 2.1(b) of the
------------------
Credit Agreement in order to refinance the outstanding Facility B Advances under
the Existing Credit Agreement as of the Agreement Date.
"Facility B Commitment" means $25,000,000.00, as reduced from time to time
---------------------
pursuant to Section 2.6 of the Credit Agreement.
"Facility B Maturity Date" means October 30, 2002, or the earlier date of
------------------------
termination in whole of the Facility B Commitment pursuant to Section 2.6 or
8.2 of the Credit Agreement.
"Facility B Notes" means the promissory notes of Borrower evidencing Facility
----------------
B Advances hereunder, substantially in the form of Exhibit B to the Credit
Agreement, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
------------------
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Lender from three
Federal funds brokers of recognized standing selected by it.
N-13
"Fixed Charges" means, for any date of calculation, calculated for Borrower
-------------
and its Subsidiaries on a consolidated basis, the sum of, without duplication,
(a) the greater of (i) Current Maturities and (ii) 10% of Funded Debt, plus (b)
interest expense (including interest expense pursuant to Capitalized Lease
Obligations).
"Fixed Charge Coverage Ratio" means the ratio of EBITDA to Fixed Charges,
---------------------------
calculated for the four consecutive fiscal quarters immediately preceding the
date of calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
------------------
organized under the laws of any state of the United States of America or the
District of Columbia.
"Funded Debt" means, as of any date of determination, determined for the
-----------
Borrower and its Subsidiaries on a consolidated basis, (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations to pay the deferred purchase price of
property or services other than trade payables incurred in the ordinary course
of business, (iv) Capitalized Lease Obligations and (v) Net Exposure Under
Securitization.
"GAAP" means generally accepted accounting principles applied on a consistent
----
basis, set forth in the Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants, or their successors which
are applicable in the circumstances as of the date in question. The requirement
that such principles be applied on a consistent basis shall mean that the
accounting principles applied in a current period are comparable in all material
respects to those applied in a preceding period.
"Guaranties" means, collectively, the Parent Guaranty and the Subsidiary
----------
Guaranty.
"Guarantor" means each direct and indirect Subsidiary of the Borrower that
---------
executes and delivers a Subsid-
N-14
iary Guaranty hereunder.
"Guaranty" or "Guaranteed", as applied to an obligation of another Person,
-------- ----------
means (a) a guaranty, direct or indirect, in any manner, of any part or all of
such obligation, and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit; provided, however, Guaranty does
not mean (i) the endorsement of instruments for collection or deposit in the
ordinary course of business and (ii) customary indemnities given in connection
with asset sales in the ordinary course of business.
"Hedge Agreements" means any and all agreements, devices or arrangements
----------------
designed to protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap, swap or collar protection
agreements, and forward rate currency or interest rate options, as the same may
be amended or modified and in effect from time to time, and any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower.
N-15
"Indebtedness" means, with respect to any Person, without duplication, (a) all
------------
obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services, (e) all obligations secured by any Lien
on any property or asset owned by such Person (other than accounts payable
arising in the ordinary course of business), whether or not the obligation
secured thereby shall have been assumed (provided that, unless such obligations
shall have been assumed, for purposes of this definition the amount of such
Indebtedness at any time shall be deemed to equal the fair market value of such
property or asset at such time), (f) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations in respect of
letters of credit, bankers' acceptances and similar instruments, and all
obligations under Hedge Agreements, (g) any Guaranty of such Person of any
obligation of another Person constituting obligations of a type set forth above
and (h) the Net Exposure Under Securitization.
"Indemnified Matters" has the meaning specified in Section 5.9(a) of the
-------------------
Credit Agreement.
"Indemnitees" has the meaning specified in Section 5.9(a) of the Credit
-----------
Agreement.
"Initial Pricing Period" means the period from and including the Agreement
----------------------
Date to and including the Rate Adjustment Date.
"Intangible Assets" means those assets which are treated as intangible
-----------------
pursuant to GAAP, and in any event including, without limitation: (i)
obligations, if any, owing by Affiliates to the Borrower or any Subsidiary of
the Borrower, (ii) the amount, if any, by which inventory exceeds the lower of
cost or market value thereof, (iii) the value of any inventory which is obsolete
or damaged or is otherwise deemed by the Administrative
N-16
Lender not to be of a marketable quality commensurate with the inventory of the
Borrower and its Subsidiaries as a whole; (iv) accounts receivable which are
deemed by the Borrower, any of its Subsidiaries or the Administrative Lender to
be uncollectible or which should be subject to a reserve for bad debts in
accordance with GAAP or which are subject to claims or setoffs; (v) leases and
leasehold improvements; (vi) any asset which is intangible or lacks intrinsic
and marketable value or collectibility, including without limitation goodwill,
noncompetition agreements, patents, copyrights, trademarks, franchises or
organization or research and development costs; (vii) organizational and
experimental expense; and (viii) unamortized debt discount and expense.
"Intercreditor Agreements" collectively means the following certain
------------------------
agreements: (i) Amended and Restated Intercreditor Agreement dated effective as
of April 1, 1996 among NationsBank of Texas, N.A., in its capacity as a lender,
the Borrower, IBM Credit Corporation and NationsBank of Texas, N.A. , (ii)
Subordination Agreement dated August 22, 1994 among NationsBank of Texas, N.A.,
in its capacity as a lender, the Borrower, IBM Credit Corporation and Hewlett-
Packard Company, (iii) Intercreditor Agreement dated December 27, 1993 among
NationsBank of Texas, N.A., in its capacity as a lender, the Borrower and Compaq
Computer Corporation, and (iv) any other intercreditor agreement hereafter
entered into among NationsBank of Texas, N.A., in its capacity as the
Administrative Lender, the Borrower and any Person that is a vendor to the
Borrower of Inventory, as any of the foregoing may be renewed, extended,
modified, amended, supplemented or restated from time to time.
"Interest Period" means the period beginning on the day any LIBOR Advance is
---------------
made and ending one, two, three or six months thereafter (as the Borrower shall
select); provided, however, that all of the foregoing provisions are subject to
-------- -------
the following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest
N-17
Period shall be extended to the next succeeding Business Day, unless, with
respect to a LIBOR Advance, the result of such extension would be to extend
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month; and
(iii) the Borrower may not select any Interest Period which ends after the
date of a scheduled principal payment on the Advances unless, after giving
effect to such selection, the aggregate unpaid principal amount of the LIBOR
Advances for which Interest Periods end after such scheduled principal payment
shall be equal to or less than the principal amount to which the Advances or
Facility B Commitment are required to be reduced after such scheduled
principal payment is made.
"Inventory" has the meaning assigned to such term in the UCC.
---------
"Inventory Release Event" means the the occurrence of all of the following
-----------------------
events: (i) the release in writing (in form and substance acceptable to the
Administrative Lender) by all holders (other than the Administrative Lender) of
all Liens covering the Inventory, or any of same, of the Borower and/or any of
its Subsidiaries, (ii) the release or termination, as applicable, of any and all
UCC financing statements with respect to such Liens on such Inventory, (iii) the
delivery to the Administrative Lender of UCC searches, or other evidence
acceptable to the Administrative Lender, evidencing such releases, and (iv) the
delivery to the Administrative Lender of such other documents, agreements and
papers as the Administrative Lender shall reasonably request in order to
evidence that such Inventory is not subject to
N-18
any Lien(s) in favor of any Person (other than the Administrative Lender).
"Investment" means any acquisition of all or substantially all assets of any
----------
Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than loans or advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the purchase of
accounts receivable of any other Person that are not current assets or do not
arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
------------
association, in its capacity as issuer of the Letters of Credit.
"Landlord's Waiver" means an agreement in form and substance satisfactory to
-----------------
the Administrative Lender pursuant to which the landlord of any leased location
where any Collateral is located shall waive its rights, if any, to the
Collateral and shall grant to the Administrative Lender rights to enter upon the
premises to inspect, remove or dispose of the Collateral.
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
---
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages hereof
------
so long as such financial institution maintains a portion of the Commitments or
is owed any part of the Obligations (including the Administrative Lender in its
individual capacity), and each Assignee that hereafter becomes a party hereto
pursuant to Section 11.6 of the Credit Agreement, subject to the limitations
set forth therein.
"L/C Related Documents" has the meaning specified in Section 2.15(e) of the
---------------------
Credit Agreement.
N-19
"Letter of Credit" has the meaning specified in Section 2.15(a) of the
----------------
Credit Agreement.
"Letter of Credit Agreement" has the meaning specified in Section 2.15(b) of
--------------------------
the Credit Agreement.
"Letter of Credit Facility" has the meaning specified in Section 2.15(a) of
-------------------------
the Credit Agreement.
"Leverage Ratio" means, for any date of calculation, the ratio of Funded Debt
--------------
as of the date of determination to EBITDA calculated for the four consecutive
fiscal quarters immediately preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made as a
-------------
LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with the
provisions of Section 2.2 of the Credit Agreement.
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. The LIBOR Basis shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums for
such reserve or deposit requirements assessed by each Lender to the extent
incurred by such Lender, which are payable directly to each Lender. Once
determined, the LIBOR Basis shall remain unchanged during the applicable
Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office designated
--------------------
as its LIBOR Lending Office on Schedule 1 attached to the Credit Agreement, and
such other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Lender.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period therefor,
----------
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars
N-20
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the term "LIBOR Rate" shall mean, for
----------
any LIBOR Advance for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
--------
however, if more than one rate is specified on Reuters Screen LIBO Page, the
- -------
applicable rate shall be the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not choate,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
----------
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means the Credit Agreement, the Notes, the Security
--------------
Agreement, the Pledge Agreement, the Subsidiary Guaranty, any other Collateral
Document, the Administrative Lender Fee Letter, any Hedge Agreements entered
into with any Lender, and any other document or agreement executed or delivered
from time to time by the Borrower, any Subsidiary of the Borrower or any other
Person in connection herewith or as security for the Obligations.
"Long Term Debt" means any obligation which is due
--------------
N-21
one year or more from the date of creation thereof which under GAAP is shown as
a liability, plus (without duplication) amounts equal to the aggregate net
rentals (after making allowances for any interest, taxes or other expenses
included therein) payable more than one year from the date of creation thereof
under Capitalized Lease Obligations.
"Material Adverse Effect" means any act or circumstance or event that (a)
-----------------------
could reasonably be expected to be material and adverse to the business,
financial condition, results of operations, or business prospects of the
Borrower and its Subsidiaries taken as a whole, or (b) in any manner whatsoever
does or could reasonably be expected to materially and adversely affect the
validity or enforceability of any Loan Document.
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender hereunder.
"NCGI Note" means that certain subordinated convertible note, dated October
---------
31, 1995, in the original principal amount of $3,000,000, executed and delivered
by the Borrower and payable to the order of Network Compatibility Group, Inc.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary or appropriate to enable the Borrower or any
Subsidiary of the Borrower to maintain and operate its business and properties,
including the sale of any Inventory.
"Net Cash Proceeds" means, with respect to any sale,
-----------------
N-22
lease, transfer or other disposition of any asset by any Person, the amount of
cash received by such Person in connection with such transaction (including cash
proceeds of any property received in consideration of any such sale, lease,
transfer or other disposition) after deducting therefrom the aggregate, without
duplication, of the following amounts to the extent properly attributable to
such transaction or to the asset that is the subject thereof: (i) reasonable
brokerage commissions, legal fees, finder's fees, financial advisory fees,
accounting fees, underwriting fees, investment banking fees and other similar
commissions and fees, in each case, to the extent paid or payable by such
Person; (ii) filing, recording or registration fees or charges or similar fees
or charges paid by such Person; (iii) taxes paid or payable by such Person or
any shareholder, partner or member of such Person to governmental taxing
authorities as a result of such sale or other disposition; and (iv) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness that is secured by a Lien on the asset in question and that is
required to be repaid under the terms thereof as a result of such asset sale.
"Net Exposure Under Securitization" means, for any date of calculation, the
---------------------------------
sum of the following (without duplication): (i) the "Net Investment" (as such
term is defined in the TAA) as of such date of calculation and (ii) any and all
obligations and liabilities of the Borrower, CFI or any other Subsidiary of
Borrower under, or in connection with, the Securitization, as of such date of
calculation, to the extent that same constitute liabilities of the Borrower or
of any Subsidiary of the Borrower under GAAP or would, under GAAP, constitute
liabilities of the Borrower or of any Subsidiary of the Borrower if the
Securitization was treated as an on balance sheet transaction.
"Net Income" means, with respect to any Person for any period, the net income
----------
(loss) of such Person, after provisions for taxes and extraordinary items,
determined in accordance with GAAP.
N-23
"Net Worth" means, as of any date of calculation, for the Borrower and its
---------
Subsidiaries, on a consolidated basis, determined in accordance with GAAP, the
consolidated total stockholders' equity of the Borrower and its Subsidiaries.
"Notes" means, collectively, the Facility A Notes, the Facility B Notes and
-----
the Swing Line Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a) of the
-------------------
Credit Agreement.
"Notice of Issuance" has the meaning specified in Section 2.15(b) of the
------------------
Credit Agreement.
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any other Obligor to any Lender or the Administrative Lender under
any of the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any other Obligor for losses, damages, expenses
or any other liabilities of any kind that any Lender may suffer by reason of a
breach by the Borrower or any other Obligor of any obligation, covenant or
undertaking with respect to any Loan Document payable by the Borrower or any
other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
-------
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) of the Credit
-----------
Agreement
"Participation" has the meaning specified in Section 11.6(c) of the Credit
-------------
Agreement.
"Payment Date" means the last day of the Interest
------------
N-24
Period for any LIBOR Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
----
to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet delinquent, and (ii)
Liens for taxes, assessments, governmental charges, levies or claims that are
not yet delinquent or that are being diligently contested in good faith by
appropriate proceedings in accordance with Section 5.6 of the Credit Agreement
and for which adequate reserves shall have been set aside on such Person's
books, but only so long as no foreclosure, restraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
incurred in the ordinary course of business for sums not yet due or being
contested in good faith, if such reserve or appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances on
the use of real property which do not interfere in any material respect with the
ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets acquired (or existing
on property at the time such property is acquired) by such Person or created to
secure Indebtedness permitted by Section 7.1(c) or 7.1(d) of the Credit
Agreement, which is incurred solely for the
N-25
purpose of financing the acquisition of such assets and incurred at the time of
acquisition or which exists against such assets at the time of acquisition
thereof, so long as each such Lien shall at all times be confined solely to the
asset or assets so acquired (and proceeds thereof), and refinancings thereof so
long as any such Lien remains solely on the asset or assets acquired and the
amount of Indebtedness related thereto is not in creased; provided, however,
that from and after the occurrence of the Inventory Release Event, Liens
covering Inventory of the Borrower or any of its Subsidiaries shall not
constitute Permitted Liens hereunder;
(g) Liens in respect of judgments or awards for which appeals or proceedings
for review are being prosecuted and in respect of which a stay of execution upon
any such appeal or proceeding for review shall have been secured, provided that
(i) such Person shall have established adequate reserves for such judgments or
awards, (ii) such judgments or awards shall be fully insured (subject to
customary deductibles) and the insurer shall not have denied coverage, or (iii)
such judgments or awards shall have been bonded to the satisfaction of the
Determining Lenders;
(h) Any Liens which are described on Schedule 2 to the Credit Agreement, and
Liens resulting from the refinancing of the related Indebtedness, provided that
the Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower; provided, however, that from and after
the occurrence of the Inventory Release Event, Liens covering Inventory of the
Borrower or any of its Subsidiaries shall not constitute Permitted Liens
hereunder;
(i) Liens arising from filing Uniform Commercial Code financing statements for
precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which the Borrower or any of its Subsidiaries
is a lessee;
(j) Any zoning or similar law or right reserved to or vested in any Tribunal
to control or regulate the use
N-26
of any real property;
(k) Any other title exception with respect to real property assets disclosed
by any preliminary title report, title commitment report or other search of
title provided to the Administrative Lender in accordance with this Agreement
unless disapproved by the Administrative Lender prior to the Agreement Date;
(l) Any Lien in favor of any Lender to secure any obligations owed to such
Lender in respect of any Hedge Agreement;
(m) Liens incurred or deposits made to secure the performance of bids, trade
contracts (other than for Indebtedness), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(n) Liens securing Indebtedness or other obligations of the Borrower or a
Subsidiary of the Borrower owing to the Borrower or a Subsidiary;
(o) Liens to the extent allowed under the MSAA or the Intercreditor
Agreements; provided, however, that from and after the occurrence of the
Inventory Release Event, Liens covering Inventory of the Borrower or any of its
Subsidiaries shall not constitute Permitted Liens hereunder;
(p) Liens in favor of EFC under, or in connection with, the TAA and/or the
RPA;
(q) any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (f), (h), (i), (j), (m),
(o) and (p) hereof; and
(r) Liens securing Indebtedness permitted by Section 7.1(k) of the Credit
Agreement, to the extent only that such Liens cover Inventory manufactured by,
purchased from or acquired from the holder of such Indebtedness and any renewals
thereof; provided, however, that
N-27
from and after the occurrence of the Inventory Release Event, Liens covering
Inventory of the Borrower or any of its Subsidiaries shall not constitute
Permitted Liens hereunder.
"Person" means an individual, corporation, partnership, trust or
------
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pledge Agreement" means the pledge agreement, substantially in the form of
----------------
Exhibit F of the Credit Agreement, as amended, modified, renewed, supplemented
or restated from time to time, executed by the Borrower.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
-----------------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning December 31, 1997.
"Rate Adjustment Date" means the date which is two Business Days following the
--------------------
date that the Lenders receive the financial statements for the fiscal year
ending December 31, 1996, required to be delivered pursuant to Section 6.2 of
the Credit Agreement.
N-28
"Receivables" has the meaning assigned to such term in the RPA.
-----------
"Reference Lender" means NationsBank; provided that if the NationsBank
----------------
Commitments shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
Administrative Lender (after consultation with Borrower) shall, with notice to
Borrower and Lenders, designate another Lender as the Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit not theretofore reimbursed by
the Borrower.
"Related Person" means (a) any Affiliate of the Borrower, (b) any individual
--------------
or entity who directly or indirectly holds 10% or more of any class of Capital
Stock of the Borrower, (c) any relative of such individual by blood, marriage or
adoption not more remote than first cousin and (d) any officer or director of
the Borrower.
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA.
----------------
"Restricted Payments" means, collectively, (i) Dividends and (ii) any (A)
-------------------
payment or prepayment of principal, premium or penalty on any Subordinated Debt
of the Borrower or any Subsidiary of the Borrower or any defeasance, redemption,
purchase, repurchase or other acquisition or retirement for value, in whole or
in part, of any Subordinated Debt (including, without limitation, the setting
aside of assets or the deposit of funds
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therefor) and (B) prepayment of interest on any Subordinated Debt.
"Rights" means rights, remedies, powers and privileges.
------
"RPA" means that certain Receivables Purchase Agreement, dated as of April 1,
---
1996, as amended and restated as of November 3, 1997, between the Borrower and
CFI providing for the sale by the Borrower to CFI and the purchase by CFI from
the Borrower all Receivables now owned and hereafter acquired and arising from
time to time prior to termination of the RPA, on the terms provided therein, as
the same may be renewed, extended, modified, amended or restated from time to
time.
"Securitization" means, collectively, the transactions evidenced and governed
--------------
by the Securitization Documents.
"Securitization Documents" means, collectively, the RPA and the TAA and any
------------------------
other agreements or documents executed or delivered by any Person in connection
therewith.
"Security Agreement" means the security agreement relating to all Inventory
------------------
and Equipment (and all computer programs, applications, disks, plans, manuals,
specifications, files and other records pertaining thereto) of the Borrower and
its Subsidiaries, substantially in the form of Exhibit D to the Credit
Agreement, as amended, modified, renewed, supplemented or restated from time to
time.
"Solvent" means, with respect to any Person, that the fair value of the assets
-------
of such Person (both at fair valuation and at present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities
(including contingent and unliquidated liabilities) of such Person as of such
date and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and such Person does not have
unreasonably small capital with which to
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carry on its business. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability discounted to present value at rates believed to be reasonable by such
Person.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll, P.C., or
---------------
such other legal counsel as the Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
--------------------
beside its name on the signature pages hereof, or if applicable, specified in
its most recent Assignment Agreement.
"Subordinated Debt" means (i) the NCGI Note and (ii) any other Indebtedness of
-----------------
the Borrower or any Subsidiary of the Borrower having maturities and terms, and
which is subordinated to payment of the Obligations in a manner, approved in
writing by the Administrative Lender and the Determining Lenders, with only such
changes or amendments as are not prohibited by Section 7.22 of the Credit
Agreement.
"Subsequent Pricing Period" means the period from and including the date which
-------------------------
is the first day following the end of the Initial Pricing Period to and
including the Facility A Maturity Date or Facility B Maturity Date, whichever is
later.
"Subsidiary" of any Person means any corporation, partnership, joint venture,
----------
trust or estate or other Person of which (or in which) more than 50% of:
(a) the outstanding capital stock having voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingen-
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cy),
(b) the interest in the capital or profits of such partnership or joint
venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries;
provided, however, that no Person shall be deemed to be a Subsidiary of the
Borrower solely by virtue of the fact that certain shares of the stock of such
Person have been pledged to the Borrower.
"Subsidiary Guaranty" means a guaranty, substantially in the form of Exhibit
-------------------
I to the Credit Agreement, executed and delivered by each Guarantor, as such
guaranty(ies) may be amended, supplemented, modified, renewed or otherwise
restated from time to time.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(c) of the
------------------
Credit Agreement.
"Swing Line Bank" means NationsBank of Texas, N.A. and any successor thereto
---------------
appointed in accordance with Section 10.1(b) of the Credit Agreement.
"Swing Line Facility" has the meaning specified in Section 2.1(c) of the
-------------------
Credit Agreement.
"Swing Line Note" means the Swing Line Note of the Borrower payable to the
---------------
order of the Swing Line Bank, substantially in the form of Exhibit C of the
Credit Agreement, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"TAA" means that certain the Transfer and Administration Agreement, dated as
---
of April 1, 1996, as amended and restated as of November 3, 1997, among the
Borrower,
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CFI, EFC and NationsBank, N.A. in its capacity as Agent and a Bank Investor
thereunder, providing for the transfer by CFI to EFC and the acceptance by EFC
from CFI of an undivided interest in certain Receivables acquired by CFI from
the Borrower pursuant to the RPA, from time to time, on the terms provided
therein, as the same may be renewed, extended, modified, amended or restated
from time to time.
"Tangible Net Worth" means the sum of the following for the Borrower and its
------------------
Subsidiaries, on a consolidated basis, determined in accordance with GAAP, (a)
Net Worth minus (b) the sum of the following (without duplication in respect of
items already deducted in arriving at Net Worth): Intangible Assets, and any
write-up in the book value of assets resulting from revaluation thereof
subsequent to December 31, 1995.
"Taxes" has the meaning specified in Section 2.14 of the Credit Agreement.
-----
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
--------
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental or other regulatory or
public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Unused Portion" means an amount equal to the result of (a) the sum of (i) the
--------------
Facility A Commitment plus (ii) the Facility B Commitment minus (b) the sum of
(i) the outstanding Facility A Advances plus (ii) the outstanding Facility B
Advances plus (iii) the outstanding Reimbursement Obligations in respect of the
Letters of Credit.
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