<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended MARCH 31, 1996 Commission File Number 1-5620
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SAFEGUARD SCIENTIFICS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1609753
- --------------------------------------------------------------------------------
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
800 THE SAFEGUARD BUILDING, 435 DEVON PARK DRIVE WAYNE, PA 19087
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 293-0600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
-------- --------
Number of shares outstanding as of MAY 9, 1996
Common Stock 14,837,521
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
QUARTERLY REPORT FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Consolidated Balance Sheets -
March 31, 1996 (unaudited) and December 31, 1995. . . . . . . . . . . . .3
Consolidated Statements of Operations (unaudited)-
Three Months Ended March 31, 1996 and 1995. . . . . . . . . . . . . . . .5
Consolidated Statements of Cash Flows (unaudited)-
Three Months Ended March 31, 1996 and 1995. . . . . . . . . . . . . . . .6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . .7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . .8
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . .12
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . .12
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2
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SAFEGUARD SCIENTIFICS, INC.
CONSOLIDATED BALANCE SHEETS
(000 omitted)
<TABLE>
<CAPTION>
March 31 December 31
ASSETS 1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 48,730 $ 7,267
Receivables less allowances ($2,639-1996; $2,644-1995) 286,818 285,684
Inventories 232,408 197,948
Other current assets 5,894 7,376
----------- ---------
Total current assets 573,850 498,275
PROPERTY, PLANT AND EQUIPMENT 72,259 80,235
Less accumulated depreciation and amortization (32,106) (36,960)
----------- ---------
40,153 43,275
COMMERCIAL REAL ESTATE 25,893 25,810
Less accumulated depreciation (8,257) (8,023)
----------- ---------
17,636 17,787
OTHER ASSETS
Investments 115,723 132,860
Notes and other receivables 9,765 5,882
Excess of cost over net assets of businesses acquired 27,384 28,830
Other 19,663 15,965
----------- ---------
172,535 183,537
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$ 804,174 $ 742,874
----------- ---------
----------- ---------
</TABLE>
3
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SAFEGUARD SCIENTIFICS, INC.
CONSOLIDATED BALANCE SHEETS
(000 omitted except shares)
<TABLE>
<CAPTION>
March 31 December 31
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
-------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES
Current commercial real estate debt $ 3,103 $ 3,103
Current debt obligations 6,983 9,382
Accounts payable 214,788 192,919
Accrued expenses 57,120 66,212
--------- ---------
Total current liabilities 281,994 271,616
LONG TERM DEBT 152,615 204,431
COMMERCIAL REAL ESTATE DEBT 17,327 17,380
DEFERRED TAXES 21,215 28,449
OTHER LIABILITIES 856 1,057
MINORITY INTEREST 69,529 65,632
CONVERTIBLE SUBORDINATED NOTES 115,000
SHAREHOLDERS' EQUITY
Common stock, par value $.10 a share
Authorized 20,000,000 shares
Issued 16,399,671 shares 1,640 1,640
Additional paid-in capital 22,350 22,349
Retained earnings 114,023 110,043
Treasury stock, at cost
1,594,227 shares-1996 (9,761)
1,717,414 shares-1995 (10,471)
Net unrealized appreciation on investments 17,386 30,748
--------- ---------
145,638 154,309
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$ 804,174 $ 742,874
--------- ---------
--------- ---------
</TABLE>
4
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SAFEGUARD SCIENTIFICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(000 omitted except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
1996 1995
---------- ---------
(UNAUDITED)
<S> <C> <C>
REVENUES
Net Sales
Product $390,087 $314,511
Services 40,010 28,648
---------- ---------
Total net sales 430,097 343,159
Gains on sales of securities, net 5,680 2,008
Other income 1,888 2,932
---------- ---------
Total revenues 437,665 348,099
COSTS AND EXPENSES
Cost of sales- product 346,292 277,660
Cost of sales- services 25,477 19,192
Selling 27,954 21,009
General and administrative 17,665 13,980
Depreciation and amortization 4,616 4,037
Interest 5,355 5,008
Income from equity investments (887) (870)
---------- ---------
Total costs and expenses 426,472 340,016
---------- ---------
EARNINGS BEFORE MINORITY INTEREST AND TAXES 11,193 8,083
Minority interest (4,559) (2,191)
---------- ---------
EARNINGS BEFORE TAXES ON INCOME 6,634 5,892
Provision for taxes on income 2,654 2,356
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NET EARNINGS $ 3,980 $ 3,536
---------- ---------
---------- ---------
EARNINGS PER SHARE
Primary $ .25 $ .23
Fully diluted $ .25 $ .21
AVERAGE COMMON SHARES OUTSTANDING
Primary 15,528 15,040
Fully diluted 15,586 15,097
</TABLE>
5
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------------
1996 1995
---------- ---------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 3,980 $ 3,536
Adjustments to reconcile net earnings to cash from operating
activities
Depreciation and amortization 4,616 4,037
Deferred income taxes (71) (1,243)
Income from equity investments (887) (870)
Gains on sales of securities, net (5,680) (2,008)
Minority interest, net 2,669 1,315
---------- ---------
4,627 4,767
Cash provided (used) by changes in working capital items
Receivables 1,872 20,992
Inventories (34,567) 10,846
Accrued liabilities and other 17,305 (36,339)
---------- ---------
(15,390) (4,501)
---------- ---------
Cash provided (used) by operating activities (10,763) 266
Proceeds from sales of securities, net 6,848 1,806
---------- ---------
Cash provided (used) by operating activities and sales of
securities, net (3,915) 2,072
OTHER INVESTING ACTIVITIES
Investments and notes acquired, net (6,230) (3,909)
Capital expenditures (2,135) (3,169)
Business acquisitions, net of cash acquired (5,372) (1,185)
Other, net (2,492) (2,761)
---------- ---------
Cash (used) by other investing activities (16,229) (11,024)
FINANCING ACTIVITIES
Issuance of subordinated notes, net 112,413
Net borrowings (repayments) on revolving credit facilities (45,271) 7,646
Net repayments on term debt (7,182) (1,355)
Issuance of Company and subsidiary stock 1,647 1,153
---------- ---------
Cash provided by financing activities 61,607 7,444
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 41,463 (1,508)
Cash and Cash Equivalents - beginning of year 7,267 7,860
---------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 48,730 $ 6,352
---------- ---------
---------- ---------
</TABLE>
6
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. The accompanying unaudited interim consolidated financial statements were
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. The Summary of Accounting
Policies and Notes to Consolidated Financial Statements included in the
1995 Form 10-K should be read in conjunction with the accompanying
statements. These statements include all adjustments (consisting only of
normal recurring adjustments) which the Company believes are necessary for
a fair presentation of the statements. The interim operating results are
not necessarily indicative of the results for a full year.
2. In February 1996, the Company issued $115 million of 6% Convertible
Subordinated Notes due February 1, 2006. The Notes are convertible into
the Company's Common Stock at $57.97 per share. The Company used
approximately $67 million of the net proceeds from the Notes to repay all
of the Company's outstanding indebtedness under its revolving credit
facility at that date.
3. During April 1996, CompuCom executed amendments to its August 1993
Financing and Security Agreement ("Credit Facility") eliminating the $60
million fixed rate portion and increasing the amount of borrowings CompuCom
may allocate to LIBOR tranches up to $165 million. The amount of the
Credit Facility remained at $175 million, with the interest rate on the
remaining $10 million at prime. The amendment also extended the maturity
date of the Credit Facility to April 1, 1998. In addition, during April
1996, CompuCom entered into an agreement for a $75 million receivable
securitization whereby a portion of trade receivables are pledged to a
third party as collateral, increasing its financing capacity to $250
million. The interest rate applicable to the receivable securitization is
based upon the commercial paper rate plus .55%. The receivable
securitization agreement matures on April 1, 1998, subject to certain
conditions.
4. All share and per share data have been retroactively adjusted to reflect
the three-for-two split of the Company's common shares effective August 31,
1995.
5. Certain amounts in the 1995 consolidated financial statements have been
reclassified to conform with the 1996 presentation, the most significant of
which is the reclassification of direct expenses related to services
revenue from operating expenses to cost of sales. These reclassifications
had no effect on previously reported net earnings or shareholders' equity.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's business strategy is the development of advanced technology-
oriented, entrepreneurially-driven partnership companies to achieve maximum
returns for its shareholders. The Company provides to its partnership companies
and associated venture funds active strategic management, operating guidance,
acquisition and disposition assistance, board and management recruitment and
innovative financing. The Company offers its shareholders, through the rights
offering process, the opportunity to acquire direct ownership in selected
partnership companies which are ready for public ownership.
If the Company significantly increases or reduces its investment in any of
the partnership companies, the Company's consolidated net sales and earnings may
fluctuate primarily due to the applicable accounting methods used for
recognizing its participation in the operating results of those companies.
The net sales and related costs and expenses of a partnership company are
included in the Company's consolidated operating results if the Company owns
more than 50% of the voting securities of the partnership company.
Participation of shareholders other than the Company in the earnings or losses
of the partnership company is reflected in the caption "Minority interest" in
the Consolidated Statement of Operations which adjusts consolidated earnings to
reflect only the Company's share of the earnings or losses of the partnership
company.
If the Company reduces its ownership of voting securities in a partnership
company below 50%, the equity method of accounting is used. Under this method,
the partnership company's net sales and related costs and expenses are not
included in the Company's consolidated operating results; however, the Company's
share of the earnings or losses of the partnership company are reflected under
the caption "Income (loss) from equity investments" in the Consolidated
Statement of Operations. Under either consolidation accounting or the equity
method of accounting, only the Company's share of the earnings or losses of the
partnership company is included in the Statement of Operations.
OPERATIONS OVERVIEW
Net sales for the first quarter of 1996 were $430.1 million compared to
$343.2 million for the comparable period in 1995. Net earnings were $3.98
million, or $.25 a share in 1996, compared to $3.54 million, or $.23 a share,
for the same period in 1995. CompuCom represented 96% and 94% of the
Company's total net sales for the first quarter of 1996 and 1995,
respectively. As a result of the relative significance of CompuCom in the
consolidated results, fluctuations in other business units have tended to
have a minimal impact.
The 25% net sales increase primarily reflects the 28% increase at CompuCom.
CompuCom's product and services revenue increased 25% and 67%, respectively.
The increased
8
<PAGE>
product revenue reflects higher demand by corporate customers for personal
computers, particularly related to the current Pentium upgrade cycle and
increased demand for laptops. Also favorably impacting CompuCom's product
revenue was corporate customers continuing to consolidate the number of
suppliers. The increase in services revenue reflects CompuCom's continued focus
on expanding its network and technology services at competitive prices as well
as the impact of various small service acquisitions which occurred after the
first quarter of 1995. Strong product demand has continued into the second
quarter of 1996 at CompuCom. However, CompuCom expects this will be partially
offset by services revenue growing at a slower pace in the second quarter of
1996 when compared to the first quarter of 1996.
Net earnings at CompuCom improved 50% in 1996 primarily as a result of the
growth in sales. However, the Company's share of CompuCom's earnings, after
allocation to minority interest, increased only 21% in 1996 due to the decrease
in the Company's ownership of CompuCom from 63% in the first quarter of 1995 to
50% in the first quarter of 1996. The Company continues to hold up to a 60%
voting interest in CompuCom as a result of voting rights associated with the
Company's ownership of CompuCom's Series B cumulative convertible preferred
stock.
The Company's increased net earnings in the first quarter of 1996 over
the comparable period of 1995 resulted from CompuCom's increase in net
earnings and higher securities gains. These increases were partially offset
by lower sales and earnings in the Company's Information Solutions segment
primarily due to the continuing effect of deferral of customer buying
decisions associated with the development by Premier of new UNIX and Windows
based versions of its software and from merger activity at large financial
institutions, Premier's primary market. Premier expects to complete the
Windows and UNIX based versions of its software in mid and late 1996,
respectively. In addition, corporate expenses increased to support the
additional investments in and growing activities of the partnership companies.
With respect to Safeguard's principal equity investments, Cambridge
Technology Partners and Coherent Communications each reported strong results
in the first quarter and USDATA Corporation announced a major new product
release.
Cambridge's earnings increased 74% on a 46% revenue increase, as it
continues to see increased demand for its services in North America and Europe
resulting from an expanding market for client/server systems performed on a
fixed time/fixed price basis. Growth of Cambridge's European operations was
particularly impressive, representing 24% of total revenues in the first quarter
of 1996 compared to 17% for the same period in 1995. Safeguard owns
approximately 21% of Cambridge's common stock at March 31, 1996.
Coherent Communications reported increased earnings of 29% on a 14% sales
increase for the first quarter of 1996. Sales increases of echo cancellers were
particularly strong in Europe, North America and Latin America. Revenue
increases were attributable to large shipments to Alcatel, Nokia, Kapsch
Aktiengesellschaft and TRT in Europe; and Ameritech Cellular and Motorola in
North America. Safeguard owns approximately 37% of Coherent's common stock at
March 31, 1996.
In late 1994, USDATA determined that in order to increase awareness of its
products, accelerate growth, obtain a larger share of a rapidly growing market
and position itself for future revenue growth, it should substantially increase
expenditures for sales, marketing and product
9
<PAGE>
development. USDATA increased spending in these areas throughout 1995 and into
the first quarter of 1996. In March 1996, USDATA launched its most powerful
real-time system, the FactoryLink Enterprise Control System (ECS). FactoryLink
ECS represents a significant upgrade of FactoryLink that adds important
additional features, power and "ease of use" to USDATA's products. Safeguard
owns approximately 21% of USDATA's common stock at March 31, 1996.
The Company's overall gross margin was 13.6% and 13.5% in the first quarter
of 1996 and 1995, respectively. CompuCom's product gross margin for the first
quarter of 1996 was 10.1% compared to 10.5% for the same period in 1995. The
lower margin at CompuCom is principally due to increased competitive pricing
pressures. Future product margins at CompuCom will be influenced by
manufacturers' pricing strategies together with competitive pressures from other
resellers in the industry. CompuCom's services gross margin for the first
quarter increased to 37.2% in 1996 from 28.3% in 1995, primarily as a result
of the higher margins of the various small service acquisitions previously
mentioned and an increase in higher-end, higher margin services performed for
customers. Future improved profitability at CompuCom will depend on its
ability to retain and hire quality service personnel, increased focus on
providing technical service and support to customers, competition,
manufacturer product pricing changes, product availability, effective
utilization of vendor programs, and control of operating expenses. CompuCom
participates in certain manufacturer-sponsored programs designed to increase
sales of specific products. These programs, excluding volume rebates, are
not material when compared to CompuCom's overall financial results.
Selling expense as a percentage of net sales increased to 6.5% in 1996 from
6.1% in 1995 largely as a result of costs incurred by CompuCom to expand the
services business. General and administrative expense was 4.1% of net sales in
1996 and 1995. CompuCom's general and administrative expenses are reported net
of reimbursements by certain manufacturers for specific training, promotional
and marketing programs. These reimbursements offset the expenses incurred by
CompuCom.
Interest expense increased in the first quarter of l996 compared to the
same period in 1995 primarily as a result of the issuance of the Company's
convertible subordinated notes and higher working capital required to support
the revenue growth at CompuCom. These increases were partially offset by the
repayment of all of the outstanding indebtedness under the Company's revolving
credit facility, the lower interest rate on the Company's convertible
subordinated notes compared to the bank credit facility, and the redemption in
October 1995 of $18.5 million of convertible subordinated notes by CompuCom.
LIQUIDITY AND CAPITAL RESOURCES
In February 1996, the Company issued $115 million of 6% Convertible
Subordinated Notes (the "Notes") due February 1, 2006. The Notes are
convertible into the Company's Common Stock at $57.97 per share. The Company
used approximately $67 million of the net proceeds to repay all of the
outstanding indebtedness under its $100 million revolving credit facility, which
continues to be maintained and against which there were no outstanding
10
<PAGE>
borrowings at March 31, 1996. The credit facility, which matures in January
1998, unless renegotiated, is secured by the equity securities the Company holds
of its publicly traded partnership companies, including CompuCom. The value of
these securities significantly exceeds the total availability under the bank
credit facility.
As of March 31, 1996 the Company held approximately $43 million of
temporary cash investments in institutional money market accounts. Existing
cash resources, availability under the Company's $100 million revolving credit
facility, proceeds from the sales from time to time of selected minority-owned
publicly traded securities and other internal sources of cash flow should be
sufficient to fund the Company's cash requirements through 1996, including
investments in new or existing partnership companies and general corporate
requirements.
CompuCom and Premier maintain separate, independent bank credit facilities,
which are nonrecourse to the Company and are secured by substantially all of the
assets of the applicable borrower. CompuCom's $175 million credit facility
prohibits the payment of common stock dividends by CompuCom while its credit
line remains outstanding. At March 31, 1996, approximately $136 million was
outstanding under this facility. Premier has $3.7 million outstanding on its
master demand note at March 31, 1996. The note is payable on demand within five
days of notice, and bears interest at the prime rate plus 0.5%.
During recent years, CompuCom has utilized operating earnings, the bank
credit facility, equity financing and long-term subordinated notes to fund its
significant revenue growth and related operating asset requirements. During
April 1996, the Company executed amendments to the August 1993 Financing and
Security Agreement ("Credit Facility") eliminating the $60 million fixed rate
portion and increasing the amount of borrowings the Company may allocate to
LIBOR tranches up to $165 million. The amount of the Credit Facility remained
at $175 million, with the interest rate on the remaining $10 million at prime.
The amendments also extended the maturity date of the Credit Facility to April
1, 1998. In addition, during April 1996, CompuCom entered into an agreement for
a $75 million receivable securitization whereby a portion of trade receivables
are pledged to a third party as collateral, increasing its financing capacity to
$250 million. The interest rate on amounts borrowed under the receivable
securitization will be based on the commercial paper rate plus .55%. The
receivable securitization agreement matures on April 1, 1998, subject to certain
conditions.
Working capital increased in 1996 as a result of the issuance of the
Company's convertible subordinated notes, net of repayment of all borrowings
under the Company's revolving credit facility, and higher levels of inventory
allocated to specific customers at CompuCom, partially offset by an increase
in accounts payable. The Company's operations are not capital intensive.
Capital additions are generally funded through internally generated funds or
other financing sources. There were no material asset purchase commitments at
March 31, 1996.
11
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 9, 1996. At the
meeting, the shareholders voted in favor of electing as directors the twelve
nominees named in the Proxy Statement dated April 2, 1996 and authorized the
amendment of the Company's Articles of Incorporation to increase the number of
authorized shares of common stock from 20,000,000 to 100,000,000. The number of
votes cast were as follows:
I. ELECTION OF DIRECTORS
FOR WITHHELD
---------- --------
Warren V. Musser 11,986,333 26,759
Vincent G. Bell, Jr. 11,979,133 26,759
Donald R. Caldwell 11,979,133 26,759
Robert A. Fox 11,979,133 26,759
Delbert W. Johnson 11,979,133 26,759
Robert E. Keith, Jr. 11,978,083 27,809
Peter Likins, Ph.D. 11,979,133 26,759
Jack L. Messman 11,979,133 26,759
Russell E. Palmer 11,978,083 27,809
John W. Poduska, Sr., Ph.D. 11,979,133 26,759
Heinz Schimmelbusch, Ph.D. 11,978,933 26,959
Hubert J.P. Schoemaker, Ph.D. 11,979,133 26,759
II. AMENDMENT OF COMPANY'S ARTICLES OF INCORPORATION
FOR AGAINST ABSTAIN
--- ------- -------
10,132,050 1,837,107 37,335
Item 5. OTHER INFORMATION
A rights offering to Safeguard shareholders of approximately 2,625,000
shares of Integrated Systems Consulting Group (ISCG) common stock was commenced
in April 1996. The ISCG rights offering was effective April 17, 1996 and
Safeguard shares began trading ex-rights April 19, 1996. Safeguard
shareholders received one transferable right to purchase one share of ISCG
common stock at $5.00 per share for each six shares of Safeguard common stock
owned. The rights will be exercisable until 5:00 p.m., New York City time, on
May 22, 1996. After completion of the rights offering, Safeguard will
beneficially own approximately 11% of ISCG's common stock.
12
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
10.1 Fourth Amendment A to Financing and Security Agreement,
dated as of March 22, 1996, between NationsBank of Texas,
N.A. and CompuCom Systems, Inc.
10.2 Fifth Amendment to Financing and Security Agreement, dated
as of April 1, 1996, between NationsBank of Texas, N.A. and
CompuCom Systems, Inc. (exhibits omitted)
10.3 Pledge and Security Agreement, dated as of April 1, 1996,
between NationsBank of Texas, N.A. and CompuCom Systems,
Inc.
10.4 Intercreditor Agreement, dated as of April 1, 1996, among
NationsBank of Texas, N.A., CompuCom Systems, Inc., and IBM
Credit Corporation.
10.5 Master Security and Administration Agreement, dated as of
April 1, 1996, among CompuCom Systems, Inc., NationsBank of
Texas, N.A., CSI Funding, Inc. and Enterprise Funding
Corporation. (exhibits omitted)
10.6 Receivables Purchase Agreement, dated as of April 1, 1996,
between CompuCom Systems, Inc. and CSI Funding, Inc.
(exhibits omitted)
10.7 Transfer and Administration Agreement, dated as of April 1,
1996, among CSI Funding, Inc., CompuCom Systems, Inc.,
Enterprise Funding Corporation and NationsBank, N.A.
(exhibits omitted)
11 Computation of Per Share Earnings
27 Financial Data Schedule (electronic filing only)
(b) No reports on Form 8-K have been filed by the Registrant during the
quarter ended March 31, 1996.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAFEGUARD SCIENTIFICS, INC.
(Registrant)
Date: May 15, 1996 /s/ Warren V. Musser
-------------------------------------
Warren V. Musser, Chairman
and Chief Executive Officer
Date: May 15, 1996 /s/ Gerald M. Wilk
-------------------------------------
Gerald M. Wilk
Senior Vice President
(Principal Financial and
Principal Accounting Officer)
14
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SAFEGUARD SCIENTIFICS, INC.
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
(000 omitted except per share data)
<TABLE>
Three Months Ended
March 31
------------------
1996 1995
------- -------
<S> <C> <C>
Primary earnings per common share
Net earnings $3,980 $3,536
Adjustment (1) (144) (125)
------- -------
$3,836 $3,411
------- -------
------- -------
Average common shares outstanding 14,752 14,310
Average common share equivalents 776 730
------- -------
Average number of common shares and
common share equivalents outstanding 15,528 15,040
------- -------
------- -------
Primary earnings per common share $.25 $.23
------- -------
------- -------
Fully diluted earnings per common share
Primary net earnings $3,980 $3,536
Adjustment (1) (146) (404)
------- -------
$3,834 $3,132
------- -------
------- -------
Average common shares outstanding 14,752 14,310
Average common share equivalents 834 787
------- -------
Average number of common shares
assuming full dilution 15,586 15,097
------- -------
------- -------
Fully diluted earnings per common share $.25 $.21
------- -------
------- -------
</TABLE>
(1) Net earnings are adjusted for the dilutive effect of public subsidiary
common stock equivalents (primary) and convertible securities
(fully diluted).
Share and per share data have been retroactively adjusted to reflect the
three-for-two split of the Company's common shares effective August 31,
1995.
<PAGE>
NATIONSBANK
NationsBank of Texas, N.A.
- --------------------------------------------------------------------------------
AMENDMENT 4A
TO
FINANCING AND SECURITY AGREEMENT
This Amendment 4A to Financing and Security Agreement is executed and
entered into by COMPUCOM SYSTEMS, INC. ("Borrower") and NATIONSBANK OF TEXAS,
N.A. ("Lender"), effective as of March 22, 1996, as follows:
RECITALS
Borrower and Lender are parties to the certain Financing and Security
Agreement dated effective as of August 4, 1993, as amended by (i) the
First Amendment to Financing and Security Agreement dated effective as
of March 31, 1994, (ii) the Second Amendment to Financing and Security
Agreement dated effective as of December 12, 1994, (iii) the Third
Amendment to Financing and Security Agreement dated effective as of
April 26, 1995 and (iv) the Fourth Amendment to Financing and Security
Agreement dated effective as of October 1, 1995 (collectively the
"Financing and Security Agreement"). Terms defined by the Financing
and Security Agreement, wherever used in this Amendment 4A, shall have
the same meanings in this Amendment 4A as are prescribed by the
Financing and Security Agreement.
Borrower has requested Lender to amend the Financing and Security
Agreement such that, effective as of the date of this Amendment 4A,
all unpaid principal outstanding under the Facility shall be deemed to
be included within the Category II Facility Balance and that no amount
thereof be deemed to be outstanding under the Category I Facility
Balance. Lender is willing to agree to such request on the terms
provided herein.
NOW THEREFORE, premises considered, for value received, Borrower and Lender
hereby agree as follows:
1. Each of the following definitions contained in ARTICLE I
("DEFINITIONS") of the Financing and Security Agreement hereby is amended to
read in its entirety as follows:
1.63 "Category I Facility Balance" means that portion of the
outstanding balance of the Facility which is equal to, but not
exceeding, Zero Dollars ($0.00).
1.64 "Category II Facility Balance" means that portion of the
outstanding balance of the Facility which is greater than the Category
I Facility Balance.
2. Borrower represents and warrants to Lender that its Certificate of
Incorporation and Bylaws have not been amended since Borrower's certification
thereof under Secretary's Certificate dated October 1, 1995 previously delivered
to Lender, and that the officers of Borrower specified therein are duly elected,
qualified and acting in the capacities therein stated, as of the effective date
hereof and that all necessary corporate action has been taken in order to
properly authorize this Amendment 4A and the officer signing on behalf of
Borrower below is duly authorized to do so.
3. Borrower agrees to deliver to Lender such documentation as Lender may
reasonably require in connection with this Amendment 4A.
4. In consideration of this Amendment 4A, Borrower represents to Lender
that (i) no Event of Default, or other event or condition which would be the
subject of a required notice under paragraph 6.14 of the Financing and Security
Agreement, is in existence as of the effective date hereof (except with respect
to clause (f) of paragraph 6.38 as verbally disclosed to Lender and as will be
specified in Borrower's March 31, 1996 compliance certificate to be delivered to
Lender), (ii) each of the representations and warranties contained in the
following paragraphs of the Financing and Security Agreement are true and
correct as of the effective date of this Amendment 4A: paragraph 3.3, paragraph
3.4, and paragraph 5.1 through paragraph 5.18. Borrower hereby ratifies and
confirms the Financing and Security Agreement as being and continuing in full
force and effect, as amended by this Amendment 4A.
5. This Amendment 4A, when signed by each of Borrower, Lender and each
Participant as provided below (i) shall be deemed effective prospectively as of
the effective date specified in the preamble, (ii) contains the entire agreement
among the parties and may not be amended or modified except in writing signed by
all parties, (iii) shall be governed and construed according to the laws of the
State of Texas and (iv) may be executed in any number of counterparts, each of
which shall be valid as an original and all of which shall be one and the same
agreement. A telecopy of any executed counterpart shall be deemed valid as an
original.
<PAGE>
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the effective date specified in the preamble.
NATIONSBANK OF TEXAS, N.A.
By: /s/ Sally Glynn
-----------------------------------
Sally Glynn
Senior Vice President
COMPUCOM SYSTEMS, INC.
By: /s/ Robert J. Boutin
-----------------------------------
Robert J. Boutin,
Senior Vice President and
Chief FinanciaL Officer
CONSENT BY PARTICIPANTS
Each of the undersigned consents to Borrower's and Lender's execution of
the above Amendment 4A to Financing and Security Agreement:
BARNETT BANK OF TAMPA MIDLANTIC BANK, N.A.
By: /s/ Kimberly A. Bruce By: /s/ Joseph G. Meterchick
--------------------------- -------------------------------
Name: Kimberly A. Bruce Name: Joseph G. Meterchick
------------------------- -----------------------------
Title: Assistant Vice President Title: Vice President
NATIONAL BANK OF CANADA UNION BANK, A DIVISION OF UNION
BANK OF CALIFORNIA, N.A.
By: /s/ William Handley/Larry L. Sears By: /s/ Stephen Sweeney
----------------------------------- ------------------------------
Name: William Handley/Larry L. Sears Name: Stephen Sweeney
Title: Vice President/Group Vice President Title: Vice President
SANWA BUSINESS CREDIT CORP. THE SUMITOMO BANK, LTD.
Successor in interest of The Diawa
Bank, Ltd.
By: /s/ Michael J. Cox By: /s/ James T. Wang
----------------------------- -------------------------------
Name: Michael J. Cox Name: James T. Wang
Title: Vice President Title: Vice President and Manager
By: /s/ Kirk L. Stites
--------------------------------
Name: Kirk L. Stites
Title: Vice President
<PAGE>
NATIONSBANK
NationsBank of Texas, N.A.
- -------------------------------------------------------------------------------
FIFTH AMENDMENT
(RESTATED AMENDMENT)
TO
FINANCING AND SECURITY AGREEMENT
This Fifth Amendment ("Fifth Amendment") to Financing and Security
Agreement is executed and entered into by COMPUCOM SYSTEMS, INC. ("Borrower")
and NATIONSBANK OF TEXAS, N.A. ("Lender"), effective as of April 1, 1996, as
follows:
RECITALS
Borrower and Lender are parties to the certain Financing and Security Agreement
dated effective as of August 4, 1993 (hereinafter called the "Financing and
Security Agreement").
Lender and Borrower have entered into the following amendments with respect to
the Financing and Security Agreement (hereinafter collectively called the
"Amendments"):
First Amendment to Financing and Security Agreement effective as of March
31, 1994;
Second Amendment to Financing and Security Agreement effective as of
December 12, 1994;
Third Amendment to Financing and Security Agreement effective as of
April 26, 1995;
Fourth Amendment to Financing and Security Agreement effective as of
October 1, 1995; and
Amendment 4A to Financing and Security Agreement effective as of March 22,
1996.
Lender and Borrower desire to further amend the Financing and Security
Agreement, and to do so in a single agreement which also amends, restates,
supersedes and replaces the Amendments, as provided hereinbelow.
Borrower proposes to execute and enter into (i) the certain Receivables Purchase
Agreement of even date herewith between Borrower and CSI Funding, Inc., a wholly
owned subsidiary of Borrower, which provides for the sale by Borrower of an
undivided fractional ownership interest in all accounts now owned and hereafter
acquired and arising from time to time prior to termination of such agreement,
on the terms provided therein (referred to in this Fifth Amendment as the "RPA")
and (ii) the certain Transfer and Administration Agreement of even date herewith
among Borrower, CSI Funding, Inc., Enterprise Funding Corporation and
NationsBank, N.A. in its capacity as Agent and a Bank Investor thereunder,
providing for the transfer by CSI Funding, Inc. to Enterprise Funding
Corporation, from time to time, of a portion of the interest sold by Borrower
under the RPA, on the terms provided therein (referred to in this Fifth
Amendment as the "TAA") and (iii) certain related agreements (including without
limitation the MSAA defined hereinbelow).
Borrower has requested Lender to consent to Borrower's execution and performance
of the RPA and the TAA, and the related agreements proposed to be executed by
Borrower in connection therewith, and Lender is willing to grant such consent on
the terms provided herein.
NOW THEREFORE, premises considered, for value received, Borrower and Lender
hereby agree as follows (terms defined by the Financing and Security Agreement,
including as amended by this Fifth Amendment, shall have the same meanings
wherever used in this Fifth Amendment as are prescribed by the Financing and
Security Agreement, including as amended by this Fifth Amendment):
AGREEMENT
1. ARTICLE I ("DEFINITIONS") of the Financing and Security Agreement
hereby is amended to add the following definitions, which shall be deemed added
immediately following paragraph 1.61 thereof:
"1.62 "ADJUSTED LIBOR RATE" means a rate per annum which is the London
Interbank Offered Rate (determined and fixed for the duration of any
Interest Period) as adjusted by Lender for the Reserve Requirement.
Determination of the Adjusted LIBOR Rate shall be made by Lender in its
discretion and shall be binding and conclusive in the absence of manifest
error.
1.63 "AGGREGATE BALANCE" means, at any time, the aggregate unpaid balance
of all Obligations owing to Lender by Borrower at such time under this
Agreement.
1.64 "CFI" means CSI Funding, Inc., a Delaware corporation and wholly owned
subsidiary of Borrower, as purchaser under the RPA.
1.65 "CFI NOTE" means the "Subordinated Note" as defined by the RPA, and
any and all renewals, extensions, modifications, amendments, supplements or
restatements thereof.
<PAGE>
1.66 "CFI SHARES" means all right, title and interest now or hereafter
owned by Pledgor in the following described securities: All shares of CSI
Funding, Inc., a Delaware corporation, now owned and hereafter acquired by
Pledgor, including without limitation all shares, equity ownership
interests or other interests therein, whether or not certificated, and all
substitutions and replacements thereof, together with all securities
hereafter delivered or deliverable in substitution for or in addition
thereto, and all certificates, book entries and instruments representing
any of the foregoing, and all cash, securities, interest, dividends, stock
dividends, stock splits, distributions, payments, rights, proceeds and
other property at anytime and from time to time received, receivable or
otherwise distributed in respect of or in exchange for and any or all
thereof, and all proceeds of any of the foregoing.
1.67 "EFC" means Enterprise Funding Corporation, a Delaware corporation, as
purchaser of a portion of the RPA Interest as provided by the TAA.
1.68 "EURODOLLAR BUSINESS DAY" means any Business Day on which dealings in
United States Dollars are conducted in the London interbank market.
1.69 "FIXED CHARGE COVERAGE RATIO" shall have the meaning defined in
paragraph 6.23.
1.70 "INTEREST PERIOD" means the period commencing on the first effective
Eurodollar Business Day of a LIBOR Rate Option and ending one, two, three
or six months thereafter, as designated by Borrower at the time of electing
such LIBOR Rate Option, PROVIDED that (i) if any Interest Period would
otherwise end on a day which is not a Eurodollar Business Day, then such
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless to do so would extend such Interest Period into a
subsequent calendar month, in which event such Interest Period shall end on
the next preceding Eurodollar Business Day, and (ii) any Interest Period
that begins on the last 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 Eurodollar Business Day of
the last calendar month of such Interest Period, and PROVIDED FURTHER, that
no Interest Period may end on a day which is after the expiration of the
Contract Term.
1.71 "LENDER'S CONSEQUENTIAL LOSS" means with respect to any prepayment of
any LIBOR Loan, any loss or expense incurred by Lender as a result of any
such prepayment including, without limitation, an amount equal to (i) the
amount of interest Lender would have earned in respect of the amount of
such prepayment for the remaining period of the Tranche applicable to such
LIBOR Loan, determined as of the date of any such prepayment, less (ii) the
amount of interest, if any, Lender is able to obtain by reloaning or
reinvesting such amount for a period of time equal or reasonably equivalent
to such remaining period, determined as of the date of any such prepayment,
plus (iii) any expense or penalty incurred by Lender on reinvesting such
principal amount.
1.72 "LIBOR FIXED RATE" means the Adjusted LIBOR Rate plus one and one-half
percent (1.50%) per annum.
1.73 "LIBOR LOAN" at any time means the aggregate portion, if any, of the
unpaid balance of the Facility which is subject to a LIBOR Rate Option.
1.74 "LIBOR RATE OPTION" means any election by Borrower, in accordance with
paragraph 2.2.2, to have any Tranche bear interest at the LIBOR Fixed Rate.
1.75 "LONDON INTERBANK OFFERED RATE" means, with respect to each Interest
Period, the rate per annum (determined and fixed for the duration of such
Interest Period) determined by Lender to be the per annum rate at which
dollar deposits (in amounts comparable to the principal amount to be
subject to the LIBOR Fixed Rate and for a period of time equal or
comparable to the such Interest Period) in immediately available funds are
offered (at approximately 9:00 a.m. Dallas, Texas time) two Eurodollar
Business Days prior to the first day of such Interest Period by leading
banks selected by Lender in the London Interbank Eurodollar market for
delivery on the first day of such Interest Period.
1.76 "MSAA" means the certain Master Security and Administration Agreement
of even date herewith among Borrower, NationsBank of Texas, N.A. in its
capacity as Administrative Secured Party thereunder, Lender, CFI and EFC,
as the same may be renewed, extended, modified, amended or restated from
time to time.
1.77 "PLEDGE AGREEMENT" means the certain Pledge and Security Agreement
executed by Borrower for the benefit of Lender, as in effect from time to
time, providing for the grant by Borrower to Lender of a continuing
security interest, pledge and lien in and to the CFI Shares, as the same
may be renewed, extended, modified, amended or restated.
1.78 "PRIME BASED LOAN" at any time means the aggregate portion, if any, of
the unpaid balance of the Facility which bears interest according to the
Contract Rate.
1.79 "PROJECTED UNUSED AVAILABILITY" as of any day of determination means
the amount, if any, by which the Availability on such day exceeds the sum
of the Loan Balance on such day plus the amount of pending unfunded loan
requests by Borrower as of such day under this Agreement
2
<PAGE>
(calculated after giving effect to any proposed increase in the RPA
Interest as of such day and proposed payment to Lender (and application to
the Obligations) of all amounts, if any, to be received by Borrower from
EFC in payment for any such increased interest).
1.80 "RESERVE REQUIREMENT" shall mean, on any day, that percentage which is
in effect on such day, as provided by the Board of Governors of the Federal
Reserve System (or any successor governmental body) applied for determining
the reserve requirements (including without limitation, basic,
supplemental, marginal and emergency reserves) under Regulation D (12
C.F.R. Part 24), or any successor or other law or regulation relating to
reserve requirements applicable to Lender with respect to Eurocurrency
liabilities or Eurocurrency funding.
1.81 "RPA" means the certain Receivables Purchase Agreement of even date
herewith between Borrower and CFI providing for the sale by Borrower to CFI
and the purchase by CFI from Borrower (subject to the terms of the MSAA) of
an undivided fractional ownership interest in 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.
1.82 "RPA INTEREST" means, at any time, the undivided fractional ownership
interest in the Receivables sold and transferred by Borrower to CFI
pursuant to the RPA.
1.83 "TAA" means the certain Transfer and Administration Agreement of even
date herewith between Borrower, 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 a portion of
the RPA Interest, from time to time, on the terms provided therein, as the
same may be renewed, extended, modified, amended or restated from time to
time.
1.84 "TRANCHE" means any portion of the unpaid balance of the Facility
which is designated to be subject to a LIBOR Rate Option, as provided by
paragraph 2.2.2, PROVIDED that no Tranche may exist with respect to any
principal amount less than $5,000,000.00."
2. Each of the following definitions contained in ARTICLE I
("DEFINITIONS") of the Financing and Security Agreement hereby is amended to
read in its entirety as follows:
"1.3 "AGREEMENT" means this Financing and Security Agreement, and all
exhibits and addenda, as may be renewed, extended, modified, amended,
supplemented or restated from time to time."
"1.7 BORROWING BASE at any time means an amount equal to the sum of (i) up
to a maximum of eighty-five percent (85.0%) of the net amount of Borrower's
ownership interest in Eligible Accounts plus (ii) up to a maximum of fifty
percent (50.0%) (but limited, however, to an amount not exceeding
$20,000,000.00) of the net amount of Eligible Inventory, less (iii) the
Reserve."
"1.11 "COLLATERAL" means collectively all of the following, now owned
and hereafter acquired: Receivables, Inventory, Equipment, CFI Shares, the
CFI Note, and all computer programs, applications, discs, software, files
and other records pertaining to any Collateral. "Collateral" also includes
all proceeds of any of the foregoing at any time arising, including
insurance proceeds."
"1.13 "CONTRACT RATE" means, on any day, a floating annual rate of
interest calculated on the basis of actual days elapsed but computed as if
each year consists of 360 days, equal to the sum of the Prime Rate
effective as of the first day of the calendar month in which such day falls
plus zero percent (0.00%). Upon written notification to Borrower at any
time when any Event of Default exists, the Contract Rate otherwise
applicable hereunder shall automatically increase by an additional two
percent (2.0%) per annum, beginning on the effective date specified in such
written notice (which shall be on or after the date on which any such Event
of Default shall have first occurred) and continuing thereafter for so long
as any such Event of Default remains uncured or until Lender may agree
otherwise."
"1.14 "CONTRACT TERM" means the period beginning on the effective date
specified in the preamble of this Agreement and continuing through April 1,
1998."
"1.15 "CREDIT LIMIT" means the amount of One Hundred Seventy Five
Million and no/100 Dollars ($175,000,000), less the amount, if any, of any
applicable reduction in the Credit Limit pursuant to paragraph 2.11."
"1.30 "INTERCREDITOR AGREEMENTS" collectively means the following
certain agreements: (i) Amended and Restated Intercreditor Agreement dated
effective as of April 1, 1996 among Lender, Borrower, IBM Credit
Corporation and NationsBank of Texas, N.A. in its capacity as
Administrative Secured Party under the MSAA, (ii) Subordination Agreement
dated August 22, 1994 among Lender, Borrower and Hewlett-Packard Company,
(iii) Intercreditor Agreement dated December 27, 1993 among Lender,
Borrower and Compaq Computer Corporation, (v) Intercreditor Agreement among
Lender, Borrower and Apple Computer, Inc., and (vi) any other intercreditor
agreement hereafter entered into among Lender, Borrower and any Person that
is a vendor to Borrower of Inventory, as any of the foregoing may be
renewed, extended, modified, amended, supplemented or restated from time to
time.
3
<PAGE>
"1.36 "LENDER'S MAXIMUM AMOUNT" means the amount of Fifty Three Million
and no/100 Dollars ($53,000,000.00)."
"1.37 "LOAN DOCUMENTS" means this Agreement, the Revolving Note, the
Pledge Agreement and any other documents or agreements executed in
connection therewith, and also includes any and all renewals, extensions,
modifications or amendments of any of the foregoing."
3. Paragraph 2.2 of the Financing and Security Agreement hereby is
amended to read in its entirety as follows:
"2.2 INTEREST. The unpaid principal from day to day outstanding under the
Facility shall bear interest as follows:
2.2.1 APPLICABLE RATE.
(a) CONTRACT RATE. Subject to any election by Borrower in respect of
the LIBOR Fixed Rate under paragraph 2.2.1(b), the unpaid
principal of the principal balance from day to day outstanding
under the Facility shall bear interest at the lesser of (i) the
Contract Rate or (ii) the Maximum Rate, PROVIDED, however that,
subject to the provisions of paragraph 9.10, in the event that
the Contract Rate shall exceed the Maximum Rate at any time and
thereafter the Contract Rate shall be less than the Maximum Rate,
the rate of interest applicable hereunder shall remain at the
Maximum Rate until the aggregate accrued interest to date under
the Facility equals the amount that would have accrued had the
Contract Rate at all times remained in effect.
(b) LIBOR FIXED RATE. Subject to limitation by the Maximum Rate and
the terms and provisions of this Agreement, and in lieu of the
rate otherwise applicable under paragraph 2.2.1(a), Borrower
shall have the option (to be exercised in the manner provided by
paragraph 2.2.2) to elect the LIBOR Fixed Rate as being
applicable to any Tranche PROVIDED, that (i) any such Tranche
shall be in the minimum amount of $5,000,000.00, (ii) no more
than six (6) separate Tranches may exist in the aggregate at any
one time and (iii) the maximum aggregate amount of the Facility
that may be subject to a LIBOR Rate Option at any time shall not
exceed $165,000.000.
(c) MAXIMUM RATE. All past due principal and all past due accrued
interest under the Facility shall accrue interest at the Maximum
Rate.
2.2.2 ELECTION OF LIBOR RATE OPTION. Borrower may elect a LIBOR
Rate Option at any time by written notice of election, in form
satisfactory to Lender, delivered to Lender no later than the close of
Lender's business on Tuesday of any calendar week, applicable for the
beginning of an Interest Period beginning on the following Thursday,
therein stating (i) the LIBOR Rate Option elected, (ii) the Interest
Period selected, and the date such Interest Period is to begin (which
shall be the Thursday following the Tuesday on which any such written
notice of election is delivered to Lender), and (iii) the principal
amount of the Tranche to be subject to such LIBOR Rate Option (which
shall be at least $5,000,000.00). Any such written notice of election
shall be irrevocable by Borrower unless Lender agrees otherwise.
2.2.3 INTEREST PAYMENT DATES. Accrued interest under the Facility
shall be payable as follows: (a) accrued interest on any Prime Based
Loan shall be payable monthly on the last day of each calendar month,
and (b) accrued interest on any LIBOR Loan shall be payable on the
last day of the Interest Period applicable to such LIBOR Loan.
2.2.4 LIBOR LIMITATION. If, with respect to any LIBOR Rate Option
elected by Borrower, (a) Lender determines that deposits in United
States Dollars, in applicable amounts, are not being offered to
Lender, or other major United States banks of comparable size to
Lender, in the London interbank Eurodollar market for the applicable
Interest Period, or (b) Lender determines that the LIBOR Fixed Rate
will not adequately and fairly reflect the cost to Lender of
maintaining or funding the applicable portion of the Facility relative
to such LIBOR Rate Option for such Interest Period, then at Lender's
option, Lender may give notice to Borrower and thereby suspend
Borrower's option to elect a LIBOR Rate Option, pending any subsequent
reinstatement in Lender's discretion."
4. Two new paragraphs (numbered 2.4a and 2.4b) shall be added to the
Financing and Security Agreement, immediately following paragraph 2.4 thereof,
each of which shall read in its entirety as follows:
"2.4a PREPAYMENT OF LIBOR LOANS; LENDER'S CONSEQUENTIAL LOSS. Any and
all prepayments (including without limitation application of collections
and proceeds of Receivables under paragraph 3.8 and paragraph 2.4(b) of any
portion of any LIBOR Loan shall be subject to payment of Lender's
Consequential Loss, if any, which shall be payable to Lender at the time of
such prepayment. Borrower's obligations under this paragraph 2.4a are
subject to paragraph 9.10.
4
<PAGE>
"2.4b APPLICATION OF PAYMENTS AND COLLECTIONS. Payments of principal
(including without limitation applications of collections and proceeds of
Receivables under paragraph 3.8) under the Facility shall be applied first
in reduction of the Prime Based Loan. Unless otherwise agreed, all
collections and proceeds of Receivables received by Lender at any time when
a LIBOR Loan is outstanding but there is no Prime Based Loan outstanding
shall be deposited into a special cash collateral account with Lender
(notwithstanding the provisions of paragraph 3.8). Collected amounts, if
any, from time to time on deposit in such special cash collateral account
shall continue as security for the Obligations, and shall be held for
application in reduction of any future Prime Based Loan, PROVIDED, that in
Lender's sole discretion, such amounts may be applied at any time to any of
the Obligations (including without limitation any existing or future LIBOR
Loan), without prior notice."
5. Paragraph 2.5 ("Early Termination of Facility by Borrower") of the
Financing and Security Agreement hereby is deleted in its entirety.
6. A new paragraph 2.14, entitled "Unused Line Fee," hereby is added to
the Financing and Security Agreement, immediately following paragraph 2.13
thereof, which shall read in its entirety as follows:
"2.14 UNUSED LINE FEE. In connection with and as
consideration for Lender's commitments under this Agreements, Borrower
shall pay a fee to Lender in an amount equal to one-quarter of one
percent (0.25%) per annum of the average daily amount by which the
Credit Limit exceeds the unpaid principal balance outstanding under
the Facility, payable monthly in arrears on the first day of each
month and on the date of termination of this Agreement."
7. Paragraph 3.3 ("First Priority") of the Financing and Security
Agreement hereby is amended and restated to read in its entirety as follows:
"3.3 FIRST PRIORITY. Borrower represents to Lender that no
security interests, liens or other encumbrances exist with respect to
any of the Collateral except in favor of Lender or to the limited
extent allowed under the MSAA or the Intercreditor Agreements.
Lender's security interests in the Collateral granted herein at all
times shall be and remain first, prior and senior to any other
interests in the Collateral, except to the limited extent allowed
under, and at all times subject to, the MSAA or the Intercreditor
Agreements, or as otherwise may be expressly agreed by Lender in
writing. All aspects of the intercreditor relationships between
Lender and the other party to each of the MSAA and the Intercreditor
Agreements, respectively, shall at all times remain satisfactory to
Lender in its discretion."
8. Paragraph 3.6 ("Collateral Reports") of the Financing and Security
Agreement hereby is amended as follows:
a. A new sentence hereby is added, immediately following the first
sentence thereof, which shall read in its entirety as follows:
"Each Collateral Report shall certify to Lender the CompuCom
Interest Percentage and the RPA Interest Percentage (as
defined by the MSAA, respectively) outstanding as of the
effective date thereof."
b. The introductory phrase and the first clause of the last sentence
thereof hereby is amended to read as follows:
"The execution and delivery of a Collateral Report shall in
each instance constitute an agreement, representation and
warranty by Borrower to Lender that, except for the security
interest of Lender therein: Borrower is the sole owner of
the Collateral included in such Collateral Report and has
full unrestricted power to grant to Lender a continuing
security interest and lien therein free from any lien,
security interest or encumbrance, except as allowed by the
MSAA and the Intercreditor Agreements;..."
9. Paragraph 3.8 of the Financing and Security Agreement hereby is
amended such that the second, third and fourth sentences thereof, respectively,
shall be amended and restated to read as follows:
"Unless expressly agreed otherwise by Lender in writing, all
collections and proceeds of Receivables shall be directed
daily as follows: (i) at all times when the MSAA is in
effect, in accordance with the requirements of the MSAA and
(ii) at all times when the MSAA is not in effect, to Lender
for deposit to the Blocked Collection Account. All
collected funds from collections and proceeds of Receivables
from time to time deposited to the Blocked Collection
Account (including without limitation amounts deposited
thereto pursuant to the MSAA) shall be applied directly to
the Obligations. All checks at any time processed by Lender
for collection
5
<PAGE>
and application to the Obligations (which excludes those
directly deposited to the Concentration Account (as defined
by the MSAA) for administration under the MSAA) shall be
subject to one (1) Business Day collection time and shall
remain provisional until collected, PROVIDED that for the
sole purpose of calculating the Availability, if any, from
time to time under the Facility, such checks shall be
assumed to be collected and applied in reduction of the
Obligations as of the Business Day of receipt by Lender."
10. A new paragraph 3.10a, captioned "CFI Shares" and a new paragraph
3.10b, captioned "CFI Note," hereby are added to the Financing and Security
Agreement, immediately following paragraph 3.19 ("Equipment"), each of which
shall read in its entirety as follows, respectively:
"3.10a CFI SHARES. Borrower shall execute and deliver to
Lender the Pledge Agreement as further evidence of Lender's continuing
security interest, pledge and lien in the CFI Shares, such Pledge
Agreement to be in form satisfactory to Lender, PROVIDED, that
notwithstanding anything to the contrary otherwise contained in this
Agreement, such Pledge Agreement shall provide that for so long as no
Event of Default is in existence and continuing, Borrower shall be
allowed to retain any and all proceeds of the CFI Shares and use same
for working capital purposes in the ordinary course of business, AND
PROVIDED FURTHER, that Lender's exercise of remedies to foreclose,
sell or otherwise dispose of the CFI Shares shall be conditioned upon
the existence and continuation of an Event of Default and termination
of the RPA and the TAA, respectively."
"3.10b CFI NOTE. Contemporaneously upon execution thereof,
Borrower shall deliver possession of the CFI Note to Lender, which at
all times shall be included within the Collateral, PROVIDED, that
notwithstanding anything to the contrary otherwise contained in this
Agreement (i) for so long as no Event of Default is in existence and
continuing, Borrower shall be allowed to retain any and all payments
under or proceeds of the CFI Note and use same for working capital
purposes in the ordinary course of business and (ii) Lender's exercise
of remedies to foreclose, sell or otherwise dispose of the CFI Note
shall be conditioned upon the existence and continuation of an Event
of Default and termination of the RPA and the TAA, respectively."
11. The following hereby is added to paragraph 6.5 ("Annual Financial
Statements") of the Financing and Security Agreement, immediately following the
end thereof:
"Notwithstanding the foregoing, until directed otherwise by Lender in
writing, at Borrower's option the foregoing consolidating financial
statements, and accompanying signed statement, may exclude ClientLink,
Inc."
12. Paragraph 6.6 ("Interim Financial Statements") of the Financing and
Security Agreement hereby is amended as follows:
a. The second sentence thereof is amended and restated to read in
its entirety as follows:
"Such financial statements shall be accompanied by a statement
signed by Borrower's president, chief financial officer or
controller representing to Lender that such financial statements
are true and complete and fairly present the financial condition
and results of operations of Borrower and the Subsidiaries."
b. The following sentence hereby is added immediately following the
end thereof:
"Notwithstanding the foregoing, until directed otherwise by
Lender in writing, at Borrower's option the foregoing
consolidating financial statements, and accompanying signed
statement, may exclude ClientLink, Inc."
13. Clause (iii) of paragraph 6.7 ("Monthly Reports") hereby is amended to
read as follows:
"(iii) a summary of all Inventory on hand, described by item
or type, including a breakdown of identification of
Inventory sold to Borrower by International Business
Machines Corporation or any of its affiliates, Apple
Computer, Inc. or any its affiliates, Hewlett-Packard
Corporation or any of its affiliates, Compaq Computer
Corporation or any of its affiliates, or any other Person
that is a vendor to Borrower of Inventory and is a party
with Lender and Borrower to an Intercreditor Agreement, all
as referenced in the Intercreditor Agreements, together with
a copy of all reports, if any, furnished to Borrower by any
of such entities during such month relative to any of such
Inventory, with appropriate cost extensions as Lender may
request, prepared in accordance with GAAP, and in reasonable
detail, certified by Borrower's chief financial officer,
controller or treasurer as being true, accurate and
complete"
14. Paragraph 6.12 ("Notification of Contingent Liabilities") of the
Financing and Security Agreement hereby is amended and restated to read in its
entirety as follows:
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"6.12 NOTIFICATION OF CONTINGENT LIABILITIES. Promptly upon
receiving notice or otherwise becoming aware thereof, Borrower shall
notify Lender of any pending or threatened lawsuit, claim, action,
liability, investigation or proceeding pertaining to Borrower or any
Subsidiary that would be treated as a contingent liability under GAAP
and is in an amount in excess of $2,000,000.00, or which is reasonably
expected to result in a Material Adverse Effect."
15. Paragraph 6.23 ("Financial Covenants") of the Financing and Security
Agreement hereby is amended and restated to read in its entirety as follows:
"6.23 FINANCIAL COVENANTS.
(a) Borrower agrees that the following financial covenants must be
maintained at all times as set forth herein.
1. TANGIBLE NET WORTH. Tangible Net Worth at all times shall equal
or exceed the Tangible Net Worth Requirement.
2. DEBT TO TANGIBLE NET WORTH RATIO. Debt to Tangible Net Worth
Ratio at any time shall not exceed 4.0 to 1.0.
3. INTEREST COVERAGE RATIO. Interest Coverage Ratio at all times
shall equal or exceed 2.0 to 1.0.
4. NET INCOME: Net Income shall equal or exceed the following
amounts for the following periods, respectively:
January 1, 1993 through December 31, 1993:$ 7,000,000.00
January 1, 1994 through December 31, 1994:$ 8,000,000.00
January 1, 1995 through December 31, 1995:$ 9,000,000.00
January 1, 1996 through December 31, 1996: $20,000,000.00
January 1, 1997 through December 31, 1997: $25,000,000.00
5. FIXED CHARGE COVERAGE RATIO. Fixed Charge Coverage Ratio at
all times shall equal or exceed 1.50 to 1.00
(b) For purposes of measuring the financial covenants under this
paragraph, the following definitions shall apply, each determined on a
consolidated basis for Borrower and the Subsidiaries according to GAAP:
1. "DEBT TO TANGIBLE NET WORTH RATIO" means the ratio of Total
Liabilities to Tangible Net Worth. As used herein:
"TOTAL LIABILITIES" means all indebtedness now or hereafter
existing, including without limitation indebtedness for
borrowed money, trade debt, inter-company debt and all other
liabilities of Borrower which should be reflected on the
consolidated balance sheet of Borrower and the Subsidiaries
according to GAAP, BUT EXCLUDING: (i) Subordinated Debt
(defined hereinbelow) and (ii) indebtedness for the purchase
of Inventory which is in transit from the vendor or
supplier, regardless of shipping terms, and has not yet been
physically delivered to any of Borrower's locations
specified in Exhibit 3.4 (as such exhibit may be amended
from time to time in accordance with the requirements of
this Agreement); and
"TANGIBLE NET WORTH" shall have the meaning defined
hereinbelow.
Transactions under the RPA shall be disregarded in calculating
Debt to Tangible Net Worth Ratio for the limited purpose of
measuring Borrower's compliance with paragraph 6.23(a)(2).
2. "NET INCOME" for any period means net income for such period
after accruing for all appropriate taxes, according to GAAP, and
excluding the following: (a) gain arising from the sale of any
capital asset; (b) gain arising from any write up of the book
value of any asset; (c) earnings of any corporation substantially
all of the assets of which have been acquired by Borrower or any
of the Subsidiaries to the extent realized by such other
corporation prior to the date of such acquisition; (d) earnings
of any business entity (other than the Subsidiaries) in which
Borrower or any of the Subsidiaries has an ownership interest,
unless (and only to the extent) such earnings shall actually have
been received in cash; (e) gain
7
<PAGE>
arising from the acquisition of debt or equity securities or from
the cancellation or forgiveness of any indebtedness or
obligation; and (f) any gain arising from any extraordinary item.
3. "TANGIBLE NET WORTH" shall mean the amount by which the sum of
(a) Shareholders Equity plus Subordinated Debt exceeds (b)
Intangible Assets (PROVIDED, that in calculating Tangible Net
Worth, inventory which is in transit from the vendor or supplier
(regardless of shipping terms) and has not yet been physically
delivered to any of Borrower's locations specified in Exhibit 3.4
(as such exhibit may be amended from time to time in accordance
with the requirements of this Agreement) shall be excluded for
all purposes). As used herein:
"SHAREHOLDERS EQUITY" means shareholders equity determined
according to GAAP;
"SUBORDINATED DEBT" means all indebtedness which by its
terms is subordinate in right of payment and claim in favor
of Lender pursuant to an Affiliate Subordination Agreement
or any other written subordination agreement satisfactory to
Lender, PROVIDED, that the purpose, terms (including,
without limitation, the amount, applicable interest rate,
payment provisions and term) and subordination arrangements
pertaining to any such indebtedness shall be satisfactory to
Lender in its discretion.
"INTANGIBLE ASSETS" shall mean those assets which are
treated as intangible pursuant to GAAP, and in any event
including, without limitation: (i) obligations, if any,
owing by Affiliates, (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 Lender not to be of a
marketable quality commensurate with the inventory of
Borrower and the Subsidiaries as a whole; (iv) accounts
receivable which are deemed by Borrower, any of the
Subsidiaries or Lender to be uncollectible or which should
be subject to a reserve for bad debts in accordance with
GAAP or which are subject to potential claims or setoffs;
(v) leases and leasehold improvements; and (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.
4. "TANGIBLE NET WORTH REQUIREMENT" as of the time of any
determination means (A) at any time through December 30, 1995,
the greater of (1) the sum of (i) the consolidated tangible net
worth of Borrower and the Subsidiaries at December 31, 1992
(which amount for purposes hereof is deemed to be $45,546,000.00)
plus (ii) Net Income, if any, for the period January 1, 1993
through the time of such determination (which for purposes hereof
shall not be less than $0.00) less (iii) $5,000,000.00, or (2)
the amount of $40,546,000.00, and (B) at any time after December
30, 1995, the following required amounts, as applicable:
Applicable Period Required Amount
----------------- ---------------
December 31, 1995 -- December 30, 1996: $108,000,000.00
December 31, 1996 -- December 30, 1997: $125,000,000.00
December 31, 1997 and thereafter: $151,000,000.00
5. "INTEREST COVERAGE RATIO" means the ratio of (i) Net Income
before interest expense and taxes to (ii) interest expense, as of
the end of each fiscal quarter of Borrower, measured for the
fiscal year to date period through the end of such fiscal
quarter.
6. "FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
(i) the sum of Net Income plus depreciation plus amortization for
such period to (ii) current maturities of long term debt, for
such period."
16. Paragraph 6.24 ("Capital Expenditures") of the Financing and Security
Agreement hereby is amended to read in its entirety as follows:
"6.24 CAPITAL EXPENDITURES. Borrower's Capital Expenditures during any
fiscal year (including, with respect to the current fiscal year, any
Capital Expenditures prior to the effective date of this Agreement) shall
not exceed the aggregate amount of
8
<PAGE>
$10,000,000.00 (not including expenditures for the purchase or acquisition
of assets not otherwise prohibited by paragraph 6.34)."
17. Paragraph 6.26 ("Prohibition Against Liens on Collateral") of the
Financing and Security Agreement hereby is amended to read in its entirety as
follows:
"6.26 PROHIBITION AGAINST LIENS ON COLLATERAL. Borrower will not
grant, create or allow to exist any security interest, lien or other encumbrance
on any of the Collateral except to the limited extent as expressly allowed
under, and at all times subject to, the MSAA or the Intercreditor Agreements."
18 Clause (b) and clause (f) of paragraph 6.28 ("Limitation on
Indebtedness") of the Financing and Security Agreement hereby each is amended to
read as follows, respectively:
"...(b) purchase money indebtedness incurred in the ordinary course of
business for the deferred purchase price of inventory,"
"...(f) real property leases established after August 4, 1993 (not
including renewals or replacements of leases existing prior to such date to
the extent they do not involve increased or additional rental), PROVIDED
that (i) the aggregate monthly lease obligations for such real property
leases on operating locations of Borrower established after August 4, 1993
shall not exceed, at any time, $600,000.00 per calendar month and (ii) the
aggregate total lease obligations for such real property leases on
operating locations of Borrower established after August 4, 1993 (over the
entire unexpired term of each such lease, respectively) shall not exceed,
at any time $8,000,000.00,..."
19. Paragraph 6.32 ("Dividend, Distributions") of the Financing and
Security Agreement hereby is amended to read in its entirety as follows:
"6.32 DIVIDENDS, DISTRIBUTIONS. Borrower will not declare, pay or
issue any dividends or other distributions in respect of its capital stock,
or distribute, reserve, secure or otherwise make or commit distributions in
respect of its capital stock, other than annual dividends on any "Series B
Cumulative Preferred Stock" of Borrower (i) up to but not exceeding the
aggregate amount of $2,000,000.00 to Safeguard Scientifics, Inc. to the
extent allowed by paragraph 6.33 or (ii) provided that no Event of Default
is in existence, to any other record owners thereof."
20. Paragraph 6.33 ("Transactions with Affiliates") of the Financing and
Security Agreement hereby is amended to read in its entirety as follows:
"6.33 TRANSACTIONS WITH AFFILIATES. The aggregate of all amounts
directly or indirectly paid or transferred by Borrower to or for the
benefit of any Affiliate during any fiscal year, whether by way of
extensions of credit, management or consulting fees, dividends, payments on
other obligations or other transfers of cash or cash equivalents
(including, with respect to the current fiscal year, all such amounts, if
any, made by Borrower prior to the effective date of this Agreement) shall
not exceed (i) $5,000,000.00 plus (ii) so long as no Event of Default is in
existence, up to the maximum amount of $2,000,000.00 for the payment of
dividends to Safeguard Scientifics, Inc. on the "Series B Cumulative
Preferred Stock" of Borrower as provided in paragraph 6.32. Borrower will
not in any event enter into any transaction (other than as evidenced by the
RPA or the TAA) with any Affiliate except in the ordinary course of
business on terms no less favorable to Borrower, nor more favorable to such
Affiliate, than would be obtainable in a comparable arm's length
transaction with a Person who is not an Affiliate, and any such transaction
(other than as evidenced by the RPA or the TAA) which involves an amount in
excess of $500,000.00 shall first be specifically approved by Borrower's
board of directors as being an arm's length transaction on terms no less
favorable to Borrower, nor more favorable to such Affiliate, than would be
obtainable in a comparable arm's length transaction with a Person who is
not an Affiliate. At Lender's request, Borrower will provide Lender with a
written summary of transactions with Affiliates, containing such
information in respect of such transactions as Lender may require."
21. Paragraph 6.34 ("Acquisitions") of the Financing and Security
Agreement hereby is amended to read in its entirety as follows:
"6.34 ACQUISITIONS. Borrower shall not purchase or otherwise
acquire assets from any Person outside the ordinary course of business
of Borrower, the aggregate purchase or acquisition price of which
(including cash, assumed obligations, deferred obligations and all
other consideration paid or payable by Borrower) during any fiscal
year, would exceed $20,000,000.00."
22. The first sentence of Paragraph 6.35 ("Limitation on Investments") of
the Financing and Security Agreement hereby is amended to read in its entirety
as follows:
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<PAGE>
"Borrower shall not invest in or otherwise purchase or acquire the
securities of any Person (excluding PC Service Source, Inc., and excluding
Borrower's capitalization of CFI existing as of April 1, 1996 and
additional capital contributions to the limited extent provided by the
RPA), the aggregate amount of which at any time exceeds $5,000,000.00."
23. Three new paragraphs (numbered 6.38, 6.39 and 6.40, respectively)
hereby are added as a part of the Financing and Security Agreement, immediately
following paragraph 6.37 thereof, each of which shall read in its entirety as
follows:
"6.38 AGREEMENTS IN RESPECT OF RPA AND TAA. With respect to the
RPA and the TAA, respectively, (a) unless otherwise agreed by Lender,
Borrower at all times shall have and maintain the sole and exclusive right
to service, administer and collect the Receivables, SUBJECT AT ALL TIMES,
HOWEVER, to this Agreement and the MSAA, (b) Borrower will not in any
event effect an increase in the RPA Interest Percentage (as defined by the
MSAA) if as of the proposed time of the effectiveness of any such increase
(i) any Event of Default, or any condition or event which with notice or
the passage of time would constitute an Event of Default, is in existence,
or would exist upon such effectiveness or (ii) Projected Unused
Availability is less than zero dollars ($0.00), (c) contemporaneously upon
effecting any increase in the RPA Interest Percentage (as defined by the
MSAA) Borrower shall deliver to Lender a current Collateral Report, dated
as of the effective date of any such increase, (d) contemporaneously upon
execution and delivery of the RPA, Borrower shall cause all proceeds of the
Net Investment (as defined by the TAA) received by CFI and paid to Borrower
in payment of the RPA Interest initially sold by Borrower under the RPA to
be paid directly to Lender for application to the Obligations, and
thereafter, Borrower shall cause all proceeds of any increase in the Net
Investment (as defined by the TAA) received by CFI and paid to Borrower in
payment of any RPA Interest under the RPA to be paid directly to Lender for
application to the Obligations, (e) Borrower will not effect any increase
in the Maximum Net Investment (as defined by the TAA) without the prior
written consent of Lender and (f) Borrower will not enter into any
agreement to amend the RPA without the prior written consent of Lender."
"6.39 NOTICES, INFORMATION IN RESPECT OF RPA AND TAA. Borrower
will notify Lender in writing (i) on each Collateral report, and at such
other times as Lender may request, the amount of the RPA Interest
Percentage (as defined by the MSAA) and the Maximum Net Investment (as
defined by the TAA), (ii) at least two (2) Business Days before effecting
any change in the RPA Interest under the terms of the RPA, as provided in
Section 2.2(b) of the MSAA, (iii) promptly upon any termination of the RPA
or the TAA, or upon receiving or sending any notice of intended, pending or
potential termination of the RPA or the TAA, (iv) promptly at any time when
the "Percentage Factor" exceeds the "Maximum Percentage Factor" (as those
terms are defined by the TAA); (v) promptly upon becoming aware of any
assignment by EFC, or any request by CFI for an assignment by EFC, of EFC's
interest under the TAA to any "Bank Investor" (as defined in the TAA)
pursuant to Section 9.7 of the TAA and (vi) promptly upon becoming aware
any "Termination Event" or "Potential Termination Event" (as those terms
are defined in the TAA) under the TAA."
"6.40 COPIES IN RESPECT OF RPA AND TAA. Promptly upon execution,
Borrower will deliver to Lender a true and correct copy of the RPA and the
TAA, respectively, and all other agreements, certifications, opinions and
other documentation in connection therewith. Borrower will provide Lender
with a true and correct copy of (i) each monthly report delivered by
Borrower to CFI under the RPA; (ii) each Investor Report delivered by
Borrower to EFC under the TAA; (iii) each notice, if any, at any time given
by CFI pursuant to Section 5.1(b)(i) of the TAA (notifications in respect
of any "Termination Event" or "Potential Termination Event," as those terms
are defined by the TAA) and (iv) any notice (or copy of any such notice) of
termination, or of intended, pending or potential termination of the RPA or
the TAA sent or received by Borrower or CFI."
24. Subparagraph (k) of paragraph 7.1 ("Event of Default") hereby is
amended and restated to read in its entirety as follows:
"(k) The entry of any judgment against Borrower in an amount equal to
or exceeding $2,000,000.00 and such judgment is not satisfied,
dismissed, stayed or superseded by bond within 30 days after the day
of entry thereof (and in the event of a stay or supersedeas bond, such
judgment is not discharged within 30 days after termination of any
such stay or bond);"
25. A new subparagraph (s) hereby is added as a part of paragraph 7.1
("Event of Default") of the Financing and Security Agreement, immediately
following subparagraph (r) thereof, which shall read in its entirety as follows:
"(s) Any breach or default by Borrower, CFI or EFC of any obligations
under the MSAA; or material impairment of the enforceability of the
rights and benefits intended for the benefit of Lender as a Beneficial
Secured Party under the MSAA or the taking of any action by any Person
to challenge same; or any breach or
10
<PAGE>
default by Borrower, CFI or EFC of any obligations under the RPA; or
the occurrence of any "Termination Event" or "Potential Termination
Event" as those terms are defined by the TAA."
26. Lender hereby consents to Borrower's execution and performance of the
RPA and the TAA, subject to the terms of this Fifth Amendment, PROVIDED, that
all sales of the RPA Interest under the RPA, and all transfers of a portion
thereof under the TAA, and all rights of Borrower, CFI, EFC, their successors
and assigns and any Person claiming under any of them, respectively, at all
times shall be and remain expressly subject to the terms and provisions of the
MSAA in a manner which is acceptable to Lender. Borrower hereby acknowledges,
confirms and agrees that all right, title and interest of Borrower under the RPA
and the TAA, including without limitation all payments and rights to payment
from time to time owing to Borrower thereunder, respectively, at all times are
and shall be included in the Collateral and subject to Lender's rights under the
Financing and Security Agreement, PROVIDED that, except as required by paragraph
6.38, for so long as no Event of Default is in existence and continuing,
Borrower shall be allowed to retain such amounts and use same for working
capital purposes in the ordinary course of business. Borrower acknowledges,
confirms and agrees that all right, title and interest, if any, at any time
hereafter acquired by Borrower in the RPA Interest, or any portion thereof,
whether by repurchase or otherwise, shall automatically be included in the
Collateral and subject to Lender's rights under the Financing and Security
Agreement.
27. Borrower agrees to indemnify and reimburse Lender for all amounts, if
any, paid by Lender to Administrative Secured Party in respect of returned
checks or other items pursuant to Section 9.6 of the MSAA, and such indemnity
and reimbursement obligation shall be deemed included within the Obligations and
secured by the Collateral under the Financing and Security Agreement.
28. At any time when the Net Investment and all Aggregate Unpaids (as such
terms are defined by the TAA) have been paid in full and in any event promptly
upon termination of the TAA, Borrower shall cause all amounts paid or payable to
CFI by the Administrative Secured Party under the MSAA in respect of the RPA
Interest (as defined by the MSAA), whether then on hand or thereafter coming
into CFI's possession, to be transferred to Borrower (by dividend or otherwise)
and Borrower shall use same for working capital purposes in the ordinary course
of business.
29. Lender and Borrower acknowledge and confirm the following in respect
of all Exhibits to the Financing and Security Agreement:
Exhibit 2.10 ("Participants") hereby is amended and restated to read in its
entirety as set forth in Exhibit 2.10 attached hereto.
Exhibit 3.4 ("Location of Collateral") hereby is amended and restated to
read in its entirety as set forth in Exhibit 3.4 attached hereto.
Exhibit 5.1 ("Assumed Names") hereby is amended and restated to read in its
entirety as set forth in Exhibit 5.1 attached hereto.
Exhibit 5.6 ("Outstanding Shares and Commitments to Sell Shares") hereby is
amended and restated to read in its entirety as set forth in Exhibit 5.6
attached hereto.
Exhibit 5.8 ("Subsidiary Information") hereby is amended and restated to
read in its entirety as set forth in Exhibit 5.8 attached hereto.
Exhibit 5.9 ("Pending Litigation") hereby is amended and restated to read
in its entirety as set forth in Exhibit 5.9 attached hereto.
Exhibit 5.11 ("Judgments and Assessments") hereby is amended and restated
to read in its entirety as set forth in Exhibit 5.11 attached hereto.
Exhibit 5.12 ("Taxes") hereby is amended and restated to read in its
entirety as set forth in Exhibit 5.12 attached hereto.
30. The following items shall be delivered to Lender prior to or
simultaneously with execution and delivery of this Fifth Amendment:
(a) A certificate signed by the corporate secretary of Borrower (i)
certifying to Lender that its Certificate of Incorporation and Bylaws have
not been amended since Borrower's certification thereof under Secretary's
Certificate dated April 5, 1994 previously delivered to Lender, and that
the officers of Borrower specified therein are duly elected, qualified and
acting in the capacities therein stated, as of the effective date hereof
(or otherwise certifying to Lender Borrower's current Certificate of
Incorporation, Bylaws and officer incumbency in form satisfactory to
Lender) and (ii) attaching and certifying resolutions duly adopted by the
board of directors of Borrower authorizing this Fifth Amendment and the
transactions evidenced hereby, and authorizing and directing one or more
named officers of Borrower to execute and deliver this Fifth Amendment, and
all
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<PAGE>
related documentation required by Lender, on behalf of Borrower, which
certificate shall be in form satisfactory to Lender;
(b) Such consents and agreements in respect of the Intercreditor
Agreements and the Subordinated Note Agreement as Lender may require, in
form satisfactory to Lender;
(c) An opinion of Borrower's counsel, in form satisfactory to Lender;
and
(d) Such other documentation as Lender may reasonably require in
connection with the Financing and Security Agreement or this Fifth
Amendment.
31. In consideration of this Fifth Amendment, Borrower represents to
Lender that (i) no Event of Default, or other event or condition which would be
the subject of a required notice under paragraph 6.14 of the Financing and
Security Agreement, is in existence as of the effective date hereof, (ii) each
of the representations and warranties contained in the following paragraphs of
the Financing and Security Agreement are true and correct as of the effective
date of this Fifth Amendment: paragraphs 3.3, paragraph 3.4, and paragraph 5.1
through paragraph 5.18. Borrower hereby ratifies and confirms the Financing and
Security Agreement and all Loan Documents as being and continuing in full force
and effect, as amended by this Fifth Amendment. All references to the Financing
and Security Agreement contained in the Loan Documents shall be deemed to mean
the Agreement as amended by this Fifth Amendment.
32. Upon execution of this Fifth Amendment by each of Borrower and Lender
AND execution by all Participants of the Consent and Acknowledgment by
Participants (hereinbelow), this Fifth Amendment shall be deemed effective
prospectively as of the effective date specified in the preamble. This Fifth
Amendment (i) contains the entire agreement among the parties and may not be
amended or modified except in writing signed by all parties, (ii) shall be
governed and construed according to the laws of the State of Texas and (iii) may
be executed in any number of counterparts, each of which shall be valid as an
original and all of which shall be one and the same agreement. A telecopy of
any executed counterpart shall be deemed valid as an original.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
<PAGE>
EXECUTED as of the effective date specified in the preamble.
NATIONSBANK OF TEXAS, N.A.
By: /s/ Sally Glynn
------------------------------
Sally Glynn
Senior Vice President
COMPUCOM SYSTEMS, INC.
By: /s/ Robert J. Boutin
------------------------------
Robert J. Boutin
Senior Vice President, Finance
and Chief Financial Officer
<PAGE>
NATIONSBANK
NationsBank of Texas, N.A.
- -------------------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement ("Agreement") is made effective as April
1, 1996, by COMPUCOM SYSTEMS, INC., a Delaware corporation (hereinafter called
"Pledgor"), in favor of NATIONSBANK OF TEXAS, N.A., a national bank ("Lender").
DEFINITIONS
The following definitions shall apply throughout this Agreement:
"Code" means the Texas Uniform Commercial Code, as in effect from time to
time.
"Collateral" means all Pledged Shares and all proceeds thereof at any time
arising.
"Event of Default" means any Event of Default defined in paragraph 7.
"NationsBank" means NationsBank of Texas, N.A., a national bank with its
principal place of business located in Dallas County, Texas.
"NationsBank Security Agreement" means that certain Financing and Security
Agreement dated as of August 4, 1993, as amended by (i) the First Amendment
to Financing and Security Agreement dated effective as of March 31, 1994,
(ii) the Second Amendment to Financing and Security Agreement dated
effective as of December 12, 1994, (iii) the Third Amendment to Financing
and Security Agreement dated effective as of April 26, 1995, (iv) the
Fourth Amendment to Financing and Security Agreement dated effective as of
October 1, 1995, (iv) Amendment 4A to Financing and Security Agreement
dated effective as of March 22, 1996, and (v) the Fifth Amendment to
Financing and Security Agreement dated effective as of April 1, 1996, as
the same may be renewed, extended, modified, amended or restated hereafter.
"Obligations" means all "Obligations" as defined in the NationsBank
Security Agreement, all costs, fees and expenses incurred by Secured Party
in enforcing this Agreement, and any and all renewals, extensions,
increases, amendments, modifications or restatements thereof.
"Pledged Shares" means all right, title and interest now or hereafter owned
by Pledgor in the following described securities: All shares of CSI
Funding, Inc., a Delaware corporation, now owned and hereafter acquired by
Pledgor, including without limitation all shares, equity ownership
interests or other interests therein, whether or not certificated, and all
substitutions and replacements thereof, together with all securities
hereafter delivered or deliverable in substitution for or in addition
thereto, and all certificates, book entries and instruments representing
any of the foregoing, and all cash, securities, interest, dividends, stock
dividends, stock splits, distributions, payments, rights, proceeds and
other property at anytime and from time to time received, receivable or
otherwise distributed in respect of or in exchange for and any or all
thereof, and all proceeds of any of the foregoing.
"Pledgor" means CompuCom Systems, Inc., a Delaware corporation.
"Secured Party" means NationsBank and its successors and assigns, and
includes any person to whom NationsBank, or its successors or assigns, may
assign its rights and interests under this Agreement.
Unless expressly provided otherwise, all terms defined in the NationsBank
Security Agreement, wherever used in this Agreement, shall have the same
meanings as are prescribed by the NationsBank Security Agreement, and all
terms defined by the Code, wherever used herein, shall have the same
meanings as are prescribed by the Code.
RECITALS
NationsBank and Pledgor are parties to the NationsBank Security Agreement,
pursuant to which NationsBank has established a credit facility for loans
by NationsBank to Pledgor from time to time as provided therein;
In connection with the extension of credit to Pledgor under the NationsBank
Security Agreement, NationsBank requires a security interest in the
Collateral as additional collateral support for the Obligations;
Pledgor has agreed to grant to NationsBank a continuing security interest
and pledge in the Collateral, as security for all Obligations, on the terms
prescribed below;
<PAGE>
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Pledgor and NationsBank each hereby agrees as
follows:
1. COLLATERAL. Pledgor hereby grants to Secured Party a continuing
security interest, pledge and lien in and to the Collateral as security for full
payment and performance of the Obligations.
2. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants the following to Secured Party: (a) Pledgor has full corporate
authorization to execute and perform this Agreement; (b) this Agreement
constitutes legal, valid and binding obligations of Pledgor, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of creditors'
rights generally; (c) Pledgor has good and transferable title to the Collateral
free and clear of all liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement (and except to the
extent, if any, that applicable federal and state securities laws and compliance
therewith may be considered to be an encumbrance); (d) no dispute, right of
setoff, counterclaim or defense exists with respect to all or any part of the
Collateral; (e) the execution and performance of this Agreement by Pledgor will
not conflict with any agreement, law or regulation, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting the
Collateral; (f) no consent, approval, authorization or order of, and no notice
to or filing with, any court, governmental authority or third party is required
in connection with the execution and performance of this Agreement; (g) all of
Pledgor's records concerning the Collateral shall be maintained at the principal
office of Pledgor which, as of the date hereof, is located at the address for
notice specified herein for Pledgor; and (h) the Pledged Shares are wholly
comprised of unrestricted assets of the Pledgor.
3. COVENANTS. So long as any of the Obligations remain unpaid, Pledgor
covenants and agrees with Secured Party as follows:
a. DISPOSITION OF COLLATERAL. Pledgor shall not sell, transfer, deliver
or otherwise dispose of any of the Collateral or any interest therein without
the express written permission of Secured Party.
b. OWNERSHIP AND LIENS. Pledgor will maintain good and defensible title
to all Collateral free and clear of all liens, security interests, encumbrances
or adverse claims, except for the security interest created by this Agreement
(and except to the extent, if any, that applicable federal and state securities
laws and compliance therewith may be considered to affect marketability of title
or to be an encumbrance). Pledgor will not permit any dispute, right of setoff,
counterclaim or defense to exist with respect to the Collateral. Pledgor will
defend at its expense Secured Party's right, title and security interest in and
to the Collateral against the claims of any third party.
c. POSSESSION OF PLEDGED SHARES. The Pledged Shares are
uncertificated as of the effective date hereof. Promptly upon issuance or
receipt thereof, Pledgor shall deliver, or cause to be delivered, to Secured
Party, all share certificates and other instruments or documents at any time,
from time to time, evidencing any of the Collateral or any stock, stock
dividends, stock splits, non-cash distributions, warrants and rights received
with respect to any of the Collateral, together with stock powers duly
executed in blank with respect to all stock certificates. Secured Party
hereby is appointed to retain physical possession of the certificates and
instruments representing or evidencing Collateral in accordance with the
provisions of this Agreement. Any and all certificates or other property or
items referenced in this paragraph 3.c from time to time coming within the
possession of Pledgor, and any and all proceeds thereof, shall be held in
trust for the benefit of Secured Party and forthwith delivered to Secured
Party in the form received.
d. INSPECTION OF BOOKS AND RECORDS. Pledgor will keep adequate records
concerning the Collateral. Secured Party and all representatives and agents
appointed by Secured Party shall have the right to inspect and copy such records
at any time during normal business hours.
e. "MARGIN LOANS". Pledgor represents to Secured Party that it is not
obligated for any "margin loans" secured by the Collateral.
f. FURTHER ASSURANCES. Pledgor will from time to time at its expense
promptly execute and deliver all further instruments, financing statements and
documents and take all further action necessary or appropriate or that Secured
Party may reasonably request in order to achieve and maintain perfection and
priority of Secured Party's security interests under this Agreement and
otherwise effect the purposes of this Agreement. Without limiting the
foregoing, Pledgor will take all action necessary to comply with Chapter 8 and
Chapter 9 of the Code relative to perfection of the security interests in the
Collateral under this Agreement.
4. PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may take such action as
may be deemed necessary by Secured Party to protect its interest in the
Collateral, and reasonable expenses of Secured Party incurred in connection
therewith shall be a part of the Obligations secured by the Collateral and
payable by Pledgor to Secured Party on demand.
5. POWER OF ATTORNEY. Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, such power being coupled with an interest, with
full authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, to take any action authorized under paragraph 4 and to take any other
action or execute and deliver any notice, demand or instrument which Secured
Party may from time to time in Secured Party's discretion deem necessary or
appropriate to perfect its interests, rights
2
<PAGE>
and benefits under this Agreement or, upon and during the continuation of any
Event of Default to dispose of and transfer any Collateral or otherwise protect
or enforce its rights under this Agreement. Pledgor irrevocably authorizes any
other person to rely upon and comply with any notice, demand, stock power or
other document signed by Secured Party, whether in the name of Secured Party or
Pledgor, the same as if such notice or demand were executed and delivered by
Pledgor, and Pledgor agrees to indemnify and hold Secured Party and any such
other person harmless from any and all claims resulting from such compliance.
Until the occurrence of an Event of Default, the right to vote the Pledged
Shares and other rights in respect of ownership thereof (excluding the right to
dispose of or encumber the Collateral) shall remain vested in Pledgor subject to
Secured Party's rights under this Agreement.
6. NOTIFICATION TO ISSUERS. Secured Party shall be entitled at any time
to take such action as it deems necessary in order to register its security
interests in the Collateral with the issuer thereof or otherwise notify such
issuer of Secured Party's interests in the Collateral.
7. DEFAULT. An Event of Default shall exist under this Agreement upon
the occurrence of any one or more of the following events: (a) any Event of
Default or other breach or default as defined by the NationsBank Security
Agreement; (b) default by Pledgor in the performance or observance of any of the
covenants, terms or conditions herein; (c) any representation or warranty
contained herein or made or furnished by Pledgor in connection herewith shall be
false or misleading in any material respect as of the date made or deemed to
have been made; (d) the filing or commencement of any attachment, sequestration,
garnishment, execution or other action against or with respect to any of the
Collateral; (e) the filing of any petition in bankruptcy, or any other
insolvency proceeding, by or against Pledgor under the United States Bankruptcy
Code or any other applicable law; or (f) any repudiation by Pledgor, or
impairment of, Secured Party's rights under this Agreement.
8. REMEDIES. Should any Event of Default occur, and during the
continuation thereof, Secured Party may from time to time in its discretion,
without limitation and without notice except as expressly provided in any of
the NationsBank Security Agreement take any of the following actions,
PROVIDED, HOWEVER, that notwithstanding anything to the contrary otherwise
contained herein or otherwise in any of the Loan Documents, Lender's exercise
of any remedy to foreclose, sell or otherwise dispose of the Pledged Shares
shall be additionally conditioned upon termination of the RPA and the TAA,
respectively: (a) exercise in respect of the Collateral all the rights and
remedies of a secured party under the Code; (b) reduce its claim to judgment
or foreclose or otherwise enforce, in whole or in part, the security
interest, pledge and lien granted hereunder by any available judicial
procedure; (c) sell or otherwise dispose of, at Secured Party's office, or on
the premises of Pledgor, or elsewhere, the Collateral, in whole or in part,
by public or private proceedings, and by way of one or more contracts (it
being agreed that the sale or other disposition of any part of the Collateral
shall not exhaust Secured Party's power of sale, but sales or other
dispositions may be made from time to time until all of the Collateral has
been sold or disposed of or until the Obligations have been paid and
performed in full); (d) buy the Collateral, or any portion thereof, at any
public sale; (e) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed standard price
quotations; or (f) apply for the appointment of a receiver for the
Collateral. Pledgor agrees that in the event Pledgor is entitled to receive
any notice of the sale or other disposition of any Collateral, notice shall
be deemed reasonable if deposited in the United States Mail, postage prepaid,
or courier delivered or telecopied, addressed to Pledgor's address for notice
specified herein, five (5) days prior to the date of any public sale, or the
date after which a private sale, of any of such Collateral is to be held.
Secured Party shall not be obligated to proceed with any such sale,
regardless of notice of sale having been given. Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Notwithstanding the
foregoing, Secured Party shall not pledge the Collateral to any person
without the prior written consent of Pledgor.
9. DISPOSITION OF THE COLLATERAL UPON DEFAULT. In exercising any
remedies of sale or disposition allowed by paragraph 8, Pledgor recognizes that
Secured Party may be unable to effect a public sale of all or any part of the
securities pledged as Collateral because of restrictions in applicable federal
and state securities laws and that Secured Party may determine to make one or
more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that each such private sale may be at
prices and other terms less favorable than what might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that each such private
sale shall be deemed to have been made in a commercially reasonable manner and
that Secured Party shall have no obligation to delay the sale of any such
securities for the period of time necessary to permit the issuer to register
such securities for public sale under any federal or state securities laws.
Pledgor further acknowledges and agrees that any offer to sell such securities
which has been made privately in the manner described above to not less than
five (5) BONA FIDE offerees shall be deemed to involve a "public sale" for the
purposes of Section 9.504(c) of the Code, notwithstanding that such sale may not
constitute a "public offering" under any federal or state securities laws and
that Secured Party may, in such event, bid for the purchase of such securities.
Any purchaser at a sale conducted pursuant to the terms of this Agreement shall
hold the property sold absolutely, free from any claim or right on the part of
the Pledgor. Each and every purchaser of any of the Collateral shall be vested
with all shareholder's ownership rights including, without limitation, all
voting, dividend and distribution rights. Pledgor agrees that Secured Party may
purchase the Collateral or any part thereof at any sale conducted in good faith
in accordance herewith provided that at least five (5) days prior notice of such
sale has been furnished to Pledgor. Secured Party acknowledges that its right
to exercise any remedies of sale or disposition of the Pledged Shares is
expressly conditioned as provided by paragraph 8.
3
<PAGE>
10. INTEREST PAYMENTS AND COLLATERAL SUBSTITUTION. Upon the occurrence of
an Event of Default, all rights, if any, of Pledgor to receive and retain
interest payments, dividends and other distributions on the Collateral shall
automatically be suspended, and all such rights shall thereupon become vested
with Secured Party, until such time as may be agreed otherwise by Secured Party
in writing. All interest payments, dividends or other distributions which may
be received by Pledgor at any time when the receipt of same by Pledgor is
prohibited by this Agreement shall be received by Pledgor and held in trust for
the benefit of Secured Party and shall be segregated from other property of
Pledgor and forthwith delivered to Secured Party in the form received (properly
endorsed or assigned if requested by Secured Party), to be held by Secured Party
as Collateral.
11. INDEMNITY. Pledgor hereby indemnifies and agrees to hold harmless
each of Secured Party and its officers, directors, employees, attorneys, agents
and representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by or asserted
against, any Indemnified Person (WHETHER OR NOT CAUSED BY ANY INDEMNIFIED
PERSON'S ORDINARY NEGLIGENCE) arising in connection with this Agreement or the
Collateral (including without limitation, the enforcement of this Agreement and
defense of any Indemnified Person's actions and/or inactions in connection with
this Agreement), except to the limited extent the Claims against an Indemnified
Person are caused by such Indemnified Person's gross negligence or willful
misconduct. If Pledgor or any third party ever alleges such gross negligence or
willful misconduct by any Indemnified Person, the indemnification provided for
in this paragraph shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the alleged
gross negligence or willful misconduct. The indemnification provided for in
this paragraph shall survive the termination of this Agreement and shall extend
and continue to benefit each individual or entity who is or has at any time been
an Indemnified Person hereunder. It is agreed that Secured Party shall have no
obligation to take necessary steps to preserve rights against prior parties, if
any.
12. COSTS AND EXPENSES. Pledgor will upon demand pay to Secured Party the
amount of any and all costs, fees and expenses (including without limitation,
attorneys' fees and expenses), which Secured Party may reasonably incur in
connection with the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, or the exercise or
enforcement of any of the rights of Secured Party under this Agreement.
13. NO COMMITMENT. Nothing in this Agreement shall be construed as an
obligation on the part of Secured Party to extend or continue to extend credit
for the benefit of Pledgor other than as expressly provided by the NationsBank
Security Agreement.
14. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests, demands or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and given by (i) personal
delivery, (ii) telecopy or other electronic transmission, (iii) expedited
delivery service with proof of delivery, or (iii) mail, postage prepaid,
registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth below or to such different address as the
addressee shall have designated by written notice sent pursuant to the terms
hereof and shall be deemed to have been received either, in the case of personal
delivery or telecopy or other electronic transmission, at the time of receipt,
or in the case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the case of
mail, upon deposit in a depository receptacle under the care and custody of the
appropriate postal authority.
SECURED PARTY: As specified for NationsBank by the NationsBank Security
Agreement.
PLEDGOR: As specified by the NationsBank Security Agreement.
Either party shall have the right to change its address for notice hereunder to
any other address by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
15. WAIVERS. In connection with all matters pertaining to this Agreement,
Pledgor hereby waives: (1) notice of acceptance hereof; (2) notice of
presentment for payment, demand, protest and notice thereof, notice of intention
to accelerate and notice of acceleration as to any promissory notes or other
instruments from time to time evidencing the Obligations or any portion thereof,
except to the extent, if any, specifically provided otherwise by the NationsBank
Security Agreement; (3) all other notices (except if such notice is specifically
required to be given to Pledgor hereunder) and demands to which Pledgor might
otherwise be entitled, except to the extent, if any, specifically provided
otherwise by the NationsBank Security Agreement; (4) any rights to assert
against Secured Party any defense (legal or equitable), set-off, counterclaim or
claim which Pledgor may now or at any time hereafter have against any other
party liable to Secured Party; (5) any defense, set-off, counterclaim or claim
of any kind or nature, arising directly or indirectly from the present or future
lack of perfection, sufficiency, validity or enforceability of the Obligations
or any security therefor; and (6) any right or defense arising by reason of any
claim or defense based upon election of remedies by Secured Party.
16. NON-IMPAIRMENT; NON-WAIVER. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by (i) any
renewal, extension, increase or modification with respect to the Obligations,
(ii) any surrender, compromise, release, renewal, extension, exchange or
4
<PAGE>
substitution which Secured Party may grant with respect to the Collateral, or
(iii) any release or indulgence granted to Pledgor or any endorser, guarantor or
surety of the Obligations. The taking of additional security by Secured Party
shall not release or impair the lien, security interest or other security rights
of Secured Party hereunder or affect the obligations of Pledgor hereunder.
Secured Party may waive any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any default without
waiving the Event of Default remedied. Neither the failure by Secured Party to
exercise, nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of Default or
as a waiver of the right to exercise any such right or remedy at a later date.
No single or partial exercise by Secured Party of any right or remedy hereunder
shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right or remedy hereunder may be exercised at any time. No
waiver of any provision hereof nor consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to nor demand on Pledgor in any case shall of itself entitle Pledgor
to any other or further notice or demand in similar or other circumstances.
Pledgor consents and agrees that, without notice to or by Pledgor and without
affecting or impairing the obligations of Pledgor hereunder, Secured Party may,
by action or inaction: (a) compromise, settle, extend the duration or the time
for the payment of, or discharge the performance of, or may refuse to or
otherwise not enforce the NationsBank Security Agreement; (b) release all or any
one or more parties to the NationsBank Security Agreement or grant other
indulgences to Pledgor in respect thereof; (c) amend or modify in any manner and
at any time (or from time to time) the NationsBank Security Agreement; or (d)
release or substitute any Person from time to time liable on the Obligations, or
any portion thereof, or enforce, exchange, release or waive any security for the
Obligations or any other guaranty of the Obligations, or any portion thereof.
17. NONCONTRAVENTION. Execution, delivery and performance by Pledgor of
this Agreement does not, and will not, violate or contravene any provision of
Pledgor's corporate charter or bylaws or any other agreement governing or
affecting Pledgor.
18. NO ELECTION. Secured Party shall have the right to seek recourse
under this Agreement to the fullest extent provided for herein, and no election
by Secured Party to proceed in one form or action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Secured Party's right
to proceed in any other form of action or proceeding or against other parties
unless Secured Party has expressly waived such right in writing. Specifically,
but without limiting the generality of the foregoing, no action or proceeding by
Secured Party under any document or instrument evidencing the Obligations shall
serve to diminish the liability of Pledgor under this Agreement except to the
extent that Secured Party finally and unconditionally shall have realized
indefeasible payment by such action or proceeding.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on Pledgor
and its successors and assigns, and shall inure to the benefit of Secured Party
and its successors and assigns. Secured Party's rights under this Agreement may
be transferred in connection with any transfer of the Obligations, or any part
thereof, to the extent not otherwise prohibited by the NationsBank Security
Agreement. Pledgor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured Party.
20. CUMULATIVE RIGHTS. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which Secured
Party may otherwise have at law or in equity or under the NationsBank Security
Agreement, and the exercise of one or more of such rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of any other rights or
remedies.
21. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be illegal, invalid or unenforceable under present
or future laws, such provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be illegal, invalid or unenforceable.
22. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
Secured Party and Pledgor with respect to the Collateral, and may not be
modified or amended except in writing signed by all parties.
23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF TEXAS.
24. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO PARTY
SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN THEM CONCERNING
THIS AGREEMENT OR ANY CLAIMS OR TRANSACTIONS IN CONNECTION HEREWITH, IN EITHER A
STATE OR FEDERAL COURT, THE RIGHT TO TRIAL BY JURY BEING EXPRESSLY WAIVED. THE
PARTIES EACH ACKNOWLEDGE THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND
UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH
THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
5
<PAGE>
IN WITNESS WHEREOF, Pledgor and NationsBank have caused this Agreement to
be duly executed and delivered under hand, all as of the day and year first
above written.
COMPUCOM SYSTEMS, INC.
By: /s/ Robert J. Boutin
-------------------------------------
Robert J. Boutin
Senior Vice President, Finance
and Chief Financial Officer
NATIONSBANK OF TEXAS, N.A.
By: /s/ Sally Glynn
-----------------------------------
Sally Glynn
Senior Vice President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Robert J. Boutin, known to me to be the person and officer whose name is
subscribed in the foregoing instrument, and acknowledged to me that the same
was the act of said COMPUCOM SYSTEMS, INC., and that he executed the same for
the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 1 day of April, 1996.
/s/ M. Patricia Tarkington
------------------------------
NOTARY PUBLIC,
STATE OF TEXAS
My Commission Expires:
4/1/1998 [SEAL] M. PATRICIA TARKINGTON
- ---------------------- ------------------------------
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared Sally
Glynn, known to me to be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that the same was the act of said
NATIONSBANK OF TEXAS, N.A., and that she executed the same for the purposes and
considerations therein expressed.
GIVE UNDER MY HAND AND SEAL OF OFFICE THIS THE 5 day of April, 1996.
/s/ Cindy Haskovec
------------------------------
NOTARY PUBLIC, STATE OF TEXAS
My Commission Expires:
_____________________
CINDY HASKOVEC
------------------------------
(Printed Name of Notary)
6
<PAGE>
AMENDED AND RESTATED
INTERCREDITOR AGREEMENT
This Amended and Restated Intercreditor Agreement ("Agreement") is executed
by and among NATIONSBANK OF TEXAS, N.A., in its individual corporate capacity as
Lender under the NationsBank Security Agreement defined below ("NationsBank"),
COMPUCOM SYSTEMS, INC. a Delaware corporation ("Debtor"), IBM CREDIT
CORPORATION, a Delaware corporation ("IBM Credit") and NATIONSBANK OF TEXAS,
N.A., in its capacity as Administrative Agent under the MSAA defined below
("Administrative Secured Party"), as follows:
I. DEFINITIONS
The following terms shall have the meanings defined hereinbelow:
"IBM CREDIT COLLATERAL" means the following collateral described in the IBM
Credit Security Agreement: accounts; inventory and equipment (and all
accessions, accessories, additions, and attachments thereto, and all
exchanges, parts, products, replacements, repossessions, returns and
substitutions thereof); general intangibles (including, but not limited to,
copyrights, incentive payments, rebates, discounts, credits, refunds and
all contract rights); instruments; chattel paper; furniture and fixtures;
reserves; deposit accounts; and documents of title, and all proceeds and
insurance proceeds of all of the foregoing.
"IBM CREDIT INVENTORY" means all specific items of inventory and equipment
manufactured or sold by International Business Machines Corporation or any
of its affiliates or Lexmark International, Inc. or bearing the trademark,
trade name or label of International Business Machines Corporation or any
of its affiliates or Lexmark International, Inc., and all parts thereof,
attachments, additions, accessories and accessions thereto, all documents,
substitutions, repossessions, and returns thereof, all general intangibles
owing to Debtor by International Business Machines Corporation or any of
its affiliates or Lexmark International, Inc. in connection with Debtor's
purchase of such inventory, including, but not limited to, contracts,
credits, discounts, rebates and incentive payments, whether now owned or
hereafter acquired or existing. "IBM Credit Inventory" also includes (i)
IBM Credit Identifiable Cash Proceeds, (ii) insurance proceeds and (iii)
proceeds arising after repossession of IBM Credit Inventory and upon
disposition thereof under the IBM Credit Security Agreement, but "IBM
Credit Inventory" does not include other proceeds and does not include
Returned Inventory.
"IBM CREDIT IDENTIFIABLE CASH PROCEEDS" means identifiable cash or checks,
or similar instruments, directly paid to Debtor by a buyer as consideration
of a sale by Debtor of IBM Credit Inventory, and segregated deposit
accounts solely containing such identifiable cash, checks or similar
instruments, but does not include any such cash after it has been
commingled with other funds of Debtor and does not include any such cash or
checks after the same may have been delivered to NationsBank for
application to the NationsBank
<PAGE>
Obligations. IBM Credit Identifiable Cash Proceeds does not include any
proceeds of any account which is proceeds of IBM Credit Inventory.
"IBM CREDIT SECURITY AGREEMENT" means that certain Agreement for Wholesale
Financing dated August 27, 1991, by and between Debtor and IBM Credit
providing for the extension of credit by IBM Credit to Debtor for the
acquisition of IBM Credit Inventory, and granting to IBM Credit a security
interest in the IBM Credit Collateral to secure Debtor's obligations to IBM
Credit as set forth therein, as amended from time to time, and all
renewals, extensions, modifications, amendments, supplements, and
restatements thereof.
"IBM CREDIT OBLIGATIONS" means all obligations and indebtedness from time
to time owing by Debtor to IBM Credit, any and all renewals and extensions
thereof.
"NATIONSBANK COLLATERAL" means all "Collateral" defined in the NationsBank
Security Agreement (which is incorporated herein by reference) and
includes, without limitation, collectively all of the following, now owned
and hereafter acquired: Receivables, Inventory and Equipment, and all
computer programs, applications, discs, software, files and other records
pertaining to any Collateral. Collateral also includes all proceeds of any
of the foregoing at any time arising, including insurance proceeds. As
used in this definition of Collateral: "Receivables" means all present and
future accounts, chattel paper, contract rights, documents, instruments,
deposit accounts, and general intangibles now or hereafter owned, held, or
acquired by CompuCom and includes, without limitation, all of the
following: all of CompuCom's accounts receivable, including all rights to
payment for goods sold or leased or for services rendered, whether or not
earned by performance (and in any case where an account arises from the
sale of goods, the interest of CompuCom in such goods); lease receivables;
license receivables; notes receivable; all other rights to receive payments
of money from any Person; CompuCom's right, title and interest under
equipment leases; CompuCom's rights under any service, lease rental,
consulting or similar agreements; trademarks, trade names and service
marks; rights or claims under contracts; all tax refunds or claims for tax
refunds; books of account, customer lists and other records relating in any
way to any of the foregoing; "Inventory" means all of CompuCom's inventory
now or hereafter owned, acquired, possessed, held on consignment or held
for sale or return, including raw materials, work in process, finished
goods and all other goods held for sale or lease, wherever located.
"Inventory" also includes Returned Inventory; "Equipment" means all
equipment and other goods used or useable in CompuCom's business, now owned
and hereafter acquired by CompuCom, and all tools, parts, accessories,
processes, plans, manuals and specifications relating thereto.
"NATIONSBANK OBLIGATIONS" means all "Obligations" defined in the
NationsBank Security Agreement, which includes without limitation, (i) all
obligations and indebtedness now or hereafter owing by CompuCom under the
NationsBank Security Agreement, and any and all future amendments,
modifications, supplements, extensions or restatements of the NationsBank
Security Agreement, or otherwise arising in connection with such agreement
-2-
<PAGE>
or any of the other Loan Documents defined therein, including without
limitation, all loan repayment obligations, accrued interest and fees,
costs and expenses as provided by such agreement or any of the other Loan
Documents defined therein, and any other amounts from time to time owing by
CompuCom to NationsBank in connection therewith; (ii) any and all other
indebtedness and obligations of every kind and character now or hereafter
owing by CompuCom to NationsBank, whether direct or indirect, primary or
secondary, joint, several, or joint and several, fixed or contingent,
including indebtedness and obligations, if any, which may be assigned to or
acquired by NationsBank; and (iii) any and all renewals and extensions of
the foregoing, or any part thereof, it being understood that NationsBank
and CompuCom may agree to increase the amount of the Obligations from time
to time, without requirement of additional notice, consent or amendment
with respect to this Agreement.
"NATIONSBANK SECURITY AGREEMENT" means the certain Financing and Security
Agreement dated August 4, 1993, as amended by the following: First
Amendment to Financing and Security Agreement dated effective March 31,
1994; Second Amendment to Financing and Security Agreement dated effective
December 12, 1994, Third Amendment to Financing and Security Agreement
dated effective April 26, 1995, Fourth Amendment to Financing and Security
Agreement dated effective April 1, 1995 and Fifth Amendment to Financing
and Security Agreement of even date herewith, providing for extensions of
credit by NationsBank to Debtor, and granting to NationsBank a continuing
security interest and lien in and to the NationsBank Collateral to secure
the NationsBank Obligations, as set forth therein, and all renewals,
extensions, modifications, amendments, supplements, and restatements
thereof.
"MSAA" means the certain Master Security and Administration Agreement of
even date herewith among CompuCom, Administrative Secured Party, and
NationsBank, CSI Funding Inc., a Delaware corporation, and Enterprise
Funding Corporation, a Delaware corporation, as Beneficial Secured Parties
thereunder, and all renewals, extensions, modifications, amendments,
supplements, and restatements thereof.
"MSAA COLLATERAL" means all "Collateral" as defined under the MSAA which
includes, without limitation, all accounts and all proceeds thereof.
"MSAA SECURED OBLIGATIONS" means the "Secured Obligations" as defined under
the MSAA, which definition hereby is incorporated herein by reference.
"RETURNED INVENTORY" means goods which have been segregated from other
inventory of Debtor and are identifiable as having been returned to Debtor
by any account debtor of Debtor during any time when an Event of Default
exists under the NationsBank Security Agreement.
-3-
<PAGE>
II. RECITALS
a. IBM Credit from time to time extends credit to Debtor to enable
Debtor's purchase of IBM Credit Inventory; Debtor has granted to IBM Credit a
security interest in the IBM Credit Collateral as provided by the IBM Credit
Security Agreement;
b. NationsBank from time to time extends credit to Debtor as provided by
the NationsBank Security Agreement; the NationsBank Obligations are secured by
security interests in the NationsBank Collateral.
c. It is proposed that CompuCom grant to Administrative Secured Party a
continuing security interest in the MSAA Collateral as provided by the MSAA.
d. NationsBank and IBM Credit are not willing to make loans to Debtor,
and Administrative Secured Party is not willing to enter into the MSAA, unless
Debtor, NationsBank, Administrative Secured Party and IBM Credit make certain
agreements regarding the relative priority of their respective interests, as
provided hereinbelow.
NOW THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged, and in consideration of the mutual agreements provided
herein, and the benefits deriving therefrom, IBM Credit, Debtor, NationsBank and
Administrative Secured Party each hereby agrees as follows:
1. It is expressly agreed that Administrative Secured Party's rights in
and to all MSAA Collateral shall be first, senior and prior to the rights and
remedies of IBM Credit therein, and any and all security interests, liens, or
other rights now or hereafter claimed by IBM Credit with respect to any of the
MSAA Collateral shall be and hereby are expressly made subordinate and junior to
any and all security interests, liens, or other rights now or hereafter claimed
by Administrative Secured Party therein. It is expressly agreed that
NationsBank's rights in and to all NationsBank Collateral other than the IBM
Credit Inventory shall be first, senior and prior to the rights and remedies of
IBM Credit therein, and any and all security interests, liens, or other rights
now or hereafter claimed by IBM Credit with respect to any of the NationsBank
Collateral other than the IBM Credit Inventory shall be and hereby are expressly
made subordinate and junior to any and all security interests, liens, or other
rights now or hereafter claimed by NationsBank therein.
2. It is expressly agreed that IBM Credit's rights in and to all IBM
Credit Inventory shall be first, senior and prior to the rights and remedies of
NationsBank therein, and any and all security interests, liens, or other rights
now or hereafter claimed by NationsBank with respect to the IBM Credit Inventory
shall be and hereby are expressly made subordinate and junior to any and all
security interests, liens, or other rights now or hereafter claimed by IBM
Credit therein.
3. Without limiting the agreements above, it is agreed that any and all
proceeds of IBM Credit Inventory, including without limitation cash proceeds,
accounts, instruments, chattel
-4-
<PAGE>
paper, or general intangibles (BUT EXCLUDING (i) IBM Credit Identifiable Cash
Proceeds, (ii) insurance proceeds, (iii) proceeds arising after repossession of
IBM Credit Inventory and upon disposition thereof under the IBM Credit Security
Agreement and (iv) any general intangibles specifically defined as being
included within the IBM Credit Inventory), shall at all times be and remain
subject to the first and prior security interests of Administrative Secured
Party and NationsBank, respectively, and any and all security interests and
liens now or hereafter claimed by IBM Credit in any of such proceeds shall at
all times be and remain subordinate and junior to any and all security
interests, liens and other rights now or hereafter claimed therein by
Administrative Secured Party or NationsBank, respectively.
4. In the event that IBM Credit seeks to foreclose or otherwise realize
upon the IBM Credit Inventory, NationsBank agrees not to interfere in any way
with such proceeding or actions, or to restrict access by IBM Credit to the IBM
Credit Inventory for purposes of satisfying the IBM Credit Obligations;
PROVIDED, HOWEVER, that IBM Credit agrees that until termination of this
Agreement (as defined in paragraph 14 below) IBM Credit shall not take any
action (and shall have no right) to foreclose, repossess, marshal, control, or
exercise any remedies or otherwise realize upon any of the MSAA Collateral, or
the NationsBank Collateral other than the IBM Credit Inventory, unless otherwise
agreed to in writing between Administrative Secured Party or NationsBank, as the
case may be, and IBM Credit. In the event that NationsBank seeks to foreclose
or otherwise realize upon the NationsBank Collateral, IBM Credit agrees not to
interfere in any way with such proceeding or actions, or to restrict access by
NationsBank to the NationsBank Collateral for purposes of satisfying the
NationsBank Obligations; PROVIDED, HOWEVER, that NationsBank agrees that until
termination of this Agreement (as defined in paragraph 14 below) NationsBank
shall not take any action (and shall have no right) to foreclose, repossess,
marshal, control, or exercise any remedies or otherwise realize upon the IBM
Credit Inventory unless otherwise agreed to in writing between NationsBank and
IBM Credit. In the event that Administrative Secured Party seeks to foreclose
or otherwise realize upon the MSAA Collateral, IBM Credit agrees not to
interfere in any way with such proceeding or actions, or to restrict access by
Administrative Secured Party to the MSAA Collateral for purposes of
administering and enforcing the MSAA.
5. Until termination of this Agreement, IBM Credit shall not make any
contact or communications, directly or indirectly, with any account debtor or
obligor with respect to any accounts or other property included within the MSAA
Collateral or the NationsBank Collateral including, without limitation,
notification or confirmation, without the prior written consent of
Administrative Secured Party and NationsBank, and IBM Credit agrees that if it
from time to time comes into possession of any payments, distributions,
property, security, or proceeds in respect of indebtedness owing by any such
account debtors, or any other proceeds of the NationsBank Collateral (other than
(i) IBM Credit Identifiable Cash Proceeds, (ii) insurance proceeds, (iii)
proceeds arising after repossession of IBM Credit Inventory and upon disposition
thereof under the IBM Credit Security Agreement and (iv) any general intangibles
specifically defined as being included within the IBM Credit Inventory), all of
such amounts shall be held in trust for the benefit of MSAA and NationsBank, as
their respective interests may appear, and shall be paid as soon as reasonably
possible to Administrative Secured Party or NationsBank, as their respective
interests appear, for the account of Debtor.
-5-
<PAGE>
6. It is understood and agreed that NationsBank may release any person or
entity now or hereafter liable upon any of the NationsBank Obligations, or
permit substitutions, withdrawals or release of any security or collateral at
any time securing same, or renew, extend or accept partial payments upon any of
the NationsBank Obligations, or amend or modify the terms of any instrument or
agreement evidencing or securing same, or any part thereof, in such manner and
at such times from time to time, without notice to or consent from IBM Credit as
NationsBank may determine in its sole discretion without in any manner impairing
the rights and obligations under this Agreement. NationsBank shall not at any
time be required to institute suit or exercise or exhaust remedies against any
person or entity obligated to pay any of the NationsBank Obligations prior to
exercising its rights or receiving the benefits of this Agreement. It is
understood and agreed that Administrative Secured Party may permit
substitutions, withdrawals or release of any MSAA Collateral, or amend or modify
the terms of the MSAA, in such manner and at such times from time to time,
without notice to or consent from IBM Credit as Administrative Secured Party may
determine in its sole discretion without in any manner impairing the rights and
obligations under this Agreement. It is understood and agreed that IBM Credit
may release any person or entity now or hereafter liable upon any of the IBM
Credit Obligations, or permit substitutions, withdrawals or release of any
security or collateral at any time securing same, or renew, extend or accept
partial payments upon any of the IBM Credit Obligations, or amend or modify the
terms of any instrument or agreement evidencing or securing same, or any part
thereof, in such manner and at such times from time to time, without notice to
or consent from Administrative Secured Party or NationsBank as IBM Credit may
determine in its sole discretion without in any manner impairing the rights and
obligations under this Agreement. IBM Credit shall not at any time be required
to institute suit or exercise or exhaust remedies against any person or entity
obligated to pay any of the IBM Credit Obligations prior to exercising its
rights or receiving the benefits of this Agreement.
7. As between Administrative Secured Party and NationsBank, on the one
hand, and IBM Credit on the other, the subordinations, agreements and priorities
specified hereinabove are applicable irrespective of the validity or the time or
order of attachment or perfection of the security interests or other interests
referred to herein, the time or order of filing of financing statements, the
acquisition of purchase money or other security interests, or the time of giving
or failure to give notice of the acquisition or expected acquisition of purchase
money or other security interests, PROVIDED THAT the priorities established
hereunder are solely for the respective benefit of IBM Credit, Administrative
Secured Party and NationsBank and shall not entitle any other person or entity,
or any trustee in bankruptcy to priority over IBM Credit, Administrative Secured
Party or NationsBank. The relative priorities specified herein shall apply as
between IBM Credit, on the one hand, and Administrative Secured Party and
NationsBank, on the other, notwithstanding any liquidation of the MSAA
Collateral, the NationsBank Collateral or the IBM Credit Collateral or any
liquidation or insolvency of Debtor. Should NationsBank's security interests in
the NationsBank Collateral or Administrative Secured Party's security interest
in the MSAA Collateral at any time be determined to be unperfected, or should
any such security interest be determined by a court to be voidable under any
applicable law, then any MSAA Collateral or NationsBank Collateral which from
time to time may be received by IBM Credit shall be paid forthwith by IBM Credit
to Administrative Secured Party or NationsBank, as their interests may appear,
for the account of Debtor. Should IBM Credit's security interests in the IBM
Credit
-6-
<PAGE>
Inventory at any time be determined to be unperfected, or should any such
security interest be determined by a court to be voidable under any applicable
law, then any and all IBM Credit Inventory which from time to time may be
received by NationsBank shall be paid forthwith by NationsBank to IBM Credit for
the account of Debtor. This Agreement shall remain in full force and effect
regardless of whether any party hereto in the future seeks to rescind, amend,
terminate or reform, by litigation or otherwise, its respective agreements with
Debtor.
8. Until termination of this Agreement, in the event of any liquidation
or dissolution of Debtor, whether partial or complete, voluntary or involuntary,
by operation of law or otherwise, or in the event of any receivership,
insolvency or bankruptcy proceedings by or against Debtor under any bankruptcy
or insolvency laws: (1) any and all amounts which thereafter shall be payable
or deliverable to IBM Credit upon or with respect to any property defined herein
as being within the MSAA Collateral or the NationsBank Collateral (other than
the IBM Credit Inventory) shall immediately be paid or delivered directly to
Administrative Secured Party or NationsBank, as their interests may appear, for
the account of Debtor, and (2) any and all amounts which thereafter shall be
payable or deliverable to NationsBank upon or with respect to any property
defined herein as being within the IBM Credit Inventory shall immediately be
paid or delivered directly to IBM Credit for application in reduction of the IBM
Credit Obligations.
9. Until termination of this Agreement, in the event any proceeds or
other amounts at any time are received by IBM Credit in respect of the MSAA
Collateral or the NationsBank Collateral other than as expressly allowed
hereunder, IBM Credit shall forthwith deliver same to Administrative Secured
Party or NationsBank, as their interests may appear, in the form received, with
any endorsement or assignment if requested by Administrative Secured Party or
NationsBank, for, and until so delivered, all of such amounts shall be held in
trust by IBM Credit as the property of Administrative Secured Party or
NationsBank, as their interests may appear. In the event any proceeds or other
amounts at any time are received by NationsBank in respect of the IBM Credit
Collateral other than as expressly allowed hereunder, NationsBank shall
forthwith deliver same to IBM Credit in the form received, with any endorsement
or assignment if requested by IBM Credit, for application in reduction of the
IBM Credit Obligations whether or not due or mature, until the IBM Credit
Obligations have been paid in full, and until so delivered, all of such amounts
shall be held in trust by NationsBank as the property of IBM Credit.
10. This Agreement is an irrevocable and continuing agreement of
subordination, and NationsBank and IBM Credit may continue to rely upon same in
lending money, extending credit, and making other financial accommodations to or
for the account of Debtor, without notice to the other.
11. IBM Credit and Debtor each represents that IBM Credit's security
interests in the IBM Credit Collateral is evidenced by the IBM Credit Security
Agreement, and at this time IBM Credit claims no interest in any property of
Debtor except as provided in the IBM Credit Security Agreement.
-7-
<PAGE>
12. IBM Credit agrees to not assign or transfer the security interests
granted under the IBM Credit Security Agreement in all or any part of the IBM
Credit Collateral, unless such assignment or transfer is made expressly in
writing subject to this Agreement after prior written notice thereof to
Administrative Secured Party and NationsBank. Any assignment or transfer of the
security interests granted to IBM Credit under the IBM Credit Security
Agreement, or any rights of IBM Credit thereunder, shall be deemed to be subject
to this Agreement, and any assignee or transferee shall be bound by all terms
and provisions hereof.
13. IBM Credit agrees that the "Overadvance Allowance Amount" as defined
in the NationsBank Security Agreement may be increased or decreased to any
amount, and the conditions for applicability thereof as prescribed by the
NationsBank Security Agreement may be amended, at any time, from time to time,
without requirement for consent by IBM Credit. CompuCom agrees to notify IBM
Credit of any subsequent agreement to increase the allowed maximum amount of the
Overadvance Allowance Amount (as defined in the NationsBank Security Agreement)
within a reasonable time after execution thereof (PROVIDED that any delay or
failure in providing such notice shall not impair the continued effectiveness of
this Agreement with respect to any such agreement).
14. Whenever, pursuant to this Agreement, IBM Credit is obligated to pay
or deliver any proceeds of MSAA Collateral or NationsBank Collateral to
"Administrative Secured Party or to NationsBank, as their interests may appear,"
then, subject to any judicial order to the contrary, IBM Credit shall be deemed
to have fulfilled such obligation by tendering same (i) if in the form of
payment, jointly payable to NationsBank and Administrative Secured Party or (ii)
if delivery of checks or other items in kind, by delivery to an officer of
NationsBank under written transmittal addressed jointly to NationsBank and
Administrative Secured Party.
15. Any notice, demand or request shall be in writing and be deemed given
upon same being messenger delivered, or deposited in the United States mail,
postage prepaid, to the applicable address specified below:
(a) If to Debtor:
CompuCom Systems, Inc.
10100 North Central Expressway
Dallas, Texas 75231
Attention: Robert J. Boutin, Senior Vice President/Finance
and Chief Financial Officer
(b) If to IBM Credit:
IBM Credit Corporation
1500 RiverEdge Parkway
Atlanta, Georgia 30328
Attention: Remarketer Financing Center Manager
-8-
<PAGE>
(c) If (a) to NationsBank in its individual corporate capacity, addressed
to "NationsBank of Texas, N.A." or (b) to Administrative Secured Party,
addressed to "NationsBank of Texas, N.A. in its capacity as Administrative
Secured Party", and in either case addressed as follows::
P.O. Box 830732
Dallas, Texas 75283-0732
Attn: NationsBank Business Credit/Department Manager-URGENT
Or for hand delivery:
901 Main Street
6th Floor
Dallas, Texas
Attn: NationsBank Business Credit/Department Manager-URGENT
16. This Agreement shall remain in full force and effect until the MSAA
and the NationsBank Security Agreement each has been terminated and 91 days
shall have passed after the payment in full of all MSAA Secured Obligations and
NationsBank Obligations without the filing of any petition in bankruptcy by or
against Debtor or the occurrence of any other insolvency, receivership or
similar proceeding; or, if any bankruptcy or other such proceeding has been
filed by or against Debtor, then this Agreement shall not terminate, and shall
remain in full force and effect, until the MSAA and the NationsBank Security
Agreement each has been terminated , and any such proceeding shall have been
dismissed or a determination shall have been made by the court in such
proceeding that NationsBank is not required to repay any amounts received in
payment of the NationsBank Obligations and that any person having received any
amounts in payment or performance of the MSAA Secured Obligations is not
required to repay any such amounts, and such dismissal or determinations shall
have become final and non-reviewable by appeal or otherwise.
17. No waiver shall be deemed to have been made by Administrative Secured
Party, NationsBank or IBM Credit of their respective rights hereunder unless
such waiver is in writing and signed by Administrative Secured Party,
NationsBank or IBM Credit, as the case may be (the effect of any such writing
being limited to the specific instance specified therein).
18. If any provisions of this Agreement is for any reason held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability will not affect any other provision of this Agreement.
19. This Agreement is binding upon and inures to the benefit of the
parties hereto and their respective assignees, transferees, and successors, and
in addition with respect to Administrative Secured Party, to the "Beneficial
Secured Parties" as defined by the MSAA. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas.
-9-
<PAGE>
20. This Agreement may be executed in counterparts, each of which shall be
an original, but all of which, taken together, shall constitute one and the same
instrument. A telecopy of any such executed counterpart shall be valid as an
original.
SIGNED effective as of April 1, 1996.
NATIONSBANK OF TEXAS, N.A.
in its individual corporate capacity
under the NationsBank Security Agreement
as defined herein
By: /S/ SALLY GLYNN
-----------------------------------
Name: Sally Glynn
--------------------------------
Title: Senior Vice President
--------------------------------
NATIONSBANK OF TEXAS, N.A.
in its corporate capacity as
Administrative Secured Party under the
MSAA as defined herein
By: /s/ Sally Glynn
-----------------------------------
Name: Sally Glynn
--------------------------------
Title: Senior Vice President
--------------------------------
COMPUCOM SYSTEMS, INC.
By: /s/ Robert J. Boutin
-----------------------------------
Name: Robert J. Boutin
--------------------------------
Title: Senior Vice President and
--------------------------------
IBM CREDIT CORPORATION
By: /s/ Michael Burdian
------------------------------------
Name: Michael Burdian
---------------------------------
Title: Manager, Working Capital Practice
----------------------------------
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<PAGE>
ACKNOWLEDGMENT AND CONSENT
BY BENEFICIAL SECURED PARTIES UNDER
MASTER SECURITY AND ADMINISTRATION AGREEMENT
NationsBank, CSI Funding, Inc. and Enterprise Funding, Inc., each in its
capacity as a "Beneficial Secured Party" under the MSAA, hereby confirms its
consent to the foregoing Amended and Restated Security Agreement
NATIONSBANK OF TEXAS, N.A.
By:/s/ Sally Glynn
- -----------------------------------
Name:Sally Glynn
- -----------------------------------
Title: Senior Vice President
- -----------------------------------
CSI FUNDING, INC.
By:/s/ Robert J. Boutin
- -----------------------------------
Name:Robert J. Boutin
- -----------------------------------
Title: President
- -----------------------------------
ENTERPRISE FUNDING CORPORATION
By: /s/ John R. Bulger
Name: John R. Bulger
Title: Vice President
-11-
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersinged authority, on this day personally appeared Sally
Glynn, Senior Vice Prsident, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said NationsBank of Texas, N.A., a national banking association,
acting in its individual corporate capacity as described therein, and that she
executed the same for the purposes and consdierations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 5th day of April, 1996.
/s/ Cindy Haskovec
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission Expires:
_______________________ CINDY HASKOVEC
------------------------------
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersinged authority, on this day personally appeared Sally
Glynn, Senior Vice Prsident, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said NationsBank of Texas, N.A., a national banking association,
acting in its individual corporate capacity as described therein, and that she
executed the same for the purposes and consdierations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 5th day of April, 1996.
/s/ Cindy Haskovec
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission Expires:
_______________________ CINDY HASKOVEC
------------------------------
(Printed Name of Notary)
-12-
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Robert Boutin, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said CompuCom Systems, Inc., a Delaware corporation,and that
he executed the same for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 5th day of April, 1996.
/s/ M. Patricia Tarkington
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission Expires:
4/1/98 M. PATRICIA TARKINGTON
- ----------------------- ------------------------------
(Printed Name of Notary)
THE STATE OF CONNECTICUT )
)
COUNTY OF FAIRFIELD )
BEFORE ME, the undersigned authority, on this day personally appeared
ROBERT BOUTIN, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said IBM Credit Corporation, a Delaware corporation, and
that he executed the same for the purposes and considerations therein
expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 1 day of APRIL, 1996.
/s/ Teresa D. Schiff
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF CONNECTICUT
My commission Expires:
June 30, 1999
- ----------------------- Teresa D. Schiff
------------------------------
(Printed Name of Notary)
-13-
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Sally Glynn, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act of
said NationsBank of Texas, N.A. in its capacity as a Beneficial Secured Party
under the MSAA as defined therein, and that she executed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 5th day of April, 1996.
/s/ Cindy Haskovec
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission Expires:
CINDY HASKOVEC
- ----------------------- ------------------------------
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
ROBERT BOUTIN, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said CSI Funding Inc., a Delaware corporation, in its capacity
as a Beneficial Secured Party under the MSAA as defined therein, and that he
executed the same for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 1 day of APRIL, 1996.
[SEAL] /s/ M. Patricia Tarkington
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF CONNECTICUT
My commission Expires:
4/1/98
- ----------------------- M. PATRICIA TARKINGTON
------------------------------
(Printed Name of Notary)
-14-
<PAGE>
MASTER
SECURITY AND ADMINISTRATION AGREEMENT
COMPUCOM SYSTEMS, INC.
NATIONSBANK OF TEXAS, N.A.
IN ITS CAPACITY AS
ADMINISTRATIVE SECURED PARTY
ON BEHALF OF
NATIONSBANK OF TEXAS, N.A.
CSI FUNDING, INC.
NATIONSBANK OF TEXAS, N.A.
CSI FUNDING, INC.
ENTERPRISE FUNDING CORPORATION
DATED EFFECTIVE AS OF
APRIL 1, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
GRANT OF SECURITY INTEREST; APPOINTMENT OF
ADMINISTRATOR; COLLATERAL COVENANTS . . . . . . . . . . . . . . . . . . 8
1.1 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . 8
1.2 Administrative Secured Party Appointed as Administrator . . . . . 9
1.3 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4. Adjustment and Compromise of Receivables. . . . . . . . . . . . . 10
1.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 10
1.6 Perfection and Protection . . . . . . . . . . . . . . . . . . . . 10
1.7 Examinations; Inspections . . . . . . . . . . . . . . . . . . . . 10
1.8 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.9 Preservation of Rights. . . . . . . . . . . . . . . . . . . . . . 11
1.10 Special Rights; Power of Attorney . . . . . . . . . . . . . . . . 11
ARTICLE II. COLLECTIONS ADMINISTRATION . . . . . . . . . . . . . . . . . . . 12
2.1 Administration of Collections . . . . . . . . . . . . . . . . . . 12
2.2 Certification of RPA Interest and CompuCom Interest . . . . . . . 13
2.3 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III. CLOSING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 15
3.1 Items to be Delivered by CompuCom . . . . . . . . . . . . . . . . 15
ARTICLE IV. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Corporate Name; Trade Names . . . . . . . . . . . . . . . . . . . 16
4.2 Chief Executive Office. . . . . . . . . . . . . . . . . . . . . . 16
4.3 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Corporate Power and Authority; Validity . . . . . . . . . . . . . 17
4.5 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . 17
4.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11 Representations and Warranties Cumulative . . . . . . . . . . . . 17
ARTICLE V. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . 18
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . 18
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5.5 Monthly Receivables Report. . . . . . . . . . . . . . . . . . . . 18
5.8 Additional Information. . . . . . . . . . . . . . . . . . . . . . 19
5.9 Notification of Material Changes. . . . . . . . . . . . . . . . . 19
5.10 Notification Regarding Default. . . . . . . . . . . . . . . . . . 19
5.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 19
5.12 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.13 Waivers and Consents. . . . . . . . . . . . . . . . . . . . . . . 20
5.14 Restriction on Disposition of Collateral. . . . . . . . . . . . . 20
5.15 Prohibition Against Liens on Collateral . . . . . . . . . . . . . 20
5.16 Covenants Cumulative. . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI. EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Cash Collateral; Injunctive Relief. . . . . . . . . . . . . . . . 22
7.3 Application of Proceeds; Deficiency . . . . . . . . . . . . . . . 22
7.4 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Performance by Administrative Secured Party . . . . . . . . . . . 23
7.7 Non-waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Administration. . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 30
9.1 Equal Dignity . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Pro-Rata Treatment Among Beneficial Secured Parties . . . . . . . 30
9.3 Subordination of Interests. . . . . . . . . . . . . . . . . . . . 30
9.4 Other Rights; Waiver of Marshaling. . . . . . . . . . . . . . . . 33
9.5 Access to Information . . . . . . . . . . . . . . . . . . . . . . 33
9.8 Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 Effective Date; Term; Termination . . . . . . . . . . . . . . . . 34
10.2 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4 Benefit to CompuCom . . . . . . . . . . . . . . . . . . . . . . . 36
10.5 Administrative Secured Party. . . . . . . . . . . . . . . . . . . 36
10.6 Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . . . 36
10.7 Administrative Secured Party's Records; Account Statements. . . . 37
10.8 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.9 Interest Limitation . . . . . . . . . . . . . . . . . . . . . . . 37
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10.10 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 37
10.11 Acceptance and Performance; Venue . . . . . . . . . . . . . . . . 38
10.12 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . . . 38
10.13 Copies Valid as Financing Statements. . . . . . . . . . . . . . . 38
10.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.15 Entirety and Amendments . . . . . . . . . . . . . . . . . . . . . 38
10.16 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.17 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.19 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . 39
10.20 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.21 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . 40
10.22 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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<PAGE>
MASTER
SECURITY AND ADMINISTRATION AGREEMENT
This Master Security and Administration Agreement is executed and entered
into by and among COMPUCOM SYSTEMS, INC., a Delaware corporation, NATIONSBANK OF
TEXAS, N.A., a national bank, in its capacity as Administrative Secured Party
under this Agreement, NATIONSBANK OF TEXAS, N.A., a national bank, in its
individual corporate capacity, CSI FUNDING, INC., a Delaware corporation, and
ENTERPRISE FUNDING CORPORATION, a Delaware corporation, effective as of April
1, 1996, as follows:
DEFINITIONS
The following definitions shall apply throughout this Agreement:
"ACCOUNT DEBTOR" means a Person that is obligated for payment of a
Receivable.
"ADMINISTRATION DOCUMENTS" means this Agreement, each Agency Account
Agreement, any Lockbox Agreement, any and all deposit account agreements
pertaining to the Concentration Account, the NationsBank Account and the
CFI Account, respectively, all financing statements in respect of this
Agreement, and any and all renewals, extensions, modifications, amendments
or restatements of any of the foregoing.
"ADMINISTRATIVE SECURED PARTY" means NATIONSBANK OF TEXAS, N.A., a
national bank, in its capacity as Administrative Secured Party under this
Agreement, whose principal place of business is located at 901 Main Street,
Dallas, Dallas County, Texas 75202. When used throughout this Agreement,
"Administrative Secured Party" also includes Administrative Secured Party's
successors and any party to whom Administrative Secured Party, or its
successors, assigns its rights and interests under this Agreement as
allowed by, and pursuant to, paragraph 8.1(h).
"AGREEMENT" means this Master Security and Administration Agreement and all
exhibits and addenda, and any renewal, extension, amendment, modification
or restatement thereof.
"AGENCY ACCOUNT" means a special account of CompuCom over which
Administrative Secured Party alone has power of withdrawal or transfer,
established at a depository bank acceptable to Administrative Secured Party
and the Beneficial Secured Parties, for the deposit of Collections and
transfer of same to the Concentration Account pursuant to an Agency Account
Agreement as prescribed by this Agreement.
"AGENCY ACCOUNT AGREEMENT" means an agreement among CompuCom,
Administrative Secured Party and a depository bank acceptable to
Administrative Secured Party and the Beneficial Secured Parties under which
an Agency Account is established with such depository bank, in form and
substance satisfactory to Administrative Secured Party and containing such
provisions as Administrative Secured Party may require, including without
limitation the following: (a) such depository bank agrees to hold all funds
from time to time
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deposited to the Agency Account as bailee for Administrative Secured Party
and forward same daily to Administrative Secured Party by wire transfer (or
such other manner of transfer acceptable to Administrative Secured Party
and the Beneficial Secured Parties) to the Concentration Account (or such
other account as may be designated by Administrative Secured Party); (b)
CompuCom and such depository bank agree that they shall have no power of
withdrawal over the funds in the Agency Account; (c) such depository bank
waives any right, claim or interest in the Agency Account, and funds on
deposit therein, and agrees that it shall neither claim nor exercise any
right of offset, banker's lien or other rights against such funds; (d)
CompuCom agrees to pay directly all costs and expenses of such depository
bank associated with the Agency Account; and (e) CompuCom and such
depository bank agree that CompuCom may not terminate the Agency Account or
the Agency Account Agreement, without the prior written consent of
Administrative Secured Party.
"BENEFICIAL SECURED PARTY" means each of (i) NationsBank (until full
payment of all NationsBank Secured Obligations and termination of the
NationsBank FSA, but not thereafter) and (ii) CFI (until termination of the
RPA and collection, or write-off by CFI, of all Receivables in which an RPA
Interest was transferred under the RPA, but not thereafter) and, until
termination of the TAA (but not thereafter), EFC as assignee of the CFI
Secured Obligations and a portion of the RPA Interest, as its interest
therein appears pursuant to the TAA, and its permitted assigns; and in each
case their legal successors, respectively.
"BOOKS AND RECORDS" means all books, records, books or records of account,
files, journals, ledgers, correspondence, bank statements, registers, logs,
customer lists and related customer credit information, address or
telephone number lists, records of sales and payments made and received,
computer programs, discs, tapes, cards, software, printouts, systems and
other records, in whatever form, relating in any way to any of the
foregoing, and all other tangible and intangible media created, generated,
received, kept or otherwise used for recording actions, transactions and
other facts relating or pertaining to the Collateral.
"BUSINESS DAY" means any calendar day except Saturday, Sunday and those
days on which Administrative Secured Party is closed for business or which
are legal public holidays specified in 5 U.S.C. Section 6103(a), as may be
amended from time to time.
"CFI" means CSI Funding, Inc., a Delaware corporation and wholly owned
subsidiary of CompuCom, whose chief executive office and principal place of
business is located at 10100 Central Expressway, Dallas, Texas 75321.
"CFI ACCOUNT" means account No. 1291795475 maintained by CFI at NationsBank
or any other demand deposit account maintained by CFI and designated to
Administrative Secured Party in writing as an account for deposits by
Administrative Secured Party pursuant to paragraph 2.1(c)(1).
"CFI SECURED OBLIGATIONS" means all obligations now or hereafter owing by
CompuCom to or for the benefit of CFI (or EFC as transferee of a portion of
the RPA Interest under the TAA) under the RPA, the TAA or this Agreement,
whether pursuant to their respective terms or as may otherwise be
determined by applicable law (in all events including, without
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limitation, CompuCom's obligation to deliver, or cause to be delivered, to
Administrative Secured Party all Collections for the benefit of the
Beneficial Secured Parties as required by this Agreement and the RPA and
also including, to the extent (if any) that the transactions under the RPA
are recharacterized by a court of competent jurisdiction to be a financing
transaction, CompuCom's obligations to repay any loans deemed made to it by
CFI thereunder), and all renewals, extensions, amendments, modifications or
restatements thereof.
"COLLATERAL" means collectively all Receivables, Related Security, and
Books and Records now owned and hereafter acquired by CompuCom, and all
proceeds thereof at any time arising.
"COLLATERAL ACCESS AND WAIVER AGREEMENT" means an agreement in form and
substance satisfactory to Administrative Secured Party pursuant to which,
among other things, the owner and landlord of any real property leased by
CompuCom where any Books and Records are located shall waive its rights, if
any, thereto and allow Administrative Secured Party to enter upon the
premises to inspect, use, copy, or remove same.
"COLLECTIONS" means all proceeds of Receivables in whatever form, including
without limitation money, electronic funds transfers or checks, drafts,
notes, or other instruments in payment of Receivables or otherwise
constituting proceeds of Receivables.
"COMPUCOM" means COMPUCOM SYSTEMS, INC., a Delaware corporation, with its
chief executive office located at 10100 Central Expressway, Dallas, Texas
75321.
"COMPUCOM INTEREST" means, at any time, the undivided fractional ownership
interest in the Receivables other than the RPA Interest, which together
with the RPA Interest constitutes a one hundred percent (100%) ownership
interest.
"COMPUCOM INTEREST PERCENTAGE" means, at any time, the CompuCom Interest
expressed as a percentage of the sum of the CompuCom Interest and the RPA
Interest, which percentage at any time shall be as most recently certified
to Administrative Secured Party by CompuCom and CFI pursuant to paragraph
2.2(a) or paragraph 2.2(b), subject however, to paragraph 2.2(c) and
paragraph 2.2(d).
"CONCENTRATION ACCOUNT" means a special account maintained by
Administrative Secured Party with a depository bank acceptable to
Administrative Secured Party and the Beneficial Secured Parties for
transfer and deposit of amounts deposited to the Lockbox or any Agency
Account.
"CONTRACT TERM" means the period beginning on the Effective Date and ending
on the earlier of (1) both (i) termination of the RPA and the TAA and
certification thereof to Administrative Secured Party by CompuCom and the
RPA Interest Owner and (ii) full payment and performance of the NationsBank
Secured Obligations and termination of the NationsBank FSA, and
certification thereof to Administrative Secured Party by CompuCom and
NationsBank or (2) mutual agreement in writing signed by CompuCom,
Administrative Secured Party and each of the Beneficial Secured Parties.
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"EFC" means Enterprise Funding Corporation, a Delaware corporation.
"EFFECTIVE DATE" means the effective date specified in the preamble of this
Agreement.
"INDEMNIFIED CLAIMS" means any and all claims, demands, actions, causes of
action, judgments, obligations, liabilities, losses, damages and
consequential damages, penalties, fines, costs, fees, expenses and
disbursements (including without limitation, fees and expenses of attorneys
and other professional consultants and experts in connection with
investigation or defense) of every kind, known or unknown, existing or
hereafter arising, foreseeable or unforeseeable, which may be imposed upon,
threatened or asserted against, or incurred or paid by, any Indemnified
Person at any time and from time to time, because of, resulting from, in
connection with, or arising out of any transaction, act, omission, event or
circumstance in any way connected with the Collateral or the Administration
Documents (including enforcement, defense or protection of any rights of
Administrative Secured Party or the Beneficial Secured Parties thereunder),
including but not limited to economic loss, property damage, personal
injury or death in connection with any act performed or omitted to be
performed under any Administration Documents, any breach by CompuCom of any
representation, warranty, covenant, agreement or condition contained in any
Administration Documents or any Event of Default as defined in this
Agreement. THE FOREGOING INCLUDES CLAIMS BASED UPON OR ARISING FROM
ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PERSON BUT EXCLUDES CLAIMS BASED
UPON OR ARISING FROM GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY
INDEMNIFIED PERSON.
"INDEMNIFIED PERSONS" collectively means Administrative Secured Party and
each of the Beneficial Secured Parties, and their respective officers,
directors, shareholders, employees, agents, attorneys and representatives,
and any person owned or controlled by, or which owns or controls or is
under common control or is otherwise affiliated with, any of them,
respectively, and any other person, if any, who acquires a portion of the
Collateral in any manner through exercise of rights and remedies under the
Administration Documents.
"LOCKBOX" means a United States Post Office Box designated for the receipt
of Collections pursuant to a Lockbox Agreement.
"LOCKBOX AGREEMENT" means an agreement between Administrative Secured Party
and CompuCom designating a Lockbox for the receipt, deposit and collection
of Collections, in form and substance satisfactory to Administrative
Secured Party and containing provisions for the receipt of Collections and
daily deposit of same to the Concentration Account, and such other
provisions as Administrative Secured Party may require.
"MATERIAL ADVERSE EFFECT" means (i) a materially adverse effect on the
business, assets, operations, prospects or condition, financial or
otherwise, of CompuCom or (ii) material impairment of the ability of
CompuCom to perform any obligations under the Administration Documents or
(iii) material impairment of the enforceability of the rights and remedies
intended to be provided to Administrative Secured Party and the Beneficial
Secured Parties by this Agreement.
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"MAXIMUM RATE" means the greater of (i) the "monthly ceiling" as referred
to and in effect from time to time under the provisions of Tex. Rev. Civ.
Stat. Ann. art. 5069-1.04(c), as amended, or (ii) the maximum rate of
interest permitted from day to day by any other applicable state or federal
law.
"NATIONSBANK" means NationsBank of Texas, N.A., a national bank, in its
individual corporate capacity, whose chief executive office and principal
place of business is located at 901 Main Street, Dallas, Dallas County,
Texas 75202, and its respective successors and assigns, including
specifically any party to whom NationsBank or its successors or assigns may
assign its rights and interests in any NationsBank Secured Obligations.
"NATIONSBANK ACCOUNT" means NationsBank's account No. 0180019471 maintained
by NationsBank at NationsBank, or any other demand deposit account
maintained by NationsBank and designated to Administrative Secured Party in
writing as an account for deposits by Administrative Secured Party pursuant
to paragraph 2.1(c)(2).
"NATIONSBANK FSA" means the certain Financing and Security Agreement dated
effective as of August 4, 1993 between NationsBank and CompuCom, as amended
by the following: (i) the First Amendment to Financing and Security
Agreement dated effective as of March 31, 1994, (ii) the Second Amendment
to Financing and Security Agreement dated effective as of December 12,
1994, (iii) the Third Amendment to Financing and Security Agreement dated
effective as of April 26, 1995, (iv) the Fourth Amendment to Financing and
Security Agreement dated effective as of October 1, 1995, (v) Amendment 4A
to Financing and Security Agreement dated effective as of March 22, 1996
and (v) the Fifth Amendment to Financing and Security Agreement of even
date herewith, as the same may hereafter be renewed, extended, modified,
amended or restated from time to time.
"NATIONSBANK SECURED OBLIGATIONS" means all "Obligations" defined in the
NationsBank FSA (which definition is incorporated herein by reference, and
includes without limitation, all obligations and indebtedness now or
hereafter owing by CompuCom to NationsBank under or in connection with the
NationsBank FSA and all other obligations and indebtedness from time to
time owing by CompuCom to NationsBank), and all renewals, extensions,
amendments, modifications or restatements thereof.
"OWNERSHIP CERTIFICATION" means a written certification of the RPA Interest
Percentage and the CompuCom Interest Percentage, respectively, jointly
signed by the president, chief financial officer, treasurer or controller
of CompuCom and CFI, respectively, in form as appears in Exhibit 2.2 or
otherwise satisfactory to Administrative Secured Party, delivered by
CompuCom pursuant to paragraph 2.2.
"PERMITTED SUBORDINATED INTERESTS" means all interests in the Collateral
evidenced by (i) each of the NationsBank FSA, the RPA and the TAA, in each
case, however, subject to the provisions of this Agreement as provided by
paragraph 9.3, and (ii) interests of IBM Credit Corporation pursuant to the
certain Agreement for Wholesale Financing dated August 27, 1991 between IBM
Credit Corporation and CompuCom, as amended from time to time, subject at
all times, however, to the certain Amended and Restated Intercreditor
Agreement
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of even date herewith among IBM Credit Corporation, CompuCom,
Administrative Secured Party and NationsBank, as amended from time to time.
"PERSON" means any individual, corporation, joint venture, general or
limited partnership, trust, unincorporated organization or governmental
entity or agency.
"PRO RATA PERCENTAGE" means, with respect to any Receivable, a percentage
of such Receivable equal to (i) the CompuCom Interest Percentage in the
case of CompuCom or NationsBank, and (ii) the RPA Interest Percentage in
the case of CFI, or until termination of the TAA (but not thereafter), CFI
and EFC, collectively (as their respective interests in the RPA Interest
appear pursuant to the TAA).
"RECEIVABLES" means all of CompuCom's rights to payment from time to time
owing to CompuCom in connection with the sale of inventory or other goods,
or performance of services, by CompuCom (including without limitation,
accounts, chattel paper, instruments, contract rights and general
intangibles).
"RELATED SECURITY" means all security interests or liens, and all property
subject thereto, from time to time securing payment and performance of any
Receivable, and all guarantees, insurance or other agreements or
arrangements of any kind from time to time supporting or securing payment
of any Receivable and all returned goods the sale of which gave rise to any
Receivable.
"RPA" means the certain Receivables Purchase Agreement of even date
herewith between CompuCom and CFI providing for the sale by CompuCom to CFI
and the purchase by CFI from CompuCom (subject to the interests and rights
of the Administrative Secured Party under this Agreement) of an undivided
fractional ownership interest in all Receivables now owned and hereafter
acquired and arising from time to time prior to termination thereof, on the
terms provided therein, as the same may be renewed, extended, modified,
amended or restated from time to time.
"RPA INTEREST" means the undivided fractional ownership interest in the
Receivables that has been sold and transferred, and alternatively, in which
a security interest has been granted, by CompuCom to CFI pursuant to, and
which is the subject of, the RPA.
"RPA INTEREST OWNER" means CFI, and until termination of the TAA (but not
thereafter) also includes EFC, and its permitted assigns, as purchaser and
assignee of a portion of the RPA Interest pursuant to the TAA, as its
interest therein appears pursuant to the RPA.
"RPA INTEREST PERCENTAGE" means the RPA Interest expressed as a percentage
of the sum of the CompuCom Interest and the RPA Interest, which percentage
at any time shall be as most recently certified to Administrative Secured
Party by CompuCom and CFI pursuant to paragraph 2.2(a) or paragraph 2.2(b),
subject however, to paragraph 2.2(c) and paragraph 2.2(d).
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"SECURED OBLIGATIONS" collectively means (i) all obligations from time to
time owing by CompuCom to Administrative Secured Party under this
Agreement, (ii) the NationsBank Secured Obligations and (iii) the CFI
Secured Obligations, and any and all renewals or extensions thereof,
respectively.
"TAA" means the certain Transfer and Administration Agreement of even date
herewith among CFI, EFC, CompuCom 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 a portion of the RPA Interest,
from time to time, on the terms provided therein, as the same may be
renewed, extended, modified, amended or restated from time to time.
"TEXAS UCC" means the Texas Uniform Commercial Code as in effect on the
date of this Agreement and as it may hereafter be amended from time to
time.
All words and phrases used herein which are expressly defined in Section 1.201
or in Chapter 9 of the Texas UCC shall have the meaning provided for therein.
Other such words and phrases defined elsewhere in the Texas UCC shall have the
meanings specified therein except to the extent such meaning is inconsistent
with a definition in Section 1.201 or Chapter 9 thereof.
RECITALS
CompuCom and NationsBank are parties to the NationsBank FSA which
provides for a credit facility for loans by NationsBank to CompuCom,
from time to time, secured by (among other collateral) all of
CompuCom's Receivables now owned and hereafter acquired, on the terms
provided therein.
CFI is a special purpose, bankruptcy remote, wholly owned subsidiary
of CompuCom, formed and operating for the sole purpose of entering
into and performing (i) this Agreement, (ii) the RPA, pursuant to
which CompuCom will sell to CFI and CFI will purchase from CompuCom,
from time to time, the RPA Interest, (iii) the TAA, pursuant to which
CFI will transfer to EFC and EFC will accept from CFI, from time to
time, a portion of the RPA Interest, and (iv) various related
agreements.
CompuCom, NationsBank, CFI and EFC wish to establish a means by which
CompuCom may utilize its Receivables to access working capital sources
VIA both the NationsBank FSA and the RPA, as CompuCom shall determine
in accordance with this Agreement, the NationsBank FSA and the RPA,
and contemporaneous means by which the interests of the Beneficial
Secured Parties may be administered on terms, and in a manner,
mutually agreeable to Administrative Secured Party, CompuCom and the
Beneficial Secured Parties.
CompuCom and CFI intend that the transaction contemplated by the RPA
create an absolute transfer to CFI from CompuCom of the RPA Interest
in effect from time to time. In that regard, CFI has entered into
this Agreement to provide a means for administration of the
Receivables, the Related Security and Collections
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in a manner consistent with its rights therein and the rights of
NationsBank therein. This agreement provides for the grant by CompuCom to
Administrative Secured Party, for the benefit of the Beneficial Secured
Parties as provided herein, of a security interest in the Collateral as a
whole (and not just the portion thereof as might separately secure the
NationsBank Secured Obligations) because CFI has requested that, in the
event of any possible recharacterization by a court of competent
jurisdiction of the transactions contemplated by the RPA not as an absolute
transfer to CFI of the RPA Interest but rather as a financing (despite the
expressed intent of CompuCom and CFI), CFI have the equivalent benefit of a
security interest in that portion of the Receivables, the Related Security
and the Collections as might separately secure the payment to CFI of any
loan deemed to have been made to CompuCom by CFI pursuant to any such
recharacterization. As a means to address administrative
impracticabilities caused by the nature of trade accounts receivable and
intercreditor matters regarding the rights of NationsBank on the one hand
and CFI on the other, this Agreement provides for the grant by CompuCom to
Administrative Secured Party, for the benefit of the Beneficial Secured
Parties, of a security interest in all of the Receivables, the Related
Security and the Collections, to secure both the CFI Secured Obligations
and the NationsBank Secured Obligations as well as to provide for the
administration of the Collateral in a manner which is acceptable to all
parties, consistent with CFI's rights therein and the rights of NationsBank
therein.
Therefore, the undersigned parties have determined to enter into
certain agreements and arrangements according to the terms and
provisions as set forth hereinbelow.
THEREFORE, for value received and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
benefits provided herein, the undersigned parties hereby agree as follows:
ARTICLE I.
GRANT OF SECURITY INTEREST;
APPOINTMENT OF ADMINISTRATOR; COLLATERAL COVENANTS
1.1 SECURITY INTEREST.
a. GRANT OF SECURITY INTEREST. CompuCom hereby grants to
Administrative Secured Party, for the benefit of the Beneficial Secured
Parties according to their respective Pro Rata Percentages, a continuing
security interest, collateral assignment and lien in and to the Collateral
to secure full payment and performance of the Secured Obligations.
b. PRIORITY. Subject to paragraph 9.3, the security interest,
collateral assignment and lien in the Collateral granted to Administrative
Secured Party for the benefit of Beneficial Secured Parties under this
Agreement at all times shall be and remain first, prior and senior to any
other interests in the Collateral. CompuCom represents to Administrative
Secured Party that no other security interests, liens, financing statements
or other encumbrances exist
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or shall be allowed to exist with respect to any of the Collateral, except
the Permitted Subordinated Interests and perfected rights, if any, in
returned inventory in favor of any Person who is a seller of inventory to
CompuCom, existing as of the Effective Date.
1.2 ADMINISTRATIVE SECURED PARTY APPOINTED AS ADMINISTRATOR. The
Beneficial Secured Parties hereby appoint Administrative Secured Party as
administrator to collect, receive and administer all Collections, on the
Beneficial Secured Parties' joint behalf, as provided by Article II and in
accordance with the other provisions of this Agreement. Until termination of
this Agreement (i) each Beneficial Secured Party irrevocably appoints
Administrative Secured Party as its nominee and attorney in fact with full power
coupled with an interest, to exercise and enforce any and all rights or remedies
in respect of its interests in the Receivables, whether under this Agreement,
the FSA (in the case of NationsBank), the RPA (in the case of CFI), the TAA (in
the case of CFI or EFC), or otherwise. Administrative Secured Party may
exercise or refrain from exercising any and all such rights or remedies as it
may determine in its discretion as provided, and subject to, the provisions of
Article VIII, subject to all other terms of this Agreement, and all Collections
received by Administrative Secured Party in the exercise of any such rights or
remedies shall be deemed received for the benefit of the Beneficial Secured
Parties according to their respective Pro Rata Percentages as of the time of
receipt thereof and administered according to the provisions of Article II and
the other provisions of this Agreement. The rights delegated and appointed to
Administrative Secured Party under this paragraph 1.2 are separate, distinct
and independent of Administrative Secured Party's rights as a secured party
arising under paragraph 1.1(a).
1.3 RECEIVABLES. CompuCom hereby represents, warrants and agrees as
follows (such representations, warranties and covenants being deemed made daily
by CompuCom to Administrative Secured Party for the benefit of the Beneficial
Secured Parties until this Agreement has been terminated): (a) CompuCom is the
sole owner of and has full unrestricted power and right to grant to
Administrative Secured Party a continuing security interest, collateral
assignment and pledge of all Receivables free from any lien, security interest
or encumbrance, other than Permitted Subordinated Interests; (b) each Receivable
is in existence, unconditional and valid, and arose from a bona fide outright
sale of inventory or performance of services in the ordinary course of business,
for liquidated amounts and maturing as set forth on its face and such inventory
has been shipped to, or such services have been performed for, the respective
Account Debtors; (c) no Receivable is or will be subject to any sale,
assignment, claim or security interest of any character, other than the
Permitted Subordinated Interests, and CompuCom will not make any sale or other
assignment thereof or create any other security interest therein; (d) except as
disclosed to Administrative Secured Party in writing, CompuCom has no knowledge
that any Receivable is subject to any claim for credit, deduction, allowance or
adjustment by an Account Debtor, or to any defense, dispute, setoff or
counterclaim, and no extension or indulgence has been granted by CompuCom with
respect thereto; and (e) CompuCom believes and expects that each Receivable will
be paid in full at maturity. CompuCom represents, warrants and confirms that
the existing security interest in certain inventory previously granted by
CompuCom to each of Apple Computer, Inc. and Compaq Computer Corporation,
respectively, in each case, is limited by agreement such that the security
interest in proceeds of such inventory is limited only to cash proceeds and
insurance proceeds and excludes all other proceeds (CompuCom will endeavor to
deliver to Administrative Secured Party, as soon as reasonably possible
following execution of this Agreement, a written statement from each such
secured party confirming that its security interest in proceeds of such
inventory is so limited,
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PROVIDED, that any failure or delay in delivering any such statement, in and of
itself, shall not impair the foregoing representation, warranty and confirmation
by CompuCom or Administrative Secured Party's reliance thereon).
1.4. ADJUSTMENT AND COMPROMISE OF RECEIVABLES. CompuCom agrees that
it will not settle, adjust, compromise, discharge or extend the time for payment
of any Receivable except in compliance with CompuCom's credit policy and
involving an amount not in excess of $2,000,000.00, without Administrative
Secured Party's consent.
1.5 BOOKS AND RECORDS. CompuCom represents and warrants to Administrative
Secured Party that all Books and Records are located at CompuCom's chief
executive office designated for CompuCom in the "Definitions" of this Agreement,
and at such other locations, if any, as may be specified in Exhibit 1.5.
CompuCom agrees that it will not maintain any Books and Records at any location
other than as designated in Exhibit 1.5 unless it gives Administrative Secured
Party at least 30 days prior written notice and first executes such financing
statements and other documents as Administrative Secured Party may request in
connection therewith, PROVIDED that, if any such location is a leased location
CompuCom shall first cause each owner or landlord thereof to execute and deliver
to Administrative Secured Party a Collateral Access and Waiver Agreement.
CompuCom shall immediately notify Administrative Secured Party upon receipt of
any notice from any Person claiming past due rent, fees or other charges in
respect of any location where any Books and Records are located. CompuCom will
not deliver possession of any Books and Records to any Person (other than
pursuant to valid judicial process) without the prior written consent of
Administrative Secured Party.
1.6 PERFECTION AND PROTECTION. CompuCom shall perform, at its expense,
all action requested by Administrative Secured Party at any time to perfect,
maintain, protect, and enforce Administrative Secured Party's security interests
in the Collateral, including without limitation executing and filing financing
statements and amendments thereof, in form and substance satisfactory to
Administrative Secured Party; delivering to Administrative Secured Party any
proceeds of Collateral the possession of which is required for continued
perfection of Administrative Secured Party's security interests, duly endorsed
or assigned to Administrative Secured Party without restriction, as may be
required for such purpose; placing notations on books of account to disclose
Administrative Secured Party's security interests; and such other steps as are
deemed necessary by Administrative Secured Party to maintain its security
interests. So long as this Agreement is in effect and until all Secured
Obligations have been fully satisfied, Administrative Secured Party's security
interest and lien hereunder shall continue in full force and effect in all
Collateral.
1.7 EXAMINATIONS; INSPECTIONS. Administrative Secured Party or its
designee shall have the right without hindrance or delay, during normal business
hours and without necessity of prior notice, to examine and inspect the
Collateral. Administrative Secured Party is authorized to discuss CompuCom's
affairs with any employees of CompuCom, as Administrative Secured Party may deem
necessary in relation to the Collateral. CompuCom agrees to pay Administrative
Secured Party's customary fees and disbursements relating to any such
examinations or inspections. Administrative Secured Party shall have full
access to all records available to CompuCom from any credit reporting service,
bureau or similar service and shall have the right to examine and make copies of
any such records. Administrative Secured Party may exhibit a copy of this
Agreement to such service and such
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service shall be entitled to rely on the provisions hereof in providing access
to Administrative Secured Party as provided herein.
1.8 RIGHT TO CURE. Administrative Secured Party in its sole discretion
may pay any amount or take any action in order to preserve, protect and maintain
the Collateral and Administrative Secured Party's security interest therein,
including without limitation, payment of any landlord's claim or other
encumbrance or claim asserted against the Collateral (PROVIDED that with respect
to any payment or obligation owing by CompuCom to any Person other than
Administrative Party, CompuCom shall have first had the opportunity to make any
such payment or perform any such obligation). All such payments and all
out-of-pocket costs and expenses made or incurred by Administrative Secured
Party shall be payable by CompuCom to Administrative Secured Party on demand.
Any payment made or other action taken by Administrative Secured Party under
this paragraph shall be without prejudice to any right to assert an Event of
Default or exercise any other remedy hereunder.
1.9 PRESERVATION OF RIGHTS. To the extent allowed by law, neither
Administrative Secured Party nor any of its officers, directors, employees, and
agents shall be liable or responsible in any way for the safekeeping of any
Collateral or for any act or failure to act with respect to the Collateral, or
for any loss or damage thereto or any diminution in the value thereof, or for
any act by any other Person. In the case of any instruments and chattel paper
included within any proceeds of the Collateral, Administrative Secured Party
shall have no duty or obligation to preserve rights against prior parties. The
Secured Obligations shall not be affected by any failure of Administrative
Secured Party to take any steps to perfect its security interests or to collect
or realize upon the Collateral, nor shall loss of or damage to the Collateral
release CompuCom from any of the Secured Obligations. Unless otherwise
expressly agreed by Administrative Secured Party and the Beneficial Secured
Parties, no (i) modification or amendment of the terms of any Administration
Documents, (ii) compromise, forbearance or grant of renewals, extensions,
indulgences or releases with respect to any Administration Documents, the
Collateral or the Secured Obligations or (iii) other action with respect to the
Collateral or any Person directly or indirectly obligated in connection
therewith shall impair the Secured Obligations, or Administrative Secured
Party's or the Beneficial Secured Parties' interests in the Collateral or any
rights under the Administration Documents.
1.10 SPECIAL RIGHTS; POWER OF ATTORNEY. CompuCom hereby irrevocably
appoints Administrative Secured Party as CompuCom's agent and attorney-in-fact,
for the benefit of the Beneficial Secured Parties, from time to time in
Administrative Secured Party's discretion, to take any action necessary to
preserve and protect the Collateral and Administrative Secured Party's interests
under the Administration Documents. CompuCom hereby authorizes and appoints
Administrative Secured Party as attorney in fact to sign and file any financing
statement or other document necessary to perfect Administrative Secured Party's
security interest in the Collateral. Administrative Secured Party shall have
the right at any time to take any of the following actions, in its own name or
in the name of CompuCom, whether or not an Event of Default is in existence: (i)
make written or verbal requests for verification of amounts owing on Receivables
from any or all Persons which Administrative Secured Party believes may be an
Account Debtor; (ii) take possession and control of Collections; (iii) redirect
the deposit and disposition of Collections; (iv) endorse the name of CompuCom on
checks, instruments constituting Collections; (v) prepare, sign and file, on
behalf of CompuCom in CompuCom's name or in Administrative Secured Party's name
as assignee, any notice
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of lien, or any proof of claim or other document in any bankruptcy proceedings
of any Account Debtor; (vi) access, copy or utilize any information recorded or
contained in any computer or data processing equipment or system in respect of
the Receivables maintained by CompuCom or any affiliate, or to which CompuCom
has access; (vii) enter onto CompuCom's premises and discuss CompuCom's affairs
with CompuCom's personnel as may be reasonably necessary in connection with
maintaining or enforcing Administrative Secured Party's rights under the
Administration Documents; (viii) access and utilize the information recorded on
or contained in any data processing equipment and computer hardware and software
relating to the Receivables or other Collateral to which CompuCom has access;
and (ix) take all other action allowed by law as may be necessary to carry out
the Administration Documents and give effect to Administrative Secured Party's
rights thereunder. In addition, Administrative Secured Party shall have the
right to take any of the following actions, in its own name or in the name of
CompuCom, at any time when any Event of Default is in existence, whether or not
Administrative Secured Party has taken any action to exercise any remedies under
the Administration Documents: (x) notify any Person which Administrative Secured
Party believes may be an Account Debtor to make payments directly to
Administrative Secured Party; (xi) settle, adjust, compromise or discharge
Receivables or extend time of payment upon such terms as Administrative Secured
Party may determine; (xii) take action in Administrative Secured Party's name or
CompuCom's name to enforce collection of Receivables; (xiii) open mail addressed
to CompuCom to take possession of and dispose of checks or other proceeds of
Receivables in accordance with this Agreement; and (xiv) direct the U.S. Postal
service to change the address to which CompuCom's mail is delivered. Should
Administrative Secured Party at any time elect to exercise its right of
verification or notification with respect to the Receivables as provided in
clause (i) or clause (x) above, respectively, Administrative Secured Party shall
have the right in its sole discretion to direct such request for verification,
or notification, as the case may be, to all Persons which Administrative Secured
Party believes may have transacted business with CompuCom at any time, whether
or not such Persons are then indebted to CompuCom, and Administrative Secured
Party is hereby released and discharged from any liability by reason of any such
request for verification or notification. Costs and expenses incurred by
Administrative Secured Party in connection with any of such actions by
Administrative Secured Party, including reasonable attorneys' fees and
out-of-pocket expenses, shall be reimbursed by CompuCom to Administrative
Secured Party on demand.
ARTICLE II. COLLECTIONS ADMINISTRATION
2.1 ADMINISTRATION OF COLLECTIONS. Unless otherwise expressly agreed in
writing by Administrative Secured Party and the Beneficial Secured Parties:
(a) CompuCom will instruct each Account Debtor to address all
remittances in payment of Receivables to the Lockbox or a designated Agency
Account and will cause all invoices evidencing Receivables to be noted with
a legend stating that payment thereon is to be made to CompuCom at the
Lockbox or a designated Agency Account. CompuCom will cause all
Collections to be delivered to the Lockbox or an Agency Account, or
otherwise delivered directly to Administrative Secured Party for deposit to
the Concentration Account (PROVIDED, that notwithstanding the foregoing,
CompuCom may allow any Account Debtor to make payment on any Receivable by
electronic funds transfer or other immediately
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available cash equivalent by deposit directly to the Concentration Account,
for the account of CompuCom, with contemporaneous notice thereof to
Administrative Secured Party).
(b) All Collections received in the Lockbox shall be deposited daily
to the Concentration Account. All deposits to an Agency Account shall be
transferred to Administrative Secured Party for deposit to the
Concentration Account in accordance with the procedures set forth in the
applicable Agency Account Agreement.
(c) Unless and until agreed otherwise by Administrative Secured Party
and the Beneficial Secured Parties, all deposits to the Concentration
Account shall be disbursed simultaneously by Administrative Secured Party
as follows (subject to prior payment of Secured Obligations due and payable
by CompuCom to Administrative Secured Party as provided by the
Administration Documents):
(1) A percentage of each dollar thereof equal to the RPA
Interest Percentage as of the time of disbursement shall be deposited
to the CFI Account; and
(2) A percentage of each dollar thereof equal to the CompuCom
Interest Percentage as of the time of disbursement shall be deposited
to the NationsBank Account.
(d) All Collections at all times shall be subject to an express trust
in favor of Administrative Secured Party for the benefit of the Beneficial
Secured Parties. CompuCom will not use, dispose of, withhold or otherwise
exercise dominion over any Collections. CompuCom agrees that it will not
commingle proceeds of Collections with any other funds, and that no
deposits will be made to the Lockbox, any Agency Account or the
Concentration Account other than Collections. All amounts from time to
time deposited to the Lockbox, any Agency Account or the Concentration
Account are for the benefit of the Beneficial Secured Parties and shall
remain subject to Administrative Secured Party's interests under this
Agreement.
2.2 CERTIFICATION OF RPA INTEREST AND COMPUCOM INTEREST.
(a) INITIAL CERTIFICATION. On or after the Effective Date CompuCom
shall deliver to Administrative Secured Party an Ownership Certification,
dated effective as of a specified Business Day (which shall be on or after
the date of delivery thereof) therein certifying the RPA Interest
Percentage and the CompuCom Interest Percentage, respectively, as of such
day. On and after the specified effective date of such initial Ownership
Certification, the RPA Interest Percentage and the CompuCom Interest
Percentage each shall be deemed to be as specified in such Ownership
Certification, and Administrative Secured Party shall be entitled to rely
thereon in connection with its administration of this Agreement until such
time, if any, as any subsequent Ownership Certification is actually
delivered to Administrative Secured Party and becomes effective as provided
in paragraph 2.2(b).
(b) AFTER THE EFFECTIVE DATE. Subject to at least two Business Days
prior written notice to Administrative Secured Party of its intention to do
so, CompuCom may effect a
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change in the RPA Interest Percentage and the CompuCom Interest Percentage,
for purposes of this Agreement, by delivering to Administrative Secured
Party an Ownership Certification, dated as of a Business Day subsequent to
expiration of such notice period, therein certifying the RPA Interest
Percentage and the CompuCom Interest Percentage, respectively, as of such
day. Provided that no Event of Default is then in existence and PROVIDED
FURTHER, that any such change in the CompuCom Interest Percentage and the
RPA Interest Percentage to be effected thereby does not create an Event of
Default, such Ownership Certification shall become effective as of the day
specified therein (which shall be on or after the beginning of the third
Business Day following the Business Day of Administrative Secured Party's
receipt of the foregoing notice), whereupon the RPA Interest Percentage and
the CompuCom Interest Percentage each shall be deemed to be as specified
therein, and Administrative Secured Party shall be entitled to rely thereon
in connection with its administration of this Agreement until such time, if
any, as any subsequent Ownership Certification is actually delivered to
Administrative Secured Party and becomes effective as provided in this
paragraph 2.2(b).
(c) UPON AND FOLLOWING TERMINATION OF RPA. Notwithstanding any
Ownership Certification, the RPA Interest Percentage in all Receivables
created on or after the effective date of any termination of the RPA
automatically shall be zero percent (0.00%) and the CompuCom Interest
Percentage therein shall be one hundred percent (100.00%). At
Administrative Secured Party's option in its sole discretion,
Administrative Secured Party may cause all Collections received in respect
of Receivables created on or after the effective date of termination of the
RPA to be segregated and deposited to a separate account for collection and
transfer to the NationsBank Account in accordance with paragraph 2.1(c)(2).
It is understood and agreed that the RPA Interest Percentage in effect at
the time of any such termination of the RPA shall remain in effect as to
all Receivables created prior to the effective time of any such termination
of the RPA.
(d) RECEIVABLES SUBJECT TO RECONVEYANCE. Notwithstanding any
Ownership Certification, the RPA Interest Percentage in Receivables, if
any, with respect to which the RPA Interest is reconveyed in full by CFI to
CompuCom pursuant to the RPA, at any time, shall be zero percent (0.0%) and
the CompuCom Percentage Interest therein shall be one hundred percent
(100.0%). CompuCom and CFI shall notify Administrative Secured Party and
NationsBank in writing prior to effecting any such reconveyance, therein
describing the Receivable(s) which are to be the subject thereof. At
Administrative Secured Party's request, CompuCom will assist Administrative
Secured Party in identifying Collections in respect of such Receivables
and, at Administrative Secured Party's option in its discretion,
Administrative Secured Party may cause all Collections at any time received
in respect of such Receivables to be segregated and deposited to a separate
account for collection and transfer to the NationsBank account in
accordance with paragraph 2.1(c)(2).
2.3 FEES.
a. FLOAT. In order to compensate Administrative Secured Party for
collection time required for collection of checks and other items
administered under paragraph 2.1(c), CompuCom shall pay to Administrative
Secured Party, for its own account, as of the last day
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of each calendar month, an amount determined by multiplying the aggregate
amount of such Collections administered during such month by the Contract
Rate applicable under the NationsBank FSA, dividing the answer by 360 and
multiplying the result by one (1) Business Day.
b. ADMINISTRATION FEE. In order to compensate Administrative
Secured Party for its administration of the Administration Documents,
CompuCom agrees to pay to Administrative Secured Party, for its own
account, an annual administration fee equal to $187,500.00 per year, which
shall be payable monthly in arrears in the amount of $15,625.00 per month
beginning on May 1, 1996 and continuing on the first day of each
consecutive calendar month thereafter and one final payment, prorated to
the date of such payment, on the last day of the Contract Term.
ARTICLE III. CLOSING REQUIREMENTS
3.1 ITEMS TO BE DELIVERED BY COMPUCOM. Prior to or simultaneously with
execution and delivery hereof, CompuCom shall deliver, or cause to be delivered,
to Administrative Secured Party the following:
(a) SECRETARY'S CERTIFICATE. A certificate in form satisfactory to
Administrative Secured Party, signed by the corporate secretary of CompuCom
and authenticated by the president of CompuCom, attaching and certifying
the following:
1. ARTICLES OF INCORPORATION AND CERTIFICATE OF EXISTENCE. A
copy of the articles of incorporation, and all amendments thereto, of
CompuCom, accompanied by the certificate of the Secretary of State of
Delaware and bearing a date no more than thirty (30) days prior to
the date hereof, to the effect that such copy is correct and complete
and that CompuCom is a corporation duly incorporated and validly
existing in such state.
2. GOOD STANDING. A certification by the appropriate official
of the State of Delaware bearing a date no more than thirty (30) days
prior to the date hereof, to the effect that CompuCom is in good
standing in such state with respect to payment of franchise and
similar taxes, and a certification by the Comptroller of Public
Accounts of the State of Texas bearing a date no more than thirty (30)
days prior to the date hereof confirming that CompuCom is duly
qualified to transact business in the State of Texas, bearing a date
no more than thirty (30) days prior to the date hereof confirming that
CompuCom is duly qualified to transact business in such state.
3. BYLAWS. A correct and complete copy of the bylaws of
CompuCom, and all amendments thereto.
4. INCUMBENCY. Certification of the name and signature of
all incumbent corporate officers of CompuCom authorized to act on
behalf of CompuCom in respect of the Administration Documents.
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5. RESOLUTIONS. A copy of corporate resolutions of
CompuCom approving the Administration Documents and authorizing the
transactions contemplated hereby, and authorizing and directing a
named officer or officers to sign and deliver all Administration
Documents to be executed by CompuCom, duly adopted by its board of
directors, including the certificate of CompuCom's corporate
secretary, dated the date hereof, that such copy is a true and
complete copy of resolutions duly adopted by the board of directors,
and that such resolutions have not been amended, modified, or revoked
in any respect and are in full force and effect as of the date hereof.
(b) ADMINISTRATION DOCUMENTS. This Agreement and all other
Administration Documents, duly executed.
(c) FINANCING STATEMENTS. All financing statements required by
Administrative Secured Party in connection with perfection of
Administrative Secured Party's security interests in the Collateral.
(d) COLLATERAL ACCESS AND WAIVER AGREEMENTS. All Collateral Access
and Waiver Agreements, if any, as may be required by Administrative Secured
Party pursuant to paragraph 1.5.
(e) OPINION OF COMPUCOM'S COUNSEL. An opinion of counsel for
CompuCom in form and substance satisfactory to Administrative Secured
Party, addressing such matters in connection with this Agreement as
Administrative Secured Party may request.
(f) OTHER DOCUMENTS. Such other items as Administrative Secured
Party may request in order to perfect or protect its interests and rights
under the Administration Documents.
ARTICLE IV. REPRESENTATIONS
4.1 CORPORATE NAME; TRADE NAMES. CompuCom is conducting, transacting, and
carrying on its business under the name shown for CompuCom in the Definitions of
this Agreement, and such other names, if any, as may be specified in Exhibit
4.1, and is not engaged in business under any other name. Except as provided in
Exhibit 4.1, during the past five (5) years CompuCom has not (i) done business
under any other name, (ii) been party to a merger or consolidation or (iii)
acquired any of the property included within the Collateral from any other
Person.
4.2 CHIEF EXECUTIVE OFFICE. CompuCom's chief executive office is located
at the address specified for CompuCom in the Definitions of this Agreement.
4.3 CORPORATE EXISTENCE. CompuCom is a corporation, duly incorporated,
validly existing, and in good standing under the laws of the State of Delaware,
and is duly qualified or licensed to transact business in all jurisdictions the
laws of which require it to be so qualified or
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licensed, except for those jurisdictions, if any, where the failure to be so
qualified or licensed would not cause a Material Adverse Effect.
4.4 CORPORATE POWER AND AUTHORITY; VALIDITY. CompuCom possesses all
requisite authority and power and authority to conduct to own, lease and operate
its properties and to carry on its business as now conducted and proposed to be
conducted and to execute, deliver, and comply with the Administration Documents.
Each of the Administration Documents has been duly authorized by all necessary
corporate action and duly executed and delivered by CompuCom, and evidences
valid and binding obligations enforceable in accordance with its respective
terms.
4.5 NO CONFLICTING AGREEMENTS. CompuCom represents that the execution,
delivery and performance of the Administration Documents will not violate its
articles of incorporation or bylaws, nor constitute a default under, or result
in a breach of, any contract, agreement, or other instrument to which it is a
party or which is applicable to its property.
4.6 COMPLIANCE WITH LAWS. CompuCom represents that it is not in violation
of any laws, regulations and orders in any respect which will result in or
cause, or reasonably would be expected to result in or cause, a Material Adverse
Effect.
4.7 JUDGMENTS. There are no outstanding or unpaid material judgments or
assessments against CompuCom.
4.8 TAXES. All tax returns or filings required to be filed by CompuCom
have been filed and taxes imposed upon CompuCom which are due and payable have
been paid.
4.9 TITLE TO PROPERTY. CompuCom has good and indefeasible title to all
Collateral.
4.10 CONSENTS. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution, delivery and
performance of the Administration Documents other than financing statements
required by Administrative Secured Party under the Texas UCC. CompuCom has all
required governmental permits and licenses, if any, on account of its operations
and activities and is in full compliance with the terms and conditions thereof,
and all such permits and licenses are in full force and effect.
4.11 REPRESENTATIONS AND WARRANTIES CUMULATIVE. The representations and
warranties contained in this Article IV are in addition to all other
representations and warranties provided in the Administration Documents.
ARTICLE V. COVENANTS
Throughout the Contract Term, CompuCom agrees as follows (unless otherwise
allowed by prior written consent of Administrative Secured Party):
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5.1 COMPLIANCE CERTIFICATE. Within forty five (45) days following the end
of each fiscal quarter of CompuCom, CompuCom shall deliver to Administrative
Secured Party a certificate signed by the president or chief financial officer
of CompuCom certifying to Administrative Secured Party that, except as may be
expressly identified and described in such certificate, CompuCom is in
compliance with its obligations under this Agreement and that no event or
condition that would be the subject of a required notice under paragraph 5.7,
paragraph 5.8 or paragraph 5.9 is in existence as of the date of such
certificate. Such certificate shall be deemed to be a continuing representation
and warranty pending any subsequent certification or notification by CompuCom
respecting its compliance or non-compliance with this Agreement.
5.2 AUTHORITY. Immediately following any effective change thereof (and at
such other times, from time to time, at the request of Administrative Secured
Party) CompuCom shall certify to Administrative Secured Party the names and
signatures of all Persons authorized to execute and deliver to Administrative
Secured Party any documentation contemplated by or relating to any
Administration Documents.
5.3 BOOKS AND RECORDS. CompuCom shall keep and maintain proper, complete
and consistent books of record and account respecting the Collateral and
CompuCom's affairs in accordance with GAAP.
5.4 CORPORATE EXISTENCE. CompuCom shall preserve and maintain its
corporate existence, good standing and authority to transact business in all
jurisdictions where necessary for the proper conduct of its business, and shall
maintain all of its properties, rights, privileges and franchises necessary or
desirable in the normal conduct of its business.
5.5 MONTHLY RECEIVABLES REPORT. Within 15 days after the end of each
calendar month, CompuCom shall furnish to Administrative Secured Party and the
Beneficial Secured Parties a listing and analysis of all Receivables, in form
satisfactory to Administrative Secured Party, including such information as may
be required by Administrative Secured Party including, without limitation (a) a
listing of each Receivable and the unpaid balance owing thereon, and a statement
of the aggregate unpaid balance owing on all Receivables, (b) a listing of the
name and complete address of each Account Debtor and each Receivable owing by
such Account Debtor, and (c) an aging of each Receivable as follows: (i) those
aged 30 days or less from date of invoice, (ii) those aged over 30 days, but
less than 61 days, from date of invoice, (iii) those aged over 60 days, but less
than 91 days, from date of invoice, (iv) those aged over 90 days from date of
invoice.
5.6 NOTICES, INFORMATION IN RESPECT OF RPA AND TAA. CompuCom and CFI will
notify Administrative Secured Party and the Beneficial Secured Parties in
writing (i) at least two (2) Business Days before effecting any change in the
RPA Interest under the terms of the RPA, as provided in paragraph 2.2(b), (ii)
promptly upon any termination of the RPA or the TAA, or upon receiving or
sending any notice of intended, pending or potential termination of the RPA or
the TAA, (iii) promptly at any time when the Percentage Factor exceeds the
Maximum Percentage Factor (as those terms are defined by the TAA); (iv) promptly
upon any assignment by EFC, or any request by CFI for an assignment by EFC, of
EFC's interest under the TAA to any Bank Investor pursuant to Section 9.7 of the
TAA.
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5.7 COPIES IN RESPECT OF RPA AND TAA. Promptly upon execution, CompuCom
will deliver to Administrative Secured Party and the Beneficial Secured Parties
a true and correct copy of the RPA and the TAA, respectively, and all other
agreements, certifications, opinions and other documentation in connection
therewith. CompuCom will provide Administrative Secured Party and the
Beneficial Secured Parties with a true and correct copy of (i) each Ownership
Certification delivered to Administrative Secured Party, (ii) each monthly
report delivered by CompuCom to CFI under the RPA; (iii) each Investor Report
delivered by CompuCom to EFC under the TAA; (iv) each notice, if any, at any
time given by CFI pursuant to Section 5.1(b)(i) of the TAA (notifications in
respect of Termination Events or Potential Termination Events, as those terms
are defined by the TAA) and (v) any notice of termination, or of intended,
pending or potential termination of the RPA or the TAA sent or received by
CompuCom or CFI.
5.8 ADDITIONAL INFORMATION. In addition to information and items
specifically required by the Administration Documents, CompuCom shall promptly
furnish to Administrative Secured Party such other information or documentation
respecting the Collateral, and its business affairs in connection therewith, as
Administrative Secured Party may reasonably request.
5.9 NOTIFICATION OF MATERIAL CHANGES. CompuCom shall promptly notify
Administrative Secured Party of any change in any other material fact or
circumstance represented or warranted in any of the Administration Documents.
Without limitation, CompuCom will notify Administrative Secured Party in writing
at least thirty (30) days prior to the occurrence of any of the following:
(i) change of CompuCom's name, (ii) change of the location of CompuCom's chief
executive office, or (iii) use of any trade name, fictitious name or other
assumed name not disclosed to Administrative Secured Party at the time of
execution of this Agreement.
5.10 NOTIFICATION REGARDING DEFAULT. CompuCom shall immediately notify
Administrative Secured Party and the Beneficial Secured Parties in writing upon
becoming aware of the existence of any condition or event which constitutes an
Event of Default or any condition or event which, after notice or lapse of time,
or both, would constitute an Event of Default, therein specifying the nature and
period of existence thereof and what action CompuCom is taking or proposes to
take with respect to such condition or event. CompuCom shall immediately notify
Administrative Secured Party and the Beneficial Secured Parties in writing if it
knows, or reasonably expects, that an Event of Default will occur, therein
specifying the nature of the anticipated Event of Default. CompuCom will
immediately notify Administrative Secured Party and the Beneficial Secured
Parties if CompuCom is aware that any covenant under this Agreement has been
breached, or reasonably expects that any such covenant will be breached, or if
CompuCom's board of directors authorizes the filing by CompuCom of a petition in
bankruptcy.
5.11 COMPLIANCE WITH LAWS. CompuCom shall comply with all applicable laws,
regulations and orders applicable to it or its property, a violation of which
would reasonably be expected to result in a Material Adverse Effect.
5.12 PAYMENT OF TAXES. CompuCom shall promptly pay, or cause to be paid,
when due, all assessments, taxes, governmental charges and levies imposed upon
CompuCom or its income or profits, the non payment of which could give rise to
any notice of tax lien, levy or other lien or process against any of the
Collateral, except such as may be contested in good faith by appropriate
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proceedings, PROVIDED, that adequate reserves shall be maintained as are
appropriate according to GAAP. CompuCom shall promptly pay any amounts adjudged
to be due pursuant to any such contest, with all costs, penalties, and interest
thereon, before such judgment becomes final or any writ or order is issued under
which the Collateral, or any portion thereof, may become subject to any lien or
encumbrance. Promptly upon Administrative Secured Party's request, CompuCom
will furnish to Administrative Secured Party evidence of payment of all such
contested amounts and will authorize the appropriate governmental official to
deliver to Administrative Secured Party at any time a written statement of any
taxes or other such amounts owing by CompuCom.
5.13 WAIVERS AND CONSENTS. CompuCom shall furnish to Administrative Secured
Party such waivers and consents as may reasonably be requested by Administrative
Secured Party with respect to Administrative Secured Party's security interests
and liens in the Collateral.
5.14 RESTRICTION ON DISPOSITION OF COLLATERAL. CompuCom will not sell or
dispose of any interest in the Collateral except pursuant to the RPA.
5.15 PROHIBITION AGAINST LIENS ON COLLATERAL. CompuCom will not grant,
create or allow to exist any security interest, lien, financing statement or
other encumbrance on any Collateral other than (i) under this Agreement, or (ii)
the Permitted Subordinated Interests. CompuCom will take prompt action as may
be necessary to discharge or dismiss any tax lien notice, judgment, levy,
attachment or other process filed or levied against any of the Collateral.
5.16 COVENANTS CUMULATIVE. The covenants contained in this Article V are
in addition to all other covenants provided in the Administration Documents.
ARTICLE VI. EVENT OF DEFAULT
6.1 EVENT OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Any Event of Default defined by the NationsBank FSA;
(b) Any default or breach by CompuCom of any obligation under
the RPA;
(c) Any Termination Event defined by the TAA;
(d) Any violation, breach or default of any covenant, agreement or
other obligation under the Administration Documents;
(e) Any representation or warranty made by CompuCom in the
Administration Documents was false in any material respect at the time when
made;
(f) Material impairment of the enforceability of the interests,
rights or remedies granted to Administrative Secured Party or the
Beneficial Secured Parties under this
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Agreement, or the taking of any action by any party to this Agreement to
repudiate or challenge same.
ARTICLE VII. REMEDIES
7.1 REMEDIES. Should an Event of Default occur at any time,
Administrative Secured Party may at its option take any or all of the following
actions: (a) notify Account Debtors to make all payments on Receivables directly
to Administrative Secured Party at such address as Administrative Secured Party
shall designate; (b) make demand for payment on Account Debtors and take action
(including without limitation, filing suit) to enforce payment of Receivables,
in the name of Administrative Secured Party (on behalf of the Beneficial Secured
Parties) or CompuCom, as Administrative Secured Party shall determine in its
discretion; (c) take any other action to enforce the collection rights of a
secured party under the Texas UCC; and (d) exercise, enforce and avail itself of
any and all other rights or remedies as may be available under this Agreement or
any other Administration Documents or as otherwise may be available under the
Texas UCC or other applicable law. Administrative Secured Party at all times
shall have the collection rights and all other rights and remedies of a secured
party under the Texas UCC, including but not limited to the right to take
possession of Collections and enforce direct payment of Receivables. To the
extent necessary to protect and enforce its rights under the Administration
Documents, Administrative Secured Party is expressly authorized to receive,
open, and dispose of mail addressed to CompuCom and endorse notes, checks,
drafts, money orders, or other evidences of payment, on behalf of and in the
name of CompuCom. Administrative Secured Party may demand, collect, receipt
for, settle, compromise, adjust, sue for, foreclose or otherwise realize upon
the Receivables as Administrative Secured Party may determine in its discretion.
In collecting or pursuing collection of Receivables, Administrative Secured
Party may utilize CompuCom's books and records, premises, telephones,
telecopiers, copiers, and other facilities, or the services of CompuCom's
personnel, at CompuCom's cost and expense, as may be necessary for prompt and
expedient collection. CompuCom agrees that Administrative Secured Party's use
of such facilities or personnel is a commercially reasonable method of pursuing
timely collection and enforcement of Receivables and that, in taking any such
action, Administrative Secured Party is acting solely in its capacity as a
secured party under the Texas UCC and as attorney in fact and administrator, as
provided by this Agreement. Administrative Secured Party may give verbal or
written notice to any Person who Administrative Secured Party reasonably
believes is or may be an Account Debtor on Receivables and thereby demand
payment of all amounts which may be or become due by such Person on Receivables.
In taking possession of any Collateral, Administrative Secured Party is
authorized to enter upon any premises owned or leased by CompuCom where any
Collateral is located. At its option, Administrative Secured Party may require
CompuCom to assemble the Collateral and make it available to Administrative
Secured Party at a place to be designated by Administrative Secured Party which
is reasonably convenient to both Administrative Secured Party and CompuCom.
CompuCom agrees that Administrative Secured Party shall be entitled to collect
or dispose of any Collateral on CompuCom's premises. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Administrative Secured Party will give CompuCom
reasonable notice of the time and place of any public sale of Collateral or of
the time after which any private sale or any other intended disposition thereof
is to be made. For this purpose, it is agreed that at least five (5) days
notice of the time of sale or other intended disposition of Collateral delivered
in accordance with
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paragraph 10.3 shall be deemed to be reasonable notice in conformity with the
Texas UCC. Administrative Secured Party may adjourn or otherwise reschedule any
public sale by announcement at the time and place specified in the notice of
such public sale, and such sale may be made at the time and place as so
announced without necessity of further notice. Administrative Secured Party
shall not be obligated to sell or dispose of any Collateral, or to pursue any
particular manner of collection or disposition, notwithstanding any prior notice
of intended disposition. With respect to any instruments or chattel paper at
any time included within the Collateral, Administrative Secured Party shall not
have any duty or obligation to take steps to preserve rights against prior
parties.
7.2 CASH COLLATERAL; INJUNCTIVE RELIEF. All cash proceeds of Collateral
from time to time existing, including without limitation all Collections, at all
times shall be and remain subject to Administrative Secured Party's continuing
security interest, lien and administration under this Agreement, and shall be
subject to an express trust for the benefit of Administrative Secured Party, for
the benefit of the Beneficial Secured Parties. Except as may be specifically
allowed otherwise by this Agreement, CompuCom is expressly prohibited from
using, spending, retaining or otherwise exercising any dominion over such
proceeds, and all such proceeds shall be promptly turned over to Administrative
Secured Party in the form in which they are received by CompuCom, either by
mailing or delivering the same to Administrative Secured Party not later than
the Business Day following receipt thereof by CompuCom. CompuCom acknowledges
and agrees that an action for damages against CompuCom for any breach of the
prohibitions and obligations of this paragraph shall not be an adequate remedy
at law. In the event of any such breach, CompuCom agrees, to the fullest extent
allowed by law, that Administrative Secured Party shall be entitled to
injunctive relief to restrain such breach and require compliance with the
requirements of this Agreement.
7.3 APPLICATION OF PROCEEDS; DEFICIENCY. After deducting all costs, fees
and expenses of collection and enforcement for which CompuCom is obligated to
Administrative Secured Party pursuant to the Administration Documents or
applicable law, any remaining Collections or other proceeds of collection, sale
or disposition of the Collateral shall be deposited to the Concentration Account
and administered according to paragraph 2.1(c), and the excess, if any,
remaining after expiration of the Contract Term shall be held or disbursed by
Administrative Secured Party by mutual agreement among CompuCom, Administrative
Secured Party and the Beneficial Secured Parties or, in the absence of such
mutual agreement, in accordance with applicable law. CompuCom expressly agrees
that it shall remain liable for all Secured Obligations, if any, remaining after
liquidation or other disposition of the Collateral (PROVIDED, that the foregoing
shall not be construed to create any liability of CompuCom under the RPA except
as expressly provided therein).
7.4 WAIVER OF NOTICES. CompuCom expressly waives any notices from
Administrative Secured Party or the Beneficial Secured Parties except as
otherwise expressly provided for and required by this Agreement.
7.5 SETOFF. CompuCom irrevocably authorizes Administrative Secured Party
to charge any account of CompuCom maintained with Administrative Secured Party
with such amount as may be necessary from time to time to pay any Secured
Obligations. CompuCom agrees that Administrative Secured Party shall have a
contractual right to setoff any and all deposits or other sums at any time
credited by or due from Administrative Secured Party to CompuCom against any
part of the Secured Obligations. Such right of setoff may be exercised at any
time by Administrative
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Secured Party without prior notice, irrespective of whether an Event of Default
exists or whether the Secured Obligations have fully matured. Upon the
occurrence of an Event of Default and for so long as the same shall remain in
existence and is not cured or waived, Administrative Secured Party shall be
entitled in its discretion, without prior notice, to hold any such deposits or
other sums (and return checks or other items presented for payment against same,
and otherwise deny access to same) pending acceleration of any Secured
Obligations. All amounts, if any, charged or set off by Administrative Secured
Party against any Collections shall be deposited to the Concentration Account
and administered as provided by paragraph 2.1(c).
7.6 PERFORMANCE BY ADMINISTRATIVE SECURED PARTY. Should CompuCom fail to
perform any covenant, duty, or agreement required by the Administration
Documents (including without limitation, payment and discharge of any taxes,
liens or encumbrances affecting or potentially affecting the Collateral)
Administrative Secured Party may in its sole discretion perform or attempt to
perform or cause performance of same on behalf of CompuCom at CompuCom's
reasonable cost and expense, PROVIDED that Administrative Secured Party shall
have no obligation or duty to take any such action. CompuCom agrees to
reimburse Administrative Secured Party for such reasonable out-of-pocket costs
and expenses on demand and until paid.
7.7 NON-WAIVER. Forbearance or indulgence by Administrative Secured Party
of any Event of Default or any other event or condition which is or would be the
subject of a required notice under paragraph 5.10, at any time from time to
time, shall not be deemed a waiver of any rights of Administrative Secured Party
under the Administration Documents. The acceptance by Administrative Secured
Party or the Beneficial Secured Parties, at any time and from time to time, of
any partial payment of the Secured Obligations shall not be deemed to be a
waiver of any Event of Default then existing. No delay or omission by
Administrative Secured Party in exercising any right or remedy shall impair such
right or remedy, or be construed as a waiver thereof, nor shall any single or
partial exercise of any such rights or remedies preclude other or further
exercise thereof. Administrative Secured Party shall not be required or
obligated to file suit or otherwise pursue any Account Debtor or other Person
for enforcement or collection of any Receivables or to otherwise take any action
to realize upon any of the Collateral.
7.8 REMEDIES CUMULATIVE. The remedies specified in this Article VII are
cumulative with and in addition to all other rights and remedies provided by
this Agreement and the other Administration Documents, or by applicable law.
ARTICLE VIII. ADMINISTRATION
8.1 ADMINISTRATION. Administrative Secured Party, each of the Beneficial
Secured Parties and CompuCom each agrees as follows:
(a) ADMINISTRATIVE SECURED PARTY: APPOINTMENT; POWERS. Subject to
the terms of this Agreement, each of the Beneficial Secured Parties hereby
irrevocably appoints and authorizes Administrative Secured Party to act as
nominee on behalf of itself and any of the other Beneficial Secured
Parties, in the name of Administrative Secured Party, the Beneficial
Secured Parties or any of them, to take any one or more of the following
actions: Administer
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the Administration Documents in accordance with their terms, and act or
refrain from acting under the Administration Documents in accordance with
powers delegated to Administrative Secured Party under the Administration
Documents and such other powers as are reasonably incidental thereto;
execute and enter into the Administration Documents; hold the
Administration Documents; hold and enforce the security interests and liens
in the Collateral granted under the Administration Documents; exercise and
enforce rights and remedies in respect of the Receivables as attorney-in-
fact and administrator as provided by paragraph 1.2; receive all documents,
certifications, opinions and other items furnished by CompuCom under the
Administration Documents; take actions as may be requested or instructed by
the Beneficial Secured Parties (PROVIDED, that unless the Administration
Documents specifically require or permit direction or consent by the
Beneficial Secured Parties and, in such event, unless further assurance of
indemnification (if requested by Administrative Secured Party) is furnished
as provided by paragraph 8.1(g), Administrative Secured Party shall not be
obligated to comply with any such instructions); collect, receive and
administer Collections as provided by this Agreement; distribute to the
Beneficial Secured Parties such information, requests and documents
received from CompuCom pursuant to the Administration Documents; and
deliver to CompuCom requests, demands, approvals and consents as required
or allowed under the Administration Documents. Except as otherwise
expressly provided by the Administration Documents, each of the Beneficial
Secured Parties irrevocably authorizes Administrative Secured Party to take
or refrain from taking such actions on the Beneficial Secured Parties'
behalf as Administrative Secured Party in its discretion determines
necessary or appropriate in administering the Administration Documents.
Except as otherwise provided by this Agreement, Administrative Secured
Party may take such action, or refrain from taking such action, in respect
of the Collateral, or in respect of administration of the Administration
Documents, as it may deem in its discretion to be advisable in the
performance of its obligations under this Agreement. Unless otherwise
agreed by Administrative Secured Party, any action taken by Administrative
Secured Party with the consent or at the direction of the Beneficial
Secured Parties shall be deemed to have been taken for and on behalf of
each of the Beneficial Secured Parties. Administrative Secured Party shall
not be required to take action or exercise any remedy except to the extent
expressly required by this Agreement upon direction of the Beneficial
Secured Parties, PROVIDED, that Administrative Secured Party shall not be
required to take any action which Administrative Secured Party believes
would expose it or any of the Beneficial Secured Parties to personal
liability, or which Administrative Secured Party believes is contrary to
any of the Administration Documents or applicable law. Administrative
Secured Party may perform any of its duties under the Administration
Documents by or through officers, directors, employees, attorneys or
agents, and shall be entitled to employ and consult with legal counsel,
independent public accountants, and other experts or consultants and shall
not be liable for any action taken or omitted to be taken in good faith in
accordance with the advice of such counsel, accountants, experts or
consultants, and may rely and act upon any resolution, notice, consent,
certificate, affidavit, letter or other document or instrument or writing,
or any telecopy, fax, telegram, telex or teletype, or any court order, or
any conversation, which it believes to be genuine and correct and to have
been signed or made by the proper Person. Administrative Secured Party
shall be fully protected in acting, or in refraining from acting, under the
Administration Documents in accordance with instructions signed by the
Beneficial Secured Parties, and such instructions and any action or
inaction by
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Administrative Secured Party pursuant thereto shall be binding on each of
the Beneficial Secured Parties. Neither Administrative Secured Party nor
its affiliates, officers, directors, employees, attorneys, or agents shall
be liable for any action taken or omitted to be taken in connection with
the Administration Documents except for gross negligence or willful
misconduct.
(b) LIMITATION OF SCOPE. Administrative Secured Party's appointment
hereunder is expressly limited as provided in this Agreement.
Administrative Secured Party accepts such appointment solely as a secured
party under the Texas UCC, and as attorney-in-fact and administrator, on
the terms provided by this Agreement. The duties and responsibilities of
Administrative Secured Party under this Agreement are ministerial and
administrative in nature, and it is expressly agreed that Administrative
Secured Party shall not be a fiduciary or trustee on behalf of any Person.
Administrative Secured Party shall have no duties or obligations, express
or implied, except as expressly set forth in this Agreement.
(c) AVAILABILITY OF INFORMATION. Administrative Secured Party will
forward to the Beneficial Secured Parties copies of all reports of a
material nature which are furnished by CompuCom to Administrative Secured
Party, other than those, if any, which by the terms of this Agreement are
to be delivered by CompuCom directly to the Beneficial Secured Parties,
PROVIDED, that Administrative Secured Party shall not have any liability to
any Beneficial Secured Party for failure to do so. Administrative Secured
Party shall promptly notify the Beneficial Secured Parties upon becoming
aware of any Event of Default, PROVIDED, that in the absence of gross
negligence or intentional misconduct Administrative Secured Party shall not
have any liability to any of the Beneficial Secured Parties for failure to
do so, and PROVIDED FURTHER, that Administrative Secured Party shall not be
deemed to have knowledge or notice of any Event of Default (other than
breaches by CompuCom, of which Administrative Secured Party has actual
knowledge, of CompuCom's obligations under paragraph 2.1, or failure of
timely payment to Administrative Secured Party of any costs or fees as
required by the Administration Documents) unless it receives written notice
from CompuCom or any Beneficial Secured Party specifying an event or
condition and designating the same as an Event of Default. Upon request,
Administrative Secured Party will make available to any Beneficial Secured
Party any documents, reports or other items from time to time received from
CompuCom and remaining in Administrative Secured Party's possession.
(d) REQUIRED CONSENT OF BENEFICIAL SECURED PARTIES. Notwithstanding
the authority granted to Administrative Secured Party elsewhere in this
Agreement:
1. The written consent of Administrative Secured Party and all
Beneficial Secured Parties shall be required as a condition to the
effectiveness of any of the following actions: (i) extend the Contract
Term; (ii) release any security interest or lien in any Collateral;
(iii) agree to waive, modify or amend any covenants, agreements or
other provisions contained in Article I ("Security Interest and
Collateral Covenants"), Article II ("Collections Administration") or
Article V ("Covenants"), Article VI ("Event of Default") or Article
VII ("Remedies"), Article VIII ("Administration"), Article IX
("Additional Agreements") or Article X ("Miscellaneous") of this
Agreement; (iv) consent to allow any security interests, liens
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or encumbrances on any Collateral (other than the Permitted
Subordinated Interests), or consent to allow the disposition of any
Collateral other than as expressly provided by the Administration
Documents; (v) grant any consent or make any agreement which is
expressly subject to the consent of the Beneficial Secured Parties
pursuant to this Agreement; (vi) exercise any remedies under this
Agreement to sell or otherwise dispose of Receivables; (vii) file, or
join with any other Person in filing, any petition against CFI for an
order of relief under the United States Bankruptcy Code or for
receivership or similar relief under any other applicable law; (viii)
agreement to amend this subparagraph (1) of this paragraph 8.1(d).
2. Subject to paragraph 8.1(a), Administrative Secured Party
agrees to take any of the following actions upon written direction of
each and all of the Beneficial Secured Parties, PROVIDED, that in each
instance, such written direction references this paragraph 8.1(d) and
specifically identifies the requested action: (i) request or direct
CompuCom to take any action which may be requested or directed by
Administrative Secured Party under the Administration Documents; (ii)
pursue any remedies provided by the Administration Documents; or (iii)
perform or take any action which may be taken by Administrative
Secured Party under the Administration Documents.
3. Subject to paragraph 8.1(a), Administrative Secured Party
agrees to take any of the following actions upon written direction of
any Beneficial Secured Party, PROVIDED, that in each instance, such
written direction references this paragraph 8.1(d) and specifically
identifies the requested action: (i) request information from CompuCom
which may be requested by Administrative Secured Party under the
Administration Documents or (ii) report requested information
regarding Collections administration under Article II.
Notwithstanding the foregoing, no consent shall be required with respect to
any action if Administrative Secured Party is required to take any such
action by court order or applicable law. Otherwise, except as provided or
referenced above, Administrative Secured Party may amend, modify or waive
any of the terms of the Administration Documents, consent to any action or
failure to act by CompuCom, or exercise or refrain from exercising any
powers or rights which it may have under the Administration Documents or as
a matter of law, without the requirement of prior notice to or consent of
the Beneficial Secured Parties. Any consent requested by Administrative
Secured Party from any Beneficial Secured Party, and any directive, consent
or refusal of consent given to Administrative Secured Party by any
Beneficial Secured Party, shall be communicated as provided in paragraph
10.3. In the event any consent requested by Administrative Secured Party
is not granted or refused within ten (10) days after it is requested by
Administrative Secured Party, the same shall be deemed to have been
granted.
(e) LIMITATION OF ADMINISTRATIVE SECURED PARTY'S LIABILITY. Neither
Administrative Secured Party nor any of its officers, directors, employees,
attorneys or agents shall be liable for any action taken or omitted to be
taken in connection with the Administration Documents in conformity with
instructions or consents of any Beneficial Secured Party, or based upon
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its belief that such action or inaction is within the discretion or power
conferred to Administrative Secured Party under the Administration
Documents, nor shall Administrative Secured Party or any of such officers,
directors, employees, attorneys or agents be liable for the consequences of
any error of judgment, except for gross negligence or wilful misconduct.
Administrative Secured Party shall not be responsible to the Beneficial
Secured Parties for the due execution, validity, effectiveness,
enforceability, or sufficiency of this Agreement or any of the other
Administration Documents, or for any recitals, representations or
warranties, reports, statements contained in the Administration Documents
or furnished in connection therewith, or for the perfection or value of any
Collateral or for any failure by any other Person to perform any
obligations under the Administration Documents. Administrative Secured
Party shall have no liability to any Beneficial Secured Party with respect
to ascertaining or confirming performance or observation by CompuCom of any
terms, covenants or conditions of any Administration Documents.
(f) EXPENSES. Each Beneficial Secured Party severally agrees to
reimburse Administrative Secured Party promptly upon demand for its Pro
Rata Percentage share of any and all out-of-pocket expenses (including
reasonable attorneys' fees) incurred by Administrative Secured Party in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement of the Administration Documents, and
legal advice in respect of rights or obligations thereunder (whether in
connection with negotiations, legal proceedings, or otherwise) to the
extent that any such expenses are not paid or reimbursed to Administrative
Secured Party by CompuCom or from other sources within 60 days after
request for payment or reimbursement is made to CompuCom (PROVIDED that any
such payment by any Beneficial Secured Party to Administrative Secured
Party shall be without prejudice to the right to contest such Beneficial
Secured Party's obligation to make such payment, AND PROVIDED FURTHER, that
EFC shall make any such reimbursement only to the extent that it has
received sufficient funds from all sellers of accounts to it in excess of
the amount necessary to pay matured and maturing commercial paper). To the
extent any such expenses are recovered by Administrative Secured Party from
CompuCom or other sources after any such amounts have been paid to
Administrative Secured Party by any Beneficial Secured Party(ies), the
amount so recovered shall be refunded by Administrative Secured Party to
each such paying Beneficial Secured Party ratably according to its
respective payments.
(g) INDEMNIFICATION. Each Beneficial Secured Party hereby severally
indemnifies, in accordance with its Pro Rata Percentage, and holds harmless
Administrative Secured Party from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and/or disbursements of any kind or nature whatsoever which may be
imposed on, asserted against, or incurred by Administrative Secured Party
in any way with respect to any Administration Documents (including without
limitation as may arise as a result of any order of a court of competent
jurisdiction pursuant to which Administrative Secured Party is required to
refund, repay or otherwise return any Collections to any other Person) or
any action taken or omitted by Administrative Secured Party under the
Administration Documents, except to the extent the same is caused by gross
negligence or wilful misconduct by Administrative Secured Party (IT BEING
ACKNOWLEDGED THAT IT IS THE EXPRESS INTENTION OF ADMINISTRATIVE SECURED
PARTY AND THE BENEFICIAL SECURED PARTIES THAT
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SUCH INDEMNIFICATION AND HOLD HARMLESS OBLIGATIONS SHALL INCLUDE ANY SUCH
ACTIONS OR INACTIONS WHICH ARE A RESULT OF NEGLIGENCE OTHER THAN GROSS
NEGLIGENCE), PROVIDED, that EFC's obligation to make payment under the
foregoing indemnity is limited to the extent that it has received
sufficient funds from all sellers of accounts to it in excess of the amount
necessary to pay matured and maturing commercial paper). Prior to
compliance with any instructions by the Beneficial Secured Parties under
the Administration Documents, Administrative Secured Party shall be
entitled to request further assurance of any such indemnification in form
satisfactory to Administrative Secured Party, and unless and until such
further assurance is provided to Administrative Secured Party,
Administrative Secured Party shall have no obligation to comply with such
instructions and may disregard same.
(h) REPLACEMENT OF ADMINISTRATIVE SECURED PARTY. Subject to the
following, Administrative Secured Party may resign as Administrative
Secured Party at any time by giving written notice of such resignation to
the Beneficial Secured Parties and CompuCom, and Administrative Secured
Party may be removed upon written notice by unanimous consent of the
Beneficial Secured Parties. Should Administrative Secured Party give any
such notice of its resignation as Administrative Secured Party, or should
the Beneficial Secured Parties give any such notice of removal, then the
Beneficial Secured Parties collectively shall forthwith appoint another
Person, acceptable to them and to CompuCom (such acceptance not to be
unreasonably withheld or delayed), to become Administrative Secured Party,
whereupon such newly appointed Person shall thereafter be Administrative
Secured Party and CompuCom and the Beneficial Secured Parties shall execute
such documents as any Beneficial Secured Party may reasonably request to
reflect such change. Any resignation or removal of Administrative Secured
Party shall become effective upon the appointment of a successor
Administrative Secured Party (PROVIDED, that if the Beneficial Secured
Parties fail for any reason to appoint a successor within sixty (60) days
after written notice of such resignation or removal, Administrative Secured
Party shall thereafter have no obligation to act as Administrative Secured
Party hereunder). Any Person appointed as successor Administrative Secured
Party as provided above shall be deemed to accept such appointment, and
such successor Administrative Secured Party shall thereupon succeed to and
become vested with all rights, powers, privileges, immunities, and duties
of the resigning or removed Administrative Secured Party, and the resigning
or removed Administrative Secured Party shall be discharged from its duties
and obligations under this Agreement and the other Administration
Documents. After any Administrative Secured Party's resignation or removal
as Administrative Secured Party, the provisions of this Article VIII shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was Administrative Secured Party.
NationsBank has been appointed as Administrative Secured Party, and has
accepted such appointment, subject to the terms of this Agreement, as of
the Effective Date. As of the Effective Date, NationsBank has assigned
administration of its functions as Administrative Secured Party to
NationsBank Business Credit, an unincorporated division of NationsBank, and
at EFC's request hereby agrees that it will not transfer such
administration to any other division unless such division is acceptable to
Beneficial Secured Parties (such acceptance not be unreasonably withheld or
delayed).
(i) RIGHTS OF ADMINISTRATIVE SECURED PARTY AS BENEFICIAL SECURED
PARTY. Any Beneficial Secured Party who serves as Administrative Secured
Party shall nonetheless
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continue to have the same rights as a Beneficial Secured Party, in its
individual corporate capacity as a Beneficial Secured Party, as any other
Beneficial Secured Party and may exercise the same as though it were not
acting as Administrative Secured Party, and unless the context indicates
otherwise, to the extent that Administrative Secured Party in its
individual capacity is a Beneficial Secured Party, the term "Beneficial
Secured Party" or "Beneficial Secured Parties," wherever used in the
Administration Documents shall include the Administrative Secured Party in
its individual corporate capacity as a Beneficial Secured Party.
(j) INDEPENDENT CREDIT DECISIONS. Each Beneficial Secured Party
represents, warrants and agrees that it has made its own underwriting
analysis of CompuCom and its own evaluation and valuation of the Collateral
and has made its own decision to enter into this Agreement independently
and without reliance on Administrative Secured Party or any other
Beneficial Secured Party and based on such documents and information as it
has deemed appropriate. Each Beneficial Secured Party further acknowledges
and agrees that it will continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other
Administration Documents, independently and without reliance upon
Administrative Secured Party or any other Beneficial Secured Party and
based upon such documents and information as it shall deem appropriate at
the time. Each Beneficial Secured Party acknowledges that it shall have no
right to rely upon Administrative Secured Party to inform it of the
financial conditions or creditworthiness of CompuCom or the condition,
value, marketability or other conditions in respect of the Collateral.
Upon written request by any Beneficial Secured Party, Administrative
Secured Party will make any documents, reports or other information
received by Administrative Secured Party from CompuCom and designated in
such request available to such Beneficial Secured Party. Otherwise, except
as specifically provided in this Agreement, Administrative Secured Party
shall not have any duty or responsibility to provide any Beneficial Secured
Party with any credit or other financial information concerning the
affairs, financial condition or business of CompuCom or any of its
subsidiaries or affiliates.
(k) SEVERAL COMMITMENTS. Administrative Secured Party shall not be
liable to CompuCom or any Beneficial Secured Party for any act or omission
by any Beneficial Secured Party, and no Beneficial Secured Party shall be
responsible to CompuCom or any other Beneficial Secured Party for any act
or omission of any other Beneficial Secured Party.
(l) COLLECTION ADMINISTRATION: LOCKBOX; AGENCY ACCOUNTS. On and
after the Effective Date and continuing through the end of the Contact
Term, for so long as NationsBank is serving in the capacity as
Administrative Secured Party, it is agreed that (i) the lockbox presently
established and operating in connection with the NationsBank FSA shall be
deemed to be the Lockbox and (ii) each agency account presently established
and operating in connection with the NationsBank FSA shall be deemed to be
an Agency Account, and all Collections during any such period, from time to
time, received or deposited thereto, respectively, shall be deemed to have
been received by Administrative Secured Party solely pursuant, and subject
to, the terms of this Agreement.
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(m) BENEFITS. CompuCom expressly acknowledges and agrees to the
provisions of this Article VIII, PROVIDED, that none of the provisions of
this Article shall inure to the benefit of CompuCom or any Person other
than Administrative Secured Party and the Beneficial Secured Parties.
CompuCom shall not be entitled to rely upon, or to raise as a defense, any
failure of Administrative Secured Party or any Beneficial Secured Party to
comply with such provisions. Subject to the requirements of paragraph
8.1(d)1, CompuCom shall be entitled to rely on actions, agreements and
consents of Administrative Secured Party in connection with administering
the Administration Documents as the actions, agreements and consents of all
Beneficial Secured Parties.
ARTICLE IX. ADDITIONAL AGREEMENTS
In consideration of the mutual benefits under this Agreement,
Administrative Secured Party and the Beneficial Secured Parties each agrees
among themselves as follows:
9.1 EQUAL DIGNITY. The rights and interests pertaining to the CompuCom
Interest and the RPA Interest, under this Agreement or otherwise, are of equal
dignity and neither shall enjoy or be entitled to any right or benefit in
priority or preference over the other. All such rights and interests, and all
proceeds thereof, shall be shared by the Beneficial Secured Parties according to
their respective Pro Rata Percentage.
9.2 PRO-RATA TREATMENT AMONG BENEFICIAL SECURED PARTIES. All Collections
and other proceeds of Receivables at any time received by Administrative Secured
Party shall be for the account of the Beneficial Secured Parties in accordance
with their respective Pro Rata Percentage as of the time of Administrative
Secured Party's receipt thereof.
9.3 SUBORDINATION OF INTERESTS.
a. As among Administrative Secured Party and the Beneficial Secured
Parties only and subject to paragraph 9.3(e), NationsBank agrees that all
valid and perfected rights and interests pertaining to the CompuCom
Interest and the RPA Interest under this Agreement are and shall be first,
senior and prior to any other rights now or hereafter claimed therein by
NationsBank, whether under the NationsBank FSA or otherwise, and all
security interests, collateral assignments, pledges, liens, mortgages,
rights or other interests now or hereafter claimed by NationsBank with
respect to the Collateral (other than its interest as a Beneficial Secured
Party under this Agreement) shall be and hereby are expressly subordinated
and made junior to all such valid and perfected rights and interests
pertaining to the CompuCom Interest and the RPA Interest under this
Agreement.
b. All sales and transfers of the RPA Interest under the RPA are
expressly subject to the interests granted or delegated to Administrative
Secured Party under this Agreement. As among Administrative Secured Party
and the Beneficial Secured Parties only and subject to paragraph 9.3(e),
CFI agrees that all valid and perfected rights and interests pertaining to
the CompuCom Interest and the RPA Interest under this Agreement are and
shall be first, senior and prior to any other rights now or hereafter
claimed therein by CFI, whether under
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the RPA, the TAA or otherwise, and any and all security interests,
collateral assignments, pledges, liens, mortgages, rights or other
interests now or hereafter claimed by CFI with respect to the Collateral
(other than its interest as a Beneficial Secured Party under this
Agreement) shall be and hereby are expressly subordinated and made junior
to all such valid and perfected rights and interests pertaining to the
CompuCom Interest and the RPA Interest under this Agreement. CFI agrees
that it will not sell or transfer any RPA Interest to any Person except EFC
pursuant to the TAA subject to the rights of Administrative Secured Party
and the Beneficial Secured Parties under this Agreement.
c. All sales and transfers of any portion of the RPA Interest under
the TAA are expressly subject to the interests granted to Administrative
Secured Party under this Agreement. As among Administrative Secured Party
and the Beneficial Secured Parties only, and subject to paragraph 9.3(e),
EFC agrees that all valid and perfected rights and interests pertaining to
the CompuCom Interest and the RPA Interest under this Agreement are and
shall be first, senior and prior to any rights now or hereafter claimed
therein by EFC (or any assignee of EFC under the TAA), whether under the
TAA or otherwise and any and all security interests, collateral
assignments, pledges, liens, mortgages, rights or other interests now or
hereafter claimed by EFC (or any assignee of EFC under the TAA) with
respect to the Collateral (other than EFC's interest as a Beneficial
Secured Party under this Agreement) shall be and hereby are expressly
subordinated and made junior to all such valid and perfected rights and
interests pertaining to the CompuCom Interest and the RPA Interest under
this Agreement. CompuCom, CFI and EFC each agree that the RPA and the TAA
at all times will contain provisions expressly providing that all rights
and interests in the RPA Interest conveyed or claimed thereunder are
subject to the rights and interests of Administrative Secured Party under
this Agreement. EFC agrees that it will not sell or transfer any portion
of the RPA Interest to any Person (except assignments of EFC's rights
therein to the limited extent provided by the TAA as of the Effective Date,
PROVIDED that any such portions of the RPA Interests assigned pursuant to
any such assignments shall at all times be and remain subject to the rights
of Administrative Secured Party under the Administration Documents).
d. The Beneficial Secured Parties each agrees, among themselves,
that until termination of this Agreement, if it from time to time comes
into possession of any Collections other than as provided by paragraph
2.1(c) this Agreement, all of such amounts shall be received in trust for
the benefit of the Beneficial Secured Parties according to their respective
Pro Rata Percentages and shall be paid forthwith to Administrative Secured
Party, for the account of the Beneficial Secured Parties, for deposit to
the Concentration Account and administration under paragraph 2.1(c) of this
Agreement. In the event any Beneficial Secured Party is required to
deliver to Administrative Secured Party any amounts received by such
Beneficial Secured Party in respect of Collections as required by this
paragraph 9.3(d) then, for purposes of this paragraph 9.3(d) and clause (1)
of the definition of "Contract Term" in the Definitions of this Agreement,
such Beneficial Secured Party shall be deemed to have received payment in
respect of such Collections only to the extent that it actually receives
payment of its Pro Rata Percentage thereof from Administrative Secured
Party pursuant to this paragraph 9.3(d).
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e. As among Administrative Secured Party and the Beneficial Secured
Parties only, the subordinations, priorities and agreements specified in
paragraph 9.3(a), paragraph 9.3(b) and paragraph 9.3(c) are applicable
irrespective of the time or order of filing of financing statements with
respect thereto, PROVIDED, that such subordinations, priorities and
agreements are SOLELY for the respective benefit of Administrative Secured
Party and the Beneficial Secured Parties, as a separate contractual
agreement among themselves only, and shall not in any event operate,
entitle or be construed to allow any other Person (specifically including
without limitation any trustee in bankruptcy) to any rights or priority
over Administrative Secured Party or the Beneficial Secured Parties, or any
of them. The subordinations, priorities and agreements specified in
paragraph 9.3(a), paragraph 9.3(b) and paragraph 9.3(c) shall not be
effective to the extent, if any, that any rights or interests pertaining to
the CompuCom Interest or the RPA Interest for any reason are determined by
a court of competent jurisdiction to be invalid, unenforceable, unperfected
or avoidable, or subordinate to any Person other than Administrative
Secured Party and the Beneficial Secured Parties.
f. Each of the Beneficial Secured Parties may release any Person now
or hereafter liable to such Beneficial Secured Party upon any of the
Secured Obligations, or permit substitutions, or renew, increase, extend or
accept partial payments upon any of the Secured Obligations, or amend or
modify the terms of any instrument or agreement evidencing or otherwise
securing same, or any part thereof, in such manner and at such times from
time to time, as it may determine in its sole discretion, without notice to
or consent from the other, and without in any manner impairing the rights
and obligations under this Agreement (PROVIDED, that the foregoing shall
not impair any condition or requirement imposed upon CompuCom by any
Beneficial Secured Party pursuant to the FSA, the RPA or the TAA,
respectively).
g. Until termination of this Agreement each of NationsBank, CFI and
EFC each agrees, for itself and its successors and assigns, that it will
not take any action to foreclose, repossess, marshal, control, or exercise
remedies or other rights with respect to any Collateral, whether pursuant
to the NationsBank FSA, the RPA or the TAA, respectively, or otherwise
(subject to NationsBank's prior rights in respect of returned inventory
under the FSA as provided in paragraph 9.3(h)), PROVIDED, that the
foregoing shall not prohibit or restrict NationsBank, CFI or EFC from
asserting and protecting their respective interests in the Collateral in
any bankruptcy proceeding, SUBJECT AT ALL TIMES HOWEVER, to all other terms
and provisions of this Agreement.
h. Notwithstanding any other provisions in this Agreement regarding
rights and relative priorities of interests among Administrative Secured
Party and the Beneficial Secured Parties, it is agreed that all rights and
interests, if any, of Administrative Secured Party, CFI and EFC,
respectively, at any time arising in returned inventory shall be subject to
the prior rights and interests of NationsBank in returned inventory under
the FSA and perfected rights, if any, in returned inventory in favor of any
Person who is a seller of inventory to CompuCom, existing as of the
Effective Date.
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i. Notwithstanding the sale and transfer by CompuCom to CFI of the
RPA Interest pursuant to the RPA, and any contemporaneous or subsequent
transfer of a portion thereof by CFI to EFC, from time to time, and
notwithstanding anything to the contrary contained in the RPA or the TAA,
for so long as CompuCom is owner of the CompuCom Interest and until
termination of this Agreement, CFI and EFC each agrees, for itself and its
successors and assigns, that (i) for so long as no Event of Default is in
existence and continuing, CompuCom shall have the sole and exclusive right
to service, administer and collect the Receivables, SUBJECT AT ALL TIMES,
HOWEVER, to the administration of Collections as provided in Article II and
all other rights, interests and remedies of Administrative Secured Party
under the terms and provisions of this Agreement, and no notice or action
under the RPA or TAA shall be effective to limit or preclude such rights of
CompuCom or grant rights to any Person which are inconsistent or in
conflict therewith, (ii) following the occurrence and during the existence
of any Event of Default, any Person other than CompuCom who is appointed to
service Receivables under the RPA or who is appointed as "Collection Agent"
under the TAA shall be a Person that is acceptable to Administrative
Secured Party and the Beneficial Secured Parties, and (iii) without the
prior written consent of Administrative Secured Party, neither CompuCom,
CFI or EFC will exercise any dominion over any Collateral except proceeds
of Collections deposited to the CFI Account pursuant to paragraph 2.1, or
notify any Account Debtor of CompuCom's transfer to CFI of the RPA Interest
or of CFI's transfer of a portion thereof to EFC.
j. Except as expressly provided in this Agreement, nothing in this
Agreement shall limit or restrict (i) NationsBank in the exercise of rights
and remedies under the FSA, (ii) CFI in the exercise of rights and remedies
under the RPA or (iii) EFC in the exercise of rights and remedies under the
TAA or, as assignee of CFI, the exercise of rights and remedies under the
RPA.
k. In the event of any bankruptcy of CompuCom or CFI, until
termination of this Agreement Administrative Secured Party shall have the
right, and hereby is irrevocably authorized by the Beneficial Secured
Parties, to assert Administrative Secured Party's rights, on behalf of the
Beneficial Secured Parties, to receive, collect and administer the
Receivables in accordance with the provisions of the Administration
Documents.
l. The agreements in this paragraph 9.3 are irrevocable and
continuing, and the Beneficial Secured Parties may continue to rely upon
same in making financial accommodations to or for the account of CompuCom,
without notice to the other except as otherwise provided in this Agreement.
9.4 OTHER RIGHTS; WAIVER OF MARSHALING. Each of NationsBank, CFI and EFC
waives marshaling as to the other, and agrees that each shall be entitled to
pursue rights and remedies against CompuCom or in respect of property of
CompuCom other than the Collateral as may be provided by any other agreement.
9.5 ACCESS TO INFORMATION. In consideration of the mutual benefits of
this Agreement, each of NationsBank, CFI and EFC agrees that, upon request, it
will provide to Administrative Secured Party any information available to it in
respect of CompuCom or the Collateral for the
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purpose of assisting Administrative Secured Party in administering this
Agreement or enforcing and collecting Receivables. CompuCom expressly agrees
and consents to the providing of any such information for such purpose.
9.6 PAYMENTS BY ADMINISTRATIVE SECURED PARTY. Administrative Secured
Party shall have no further duty or obligations in respect of any Collections
following administration and transfer thereof in compliance with the
requirements of paragraph 2.1. Each Beneficial Secured Party, severally
according to its respective Pro Rata Percentage, agrees to promptly reimburse
Administrative Secured Party for any checks or items deposited to the
Concentration Account and transferred to such Beneficial Secured Party pursuant
to paragraph 2.1 which are returned unpaid for any reason, PROVIDED, that EFC
shall make any such reimbursement only to the extent that it has received
sufficient funds from all sellers of accounts to it in excess of the amount
necessary to pay matured and maturing commercial paper. In the event EFC, CFI,
or any Person claiming through or under either of them, including any assignee
under the TAA, at any time makes demand upon Administrative Secured Party for
payment of any amount in respect of Collections relative to the RPA Interest,
Administrative Secured Party shall be fully protected in depositing such amount
to the CFI Account or, at Administrative Secured Party's option in its sole
discretion, making such payment jointly payable to CFI and any such claimant and
delivering same to an officer of CFI or such claimant, and in either of such
instances, Administrative Secured Party shall be fully released and discharged
from further duty or obligation in respect of such amount.
9.7 NOTICES, CONSENTS, AGREEMENTS REGARDING EFC. Any notice, consent or
agreement to or by EFC or any of its permitted assigns pursuant to or in
connection with the Administration Documents shall be effective for all purposes
if given or made to or by the Person serving in the capacity as "Agent" under
the TAA, and the same shall be deemed valid and binding for all purposes of this
Agreement as having been given or made to or by EFC.
9.8 LIMITATION. CompuCom expressly acknowledges and agrees to the
provisions of this Article IX, PROVIDED, that none of the provisions of this
Article IX shall inure to the benefit of CompuCom. CompuCom shall not be
entitled to rely upon, or to raise as a defense, any matters contained in this
Article IX. Notwithstanding anything in this Agreement to the contrary,
NationsBank, CFI and EFC may amend or modify any agreement contained in this
Article IX by mutual agreement in writing among themselves without necessity of
joinder or consent by any other Person.
ARTICLE X. MISCELLANEOUS
10.1 EFFECTIVE DATE; TERM; TERMINATION. This Agreement shall become
effective upon acceptance by Administrative Secured Party, as of the Effective
Date and shall continue in full force and effect through the end of the Contract
Term.
10.2 PAYMENTS. All Collections received to the Concentration Account after
the time for closing business on any Business Day as internally established by
applicable depository bank, or otherwise received by Administrative Secured
Party after its internally established time for closing business on any Business
Day, shall be deemed received as of the next succeeding Business Day.
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10.3 NOTICES. Any consent, approval, notice, request, or demand from one
party to another must be made in writing to be effective, and shall be deemed to
have been given on the third Business Day after its deposit in the United States
mail, postage prepaid and properly addressed, by certified or registered mail,
return receipt requested, or on the Business Day
on which it is actually delivered by messenger delivery, telecopy or other
electronic transmission, whichever is earlier. The address of each party for
the purposes hereof is as follows:
COMPUCOM:
CompuCom Systems, Inc.
10100 North Central Expressway
Dallas, Texas 75231
Attention: Mr. Dan Celoni, Treasurer
Telecopy: 214-265-5449
ADMINISTRATIVE SECURED PARTY:
NationsBank of Texas, N.A.,
Administrative Secured Party
MAILING ADDRESS: P.O. Box 830732
Dallas, Texas 75283-0732
MESSENGER DELIVERY: NationsBank Plaza, 6th Floor
901 Main Street
Dallas, Texas 75202
Attention: Business Credit/Regional Manager: URGENT
Telecopy: (214) 508-3501
NATIONSBANK
NationsBank of Texas, N.A.
MAILING ADDRESS: P.O. Box 830732
Dallas, Texas 75283-0732
MESSENGER DELIVERY: NationsBank Plaza, 6th Floor
901 Main Street
Dallas, Texas 75202
Attention: Business Credit/Regional Manager: URGENT
Telecopy: (214) 508-3501
CFI:
CSI Funding, Inc.
10100 North Central Expressway
Dallas, Texas 75231
Attention: Mr. Dan Lane, Vice President and Secretary
Telecopy: 214-265-5449
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EFC:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets, Inc.
World Financial Center--South Tower
225 Liberty Street
New York, New York 10281
Telecopy: 212-236-7584
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath, Investment Banking
Telecopy: 704-388-9169
or such other address as may hereafter be designated and delivered in writing.
10.4 BENEFIT TO COMPUCOM. This Agreement is executed at the request of
CompuCom for the purpose of establishing a means by which CompuCom may utilize
its Receivables to access working capital sources VIA the NationsBank FSA and
the RPA, as CompuCom shall determine. CompuCom acknowledges that it has and
will continue to receive direct equivalent value for the interests granted
pursuant to this Agreement. CompuCom acknowledges and agrees that (i)
Administrative Secured Party's agreement to serve in such capacity and perform
its duties under the Administration Documents, (ii) NationsBank's agreements
under the NationsBank FSA (including, without limitation, as evidenced by the
Fifth Amendment to Financing and Security Agreement of even date herewith) and
(iii) CFI's agreements under the RPA and EFC's agreements under the TAA,
respectively, each separately and also collectively together, constitutes value
given to CompuCom for purposes of Section 9.203(a)(2) of the Texas UCC.
10.5 ADMINISTRATIVE SECURED PARTY. CompuCom and the Beneficial Secured
Parties have designated NationsBank, in its capacity as Administrative Secured
Party, to serve as Administrative Secured Party as provided by this Agreement.
Each party to this Agreement, for itself and its successors and assigns,
acknowledges that (i) NationsBank is a creditor of CompuCom and that CFI is a
wholly owned subsidiary of CompuCom, (ii) NationsBank, N.A., which is an
affiliate of NationsBank, is a party to the TAA as Agent thereunder, and also is
a Bank Investor, the Liquidity Support Provider and the Credit Support Provider,
as such terms are defined, and as provided, thereunder, (iii) appointment of
NationsBank to serve as Administrative Secured Party is not a condition or
prerequisite to execution or performance of this Agreement, and each of
CompuCom, NationsBank, CFI and EFC has indicated its willingness to enter into
this Agreement with the Administrative Secured Party being a Person other than
NationsBank, PROVIDED that any such Person otherwise is acceptable to all
parties.
10.6 EXERCISE OF RIGHTS. The Beneficial Secured Parties shall not at any
time be required to institute suit or exercise or exhaust remedies against any
Person obligated to pay any of the
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Secured Obligations, or against any other property or other security of the
payment of same, prior to exercise by Administrative Secured Party of the rights
under this Agreement.
10.7 ADMINISTRATIVE SECURED PARTY'S RECORDS; ACCOUNT STATEMENTS.
Administrative Secured Party's records in respect of Collections administered
under this Agreement shall be deemed conclusive absent demonstration of error
and all statements of account rendered by Administrative Secured Party to
CompuCom relating same shall be presumed to be correct and accurate unless,
within thirty (30) days after receipt thereof, CompuCom shall notify
Administrative Secured Party in writing of any claimed error therein.
10.8 INDEMNITY. CompuCom hereby indemnifies and agrees to hold harmless
and defend all Indemnified Persons from and against any and all Indemnified
Claims. Upon notification and demand, CompuCom agrees to provide defense of any
Indemnified Claim and pay all costs and expenses of counsel selected by any
Indemnified Person in respect thereof. Any Indemnified Person against whom any
Indemnified Claim may be asserted reserves the right to settle or compromise any
such Indemnified Claim as such Indemnified Person may determine in its/his/her
sole discretion, and the obligations of such Indemnified Person, if any,
pursuant to any such settlement or compromise shall be deemed included within
the Indemnified Claims. The indemnification provided for in this paragraph
shall survive any termination of this Agreement and shall continue for the
benefit of all Indemnified Persons. Except as specifically provided in this
paragraph, CompuCom waives all notices from any Indemnified Person.
10.9 INTEREST LIMITATION. CompuCom expressly agrees that any provision
contained in the NationsBank FSA, the RPA, the TAA or any other agreement
between CompuCom and NationsBank, CFI or EFC, respectively, pertaining to
limitations on the maximum rate of interest that may be contracted, charged or
received in connection therewith shall be deemed applicable to any payments,
rights or benefits paid or accrued to such party under the Administration
Documents.
10.10 COSTS AND EXPENSES. CompuCom agrees to pay all costs and
expenses incurred by Administrative Secured Party in connection with the
Administration Documents, including without limitation: (i) negotiation,
preparation and closing of the Administration Documents, including attorneys
fees and disbursements, search fees, filing and recording fees, (ii) ongoing
administration of the Administration Documents, including without limitation,
fees and costs incurred in consultation with attorneys, (iii) negotiation,
preparation and closing of any amendment, waiver or consent relating to the
Administration Documents, including attorneys fees and disbursements, search
fees, filing and recording fees, and (iv) enforcing any provision of the
Administration Documents, collection and pursuit of collection and enforcement
of Receivables, taking possession, exercising any rights or remedies or pursuing
or defending any claim arising out of, or in any way relating to the
Administration Documents, including without limitation fees and costs of
attorneys, experts or other consultants retained by Administrative Secured Party
in connection therewith and any other costs, fees or expenses for which CompuCom
isobligated pursuant to any other provision of the Administration Documents.
CompuCom will pay any applicable stamp, registration, recordation and similar
taxes, fees and charges in respect of the Collateral or perfection or
maintenance of Administrative Secured Party's rights under the Administration
Documents, and agrees to indemnify Administrative Secured Party against any
liabilities resulting from any delay, deferral or omission in payment of any
such taxes, fees or charges. All fees, costs and expenses for which CompuCom is
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obligated under the Administration Documents shall be payable to Administrative
Secured Party on demand.
10.11 ACCEPTANCE AND PERFORMANCE; VENUE. This Agreement shall become
effective only upon acceptance by Administrative Secured Party at its offices in
Dallas, Dallas County, Texas. This Agreement is performable at Administrative
Secured Party's offices in Dallas, Dallas County, Texas, such acceptance to be
conclusively established by execution of this Agreement by Administrative
Secured Party. CompuCom and Administrative Secured Party each agree that Dallas
County, Texas shall be the exclusive venue for litigation of any dispute or
claim arising under or relating to the Administration Documents, and that such
county is a convenient forum in which to decide any such dispute. CompuCom and
Administrative Secured Party each consents to the personal jurisdiction of the
state and federal courts located in Dallas County, Texas for the litigation of
any such dispute or claim.
10.12 WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO PARTY
SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN THEM CONCERNING
THE LOAN DOCUMENTS OR ANY CLAIMS OR TRANSACTIONS IN CONNECTION THEREWITH, IN
EITHER A STATE OR FEDERAL COURT, THE RIGHT TO TRIAL BY JURY BEING EXPRESSLY
WAIVED. ADMINISTRATIVE SECURED PARTY, COMPUCOM, AND BENEFICIAL SECURED PARTIES
EACH ACKNOWLEDGE THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING
OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF
ADVICE OF COUNSEL OF ITS CHOOSING.
10.13 COPIES VALID AS FINANCING STATEMENTS. CompuCom grants to
Administrative Secured Party a special power of attorney to sign CompuCom's
name, on behalf of CompuCom, to any financing statement describing the
Collateral, or any part thereof, or to any amendment of any financing statement
filed pursuant to this Agreement, and to file such financing statement or
amendment in any jurisdiction deemed necessary by Administrative Secured Party
to perfect Administrative Secured Party's interests under this Agreement. A
carbon, photographic or other reproduction, including photocopy, telecopy or
electronic transmission, of this Agreement or any financing statement shall be
sufficient as a financing statement and may be filed as an original.
10.14 GOVERNING LAW. THIS AGREEMENT, AND ALL DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF TEXAS, PROVIDED, THAT TO THE EXTENT FEDERAL LAW WOULD
ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE
OF TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW WHICH PURPORTS TO LIMIT
THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN
CONNECTION WITH ANY OF THE OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY.
10.15 ENTIRETY AND AMENDMENTS. This Agreement embodies the entire
agreement between the parties relating to the subject matter hereof, and may be
modified or amended only by an instrument in writing executed by an authorized
officer of each of Administrative Secured Party, each of the Beneficial Secured
Parties and CompuCom. It is expressly agreed that no conversations, statements,
negotiations or other verbal communications between Administrative Secured Party
and
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CompuCom, nor any purported modification or amendment, or waiver, shall be
binding unless the same is evidenced in writing executed by an authorized
officer of each of Administrative Secured Party, each of the Beneficial Secured
Parties and CompuCom.
10.16 PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of CompuCom, Administrative Secured Party and the Beneficial Secured
Parties, and their respective successors in interest. CompuCom may not assign
any right, power, duty, or obligation under this Agreement, or any document or
instrument executed in connection herewith, without the prior written consent of
Administrative Secured Party and each Beneficial Secured Party. Neither CFI nor
EFC may assign any right, power, duty, or obligation under this Agreement, or
any document or instrument executed in connection herewith, without the prior
written consent of Administrative Secured Party (except assignments to the
limited extent provided in the RPA and TAA as of the Effective Date, PROVIDED
that any such portions of the RPA Interests assigned pursuant to any such
assignments at all times shall be and remain subject to Administrative Secured
Party's rights and interests under this Agreement). This Agreement is intended
for the benefit of CompuCom, Administrative Secured Party, the Beneficial
Secured Parties (and any Person properly claiming through any of them as an
assignee to the limited extent otherwise permitted by this Agreement), and may
not be relied upon by any other Person.
10.17 EXHIBITS. All exhibits referenced herein, and attached hereto,
are incorporated in this Agreement and made a part hereof for all purposes.
10.18. DESCRIPTIVE TITLES. The descriptive titles "Administrative
Secured Party" and "Beneficial Secured Party" are for convenience only and shall
not themselves be construed to limit the rights and powers granted to
Administrative Secured Party or Beneficial Secured Parties under this Agreement.
10.19 CUMULATIVE RIGHTS. All rights and remedies of Administrative
Secured Party under the Administration Documents are cumulative, and are in
addition to rights and remedies available to Administrative Secured Party by
applicable law. Such rights and remedies may be exercised concurrently or
successively, at such times as Administrative Secured Party may determine in its
discretion. CompuCom waives any right to require marshaling. If Administrative
Secured Party, in its individual corporate capacity, and CompuCom are parties to
any prior agreement, either written or oral, relating to the Collateral, the
terms of this Agreement shall supersede the terms of such prior agreements as to
transactions respecting the Collateral on or after the Effective Date, but all
security agreements, financing statements, guaranties, other contracts and
notices for the benefit of Administrative Secured Party, in its individual
corporate capacity, in connection with any such prior agreement shall continue
in full force and effect (subject to the terms of this Agreement) to secure all
obligations under the terms thereof unless Administrative Secured Party
specifically releases its rights thereunder by separate release in writing
executed by Administrative Secured Party.
10.20 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future laws effective
during the Contract Term, such provisions shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement. In such
case, the
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remaining provisions of the Agreement shall remain in full force and effect and
shall not be effected thereby.
10.21 MULTIPLE COUNTERPARTS. This Agreement may be executed
simultaneously in one or more multiple originals, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement.
10.22 SURVIVAL. All covenants, agreements, representations, and
warranties made by CompuCom herein shall survive the execution, delivery, and
closing of this Agreement, and all documents executed in connection herewith,
and shall not be affected by any investigation made by any party.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED as of the effective date specified in the preamble.
COMPUCOM SYSTEMS, INC.
By: /s/ Robert J. Boutin
--------------------------------
Robert J. Boutin, Senior Vice
President/Finance and
Chief Financial Officer
NATIONSBANK OF TEXAS, N.A.
IN ITS CAPACITY AS ADMINISTRATIVE SECURED PARTY
By: /s/ Sally Glynn
--------------------------------
Sally Glynn, Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Sally Glynn
--------------------------------
Sally Glynn, Senior Vice President
CSI FUNDING, INC.
By: /s/ Robert J. Boutin
--------------------------------
Robert J. Boutin, President
ENTERPRISE FUNDING CORPORATION
By: /s/ John R. Bulger
--------------------------------
Name: John R. Bulger
------------------------------
Title: Vice President
-----------------------------
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RECEIVABLES PURCHASE AGREEMENT
BETWEEN
COMPUCOM SYSTEMS, INC.,
as Seller
AND
CSI FUNDING INC.,
as Purchaser
Dated as of April 1, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT, dated as of April 1, 1996 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "AGREEMENT"), between COMPUCOM SYSTEMS, INC., a Delaware corporation, as
seller (the "SELLER") and CSI FUNDING INC., a Delaware corporation, as purchaser
(the "PURCHASER").
W I T N E S S E T H :
--------------------
WHEREAS, the Purchaser desires to purchase from time to time the RPA
Interest existing on the Closing Date and acquired or generated thereafter in
the normal course of the Seller's business pursuant to written agreements or
with invoices on open accounts;
WHEREAS, the Seller desires to sell and assign from time to time the
RPA Interest to the Purchaser upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the Purchaser and the Seller as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All capitalized terms used herein shall
have the meanings specified herein or, if not so specified, the meaning
specified in, or incorporated by reference into, the Transfer Agreement, and
shall include in the singular number the plural and in the plural number the
singular:
"ADVANCE" shall have the meaning specified in Section 3.2(b).
"ADVANCE LIMIT" shall have the meaning specified in Section 3.2(b).
<PAGE>
"AGENT" shall mean NationsBank, N.A., as agent on behalf of Enterprise
and the Bank Investors pursuant to the Transfer Agreement.
"CLOSING DATE" shall mean the effective date of the initial Ownership
Certification delivered under the Master Security and Administration Agreement.
"CONTRIBUTED RPA INTEREST" shall have the meaning specified in Section
3.2(b).
"CONVEYANCE PAPERS" shall have the meaning set forth in Section 4.1(b)
hereof.
"ENTERPRISE" shall mean Enterprise Funding Corporation, a Delaware
corporation, and its successors and assigns.
"PERMITTED ASSIGNEE" shall have the meaning set forth in Section 9.5
hereof.
"PURCHASE DISCOUNT" shall mean for any day, an amount, calculated in
good faith by the Purchaser, equal to the decimal equivalent of the sum of (i)
the product of (A) the sum of (x) the "AA" rated commercial paper index rate for
a maturity most closely corresponding to the Estimated Maturity Period and (y)
0.50% (servicing fee) and (z) 1.50% and (B) a fraction the numerator of which is
the Estimated Maturity Period of the Receivables and the denominator of which is
360, AND (ii) the decimal equivalent of the average Loss to Liquidation Ratio
with respect to the prior three calendar months.
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1 hereof.
"PURCHASED RPA INTEREST" shall have the meaning specified in Section
3.2(b).
"PURCHASER" shall mean CSI Funding Inc., a Delaware corporation, and its
successors and assigns.
"RECEIVABLE" shall mean, for purposes of this Agreement, the
indebtedness owed to the Seller by any Obligor under a Contract, whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the sale of merchandise or
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services by the Seller, 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 6.2 hereof, it shall no longer constitute a Receivable
hereunder.
"RPA INTEREST" shall have the meaning set forth in Section 2.1(a)
hereof.
"SECURED OBLIGATIONS" shall have the meaning set forth in Section
2.1(d) hereof.
"SUBORDINATED NOTE" shall have the meaning specified in Section
3.2(b).
"TRANSFER AGREEMENT" shall mean the Transfer and Administration
Agreement, dated as of April 1, 1996, by and among the Purchaser, the Seller,
Enterprise and NationsBank N.A., as Agent thereunder, as such agreement may be
amended, modified or supplemented from time to time.
"TRANSFERRED RPA INTEREST" shall have the meaning specified in Section
3.2(b).
SECTION 1.2. OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC, and not
specifically defined herein, are used herein as defined in such Article 9.
SECTION 1.3. 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" shall mean "from and including" and the
words "to" and "until" each shall mean "to but excluding."
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ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES
SECTION 2.1. SALE. (a) Upon the terms and subject to the conditions
set forth herein, the Seller hereby sells, assigns, transfers and conveys to the
Purchaser, and the Purchaser hereby purchases from the Seller, on the terms and
subject to the conditions specifically set forth herein, an undivided interest
in, to and under all of the Seller's right, title and interest, whether now
owned or hereafter acquired, in, to and under the Receivables outstanding on the
Closing Date and thereafter originated by the Seller through any Termination
Date (but not thereafter), together with all Related Security and Collections
with respect thereto and all proceeds of the foregoing. Such undivided interest
(the "RPA INTEREST"), expressed as a dollar amount, shall be equal to the
aggregate unpaid balance of the Receivables from time to time multiplied by the
RPA Interest Percentage, which percentage shall be determined from time to time
as provided in Section 3.3. The foregoing sale, assignment, transfer and
conveyance does not constitute an assumption by the Purchaser of any obligations
of the Seller or any other Person to Obligors or to any other Person in
connection with the Receivables or under any Related Security or other agreement
and instrument relating to the Receivables.
(b) In connection with the foregoing sale, the Seller agrees to record
and file on or prior to the Closing Date, at its own expense, a financing
statement or statements with respect to the RPA Interest and the other property
described in Section 2.1(a) sold by the Seller hereunder meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect and protect the interests of the Purchaser created
hereby under the UCC (subject, in the case of Related Security constituting
returned inventory, to the applicable provisions of Section 9-306 of the UCC,
the Inventory Financing Agreements) against all creditors of and purchasers from
the Seller, and to deliver either the originals of such financing statements or
file-stamped copies of such financing statements or other evidence of such
filings to the Purchaser on the Closing Date.
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<PAGE>
(c) The Seller 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 Purchaser may reasonably request in order to
perfect or protect the interest of the Purchaser in the RPA Interest purchased
hereunder or to enable the Purchaser to exercise or enforce any of its rights
hereunder. Without limiting the foregoing, the Seller will, in order to
accurately reflect this purchase and sale transaction, execute and file such
financing or continuation statements or amendments thereto or assignments
thereof (as permitted pursuant hereto) as may be requested by the Purchaser and
mark its master data processing records and other documents with a legend
describing the purchase by the Purchaser. The Seller shall, upon request of the
Purchaser, obtain such additional search reports as the Purchaser shall request.
To the fullest extent permitted by applicable law, the Purchaser shall be
permitted to sign and file continuation statements and amendments thereto and
assignments thereof without the Seller's signature. Carbon, photographic or
other reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement.
(d) It is the express intent of the Seller and the Purchaser that the
conveyance of the RPA Interest by the Seller to the Purchaser pursuant to this
Agreement be construed as a sale of such RPA Interest by the Seller to the
Purchaser. Further, it is not the intention of the Seller and the Purchaser
that such conveyance be deemed a grant of a security interest in the Receivables
by the Seller to the Purchaser to secure a debt or other obligation of the
Seller. However, in the event that, notwithstanding the intent of the parties,
the RPA Interest is construed to constitute property of the Seller, then (i)
this Agreement also shall be deemed to be, and hereby is, a security agreement
within the meaning of the UCC; and (ii) the conveyance by the Seller provided
for in this Agreement shall be deemed to be, and the Seller hereby grants to the
Purchaser, a security interest in, to and under all of the Seller's right, title
and interest in, to and under the Receivables outstanding on the Closing Date
and thereafter originated by the Seller, together with all Related Security and
Collections with respect thereto and all proceeds of the foregoing, to secure
the rights of the Purchaser set forth in this Agreement or as may be determined
in connection therewith
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<PAGE>
by applicable law (collectively, the "SECURED OBLIGATIONS"). The Seller and the
Purchaser shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Receivables, such security interest would be deemed to
be a perfected security interest in favor of the Purchaser under applicable law
and will be maintained as such throughout the term of this Agreement (subject
only to the security interest and rights in favor of the Administrative Secured
Party under the Master Security and Administration Agreement as provided
therein).
(e) The RPA Interest purchased by the Purchaser hereunder at all
times shall be subject to the security interest and rights in favor of the
Administrative Secured Party under the Master Security and Administration
Agreement as provided therein. All terms and provisions of the Master Security
and Administration Agreement which are binding or otherwise applicable to the
Seller, the Purchaser or the interests of either of them in the Receivables sold
hereunder or any portion thereof, and all rights and remedies with respect
thereto, are binding and applicable to the Seller and the Purchaser,
respectively. Neither the Seller nor the Purchaser shall be entitled to take or
cause to be taken any action with respect to the Receivables or any portion
thereof which otherwise is or would be prohibited or restricted by the Master
Security and Administration Agreement.
SECTION 2.2. SERVICING OF RECEIVABLES. The servicing, administering
and collection of the Receivables shall be conducted by the Seller, who hereby
agrees to perform, 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 and the Master Security and
Administration Agreement, and with the care and diligence which the Seller
employs in servicing similar receivables for its own account, in accordance with
the Credit and Collection Policy. The Purchaser hereby appoints the Seller as
its agent to enforce the Purchaser's rights and interests in, to and under the
Receivables, the Related Security and the Collections with respect thereto. The
Seller shall hold in trust for the Purchaser, in accordance with its interests,
all Records which evidence or relate to the RPA Interest or Related Security,
Collec-
6
<PAGE>
tions and proceeds with respect thereto. Notwithstanding anything to the
contrary contained herein, from and after the occurrence of a Termination Event
or a Potential Termination Event (each as defined in the Transfer Agreement),
unless otherwise provided in the Master Security and Administration Agreement,
NationsBank, N.A., as Agent, shall have the absolute and unlimited right to
terminate the Seller's servicing activities described in this Section 2.2. In
consideration of the foregoing, the Purchaser agrees to pay the Seller a
servicing fee of 0.50 percent per annum on the RPA Interest Percentage of the
aggregate Outstanding Balance of Receivables, payable monthly, for its
performance of the duties and obligations described in this Section 2.2. The
provisions of this Section 2.2 are expressly subject to the Master Security and
Administration Agreement.
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<PAGE>
ARTICLE III
CONSIDERATION AND PAYMENT; RPA INTEREST
SECTION 3.1. PURCHASE PRICE. The Purchase Price for the RPA Interest
and related property conveyed to the Purchaser by the Seller under this
Agreement shall be a dollar amount equal to (a) for the RPA Interest sold by
Seller on the Closing Date, the product of (i) the aggregate Outstanding Balance
of the Receivables as of the Closing Date, (ii) the initial RPA Interest
Percentage and (iii) one MINUS the then applicable Purchase Discount, and (b)
for any portion of the RPA Interest sold by the Seller on any date thereafter,
the product of (i) the aggregate Outstanding Balance of the Receivables with
respect to which such RPA Interest is sold on such date, (ii) the RPA Interest
Percentage in effect for such day and (iii) one MINUS the Purchase Discount
applicable on such date.
SECTION 3.2. PAYMENT OF PURCHASE PRICE. (a) The Purchase Price for
the RPA Interest shall be paid or provided for on the Closing Date with respect
to the RPA Interest in Receivables existing on the Closing Date and on the last
Business Day of each calendar month thereafter during which the RPA Interest is
sold hereunder in Receivables thereafter originated by the Seller, as the case
may be, by payment in immediately available funds of $111,579,000. The balance
of such Purchase Price shall be paid by capital contributed by the Seller to
Purchaser in the form of a contribution of the RPA Interest.
(b) The Purchase Price for any portion of the RPA Interest sold by the
Seller on any date after the date hereof shall be paid either (i) in cash or
(ii) if Purchaser does not have sufficient cash to pay the Purchase Price, by
means of (A) an advance under the Subordinated Note (each, an "ADVANCE") or (B)
with the consent of the Seller, capital contributed by the Seller to Purchaser
in the form of a contribution of the additional RPA Interest or (iii) with the
consent of the Seller, any combination of the foregoing. In the event Purchaser
does not have sufficient cash to pay the Purchase Price due on any Purchase Date
and the Seller is not willing to consent to the payment of such insufficiency by
means of a capital contribution, such insufficiency shall be evidenced by the
making of an Advance on such Purchase
8
<PAGE>
Date in an original principal amount equal to such cash shortfall owed to the
Seller; PROVIDED, HOWEVER, that the Seller shall not make an Advance to
Purchaser to the extent that the aggregate amount of outstanding Advances would
be an amount such that the net worth of the Purchaser would be less than 7.0% of
the RPA Interest (the "ADVANCE LIMIT"). All Advances made by the Seller to
Purchaser shall be evidenced by a single subordinated note, duly executed on
behalf of Purchaser, in substantially the form of Exhibit B annexed hereto,
delivered and payable to the Seller in a principal amount equal to the Advance
Limit thereunder (the "SUBORDINATED NOTE"). The Seller is hereby authorized by
Purchaser to endorse on the schedule attached to the Subordinated Note (or a
continuation of such schedule attached thereto and made a part thereof) an
appropriate notation evidencing the date and amount of each Advance, as well as
the date and amount of each payment with respect thereto; PROVIDED, HOWEVER,
that the failure of any Person to make such a notation shall not affect any
obligations of Purchaser thereunder. Any such notation shall be conclusive and
binding as to the date and amount of such Advance, or payment of principal or
interest thereon, absent manifest error. The RPA Interest with respect to which
the Purchase Price therefor is paid pursuant to either clause (i) or clause
(ii)(A) above is referred to herein as the "PURCHASED RPA INTEREST", and the RPA
Interest with respect to which the Purchase Price therefor is paid pursuant to
clause (ii)(B) above is referred to herein as the "CONTRIBUTED RPA INTEREST".
The Purchased RPA Interest and the Contributed RPA Interest are collectively
referred to herein as the "TRANSFERRED RPA INTEREST".
(c) The terms and conditions of the Subordinated Note and all
Advances thereunder shall be as follows:
(i) REPAYMENT OF ADVANCES. All amounts paid by the
Purchaser with respect to the Advances shall be allocated first to the repayment
of accrued interest until all such interest is paid, and then to the outstanding
principal amount of the Advances. Subject to the provisions of this Agreement,
the Purchaser may borrow, repay and reborrow Advances on and after the date
hereof and prior to the termination of this Agreement, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
require-
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ment that no Advance be made to the extent that after giving effect thereto the
aggregate outstanding principal amount of all Advances would exceed the Advance
Limit.
(ii) INTEREST. The Subordinated Note shall bear interest from
its date on the outstanding principal balance thereof at a rate per annum equal
to 5.00%. Interest on each Advance shall be computed based on the number of
days elapsed in a year of 360 days.
(iii) SOLE AND EXCLUSIVE REMEDY/SUBORDINATION. The Purchaser
shall be obligated to repay Advances to the Seller only to the extent of funds
available to the Purchaser from Collections on the RPA Interest and, to the
extent that such payments are insufficient to pay all amounts owing to the
Seller under the Subordinated Note, the Seller shall not have any claim against
the Purchaser for such amounts and no further or additional recourse shall be
available against Purchaser. The Subordinated Note shall be fully subordinated
to any rights of Enterprise and its permitted assigns pursuant to the Transfer
Agreement, and shall not evidence any rights in the RPA Interest.
(iv) OFFSETS, ETC. The Purchaser may offset any amount due and
owing by the Seller against any amount due and owing by Purchaser to the Seller
under the terms of the Subordinated Note.
SECTION 3.3. DETERMINATION OF THE RPA INTEREST. (a) By delivery of
the initial Ownership Certification under the Master Security and Administration
Agreement, the Seller shall notify the Purchaser and the Administrative Secured
Party of the initial RPA Interest Percentage. The RPA Interest Percentage as in
effect at any time shall represent the interest of the Purchaser in, to and
under each and every Receivable existing at such time.
(b) The RPA Interest Percentage shall remain constant until such time
as the Purchaser and the Seller mutually agree to a change in such percentage,
it being understood that neither the Purchaser nor the Seller shall be under any
obligation to agree to any change in such percentage at any time. Without
limiting the foregoing, no decrease in the RPA Interest Percentage shall be made
if, after giving effect thereto, a Termination
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Event under and as defined in the Transfer and Administration Agreement would
exist, and no increase to the RPA Interest Percentage shall be made if, after
giving effect thereto, an Event of Default under and as defined in the Financing
and Security Agreement would exist.
SECTION 3.4. MONTHLY REPORT. On the last Business Day of each
calendar month, the Seller shall deliver to the Purchaser a monthly report,
substantially in the form of Exhibit A attached hereto, showing (i) the
aggregate Purchase Price of the RPA Interest in Receivables acquired or
generated by the Seller in the preceding month and (ii) the aggregate
Outstanding Balance of such Receivables that are Eligible Receivables.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller
represents and warrants to the Purchaser as of the Closing Date and shall be
deemed to represent and warrant as of the date of the creation of any sale of
any interest in Receivables to the Purchaser pursuant to this Agreement that:
(a) CORPORATE EXISTENCE AND POWER. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted.
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The
execution, delivery and performance by the Seller of this Agreement, and each
other document or instrument to be delivered by the Seller hereunder
(collectively, "CONVEYANCE PAPERS"), are within its 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 2.1(c)), and do not contravene, or constitute a material
default under, any provision of applicable law or regulation or of the
Certificate of Incorporation or By Laws of the Seller, or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Seller
or result in the creation or imposition of any lien on assets of the Seller or
any of its respective Subsidiaries (except as contemplated by Section 2.1(c)).
(c) BINDING EFFECT. Each of the Conveyance Papers constitutes the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors' rights
generally (whether considered in a proceeding at law or in equity).
(d) PERFECTION. Immediately preceding each sale hereunder, the
Seller shall be the owner of all of
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the Receivables, free and clear of any Adverse Claims, except any Adverse Claim
created by, and any Permitted Subordinated Interest as defined in, the Master
Security and Administration Agreement. On or prior to the date of each sale
hereunder, all financing statements and other documents required to be recorded
or filed in order to protect the Purchaser's interest in the RPA Interest
against all creditors of and purchasers from Seller (other than any financing
statements or assignments of financing statements required to perfect the
Purchaser's interest hereunder), 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 Seller to the Purchaser for purposes of or in connection with this
Agreement, the Conveyance Papers or any transaction contemplated in connection
therewith is, and all such information hereafter furnished by the Seller to the
Purchaser will be, true and accurate in every material respect, on the date such
information is stated or certified.
(f) TAX RETURNS. The Seller 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 government charges due and
payable.
(g) ACTION, SUITS. There are no actions, suits or proceedings
pending, or to the knowledge of the Seller threatened, against or affecting the
Seller or any Affiliate of the Seller or their respective properties, in or
before any court, arbitrator or other body, which individually or in the
aggregate, could be reasonably expected to materially adversely affect the
financial condition of the Seller and its subsidiaries taken as a whole or
materially adversely affect the ability of Seller to perform its obligations
under this Agreement.
(h) USE OF PROCEEDS. No proceeds of any sale hereunder will be used
by the Seller to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
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(i) PLACE OF BUSINESS. The principal place of business and chief
executive office of the Seller is Dallas, Texas and the offices where the Seller
keeps all its Records, are located at the address(es) described on Exhibit G to
the Transfer Agreement or such other locations notified to the Purchaser in
accordance with Sections 2.1(b) in jurisdictions where all action required by
Section 2.1(b) has been taken and completed.
(j) GOOD TITLE. Prior to any sale hereunder, the Seller shall have
all right, title and interest in, to and under each Receivable, free and clear
of any Adverse Claim, except any Adverse Claim created by, and any Permitted
Subordinated Interest as defined in, the Master Security and Administration
Agreement. Upon the consummation of each sale hereunder, the Seller shall have
transferred to the Purchaser an undivided interest in all right, title and
interest of the Seller in, to and under each Receivable that exists on the date
of such sale and in the Related Security and Collections with respect thereto to
the extent of the RPA Interest Percentage free and clear of any Adverse Claim,
except any Adverse Claim created by, and any Permitted Subordinated Interest as
defined in, the Master Security and Administration Agreement. No Person to
which the Seller has granted a security interest in inventory shall have a
security interest in any Receivable, except any such security interest which
shall be a Permitted Subordinated Interest as defined in the Master Security and
Administration Agreement or as shall otherwise be consented to in writing by the
Purchaser and, for so long as the Transfer Agreement shall be in effect, the
Agent.
(k) TRADENAMES, ETC. The Seller has not used any corporate names,
tradenames or assumed names other than its name set forth on the signature pages
of this Agreement 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).
(l) NATURE OF RECEIVABLES. Each Receivable an interest in which is
reported by the Seller to be included in the RPA Interest which is reported as
being an Eligible Receivable shall satisfy the definition of "Eligible
Receivable".
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(m) AMOUNT OF RECEIVABLES. As of the close of business on the
second Business Day prior to the Closing Date, the aggregate Outstanding Balance
of the Receivables in existence shall be as set forth in the certification of
the Seller required to be delivered pursuant to Section 7.1(f).
(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 or in the ability of the Seller to service and collect the
Receivables.
(o) 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).
(p) NO RESTRICTION ON TRANSFER. No Contract requires the prior
written consent of an Obligor or contains any other restriction relating to the
transfer or assignment of rights of payment under such Contract (other than a
consent or waiver of such restriction that has been obtained prior to the
related Purchase Date).
(q) NOT AN INVESTMENT COMPANY. The Seller 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. The Seller is in compliance in all material respects with
ERISA and no ERISA lien on any of the Receivables shall exist.
(s) LOCKBOXES. The account numbers of the Lockboxes have been
provided to the Administrative Secured Party in accordance with the Master
Security and Administration Agreement. All Obligors have been instructed to
make payment directly to Lockboxes in accordance with the Master Security and
Administration Agreement.
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(t) NO TERMINATION EVENT. No Termination Event, and no condition
that, with the giving of notice and/or the passage of time would constitute a
Termination Event, has occurred and is continuing.
SECTION 4.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES BY THE
SELLER; NOTICE OF BREACH. On each sale date, the Seller, by accepting the
proceeds of such sale, shall be deemed to have certified that all
representations and warranties described in Section 4.1 are true and correct on
and as of such day as though made on and as of such day. The representations
and warranties set forth in Section 4.1 shall survive the conveyance of the RPA
Interest to the Purchaser, and termination of the rights and obligations of the
Purchaser and the Seller under this Agreement. Upon discovery by the Purchaser
or the Seller of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other within three Business Days of such discovery.
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ARTICLE V
COVENANTS OF THE SELLER
SECTION 5.1. COVENANTS OF THE SELLER. The Seller hereby covenants
and agrees with the Purchaser that, for so long as this Agreement is in effect,
and until all Receivables an interest in which has been sold to the Purchaser
pursuant hereto shall have been paid in full or written-off as uncollectible,
and all amounts owed by the Seller pursuant to this Agreement have been paid in
full, unless the Purchaser otherwise consents in writing, the Seller covenants
and agrees as follows:
(a) CONDUCT OF BUSINESS. The Seller 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 will maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted.
(b) COMPLIANCE WITH LAWS. The Seller 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.
(c) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. The Seller
will furnish to the Purchaser from time to time such information with respect to
the Receivables as the Purchaser may reasonably request, including, without
limitation, listings identifying the Obligor and the Outstanding Balance for
each Receivable. The Seller will at any time and from time to time during
regular business hours permit the Purchaser, 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 the Seller for the purpose of examining such
Records, and to discuss matters relating to Receivables or the Seller's
performance hereunder with any of the officers, directors, employees or
independent public accountants of the Seller having knowledge of such matters.
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(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Seller will
maintain a system of accounting established and administered in accordance with
generally accepted accounting principles, consistently applied, and will
maintain for each of its Subsidiaries, a system of accounting established and
administered in accordance with accounting practices currently used by its
Subsidiaries, consistently applied, and 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, or obtain, as and
when required, 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).
The Seller will give the Purchaser prompt notice of any change in the
administrative and operating procedures referred to in the previous sentence to
the extent such change may have a material adverse effect.
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. The
Seller at its expense will, and will cause each of its Subsidiaries to, 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.
(f) CREDIT AND COLLECTION POLICY. The Seller will comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
(g) COLLECTIONS. The Seller shall instruct all Obligors to cause all
Collections to be deposited directly to a Lockbox in accordance with the terms
of the Master Security and Administration Agreement.
(h) COLLECTIONS RECEIVED. Any and all Collections at any time coming
into the Seller's possession shall be delivered to the Administrative Secured
Party in accordance with the requirements of the Master Security and
Administration Agreement. All proceeds of Collections in respect of the RPA
Interest at any time coming into the Seller's possession shall be held in trust
for
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the Purchaser and applied as required by the Transfer Agreement.
(i) SALE TREATMENT. The Seller agrees to treat this conveyance for
all purposes (including, without limitation, tax and financial accounting
purposes) as a sale and, to the extent any such reporting is required, shall
report the transactions contemplated by this Agreement on all relevant books,
records, tax returns, financial statements and other applicable documents as a
sale of the RPA Interest to the Purchaser.
(j) NO SALES, LIENS, ETC. Except as otherwise provided herein and
except for any Adverse Claim created by, and any Permitted Subordinated Interest
as defined in, the Master Security and Administration Agreement, the Seller will
not, and will not permit any of its Subsidiaries to, sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon (or the filing of any financing statement) or with respect
to, any Receivable, Related Security or Collections (subject, in each case with
respect to Related Security constituting returned inventory, to the applicable
provisions of Section 9-306 of the UCC) or upon or with respect to any Lockbox
to which any Collections of any Receivable are sent, or, in each case, assign
any right to receive income in respect thereof. Except for any Permitted
Subordinated Interest as defined in the Master Security and Administration
Agreement, the Seller will not, and will not permit any of its Subsidiaries to,
grant or suffer to exist any security interest in any inventory unless such
security interest (and related UCC financing statement or other related filing)
expressly excludes Receivables, Related Security (other than returned inventory)
and Collections. The Seller will provide the Purchaser and the Agent with a
copy of any inventory financing agreement at least three Business Days prior to
the effectiveness thereof.
(k) NO EXTENSION OR AMENDMENT OF RECEIVABLES. The Seller 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, except as
provided in the Transfer Agreement or in the Master Security and Administration
Agreement, without the prior written consent of the Purchaser.
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(l) NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY; CERTAIN
CONTRACTS. Except as provided in the Transfer Agreement or in the Master
Security and Administration Agreement, the Seller will not make any change in
the Credit and Collection Policy, which change might impair the collectibility
of any Receivable.
(m) NO MERGERS, ETC. The Seller will not (i) consolidate or merge
with or into any other Person, or (ii) sell, lease or transfer all or
substantially all of its assets to any other Person; PROVIDED, that the Seller
may merge with another Person if the Seller is the surviving corporation and
such merger or consolidation does not cause a Termination Event or Potential
Termination Event under the Transfer Agreement.
(n) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. The Seller will not
add or terminate, or make any change to, any Lockbox except in accordance with
the Master Security and Administration Agreement.
(o) DEPOSITS TO LOCKBOXES. The Seller 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.
(p) CHANGE OF NAME, ETC. The Seller shall not change its name,
identity or structure or its chief executive office, unless at least ten (10)
days prior to the effective date of any such change the Seller delivers to the
Purchaser and the Administrative Security Party (i) UCC financing statements,
executed by the Seller, necessary to reflect such change and to continue the
perfection of the Purchaser's interest in the RPA Interest and (ii) new or
revised Lock-Box Agreements which reflect such change and enable the
Administrative Secured Party to exercise its rights under the Transfer
Agreement.
(q) INDEMNIFICATION. The Seller agrees to indemnify, defend and hold
the Purchaser harmless from and against any and all loss, liability, damage,
judgment, claim, deficiency, or expense (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement) to which the
Purchaser may become subject insofar as such loss, liability, damage, judgment,
claim, deficiency, or expense arises out of or is based upon a
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breach by the Seller of its representations, warranties and covenants contained
herein, or any information certified in any schedule or certificate delivered by
the Seller hereunder or in connection with the Conveyance Papers, being untrue
in any material respect at any time. The obligations of the Seller under this
Section 5.1(q) shall be considered to have been relied upon by the Purchaser and
shall survive the execution, delivery, performance and termination of this
Agreement for a period of three (3) years following the Termination Date,
regardless of any investigation made by the Purchaser.
(r) ERISA. The Seller shall promptly give the Purchaser written
notice upon becoming aware that the Seller is not in compliance in all material
respects with ERISA or that any ERISA lien on any of the Receivables exists.
(s) INVENTORY. The Seller shall on or prior to April 25, 1996 obtain
written confirmation, in form and substance acceptable to the Purchaser and the
Agent, from each of Apple Computer, Inc. and Compaq Computer Corporation that
any security interest in inventory granted to such Person by the Seller does not
extend to accounts receivable created upon the sale of inventory in which such
Person has a security interest.
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ARTICLE VI
REPURCHASE OBLIGATION
SECTION 6.1. MANDATORY REPURCHASE.
(a) BREACH OF WARRANTY. If on any day a Receivable, an RPA
Interest in which has been sold by the Seller hereunder and which has been
reported by the Seller as an Eligible Receivable, shall fail to meet the
conditions set forth in the definition of Eligible Receivable or for which any
representation or warranty made herein in respect of such Receivable shall no
longer be true, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full and shall on such day pay to the Purchaser
an amount equal to the RPA Interest Percentage of the Outstanding Balance of
such Receivable.
(b) RECONVEYANCE UNDER CERTAIN CIRCUMSTANCES. The Seller agrees
that, with respect to any Receivable an interest in which has been sold
hereunder, in the event of a breach of any of the representations and warranties
set forth in Sections 4.1(d), 4.1(e), 4.1(g), 4.1(j), 4.1(l), 4.1(h), 4.1(o),
4.1(p) and 4.1(q), the Seller agrees to accept the reconveyance of the RPA
Interest in such Receivable created on and after the date of such breach upon
receipt by the Seller of notice given in writing by the Purchaser and the
Seller's failure to cure such breach within thirty (30) days (or, in the case of
representations and warranties found in Sections 4.1(d) and 4.1(j), within three
(3) days) of such notice. In the event of a reconveyance under this Section
6.1(b), the Seller shall pay to the Purchaser in immediately available funds on
such 30th day (or third day, if applicable) an amount equal to the RPA Interest
Percentage of the Outstanding Balance of any such Receivables.
SECTION 6.2. DILUTIONS, ETC. The Seller agrees that if on any day
the Outstanding Balance of a Receivable an interest in which has been sold by
the Seller hereunder is either (x) reduced as a result of defective, rejected or
returned goods 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
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unrelated transaction), then the Seller shall be deemed to have received on such
day a collection of such Receivable in the amount of such reduction,
cancellation or payment made by the Obligor and shall on such day pay to the
Purchaser the RPA Interest Percentage of the amount of such reduction or
cancellation.
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ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO THE PURCHASER'S OBLIGATIONS REGARDING
RECEIVABLES. The obligations of the Purchaser to purchase any interest in any
Receivable on any Business Day shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Seller contained in
this Agreement shall be true and correct on the Closing Date and on the day of
creation of any Receivable thereafter with the same effect as though such
representations and warranties had been made on such date;
(b) All information concerning the Receivables provided to the
Purchaser shall be true and correct in all material respects as of the Closing
Date, in the case of any Receivables an RPA Interest in which is sold to the
Purchaser on the Closing Date, or the date such Receivables are created, in the
case of any Receivables an interest in which is created after the Closing Date;
(c) The Seller shall have substantially performed all other
obligations required to be performed by the provisions of this Agreement;
(d) The Seller shall have either filed or caused to be filed the
financing statement(s) required to be filed pursuant to Section 2.1(b);
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Purchaser, and the Purchaser shall
have received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Purchaser may reasonably have requested; and
(f) On the Closing Date, the Seller shall deliver to the Purchaser a
certification of the aggregate Outstanding Balance of the Receivables in
existence as of
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the close of business on the second Business Day prior to the Closing Date.
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ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1. TERM. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the date following the earlier of (i) the date designated by the Purchaser or
the Seller as the termination date at any time following sixty (60) day's
written notice to the other (with a copy thereof to Enterprise), (ii) the date
on which the Agent declares a Termination Event or Potential Termination Event
pursuant to Section 7.2 of the Transfer Agreement, (iii) the day on which a
Reinvestment Termination Date shall occur under the Transfer Agreement unless
the Transferred Interest shall have been assigned (or concurrently is so
assigned) to the Bank Investors under Section 9.7 of the Transfer Agreement,
(iv) upon the occurrence of an Event of Bankruptcy with respect to either the
Purchaser or the Seller or (v) the date on which either the Purchaser or the
Seller becomes unable for any reason to purchase or re-purchase the interest of
the Purchaser in any Receivable in accordance with the provisions of this
Agreement or defaults on its obligations hereunder, which default continues
unremedied for more than thirty (30) days after written notice (any such date
being a "TERMINATION DATE"); PROVIDED, HOWEVER, that the termination of this
Agreement pursuant to this Section 8.1 hereof shall not discharge any Person
from any obligations incurred prior to such termination, including, without
limitation, any obligations to make any payments with respect to the interest of
the Purchaser in any Receivable sold prior to such termination.
SECTION 8.2. EFFECT OF TERMINATION. Following the termination of this
Agreement pursuant to Section 8.1, the Seller shall not sell, and the Purchaser
shall not purchase any interests in any Receivables. No termination or
rejection or failure to assume the executory obligations of this Agreement in
any Event of Bankruptcy with respect to the Seller or the Purchaser shall be
deemed to impair or affect the obligations pertaining to any executed sale or
executed obligations, including, without limitation, pre-termination breaches of
representations and warranties by the Seller or the Purchaser. Without limiting
the foregoing, prior to termination, the failure of the Seller to deliver
computer records of
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Receivables or any reports regarding the Receivables shall not render such
transfer or obligation executory, nor shall the continued duties of the parties
pursuant to Article V of this Agreement render an executed sale executory.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. AMENDMENT. This Agreement and any other Conveyance
Papers and the rights and obligations of the parties hereunder may not be
changed orally, but only by an instrument in writing signed by the Purchaser and
the Seller. Any reconveyance executed in accordance with the provisions hereof
shall not be considered amendments to this Agreement.
SECTION 9.2. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) The parties hereto hereby submit 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 party hereto 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 9.2
shall affect the right of the Purchaser to bring any other action or proceeding
against the Seller or its property in the courts of other jurisdictions.
SECTION 9.3. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to:
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(a) in the case of the Purchaser:
CSI Funding Inc.
10100 North Central Expressway
Dallas, Texas 75231
Attention: Mr. Dan Lane, Vice President
and Secretary
Telecopy: (214) 265-5449
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 10th Floor
Charlotte, NC 28255
Attention: Michelle M. Heath
Investment Banking
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
(b) in the case of the Seller:
CompuCom Systems, Inc.
10100 North Central Expressway
Dallas, Texas 75231
Attention: Mr. Dan Celoni, Treasurer
Telecopy: (214) 265-5449
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION 9.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any other
Conveyance Paper shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions, or terms shall be deemed severable from the
remaining covenants, agreements, provisions, or terms of this Agreement or any
other Conveyance Paper and shall in no way affect the validity or enforceability
of the other provisions of this Agreement or of any other Conveyance Paper.
SECTION 9.5. ASSIGNMENT. This Agreement and all other Conveyance
Papers may not be assigned by the parties hereto, except that the Purchaser may
assign its rights hereunder pursuant to the Transfer Agreement to the Agent for
the benefit of Enterprise and the Bank
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Investors. The Purchaser hereby notifies (and the Seller hereby acknowledges
that) the Purchaser, pursuant to the Transfer Agreement, has assigned its rights
hereunder to the Agent. All rights of the Purchaser hereunder may be exercised
by the Agent or its assignees, to the extent of their respective rights pursuant
to such assignments.
SECTION 9.6. FURTHER ASSURANCES. The Purchaser and the Seller agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the other party more
fully to effect the purposes of this Agreement and the other Conveyance Papers,
including, without limitation, the execution of any financing statements or
continuation statements or equivalent documents relating to the RPA Interest for
filing under the provisions of the UCC or other laws of any applicable
jurisdiction.
SECTION 9.7. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Purchaser, the Seller or
Enterprise, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.
SECTION 9.8. COUNTERPARTS. This Agreement and all other Conveyance
Papers may be executed in two or more counterparts including telecopy
transmission thereof (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 9.9. BINDING EFFECT; THIRD-PARTY BENEFICIARIES. This
Agreement and the other Conveyance Papers will inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Any Permitted Assignee, including Enterprise and any Bank Investor, is
intended by the parties hereto to be a third-party beneficiary of this
Agreement.
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SECTION 9.10. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement and the other Conveyance Papers set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the other Conveyance Papers. This Agreement and the other Conveyance Papers may
not be modified, amended, waived or supplemented except as provided herein.
SECTION 9.11. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 9.12. EXHIBITS. The schedules and exhibits referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.
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IN WITNESS WHEREOF, the Purchaser and the Seller each have caused this
Receivables Purchase Agreement to be duly executed by their respective officers
as of the day and year first above written.
COMPUCOM SYSTEMS, INC., as Seller
By: /s/ Robert J. Boutin
--------------------------------
Name: Robert J. Boutin
Title: Senior Vice President
CSI FUNDING INC., as Purchaser
By: /s/ Robert J. Boutin
------------------------------
_ Name: Robert J. Boutin
Title: President
Acknowledged and agreed as
of the date first above written:
ENTERPRISE FUNDING CORPORATION
By: /s/ Martin J. McInerney
------------------------------
Name: Martin J. McInerney
Title: Vice President
NATIONSBANK, N.A., as Agent
By: /s/ Michelle M. Heath
------------------------------
Name: Michelle M. Heath
Title: Vice President
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRANSFER AND ADMINISTRATION AGREEMENT
BY AND AMONG
CSI FUNDING INC.,
as Transferor,
COMPUCOM SYSTEMS, INC.,
as Collection Agent,
ENTERPRISE FUNDING CORPORATION,
as Company,
AND
NATIONSBANK, N.A.,
as Agent
Dated as of April 1, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Terms . . . . . . . . . . . . . . . . . . . . 25
SECTION 1.3. Computation of Time Periods . . . . . . . . . . . . 26
ARTICLE II
TRANSFERS AND SETTLEMENTS
SECTION 2.1. Facility. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.2. Transfers; Company Certificate;
Eligible Receivables. . . . . . . . . . . . . . . . 27
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 . . . . . . . . . . . . . . 31
SECTION 2.6. Liquidation Settlement Procedures . . . . . . . . . 32
SECTION 2.7. Fees. . . . . . . . . . . . . . . . . . . . . . . . 33
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. . . . . . . . . . . 36
SECTION 2.11. Reports.. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.12. Collection Account. . . . . . . . . . . . . . . . . 36
SECTION 2.13. Call Provision. . . . . . . . . . . . . . . . . . . 37
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. . . . . . . . . . . 38
SECTION 3.2. Reaffirmation of Representations
and Warranties by the Transferor. . . . . . . . . . 42
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing.. . . . . . . . . . . . . . . 43
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of each
of Transferor and the Collection Agent. . . . . . . 46
SECTION 5.2. Negative Covenants. . . . . . . . . . . . . . . . . 51
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent . . . . . . . . . . 54
SECTION 6.2. Duties of Collection Agent. . . . . . . . . . . . . 54
SECTION 6.3. Rights After Designation of New
Collection Agent. . . . . . . . . . . . . . . . . . 57
SECTION 6.4. Responsibilities of each of the
Transferor and CompuCom . . . . . . . . . . . . . . 58
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events. . . . . . . . . . . . . . . . . 59
SECTION 7.2. Termination . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses. . . . . 65
SECTION 8.3. Other Costs, Expenses and Related Matters . . . . . 68
SECTION 8.4. Reconveyance Under Certain Circumstances. . . . . . 68
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Page
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ARTICLE IX
THE AGENT AND THE BANK COMMITMENT
SECTION 9.1. Authorization and Action. . . . . . . . . . . . . . 70
SECTION 9.2. Agent's Reliance, Etc.. . . . . . . . . . . . . . . 71
SECTION 9.3. Credit Decision . . . . . . . . . . . . . . . . . . 72
SECTION 9.4. Indemnification of the Agent. . . . . . . . . . . . 73
SECTION 9.5. Successor Agent . . . . . . . . . . . . . . . . . . 73
SECTION 9.6. Payments by the Agent . . . . . . . . . . . . . . . 74
SECTION 9.7. Bank Commitment; Assignment to Bank Investors . . . 74
SECTION 9.8 Master Security and Administration Agreement. . . . 78
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Term of Agreement . . . . . . . . . . . . . . . . . 80
SECTION 10.2. Waivers; Amendments . . . . . . . . . . . . . . . . 80
SECTION 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.4. Governing Law; Submission to
Jurisdiction; Integration . . . . . . . . . . . . . 82
SECTION 10.5. Severability; Counterparts. . . . . . . . . . . . . 82
SECTION 10.6. Successors and Assigns. . . . . . . . . . . . . . . 83
SECTION 10.7. [RESERVED]. . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.8. Confidentiality . . . . . . . . . . . . . . . . . . 83
SECTION 10.9. No Bankruptcy Petition Against the Company. . . . . 84
SECTION 10.10. Limited Recourse; Waiver of Setoff. . . . . . . . . 84
SECTION 10.11. Grant of Security Interest. . . . . . . . . . . . . 85
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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
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TRANSFER AND ADMINISTRATION AGREEMENT
TRANSFER AND ADMINISTRATION AGREEMENT (as amended, supplemented or
otherwise modified and in effect from time to time, this "AGREEMENT"), dated as
of April 1, 1996, among CSI FUNDING INC., a Delaware corporation, as transferor
(in such capacity, the "TRANSFEROR"), COMPUCOM SYSTEMS, INC., a Delaware
corporation, as collection agent (in such capacity, the "COLLECTION AGENT"),
ENTERPRISE FUNDING CORPORATION, a Delaware corporation (the "COMPANY") and
NATIONSBANK, N.A., as agent for the benefit of the Company and the Bank
Investors (the "AGENT").
PRELIMINARY STATEMENT
WHEREAS, the Transferor desires to convey, transfer and assign, from
time to time, undivided percentage interests in the RPA Interest, and the
Company desires to accept such conveyance, transfer and assignment of such
undivided percentage interests, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ADVERSE CLAIM" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
<PAGE>
"ADMINISTRATIVE SECURED PARTY" means NationsBank of Texas, N.A., and
its successors and permitted assigns pursuant to the Master Security and
Administration Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
directly or 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 Obligor.
"AGENT" means NationsBank, N.A., in its capacity as agent for the
Company 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) 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.
"ARRANGEMENT FEE" means the fee payable by the Transferor to the Agent
pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"ASSIGNMENT" shall have the meaning specified in Section 9.7(a).
"ASSIGNMENT AMOUNT" with respect to a Bank Investor shall mean an
amount 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 to Article IX.
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"BASE RATE" or "BR" means, a rate per annum equal to the greater of
(i) the 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
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
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 Rate.
"BR TRANCHE PERIOD" means, with respect to a BR Tranche, prior to the
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 as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with generally accepted accounting principles.
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"CD RATE" shall mean, with respect to any CD Tranche Period, a rate
which 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 Regulation 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 Rate.
"CD TRANCHE PERIOD" means, with respect to a CD Tranche, 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 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, 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
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which such CD Rate is to be applicable and with a maturity approximately equal
to the applicable CD Tranche Period.
"CLOSING DATE" means the effective date of the initial Ownership
Certification under the Master Security and Administration Agreement.
"COLLATERAL AGENT" has the meaning specified in Section 10.6(b).
"COLLECTIONS" means, with respect to any Receivable, all cash
collections 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 Transferor and maintained at NationsBank, N.A.
"COLLECTION AGENT" means at any time the Person then authorized
pursuant to Section 6.1 to service, administer and collect Receivables.
"COMMERCIAL PAPER" means the promissory notes of the Company issued by
the Company in the commercial paper market.
"COMMITMENT" means for each Bank Investor, the commitment of such Bank
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 April 2, 1997, or such later date
to which the Commitment Termination Date may be extended by the Transferor, the
Agent and the Bank Investors not later than sixty (60) days prior to the then
current Commitment Termination Date.
"COMPANY CERTIFICATE" means the certificate issued to the Company
pursuant to Section 2.2 hereof.
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"COMPUCOM" means CompuCom Systems, Inc., a Delaware corporation, and
its successors and assigns.
"CONCENTRATION AMOUNT" means for any Designated Obligor, (a) 2% of the
product of (x) the RPA Interest Percentage and (y) the aggregate Outstanding
Balance of Eligible Receivables at such time; PROVIDED, HOWEVER, that with
respect to any Designated Obligor and its affiliates whose long term unsecured
debt obligations are rated at least "A1" by Moody's and at least "A+" by
Standard & 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 product of
(x) the RPA Interest Percentage and (y) the aggregate 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 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 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 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 Rate.
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"CP TRANCHE PERIOD" means, with respect to a CP Tranche, a period of
days 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 policy or policies and 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 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 will provide
credit 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 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 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
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 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 part thereof, remains unpaid for 91 days or more from the original
due date for such
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<PAGE>
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 ratio (expressed as a percentage) 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, 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, 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
(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 (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.
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"DISCOUNT" means, with respect to any Tranche Period:
(TR x TNI x AD)
---
360
Where:
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
or permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Discount shall not be considered
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:
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
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.
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"ELIGIBLE INVESTMENTS" shall mean (a) negotiable instruments or
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 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 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:
(i) which is subject to a valid sale and assignment of the RPA
Interest from CompuCom
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to the Transferor under the Receivables Purchase Agreement and
with respect to which interest the Transferor has agreed to
transfer, or has transferred to the Company, good title to a
portion of such RPA Interest pursuant to this Agreement thereto,
free and clear of all liens (except as permitted pursuant to the
Master Security and Administrative Agreement);
(ii) which is subject to a valid first perfected security interest and
assignment from CompuCom to the Administrative Secured Party
pursuant to the Master Security and Administration Agreement;
(iii) the Obligor, who is 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;
(iv) 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.;
(v) which is not a Defaulted Receivable at the time of the initial
creation of an interest in such Receivable;
(vi) which is an "eligible asset" as defined in Rule 3a-7 under the
Investment Company Act of 1940, as amended;
(vii) which is not more than 30 days delinquent at the time of initial
creation of an interest in such Receivable;
(viii) which is an "account" within the meaning of Section 9-106 of the
UCC of all applicable jurisdictions;
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(ix) which is denominated and payable only in United States dollars in
the United States;
(x) 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;
(xi) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto;
(xii) 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;
(xiii) which was generated in the ordinary course of CompuCom's business
and represents amounts payable in respect of goods delivered or
services performed;
(xiv) the Obligor of which has been directed to make all payments to a
Lockbox in accordance with the Master Security and Administration
Agreement; and
(xv) 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,
rounded upward to the nearest whole
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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 normal accounting practices applied on a basis consistent with
those reflected in CompuCom's financial statements; PROVIDED, HOWEVER, that if
the Company shall 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 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 the Eurodollar Rate.
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"EURODOLLAR TRANCHE PERIOD" means, with respect to a Eurodollar
Tranche, 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 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 such Eurodollar Tranche Period would expire on (a) a day which is not a
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 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.
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"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 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
15
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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.
"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.
EM = the Estimated Maturity Period of the Receivables.
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"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" has the meaning specified in the definition of "Lockbox" in
the Master Security and Administration Agreement.
"LOCK-BOX AGREEMENT" has the meaning specified in the Master Security
and Administration Agreement.
"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.
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 $7,500,000.
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"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).
"MASTER SECURITY AND ADMINISTRATION AGREEMENT" means that certain
Master Security and Administration Agreement, dated as of April 1, 1996, by and
among CompuCom, the Administrative Secured Party, the Transferor, NationsBank of
Texas, N.A. and the Company, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"MAXIMUM NET INVESTMENT" means $100,000,000.
"MAXIMUM PERCENTAGE FACTOR" means 98%.
"MOODY'S" means Moody's Investors Service, Inc.
"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).
"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 In-
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vestment may be increased by the amount described in Section 9.7(g) as
described therein.
"NET RECEIVABLES BALANCE" means, at any time, the RPA Interest
Percentage of (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 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 (this clause (iv) calculated in the aggregate for all
Designated Obligors).
"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 arbitrator, 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.
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"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 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 Per-
20
<PAGE>
centage 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 RPA 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 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,
an RPA Interest in which shall have been sold to the Transferor pursuant to the
Receivables Purchase Agreement (without giving effect to any purchase hereunder
by the Company at any time) 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.
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<PAGE>
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 that certain Receivables
Purchase Agreement, dated as of April 1, 1996, 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), if any, the
sale of which by CompuCom gave rise to such 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;
22
<PAGE>
(iv) all Records; and
(v) all proceeds (as defined in Section 9-306 of the UCC)
of the foregoing.
"RPA INTEREST" means the undivided interest in all Receivables,
Related Security and Collections thereof sold by CompuCom to the Transferor
pursuant to the Receivables Purchase Agreement, which shall at any time equal
the RPA Interest Percentage of the Outstanding Balance of all Receivables.
"RPA INTEREST PERCENTAGE" means, on any date of determination, the
percentage, determined pursuant to Section 3.3 of the Receivables Purchase
Agreement, representing the undivided interest of the Transferor in, to and
under each and every Receivable existing at such time. Prior to the occurrence
of a Termination Event, the RPA Interest Percentage shall be recalculated by the
Collection Agent for each calendar month and shall be reported to the Agent in
the first weekly report of each month delivered to the Agent pursuant to Section
2.11(b). Following the occurrence of a Termination Event, the RPA Interest
Percentage shall remain fixed as of the date of the occurrence of the
Termination Event.
"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 RPA Interest 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.
"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
23
<PAGE>
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) April 1, 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.
"TRANSACTION COSTS" has the meaning specified in Section 8.3(a).
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<PAGE>
"TRANSACTION DOCUMENTS" means this Agreement, the Receivables Purchase
Agreement, the Master Security and Administration Agreement and all documents
related thereto.
"TRANSFER" means a conveyance, transfer and assignment by the
Transferor to the Company of a portion of the RPA 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 the RPA 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 RPA Interest,
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 1.2. OTHER TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Master Security and Administration Agreement. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC in the
State of
25
<PAGE>
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 1.3. 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
<PAGE>
ARTICLE II
TRANSFERS AND SETTLEMENTS
SECTION 2.1. 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 RPA Interest from time to time.
SECTION 2.2. 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 RPA Interest, 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 RPA Interest 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 RPA Interest by notice given to the Transferor by
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
27
<PAGE>
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 agreement 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
28
<PAGE>
undivided percentage ownership interests in the RPA Interest, 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 RPA Interest then existing and
which arises at any time after the date of such Transfer. The Company's
aggregate undivided percentage ownership interest in the RPA Interest 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 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 2.3. SELECTION OF TRANCHE PERIODS AND TRANCHE RATES.
29
<PAGE>
(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 RPA Interest 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 Liquidity 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.
30
<PAGE>
SECTION 2.4. 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 2.5. 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 RPA Interest Percentage of 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 the RPA Interest Percentage of Collections remaining after application
of the RPA Interest Percentage of Collections as provided in clause (i) of this
Section 2.5 to the Transferor, for the benefit of the Company to the purchase of
additional undivided percentage interests in the RPA Interest 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
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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 2.6. 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 in respect of the RPA
Interest, 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 in respect of the RPA
Interest 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
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
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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 RPA Interest (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 RPA
Interest. Any such documents shall be prepared by or on behalf of the
Transferor.
SECTION 2.7. 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 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
Arrangement Fee as set forth in the Fee Letter.
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SECTION 2.8. 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 or the Administrative Secured Party
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 name or location shall be made at the expense of Transferor.
(b) The Collection Agent shall instruct all Obligors to remit
all Collections in accordance with the Master Security and Administration
Agreement. The provisions of this Section 2.8 are expressly subject to
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the terms of the Master Security and Administration Agreement.
SECTION 2.9. 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 the
RPA Interest Percentage of such reduction or cancellation, and the Transferor
shall pay to the Collection Agent an amount equal to the Percentage Factor of
the RPA Interest in 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 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 the RPA Interest in 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 RPA Interest in
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) At any time following the termination of the Master Security
and Administration Agreement, 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 the RPA
Interest in any Receivable of such Obligor included in the Trans-
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ferred 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 2.10. 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 Provider or
the Credit Support Provider shall be binding absent manifest error.
SECTION 2.11. 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 RPA Interest Percentage for such calendar month, the RPA Interest, 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 2.12. 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 "COL-
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LECTION 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 RPA
Interest in Collections; 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 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.
SECTION 2.13. CALL PROVISION. Upon thirty (30) days' prior written
notice to the Agent, the Transferor shall have the right to purchase the
Transferred Interest from the Company for a price equal to all Aggregate Unpaids
at such time. Such purchase price shall be paid in immediately available funds
in the manner specified in Section 2.10.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. 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 and binding obligation of the
Transferor, enforceable in
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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 RPA Interest, free and clear of all
liens, encumbrances, security interests, preferences or other security
arrangement of any kind or nature whatsoever, except for those liens created
pursuant to the transactions contemplated hereby and Permitted Subordinated
Interests as defined in the Master Security and Administration Agreement and
subject to the terms of the Master Security and Administration Agreement. On or
prior to the sale of the RPA Interest 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.
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(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
threatened, 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 RPA
Interest free and clear of any Adverse Claim (subject to the provisions of the
Master Security and Administration Agreement).
(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
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proceeding under Title 11, United States Code (Bankruptcy), except as disclosed
in Exhibit H hereto.
(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. The RPA Interest in the
Receivables is not less than the sum of the (i) Net Investment, (ii) Discount
Reserve, (iii) Dilution Reserve, (iv) Loss Reserve and (v) Servicing Fee
Reserve. As of March 31, 1996, the aggregate Outstanding Balance of the
Receivables in existence was $260,957,215 and the Net Receivables Balance was
$237,268,215.
(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 account numbers of the Lockboxes have been
provided to the Administrative
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Secured Party in accordance with the Master Security and Administration
Agreement. All Obligors have been instructed to make payment to a Lockbox in
accordance with the Master Security and Administration Agreement.
(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 3.2. 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.
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. 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 financing statements (Form UCC-1), dated a
date reasonably near to the date of the initial Incremental Transfer 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-
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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 RPA Interest.
(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 or the RPA Interest previously granted by either the
Transferor or CompuCom, except those evidenced by or permitted by the terms of
the Master Security and Administration Agreement and the other Permitted
Subordinated Interests (defined therein).
(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, except for
filings pursuant to the Master Security and Administration Agreement, shall
cover any Receivables or Contracts).
(h) Executed copies of the Lock-Box Agreements, the Receivables
Purchase Agreement and the Master Security and Administration 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.
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(l) An executed copy of the Fee Letter.
(m) The Transfer Certificate, duly executed by the Transferor.
(n) The Company Certificate, duly executed by the Transferor and
appropriately completed.
(o) The Arrangement Fee in accordance with Section 2.7(b).
(p) An Investor Report for February, 1996.
(q) Such other documents as the Company shall reasonably
request.
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ARTICLE V
COVENANTS
SECTION 5.1. 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 the first three quarterly periods of each of
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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 registration statements and annual, quarterly, monthly or
other regular reports 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 after giving effect to any such change.
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(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 Company.
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(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 the
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 Agent's performance hereunder with any of the
officers, directors, employees or independent public accountants of
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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 in
accordance with the Master Security and Administration Agreement.
(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 separate from those of CompuCom or any other
entity, (iii) not commingle the Transferor's assets with those of
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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) INVENTORY. CompuCom shall on or prior to April 25, 1996 obtain
written confirmation, in form and substance acceptable to the Agent, from each
of Apple Computer, Inc. and 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.
SECTION 5.2. NEGATIVE COVENANTS. During the term of this Agreement,
unless the Company shall otherwise consent in writing:
(a) NO SALES, LIENS, ETC. Except as otherwise provided herein
and in the Master Security and Administration Agreement, the Transferor will not
sell, assign (by operation of law or otherwise) or otherwise
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dispose of, or create or suffer to exist any Adverse Claim upon (or the filing
of any financing statement) or with respect to, the RPA Interest 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 if such merger shall not result in an
Event of Default under the Master Security and Administration Agreement.
(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 the Master Security and
Administration Agreement.
(g) DEPOSITS TO LOCKBOXES. Each of the 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
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than in accordance with the Master Security and Administration Agreement.
(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 make any
dividends or distributions in respect of its common stock without the prior
written consent of the Agent.
(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.
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ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. 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. The provisions of
this Section 6.1 are expressly subject to the provisions of the Master Security
and Administration Agreement.
SECTION 6.2. 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 respect of the RPA Interest in accordance with Sections 2.5 and 2.6. The
Collection Agent shall segregate and deposit to the Company's account the
Company's
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allocable share of Collections received by the Collection Agent in respect of
the RPA Interest 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. Subject to the provisions of the Master Security and Administration
Agreement, 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 allocable to its portion of the RPA Interest received
MINUS the Percentage Factor of such Collections. On the last day of each
Tranche Period, the Collection Agent shall 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 allocable to the RPA Interest 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 satis-
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faction 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 allocable to the RPA
Interest 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, 1996,
the Collection Agent shall cause a firm of independent public accountants (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 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
(d) The provisions of this Section 6.2 are expressly subject to
the terms of the Master Security and Administration Agreement.
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SECTION 6.3. RIGHTS AFTER DESIGNATION OF NEW COLLECTION AGENT.
Subject to the provisions of the Master Security and Administration
Agreement, 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 RPA Interest 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 RPA Interest to each Obligor and
direct that payments in respect thereof be made directly to the
Administrative Secured Party or, if no Person is acting in such capacity,
to the Agent or its designee.
(iii) Each of the Transferor and the Collection Agent
shall, at the Administrative Secured Party's request, (A) assemble all of
the Records, and shall make the same available to the Administrative
Secured Party or, if no Person is acting in such capacity, 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
Administrative Secured Party or, if no Person is acting in such capacity,
to the Agent or its designee.
(iv) Each of the Transferor and the Collection Agent
hereby authorizes the 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 RPA Interest, including,
without
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limitation, if no Person is acting as Administrative Secured Party,
endorsing the Transferor's name on checks and other instruments
representing Collections and enforcing such Receivables and the related
Contracts.
SECTION 6.4. 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.
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ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. 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 contained in
any agreement under which any Indebtedness
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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 RPA Interest or the Administrative Secured Party
shall, for any reason, fail to have a valid and perfected first priority
security interest in the RPA Interest; 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
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(l) the Company and the Agent, on the one hand, and the
Transferor and the Collection Agent, on the other hand, fail to agree with
respect to the certification of the RPA Interest pursuant to Section 2.2(a) of
the Master Security and Administration Agreement.
(m) the Dilution Ratio averaged for any three-month period
exceeds 7%; or
(n) the Loss to Liquidation Ratio averaged for any three-month
period exceeds 1.50%; or
(o) the Delinquency Ratio averaged for any three-month period
exceeds 15.0%; or
(p) the Administrative Secured Party notifies the Company or the
Agent that it intends to resign pursuant to Section 8.1(h) of the Master
Security and Administration Agreement and no successor thereto shall have been
obtained and become subject to such agreement prior to sixty (60) days of the
effectiveness of such notice; or
(q) CompuCom's Debt to Tangible Net Worth Ratio shall not exceed
4.0 to 1.0 as of the last day of any fiscal quarter; or
(r) CompuCom's Interest Coverage Ratio does not fall below 3.0
to 1 at any time; or
(s) CompuCom's Fixed Charge Coverage Ratio does not fall below
1.5 to 1 at any time; 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 such Person shall
commence any action to foreclose on any such pledge or security interest.
SECTION 7.2. 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
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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 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 (subject to the terms of the Master Security and Administration
Agreement), (iii) the Maximum Net Investment shall be reduced as of each
calendar date thereafter equal to the Net Investment as of such date, (iv) the
RPA Interest Percentage shall remain fixed as of the date of the Termination
Event and (v) no Commercial Paper will thereafter be issued.
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ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. 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, the
Master Security and Administration 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 law, rule or regulation with respect to
any Receivable or the related Contract, or the nonconformity of any
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Receivable or the related Contract with any such applicable law, rule or
regulation;
(c) the failure to vest and maintain in the Transferor an
undivided percentage ownership interest to the extent of the RPA Interest in the
Receivables free and clear of any Adverse Claim (other than as expressly
permitted in the Master Security and Administration Agreement) 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 RPA Interest, free and clear of any Adverse
Claim (other than as expressly permitted in the Master Security and
Administration Agreement);
(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;
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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
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 8.2. 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
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similar requirement (including, without limitation, any such requirement
imposed by the Board 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
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the interpretation thereof by any Official Body, or any 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.
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SECTION 8.3. OTHER COSTS, EXPENSES AND RELATED 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, the Master Security and Administration 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 and the
Master Security and Administration 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 and
the Master Security and Administration Agreement), or (z) arising in connection
with any audit, dispute, disagreement, litigation or preparation for litigation
involving this Agreement and/or the Master Security and Administration
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 8.4. 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 representa-
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tions 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 immediately available funds on such 15th day (or 3rd day, if
applicable) in an amount equal to the Aggregate Unpaids.
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ARTICLE IX
THE AGENT AND THE BANK COMMITMENT
SECTION 9.1. 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 other-
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wise provided herein, the Agent shall not authorize the release of any property
conveyed to the Agent by the Company or the Transferor hereunder without 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 9.2. 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
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foregoing, the Agent: (i) may consult with legal counsel (including counsel for
the Transferor or CompuCom), independent 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 9.3. 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.
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SECTION 9.4. INDEMNIFICATION OF THE AGENT. The Bank Investors agree
to indemnify the Agent (to the 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 9.5. 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.
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Upon the acceptance of any appointment as Agent hereunder 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 9.6. 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 9.7. 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
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Net Asset Test is satisfied and (ii) the Transferor shall 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
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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 RPA Interest, 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 the Agent to
take such action as agent on its behalf and
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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.
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(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.
SECTION 9.8. MASTER SECURITY AND ADMINISTRATION AGREEMENT.
The interest in the RPA Interest transferred under this Agreement at all
times shall be subject to the security interest and rights in favor of the
Administrative Secured Party under the Master Security and Administration
Agreement as provided therein. All
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terms and provisions of the Master Security and Administration Agreement which
are binding or otherwise applicable to the Company or the Transferred Interest
or any portion thereof, and all rights and remedies with respect thereto, are
binding and applicable to Agent, any successor Agent, the Collection Agent, any
successor Collection Agent, the Collateral Agent, any successor Collateral
Agent, the Bank Investors, the Liquidity Provider and the Credit Support
Provider, respectively, and all interests of any such Persons, to the extent of
their respective interests now or hereafter arising under or in connection with
this Agreement. Neither the Agent, any successor Agent, the Collection Agent,
any successor Collection Agent, the Collateral Agent, any successor Collateral
Agent, the Bank Investors, the Liquidity Provider or the Credit Support
Provider, respectively, shall be entitled to take or cause to be taken any
action with respect to the Receivables or any portion thereof which otherwise is
or would be prohibited or restricted by the Master Security and Administration
Agreement.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. 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 10.2. 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 10.3. 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
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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.
10100 North central Expressway
Dallas, Texas 75231
Telecopy: (214) 265-5449
Payment Information:
NationsBank of Texas, N.A.
ABA: 111000025
Account 1291795475
If to the Administrative Secured Party:
NationsBank of Texas, N.A.
NationsBank Plaza, 6th floor
901 Main Street
Dallas, Texas 75202
Attention: Business Credit/Regional
Manager: URGENT
Telecopy: (214) 508-3501
81
<PAGE>
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
Attention: Camille Zerbinos
Reference: CompuCom Expenses
SECTION 10.4. 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 10.5. SEVERABILITY; COUNTERPARTS. Bank Commitment; Assignment
to Bank Investors. This Agreement may be executed in any number of counter-
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<PAGE>
parts 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 or render unenforceable such provision in any other
jurisdiction.
SECTION 10.6. 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 10.7. [RESERVED]
SECTION 10.8. 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
83
<PAGE>
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 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 10.9. 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 10.10. 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
84
<PAGE>
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 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 10.11. 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 that this Agreement shall constitute a security agreement
under applicable law. The Agent, on behalf of the Company and the Bank
Investors, hereby acknowledges that such security interest is subject to the
terms of the Master Security and Administration Agreement.
85
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Transfer and Administration Agreement as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ Martin J. McInerney
-------------------------
Name: Martin J. McInerney
Title: Vice President
CSI FUNDING INC.,
as Transferor
By: /s/ Robert J. Boutin
-------------------------
Name: Robert J. Boutin
Title: President
COMPUCOM SYSTEMS, INC.,
as Collection Agent
By: /s/ Robert J. Boutin
-------------------------
Name: Robert J. Boutin
Title: Senior Vice President and
Chief Financial Officer
NATIONSBANK, N.A., as Agent
and as Bank Investor
By: /s/ Michelle M. Heath
Commitment: -------------------------
$_________ Name: Michelle M. Heath
Title: Vice President
86
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1996 and the consolidated statement
of operations for the three months ended March 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 48,730
<SECURITIES> 0
<RECEIVABLES> 289,457
<ALLOWANCES> 2,639
<INVENTORY> 232,408
<CURRENT-ASSETS> 573,850
<PP&E> 98,152
<DEPRECIATION> 40,363
<TOTAL-ASSETS> 804,174
<CURRENT-LIABILITIES> 281,994
<BONDS> 284,942
0
0
<COMMON> 1,640
<OTHER-SE> 143,998
<TOTAL-LIABILITY-AND-EQUITY> 804,174
<SALES> 390,087
<TOTAL-REVENUES> 437,665
<CGS> 346,292
<TOTAL-COSTS> 371,769
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,355
<INCOME-PRETAX> 10,306
<INCOME-TAX> 2,654
<INCOME-CONTINUING> 3,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,980
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
