RECEIVABLES AGREEMENT AND GUARANTY
Among
SCI TECHNOLOGY, INC.,
(as Seller, Borrower and Initial Servicer)
SCI SYSTEMS, INC.,
(as Guarantor)
GOTHAM FUNDING CORPORATION,
(as Purchaser and Lender)
and
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
(as Agent)
Dated as of October 31, 1996
TABLE OF CONTENTS
Page
ARTICLE I 1
DEFINITIONS 1
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Interpretation 11
ARTICLE II 12
RECEIVABLES PURCHASE FACILITY 12
SECTION 2.01.Facility. 12
SECTION 2.02.Purchases 12
SECTION 2.03.Selection of Tranches 13
SECTION ▇.▇▇.▇▇▇▇▇▇▇▇, Fees and Other Costs and Expenses 13
SECTION 2.05.Fees 14
SECTION 2.06.Deemed Collections 14
SECTION 2.07.Receivables and Loan Reports 14
SECTION 2.08.Intention of the Parties;
Protection of Ownership Interest of Gotham 15
ARTICLE III 15
INVENTORY FACILITY 15
SECTION 3.01.Facility 15
SECTION 3.02.Making of Loans. 16
SECTION 3.03.The Note 16
SECTION 3.04.Repayment and Prepayment of Loans 16
SECTION 3.05.Interest 17
SECTION 3.06 Fees 17
SECTION 3.07.Principal to Become Non-Recourse 17
SECTION 3.08.Deemed Collections 18
SECTION ▇.▇▇.▇▇▇▇▇▇▇▇ Interest; Related Matters 18
ARTICLE IV 19
CONDITIONS 19
SECTION 4.01.Conditions Precedent to Initial Purchase or Loan 19
SECTION 4.02.Conditions Precedent to All Purchases and Loans 21
ARTICLE V 22
REPRESENTATIONS AND WARRANTIES 22
SECTION 5.01.Representations and Warranties of SCI 22
SECTION 5.02.Representations and Warranties of the Guarantor 24
ARTICLE VI 26
COVENANTS OF SCI AND THE GUARANTOR 26
SECTION 6.01.General 26
SECTION 6.02 As to Inventory Facility Collateral 30
SECTION ▇.▇▇.▇▇ to Receivables 31
ARTICLE VII 34
ADMINISTRATION AND COLLECTION 34
SECTION 7.01.Designation of Servicer 34
SECTION 7.02.Settlements;Settlement Statements 34
SECTION 7.03.Duties of Servicer; Settlement Procedures 34
SECTION 7.04.Rights of the Agent 35
SECTION 7.05.Responsibilities of SCI. 36
SECTION 7.06.Semi-Annual Servicer's Certificate 36
SECTION 7.07.Annual Independent Public Accountant Servicing Report. 36
SECTION 7.08.Lock-Box Notices. 36
ARTICLE VIII 37
TERMINATION EVENTS 37
SECTION 8.01.Termination Events 37
ARTICLE IX 39
THE AGENT 39
SECTION 9.01.Authorization and Action. 39
SECTION 9.02.Agent's Reliance, Etc. 40
SECTION 9.03.Agent and Affiliates 40
ARTICLE X 40
INDEMNIFICATION 40
SECTION 10.01.(a)General Indemnities by SCI 40
SECTION ▇▇.▇▇.▇▇▇ Indemnification 42
SECTION 10.03.Increased Cost and Reduced Return. 42
ARTICLE XI 43
SECURITY INTEREST 43
SECTION 11.01.Grant of Security Interest 43
SECTION 11.02.Further Assurances 43
SECTION 11.03.Remedies 43
ARTICLE XII 44
MISCELLANEOUS 44
SECTION 12.01.Amendments, Etc. 44
SECTION 12.02.Notices, Etc. 44
SECTION ▇▇.▇▇.▇▇ Waiver; Remedies 45
SECTION 12.04.Binding Effect; Term of Agreement 45
SECTION 12.05.GOVERNING LAW; CONSENT TO JURISDICTION 45
SECTION 12.06 Facility Costs. 46
SECTION 12.07.Non-Petition Agreement 47
SECTION 12.08.License of Certain Patent and Other Rights 47
SECTION 12.09.Execution in Counterparts 48
SECTION 12.10.Payments and Computations 48
SECTION 12.11.Full Recourse Obligations of SCI. 48
ARTICLE XIII 49
GUARANTY 49
SECTION 13.01.Guaranty. 49
SECTION 13.02.Consents and Waivers by the Guarantor 49
SECTION ▇▇.▇▇.▇▇ Subrogation 50
SECTION 13.04.Reinstatement of Guaranty 51
SECTION 13.05.Assignment; Successors 51
SIGNATURES
EXHIBIT A - Receivables and Loan Report
EXHIBIT B - Settlement Statement
EXHIBIT C - Lock Box Notice
EXHIBIT D-1 - Form of Opinion of Powell, Goldstein,
▇▇▇▇▇▇ & ▇▇▇▇▇▇
EXHIBIT D-2 - Form of Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
EXHIBIT E - Form of the Contract
EXHIBIT F - Form of Note
EXHIBIT G - Form of Toshiba Letter
EXHIBIT H - Form of Confirming Assignment
Schedule I - Lock Box Bank
Schedule II - Applicable Margin
Schedule III - Location of Records
RECEIVABLES AGREEMENT AND GUARANTY
Dated as of October 31, 1996
among SCI TECHNOLOGY, INC., an Alabama corporation (together with its successors
and assigns, "SCI"), SCI SYSTEMS, INC., a Delaware corporation (together with
its successors and assigns, the "Guarantor"), GOTHAM FUNDING CORPORATION, a
Delaware corporation (together with its successors and assigns, "Gotham") and
BANK OF TOKYO-MITSUBISHI TRUST COMPANY, a New York trust company, as agent for
Gotham (together with its successors and assigns, the "Agent").
In consideration of the premises, the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms .
(a) The terms "accounts," "chattel paper," "contract," "contract rights,"
"documents," "equipment," "general intangibles," "goods," "instruments" and
"inventory" shall have the respective meanings ascribed thereto in the Uniform
Commercial Code in effect in the State of New York from time to time.
(b) The following terms shall have the following meanings:
"Adverse Claim" means, with respect to any asset or right, (i)
any Lien (except Liens in favor of Gotham or the Agent hereunder) or Transfer
Restriction thereon or (ii) any claim of any Person to ownership thereof or to
any right, participation or interest therein.
"Affiliate" means, as to any Person, any other Person that
directly or indirectly, is in control of, is controlled by or is under common
control with such Person. The term "control" means the direct or indirect
ownership of 10% or more of any class of voting Securities of the controlled
Person or the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent's Account" means the special account (account number
310-035-147) of the Agent maintained at the office of Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Aggregate Net Investment" means, at the date of any
calculation thereof, the sum of the amounts paid to SCI for each Purchase less
the aggregate amount of Collections actually received and distributed to Gotham
to reduce such Aggregate Net Investment pursuant to Section 7.03. Aggregate Net
Investment shall not be reduced by any Collections set aside pursuant to Section
7.03 until such Collections are actually received by Gotham.
"Aggregate Unpaids" means, at any time, an amount equal to the
sum of (i) the aggregate accrued and unpaid Discount with respect to the
Aggregate Net Investment at such time, (ii) the aggregate accrued and unpaid
interest on all Loans, (iii) the then Aggregate Net Investment, (iv) the then
aggregate outstanding principal balance of all Loans, and (v) all other amounts
(including without limitation all fees, expenses and indemnities) owed, whether
due or accrued, hereunder by SCI and/or the Guarantor at such time.
"Applicable Margin" means, at the time of any determination
thereof, the margin then applicable pursuant to Schedule II hereto.
"Applicable Period" has the meaning specified in Section 12.11
hereof.
"Arrangement Fee" means a fee of $100,000, which is payable
upon execution and delivery of this Agreement.
"Available Amount" means at least $1,000,000 except for (a) a
Loan in an amount equal to the remaining Inventory Facility Commitment Amount,
which Loan may be in such remaining amount, (b) a Purchase in an amount equal to
the difference between (i) $50,000,000 and (ii) the sum of (A) the then
Aggregate Net Investment plus (B) the then outstanding principal amount of all
Loans, which Purchase may be in such remaining amount and (c) any Purchase or
Loan during a Toshiba Wind-Down, which Purchases and Loans shall have a minimum
amount of $200,000 and any higher integral multiple of $1,000.
"Base Rate" means, for any day, an interest rate per annum
equal to the higher of:
(a) the Prime Rate for such day; and
(b) 0.50% above the Federal Funds Rate for such day.
"Borrowing Base" has the meaning specified in Section 3.01.
"Business Day" means any day on which commercial banks are not
authorized or required to close in New York City.
"Change in Control" means (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of the
Voting Shares of the Guarantor entitled to exercise more than thirty percent
(30%) of the total voting power of all outstanding Voting Shares of the
Guarantor (including any such Voting Shares that are not then outstanding of
which such person or group is deemed the beneficial owner); or (ii) a change in
the board of directors of the Guarantor in which the individuals who constituted
the board of directors of the Guarantor at the beginning of the two-year period
immediately preceding such change (together with any other director whose
election by the board of directors of the Guarantor or whose nomination for
election by the shareholders of the Guarantor was approved by a vote of at least
a majority of the directors then in office either who were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors then in office; or (iii) at any time, (x) the common stock of the
Guarantor ceases to be registered under Section 12(b) or 12(g) of the Exchange
Act, (y) the common stock is held of record by fewer than three hundred (300)
Persons, or (z) the common stock of the Guarantor is neither reported on the
National Market System of NASDAQ nor listed on a national stock exchange.
"Collections" means, with respect to any Receivable as of any
date, (i) the sum of all amounts, whether in the form of cash, checks, drafts or
other instruments, received by SCI or the Servicer in payment of, or applied to,
any amount owed by Toshiba on account of such Receivable, including, without
limitation, all cash Proceeds of the Related Security, on or before such date;
and (ii) all amounts deemed to have been received by SCI with respect to such
Receivable pursuant to Sections 2.06 and 3.08.
"Commercial Paper" means promissory notes of Gotham issued in
the commercial paper market.
"Compromised Receivable" means any Receivable, the Outstanding
Balance of which is either (i) reduced as a result of any defective, rejected or
returned merchandise, insurance or services, any cash discount, or any other
adjustment of any kind by SCI or any Affiliate of SCI or (ii) reduced or
canceled as a result of any claim by Toshiba (or any Affiliate of Toshiba)
against SCI or any Affiliate of SCI (whether such claim arises out of the same
or a related transaction or an unrelated transaction).
"Compromised Receivable Ratio" means the ratio (expressed as a
percentage) computed as of any date by dividing (x) the sum of (I) the then
Outstanding Balance of all Compromised Receivables plus (II) the then
Outstanding Balance of all Disputed Receivables by (y) the then Outstanding
Balance of all Receivables.
"Contract" means the Agreement between Toshiba and SCI, dated
as of September 3, 1996, in substantially the form of Exhibit E hereto, as from
time to time amended, supplemented, restated or modified.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or undertaking of any kind to which such Person is a party or by which it or any
of its property is bound.
"CP Rate" means, for any period and with respect to any
Purchase or Loan funded by Commercial Paper, a rate per annum calculated by the
Agent to reflect Gotham's cost of so funding the same, taking into account the
weighted daily average interest rate payable in respect of such Commercial Paper
during such period (determined in the case of discount Commercial Paper by
converting the discount to an interest bearing equivalent rate per annum) and
applicable placement fees and commissions.
"Debt" of any Person means, at any date, without duplication:
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and payable no more than 90 days from the date of incurrence
thereof, (iv) all obligations of such Person as lessee under capital leases, (v)
all obligations of such Person under take-or-pay or similar contracts, (vi) all
obligations of such Person to reimburse or indemnify the issuer of a letter of
credit or Guarantee for drawings or payments thereunder, (vii) all obligations
of such Person to purchase Securities or other property that arise out of or in
connection with the sale of the same or substantially similar Securities or
property, (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Default Ratio" means the ratio (expressed as a percentage)
computed as of any date by dividing (x) the then aggregate Outstanding Balance
of all Defaulted Receivables by (y) the then aggregate Outstanding Balance of
all Receivables.
"Defaulted Receivable" means a Receivable: (a) as to which any
payment, or part thereof, remains unpaid for 61 days from the original due date
for such payment, or (b) which, consistent with SCI's credit and collection
policy, would be written off on SCI's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a
percentage) computed as of any date by dividing (x) the then aggregate
Outstanding Balance of all Delinquent Receivables by (y) the then aggregate
Outstanding Balance of all Receivables.
"Delinquent Receivable" means a Receivable : (a) as to which
any payment, or part thereof, remains unpaid for 31 days or more from the
original due date for such payment; or (b) which, consistent with SCI's credit
and collection policy, would be classified as delinquent by SCI.
"Discount" means, with respect to any Tranche:
(TR +AM) x TA x AD360
where:
AM = the Applicable Margin.
TR = the Tranche Rate applicable to such Tranche.
TA = the portion of the Aggregate Net Investment allocated to such Tranche.
AD = the actual number of days during such Settlement Period.
provided, however, that no provision of this Agreement shall require the
payment or permit the collection of Discount in excess of the maximum rate
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.
"Disputed Receivable" means any Receivable, whether or not
past due, as to which Toshiba has alleged, or overtly acted on the basis, that
all or any portion of the Outstanding Balance thereof is not due and owing.
"Dollars" and "$" means lawful currency of the United States.
"Effective Date" means October 31, 1996.
"Eligible Receivable" means a Receivable: (i) which is not
subject to any Adverse Claim; (ii) which is not a Disputed Receivable or
Compromised Receivable and which is due and owing in full pursuant to the terms
of the Contract; (iii) which was originated during the term (including any
extensions thereof pursuant to the terms thereof) of the Contract and which,
according to the Contract, is required to be paid in full within 30 days of the
original billing date therefor; (iv) which is an "account" or "general
intangible" under the applicable UCC, is not represented by an "instrument" or
any "chattel paper" under the applicable UCC and which represents all or part of
the sales price of merchandise or goods in the ordinary course of business; (v)
a purchase of (or loan secured by) which would constitute a "current
transaction" within the meaning of Section 3(a)(3) of the Securities Act of
1933, as amended; (vi) which is denominated and payable only in Dollars in the
United States; (vii) the Outstanding Balance of which does not include any
amount for sales, value added or similar taxes or any amount as to which Toshiba
is permitted to withhold payment until the occurrence of a specified event or
condition (including, without limitation, "guaranteed" or "conditional" sales);
(viii) which, together with the related Receivables Documentation, has been duly
authorized and is in full force and effect and constitutes the legal, valid,
binding and irrevocable obligation of Toshiba, enforceable against Toshiba in
accordance with its terms, and is not subject to any dispute, offset,
counterclaim or defense whatsoever; (ix) which, together with the related
Receivables Documentation, does not contravene any Requirement of Law; (x) with
respect to which no party to the Contract or any other Receivables Documentation
related thereto is in violation of any Requirement of Law other than any such
violation which could not have an adverse effect on Gotham whether by reason of
an effect on the collectiblity (or timeliness of payments) or enforceability of
any Receivable, the value of any Inventory or in any other manner whatsoever;
and (x) as to which SCI has fully performed all of its obligations under the
Contract, no rejection or return of the goods or services which gave rise to
such Receivable has occurred and all goods and services in connection therewith
have been finally performed or delivered to and accepted by Toshiba without
dispute.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means those officers of the Guarantor who
are deemed to be "Executive Officers" thereof pursuant to Rule 405 of Regulation
C of the Securities Act or any officer of the Guarantor or SCI who is a senior
vice president thereof.
"Facility Amount" means $50,000,000.
"Facility Costs" means all costs and expenses referred to in
Section 12.06.
"Federal Funds Rate" means, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, 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 which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.
"Governmental Authority" shall mean any nation or state or any
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person or in any manner providing for the payment of any
Debt of any other Person or otherwise protecting the holder of such Debt against
loss (whether by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise); provided, that, the term "Guaranty" shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guaranty" used as a verb has a corresponding meaning.
"Indemnified Party" shall mean each of: Gotham, the Agent and
the Liquidity Bank and their respective Affiliates, successors, permitted
transferees and permitted assigns.
"Inventory" means parts and materials purchased or ordered on
a non-cancelable basis by SCI, as contemplated by the Contract, pursuant to a
Master Purchase Order or a Procurement Letter, in each case issued by Toshiba to
SCI under (and as defined in) the Contract.
"Inventory Facility Collateral" has the meaning specified in
Section 3.09.
"Inventory Facility Commitment Amount" has the meaning
specified in Section 3.01.
"Inventory Facility Obligations" has the meaning specified in
Section 3.09.
"Invoice" means an invoice issued to Toshiba by SCI pursuant
to the Contract.
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien, judgment or charge of any kind, or other security
agreement or preferential arrangement of any kind or nature whatsoever with
respect to any asset or property of the Person in question, including any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of any financing statement under the UCC, or other law
relating to Liens, of any jurisdiction.
"Liquidity Agreement" means the Liquidity Agreement, dated as
of April 1, 1994, between Gotham and the Liquidity Bank, as from time to time
amended, supplemented or modified.
"Liquidity Bank" means The Bank of Tokyo-Mitsubishi, Ltd., New
York Branch, and its successors.
"Liquidity Loan" means a loan made under the Liquidity
Agreement.
"Loan" has the meaning specified in Section 3.01.
"Loan Notice" has the meaning specified in Section 3.02.
"Lock-Box Account" means the account (no. 289-001-0302)
maintained by SCI at the Lock-Box Bank for
the sole purpose of receiving Collections from Receivables.
"Lock-Box Bank" means the bank set forth in Schedule I hereto.
"Lock-Box Notice" means a notice in substantially the form of
Exhibit C from SCI to the Lock-Box Bank.
"Material Adverse Change" means a material adverse change in
the business, financial condition, or results of operations of the Guarantor and
its Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect upon
the business, financial condition, or results of operations of the Guarantor and
its Subsidiaries, taken as a whole.
"Maturity Date" shall have the meaning ascribed in Section
3.02.
"Non-Order Receivable" means a Receivable, evidenced by an
Invoice, with respect to Toshiba's obligations under the Contract in respect of
Inventory which has not resulted in a Sales Order under (and as defined in) the
Contract.
"Non-Recourse" shall have the meaning ascribed in Section
3.07(a).
"Non-Recourse Conversion Amount" shall have the meaning
ascribed in Section 3.07(b).
"Officer's Certificate" means, with respect to any Person, a
certificate signed by a duly authorized officer of such Person.
"Other Costs" and "Other Sellers" have the respective meanings
ascribed in Section 12.06.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Prime Rate" means the rate of interest announced from time to
time by Bank of Tokyo-Mitsubishi Trust Company in New York City as its Prime
Rate.
"Proceeds" has the meaning ascribed to it under the Uniform
Commercial Code as in effect in the State of New York from time to time, and, in
any event, shall include, but not be limited to: (i) any and all proceeds of any
insurance policy, indemnity, warranty or Guaranty payable to, or Lien
benefiting, SCI from time to time with respect to any of the Receivables,
Related Security or Inventory Facility Collateral, (ii) any and all payments (in
any form whatsoever) made or due and payable to SCI from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Receivables, Related Security or Inventory
Facility Collateral by any Governmental Authority or any other Person (whether
or not acting under color of governmental authority), and (iii) any and all
other amounts from time to time received from the sale or other disposition of,
or realization on or with respect to, all or any part of the Receivables,
Related Security or Inventory Facility Collateral, or otherwise paid or payable
under or in connection with all or any of the foregoing.
"Purchase" has the meaning specified in Section 2.01.
"Purchase Price" means with respect to any Receivable, the
amount of the related Invoice.
"Purchased Receivable" means any Receivable purchased by
Gotham hereunder.
"Receivable" means the indebtedness of Toshiba under an
Invoice issued by SCI under the Contract, and includes the right to payment of
any interest or finance charges and other obligations of Toshiba with respect
thereto.
"Receivables and Loan Report" has the meaning described in
Section 2.07.
"Receivables Documentation" means, with respect to any
Receivable, the Contract, the Invoice related to such Receivable and all other
documentation relating to or evidencing such Receivable.
"Records" means the Contract and all documents, books, records
and other information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained with respect to Toshiba or to the Receivables, the Receivables
Documentation or the Inventory Facility Collateral.
"Related Security" means: (i) with respect to any Receivable
(other than a Non-Order Receivable), all of SCI's right, title and interest in
the inventory or goods (including returned goods), if any, relating to such
Receivable; and (ii) with respect to a Non-Order Receivable, all of SCI's right,
title and interest in the Inventory with respect to which the related Invoice
was issued; and (iii) in either case, all Proceeds and Collections with respect
to any or all thereof.
"Reporting Date" means the 15th day of each calendar month, or
the next succeeding Business Day if such day is not a Business Day.
"Requirement of Law" for any Person shall mean the Articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, if any, and any law, treaty, rule or regulation,
judgment, injunction, order, decree or other determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such Person
or to which such Person is subject.
"Revolving Credit Agreement" means the Amended and Restated
Credit Agreement dated as of August 3, 1995 among the Guarantor, Citibank, N.A.,
as Agent, ABN AMRO Bank N.V., as Co-Agent, and the financial institutions
signatory thereto as Lenders, as the same may have been or may be amended,
supplemented, modified, extended, renewed, refinanced, restated or replaced from
time to time; provided, however, that from and after the time, if any, that The
Bank of Tokyo-Mitsubishi, Ltd., Atlanta Branch, shall no longer be a lender
thereunder, the term "Revolving Credit Agreement" shall mean such Credit
Agreement as in effect on the latest day that The Bank of Tokyo-Mitsubishi,
Ltd., Atlanta Branch is a lender thereunder.
"SEC" means the Securities and Exchange Commission.
"Servicer" means, at any time, the Person then authorized
pursuant to Section 7.01 to service, administer and collect the Receivables.
"Settlement Date" means, with respect to any Settlement
Period, the fifteenth day of the calendar month following the end of such
Settlement Period, or the next succeeding Business Day if such day is not a
Business Day; provided, however, that after the occurrence and during the
continuation of a Termination Event, the Settlement Date with respect to any
Settlement Period will be the second Business Day following the end of such
Settlement Period.
"Settlement Period" means:
(a) the period from the date of the initial Purchase
hereunder through and including the last Sunday of the next
following calendar month; and
(b) thereafter, each period from the day next succeeding the
last day of the next preceding Settlement Period through
and including the last Sunday of the next following calendar
month unless such next following calendar month is June,
then to June 30; provided, however, that (i) after the
occurrence of a Termination Event, each Settlement Period
shall be a period of 7 days; and (ii) the last Settlement
Period shall end on the date on which the Aggregate Net
Investment has been reduced to zero and all other amounts
owed by SCI hereunder shall have been paid in full.
"Standard Cost" means, with respect to any item of Inventory,
the amount in respect thereof which Toshiba is obligated to pay pursuant to the
Contract assuming termination thereof.
"Subsidiary" means, with respect to any Person, any
corporation of which more than fifty percent (50%) of the Voting Shares are
owned or controlled at the time the determination is made, directly or
indirectly, including through other Subsidiaries, by such Person.
"Suspension Notice" has the meaning described in Section
2.02(d).
"Suspension Period" has the meaning described in Section
2.02(d).
"Termination" and "Termination Event" have the meanings
specified in Section 8.01.
"Termination Date" means the earliest of: (i) the Business Day
designated by either SCI or Gotham as the Termination Date at any time following
30 days written notice to the other; (ii) the day on which the Agent delivers a
Notice of Termination pursuant to Section 8.01; (iii) October 31, 1999 and (iv)
30 days following the date on which a notice of termination is delivered by SCI
or Toshiba under the Contract.
"Toshiba" means Toshiba America Information Systems, Inc., a
California corporation, and with the prior approval of Gotham in its sole
discretion, and subject to such conditions (including, without limitation,
filing of appropriate UCC-1's) as Gotham may specify, its successors and any
Affiliate of Toshiba which has, pursuant to an amendment pursuant to Article XXX
of the Contract, become authorized to purchase product from SCI under the
Contract and which then shall be included hereunder as an entity whose
Receivables will be purchased.
"Toshiba Letter" means the letter from SCI to Gotham (and
agreed to by Toshiba), in substantially the form of Exhibit G hereto.
"Toshiba Wind-Down" means the occurrence of any event
described in Section 8.01(g) (each, an "Event of Bankruptcy") with respect to
Toshiba or an unmatured Event of Bankruptcy with respect to Toshiba.
"Tranche" means a portion of the Aggregate Net Investment
allocated by the Agent pursuant to Section 2.03.
"Tranche Rate" means for any Settlement Period:
(a) in the case of a Tranche funded by a Liquidity Loan, a rate per
annum equal for each day during the Settlement Period to the Base Rate; and
(b) for a Tranche funded by Commercial Paper, the CP Rate for such
Settlement Period, as applicable; provided, however, that on any day when any
Termination Event shall have occurred and be continuing, the Tranche Rate for
each Tranche shall mean a rate per annum equal to: (x) the higher of (i) the
Base Rate and (ii) the rate otherwise applicable to such Tranche during the
then current Settlement Period plus (y) 2% per annum.
"Transaction Documents" means each of the Contract, this
Agreement, the Liquidity Agreement, each Invoice, all Receivables Documentation
and any other document delivered pursuant hereto or thereto.
"Transfer Restriction" means, with respect to any right or
asset, any condition to or restriction (arising pursuant to any Contractual
Obligation or Requirement of Law or otherwise) on the ability of the holder or
owner thereof to sell, assign or otherwise transfer or dispose of such right or
asset other than those applicable to receivables arising under the Securities
Act of 1933, as amended, and any rules or regulations thereunder, and any
securities, blue sky or similar laws of any jurisdiction and any rules or
regulations thereunder.
"UCC" means, with respect to any jurisdiction, the Uniform
Commercial Code as from time to time in effect in such jurisdiction.
"Unmatured Termination Event" shall have the meaning ascribed
in Section 4.02(ii) hereof.
"Voting Shares" means as to any Person, all outstanding shares
of any class or classes (however designated) of stock of such Person entitled to
vote generally in the election of members of the board of directors or other
managing authority of such Person.
SECTION 1.02. Interpretation . (a) Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a basis
consistent (except for changes approved by SCI's independent public accountants)
with the most recent audited financial statements of SCI delivered to Gotham.
(b) All covenants, representations and Termination Events
contained herein shall be given independent effect, so that if any action or
condition would violate any of such covenants, or would breach any of such
representations at any time made or would constitute a Termination Event, the
fact that such action or condition would not violate or breach another covenant
or representation or constitute another Termination Event shall not avoid the
violation or breach of any such covenant or representation or any such
Termination Event.
ARTICLE II
RECEIVABLES PURCHASE FACILITY
SECTION 2.01. Facility. Upon the terms and subject to the
conditions of this Agreement, from time to time prior to the Termination Date,
SCI agrees to sell to Gotham, and Gotham similarly agrees to purchase, all of
SCI's right, title and interest in and to Receivables and Related Security (each
being a "Purchase"); provided, that no Purchase shall be made by Gotham if,
after giving effect thereto, the sum of (a) the then Aggregate Net Investment
plus (b) the then outstanding principal amount of Loans would exceed
$50,000,000; and provided, further, that no Purchase of a Non-Order Receivable
shall be made by Gotham if, after giving effect thereto, the sum of (c) the
Aggregate Net Investment in respect of Non-Order Receivables plus (d) the then
outstanding principal amount of Loans would exceed $30,000,000.
SECTION 2.02. Purchases . (a) On each Business Day on and
after the Effective Date and prior to the Termination Date (except during a
Suspension Period), the Seller shall, without any further action by itself or
any other Person, sell, transfer, assign, set over and otherwise convey to
Gotham (and shall be deemed to have sold, transferred, assigned, set over and
otherwise confirmed to Gotham), without further action by itself or any other
Person, and Gotham shall (but in each case subject to the terms and conditions
hereof, including without limitation Section 2.01) purchase from SCI, without
recourse (except as specifically provided herein), (but not in excess of the
Facility Amount), all right, title and interest of SCI in, to and under its
Receivables created subsequent to the last sale, if any, hereunder and which
Receivables are not securing Loans which have become Non-Recourse and are not
Defaulted Receivables, together with all monies due or to become due and all
amounts received with respect thereto and all Related Security in respect
thereof. Each Purchase shall be in an Available Amount, and the Purchase Price
shall be paid either (x) by Gotham upon one Business Day's notice from SCI or
(y) by applying Collections on Purchased Receivables.
(b) SCI shall deliver to Gotham on the Effective Date and on
each Settlement Date a duly executed and appropriately completed Confirming
Assignment (each, a "Confirming Assignment") in substantially the form of
Exhibit H hereto. Failure to deliver any such Confirming Assignment shall not
limit or otherwise affect the absolute conveyance of the Receivables pursuant to
Subsection (a) above.
(c) In connection with each sale hereunder, SCI further
agrees, at its own expense: (x) on or prior to the date of such sale to indicate
in its computer files (by customer number or otherwise) that the Receivables
being sold on such date have been transferred to Gotham pursuant to this
Agreement and (y) on a monthly basis on each Reporting Date, to generate a
computer list identifying (in such detail as is reasonably requested from time
to time by Gotham) each of the Purchased Receivables. The computer list(s)
referred to in the preceding clause (y) shall be held in trust for Gotham in
separate containers (prominently marked to reflect the foregoing) and in safe
places; and copies of such computer lists shall, at the request of Gotham, be
delivered to, or upon direction of, Gotham. The same shall be at all times open
to inspection and audit by Gotham, its agents and representatives. During the
continuance of a Termination Event, all such list(s) shall, at the request of
Gotham, be delivered to, or upon the direction of, Gotham.
(d) At any time prior to the Termination Date, SCI may, upon 2
Business Days prior notice, deliver to the Agent from time to time a written
notice stating that SCI wishes temporarily to suspend its obligation to sell
additional Receivables to Gotham, and Gotham's obligation to purchase additional
Receivables, under this Agreement (a "Suspension Notice"). The period during
which any such Suspension Notice remains in effect is sometimes herein referred
to as a "Suspension Period." Each Suspension Period shall remain in effect from
and including the second Business Day following the Business Day on which the
Agent receives the applicable Suspension Notice until the earlier of (i) the
second Business Day after the Business Day on which the Agent receives written
notice from SCI cancelling such Suspension Notice, or (ii) the sixtieth day
after the effective date of such Suspension Period (or if such day is not a
Business Day, then the next succeeding Business Day). Delivery of a Suspension
Notice shall not diminish, impair or delay the time for performance of any
obligations of any party hereunder except to the extent expressly provided in
the first sentence of this paragraph (d).
SECTION 2.03. Selection of Tranches . The Agent shall, from
time to time for purposes of computing Discount, divide the Aggregate Net
Investment into Tranches, and the applicable Tranche Rate may be different for
each Tranche. Gotham's Aggregate Net Investment shall be allocated to each
Tranche by the Agent to reflect the funding sources therefor, so that:
(a) there will be one or more Tranches, selected by the Agent,
reflecting the portion of the Aggregate Net Investment funded by
outstanding Liquidity Loans; and
(b) there will be a Tranche equal to the excess of Aggregate Net
Investment over the aggregate amounts allocated at such time pursuant to
clause (a) above, which Tranche shall reflect the portion of the Aggregate
Net Investment funded by Commercial Paper.
SECTION 2.04. Discount, Fees and Other Costs and Expenses .
Discount shall accrue, as specified in the definition thereof, with respect to
each Tranche on each day occurring during each Settlement Period applicable
thereto. SCI shall pay Discount hereunder and all fees (other than the
Arrangement Fee) under Section 2.05 in arrears on each Settlement Date and on
the Termination Date.
SECTION 2.05. Fees.SCI shall pay the following fees to Gotham:
(a) in arrears on each Settlement Date, a fee equal to 0.25% on the
difference between (i) the unused Facility Amount and (ii) the unused
Inventory Facility Commitment Amount; and
(b) on the date of execution hereof, the outstanding balance of the
Arrangement Fee.
SECTION 2.06. Deemed Collections .
(a) If on any day the Outstanding Balance of any Receivable becomes a
Compromised Receivable, SCI shall be deemed to have received on such day a
Collection of such Receivable in the amount of such reduction or
cancellation.
(b) If on (or as of) any day, any Receivable is not, or ceases to be,
an Eligible Receivable (except solely as a direct consequence of
circumstances described in Subsection (a) above ), SCI shall be deemed
to have received on such day a Collection of such Receivable in full.
(c) Any payment by Toshiba in respect of any indebtedness owed by it to
SCI shall, except as otherwise specified by Toshiba (simultaneously
with, or within 2 Business Days after, such payment) or otherwise required
by law (and unless otherwise instructed by Gotham or the Agent), be deemed
to have been received, and shall be applied, as a Collection of Receivables
which are either Purchased Receivables or Receivables securing Loans
which have become Non-Recourse before being applied to any other receivable
or other indebtedness of Toshiba. The selection of which of such
Receivables shall so be deemed to have been received shall be in the sole
discretion of the Agent.
(d) SCI shall pay to the Servicer on the immediately
succeeding Settlement Date all amounts deemed to have been received pursuant to
Subsections (a), (b) or (c) above ("Deemed Collections"), and the Servicer shall
forthwith distribute the same to Gotham.
SECTION 2.07. Receivables and Loan Reports . Prior to the
Reporting Date each month, the Servicer shall report, prepare and forward to the
Agent a report (each, a "Receivables and Loan Report"), relating to the
Receivables, Loans and the Inventory as of the close of business of the Servicer
on the last day of the immediately preceding Settlement Period which shall be in
substantially the form of Exhibit H hereto, appropriately completed. The
delivery of a Receivables and Loan Report shall constitute a representation and
warranty by the Servicer as to the accuracy of the contents thereof.
SECTION 2.08. Intention of the Parties; Protection of
Ownership Interest of Gotham .
(a) Each of SCI and Gotham intend the transactions hereunder
(other than Loans made pursuant to the Inventory facility pursuant to Article
III hereof) to constitute absolute and true sales of Receivables and the Related
Security by SCI to Gotham providing Gotham with the full benefits of ownership
thereof (including without limitation the rights (free of conditions that
constrain it from taking advantage of that right) to pledge or exchange the
Purchased Receivables and Related Security), and no party hereunder intends the
transactions contemplated hereunder (other than Loans made pursuant to the
Inventory facility pursuant to Article III hereof) to be, or for any purpose to
be characterized as, a loan from Gotham to SCI.
(b) SCI agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents and take all action
that Gotham (or the Agent) may reasonably request in order to perfect or protect
Gotham's interest in the Purchased Receivables and Related Security or to enable
Gotham to exercise or enforce any of its rights hereunder. Without limiting the
generality of the foregoing, SCI will, upon the request of Gotham (or the
Agent), execute and file such financing and continuation statements or
amendments thereto or assignments thereof as may be reasonably requested by
Gotham (or the Agent) and ▇▇▇▇ its physical records and other documents with a
legend describing the purchase by Gotham of the Purchased Receivables and
Related Security. To the fullest extent permitted by applicable law, Gotham (or
the Agent) shall be permitted to sign and file continuation statements and
amendments thereto and assignments thereof without SCI's signature. Carbon,
photographic or other reproduction of this Agreement or any financing statement
shall be sufficient as a financing statement. SCI shall neither change its name,
identity or corporate structure (within the meaning of Section 9-402(7) of any
applicable enactment of the UCC) nor relocate its chief executive office or any
office where Records are kept unless it shall have: (i) given Gotham at least 15
days prior notice thereof and (ii) prepared at SCI's expense and delivered to
Gotham all financing statements, instruments and other documents necessary to
preserve and protect Gotham's interest in the Purchased Receivables and Related
Security or reasonably requested by Gotham (or 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
SCI. If SCI receives any Collections, SCI shall immediately remit such
Collections to the Servicer.
ARTICLE III
INVENTORY FACILITY
SECTION 3.01. Facility . Gotham agrees, subject to the
conditions and on the terms set forth in this Agreement, to make loans (each, a
"Loan" and, collectively, the "Loans") to SCI, from time to time on any Business
Day during the period from the Effective Date to the Termination Date, in the
aggregate principal amounts not to exceed at any time outstanding the lesser of
the Borrowing Base and $15,000,000 (the "Inventory Facility Commitment Amount");
provided, that, no Loan shall be made if after giving effect thereto, (a) the
sum of (i) the then Aggregate Net Investment plus (ii) the then outstanding
principal amount of all Loans would exceed $50,000,000; or (b) the sum of (i)
the Aggregate Net Investment in respect of Non-Order Receivables plus (ii) the
then outstanding principal amount of all Loans would exceed $30,000,000. During
such period SCI may borrow, repay and reborrow (within the foregoing limits) all
in accordance with the terms and conditions of this Agreement. Each Loan shall
be in the Available Amount. "Borrowing Base" means, at any time, 100% of the
Standard Cost of all Inventory at such time. The proceeds of Loans may be used
for any general corporate purpose; provided, that : (I) no such proceeds may be
used in violation of Section 5.01 (i); and (II) no such proceeds may be used to
pay Discount, interest, fees, expenses, gross-ups or indemnities due hereunder.
SECTION 3.02. Making of Loans. Each Loan shall be made on a
Settlement Date; and the request therefor (the "Loan Notice") shall be included
in the related Settlement Statement. Each Loan Notice shall specify the desired
amount of the Loan and the desired maturity date (each, a "Maturity Date") of
the Loan, which shall be determined by Gotham after consultation with SCI and
which may be any date up to 270 days after the date of the Loan but in any event
shall be a date on or prior to the Termination Date. Upon and subject to
satisfaction of the conditions to Loans set forth in this Agreement, Gotham
shall (unless the proceeds of such Loan are to be applied pursuant to Section
7.02 hereof to the satisfaction of obligations of SCI hereunder to Gotham, in
which case the proceeds of the Loan shall be applied as provided in Section 7.02
hereof), prior to 3:00 p.m. (New York City time), deposit to SCI's account at
the Agent in immediately available funds, the amount of the Loan so requested.
SECTION 3.03. The Note . All Loans made under Article III of
this Agreement shall be evidenced by a promissory note in substantially the form
attached as Exhibit F hereto (the "Note"). Gotham is authorized to endorse on
the grid attached to the Note the amount and date of each Loan, the Maturity
Date of such Loan and all payments of principal of such Loan. Failure by Gotham
to properly endorse the grid attached to the Note shall not impair the
obligations of SCI with respect to Loans made hereunder. Gotham's records of the
terms of each Loan shall be prima facie evidence of such terms.
SECTION 3.04. Repayment and Prepayment of Loans .
(a) SCI shall repay the principal of each Loan on its Maturity
Date.
(b) If, at any time, the outstanding principal amount of the
Loans exceeds the Borrowing Base, SCI shall, on the next succeeding Settlement
Date, prepay an outstanding principal amount of the Loans at least equal to the
amount of such excess by paying the principal amount thereof plus accrued
interest thereon plus all other amounts (including without limitation any due
under Section 12.10(c)). The Agent shall allocate the amount of such prepayment
among the various principal amounts of Loans then outstanding on a first-in
first-out basis based on the date of the related Invoices.
(c) The Loans are subject to prepayment, in whole or in part,
at the option of SCI on any Settlement Date on at least 5 days prior written
notice to the Agent.
SECTION 3.05. Interest .
(a) Each Loan shall bear interest for each day from its date
until the earlier of its Maturity Date or repayment at a fluctuating per annum
rate equal to (i) the CP Rate, to the extent such Loan is funded by Commercial
Paper, or (ii) the Base Rate, to the extent such Loan is funded under the
Liquidity Agreement plus, in either case, the Applicable Margin. Accrued
interest shall be payable with respect to each Loan in arrears on each
Settlement Date and on the Maturity Date thereof.
(b) Any amount due to Gotham under or in respect of the
Inventory Facility, which is not paid as and when due, shall bear interest from
the date established for payment to the date of receipt by Gotham, at a
fluctuating rate per annum equal to the Base Rate plus 2.00%, payable on demand.
(c) In no event shall any interest rate hereunder with respect
to any Loan exceed the maximum rate permitted by applicable law. If any such
payment is inadvertently received by Gotham (or the Agent for the account of
Gotham), then such excess sum shall be refunded to SCI forthwith. It is the
express intent of the parties hereto that SCI not pay and Gotham not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by SCI under applicable law.
SECTION 3.06 Fees . SCI shall pay a commitment fee equal to
0.25% per annum on the unused portion of the Inventory Facility Commitment
Amount. Such commitment fee shall be payable in arrears on each Settlement Date
and on the Termination Date.
SECTION 3.07. Principal to Become Non-Recourse .
(a) Upon compliance with the procedures specified in
Subsection (b) below, a portion of the principal amount of a Loan (but not the
interest thereon or any other amount (including without limitation any fees,
expenses or indemnities with respect thereto or otherwise with respect to the
Inventory Facility) shall become Non-Recourse. "Non-Recourse" means, with
respect to any portion of the principal amount of a Loan, that such portion
shall be payable solely out of the Collections (including without limitation
Deemed Collections) on the Receivables specified with respect to such Loan as
provided in Subsection (b) below (and the Related Security in respect of such
Receivables), it being recognized and agreed that Gotham (or the Agent) may
allocate (or reallocate) such Collections to the principal of any Loan which has
become Non-Recourse in such amounts and at such times as either shall determine
in its sole discretion and whether or not any of such Collections are applied
with respect to any of SCI's obligations hereunder which are not Non-Recourse.
In addition, the fact that any portion of a Loan has become Non-Recourse shall
not limit or otherwise affect Gotham's rights to recover amounts (whether or not
with respect to the principal of such Loan) pursuant to Article X.
(b) A principal portion of a Loan shall become Non-Recourse
upon compliance by SCI with the following procedures. At least five (5) Business
Days prior to a Settlement Date, SCI shall deliver to the Agent copies of one or
more Invoices, together with an Officer's Certificate and such other
documentation as Gotham or the Agent may from time to time reasonably require to
establish that: (i) each such Invoice is in respect of Inventory which was
previously the subject of a Loan; (ii) no such Invoice has been the subject of a
Purchase pursuant to Article II; and (iii) the related Receivable is (and will
on the next Settlement Date be) an Eligible Receivable and is not (and will not
on the next Settlement Date be) a Defaulted Receivable. The principal amount of
the Loans which may be so converted on any Settlement Date to being Non-Recourse
(the "Non-Recourse Conversion Amount") shall: (x) not exceed what would have
been the Purchase Price of the related Receivables were such Receivables to be
purchased hereunder pursuant to Article II; and (y) be in an Available Amount.
Provided that (xx) no Termination Event or Unmatured Termination Event shall at
the time have occurred; and (yy) the circumstances referred to in clauses (i),
(ii) and (iii) above are true and correct on and as of the Settlement Date next
succeeding the date of such delivery by SCI, a portion of the Loans equal to the
applicable Non-Recourse Conversion Amount shall become Non-Recourse. The Agent
may determine which Loans (and which principal portions of such Loans) are to so
become Non-Recourse, but the failure of the Agent so to determine which Loans
are Non-Recourse shall not affect the fact that the portion of the Loans which,
pursuant to the terms hereof, is Non-Recourse. The subsequent occurrence of a
Termination Event or any Unmatured Termination Event shall not diminish or
impair the Non-Recourse nature of any Loan or portion thereof that shall have
become Non-Recourse in accordance with the foregoing. Any payment by Toshiba in
respect of any indebtedness owed by it to SCI shall, except as otherwise
specified by Toshiba (simultaneously with, or within 2 Business Days after, such
payment) or otherwise required by law (and unless otherwise instructed by Gotham
or the Agent), be deemed to have been received, and shall be applied, as a
Collection of Receivables which are either Purchased Receivables or Receivables
securing Loans which have become Non-Recourse before being applied to any other
Receivable or other indebtedness of Toshiba. The selection of which of such
Receivables shall so be deemed to have been paid shall be in the sole discretion
of the Agent.
SECTION 3.08. Deemed Collections . The provisions of Section
2.06 hereof shall apply, mutatis mutandem, to all Receivables which have
resulted in any portion of the Loans becoming Non-Recourse pursuant to Section
3.07.
SECTION 3.09. Security Interest; Related Matters .
(a) As security for the principal and interest on, and all
other amounts due or to become due from SCI in connection with or arising out of
the Loans (the "Inventory Facility Obligations"), SCI hereby pledges, assigns,
transfers, sets over, conveys, hypothecates, delivers and confirms the Inventory
Facility Collateral, all and singular, to Gotham, and hereby grants to Gotham a
continuing first and prior security interest in, and general first Lien on, all
present and future Inventory Facility Collateral. SCI further assigns to Gotham
(without requiring Gotham so to act), all of SCI's right to take, or consent to,
any action, inaction, condition or circumstance under, or with respect to, any
or all of the Inventory Facility Collateral; provided, however, that Gotham
agrees not to exercise its right to take any enforcement action under or with
respect to Inventory Facility Collateral unless and until a Termination Event
shall have occurred and is continuing. Until payment and satisfaction in full of
all the Inventory Facility Obligations, the pledge, assignment, transfer,
setting over, conveyance, hypothecation, delivery and confirmation of, and
security interest in, the Inventory Facility Collateral pursuant hereto shall
continue in full force and effect. "Inventory Facility Collateral" means all
right, title and interest of SCI in, to or under any or all of the following:
(i) all Inventory (including for this purpose all items which would have
constituted Inventory except that they were ordered on a cancelable basis),
whether now in existence or hereafter acquired, manufactured or otherwise
arising; (ii) the Contract with respect thereto; (iii) all Receivables arising
with respect thereto; (iv) all Receivables Documentation with respect to any
such Receivables; (v) all rights and privileges of SCI with respect to any of
the foregoing; and (vi) all substitutions and replacements for, and all direct
or indirect Proceeds (including without limitation all Collections) with respect
to any or all of the foregoing.
(b) Further Assurances. The provisions of Section 2.08 shall
apply, mutatis mutandem, to the security interest and other rights granted under
Section 3.09(a) as well as to Purchases hereunder.
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions Precedent to Initial Purchase or Loan
. The initial Purchase or Loan, whichever first occurs, hereunder is subject, in
addition to the conditions specified in Articles II and III and in Section 4.02
below, to the conditions precedent that: (i) the reasonable fees and
disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for Gotham, in
connection with the preparation and negotiation hereof shall have been paid in
full by SCI; and (ii) the Agent shall have received on or before the date of
such Purchase or Loan the following, each (unless otherwise indicated) dated
such date, in form and substance satisfactory to Agent:
(a) a fully executed copy of this Agreement and a duly executed Note;
(b) a certified copy of the resolutions of the Board of Directors of
SCI approving this Agreement and the other documents to be delivered by it
hereunder and the transactions contemplated hereby, certified by its
Secretary or Assistant Secretary;
(c) Good standing certificate for SCI issued by the Secretary of State
of Alabama and good standing or foreign qualification certificates for SCI
issued by the Secretaries of State of California, Colorado, New Hampshire,
North Carolina, Maine and South Dakota;
(d) a certificate of the Secretary or Assistant Secretary of SCI
certifying the names and true signatures of the officers authorized on its
behalf to sign this Agreement and the other documents to be delivered by it
hereunder (on which certificate the Agent and Gotham may conclusively rely
until such time as the Agent shall receive from SCI a revised certificate
meeting the requirements of this Subsection (d));
(e) the Articles of Incorporation of SCI, duly certified by the
Secretary of State of Alabama, as of a recent date acceptable to Agent,
together with a copy of the by-laws of SCI, duly certified by the Secretary
or an Assistant Secretary of SCI;
(f) a certified copy of the resolutions of the Executive Committee and
the Board of Directors of the Guarantor approving this Agreement and the
other documents to be delivered by it hereunder and the transactions
contemplated hereby, certified by its Secretary or Assistant Secretary;
(g) Good standing certificate for the Guarantor issued by the Secretary
of State of Delaware and good standing or foreign qualification certificate
issued by the Secretary of State of California;
(h) a certificate of the Secretary or Assistant Secretary of the
Guarantor certifying the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other documents to
be delivered by it hereunder (on which certificate the Agent and Gotham may
conclusively rely until such time as the Agent shall receive from a revised
certificate meeting the requirements of this Subsection (h));
(i) the Certificate of Incorporation of the Guarantor, duly certified
by the Secretary of State of Delaware, as of a recent date acceptable to
Agent, together with a copy of the by-laws of the Guarantor, duly certified
by the Secretary or an Assistant Secretary of the Guarantor;
(j) acknowledgment copies of proper financing statements (Form UCC-1),
filed on or prior to the date of the initial Purchase or Loan (or such
other evidence of filing reasonably satisfactory to the Agent), naming SCI
as the debtor and seller of Receivables, Related Security and/or Inventory
Facility Collateral and Gotham as the secured party and purchaser, or
other, similar instruments or documents, as may be necessary or, in the
reasonable opinion of Agent, desirable under the UCC or any comparable law
of all appropriate jurisdictions to perfect Gotham's interests in the
Receivables, Related Security, Inventory Facility Collateral and
Collections on and other Proceeds of the foregoing;
(k) a current search report provided in writing to Agent listing all
effective financing statements that name SCI as debtor and that are filed
in the jurisdictions in which filings were made pursuant to subsection (j)
above and in such other jurisdictions that Agent shall reasonably request,
together with copies of such financing statements (none of which shall
cover the Contract, any Receivables, Related Security, Inventory Facility
Collateral or interests therein or Collections or Proceeds of any thereof);
(l) duly executed copies of the Lock-Box Agreement with the Lock-Box
Bank and of the Toshiba Letter;
(m) favorable opinions of (i) Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Atlanta, Georgia, counsel to the Guarantor and SCI, and (ii) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., corporate counsel for SCI and the Guarantor in
substantially the form of Exhibits D-1 and D-2, respectively; and
(n) such other documents, instruments, approvals (and, if requested by
the Agent, certified duplicates of executed copies thereof) or opinions as
the Agent may reasonably request.
SECTION 4.02. Conditions Precedent to All Purchases and Loans
. Each Purchase or Loan (including the initial Purchase or Loan) hereunder shall
be subject to the conditions specified in Articles II or III and in Section 4.01
hereof and to the further conditions precedent that on and as of the date of
such Purchase or Loan the following statements shall be true (and the acceptance
by SCI of the proceeds of such Purchase or Loan shall constitute a
representation and warranty by SCI to such effect on and as of the date of such
Purchase or Loan):
(i) the representations and warranties contained in Section 5.01 and
5.02 of this Agreement (other than any which are by their terms expressly
limited to the date made or given) are correct on and as of the date of
such Purchase or Loan, before and after giving effect to such Purchase or
Loan and to the application of the proceeds therefrom, as though made on
and as of such date (and any Receivable which is to be the subject thereof
shall not be a Defaulted Receivable);
(ii) no event has occurred and is continuing, or would result from such
Purchase or Loan or from the application of the proceeds therefrom, which
constitutes a Termination Event or an event that would constitute a
Termination Event but for the requirement that notice be given or time
elapse or both (an "Unmatured Termination Event");
(iii) after giving effect to such Purchase or Loan, the sum of (x) the
then Aggregate Net Investment plus (y) the then outstanding principal
amount of all Loans shall not exceed $50,000,000;
(iv) after giving effect to such Purchase or Loan, the sum of (x) the
Aggregate Net Investment in respect of Non-Order Receivables plus (y) the
then outstanding principal amount of all Loans shall not exceed
$30,000,000;
(v) in the case of a Loan, after giving effect thereto, the outstanding
principal amount of all Loans shall not exceed $15,000,000;
(vi) in the case of a Purchase, the related Receivables are not in
respect of Inventory (or any Invoice resulting therefrom) which has been
the subject of a Loan; and
(vii) the Agent shall have received such other approvals, opinions,
instruments or documents as the Agent may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of SCI . SCI
represents and warrants, on and as of the date hereof and on and as of each date
on which any Receivable is Purchased (or any Loan is made or converted to being
Non-Recourse) hereunder, as follows:
(a) Organization, Good Standing Due Qualification. SCI is a corporation
duly incorporated, validly existing and in good standing under the laws of
Alabama, and has full corporate power to own its property and conduct its
business as such property is currently owned and such business is currently
conducted, and to execute, deliver and perform its obligations hereunder
and under the Contract. SCI is duly qualified and in good standing as a
foreign corporation in each jurisdiction where the conduct of its business
or its ownership or leasing of property makes such qualification necessary
and, except in the case of the Receivables and the Inventory Facility
Collateral, in which the failure to so qualify would have a Material
Adverse Effect.
(b) Due Authorization. The execution, delivery and performance by SCI
of this Agreement and the Contract, and SCI's use of the proceeds of
Purchases and Loans, are within SCI's corporate powers, have been duly
authorized by all necessary corporate action.
(c) No Conflict. The execution, delivery and performance by SCI of this
Agreement and the Contract, and SCI's use of the proceeds of Purchases and
Loans (i) will not conflict with or result in any breach of any of the
terms or provisions of, or constitute (with or without notices or lapse of
time or both) a default under, any material Contractual Obligation
applicable to SCI or any of its properties (ii) will not result in or
require the creation or imposition of any Adverse Claim upon or with
respect to any of their properties and (iii) will not conflict with or
violate any Requirement of Law applicable to SCI or any of its properties.
(d) No Approvals. No authorization or approval or other action by, and
no notice to or filing or registration with, any Governmental Authority is
required, other than those which have already been obtained for the due
execution, delivery and performance by SCI of this Agreement or the
Contract, or for the perfection of the respective interests of the Agent
and Gotham in the Purchased Receivables and the Inventory Facility
Collateral under this Agreement, except as referred to in Article IV, all
of which, on or prior to the date of the initial Purchase, will have been
duly made and be in full force and effect, other than those which have
already been obtained.
(e) Validity. This Agreement and the Contract are each, the legal,
valid and binding obligation of SCI, enforceable against SCI in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and to general equitable principles which may limit the
right to obtain the remedy of specific performance of obligations.
(f) Financial Information. The balance sheets of the Guarantor and its
Subsidiaries as at June 30, 1996, and the related statements of income and
cash flows of the Guarantor and its Subsidiaries for the fiscal year then
ended, copies of which have been furnished to the Agent and which are
included in the annual report of the Guarantor to its shareholders, (and
the unaudited balance sheet of the Guarantor and its Subsidiaries as at
September 29, 1996 and the related unaudited statements of income and cash
flows of the Guarantor and the Subsidiaries for the fiscal quarter then
ended) fairly present the consolidated financial condition of the Guarantor
and its Subsidiaries as at such date and the results of the operations of
the Guarantor and its Subsidiaries for the period(s) ended on such date(s),
all in accordance with generally accepted accounting principles
consistently applied, and since June 30, 1996, there has been no material
adverse change in such condition or operations.
(g) No Proceedings. There are no proceedings or investigations pending
or to the knowledge of SCI, after due inquiry, threatened against SCI or
any of its subsidiaries before any court or other Governmental Authority
(i) asserting the invalidity of this Agreement, the Contract, any
Receivable or any Receivable Documentation, (ii) seeking to prevent the
consummation of the transactions contemplated hereby, (iii) seeking any
termination or ruling which could materially and adversely affect the
ability of SCI to perform its obligations under this Agreement or the
Contract or (iv) seeking any determination or ruling that could materially
and adversely affect the validity or enforceability of this Agreement, the
Contract or any Receivable or Receivable Documentation, except proceedings
or investigations of the character (x) which are normally incident to the
kind of business conducted by SCI, (y) for which SCI has adequate insurance
coverage, and (z) which, if determined adversely to SCI would not have a
Material Adverse Effect.
(h) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(i) Margin Regulations. The use of all funds obtained by SCI under this
Agreement will not conflict with or contravene any of Regulations G, T, U
and X promulgated by the Board of Governors of the Federal Reserve System
from time to time.
(j) Quality of Title. Immediately preceding each Purchase, SCI shall be
the owner of all Receivables which are the subject of such Purchase,
together with the related Contract and all purchase orders and other
written agreements related to such Receivable, free and clear of any
Adverse Claim (other than Adverse Claims created by Gotham); upon each
Purchase, Gotham shall acquire a valid and perfected ownership interest in
each Receivable which is the subject of such Purchase and in the Related
Security and Collections with respect thereto, free and clear of any
Adverse Claim. Immediately preceding each Loan, SCI shall be the owner of
all Inventory Facility Collateral, free and clear of any Adverse Claim
(other than Adverse Claims created by Gotham); upon each Loan, Gotham shall
acquire a valid and perfected first priority security interest in the
related Inventory Facility Collateral, free and clear of any Adverse Claim.
All financing statements and other documents required to be recorded or
filed in order to perfect and protect Gotham's interest in the Purchased
Receivables and Related Security or in the Inventory Facility Collateral
against all creditors of and purchasers from SCI will have been duly filed
in each filing office necessary for such purpose and all filing fees and
taxes, if any, then due and payable in connection with such filings shall
have been paid in full.
(k) Accuracy of Information. All information heretofore furnished by
SCI or the Guarantor to Gotham (or the Agent) relating to the Guarantor or
any of its Subsidiaries or to any of the transactions contemplated hereby
for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by SCI
to Gotham (or the Agent) will be, true, accurate and complete in every
material respect, on the date such information is stated or certified.
(l) Place of Business. The chief place of business and chief executive
office of SCI and the offices where SCI keeps its records concerning the
Receivables are located at the addresses of SCI specified in Schedule III
(or at such other locations, as have been notified to the Agent in
accordance with Section 6.02(e)).
(m) Lock-Box Accounts. The name and address of the Lock-Box Bank,
together with the account number of the Lock-Box Account are specified in
Schedule I (or have been notified to and approved by the Agent in
accordance with the definition of "Lock-Box Bank").
(n) Tradenames. SCI has not at any time during the past five years used
any tradenames or assumed names other than "SCI Systems".
(o) Nature of Receivables. Each Receivable is an Eligible Receivable.
SECTION 5.02. Representations and Warranties of the Guarantor
. The Guarantor represents and warrants, on and as of the date hereof and on and
as of each date on which any Receivable is Purchased (or any Loan is made or
converted to being Non-Recourse) hereunder, as follows:
(a) Organization, Good Standing Due Qualification. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under
the laws of Delaware, and has full corporate power to own its property and
conduct its business as such property is currently owned and such business
is currently conducted, and to execute, deliver and perform its obligations
hereunder. The Guarantor is duly qualified and in good standing as a
foreign corporation in each jurisdiction where the conduct of its business
or its ownership or leasing of property makes such qualification necessary
in which the failure to so qualify would have a Material Adverse Effect.
(b) Due Authorization. The execution, delivery and performance by the
Guarantor of this Agreement are within the Guarantor's corporate powers,
have been duly authorized by all necessary corporate action.
(c) No Conflict. The execution, delivery and performance by the
Guarantor of this Agreement: (i) will not conflict with or result in any
breach of any of the terms or provisions of, or constitute (with or without
notices or lapse of time or both) a default under, any Material Contractual
Obligation applicable to the Guarantor or any of its properties; (ii) will
not result in or require the creation or imposition of any Adverse Claim
upon or with respect to any of its properties; and (iii) will not conflict
with or violate any Requirement of Law applicable to the Guarantor or any
of its properties.
(d) No Approvals. No authorization or approval or other action by, and
no notice to or filing or registration with, any Governmental Authority is
required other than those which have already been obtained for the due
execution, delivery and performance by the Guarantor of this Agreement.
(e) Validity. This Agreement is the legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors
generally and to general equitable principles which may limit the right to
obtain the remedy of specific performance of obligations.
(f) Financial Information. The balance sheets of the Guarantor and its
Subsidiaries as at June 30, 1996, and the related statements of income and
cash flows of the Guarantor and its Subsidiaries for the fiscal year then
ended, copies of which have been furnished to the Agent and which are
included in the annual report of the Guarantor to its shareholders, (and
the unaudited balance sheet of the Guarantor and its Subsidiaries as at
September 29, 1996 and the related unaudited statements of income and cash
flows of the Guarantor and the Subsidiaries for the fiscal quarter then
ended) fairly present the consolidated financial condition of the Guarantor
and its Subsidiaries as at such date and the results of the operations of
the Guarantor and its Subsidiaries for the period(s) ended on such date(s),
all in accordance with generally accepted accounting principles
consistently applied, and since June 30, 1996, there has been no material
adverse change in such condition or operations.
(g) No Proceedings. There are no proceedings or investigations pending
or to the knowledge of the Guarantor, after due inquiry, threatened against
the Guarantor or any of its Subsidiaries before any court or other
Governmental Authority: (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of the transactions contemplated
hereby, (iii) seeking any termination or ruling which could materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Agreement or (iv) seeking any determination or ruling that could
materially and adversely affect the validity or enforceability of this
Agreement, except proceedings or investigations of the character (x) which
are normally incident to the kind of business conducted by the Guarantor,
(y) for which the Guarantor has adequate insurance coverage, and (z) which,
if determined adversely to the Guarantor would not have a Material Adverse
Effect.
(h) Accuracy of Information. All information heretofore furnished by
the Guarantor to Gotham (or the Agent) relating to the Guarantor or any of
its Subsidiaries or to any of the transaction contemplated hereby for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by the
Guarantor to Gotham (or the Agent) will be, true, accurate and complete in
every material respect, on the date such information is stated or
certified.
ARTICLE VI
COVENANTS OF SCI AND THE GUARANTOR
SECTION 6.01. General . So long as any Aggregate Unpaids
remains outstanding or Gotham has any obligation to purchase Receivables or make
Loans under Articles II or III, each of SCI and the Guarantor covenants that:
(a) Information. SCI will (and the Guarantor will cause SCI to)
deliver to Gotham:
(i) as soon as available and in any event within 90 days after the end
of each fiscal year of the Guarantor, a consolidated and consolidating
balance sheet of the Guarantor and its Subsidiaries as at the end of such
year, and consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Guarantor and its Subsidiaries
for such year, setting forth in each case in comparative form corresponding
consolidated and consolidating figures from the preceding fiscal year,
certified (in the case of said consolidated balance sheet and consolidated
statements of income) without qualification by a firm of independent
certified public accountants of nationally recognized standing;
(ii) as soon as available, and in any event within 60 days after the
end of each of the first three fiscal quarters of the Guarantor, a copy of
the consolidated financial statements as may be prepared and included in
the Guarantor's Form 10-Q for the portion of the fiscal year through the
end of such quarter, all certified (subject to normal year-end adjustments)
as to fairness of presentation, generally accepted accounting principles
and consistency by the chief financial, accounting officer or the treasurer
of the Guarantor;
(iii) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate of the
chief financial officer or the chief accounting officer or the treasurer of
SCI stating whether there exists on the date of such certificate any
Termination Event or Unmatured Termination Event and, if any Termination
Event or Unmatured Termination Event exists, setting forth the details
thereof and the action which SCI is taking or proposes to take with respect
thereto;
(iv) forthwith within 3 Business Days of any Executive Officers of SCI
or the Guarantor having notice or actual knowledge of the occurrence of any
Termination Event or Unmatured Termination Event (or of an Event of Default
or Default under the Revolving Credit Agreement), a certificate of the
chief financial officer or the chief accounting officer or the treasurer of
SCI setting forth the details thereof and the action which SCI is taking or
proposes to take with respect thereto;
(v) promptly upon transmission thereof, copies of all financial
statements, proxy statements, notices and reports as the Guarantor shall
send to its public stockholders, and copies of all registration statements
and all reports which the Guarantor files with the SEC other than
registration statements relating to employee benefit plans and to
registrations of securities for selling securityholders; and
(vi) promptly upon any request by the Guarantor for any amendment,
waiver or consent under the Revolving Credit Agreement, a copy of such
request.
(b) Consolidations, Mergers and Sales of Assets. Neither the Guarantor
nor SCI will (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or any substantial portion of its
assets to any other Person; provided, that, so long as immediately after
and giving effect thereto no Termination Event or Unmatured Termination
Event shall have occurred and the Guarantor is in compliance with Section
6.01(c), the Guarantor may engage in a transaction referred to in clause
(i) if the Guarantor is the surviving entity. Neither the Guarantor nor SCI
will permit any Subsidiary to consolidate with, merge with or into or
transfer all or substantially all of its Properties to any Person other
than the Guarantor or a wholly-owned Subsidiary.
(c) Financial Covenants. The Guarantor will assure that it will:
(I) maintain as of and at the end of each of its fiscal quarters, a
ratio of EBIT to Interest Expense of at least 1.25 to 1.0; provided that
the ratio required to be maintained in this Section 6.01(c)(I) shall be
subject to Section 6.01(c)(III); provided, however, that any A-12 Program
Financial Statements Adjustments which were recognized in accordance with
GAAP during the fiscal year ending as of the end of such fiscal quarter
shall be added back into the calculation of the covenant set forth in this
Section 6.01(c)(I), and provided, further, that the ratio required to be
maintained in this Section 6.01(c)(I) shall be subject to Section
6.01(c)(III).
(II) maintain at all times a ratio of Total Debt to Total Capital
(calculated in percentage terms as at the end of each fiscal quarter,
beginning with the quarter ending September 29, 1996) of not more than
seventy percent (70%).
(III) maintain at all times a ratio of Adjusted Working Capital to
Senior Debt of at least 1.75 to 1.0, provided that if the ratio of EBIT to
Interest Expense (calculated in accordance with Section 6.01(c)(I) above)
is less than 1.70 to 1.0, then the Guarantor will maintain a ratio of
Adjusted Working Capital to Senior Debt of at least 2.0 to 1.0. For
purposes of this Section 6.01(c)(III), the A-12 Program Financial
Statements Adjustments previously recognized in accordance with GAAP shall
be added back into the computation of Adjusted Working Capital unless the
A-12 Program Financial Statements Adjustments equal or exceed $50,000,000.
If the A-12 Program Financial Statements Adjustments equal or exceed
$50,000,000, then all A-12 Program Financial Statements Adjustments shall
not be added back into the computation of Adjusted Working Capital in this
Section 6.01(c).
The covenants contained in this Section 6.01(c) shall be calculated in
the same manner as the corresponding covenants contained in the Revolving Credit
Agreement are calculated. If the financial covenants set forth in the Revolving
Credit Agreement which correspond to the financial covenants set forth in this
Section 6.01(c) are amended, the Guarantor will promptly provide notice of such
event and a copy of such amendments to the Agent. If requested by the Agent,
this Agreement shall be amended to reflect such changes, and the Guarantor and
SCI hereby agree to promptly execute and deliver such amendments hereto as the
Agent shall reasonably request to effect the foregoing.
For purposes of this Section 6.01(c), the following terms have the
indicated meanings:
"Net Income" means, as applied to any Person for any fiscal period, the
aggregate amount of net income (or net loss) of such Person, after taxes, for
such period as determined in accordance with GAAP.
"Permitted Subordinated Debentures" means debentures contemplated to be
issued from time to time by Guarantor after the date of the Original Agreement
that (i) are subordinated in writing to all obligations of Guarantor and SCI
hereunder, such subordination provisions to be on terms and conditions
reasonably satisfactory in all respects to the Agent and (ii) do not exceed
$150,000,000 in the aggregate at any time, but such term shall specifically
exclude the Debentures of 1996.
"Subordinated Debt" means (i) the Debentures of 1996, (ii) the
Permitted Subordinated Debentures, and (iii) any other Indebtedness of the
Guarantor or any Subsidiary of the Guarantor which is subordinated in writing to
all obligations of Guarantor or such Subsidiary on terms and conditions
satisfactory in all respects to the Agent and approved in writing by the Agent
(which approval shall not be unreasonably withheld or delayed) including,
without limitation, with respect to interest rates, payment terms, maturities,
amortization schedules, covenants, defaults, remedies and subordination
provisions.
"Total Capital" means, as to any Person at a particular date, the sum
of (i) all items which would, in accordance with GAAP, be properly classified on
the balance sheet of such Person as (A) total shareholders' equity plus (B)
long-term deferred income taxes, plus (ii) Total Debt.
"Total Debt" means, as to any Person at a particular date, the sum of
all items which would, in accordance with GAAP, be properly classified on such
Person's balance sheet as (i) short-term debt for money borrowed, plus (ii)
current maturities of long-term debt, plus (iii) long-term debt, including,
without limitation, with respect to Guarantor, the Subordinated Debt and to the
extent issued, the Permitted Subordinated Debentures.
"Financing Lease(s)" shall mean (a) any lease of property, real or
personal, the then present value of the minimum rental commitment of which
should, in accordance with GAAP, be capitalized on a balance sheet of the
lessee, and (b) any other such lease the obligations under which are capitalized
on a consolidated balance sheet or SCI or Guarantor and its Subsidiaries.
"GAAP" means United States generally accepted accounting principles.
"Indebtedness" of a Person, at a particular date, means any of the
following at such date, without duplication, (a) indebtedness of such Person for
borrowed money or evidenced by notes, bonds, debentures or like instruments, (b)
indebtedness of such Person for the deferred purchase price of property or
services, except current accounts payable and accrued expenses arising in the
ordinary course of business, (c) obligations of such Person under any Financing
Lease, (d) indebtedness of such Person arising under acceptance facilities, (e)
unreimbursed draws on letters of credit and (f) Contingent Obligations.
"Interest Expense" means for any fiscal year of Guarantor, total
interest expense (including, without limitation, interest expense attributable
to capitalized leases in accordance with GAAP) of Guarantor and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Contingent Obligation" as to any Person means any obligation of such
Person guaranteeing or in effect guaranteeing any indebtedness, leases,
dividends or other contractual obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not state or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith.
"Debentures of 1996" means the Indebtedness of Guarantor in the
aggregate original principal amount of $287,500,000 evidenced by the Guarantor's
5% Convertible Subordinated Notes due 2006, issued pursuant to the Indenture,
dated as of April 23, 1996, between Guarantor and PNC Bank, Kentucky, Inc., as
trustee. The Debentures of 1996 are subordinated on liquidation, on terms and
conditions set forth in the Indenture pursuant to which they were issued.
"EBIT" means for any fiscal year of the Guarantor, an amount equal to
the sum for such fiscal year of (i) Net Income plus (ii) provisions for income
taxes plus (iii) Interest Expense, all determined by Guarantor and its
Subsidiaries on a consolidated basis in accordance with GAAP; provided, however,
that all cash items of gain or loss for such fiscal period which are not
ordinary by GAAP definition shall be included in the computation of EBIT and
provided, further, that all non-cash items of gain or loss for such fiscal
period which are not ordinary by GAAP definition shall be excluded from the
computation of EBIT.
"A-12 Program" means the full scale engineering, development,
production and delivery of electronic assemblies for the Navy's proposed A-12
Advanced Tactical Fighter contemplated by the following ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
purchase orders: E83006, E83004, E91369, E91324, E02929, E02927 and J00545.
"A-12 Program Financial Statements Adjustments" means any charge,
expense, write-off or reserve change of Guarantor arising out of or relating to
the A-12 Program as determined in accordance with GAAP, cumulatively determined
for the periods as applicable, and which arose after March 28, 1993.
"Account Receivable" means all rights of any Person to payment for
goods sold or leased or for services rendered, whether or not such rights to
payment have been earned by performance, including, without limitation, all
accounts, contract rights, chattel paper, instruments and documents of any
Person arising from the sale of goods or services by such Person, whether
secured or unsecured, and whether now existing or hereafter created or arising
and including, further, without limitation, federal and state tax refunds due
and owing to such Person relating to taxes previously paid by such Person less
all doubtful accounts receivable owing to such Person, as determined in
accordance with GAAP. For the sole purpose of testing the financial covenant set
forth in Section 6.01(c)(III) hereof, any A-12 Program Financial Statements
Adjustments relating to Accounts Receivable previously recognized in accordance
with GAAP shall be added to the amount of Accounts Receivable in order to
determine the Adjusted Working Capital of the Guarantor and its consolidated
Subsidiaries, except as otherwise set forth in Section 6.01(c)(III) hereof.
"Adjusted Working Capital" means at any date of determination, ninety
percent (90%) of the Accounts Receivable of Guarantor and its consolidated
Subsidiaries plus eighty-five percent (85%) of the Inventory of Guarantor and
its consolidated Subsidiaries.
SECTION 6.02 As to Inventory Facility Collateral . So long as
any Aggregate Unpaids remain outstanding or Gotham has any obligation to
purchase Receivables or make Loans under Article II or III, SCI covenants that:
(a) It will defend its title to, and Gotham's first and prior Lien
upon, the Inventory Facility Collateral against all claims of all Persons
whomsoever.
(b) It will keep the Inventory Facility Collateral free from all
Adverse Claims (other than Adverse Claims created by Gotham) and will pay
or cause to be paid promptly when due all taxes, fees, assessments and
other charges now or hereafter imposed upon any of the Inventory Facility
Collateral.
(c) It will not, without the prior written consent of Gotham, sell,
assign, pledge, exchange or dispose of any of the Inventory Facility
Collateral in any manner whatsoever or attempt to do any of the foregoing
or agree to any modification or cancellation of, or substitution for, any
of the Inventory Facility Collateral. In the event of any disposition of
any of the Inventory Facility Collateral, the Proceeds will remain
Inventory Facility Collateral hereunder. The receipt by Gotham of all or
any part of the Proceeds of any sale, assignment, pledge, exchange or
disposition of any of the Inventory Facility Collateral shall not be deemed
or construed to be a consent to any such sale, assignment, pledge, exchange
or other disposition.
(d) It will keep or cause to be kept accurate and complete records
concerning the Inventory Facility Collateral, including without limitation
all payments and Proceeds received therefrom. Without limiting the
foregoing, all records shall be accurate and complete and shall be
maintained in trust for Gotham in separate containers in safe places. Upon
Gotham's request upon the occurrence and during the continuance of a
Termination Event, copies (or, to the extent practicable, originals of) all
Records shall be delivered to Gotham or its agents, as Gotham may direct;
provided, however, that SCI shall be entitled to make and retain copies of
such Records and shall be entitled to retain an executed original copy of
the Contract (and Gotham and its agents shall in any event be entitled to
access all original Records which are not delivered to them as aforesaid).
(e) It will keep its chief place of business and chief executive
office, and the offices where it keeps its records concerning the
Receivables, all related contracts and all purchase orders and other
agreements related to such Receivables (and all original documents relating
thereto), at the address(es) of SCI referred to in Section 5.01(l) or, upon
30 days' prior written notice to the Agent, at such other locations in
jurisdictions where all action required by Section 3.09 shall have been
taken and completed.
SECTION 6.03. As to Receivables . So long as any Aggregate
Unpaids remain outstanding or Gotham has any obligations under Article II or III
to purchase Receivables or make Loans, SCI covenants that:
(a) Compliance with laws, Etc. It will comply in all material respects
with all Requirements of Law in connection with its performance of its
obligations hereunder and under the Contract.
(b) Sales, Liens, Etc. Except as otherwise provided herein, it will not
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, or create or suffer to exist any option
with respect to, or create or suffer to exist any Adverse Claim (other than
any Adverse Claim created by Gotham) upon or with respect to, the Contract,
any Receivable (or Receivable Documentation), Inventory Facility Collateral
or any Collections in respect thereof, or assign any right to receive
income in respect thereof.
(c) Audits. From time to time during regular business hours (and, so
long as no Termination Event shall have occurred, upon at least three
Business Day's notice), SCI will permit the Agent, or its agents or
representatives, (i) to examine and make copies of the abstracts from all
books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of SCI relating to the
Receivables and the Contract, including, without limitation, those
pertaining to Collections and the application thereof; and (ii) to visit
the offices and properties of SCI for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to
the Contract and the Receivables and otherwise relating to the subject
matter of this Agreement, or SCI's performance hereunder (including without
limitation as Servicer) or under the Contract with any of the officers or
employees of SCI having knowledge of such matters. SCI expressly reserves
the right to restrict access to any of their facilities in accordance with
reasonably adopted procedures relating to safety and security. Section
12.06 notwithstanding, the reasonable costs and expenses incurred by the
Agent or its agents or representatives in connection with any such
examinations, copies, abstracts, visits or discussions occurring or made
(i) more than twice during any calendar year, (ii) prior to the occurrence
of a Termination Event and (iii) other than in connection with a change by
SCI of its information systems, shall be for the account of Gotham. The
Agent agrees to use its best efforts to ensure that any information
concerning the Guarantor and its Subsidiaries obtained by the Agent
pursuant to this Section 6.03(c) which is not contained in a report or
other document filed by the Guarantor with the SEC or otherwise available
to the public generally will, to the extent permitted by law and except as
may be required: by valid subpoena, by any Governmental Authority which
regulates the Agent, Gotham or the Liquidity Bank under any applicable
Requirement of Law (the "Regulators"), or in the normal course of the
business operations of the Agent, Gotham or the Liquidity Bank, be treated
confidentially by the Agent and, so long as no Termination Event or
Unmatured Termination Event has occurred and is then continuing, will not
be distributed or otherwise made available to any Person, other than the
Regulators and the employees, authorized agents or representatives,
attorneys, accountants of the Agent, Gotham or the Liquidity Bank, and the
Rating Agencies, and except as may otherwise be required by law unless the
Agent shall have given SCI or the Guarantor ten (10) days' prior written
notice of such distribution or other disclosure. In the event that the
Agent is required by subpoena or other legal process to disclose (otherwise
than to the Regulators, the employees, authorized agents, representatives,
attorneys or accountants of the Agent, Gotham or the Liquidity Bank or to
the Rating Agencies) any information concerning SCI and its Subsidiaries
(or any of them), the Agent shall provide prompt written notice thereof (to
the extent practicable, prior to disclosure; otherwise promptly after
disclosure) to SCI.
(d) Keeping of Records and Books of Account. It 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 administration and performance of the Contract and 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 of each existing Receivable).
(e) Performance and Compliance with Receivables and Contract. It will,
at its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contract, subject, however, to the right of SCI to dispute or
contest its obligations to perform or comply with any such provision,
covenant or other promise where : (I) SCI reasonably believes that such
performance or compliance is not required under the Contract; and (II) such
failure to perform or comply could not have an adverse effect on Gotham,
whether by reason of an effect on the collectibility (or timeliness of
payment or enforceability) of any Receivable, the value of any Inventory
Facility Collateral or in any other manner whatsoever.
(f) Collections. It will direct Toshiba to effect, and will
additionally use all best efforts to cause, all Collections with respect to
the Receivables and the Related Security to be deposited in the Lock-Box
Account and cause the Lock-Box Account to contain only Collections;
provided, that, upon the request of the Agent at any time following the
occurrence and during the continuance of a ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ will
instruct Toshiba to cause all Collections to be deposited directly into the
Agent's Account.
(g) Amendments to the Contract. It will not permit the amendment or
modification of any provision of the Contract, other than amendments or
modifications which could not have an adverse effect on Gotham, whether by
reason of an effect on the collectibility (or timeliness of payment or
enforceability) of any Receivable, the value of any Inventory Facility
Collateral or in any other manner whatsoever.
(h) Chattel Paper, Notes, etc. It will not permit any Receivable to be
evidenced by any "chattel paper", promissory note or "instrument" within
the meaning of the UCC in any applicable jurisdiction.
ARTICLE VII
ADMINISTRATION AND COLLECTION
SECTION 7.01. Designation of Servicer . The Receivables shall
be serviced, administered and collected by the Person (the "Servicer")
designated to do so from time to time in accordance with this Section 7.01.
Until Gotham or the Agent designates a new Servicer (which they shall have the
right to do only upon the occurrence and during the continuance of a Termination
Event), SCI is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. Whether or not SCI is
acting as Servicer, Gotham (or the Agent) may at any time notify Toshiba,
pursuant to the Toshiba Letter, that all payments under or in respect of the
Contract may only be made to the Agent (or as otherwise directed by the Agent).
The Servicer shall perform all of its duties hereunder at its own sole cost and
expense.
SECTION 7.02. Settlements; Settlement Statements . (a) Amounts
due between SCI and Gotham (whether as purchase price, repayment of Loan
balance, Collections due on Purchased Receivables, disbursement of Loans,
Discount, Interest, etc.) shall be settled on a net basis on each Settlement
Date. The foregoing shall not limit the parties obligations with respect to any
such amount, and any such amount which is not so settled shall continue to be
due and owing in full. To the extent the Outstanding Balance of Purchased
Receivables differs from any estimates of Receivables used to calculate
purchases pursuant to Section 2.02, or the aggregate Collections differ from any
estimate used to calculate payment of purchase price, payments to, or from,
Gotham and/or SCI shall be required. Payments due from SCI (with the exception
of Discount, interest, fees, expenses, gross-ups and indemnities) may be
effected by borrowing Loans, subject to the provisions in Article III.
(b) On each Settlement Date, the Servicer will deliver to the
Agent a Settlement Statement (each, a "Settlement Statement") in the form of
Exhibit C hereto, appropriately completed to reflect the settlements being
effected on such Date. The delivery of a Settlement Statement shall constitute a
representation and warranty by the Servicer as to the accuracy thereof.
SECTION 7.03. Duties of Servicer; Settlement Procedures . On
each day, the Servicer shall separately set aside and separately hold in trust
for Gotham: (i) all Collections relating to the Purchased Receivables received
on such day; (ii) all Collections on Receivables securing Loans which have
become Non-Recourse received on such day; and (iii) all Proceeds with respect to
the Inventory Facility Collateral received on such day. Amounts referred to in
clause (i) shall either be promptly paid to SCI as purchase price for additional
Purchased Receivables under Section 2.02 or shall be paid to Gotham on the next
succeeding Settlement Date in reduction of Aggregate Net Investment. Amounts
referred to in clause (ii) shall be promptly paid to Gotham on the next
succeeding Settlement Date in whole or partial repayment of the corresponding
Loan. Amounts not required to be set aside as provided in the first sentence
shall be paid promptly to SCI. On the Settlement Date in respect of each
Settlement Period, the Servicer shall deposit to the Agent's Account the amounts
set aside during such Settlement Period pursuant to the first sentence of this
Section and not previously distributed as provided above, together with any
other amounts owing to Gotham as contemplated by Section 7.02(a). The Servicer
shall take or cause to be taken all such actions as may be necessary or
advisable, in the exercise of sound business judgment, to collect each
Receivable from time to time, all in accordance with applicable Requirements of
Law and Contractual Obligations, with reasonable care and diligence. Each of
SCI, Gotham and the Agent hereby appoints as its agent the Servicer, from time
to time designated pursuant to Section 7.01, to enforce its respective rights
and interests in and under the Receivables, the Related Security and the
Contract. If instructed by the Agent, the Servicer shall segregate and deposit
with a bank (which may be the Agent) designated by the Agent all Collections
referred to above on the first Business Day following receipt by the Servicer of
such Collections. SCI shall deliver to the Servicer, and the Servicer shall hold
in trust for SCI and Gotham in accordance with their respective interests, all
documents, instruments and records (including, without limitation, computer
tapes or disks) which evidence or relate to Receivables.
SECTION 7.04. Rights of the Agent . At any time following the
designation of a Servicer other than SCI pursuant to Section 7.01:
(i) The Agent may direct Toshiba to make payment of all amounts due or
to become due under any Receivable directly to the Agent or its designee.
(ii) SCI shall, at the Agent's request and at SCI's expense, give
notice of such ownership of Receivables to Toshiba and direct Toshiba to
make such payments directly to the Agent or its designee.
(iii) SCI shall, at the Agent's request and at SCI's expense, (A)
assemble all of the documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the
Receivables, and the related Receivable Documentation and Related Security,
or which are otherwise necessary to collect the Receivables, and shall make
the same available to the Agent at a place reasonably 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
and/or Inventory Facility Collateral in a manner reasonably acceptable to
the Agent and shall, promptly upon receipt, remit all such cash, checks and
instruments of transfer, to the Agent or its designee.
(iv) The Agent may, in compliance with all Requirements of Law, take
any and all steps in SCI's name and on behalf of SCI and Gotham necessary
or desirable, in the good faith determination of the Agent, to collect all
amounts due under any and all Receivables and/or Inventory Loan Facility
Collateral, including, without limitation, endorsing SCI's name on checks
and instruments representing Collections, enforcing such Receivables and
the related Receivables Documentation, and adjusting, settling or
compromising the amount or payment thereof, in the same manner and to the
same extent as SCI might have done.
SECTION 7.05. Responsibilities of SCI. Anything herein to the
contrary notwithstanding:
(a) SCI shall perform all of its obligations under the Contract to the
same extent as if Receivables had not been sold hereunder and the exercise
by the Agent of its rights hereunder shall not relieve SCI from such
obligations or its obligations with respect to Receivables;
(b) neither the Agent nor Gotham shall have any obligation or liability
with respect to any Receivables or related Receivables Documentation, nor
shall any of them be obligated to perform any of the obligations of SCI
thereunder; and
(c) SCI shall pay to the Servicer a servicing fee of 0.25% per annum on
the outstanding portion of the Facility Amount and shall pay, or reimburse
the Servicer for, its reasonable costs and expenses in connection with
acting as Servicer hereunder.
SECTION 7.06. Semi-Annual Servicer's Certificate . SCI agrees
to deliver to the Agent on or before each April 15 and October 15 of each
calendar year, commencing April 15, 1997, an Officer's Certificate stating that
(i) a review of the activities of the Servicer, as the case may be, during the
preceding six months and of its performance under this Agreement was made under
the supervision of the officer signing such certificate and (b) to the best of
such officer's knowledge, based on such review, the Servicer has fully performed
its obligations under this Agreement in all material respects throughout such
six-month period (including its obligations to prepare and deliver each
Settlement Statement in compliance with the terms of this Agreement), or, if
there has been a default in the performance of any such obligation, specifying
each such default known to such officer and the nature and status thereof.
SECTION 7.07. Annual Independent Public Accountant Servicing
Report. Annually, on or before October 15 of each year, commencing October 15,
1997, the Servicer shall furnish to the Agent a statement from a firm of
independent public accountants stating that: (1) they have reviewed this
Agreement and the Settlement Statements and Receivables and Loan Reports for the
immediately preceding fiscal year and certain documents and records relating to
the servicing of the Receivables during such period, (2) the calculations
contained in such Settlement Statements have been performed in accordance with
the provisions of this Agreement and (3) based upon their review, nothing came
to their attention that caused them to believe that the information in any such
Settlement Statement or Receivables and Loan Report was not correct or that such
servicing was conducted in material violation of this Agreement, except for such
exceptions as shall be set forth in such report. The Servicer shall make
diligent efforts to comply with any recommendations contained in such report and
shall each deliver an Officer's Certificate not later than 30 days thereafter
describing the scope and progress of such efforts.
SECTION 7.08. Lock-Box Notices. The Agent is hereby authorized
at any time following the occurrence and during the continuance of a Termination
Event to date, and to deliver to the Lock-Box Bank, the Lock-Box Notice
delivered hereunder. SCI hereby, effective upon delivery of the Lock-Box Notice
to the Lock-Box Bank, transfers to Agent the exclusive ownership and control of
the Lock-Box Account; and shall take any further action that Agent may
reasonably request, to effect such transfer. In case any authorized signatory of
SCI whose signature shall appear in the Lock-Box Notice shall cease to have such
authority before the delivery of the Lock-Box Notice, such signature shall
nevertheless be valid and sufficient for all purposes as if such authority had
remained in force at the time of such delivery.
ARTICLE VIII
TERMINATION EVENTS
If any of the following events (each, a "Termination Event") shall occur and be
continuing:
(a)(i) the Servicer shall fail to perform or observe any term, covenant
or agreement hereunder (other than as referred to in clause (ii) of this
Section 8.01(a)) and such failure shall remain unremedied for ten (10)
Business Days or (ii) either the Servicer (if other than SCI) or SCI shall
fail to make any payment or deposit to be made by it hereunder when and as
due;
(b) SCI shall fail to perform or observe any term covenant or agreement
contained in Sections 6.01(b), 6.02 (a), (b), or (c) or 6.03(b) or (e)
through (h) inclusive or the Guarantor shall fail to perform or observe any
term covenant or agreement contained in Sections 6.01(b) or 6.01(c);
(c) any representation or warranty or statement made by (i) SCI (or any
of its officers) contained in Sections 5.01(b), (e), (i), (j), (l) or (m)
of this Agreement or (ii) the Guarantor (or any of its officers) contained
in Sections 5.02(b) or (e) of this Agreement shall prove to have been
incorrect in any material respect when made;
(d) (i) if SCI or the Guarantor shall fail to perform or observe any
other term, obligation, covenant or agreement contained herein, on its part
to be performed or observed, in this Agreement (other than, in the case of
SCI, in Sections 6.01(b), 6.02 (a), (b), or (c) or 6.03(b) or (e) through
(h) inclusive and in the case of the Guarantor, in Sections 6.01(b) or
6.01(c)) and any such failure remains unremedied, for forty-five (45) days
after the earlier of (I) notification of such failure by Gotham or (II) the
date on which any Executive Officer of SCI or of the Guarantor knew (or
should have known) of such failure, or (ii) if any representation or
warranty made by SCI or the Guarantor in this Agreement (other than, in the
case of SCI in Sections 5.01(b) (e), (i), (j), (l) or (m) and in the case
of the Guarantor, in Sections 5.02(b) or (e)), or in the Contract shall
prove to have been incorrect in any material respect when made, any such
representation or warranty continues to be incorrect in any material
respect for forty-five (45) days after the earlier of (I) notification of
such incorrectness by Gotham or (II) the date on which any executive
officer of SCI or of the Guarantor knew (or should have known) of such
incorrectness;
(e) with respect to any Debt or Debts in an aggregate principal amount
equal to or greater than $10,000,000, the Guarantor or any of its
Subsidiaries shall fail to pay any principal of or premium or interest on
any Debt when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to Debt of the Guarantor or any of its Subsidiaries if the effect
of such event or condition is to permit the holders of such Debt (or any
Trustee or other Person acting in their behalf) to: (I) accelerate the
maturity of any Debt or Debt of the Guarantor or any of its Subsidiaries in
an aggregate principal amount equal to or greater than $10,000,000; or (II)
terminate any undrawn commitment under any Contractual Obligation pursuant
to which any such Debt or Debts could otherwise have been incurred; or
(III) require that any such Debt be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased, or an
offer to prepay, redeem, purchase or defease such Debt be required to be
made; provided, that, in the case of any such event occurring with respect
to the Revolving Credit Agreement, any waiver thereof which is effective
under the Revolving Credit Agreement shall be effective hereunder if the
following conditions are met: (A) the waiver under the Revolving Credit
Agreement becomes effective within 30 days of the occurrence of the event
referred to above; (B) Gotham is granted, within such 30-day period,
pursuant to documentation satisfactory to Gotham and its counsel, the same
covenants, representations and agreements (including without limitation as
to increase in applicable margin) and (III) Gotham is granted (on a pro
rata basis, based on respective outstanding principal amounts, or as
applicable the outstanding Aggregate Net Investment), within such 30-day
period and pursuant to documentation satisfactory to Gotham and its
counsel, all monetary and other financial consideration received or agreed
to be provided the banks under the Revolving Credit Agreement in connection
with the waiver; and provided, further, that, any waiver of a Termination
Event under this Subsection (e) which becomes effective pursuant to the
foregoing proviso shall be effective only with respect to the specific
event with respect to which the waiver was given and shall not affect any
other, or subsequent, Termination Event;
(f) Gotham shall for any reason (other than release thereof by Gotham)
cease to have a valid and perfected first priority ownership interest, free
and clear of all Adverse Claims, in all Purchased Receivables and in the
Related Security and Collections with respect thereto; or Gotham shall for
any reason cease to have a valid and perfected first priority security
interest, free and clear of all Adverse Claims, in the Inventory Facility
Collateral;
(g) the Guarantor, SCI or any of its other Subsidiaries shall generally
not 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 the Guarantor, SCI or any of its other Subsidiaries seeking to
adjudicate it a 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, custodian or other
similar official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it, either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Guarantor, SCI or any
of its other Subsidiaries shall take any corporate action to authorize any
of the actions set forth above in this subsection (g);
(h) a Change of Control shall occur;
(i) a Material Adverse Change shall occur;
(j) (I) the Compromised Receivables Ratio shall at any time exceed 1%;
or (II) the Default Ratio shall at any time exceed 5%;
(k) the Contract shall for any reason cease to be in full force and
effect; then, and in any such event, the Agent shall, at the request of Gotham,
or may with the consent of Gotham, by notice (a "Notice of Termination") to
SCI declare the Termination Date to have occurred, whereupon: (i) Gotham's
obligations under Articles II and III shall automatically terminate; (ii) the
principal amount of all Loans which are not at the time Non-Recourse, together
with all interest, Discount, fees, and all other amounts unpaid hereunder shall
forthwith become immediately and automatically due and payable in full, without
demand, protest or further notice of any kind, all of which are hereby expressly
waived by SCI; provided, however, that in the event of the occurrence of any
event described above in subsection (g), the Termination Date shall
automatically occur, without notice or action of any kind by Gotham or the
Agent; (iii) the Agent may exercise with respect to the Receivables and Related
Security and with respect to the Inventory Facility Collateral all rights and
remedies available to a secured party upon default under the UCC as in effect in
the State of New York; and (iv) the Agent may exercise any and all other
remedies available at law, in equity, by contract or otherwise.
