EXHIBIT 10.15b
RECEIVABLES PURCHASE AGREEMENT
among
SOLECTRON FUNDING CORPORATION,
as Seller,
SOLECTRON CORPORATION,
individually and as Servicer,
RECEIVABLES CAPITAL CORPORATION,
as Issuer
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrator
Dated as of September 17, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1 Purchase Facility -1-
Section 1.2 Making Purchases -2-
Section 1.3 Purchased Interest Computation -3-
Section 1.4 Settlement Procedures -3-
Section 1.5 Fees -6-
Section 1.6 Payments and Computations, Etc. -6-
Section 1.7 Dividing or Combining Portions of the Capital of
the Purchased Interest -7-
Section 1.8 Increased Costs -7-
Section 1.9 Additional Discount on Portions of Purchased
Interest Bearing a Eurodollar Rate -7-
Section 1.10 Requirements of Law -8-
Section 1.11 Inability to Determine Eurodollar Rate -9-
ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1 Representations and Warranties; Covenants -9-
Section 2.2 Termination Events -9-
ARTICLE III INDEMNIFICATION
Section 3.1 Indemnities by the Seller -10-
Section 3.2 Indemnities by the Servicer -11-
Section 3.3 Contribution -12-
ARTICLE IV ADMINISTRATION AND COLLECTIONS
Section 4.1 Appointment of Servicer -12-
Section 4.2 Duties of Servicer -13-
Section 4.3 Lock-Box Arrangements -14-
Section 4.4 Enforcement Rights -15-
Section 4.5 Responsibilities of the Seller and Servicer -15-
Section 4.6 Servicing Fee -16-
ARTICLE V MISCELLANEOUS
Section 5.1 Amendments, Etc. -16-
Section 5.2 Notices, Etc. -16-
Section 5.3 Assignability -17-
Section 5.4 Costs, Expenses and Taxes -17-
Section 5.5 No Proceedings; Limitation on Payments -18-
Section 5.6 Confidentiality -18-
Section 5.7 GOVERNING LAW AND JURISDICTION -18-
Section 5.8 Execution in Counterparts -19-
Section 5.9 Survival of Termination -19-
Section 5.10 WAIVER OF JURY TRIAL -19-
Section 5.11 Entire Agreement -20-
Section 5.12 Headings -20-
Section 5.13 Issuer's Liabilities -20-
Section 5.14 Purchase and Sale Agreement -20-
EXHIBIT I DEFINITIONS
EXHIBIT II CONDITIONS OF PURCHASES
EXHIBIT III REPRESENTATIONS AND WARRANTIES
EXHIBIT IV COVENANTS
EXHIBIT V TERMINATION EVENTS
SCHEDULE I CREDIT AND COLLECTION POLICY
SCHEDULE II LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
SCHEDULE III TRADE NAMES
ANNEX A FORM OF LOCK-BOX AGREEMENT
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") is entered into
as of September 17, 1997 among SOLECTRON FUNDING CORPORATION, a Delaware
corporation, as seller (the "SELLER"), SOLECTRON CORPORATION, a Delaware
corporation, in its individual capacity ("SOLECTRON") and as initial
Servicer (in such capacity, together with its successors and permitted
assigns in such capacity, the "SERVICER"), RECEIVABLES CAPITAL
CORPORATION, a Delaware corporation (together with its successors and
permitted assigns, the "ISSUER"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, a national banking association, as administrator
(in such capacity, together with its successors and assigns in such
capacity, the "ADMINISTRATOR") for the Issuer pursuant to an agreement
between the Issuer and the Administrator.
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement.
References in the Exhibits hereto to "the Agreement" or "this
Agreement" refer to this Agreement, as amended, amended and restated,
modified or supplemented from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Issuer desires to
acquire such undivided variable percentage interest, as such percentage
interest shall be adjusted from time to time based upon, in part,
reinvestment payments which are made by the Issuer and additional
incremental payments made to the Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY (a) On the terms and conditions
hereinafter set forth, the Issuer hereby agrees to purchase and make
reinvestments in the Purchased Interest from the Seller from time to
time during the period from the date hereof to the Facility Termination
Date; PROVIDED, that nothing herein shall be deemed or construed as a
commitment by the Issuer to fund the purchase or reinvestment with
regard to the Purchased Interest through the issuance of Notes, and it
is hereby expressly acknowledged and agreed that such funding is, and
shall continue to be, wholly discretionary on the part of the Issuer.
Under no circumstances shall the Issuer make any such purchase or
reinvestment if after giving effect to such purchase or reinvestment the
aggregate outstanding Capital of the Purchased Interest would exceed the
Purchase Limit.
(b) The Seller may, upon at least 5 days' notice to the
Administrator, terminate the purchase facility provided in this SECTION
1 in whole or, from time to time, irrevocably reduce in part the unused
portion of the Purchase Limit; PROVIDED that each partial reduction
shall be in the amount of at least $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.
Section 1.2. MAKING PURCHASES. (a) Each purchase (but not
reinvestments) of undivided ownership interests with regard to the
Purchased Interest hereunder shall be made upon the Seller's irrevocable
written notice delivered to the Administrator in accordance with
SECTION 5.2 (which notice must be received by the Administrator prior to
11:00 a.m., San Francisco time) (i) three Business Days prior to the
requested purchase date, in the case of a purchase to be funded at the
Alternate Rate and based on the Eurodollar Rate, (ii) one Business Day
prior to the requested purchase date, in the case of a purchase to be
funded at the Alternate Rate and based on the Base Rate and (iii) one
Business Day prior to the requested purchase date, in the case of a
purchase to be funded at the CP Rate, which notice shall specify (A) the
amount requested to be paid to the Seller (such amount, which shall not
be less than $5,000,000, being the "CAPITAL" relating to the undivided
ownership interest then being purchased), (B) the date of such purchase
(which shall be a Business Day) and (C) the desired funding basis for
such purchase (which shall be either the Alternate Rate or the CP Rate)
and (unless such purchase shall be funded at the CP Rate) the duration
of the initial Fixed Period(s) for such purchase. If such terms relate
to the CP Rate, the Administrator shall promptly thereafter notify the
Seller whether such terms are acceptable to the Issuer. If the
Administrator notifies the Seller that such terms relating to the CP
Rate are unacceptable to the Issuer due to market conditions, then the
Seller shall be deemed to have requested that the purchase be funded at
the Alternate Rate and based on the Base Rate.
(b) On the date of each purchase (but not reinvestment) of undivided
ownership interests with regard to the Purchased Interest hereunder, the
Issuer shall, upon satisfaction of the applicable conditions set forth
in EXHIBIT II hereto, make available to the Seller in same day funds, at
Bank of America National Trust and Savings Association, account #
1233056289, an amount equal to the Capital relating to the undivided
ownership interest then being purchased.
(c) Effective on the date of each purchase pursuant to this
SECTION 1.2 and each reinvestment pursuant to SECTION 1.4, the Seller
hereby sells and assigns to the Issuer an undivided percentage ownership
interest in all its right, title and interest in (i) each Pool
Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) Collections with respect to, and other
proceeds of, such Pool Receivables and Related Security; provided that
the foregoing shall not include any Excluded Property.
(d) To secure all of the Seller's obligations (monetary or
otherwise) under this Agreement and the other Transaction Documents to
which it is a party, whether now or hereafter existing or arising, due
or to become due, direct or indirect, absolute or contingent, the Seller
hereby grants to the Administrator, for its benefit and the benefit of
the Issuer, a security interest in all of the Seller's right, title and
interest (including without limitation any undivided interest of the
Seller) in, to and under all of the following, whether now or hereafter
owned, existing or arising (A) all Pool Receivables, (B) all Related
Security with respect to each such Pool Receivable, (C) all Collections
with respect to each such Receivable, (D) the Lock-Box Accounts and any
related deposit accounts and post office boxes and all amounts on
deposit therein and all certificates and instruments, if any, from time
to time evidencing such Lock-Box Accounts, related deposit accounts and
post office boxes and amounts held or on deposit therein, and (E) all
proceeds of, and all amounts received or receivable under any or all of,
the foregoing; provided that the foregoing shall not include any
Excluded Property. The Administrator and the Issuer shall have, with
respect to the property described in this SECTION 1.2(d), and in
addition to all the other rights and remedies available to the
Administrator and the Issuer, all the rights and remedies of a secured
party under any applicable UCC.
Section 1.3. PURCHASED INTEREST COMPUTATION. The Purchased Interest
shall be initially computed on the date of the initial purchase
hereunder. Thereafter until the Termination Date, the Purchased
Interest shall be automatically recomputed (or deemed to be recomputed)
on each Business Day other than a Termination Day. The Purchased
Interest, as computed (or deemed recomputed) as of the day immediately
preceding the Termination Date, shall thereafter remain constant.
Notwithstanding the preceding sentence, the Purchased Interest shall
become zero when the Capital thereof and Discount thereon shall have
been paid in full, all the amounts owed by the Seller hereunder to the
Issuer, the Administrator, and any other Indemnified Party or Affected
Person, are paid in full and the Servicer shall have received the
accrued Servicing Fee thereon.
Section 1.4. SETTLEMENT PROCEDURES. (a) Collection of the Pool
Receivables shall be administered by the Servicer in accordance with the
terms of this Agreement. The Seller shall provide to the Servicer on a
timely basis all information needed for such administration, including
notice of the occurrence of any Termination Day and current computations
of the Purchased Interest.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or Servicer
or an Originator (including pursuant to Section 1.7 of the Purchase and
Sale Agreement):
(i) set aside and hold in trust (and, at the request of the
Administrator, segregate) for the Issuer, out of the percentage of such
Collections represented by the Purchased Interest, FIRST an amount equal
to the Discount accrued through such day for each Portion of Capital and
not previously set aside and SECOND, to the extent funds are available
therefor, an amount equal to the Servicing Fee accrued through such day
for the Purchased Interest and not previously set aside; and
(ii) subject to SECTION 1.4(f), if such day is not a Termination
Day, remit to the Seller, on behalf of the Issuer, the remainder of the
percentage of such Collections, represented by the Purchased Interest,
to the extent representing a return of Capital; such Collections shall
be automatically deemed reinvested in Pool Receivables, and in the
Related Security and Collections and other proceeds with respect
thereto, and the Purchased Interest shall be automatically recomputed
pursuant to SECTION 1.3;
(iii) if such day is a Termination Day, set aside, segregate and
hold in trust for the Issuer the entire remainder of the percentage of
the Collections represented by the Purchased Interest; PROVIDED that if
amounts are set aside and held in trust on any Termination Day and
thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or are waived by the Administrator, such previously set aside
amounts shall, to the extent representing a return of Capital, be
reinvested in accordance with the preceding PARAGRAPH (ii) on the day of
such subsequent satisfaction or waiver of conditions; and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing PARAGRAPH (ii) or the proviso to PARAGRAPH
(iii), release to the Seller (subject to SECTION 1.4(f)) for its own
account any Collections in excess of (x) such amounts, (y) the amounts
that are required to be set aside pursuant to PARAGRAPH (i) above and
(z) any other obligations of the Seller hereunder which are then due and
owing.
(c) The Servicer shall deposit into the Administration Account, on
the last day of each Settlement Period relating to a Portion of Capital
(or at such other times as the Administrator shall require upon the
occurrence and during the continuation of (i)any Unmatured Termination
Event or Termination Event or (ii) at any time when the Rated Long Term
Debt of Solectron is not rated at least Investment Grade, any event that
materially and adversely affects the Servicer's ability to perform its
obligations hereunder or the collectibility of the Receivables),
Collections held for the Issuer pursuant to SECTION 1.4(b)(i) or SECTION
1.4(f) with respect to such Portion of Capital and the lesser of (x) the
amount of Collections then held for the Issuer pursuant to SECTION
1.4(b)(iii) and (y) such Portion of Capital.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to SECTION 1.4(c) with respect to any Portion of Capital, the
Administrator shall cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a
Termination Day, FIRST to the Issuer (x) in payment in full of all
accrued Discount with respect to such Portion of Capital and (y) as a
reduction of such Portion of Capital pursuant to SECTION 1.4(f), if
applicable, and SECOND, from amounts set aside in respect of the
Servicing Fee pursuant to SECTION 1.4(b)(i), to the Servicer (payable in
arrears on the last day of each calendar month) in payment in full of
accrued Servicing Fees so set aside with respect to such Portion of
Capital; and
(ii) if such distribution occurs on a Termination Day, FIRST to
the Issuer in payment in full of all accrued Discount with respect to
such Portion of Capital, SECOND to the Issuer in payment in full of such
Portion of Capital, THIRD, if the Servicer is not Solectron or an
Affiliate thereof, to the Servicer in payment in full of all accrued
Servicing Fees with respect to such Portion of Capital, FOURTH, if the
Capital and accrued Discount with respect to each Portion of Capital has
been reduced to zero, and all accrued Servicing Fees payable to the
Servicer (if other than Solectron or an Affiliate thereof) have been
paid in full, to the Issuer, the Administrator and any other Indemnified
Party or Affected Person in payment in full of any other amounts owed
thereto by the Seller hereunder and then to the Servicer (if Solectron
or an Affiliate thereof) in payment in full of all accrued Servicing
Fees.
After the Capital and Discount and Servicing Fees with respect to the
Purchased Interest, and any other amounts payable by the Seller to the
Issuer, the Administrator or any other Indemnified Party or Affected
Person hereunder, have been paid in full, all additional Collections
with respect to the Purchased Interest shall be paid to the Seller for
its own account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable
is reduced or adjusted as a result of any defective, rejected, returned,
repossessed goods or services, or any discount or other adjustment made
by the Seller, or any setoff or dispute between the Seller and an
Obligor, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of such reduction or
adjustment;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (h) or (o) of EXHIBIT III is not true with respect to any
Pool Receivable, the Seller shall be deemed to have received on such day
a Collection of such Pool Receivable in full;
(iii) except as provided in PARAGRAPH (i) or (ii) of this
SECTION 1.4(e), or as otherwise required by applicable law or the
relevant Contract, all Collections received from an Obligor of any
Receivable shall be applied to the Receivables of such Obligor in the
order of the age of such Receivables, starting with the oldest such
Receivable, unless such Obligor designates in writing its payment for
application to specific Receivables; and
(iv) if and to the extent the Administrator or the Issuer shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding)
any amount received by it hereunder, such amount shall be deemed not to
have been so received but rather to have been retained by the Seller
and, accordingly, the Administrator or the Issuer, as the case may be,
shall have a claim against the Seller for such amount, payable
immediately.
(f) except for reductions in connection with the division or
combination of Portions of Capital pursuant to SECTION 1.7 hereof, if at
any time the Seller shall wish to cause the reduction of a Portion of
Capital (but not to commence the liquidation, or reduction to zero, of
the entire Capital of the Purchased Interest), the Seller may do so as
follows:
(i) the Seller shall give the Administrator at least five
Business Days' prior written notice thereof (including the amount of
such proposed reduction and the proposed date on which such reduction
will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections with respect
to such Portion of Capital not to be reinvested pursuant to SECTION
1.4(b)(ii) until the amount thereof not so reinvested shall equal the
desired amount of reduction, and
(iii) the Servicer shall hold such Collections in trust for the
Issuer, for payment to the Administrator on the last day of the current
Settlement Period relating to such Portion of Capital, and the
applicable Portion of Capital shall be deemed reduced in the amount to
be paid to the Administrator only when in fact finally so paid;
provided that,
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $100,000, and the entire
Capital of the Purchased Interest after giving effect to such reduction
shall be not less than $10,000,000 and shall be in an integral multiple
of $1,000,000,
B. the Seller shall choose a reduction amount, and the date
of commencement thereof, so that to the extent practicable such
reduction shall commence and conclude in the same Fixed Period, and
C. if two or more Portions of Capital shall be outstanding at
the time of any proposed reduction, such proposed reduction shall be
applied, unless the Seller shall otherwise specify in the notice given
pursuant to SECTION 1.4(f)(i), to the Portion of Capital with the
shortest remaining Fixed Period.
Section 1.5. Fees. The Seller shall pay to the Administrator certain
fees in the amounts and on the dates set forth in a letter dated
September 17, 1997 between the Seller and the Administrator delivered
pursuant to SECTION 1 of EXHIBIT II, as such letter agreement may be
amended, amended and restated or otherwise modified from time to time.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be
paid or deposited by the Seller or the Servicer hereunder shall be paid
or deposited no later than 11:00 a.m. (San Francisco time) on the day
when due in same day funds in United States dollars to
the Administration Account. All amounts received after 11:00 a.m. (San
Francisco time) will be deemed to have been received on the immediately
succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay interest
on any amount not paid or deposited by the Seller (whether as Servicer
or otherwise) when due hereunder, at an interest rate equal to 2.0% PER
ANNUM above the Base Rate, payable on demand.
(c) All computations of interest under SUBSECTION (b) above and all
computations of Discount, fees, and other amounts hereunder shall be
made on the basis of a year of 360 days for the actual number of days
elapsed. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be
made on the next succeeding Business Day and such extension of time
shall be included in the computation of such payment or deposit.
Section 1.7. DIVIDING OR COMBINING PORTIONS OF THE CAPITAL OF THE
PURCHASED INTEREST. The Seller may, on the last day of any Fixed
Period, either (i) divide the Capital of the Purchased Interest into two
or more portions (each, a "PORTION OF CAPITAL") equal, in aggregate, to
the Capital of the Purchased Interest, PROVIDED that after giving effect
to such division the amount of each such Portion of Capital shall not be
less than $5,000,000, or (ii) combine any two or more Portions of
Capital outstanding on such last day and having Fixed Periods ending on
such last day into a single Portion of Capital equal to the aggregate of
the Capital of such Portions of Capital.
Section 1.8. INCREASED COSTS. (a) If the Administrator, the Issuer,
any Purchaser, any other Program Support Provider or any of their
respective Affiliates (each an "AFFECTED PERSON") determines that the
existence of or compliance with (i) any law or regulation or any change
therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (ii) any request,
guideline or directive from any central bank or other Governmental
Authority (whether or not having the force of law) issued or occurring
after the date of this Agreement affects or would affect the amount of
capital required or expected to be maintained by such Affected Person
and such Affected Person determines that the amount of such capital is
increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables
related to this Agreement or any related liquidity facility or credit
enhancement facility and other commitments of the same type, then, upon
demand by such Affected Person (with a copy to the Administrator), the
Seller shall immediately pay to the Administrator, for the account of
such Affected Person, from time to time as specified by such Affected
Person, additional amounts sufficient to compensate such Affected Person
in the light of such circumstances, to the extent that such Affected
Person reasonably determines such increase in capital to be allocable to
the existence of any of such commitments. A certificate as to such
amounts submitted to the Seller and the Administrator by such Affected
Person shall be conclusive and binding for all purposes, absent manifest
error.
(b) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements
referred to in SECTION 1.9) in or in the interpretation of any law or
regulation or (ii) compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to any Affected
Person of agreeing to purchase or purchasing, or maintaining the
ownership of the Purchased Interest in respect of which Discount is
computed by reference to the Eurodollar Rate, then, upon demand by such
Affected Person, the Seller shall immediately pay to such Affected
Person, from time to time as specified, additional amounts sufficient to
compensate such Affected Person for such increased costs. A certificate
as to such amounts submitted to the Seller by such Affected Person shall
be conclusive and binding for all purposes, absent manifest error.
Section 1.9. ADDITIONAL DISCOUNT ON PORTIONS OF PURCHASED INTEREST
BEARING A EURODOLLAR RATE. The Seller shall pay to any Affected Person,
so long as such Affected Person shall be required under regulations of
the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional Discount on the unpaid
Capital of the applicable Portion of Capital during each Fixed Period in
respect of which Discount is computed by reference to the Eurodollar
Rate, for such Fixed Period, at a rate per annum equal at all times
during such Fixed Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Fixed Period from (ii) the rate obtained by
dividing such Eurodollar Rate referred to in clause (i) above by that
percentage equal to 100% minus the Eurodollar Reserve Percentage for
such Fixed Period, payable on each date on which Discount is payable on
the applicable Portion of Capital. Such additional Discount shall be
determined by the Affected Person and notified to the Seller through the
Administrator within 60 days after any Discount payment is made with
respect to which such additional Discount is requested. A certificate
as to such additional Discount submitted to the Seller by the Affected
Person shall be conclusive and binding for all purposes, absent manifest
error.
Section 1.10. REQUIREMENTS OF LAW. In the event that any Affected
Person determines that the existence of or compliance with (a) any law
or regulation or any change therein or in the interpretation or
application thereof, in each case adopted, issued or occurring after the
date hereof or (b) any request, guideline or directive from any central
bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement:
(i) does or shall subject such Affected Person to any tax of any
kind whatsoever with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital relating thereto, or does
or shall change the basis of taxation of payments to such Affected
Person on account of Collections, Discount or any other amounts payable
hereunder (excluding taxes imposed on the overall net income of such
Affected Person, and franchise taxes imposed on such Affected Person, by
the jurisdiction under the laws of which such Affected Person is
organized or has a lending office or a political subdivision thereof);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
purchases, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Affected Person which
are not otherwise included in the determination of the Eurodollar Rate
or the Base Rate hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
and the result of any of the foregoing is (x) to increase the cost to
such Affected Person of acting as Administrator, or of agreeing to
purchase or purchasing or maintaining the ownership of undivided
ownership interests with regard to the Purchased Interest (or interests
therein) or any Portion of Capital in respect of which Discount is
computed by reference to the Eurodollar Rate or the Base Rate or (y) to
reduce any amount receivable hereunder (whether directly or indirectly)
funded or maintained by reference to the Eurodollar Rate or the Base
Rate, then, in any such case, upon demand by such Affected Person the
Seller shall promptly pay such Affected Person any additional amounts
necessary to compensate such Affected Person for such increased cost or
reduced amount receivable. All such amounts shall be payable as
incurred. A certificate from such Affected Person to the Seller
certifying, in reasonably specific detail, the basis for, calculation
of, and amount of such increased costs or reduced amount receivable
shall be conclusive in the absence of manifest error; PROVIDED, however,
that no Affected Person shall be required to disclose any confidential
or tax planning information in any such certificate.
Section 1.11. INABILITY TO DETERMINE EURODOLLAR RATE. In the event
that the Administrator shall have determined prior to the first day of
any Fixed Period (which determination shall be conclusive and binding
upon the parties hereto) by reason of circumstances affecting the
interbank Eurodollar market, either (a) dollar deposits in the relevant
amounts and for the relevant Fixed Period are not available, (b)
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Fixed Period or (c) the Eurodollar Rate
determined pursuant hereto does not accurately reflect the cost to the
Issuer (as conclusively determined by the Administrator) of maintaining
any Portion of Capital during such Fixed Period, the Administrator shall
promptly give telephonic notice of such determination, confirmed in
writing, to the Seller prior to the first day of such Fixed Period.
Upon delivery of such notice (a) no Portion of Capital shall be funded
thereafter at the Alternate Rate determined by reference to the
Eurodollar Rate, unless and until the Administrator shall have given
notice to the Seller that the circumstances giving rise to such
determination no longer exist, and (b) with respect to any outstanding
Portions of Capital then funded at the Alternate Rate determined by
reference to the Eurodollar Rate, such Alternate Rate shall
automatically be converted to the Alternate Rate determined by reference
to the Base Rate at the respective last days of the then current Fixed
Periods relating to such Portions of Capital.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
Seller and the Servicer hereby makes the representations and warranties
set forth in EXHIBIT III, and each of the Seller and the Servicer hereby
agrees to perform and observe the covenants set forth in EXHIBIT IV.
Section 2.2. TERMINATION EVENTS. If any Termination Event shall occur
and be continuing, the Administrator may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case
the Facility Termination Date shall be deemed to have occurred);
PROVIDED that, automatically upon the occurrence of any event (without
any requirement for the passage of time or the giving of notice)
described in SUBSECTION (g) of EXHIBIT V, the Facility Termination Date
shall occur. Upon any such declaration, occurrence or deemed occurrence
of the Facility Termination Date, the Issuer and the Administrator shall
have, in addition to the rights and remedies which they may have under
this Agreement or otherwise, all other rights and remedies provided
after default under the UCC and under other applicable law, which rights
and remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other
rights that the Administrator or the Issuer or any of their respective
Affiliates, employees, agents, successors, transferees or assigns (each,
an "INDEMNIFIED PARTY") may have hereunder or under applicable law, the
Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, damages, expenses, losses and liabilities
(including Attorney Costs) (all of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS") arising out of or resulting from
this Agreement (whether directly or indirectly) or the use of proceeds
of purchases or reinvestments or the ownership of the Purchased
Interest, or any interest therein, or in respect of any Receivable or
any Contract, excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of
such Indemnified Party, or (b) any overall net income taxes or franchise
taxes imposed on such Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized or any political
subdivision thereof. Without limiting or being limited by the
foregoing, but subject to the exclusions set forth in the preceding
sentence, the Seller shall pay on demand to each Indemnified Party any
and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from
any of the following:
(i) the failure of any Receivable included in the calculation of
the Net Receivables Pool Balance as an Eligible Receivable to be an
Eligible Receivable, the failure of any information contained in a
Seller Report to be true and correct, or the failure of any other
information provided to the Issuer or the Administrator with respect to
Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or statement
made or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct in all
respects when made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract
to conform to any such applicable law, rule or regulation;
(iv) the failure to vest (A) in the Issuer a valid and enforceable
perfected undivided percentage ownership interest, to the extent of the
Purchased Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections with respect
thereto and (B) in the Administrator, on its behalf and on behalf of the
Issuer, a first priority perfected security interest in the items
described in SECTION 1.2(d), in each case, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time
of any purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset, billing adjustment or defense of
the Obligor to the payment of any Receivable in, or purporting to be in,
the Receivables Pool (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the goods
or services related to such Receivable or the furnishing or failure to
furnish such goods or services or relating to collection activities with
respect to such Receivable (if such collection activities were performed
by the Seller or any of its Affiliates acting as Servicer or by any
agent or independent contractor retained by the Seller or any of its
Affiliates);
(vii) any failure of the Seller to perform its duties or
obligations in accordance with the provisions hereof or to perform its
duties or obligations under the Contracts;
(viii) any breach of warranty, products liability or other claim,
investigation, litigation or proceeding arising out of or in connection
with merchandise, insurance or services which are the subject of any
Contract;
(ix) the commingling of any portion of Collections of Pool
Receivables at any time with other funds;
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments or the
ownership of the Purchased Interest or in respect of any Receivable,
Related Security or Contract;
(xi) any reduction in Capital as a result of the distribution of
Collections pursuant to SECTION 1.4(d), in the event that all or a
portion of such distributions shall thereafter be rescinded or otherwise
must be returned for any reason; or
(xii) any action or omission by the Seller which constitutes or
results in the breach of any covenant or any representation and warranty
made by Solectron in the Solectron Credit Agreement.
For purposes of this Article III, in determining whether any
representation or warranty or information was true and correct, any
qualification or limitation in such representation and warranty or
information as to materiality, material adverse effect, knowledge or
limitation on enforcement shall be disregarded.
Section 3.2. INDEMNITIES BY THE SERVICER. Without limiting any other
rights that the Administrator or the Issuer or other Indemnified Party
may have hereunder or under applicable law, the Servicer hereby agrees
to indemnify each Indemnified Party from and against any and all
Indemnified Amounts arising out of or resulting from the breach by the
Servicer of any of the covenants or representations and warranties made
by it herein or in any other Transaction Document or from the
negligence, willful misconduct or bad faith of the Servicer in the
performance of its duties hereunder or under any other Transaction
Document.
Section 3.3. CONTRIBUTION. If for any reason the indemnification
provided above in this Article III is unavailable to an Indemnified
Party or is insufficient to hold an Indemnified Party harmless, then the
Seller or the Servicer, as the case may be, shall contribute to the
maximum amount payable or paid to such Indemnified Party in such
proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and the Seller or the
Servicer, as the case may be, on the other hand, but also the relative
fault of such Indemnified Party (if any) and the Seller or the Servicer,
as the case may be, and any other relevant equitable considerations.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF SERVICER. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person
so designated from time to time as Servicer in accordance with this
SECTION 4.1. Until the Administrator gives notice to the Seller and the
Servicer (in accordance with this SECTION 4.1) of the designation of a
new Servicer, Solectron is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Servicer pursuant to the
terms hereof. Upon the occurrence and during the continuation of (i)
any Unmatured Termination Event or Termination Event or (ii) at any time
when the Rated Long Term Debt of Solectron is not rated at least
Investment Grade, any event that materially and adversely affects the
Servicer's ability to perform its obligations hereunder or the
collectibility of the Receivables, the Administrator may designate as
Servicer any Person (including itself) to succeed Solectron or any
successor Servicer, on the condition in each case that any such Person
so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in
SECTION 4.1(a) hereof, Solectron (or any successor Servicer) agrees that
it will terminate its activities as Servicer hereunder in a manner which
the Administrator determines will facilitate the transition of the
performance of such activities to the new Servicer, and Solectron shall
cooperate with and assist such new Servicer. Such cooperation shall
include (without limitation) access to and transfer of records and use
by the new Servicer of all books, records, other relevant data,
licenses, hardware or software necessary or desirable to collect the
Pool Receivables and the Related Security.
(c) Solectron acknowledges that the Administrator and the Issuer
have relied on Solectron's agreement to act as Servicer hereunder in
making their decision to execute and deliver this Agreement.
Accordingly, Solectron agrees that it will not voluntarily resign as
Servicer and the Seller agrees that it will not terminate Solectron as
Servicer without the prior written consent of the Administrator.
(d) The Servicer may delegate its duties and obligations hereunder
to any subservicer (each, a "SUB-SERVICER"); provided that, in each such
delegation, (i) such Sub-Servicer shall agree in writing to perform the
duties and obligations of the Servicer pursuant to the terms hereof,
(ii) the Servicer shall remain primarily liable to the Issuer for the
performance of the duties and obligations so delegated, (iii) the
Seller, the Administrator and the Issuer shall have the right to look
solely to the Servicer for performance and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder
by giving notice of its desire to terminate such agreement to the
Servicer (and the Servicer shall provide appropriate notice to such Sub-
Servicer).
Section 4.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause
to be taken all such action as may be necessary or advisable to collect
each Pool Receivable from time to time, all in accordance with this
Agreement and all applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and
Collection Policy. The Servicer shall set aside (and, if applicable,
segregate) and hold in trust for the accounts of the Seller and the
Issuer the amount of the Collections to which each is entitled in
accordance with ARTICLE I hereto. The Servicer may, in accordance with
the Credit and Collection Policy, extend the maturity of any Pool
Receivable (but not beyond thirty (30) days) and extend the maturity or
adjust the Outstanding Balance of any Defaulted Receivable as the
Servicer may determine to be appropriate to maximize Collections
thereof; PROVIDED, HOWEVER, that (i) such extension or adjustment shall
not alter the status of such Pool Receivable as a Delinquent Receivable
or a Defaulted Receivable or limit the rights of the Issuer or the
Administrator under this Agreement and (ii) if a Termination Event has
occurred and is continuing and Solectron is still serving as Servicer,
Solectron may make such extension or adjustment only upon the prior
written approval of the Administrator. The Seller shall deliver (and
shall cause each Originator to deliver) to the Servicer and the Servicer
shall hold for the benefit of the Seller and the Administrator (for the
benefit of the Issuer and individually) in accordance with their
respective interests, all records and documents (including without
limitation computer tapes or disks) with respect to each Pool
Receivable. Notwithstanding anything to the contrary contained herein,
the Administrator may direct the Servicer (whether the Servicer is
Solectron or any other Person) to commence or settle any legal action to
enforce collection of any Pool Receivable or to foreclose upon or
repossess any Related Security; PROVIDED, HOWEVER, that no such
direction may be given unless a Termination Event has occurred and is
continuing.
(b) The Servicer shall as soon as practicable following actual
receipt of collected funds turn over to the Seller the collections of
any indebtedness that is not a Pool Receivable, less, in the event that
Solectron or one of its Affiliates is not the Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering such collections; PROVIDED,
HOWEVER, the Servicer shall not be under any obligation to remit any
such funds to the Seller unless and until the Servicer has received from
the Seller evidence satisfactory to the Administrator and the Servicer
that the Seller is entitled to such funds hereunder and under applicable
law. The Servicer, if other than Solectron or one of its Affiliates,
shall as soon as practicable upon demand, deliver to the Seller all
records in its possession which evidence or relate to any indebtedness
that is not a Pool Receivable, and copies of records in its possession
which evidence or relate to any indebtedness that is a Pool Receivable.
(c) Notwithstanding anything to the contrary contained in this
ARTICLE IV, the Servicer, if not Solectron or one of its Affiliates,
shall have no obligation to collect, enforce or take any other action
described in this ARTICLE IV with respect to any indebtedness that is
not a Pool Receivable other than to deliver to the Seller the
collections and documents with respect to any such indebtedness as
described in SECTION 4.2(b). It is expressly understood and agreed by
the parties that such Servicer's duties in respect of any indebtedness
that is not a Pool Receivable are set forth in this SECTION 4.2 in their
entirety. Upon delivery by such Servicer of funds or records relating
to any indebtedness that is not a Pool Receivable to the Seller, such
Servicer shall have discharged in full all of its responsibilities to
make any such delivery.
(d) The Servicer's obligations (other than indemnity obligations)
hereunder shall terminate on the later of (i) the Facility Termination
Date and (ii) the date on which all amounts required to be paid to the
Issuer, the Administrator and any other Indemnified Party or Affected
Person hereunder shall have been paid in full. After such termination,
the Servicer shall promptly deliver to the Seller all books, records and
related materials that the Seller previously provided to the Servicer in
connection with this Agreement.
Section 4.3. LOCK-BOX ARRANGEMENTS. Prior to the initial purchase
hereunder, in accordance with SECTION 1 of EXHIBIT II, the Seller and
the Servicer shall enter into Lock-Box Agreements with all of the Lock-
Box Banks, and deliver original counterparts thereof to the
Administrator. Upon the occurrence and during the continuance of a
Termination Event, the Administrator may at any time thereafter (i)
give notice to each Lock-Box Bank that the Administrator is assuming
exclusive ownership and control of the Lock-Box Accounts, and (ii) take
any or all other actions permitted under the applicable Lock-Box
Agreement or under applicable law, including causing the proceeds that
are sent to the respective Lock-Box Accounts to be redirected pursuant
to the Administrator's instructions rather than deposited in the
applicable Lock-Box Account. Each of the Seller and the Servicer hereby
agrees that if the Administrator, at any time, takes any action set
forth in the preceding sentence, the Administrator shall have exclusive
control of the proceeds (including Collections) of all Pool Receivables
and each of the Seller and the Servicer hereby further agrees to take
any other action that the Administrator may reasonably request to
transfer such control. Any proceeds of Pool Receivables received by the
Seller or the Servicer thereafter shall be sent immediately to the
Administrator. The parties hereto hereby acknowledge that if at any
time the Administrator takes control of any Lock-Box Account, the
Administrator shall not have any rights to the funds therein in excess
of the unpaid amounts due to the Administrator, the Issuer or any other
Person hereunder and the Administrator shall distribute or cause to be
distributed such funds in accordance with SECTION 4.2(b) hereof
(including the proviso thereto) and ARTICLE I hereof (in each case as if
such funds were held by the Servicer thereunder); PROVIDED, HOWEVER,
that the Administrator shall not be under any obligation to remit any
such funds to the Seller or any other Person unless and until the
Administrator has received from the Seller or such Person evidence
satisfactory to the Administrator that the Seller or such Person is
entitled to such funds hereunder and under applicable law.
Section 4.4. ENFORCEMENT RIGHTS. (a) At any time following the
occurrence of a Termination Event or the designation of a Servicer
(other than Solectron or any of its Affiliates) pursuant to SECTION 4.1
hereof:
(i) the Administrator may direct the Obligors that payment of all
amounts payable under any Pool Receivable be made directly to the
Administrator or its designee;
(ii) the Administrator may instruct the Seller to give notice of
the Issuer's interest in Pool Receivables to each Obligor, which notice
shall direct that payments be made directly to the Administrator or its
designee, and upon such instruction from the Administrator the Seller
shall give such notice at the expense of the Seller; provided, that if
the Seller fails to so notify each Obligor, the Administrator may so
notify the Obligors; and
(iii) the Administrator may request the Seller to, and upon such
request the Seller shall, (A) assemble all of the records necessary or
desirable to collect the Pool Receivables and the Related Assets, and
transfer or license the use of, to the new Servicer, all software
necessary or desirable to collect the Pool Receivables and the Related
Assets, and make the same available to the Administrator or its designee
at a place selected by the Administrator, and (B) segregate all cash,
checks and other instruments received by it from time to time
constituting Collections with respect to the Pool Receivables in a
manner acceptable to the Administrator and, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to the Administrator or its designee.
(b) Upon the occurrence and during the continuation of any Unmatured
Termination Event or Termination Event or any event that materially and
adversely affects the Servicer's ability to perform its obligations
hereunder or the collectibility of the Receivables, the Seller hereby
authorizes the Administrator, and irrevocably appoints the Administrator
as its attorney-in-fact with full power of substitution and with full
authority in the place and stead of the Seller, which appointment is
coupled with an interest, to take any and all steps in the name of the
Seller and on behalf of the Seller necessary or desirable, in the
determination of the Administrator, to collect any and all amounts or
portions thereof due under any and all Pool Receivables or Related
Assets, including, without limitation, endorsing the name of the Seller
on checks and other instruments representing Collections and enforcing
such Pool Receivables and Related Assets. Notwithstanding anything to
the contrary contained in this SUBSECTION (b), none of the powers
conferred upon such attorney-in-fact pursuant to the immediately
preceding sentence shall subject such attorney-in-fact to any liability
if any action taken by it shall prove to be inadequate or invalid, nor
shall they confer any obligations upon such attorney-in-fact in any
manner whatsoever.
Section 4.5. RESPONSIBILITIES OF THE SELLER AND SERVICER. (a) Anything
herein to the contrary notwithstanding, Solectron shall cause each
Originator to perform all of its obligations under the Contracts related
to the Pool Receivables to the same extent as if interests in such Pool
Receivables had not been transferred hereunder and the exercise by the
Administrator or the Issuer of its rights hereunder shall not relieve
Solectron or such Originator from such obligations, and the Seller shall
pay when due any taxes, including, without limitation, any sales taxes
payable in connection with the Pool Receivables and their creation and
satisfaction. The Administrator and the Issuer shall not have any
obligation or liability with respect to any Pool Receivable or any
Related Assets, nor shall any of them be obligated to perform any of the
obligations of the Seller or Solectron or each Originator under any of
the foregoing.
(b) Solectron hereby irrevocably agrees that if at any time it shall
cease to be the Servicer hereunder, it shall act (if the then current
Servicer so requests) as the data-processing agent of the Servicer and,
in such capacity, Solectron shall conduct the data-processing functions
of the administration of the Receivables and the Collections thereon in
substantially the same way that Solectron conducted such data-processing
functions while it acted as the Servicer.
Section 4.6. SERVICING FEE. For so long as the Servicer is Solectron
or an Affiliate of Solectron, the Servicer shall be paid a fee, through
distributions contemplated by SECTION 1.4(d), equal to 0.50% PER ANNUM
of the average outstanding Capital. If the Servicer is not Solectron or
an Affiliate of Solectron, then the Servicer shall be paid a fee,
through distributions contemplated by SECTION 1.4(d), in an amount
negotiated in good faith by such Servicer and by the Administrator in
the Administrator's sole discretion (which fee shall be based on a per
annum percentage rate agreed upon by such Servicer and the
Administrator).
ARTICLE V
MISCELLANEOUS
Section 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by the Seller or Servicer
therefrom shall be effective unless in a writing signed by the
Administrator, and, in the case of any amendment, by the Seller and the
Servicer and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
given. No failure on the part of the Issuer or Administrator to
exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Section 5.2. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which
shall include facsimile communication) and sent or delivered, to each
party hereto, at its address set forth under its name on the signature
pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. Notices and
communications by facsimile shall be effective when sent (and shall be
followed by hard copy sent by first class mail), and notices and
communications sent by other means shall be effective when received.
Section 5.3. ASSIGNABILITY. (a) This Agreement and the Issuer's rights
and obligations herein (including ownership of the Purchased Interest)
shall be assignable, in whole or in part, by the Issuer and its
successors and assigns with the prior written consent of the Seller;
PROVIDED, however, that such consent shall not be unreasonably withheld;
and PROVIDED, further, however, that no such consent shall be required
if the assignment is made to Bank of America, any Affiliate of Bank of
America (other than a director or officer of Bank of America), any
Purchaser or other Program Support Provider or any Person which is (i)
in the business of issuing short-term promissory notes and (ii)
associated with or administered by Bank of America or any Affiliate of
Bank of America. Each assignor may, in connection with the assignment,
disclose to the applicable assignee any information relating to
Solectron, the Seller or the Pool Receivables furnished to such assignor
by or on behalf of Solectron, the Seller, the Issuer or the
Administrator.
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "PURCHASER") party to the Liquidity Asset Purchase
Agreement or to any other Program Support Provider participating
interests in the Purchased Interest. In the event of any such grant by
the Issuer of a participating interest to a Purchaser or other Program
Support Provider, the Issuer shall remain responsible for the
performance of its obligations hereunder. The Seller agrees that each
Purchaser or other Program Support Provider shall be entitled to the
benefits of SECTIONS 1.8, 1.9 and 1.10 with respect to its participating
interest.
(c) This Agreement and the rights and obligations of the
Administrator hereunder shall be assignable, in whole or in part, by the
Administrator and its successors and assigns.
(d) Except as provided in SECTION 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its obligations hereunder or
any interest herein without the prior written consent of the
Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it or
by its agents.
Section 5.4. COSTS, EXPENSES AND TAXES. (a) In addition to the rights
of indemnification granted under SECTION 3.1 hereof, the Seller agrees
to pay on demand all costs and expenses in connection with the
preparation, execution, delivery and administration (including, without
limitation, periodic auditing of Pool Receivables) of this Agreement,
the Purchase and Sale Agreement, the Liquidity Asset Purchase Agreement,
any asset purchase agreement, reimbursement agreement, letter of credit
or similar agreement relating to the sale or transfer of interests in
Purchased Interests and the other documents and agreements to be
delivered hereunder, and of any amendment, modification or waiver of any
of the foregoing, including, without limitation, Attorney Costs for the
Administrator, the Issuer and their respective Affiliates and agents
with respect thereto and with respect to advising the Administrator, the
Issuer and their respective Affiliates and agents as to their rights and
remedies under this Agreement and the other Transaction Documents, and
all costs and expenses, if any (including, without limitation, Attorney
Costs), of the Administrator, the Issuer and their respective Affiliates
and agents, in connection with the enforcement of this Agreement and the
other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp
and other taxes and fees payable in connection with the execution,
delivery, filing and recording of this Agreement or the other documents
or agreements to be delivered hereunder, and agrees to save each
Indemnified Party harmless from and against any liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes
and fees.
Section 5.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. Each of the
Seller, the Servicer, the Administrator, each assignee of the Purchased
Interest or any interest therein and each Person which enters into a
commitment to purchase the Purchased Interest or interests therein
hereby covenants and agrees that it will not institute against, or join
any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or
other proceeding under any federal or state bankruptcy or similar law,
for one year and one day after the latest maturing Note issued by the
Issuer is paid in full.
Section 5.6. CONFIDENTIALITY. Unless otherwise required by applicable
law, the Seller and the Servicer each agree to maintain the
confidentiality of this Agreement and the other Transaction Documents
(and all drafts thereof) in communications with third parties and
otherwise; PROVIDED that this Agreement may be disclosed to (a) third
parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably
satisfactory to the Administrator, and (b) the Seller's legal counsel
and auditors if they agree to hold it confidential.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF CALIFORNIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION (OR THE EFFECT OF
PERFECTION OR NON-PERFECTION) OF THE INTERESTS OF THE ISSUER IN THE
POOL RECEIVABLES, AND THE OTHER ITEMS DESCRIBED IN SECTION 1.2(d), IS
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA.
(b) EACH SOLECTRON PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF THE COURT OF THE STATE OF CALIFORNIA SITTING IN SAN FRANCISCO AND OF
THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF CALIFORNIA,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE EXTENT PERMITTED BY
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATOR OR THE ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST ANY SOLECTRON PARTY
OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH SOLECTRON
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN THIS CLAUSE (b). EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY
TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 5.2. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.
Section 5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall
constitute one and the same agreement.
Section 5.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.8,
1.9, 1.10, 3.1, 5.4, 5.5, 5.6, 5.7 and 5.10 (and this SECTION 5.9) shall
survive any termination of this Agreement except that the provisions of
SECTIONS 1.8, 1.9 and 1.10 shall survive only for a period of six months
following such termination; provided that the lapse of such six month
period shall not limit or prevent the effectiveness of any request or
demand for payment under SECTION 1.8, 1.9 or 1.10 which has made prior
to the end of such six month period.
Section 5.10. WAIVER OF JURY TRIAL. THE ISSUER, THE SELLER, THE
SERVICER AND THE ADMINISTRATOR EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING
OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR INDEMNIFIED PARTY, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE ISSUER, THE SELLER, THE SERVICER
AND THE ADMINISTRATOR EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT OR ANY PROVISION HEREOF OF THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND
RESTATEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT (INCLUDING WITHOUT LIMITATION ANY EXTENSION OF THE
FACILITY TERMINATION DATE).
Section 5.11. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the Issuer, the Seller, the Servicer
and the Administrator, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written,
relating to the subject matter hereof, except for that certain letter
referred to in SECTION 1.5. The Exhibits, Schedules and Annex to this
Agreement shall be deemed incorporated into this Agreement as if set
forth herein.
Section 5.12. HEADINGS. The captions and headings of this Agreement
and in any Exhibit, Schedule or Annex hereto are for convenience of
reference only and shall not affect the interpretation hereof or
thereof.
Section 5.13. ISSUER'S LIABILITIES. The obligations of the Issuer
under this Agreement are solely the corporate obligations of the Issuer.
No recourse shall be had for any obligation or claim arising out of or
based upon this Agreement against MLMMI or against any stockholder,
employee, officer, director or incorporator of the Issuer. For purposes
of this paragraph, "MLMMI" shall mean and include ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money
Markets, Inc. and all affiliates thereof and any employee, officer,
director, incorporator, shareholder or beneficial owner of any of them;
PROVIDED, however, that the Issuer shall not be considered to be an
affiliate of MLMMI; and PROVIDED, FURTHER, that this SECTION 5.13 shall
not relieve any such Person of any liability it might otherwise have for
its own gross negligence or willful misconduct. The agreements provided
in this SECTION 5.13 shall survive termination of this Agreement.
Section 5.14. PURCHASE AND SALE AGREEMENT. In consideration of the
obligations of the Issuer now or hereafter arising under this Agreement,
the Seller hereby sells and assigns to the Administrator, for its
benefit and the benefit of the Issuer, without any formal or other
instrument of assignment all of the Seller's right, title and interest
in, to and under the Purchase and Sale Agreement and the other
Transaction Documents, and all rights, remedies, powers, privileges and
claims of the Seller under the Purchase and Sale Agreement and the other
Transaction Documents (whether arising pursuant to the terms of the
Purchase and Sale Agreement (including Article VI of the Purchase and
Sale Agreement) and the other Transaction Documents or otherwise
available to the Seller at law or in equity) whether against any
Originator, the Guarantor or otherwise, including without limitation,
(i) the right of the Seller, at any time, to enforce the Purchase and
Sale Agreement and any other Transaction Documents against each
Originator and the Servicer, (ii) the right to appoint a successor to
the Servicer, (iii) the right, at any time, to give or withhold any and
all consents, requests, notices, directions, approvals, demands,
extensions or waivers under or with respect to the Purchase and Sale
Agreement, any other Transaction Document or the obligations in respect
of each Originator or Guarantor thereunder to the same extent as the
Seller may do, and (iv) all of the Seller's rights, remedies, powers,
privileges, and claims under or with respect to the Purchase and Sale
Agreement and the other Transaction Documents (whether arising pursuant
to the terms of the Purchase and Sale Agreement or any other Transaction
Document or otherwise available at law or in equity). Notwithstanding
the foregoing, the Seller shall nevertheless be permitted to give all
consents, requests, notices, directions, approvals, demands, extensions
or waivers, if any, which are required by the specific terms of the
Purchase and Sale Agreement and the other Transaction Documents to be
given by the Seller, unless the Administrator shall otherwise direct the
Seller. The assignment pursuant to the first sentence of this SECTION
5.14 shall not relieve the Seller, any Originator, the Guarantor or
Solectron from (or require the Issuer or the Administrator to undertake)
the performance of any term, covenant or agreement on the part of the
Seller, any Originator, the Guarantor or Solectron to be performed or
observed under or in connection with the Purchase and Sale Agreement and
the other Transaction Documents, any Pool Receivable or any Related
Security.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of
the date first above written.
SOLECTRON FUNDING CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Secretary
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SOLECTRON CORPORATION, in its
individual capacity and as initial
Servicer
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
RECEIVABLES CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
c/o Merrill ▇▇▇▇▇ Money Markets Inc.
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank of America National Trust
and Savings Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Securitization
Group
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrator
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Securitization
Group
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT I
DEFINITIONS
As used in the foregoing Receivables Purchase Agreement (including (i)
in its Exhibits and (ii) in any other Transaction Document that refers
to the definitions set forth in this Exhibit)), the following terms
shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes, Exhibits and
Schedules to the Agreement.
"ADMINISTRATION ACCOUNT" means the special account (account number
_________________) of the Issuer maintained at the office of Bank of
America at ________________, or such other account as may be so
designated in writing from time to time by the Administrator to the
Seller and the Servicer.
"ADMINISTRATOR" has the meaning set forth in the preamble to the
Agreement.
"ADVERSE CLAIM" means a Lien, security interest or other encumbrance, it
being understood that a Lien, security interest or other encumbrance, in
favor of the Issuer or the Administrator shall not constitute an Adverse
Claim.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.8.
"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 or is a director or officer of such Person,
except that with respect to the Issuer, Affiliate shall mean the
holder(s) of its capital stock.
"AGREEMENT" means the Receivables Purchase Agreement dated as of
September 17, 1997 among Solectron Funding Corporation, as Seller,
Solectron Corporation, individually and as Servicer, Receivables Capital
Corporation, as Issuer and Bank of America National Trust and Savings
Association, as Administrator.
"ALTERNATE RATE" for any Fixed Period for any Portion of Capital of the
Purchased Interest means an interest rate per annum equal to (a) 0.55%
PER ANNUM above the Eurodollar Rate for such Fixed Period (or, if such
Portion of Capital has been funded for three consecutive one-month Fixed
Periods at an Alternate Rate based upon the Eurodollar Rate, 0.625% PER
ANNUM above the Eurodollar Rate for such Fixed Period) or (b) the Base
Rate for such Fixed Period; PROVIDED, HOWEVER, that in the case of
(i) any Fixed Period on or prior to the first day of which the
Administrator shall have been notified by the Issuer or a Purchaser or
other Program Support Provider that the introduction of or any change in
or in the interpretation of any law or regulation makes it unlawful, or
any central bank or other Governmental Authority asserts that it is
unlawful, for the Issuer or such Purchaser or other Program Support
Provider to fund any Portion of Capital (based on the Eurodollar Rate)
set forth above (and the Issuer or such Purchaser or other Program
Support Provider shall not have subsequently notified the Administrator
that such circumstances no longer exist),
(ii) any Fixed Period of one to (and including) 13 days,
(iii) any Fixed Period as to which the Administrator does not
receive notice, by no later than 11:00 a.m.(San Francisco time) on (w)
the Business Day preceding the first day of such Fixed Period that the
Seller desires that the related Portion of Capital be funded at the CP
Rate, (x) the third Business Day preceding the first day of such Fixed
Period that the Seller desires that the related Portion of Capital be
funded at the Alternate Rate and based on the Eurodollar Rate, or (y)
the Seller has given the notice contemplated by clause (w) of this
CLAUSE (iii) and the Administrator shall have notified the Seller that
funding the related Portion of Capital at the CP Rate is unacceptable to
the Issuer due to market conditions, or
(iv) any Fixed Period relating to a Portion of Capital which is
less than $1,000,000,
the "ALTERNATE RATE" for each such Fixed Period shall be an interest
rate per annum equal to the Base Rate in effect on each day of such
Fixed Period. The "ALTERNATE RATE" for any Termination Day shall be an
interest rate equal to 2% PER ANNUM above the Base Rate in effect on
such day.
"APPLICABLE CONCENTRATION PERCENTAGE" for any Obligor means at any time
(i) 12.0% if (A) its Rated Long Term Debt is rated at least AA- or Aa3
or its Rated Short Term Debt is rated at least A-1+ or P-1, in each case
by Standard & Poor's or ▇▇▇▇▇'▇, respectively or (B) such Obligor is a
Designated Obligor; (ii) 8.0% if its Rated Long Term Debt is rated at
least BBB+ or Baa1 or its Rated Short Term Debt is rated at least A-2 or
P-2, in each case by Standard & Poor's or ▇▇▇▇▇'▇, respectively; (iii)
6.0% if its Rated Long Term Debt is rated at least Investment Grade; and
(iv) the Normal Concentration Percentage if such Obligor has no
outstanding Investment Grade Rated Long Term Debt; provided, that the
Administrator may at any time, by written notice to the Servicer, reduce
the Applicable Concentration Percentage for any Obligor to the Normal
Concentration Percentage if the Administrator determines in good faith
that the creditworthiness of such Obligor is not sufficient to support a
concentration percentage greater than the Normal Concentration
Percentage.
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all disbursements of internal
counsel.
"AVERAGE MATURITY" means at any time that period of days equal to the
average maturity of the Pool Receivables calculated by the Servicer in
the then most recent Seller Report; PROVIDED that if the Administrator
shall have a reasonable basis to disagree with any such calculation, the
Administrator may recalculate such Average Maturity, and any such
recalculation shall be prima facie evidence of such Average Maturity.
"BANK OF AMERICA" means Bank of America National Trust and Savings
Association, a national banking association.
"BANKRUPTCY CODE" means the United States Bankruptcy Reform Act of 1978
(11 U.S.C. sec. 101, ET SEQ.), as amended from time to time.
"BASE RATE" means for any day, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times
equal to the higher of:
(a) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America in San Francisco,
California, as its "reference rate." It is a rate set by Bank of
America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced
at, above, or below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
"BUSINESS DAY" means any day on which (i) banks are not authorized or
required to close in Chicago, New York City or San Francisco and (ii) if
this definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank
market.
"CAPITAL" means the amount paid to the Seller in respect of the
Purchased Interest by the Issuer pursuant to the Agreement, or such
amount divided or combined in accordance with SECTION 1.7, in each case
reduced from time to time by Collections distributed and applied on
account of such Capital pursuant to SECTION 1.4(d) and increased from
time to time by reinvestments pursuant to SECTION 1.4(b)(ii); PROVIDED,
that if such Capital shall have been reduced by any distribution and
thereafter all or a portion of such distribution is rescinded or must
otherwise be returned for any reason, such Capital shall be increased by
the amount of such rescinded or returned distribution, as though it had
not been made.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
generally accepted accounting principles, and the amount of such
obligations shall be the capitalized amount thereof determined in
accordance with generally accepted accounting principles.
"CHANGE OF CONTROL" means any of the following events or circumstances:
(a) any Person or "group" (within the meaning of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) shall either (i)
acquire beneficial ownership of more than 35% of any outstanding class
of common stock of Solectron having ordinary voting power in the
election of directors of Solectron or (ii) obtain the power (whether or
not exercised) to elect a majority of Solectron's directors;
(b) Solectron or the Seller shall (i) merge with any other Person
and not be the surviving company or (ii) sell all or substantially all
of its assets to another Person; or
(c) a majority of the Board of Directors of Solectron shall not be
Continuing Directors. As used in this definition, "Continuing
Directors" shall mean the directors of Solectron on the date of this
Agreement and each other director of Solectron, if such other director's
nomination for election to the Board of Directors of Solectron is
recommended by a majority of the then Continuing Directors.
"COLLECTIONS" means, with respect to any Pool Receivable, (a) all funds
(regardless of whether in the form of cash, checks, money orders, wire
transfers, money-grams or otherwise) which are received by an
Originator, the Seller, the Servicer or the Administrator in payment of
any amounts owed in respect of such Receivable (including, without
limitation, purchase price, finance charges, interest and all other
charges), or applied to amounts owed in respect of such Receivable
(including, without limitation, insurance payments and net proceeds of
the sale or other disposition of repossessed goods or other collateral
or property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Pool Receivable and available
to be applied thereon), (b) all amounts deemed to have been received
pursuant to SECTION 1.4(e) of the Agreement or SECTION 1.7 of the
Purchase and Sale Agreement and (c) all other proceeds of such
Receivable (regardless of whether in the form of cash, checks, money
orders, wire transfers, money-grams or otherwise).
"CONTRACT" means, with respect to any Receivable, any and all contracts,
understandings, instruments, agreements, leases, invoices, notes, or
other writings pursuant to which such Receivable arises or which
evidences such Receivable or under which an Obligor becomes or is
obligated to make payment in respect of such Receivable.
"CP MARKET DISRUPTION EVENT" means, at any time for any reason
whatsoever, the Issuer shall be unable to raise, or shall be precluded
or prohibited from raising, funds through the issuance of Notes in the
United States' commercial paper market at such time.
"CP RATE" for any Fixed Period for any Portion of Capital of the
Purchased Interest means, to the extent the Issuer funds such Portion of
Capital for such Fixed Period by issuing Notes, the per annum rate
equivalent to the "weighted average cost" (as defined below) related to
the issuance of Notes that are allocated, in whole or in part, by the
Issuer (or by the Administrator) to fund or maintain such Portion of
Capital, all other Portions of Capital of the Purchased Interest held by
the Issuer hereunder and all interests (including security interests) in
receivables or other assets of "Other Pool Sellers" (as defined below)
held by the Issuer; PROVIDED, HOWEVER, that if any component of such
rate is a discount rate, in calculating the "CP RATE" for such Portion
of Capital for such Fixed Period, the Issuer shall for such component
use the rate resulting from converting such discount rate to an interest
bearing equivalent rate per annum. As used in this definition,
(i) "OTHER POOL SELLERS" means all other sellers which transfer
interests (including by borrowing loans secured by such interests) in
receivables or other financial assets to the Issuer to the extent that
such interests in receivables or other financial assets are aggregated
with the Portion of Capital of the Purchased Interest held by the Issuer
hereunder and funded on a pooled basis by the Issuer, and (ii) the
Issuer's "WEIGHTED AVERAGE COST" shall consist of (x) the actual
interest rate paid to purchasers of the Issuer's Notes (which rate shall
reflect and give effect to the commissions of placement agents and
dealers in respect of such Notes, to the extent such commissions are
allocated, in whole or in part, to such Notes by the Issuer (or by the
Administrator)), (y) the costs associated with the issuance of such
Notes, and (z) other borrowings by the Issuer (other than under any
Program Support Agreement), including to fund small or odd dollar
amounts that are not easily accommodated in the commercial paper market.
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices in effect on the date of the Agreement
and described in SCHEDULE I hereto, as modified in compliance with the
Agreement.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
at least 151 days from the original customer billing date for such
payment;
(ii) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type described in
PARAGRAPH (g) of EXHIBIT V hereto; or
(iii) (a) which, consistent with the Credit and Collection Policy,
would be written off as uncollectible or (b) which has been written off
as uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage) computed
as of each Month-End Date having (a) a numerator that is equal to the
aggregate Outstanding Balance of Delinquent Receivables as of that
Month-End Date and (b) a denominator that is the aggregate Outstanding
Balance of Receivables as of that Month-End Date.
"DELINQUENT RECEIVABLE" means any Receivable that is not a Defaulted
Receivable as to which any payment, or part thereof, remains unpaid for
at least 91 days from the original customer billing date for such
Receivable.
"DESIGNATED OBLIGOR" means, as of the date hereof, Cisco Systems, Inc.
and Sun Microsystems, Inc., and thereafter, shall include any other
Obligor designated as such in writing by the Administrator to the
Servicer, until such time as the Administrator shall have notified the
Servicer in writing that such Obligor is no longer a Designated Obligor
hereunder (it being understood that the Administrator shall not notify
the Servicer that an Obligor is no longer a Designated Obligor absent a
good-faith determination on its part that such Obligor's credit has
declined).
"DILUTION HORIZON VARIABLE" means, at any time, a ratio having (a) a
numerator equal to the sum of the aggregate amounts payable pursuant to
invoices giving rise to Receivables (without giving effect to any
payments received with respect to such invoices) and generated by the
Originators during the calendar month ending on the most recent Month-
End Date and (b) a denominator equal to the aggregate Outstanding
Balance of all Eligible Receivables as of the most recent Month-End
Date.
"DILUTION PERCENTAGE" means, for any calendar month, the result
(expressed as a percentage) calculated in accordance with the following
formula:
{(2.0 x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Sales-Based Dilution Ratios during
the period of 12 consecutive calendar months ending on
the related Month-End Date.
DHV = the Dilution Horizon Variable.
HDR = the highest Sales-Based Dilution Ratio for any calendar
month within the 12 consecutive calendar months ending
on the related Month-End Date.
"DISCOUNT" means:
(i) for the Portion of Capital of the Purchased Interest for
any Fixed Period to the extent the Issuer will be funding such Portion
of Capital on the first day of such Fixed Period through the issuance of
Notes,
CPR x C x ED + TF
---
360
(ii) for the Portion of Capital of the Purchased Interest for
any Fixed Period to the extent the Issuer will not be funding such
Portion of Capital on the first day of such Fixed Period through the
issuance of Notes,
ED
---
AR x C x 360 + TF
where:
AR = the Alternate Rate for the Portion of Capital of the
Purchased Interest for such Fixed Period
C = the Portion of Capital of the Purchased Interest during
such Fixed Period
CPR = the CP Rate for the Portion of Capital of the Purchased
Interest for such Fixed Period
ED = the actual number of days during such Fixed Period
TF = the Termination Fee, if any, for the Portion of Capital
of the Purchased Interest for such Fixed Period
; PROVIDED that no provision of the Agreement shall require the payment
or permit the collection of Discount in excess of the maximum permitted
by applicable law; and PROVIDED, FURTHER, that Discount for the Portion
of Capital of the Purchased Interest shall not be considered paid by any
distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
"DISCOUNT RATE PERCENTAGE" has the meaning set forth in SECTION 1.4(d)
of the Purchase and Sale Agreement.
"DISCOUNT RESERVE" for the Purchased Interest at any time means the sum
of (i) the Termination Discount at such time for the Purchased Interest,
and (ii) the then accrued and unpaid Discount for the Purchased
Interest.
"DIVIDEND" means in respect of any corporation or any Solectron Party,
as the case may be, (i) cash distributions or any other distributions
on, or in respect of, any class of capital stock of such corporation or
such Solectron Party, as the case may be, except for distributions made
solely in shares of stock of the same class, and (ii) any and all funds,
cash or other payments made in respect of the redemption, repurchase or
acquisition of such stock, unless such stock shall be redeemed or
acquired through the exchange of such stock with stock of the same
class.
"ELIGIBLE RECEIVABLES" means, at any time, Receivables:
(i) the Obligor of which is a United States resident or a
resident of such other jurisdiction as has been approved in writing by
the Administrator, is not an Affiliate of any Solectron Party, is not a
government or a governmental subdivision or agency or instrumentality,
is not declared ineligible by the Administrator, is not subject to any
action of the type described in PARAGRAPH (g) of EXHIBIT V, and is not
an Excluded Obligor;
(ii) which are denominated and payable only in U.S. dollars in the
United States;
(iii) which have a stated maturity and which stated maturity is not
more than 91 days after the customer billing date of such Receivable;
(iv) which arise in the ordinary course of the applicable
Originator's business;
(v) which arise under a Contract which is in full force and
effect and which is a legal, valid and binding obligation of the related
Obligor, enforceable against such Obligor in accordance with its terms;
(vi) which conform with all applicable laws, rulings and
regulations in effect;
(vii) which are not the subject of any asserted dispute (whether or
not in writing), offset, hold back defense, Adverse Claim or other claim
and which do not arise from the sale of inventory which is subject to
any Adverse Claim (other than Permitted Liens of the types described in
CLAUSES (a), (b) and (h) of the definition of Permitted Liens), it being
understood that if a dispute pertains only to a portion of the
Outstanding Balance of an otherwise Eligible Receivable, such portion
shall be reduced in accordance with Section 1.4(e)(i) of the Agreement
and the remaining portion may continue to be characterized as a Eligible
Receivable, subject to satisfying the other requirements of this
definition of Eligible Receivables;
(viii) which comply with the requirements of the Credit and
Collection Policy;
(ix) which arise from the completion of the sale and delivery of
goods or services performed, and which do not represent an invoice in
advance of such completion;
(x) which are not subject to any contingent performance
requirements of the applicable Originator unless such requirements are
guaranteed or insured by third parties acceptable to the Administrator;
(xi) which do not require the consent of the related Obligor to be
sold or assigned;
(xii) which have not been modified or restructured since their
creation, except as permitted pursuant to SECTION 4.2 of the Agreement;
(xiii) (A) to which the applicable Originator has good and
marketable title immediately prior to the sale thereof to the Seller,
and as to which the Seller has good and marketable title, and (B) which,
immediately prior to the applicable Originator's sale thereof to the
Seller, were freely assignable by such Originator and which are freely
assignable by the Seller;
(xiv) for which the Issuer shall have a valid, perfected and
enforceable undivided percentage ownership interest, to the extent of
the Purchased Interest, and for which the Administrator for its benefit
and the benefit of the Issuer shall have a valid and enforceable first
priority perfected security interest therein and in the Related Security
and Collections with respect thereto, in each case free and clear of any
Adverse Claim;
(xv) which constitute "accounts" as defined in the UCC, and which
are not evidenced by instruments or chattel paper;
(xvi) which are not Defaulted Receivables;
(xvii) for which the applicable Originator has established no offset
arrangements with the related Obligor;
(xviii) for which Defaulted Receivables of the related Obligor do not
exceed 25% of all such Obligor's Receivables;
(xix) which do not represent any amounts owing by any Obligor in
respect of sales taxes, interest, late charges, or similar items;
(xx) which meet the eligibility requirements appropriate to the
specific type of Receivables which the Administrator may set based on
aging, turnover, delinquency, loss, dilution, type or other factor that
are necessary to maintain an A-1+/P-1 rating by S&P and Moody's
respectively, on the Notes;
(xxi) the Obligor of which has been instructed to make payment
thereon to a Lock-Box Account or a post office box to which only Lock-
Box Banks have access or otherwise solely in accordance with CLAUSE (j)
of EXHIBIT IV of this Agreement; and
(xxii) with respect to which the Administrator has not directed the
Servicer (whether the Servicer is Solectron or any other Person) to
commence or settle any legal action to enforce collection of such
Receivable or to foreclose upon or repossess any Related Security which
in good faith the Administrator believes that the failure to commence,
settle, or effect such legal action, foreclosure or repossession could
adversely affect Receivables constituting a material portion of the Pool
Receivables;
PROVIDED that, at any time following the date the rating assigned by any
nationally recognized statistical rating agency to the Rated Long Term
Debt of Solectron is withdrawn or reduced to less than Investment Grade,
the Outstanding Balance of any Eligible Receivable shall be reduced by
the aggregate amount of Indebtedness of the applicable Originator owing
to the related Obligor or any of its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect from
time to time. References to sections of ERISA also refer to any
successor sections.
"EURODOLLAR RATE" means, for any Fixed Period, an interest rate per
annum (rounded upward to the nearest 1/16th of 1%) determined pursuant
to the following formula:
Eurodollar Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any Fixed Period,
the maximum reserve percentage (expressed as a decimal, rounded upward
to the nearest 1/100th of 1%) in effect on the date LIBOR for such Fixed
Period is determined under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities") having a term comparable to such Fixed
Period; and
"LIBOR" means the rate of interest per annum determined by the
Liquidity Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the
Liquidity Agent by each Reference Bank as the rate of interest at which
dollar deposits in the approximate amount of the Capital associated with
such Fixed Period would be offered to major banks in the London
interbank market at their request at or about 11:00 a.m. (London time)
on the second Business Day prior to the commencement of such Fixed
Period.
"EXCLUDED OBLIGOR" means an Obligor, so designated from time to time in
writing as such by the Administrator to the Servicer in the event that
the Administrator reasonably considers such Obligor to be unacceptable
due to the credit risk associated with such Obligor or due to the nature
of such Obligor's business, it being understood that from time to time
the Administrator may revoke its designation of one or more Obligors as
Excluded Obligors by written notice to the Servicer.
"EXCLUDED PROPERTY" means any Collections released to Seller pursuant to
SECTION 1.4(b)(iv).
"FACILITY TERMINATION DATE" means the earliest to occur of (a) September
16, 1998, (b) the Purchase Termination Date, as defined in the Liquidity
Asset Purchase Agreement, which on the date of the Agreement is
September 16, 1998, or such later date designated as the Purchase
Termination Date from time to time pursuant to the Liquidity Asset
Purchase Agreement (it being understood that the Administrator shall
notify the Servicer of the designation of such later date, provided that
failure to provide such notice shall not limit or otherwise affect the
obligations of the Servicer or the rights of the Administrator, the
Issuer, or any other party to the Liquidity Asset Purchase Agreement),
(c) the date of termination of the commitment under any other Program
Support Agreement, (d) the date determined pursuant to SECTION 2.2, (e)
the date the Purchase Limit reduces to zero pursuant to SECTION 1.1(b),
and (f) the Purchase and Sale Termination Date under the Purchase and
Sale Agreement.
"FEDERAL FUNDS RATE" means, for any period, the per annum rate set forth
in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including
any such successor, "H.15(519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day such rate is not
yet published in H.15(519), the rate for such day will be the rate set
forth in the daily statistical release designated as the Composite 3:30
p.m. Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for
such day under the caption "Federal Funds Effective Rate". If on any
relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the
rate for such day will be the arithmetic mean as determined by the
Administrator of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of Federal funds transactions in New York City
selected by the Administrator.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal
functions.
"Final Payout Date" has the meaning set forth in the introductory
paragraph to EXHIBIT IV.
"FIXED PERIOD" means with respect to each Portion of Capital:
(a) with respect to any Portion of Capital, to the extent the Issuer
funds such Portion of Capital by issuing Notes and the Issuer has funded
such Notes on a pooled basis with Other Pooled Sellers (as defined in
the definition of CP Rate), (x) the period commencing on the date of the
initial purchase of such Portion of Capital and ending on the first day
of the immediately succeeding calendar month, and (y) thereafter, each
period commencing on the last day of the immediately preceding Fixed
Period for such Portion of Capital and ending on the first day of the
immediately succeeding calendar month; and
(b) With respect to any Portion of Capital to the extent the Issuer
funds such Portion of Capital by issuing Notes and the Issuer has not
funded such Notes on a pooled basis with Other Pooled Sellers;
(x) initially the period commencing on the date of the initial
purchase of such Portion of Capital and ending such number of days, but
not exceeding 100 days, as the Administrator shall select in
consultation with the Seller and any applicable commercial paper dealer;
and
(y) thereafter such period commencing on the last day of the
immediately preceding Fixed Period for such Portion of the Capital and
ending such number of days, but not exceeding 100 days, as the
Administrator shall select in consultation with Seller and any
applicable commercial paper dealer; and
(c) with respect to any Portion of Capital, to the extent the Issuer
funds such Portion of Capital other than by issuing Notes, (x) initially
the period commencing on the date of a purchase pursuant to SECTION 1.2
and ending such number of days as the Seller shall select, subject to
the approval of the Administrator pursuant to SECTION 1.2, up to one
month after such date; and (y) thereafter each period commencing on the
last day of the immediately preceding Fixed Period for any Portion of
Capital of the Purchased Interest and ending such number of days (not to
exceed one month) as the Seller shall select, subject to the approval of
the Administrator pursuant to SECTION 1.2, on notice by the Seller
received by the Administrator (including notice by telephone, confirmed
in writing) not later than 9:00 a.m. (San Francisco time) on such last
day, EXCEPT that if the Administrator shall not have received such
notice or approved such period on or before 9:00 a.m. (San Francisco
time) on such last day, such period shall be one day; PROVIDED that
(i) any Fixed Period in respect of which Discount is computed by
reference to the Alternate Rate shall be a period from one to and
including 13 days, or a period of one month, as the Seller may select as
provided above;
(ii) any Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day; PROVIDED, HOWEVER, if Discount in
respect of such Fixed Period is computed by reference to the Eurodollar
Rate, and such Fixed Period would otherwise end on a day which is not a
Business Day, and there is no subsequent Business Day in the same
calendar month as such day, such Fixed Period shall end on the next
preceding Business Day;
(iii) in the case of any Fixed Period of one day, (A) if such Fixed
Period is the initial Fixed Period for a purchase pursuant to SECTION
1.2, such Fixed Period shall be the day of purchase of the Purchased
Interest; (B) any subsequently occurring Fixed Period which is one day
shall, if the immediately preceding Fixed Period is more than one day,
be the last day of such immediately preceding Fixed Period, and, if the
immediately preceding Fixed Period is one day, be the day next following
such immediately preceding Fixed Period; and (C) if such Fixed Period
occurs on a day immediately preceding a day which is not a Business Day,
such Fixed Period shall be extended to the next succeeding Business Day;
(iv) in the case of any Fixed Period for any Portion of Capital of
the Purchased Interest which commences before the Termination Date and
would otherwise end on a date occurring after the Termination Date, such
Fixed Period shall end on such Termination Date and the duration of each
Fixed Period which commences on or after the Termination Date shall be
of such duration as shall be selected by the Administrator;
(v) any Fixed Period in respect of which Discount is computed by
reference to the CP Rate may be terminated at the election of, and upon
notice thereof to the Seller by, the Administrator any time upon the
occurrence and during the continuance of any CP Market Disruption Event;
and
(vi) if at any time after the occurrence and during the
continuance of any CP Market Disruption Event, the Administrator elects
to terminate any Fixed Period in respect of which Discount is computed
by reference to the CP Rate, the Portion of Capital allocated to such
terminated Fixed Period shall be allocated to a new Fixed Period to be
designated by the Administrator (but in no event to exceed 5 days) and
shall accrue Discount at the Alternate Rate.
"FUNDING DISCOUNT" has the meaning set forth in SECTION 1.4(c) of the
Purchase and Sale Agreement.
"FUNDING RATE" has the meaning set forth in SECTION 1.4(d) of the
Purchase and Sale Agreement.
"Generally Accepted Accounting Principles" or "generally accepted
accounting principles" means generally accepted accounting principles at
the time in the United States. Except as otherwise expressly provided,
all references to generally accepted accounting principles shall be
applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body or entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, including without limitation any court,
and any Person owned or controlled, through stock or capital ownership
or otherwise, by any of the foregoing.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of
any other Person (the "PRIMARY OBLIGOR") in any matter, whether directly
or indirectly, and including any obligation of the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation or (d) as
an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; PROVIDED
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.
"GUARANTOR" has the meaning set forth in the preamble of the Purchase
and Sale Agreement.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily
paid (excluding deferred compensation obligations owed to current and
former directors, officers and employees), (d) all obligations of such
Person under conditional sale or other title retention agreements
relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable, measured in accordance
with generally accepted accounting principles, incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent
or otherwise to be secured by) any Lien on property owned or acquired by
such Person, whether or not the Indebtedness secured thereby has been
assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect
of letters of credit and letters of guaranty supporting Indebtedness,
(j) all obligations, contingent or otherwise, of such Person in respect
of bankers' acceptances, and (k) all obligations, contingent or
otherwise, with respect to synthetic leases or securitized assets. The
Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of
such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 3.1.
"INITIAL PURCHASE DATE" has the meaning set forth in SECTION 1.2 of the
Purchase and Sale Agreement.
"INITIAL PURCHASER" has the meaning set forth in the preamble to the
Purchase and Sale Agreement.
"INITIAL PURCHASER NOTE" has the meaning set forth in SECTION 1.6 of the
Purchase and Sale Agreement.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors; in each case (a) and (b)
undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"INVESTMENT GRADE" means, with respect to the Rated Long Term Debt of
Solectron or any other Person, a rating of at least BBB- by Standard &
Poor's or, with respect to the Rated Long Term Debt of any Person other
than Solectron a rating of at least Baa3 by Moody's, or at least BBB- by
Duff & ▇▇▇▇▇▇ Credit Rating Co.; PROVIDED, that if the Rated Long Term
Debt of any Person other than Solectron is rated by more than one of the
foregoing rating agencies, then at least one of such rating agencies
which rates such securities shall have given them a rating at least
equal to the categories specified above; and PROVIDED FURTHER, that if
Solectron or any such other Person does not have Rated Long-Term Debt
outstanding, the Administrator shall have received written materials
reasonably satisfactory to the Administrator prepared by at least one of
such rating agencies to the effect that if such Person did have Rated
Long Term Debt securities outstanding, such securities would receive at
least such a rating.
"ISSUER" has the meaning set forth in the preamble to the Agreement.
"LIEN" means any mortgage, pledge, hypothecation, assignment deposit
arrangement, security interest, encumbrance, lien (statutory or
otherwise) or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement,
any financing or similar statement or notice filed under the UCC or
other similar recording or notice statute, and any lease in the nature
thereof).
"LIQUIDITY AGENT" means Bank of America in its capacity as Liquidity
Agent pursuant to the Liquidity Asset Purchase Agreement.
"LIQUIDITY ASSET PURCHASE AGREEMENT" means that certain Liquidity Asset
Purchase Agreement dated as of September 17, 1997 among Bank of America
and the other financial institutions listed therein as the Purchasers,
Bank of America, as Liquidity Agent and Administrator, and the Issuer,
as amended, supplemented or otherwise modified from time to time.
"LOCK-BOX ACCOUNT" means a bank account subject to a Lock-Box Agreement.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form of
ANNEX A, among the Seller, one or more Originators, the Servicer, the
Issuer, the Administrator and a Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"LOSS DISCOUNT" has the meaning set forth in SECTION 1.4(b) of the
Purchase and Sale Agreement.
"LOSS PERCENTAGE" means, on any date, the greater of (i) the Loss Ratio
on such date, and (ii) 12%.
"LOSS RATIO" means the result (expressed as a percentage), computed as
of each Month-End Date, of (a) 2.0 multiplied by (b) the highest average
of the Sales-Based Default Ratio for any three consecutive calendar
months that occurred during the preceding 12 consecutive calendar months
ending on such Month-End Date multiplied by (c) a fraction having (i) a
numerator equal to the sum of the aggregate amounts payable pursuant to
invoices giving rise to Receivables (without giving effect to any
payments received with respect to such invoices) that were generated by
each Originator during the six calendar months ending on such Month-End
Date, and (ii) a denominator equal to the aggregate Outstanding Balance
of all Eligible Receivables, as of such Month-End Date.
"LOSS RESERVE" means, for the Purchased Interest, on any date, an amount
equal to the greater of:
(a): (LP + DP) x (AER); and
(b): (16.0%) x (AER)
where:
LP = the Loss Percentage for the Purchased Interest on such
date.
DP = the Dilution Percentage for the Purchased Interest on
such date.
AER = the aggregate Outstanding Balance of all Eligible
Receivables at the close of business of the Servicer on
such date.
"MATERIAL INDEBTEDNESS" means Indebtedness, or obligations in respect of
one or more Hedging Agreements, of any one or more of the Solectron
Parties in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of
the obligations of any Solectron Party in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that such Solectron Party would be
required to pay if such Hedging Agreement were terminated at such time.
"MONTH-END DATE" means the last day of a calendar month.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
"NET RECEIVABLES POOL BALANCE" means at any time the Outstanding Balance
of Eligible Receivables then in the Receivables Pool reduced by the
aggregate amount by which the Outstanding Balance of Eligible
Receivables (other than Defaulted Receivables) of each Obligor then in
the Receivables Pool exceeds the product of (A) the Applicable
Concentration Percentage for such Obligor multiplied by (B) the
Outstanding Balance of the Eligible Receivables then in the Receivables
Pool.
"NORMAL CONCENTRATION PERCENTAGE" for any Obligor means at any time 3%.
"NOTES" means short-term promissory notes issued or to be issued by the
Issuer to fund its investments in accounts receivable or other financial
assets.
"OBLIGOR" means, with respect to any Receivable, the Person obligated to
make payments pursuant to the Contract relating to such Receivable.
"ORIGINATOR" means each of Solectron Corporation and Solectron
California Corporation.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PAYMENT DATE" has the meaning set forth in Section 1.3 of the Purchase
and Sale Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than
a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to
which Solectron, Solectron California Corporation or the Seller or any
corporation, trade or business that is, along with Solectron, Solectron
California Corporation or the Seller, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described
in sections 414(b) and 414(c), respectively, of the Internal Revenue
Code of 1986, as amended or section 4001 of ERISA may have any
liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"PERMITTED LIENS" means:
(a) Liens imposed by law by any Governmental Authority for taxes
that are not yet due or are being contested in compliance with Section
5.04 of the Solectron Credit Agreement;
(b) carriers', warehousemen's, mechanics', material men's,
repairmen's and other like Liens imposed by law, and any other
involuntary, statutory or common law Lien arising in the ordinary course
of business and securing obligations that are not overdue by more than
30 days or are being contested in compliance with Section 5.04 of the
Solectron Credit Agreement;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of any Solectron Party;
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under the Solectron
Credit Agreement;
(g) Liens which constitute rights of set-off of a customary nature
or banker's Liens with respect to amounts on deposit arising by
operation of law in connection with arrangements entered into with banks
in the ordinary course of business;
(h) Liens in favor or customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(i) leases or subleases and licenses and sublicenses granted to
others in the ordinary course of business not interfering in any
material respect with the business of any of the Solectron Parties taken
as a whole, and any interest or title of any lessor or licensor under
any lease or license;
PROVIDED that the term "Permitted Liens" shall not include any Lien
securing Indebtedness.
"PERSON" means an individual, partnership, corporation, joint stock
company, trust (including a business trust), unincorporated association,
joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PORTION OF CAPITAL" has the meaning set forth in SECTION 1.7. In
addition, at any time when the Capital of the Purchased Interest is not
divided into two or more portions, "Portion of Capital" means 100% of
the Capital of the Purchased Interest.
"PROGRAM SUPPORT AGREEMENT" means and includes the Liquidity Asset
Purchase Agreement and any other agreement entered into by any Program
Support Provider providing for the issuance of one or more letters of
credit for the account of the Issuer, the issuance of one or more surety
bonds for which the Issuer is obligated to reimburse the applicable
Program Support Provider for any drawings thereunder, the sale by the
Issuer to any Program Support Provider of the Purchased Interest (or
portions thereof) and/or the making of loans and/or other extensions of
credit to the Issuer in connection with the Issuer's securitization
program, together with any letter of credit, surety bond or other
instrument issued thereunder (but excluding any discretionary advance
facility provided by the Administrator).
"PROGRAM SUPPORT PROVIDER" means and includes any Purchaser and any
other or additional Person (other than any customer of the Issuer) now
or hereafter extending credit or having a commitment to extend credit to
or for the account of, or to make purchases from, the Issuer or issuing
a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with the Issuer's
securitization program.
"PURCHASE AND SALE AGREEMENT" means the Purchase and Sale Agreement
dated as of September 17, 1997 among Solectron California Corporation,
as an Originator, Solectron Corporation, as an Originator, as Guarantor
and as Servicer, and Solectron Funding Corporation, as the Initial
Purchaser, as the same may be amended, amended and restated or otherwise
modified in accordance with its terms.
"PURCHASE AND SALE TERMINATION DATE" means date determined in accordance
with Section 2.3 of the Purchase and Sale Agreement.
"PURCHASE AND SALE TERMINATION EVENT" has the meaning set forth in
Exhibit IV to the Purchase and Sale Agreement.
"PURCHASE DISCOUNT" has the meaning set forth in Section 1.4 of the
Purchase and Sale Agreement.
"PURCHASE LIMIT" means the lesser of (i) $120,000,000, as such amount
may be reduced pursuant to SECTION 1.1(b) and (ii) (A) the aggregate of
the Maximum Liquidity Purchase (as defined in the Liquidity Asset
Purchase Agreement) of the Purchasers under the Liquidity Asset Purchase
Agreement less (B) the aggregate of the Discount of the existing Fixed
Periods (for the entirety of such Fixed Periods), as such amount may be
reduced pursuant to SECTION 1.1(b). References to the unused portion of
the Purchase Limit shall mean, at any time, the Purchase Limit minus the
then outstanding Capital of the Purchased Interest under the Agreement.
"PURCHASE PERIOD" has the meaning set forth in Section 1.3 of the
Purchase and Sale Agreement.
"PURCHASE PRICE" has the meaning set forth in Section 1.3 of the
Purchase and Sale Agreement.
"PURCHASED INTEREST" means, at any time, the undivided percentage
ownership interest in (i) each and every Pool Receivable now existing or
hereafter arising, other than any Pool Receivable that arises on or
after the Facility Termination Date, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with respect
to, and other proceeds of, such Pool Receivables and Related Security.
Such undivided percentage interest shall be computed as
C + DR + LR + SFR
-----------------
NRB
where:
C = the Capital of the Purchased Interest at the time of
computation.
DR = the Discount Reserve of the Purchased Interest at the
time of computation.
LR = the Loss Reserve of the Purchased Interest at the
time of computation.
SFR = the Servicing Fee Reserve of the Purchased Interest
at the time of computation.
NRB = the Net Receivables Pool Balance at the time of
computation.
The Purchased Interest shall be determined from time to time pursuant to
the provisions of SECTION 1.3.
"PURCHASER" has the meaning set forth in SECTION 5.3(B).
"RATE VARIANCE FACTOR" means a number greater than one that reflects the
potential variance in selected interest rates over a period of time
designated by the Administrator, as reasonably specified by the
Administrator from time to time, notified to the Seller and set forth in
the Seller Report in accordance with the provisions thereof; PROVIDED
that the "Rate Variance Factor" may be changed from time to time upon at
least five days' prior notice by the Administrator to the Servicer.
"RATED LONG TERM DEBT" means, with respect to any Person, at any time,
the long-term, senior, unsecured, noncredit-enhanced debt of such Person
that is rated by any nationally recognized statistical rating agency.
"RATED SHORT TERM DEBT" means, with respect to any Person, at any time,
the short-term, senior, unsecured, noncredit-enhanced debt of such
Person that is rated by any nationally recognized statistical rating
agency.
"RECEIVABLE" means any indebtedness and other obligations owed to any
Originator or any rights of any Originator to payment from or on behalf
of an Obligor whether constituting an account, chattel paper, instrument
or general intangible, arising in connection with the sale or lease of
goods or the rendering of services by such Originator, and includes,
without limitation, the obligation to pay any finance charges, fees and
other charges with respect thereto. Indebtedness and other obligations
arising from any one transaction, including, without limitation,
indebtedness and other obligations represented by an individual invoice
or agreement, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other obligations arising from any
other transaction.
"RECEIVABLES POOL" means at any time all of the then outstanding
Receivables sold or contributed to the Seller pursuant to the Purchase
and Sale Agreement or the Subscription Agreement.
"REFERENCE BANK" means Bank of America.
"RELATED ASSETS" has the meaning set forth in Section 1.1 of the
Purchase and Sale Agreement.
"RELATED SECURITY" means with respect to any Receivable:
(i) all of any Originator's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all UCC financing statements or similar
filings signed by an Obligor relating thereto; and
(iii) the related Contract and all guaranties, indemnities,
insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Receivable or
otherwise relating to such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
"RESTRICTED PAYMENTS" has the meaning given thereto in PARAGRAPH (m) of
EXHIBIT IV.
"SALES-BASED DEFAULT RATIO" means the ratio (expressed as a percentage)
computed as of each Month-End Date having (a) a numerator that is the
sum of (i) the aggregate Outstanding Balance of Receivables that
remained outstanding 151 to 180 days after their respective due dates,
as determined as of such Month-End Date, plus (ii) the aggregate
Outstanding Balance of Receivables that were written off as
uncollectible during the most recently ended calendar month and that, if
not so written off, would have been outstanding not more than 180 days
after their respective due dates, as determined as of that Month-End
Date and (b) a denominator that is the aggregate amount payable pursuant
to invoices giving rise to Receivables (without giving effect to any
payments received on such invoices) that were generated by the
Originators during the calendar month that occurred six calendar months
prior to the calendar month ending on such Month-End Date.
"SALES-BASED DILUTION RATIO" means, for any calendar month, the ratio
(expressed as a percentage) having (a) a numerator equal to the
aggregate amount of payments owed by the Seller pursuant to SECTION
1.4(e) during such period and (b) a denominator equal to the aggregate
amounts payable pursuant to invoices giving rise to Receivables (without
giving effect to any payments received with respect to such invoices)
that were generated by the Originators during the preceding calendar
month (so that, for example, if the calendar month specified in CLAUSE
(a) corresponds to the month of March, the calendar month in this CLAUSE
(b) would be the one corresponding to the month of February).
"SELLER" has the meaning set forth in the preamble to the Agreement.
"SELLER REPORT" means a report, in form and substance satisfactory to
the Administrator, furnished by the Servicer to the Administrator
pursuant to the Agreement.
"SERVICER" has the meaning set forth in the preamble to the Agreement.
"SERVICER'S FEE PERCENTAGE" has the meaning set forth in Section 1.4(d)
of the Purchase and Sale Agreement.
"SERVICING FEE" shall mean the fee referred to in SECTION 4.6.
"SERVICING FEE RESERVE" for the Purchased Interest at any time means the
sum of (i) the unpaid Servicing Fee relating to the Purchased Interest
accrued to such time, plus (ii) an amount equal to (a) the Capital of
the Purchased Interest at the time of computation multiplied by (b) the
product of (x) the percentage per annum at which the Servicing Fee is
accruing on such date and (y) a fraction having as its numerator the
product of (i) the Average Maturity (as in effect on such date) times
(ii) 2.0 and 360 as its denominator.
"SETTLEMENT PERIOD" for each Portion of Capital means each period
commencing on the first day and ending on the last day of each Fixed
Period for such Portion of Capital and, on and after the Termination
Date, such period (including, without limitation, a period of one day)
as shall be selected from time to time by the Administrator or, in the
absence of any such selection, each period of 30 days from the last day
of the immediately preceding Settlement Period.
"SOLECTRON" has the meaning set forth in the preamble to the Agreement.
"SOLECTRON CREDIT AGREEMENT" shall mean the Credit Agreement dated as
of May 1, 1997, among Solectron, the banks party thereto, Bank of
America, as agent and issuing bank, and BancAmerica Securities, Inc., as
arranger, as amended, supplemented or otherwise modified from time to
time.
"SOLECTRON PARTY" means Solectron (whether acting as an Originator, as
Guarantor or Servicer), Solectron California Corporation, the Seller or
any of their respective Affiliates.
"SOLVENT" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(32) of the Bankruptcy Code and, in the
alternative, for purposes of applicable state fraudulent conveyance law;
(b) the present fair saleable value of the property of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its property and pay
its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
as such debts and liabilities mature; and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute
unreasonably small capital.
"STANDARD & POOR'S" or "S&P" means Standard & Poor's Rating Services, a
division of The McGraw Hill Companies, Inc., or any successor thereto.
"SUBSCRIPTION AGREEMENT" is defined in PARAGRAPH 1(c) of Exhibit I to
the Purchase and Sale Agreement.
"TANGIBLE NET WORTH" means total stockholders' equity minus goodwill,
patents, trade names, trade marks, copyrights, franchises,
organizational expense, deferred assets other than prepaid insurance and
prepaid taxes and such other assets as are properly classified as
"intangible assets", for any corporation as determined in accordance
with generally accepted accounting principles.
"TERMINATION DATE" means the earlier of (i) the Business Day which the
Seller so designates by notice to the Administrator at least five days
in advance and (ii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions set forth
in SECTION 2 of EXHIBIT II are not satisfied and (ii) each day which
occurs on or after the Termination Date.
"TERMINATION DISCOUNT" means, for the Purchased Interest on any date, an
amount equal to the Rate Variance Factor on such date multiplied by the
product of (i) the Capital of the Purchased Interest on such date and
(ii) the product of (a) the Base Rate for the Purchased Interest for a
30-day Fixed Period deemed to commence on such date and (b) a fraction
having as its numerator the product of (i) the Average Maturity (as in
effect on such date) times (ii) 2.0 and 360 as its denominator.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Fixed Period during which a Termination
Day occurs, the amount, if any, by which (i) the additional Discount
(calculated without taking into account any Termination Fee or any
shortened duration of such Fixed Period pursuant to CLAUSE (c)(iv) of
the definition thereof) which would have accrued during such Fixed
Period on the reductions of Capital of the Purchased Interest relating
to such Fixed Period had such reductions remained as Capital, exceeds
(ii) the income, if any, received by the Issuer from the Issuer
investing the proceeds of such reductions of Capital, as reasonably
determined by the Administrator, which determination shall be binding
and conclusive for all purposes, absent manifest error.
"TRANSACTION DOCUMENTS" means the Agreement, the Purchase and Sale
Agreement, the Lock-Box Agreements, the Liquidity Asset Purchase
Agreement, the Initial Purchaser Note, the Subscription Agreement and
all other certificates, instruments, UCC financing statements, reports
required under the Transaction Documents, notices and agreements
executed or delivered under or in connection with the Agreement, in each
case as the same may be amended, amended and restated or otherwise
modified from time to time in accordance with their respective terms
and, if applicable, in accordance with the terms of the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"UNMATURED TERMINATION EVENT" means, with respect to the Purchase and
Sale Agreement or the Agreement, an event which, with the giving of
notice or lapse of time, or both, would constitute a Purchase and Sale
Termination Event or a Termination Event, as the case may be.
"WELFARE PLAN" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.
OTHER TERMS. All accounting terms not specifically defined in the
Agreement or in any other Transaction Document shall be construed in
accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in effect in the State of California, and
not specifically defined in the Agreement or in any other Transaction
Document, are used herein as defined in such Article 9. Unless the
context otherwise requires, when used in the Agreement or in any other
Transaction Document, "or" means "and/or", and "including" (and with
correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
under the Agreement is subject to the conditions precedent that the
Administrator shall have received on or before the date of such purchase
the following, each in form and substance (including the date thereof)
satisfactory to the Administrator:
(a) A duly executed counterpart of this Agreement.
(b) A duly executed counterpart of the Purchase and Sale Agreement.
(c) Certified copies of (i) the resolutions of the Board of
Directors of each of Solectron California Corporation, the Seller and
Solectron Corporation (as an Originator, as Servicer and as Guarantor)
authorizing the execution, delivery, and performance by Solectron
California Corporation, the Seller and Solectron Corporation (as an
Originator, as Servicer and as Guarantor), respectively, of the
Agreement and the other Transaction Documents, (ii) all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by-laws of each
of Solectron California Corporation, the Seller and the Solectron
Corporation.
(d) A certificate of the Secretary or Assistant Secretary of
Solectron California Corporation, the Seller and Solectron Corporation
certifying the names and true signatures of the officers of Solectron
California Corporation, the Seller and Solectron Corporation,
respectively, authorized to sign the Transaction Documents to which it
is party. Until the Administrator receives a subsequent incumbency
certificate from Solectron California Corporation, the Seller or
Solectron Corporation in form and substance satisfactory to the
Administrator, the Administrator shall be entitled to rely on the last
such certificate delivered to it by Solectron California Corporation,
the Seller or Solectron Corporation, as the case may be.
(e) Acknowledgment copies, or time stamped receipt copies, of proper
UCC financing statements, duly filed on or before the date of such
initial purchase under the UCC of all jurisdictions that the
Administrator may deem necessary or desirable in order to perfect the
interests of the Seller, the Administrator and the Issuer contemplated
by the Agreement and the Purchase and Sale Agreement.
(f) Acknowledgment copies, or time stamped receipt copies, of proper
financing statements, if any, necessary to release all security
interests and other rights of any Person in the Receivables, Contracts
or Related Security previously granted by the Seller and each
Originator.
(g) Completed UCC requests for information, dated on or before the
date of such initial purchase, listing the financing statements referred
to in SUBSECTION (e) above and all other effective financing statements
filed in the jurisdictions referred to in SUBSECTION (e) above that name
the Seller or an Originator as debtor, together with copies of such
other financing statements (none of which shall cover any Receivables,
Contracts or Related Security), and similar search reports with respect
to federal tax liens and liens of the PBGC and judgment liens in such
jurisdictions as the Administrator may request, showing no such liens on
any of the Receivables, Contracts or Related Security.
(h) Copies of executed Lock-Box Agreements with the Lock-Box Banks.
(i) A favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
for Solectron California Corporation, the Seller and Solectron
Corporation (as an Originator, as Servicer and Guarantor), as to
corporate matters, security interests (including perfection and
priority), and as to such other matters as the Administrator may
reasonably request.
(j) A favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, as to true sale
and substantive consolidation.
(k) Satisfactory results of a review and audit of each Originator's
and the Servicer's collection, operating and reporting systems, Credit
and Collection Policy, historical receivables data and accounts,
including satisfactory results of a review of each Originator's and the
Servicer's operating location(s) and satisfactory review and approval of
the Eligible Receivables in existence on the date of the initial
purchase under the Agreement.
(l) A completed Seller Report representing the performance of the
Receivables for the month prior to closing.
(m) Evidence of payment by each Originator, Solectron and the Seller
of all accrued and unpaid fees (including those contemplated by the
letter agreement referred to in SECTION 1.5), costs and expenses to the
extent then due and payable on the date thereof, together with Attorney
Costs of the Administrator to the extent invoiced prior to or on such
date, plus such additional amounts of Attorney Costs as shall constitute
the Administrator's reasonable estimate of Attorney Costs incurred or to
be incurred by it through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts
between such Persons and the Administrator) and, without limiting the
foregoing, including any such costs, fees and expenses arising under or
referenced in SECTION 5.4.
(n) A letter agreement between the Seller and the Administrator
contemplated by SECTION 1.5.
(o) Good standing certificates with respect to each of Solectron
California Corporation, the Seller and the Servicer issued by the
Secretaries of the States of California and (with respect to the Seller
and Solectron) Delaware.
(p) A certificate from an officer of Solectron California
Corporation to the effect that the Seller has a Tangible Net Worth of at
least $20,000,000.
(q) Such other approvals, opinions or documents as the Administrator
or Purchasers may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be
subject to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered
to the Administrator on or prior to such purchase, in form and substance
satisfactory to the Administrator, a completed Seller Report with
respect to the immediately preceding calendar month, dated within 10
days prior to the date of such purchase together with a listing by
Obligor of all Receivables and such additional information as may
reasonably be requested by the Administrator;
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such
purchase or reinvestment shall be deemed a representation and warranty
by the Seller that such statements are then true):
(i) the representations and warranties contained in PARAGRAPHS
(e), (f), (h), (i), (j), (k), (o), (q), (r) and (t) of EXHIBIT III are
true and correct on and as of the date of such purchase or reinvestment
as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes a Termination Event or
that would constitute a Termination Event but for the requirement that
notice be given or time elapse or both; and
(c) the Administrator shall have received such other approvals,
opinions or documents as it may reasonably request.
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
Each of the Seller and the Servicer, represents and warrants as follows
with respect to itself and its respective properties, as applicable:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware in the case of the
Servicer, and is duly qualified to do business and is in good standing
in every other jurisdiction where the failure to so qualify could
reasonably be expected to result in a material adverse effect on its
business, assets, operations, prospects or condition, financial or
otherwise, and those of any of its subsidiaries taken as a whole, its
ability to perform its obligations under the Agreement, or the rights of
or benefits available under any Transaction Document to the Issuer or
the Administrator.
(b) The execution, delivery and performance by it of the Agreement
and the other Transaction Documents to which it is a party, including,
in the case of the Seller, the Seller's use of the proceeds of purchases
and reinvestments, (i) are within its corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) do not
contravene or result in a default under or conflict with (1) its charter
or by-laws, (2) any material law, rule or regulation applicable to it,
(3) any contractual restriction binding on or affecting it or its
property (including, without limitation the Solectron Credit Agreement)
or (4) any order, writ, judgment, award, injunction or decree binding on
or affecting the Seller or its property, and (iv) do not result in or
require the creation of any Adverse Claim upon or with respect to any of
its properties. The Agreement and the other Transaction Documents to
which it is a party have been duly executed and delivered by it.
(c) No authorization or approval or consent or other action by, and
no notice to or filing with, any Governmental Authority or other Person
is required for the due execution, delivery and performance by it of the
Agreement or any other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation
of it enforceable against it in accordance with its terms.
(e) The balance sheets of Solectron and its subsidiaries, in each
case as at September 31, 1996, and the related statements of income and
retained earnings of the Servicer and its subsidiaries, in each case for
the fiscal year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of the Servicer
and its subsidiaries, as at such date and the results of the operations
of the Servicer and its subsidiaries, for the period ended on such date,
all in accordance with generally accepted accounting principles
consistently applied, and since September 31, 1996 there has been no
material adverse change in the business, operations, property or
financial or other condition or operations of the Servicer or any of its
subsidiaries, the ability of the Servicer to perform its obligations
under the Agreement or the other Transaction Documents or, in the case
of the Seller, the collectibility of the Receivables, or which affects
the legality, validity or enforceability of the Agreement or the other
Transaction Documents.
(f) There is no pending or threatened action or proceeding affecting
the Seller or the Servicer or any of its subsidiaries before any
Governmental Authority or arbitrator (x) which could materially
adversely affect (i) the business, operations, prospects, property,
financial or other condition or operations of the Seller or the Servicer
or any of its subsidiaries, (ii) the ability of the Seller or the
Servicer to perform its obligations under the Agreement or the other
Transaction Documents, (iii) the ability of Solectron to pay its
obligations under the Solectron Credit Agreement or (iv) the
collectibility of the Receivables, or (y) which affects or purports to
affect the legality, validity or enforceability of the Agreement or the
other Transaction Documents.
(g) No proceeds of any purchase or reinvestment in respect of the
Purchased Interest will be used to acquire any equity security of a
class which is registered or required to be registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(h) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security free and clear of any Adverse Claim;
upon each purchase or reinvestment, the Issuer shall acquire a valid and
enforceable perfected undivided percentage ownership interest, to the
extent of the Purchased Interest, in each Pool Receivable then existing
or thereafter arising and in the Related Assets with respect thereto,
free and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Administrator, on its behalf and on behalf of
the Issuer, in Seller's right, title and interest in, to and under the
items described in SECTION 1.2(d), and the Administrator, on its behalf
and on behalf of the Issuer, has a first priority perfected security
interest in such items, free and clear of any Adverse Claims. Each
Receivable constitutes an "account" as such term is defined in the UCC.
No effective financing statement or other instrument similar in effect
covering any Contract or any Pool Receivable or Related Asset or any
Lock-Box Account (or other item covered by SECTION 1.2(d) of the
Agreement) is on file in any recording office, except those filed in
favor of the Administrator relating to the Agreement.
(i) Each Seller Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is
supplied by the Seller or an Affiliate), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished
at any time by or on behalf of the Seller to the Administrator in
connection with the Agreement is or will be accurate in all material
respects as of its date or (except as otherwise disclosed to the
Administrator at such time) as of the date so furnished, and no such
item contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(j) The principal place of business and chief executive office (as
such terms are used in the UCC) of the Seller and the office where the
Seller keeps its records concerning the Receivables are located at the
address referred to in PARAGRAPH (b) of EXHIBIT IV.
(k) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts, are specified in SCHEDULE
II to the Agreement (or at such other Lock-Box Banks and/or with such
other Lock-Box Accounts as have been notified to the Administrator in
accordance with the Agreement). The Lock-Box Banks have complied with
all of the terms of the Lock-Box Agreements.
(l) It is not in violation of any order of any court, arbitrator or
Governmental Authority.
(m) Neither it nor any of its Affiliates of has any direct or
indirect ownership or other financial interest in the Issuer.
(n) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including,
without limitation, Regulations G or U of the Federal Reserve Board.
(o) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance, exists and is an
Eligible Receivable as of the date of such calculation.
(p) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of the Purchased
Interest or from the application of the proceeds therefrom, which
constitutes a Termination Event.
(q) The Seller has accounted for each sale of undivided percentage
ownership interests in Receivables in its books and financial statements
as sales, consistent with Generally Accepted Accounting Principles.
(r) It has complied in all material respects with the Credit and
Collection Policy with regard to each Pool Receivable.
(s) It has complied with all of the terms, covenants and agreements
contained in the Agreement and the other Transaction Documents and
applicable to it.
(t) It is Solvent; and at the time of (and immediately after) each
purchase and reinvestment by the Purchaser, it shall have been Solvent.
(u) The Seller's complete corporate name is set forth in the
preamble to the Agreement, and the Seller does not use and has not
during the last six years used any other corporate name, trade name,
doing business name or fictitious name, except as set forth on SCHEDULE
III and except for names first used after the date of the Agreement and
set forth in a notice delivered to the Administrator pursuant to
PARAGRAPH (b)(ii) of EXHIBIT IV.
(v) The Seller is not, and is not controlled by, an "investment
company" registered or required to be registered under the Investment
Company Act of 1940, as amended.
EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER AND THE SERVICER. Until the latest of the
Facility Termination Date, the date on which no Capital of or Discount
in respect of the Purchased Interest shall be outstanding and the date
all other amounts (other than in respect of unasserted indemnity claims)
owed by the Seller under the Agreement to the Issuer, the Administrator
and any other Indemnified Party or Affected Person shall be paid in full
(such latest date being referred to as the "Final Payout Date"), each of
the Seller and the Servicer covenants and agrees, with respect to
itself, as follows:
(a) COMPLIANCE WITH LAWS, ETC. It shall comply in all material
respects with all applicable laws, rules, regulations and orders, and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so
to comply with such laws, rules and regulations or the failure so to
preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not materially adversely affect the
collectibility of the Receivables or the enforceability of any related
Contract or its ability to perform its obligations under any related
Contract or under the Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT; CHANGE OF NAME, IDENTITY,
CORPORATE STRUCTURE; ETC. In the case of the Seller, it
(i) shall keep its principal place of business and chief
executive office (as such terms are used in the UCC) and the office
where it keeps its records concerning the Receivables at the address set
forth under its name on the signature page to the Agreement or, upon at
least 30 days' prior written notice of a proposed change to the
Administrator, at any other locations in jurisdictions where all actions
reasonably requested by the Administrator to protect and perfect the
interests of the Administrator and the Issuer in the Receivables and
related items (including without limitation the items described in
SECTION 1.2(d)) have been taken and completed; and
(ii) shall provide the Administrator with at least 30 days'
written notice prior to making any change in its name or making any
other change in its identity or corporate structure (including a merger)
which could render any UCC financing statement filed in connection with
this Agreement "seriously misleading" as such term is used in the UCC;
each notice to the Administrator pursuant to this sentence shall set
forth the applicable change and the effective date thereof.
Each of the Seller and Servicer also will maintain and implement
administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Receivables and related
Contracts in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records, computer tapes and
disks and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. It shall, at its expense, cause each Originator to
timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by such Originator
under the Contracts related to the Pool Receivables, and timely and
fully comply in all material respects with the Credit and Collection
Policy with regard to each Receivable and the related Contract.
(d) OWNERSHIP INTEREST, ETC. It shall, at its expense, take all
action necessary or desirable to establish and maintain a valid and
enforceable and perfected undivided ownership interest, to the extent of
the Purchased Interest, in the Pool Receivables and the Related Assets
with respect thereto, and a first priority perfected security interest
in the items described in SECTION 1.2(d), in each case free and clear of
any Adverse Claim, in favor of the Administrator and the Issuer,
including, without limitation, filing UCC financing statements and
taking such other action to perfect, protect or more fully evidence the
interest of the Administrator and the Issuer under the Agreement as the
Administrator or the Issuer, through the Administrator, may reasonably
request.
(e) SALES, LIENS, ETC. The Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any or all of
its right, title or interest in, to or under, any item described in
SECTION 1.2(d) including without limitation the Seller's undivided
interest in any Receivable, Related Security, or Collections, or upon or
with respect to any account to which any Collections of any Pool
Receivables are sent, or assign any right to receive income in respect
of any items contemplated by this PARAGRAPH (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in
SECTION 4.2(a) of the Agreement, it shall not extend the maturity or
adjust the Outstanding Balance or otherwise modify the terms of any Pool
Receivable or amend, modify or waive any term or condition of any
related Contract.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. It shall
not make any material change in the character of its business or in the
Credit and Collection Policy, that would adversely affect the
collectibility of the Receivables Pool or the enforceability of any
related Contract or the ability of each Originator to perform its
obligations under any related Contract or the ability of each Seller or
the Servicer to perform its obligations under the Agreement without the
prior written consent of the Administrator.
(h) AUDITS. It shall, from time to time during regular business
hours with prior written notice to it as reasonably requested by the
Administrator, permit the Administrator, or its agents or
representatives, (i) to examine and make copies of and make abstracts
from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under its control
relating to Receivables and the Related Assets (including, without
limitation, the related Contracts and any such books, records and
documents relating to the identification of Obligors and agings, charge-
offs, offsets and delinquencies of Receivables), and (ii) to visit its
offices and properties for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to
Receivables and the Related Assets or its performance hereunder or under
the Contracts with any of its officers, employees, agents or contractors
having knowledge of such matters.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT
INSTRUCTIONS TO OBLIGORS. It shall not add or terminate any bank as a
Lock-Box Bank or any account as a Lock-Box Account from those listed in
Schedule II to the Agreement, or make any change in its instructions to
Obligors regarding payments to be made to any Lock-Box Account (or
related post office box), unless the Administrator shall have consented
thereto in writing and the Administrator shall have received copies of
all agreements and documents (including without limitation Lock-Box
Agreements) that it may request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. It shall (i) instruct all
Obligors to make payments of all Receivables only to one or more Lock-
Box Accounts or to post office boxes which are covered by a Lock-Box
Agreement and to which only Lock-Box Banks have access, provided that,
consistent with its efforts to maximize Collections and its month-end
collection practices in effect as of the date of the Agreement, it may
permit Obligors to make payments on Receivables directly to the
applicable Originator so long as the Rated Long Term Debt of Solectron
is Investment Grade or otherwise with the prior written consent of the
Administrator, (ii) instruct and cause the Lock-Box Banks to cause all
items and amounts relating to such Receivables received in such post
office boxes to be removed and deposited into a Lock-Box Account on a
daily basis, and (iii) deposit, or cause to be deposited, any
Collections of Pool Receivables received by it into Lock-Box Accounts
not later than three Business Days after receipt thereof. It will not
deposit or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Pool Receivables or interest accruing on amounts held in
such accounts.
(k) MARKING OF RECORDS. It shall, at its expense, ▇▇▇▇ its master
data processing records relating to Pool Receivables and related
Contracts, including with a legend evidencing that the undivided
percentage ownership interests with regard to the Purchased Interest
related to such Receivables and related Contracts have been sold in
accordance with the Agreement.
(l) REPORTING REQUIREMENTS. It shall provide to the Administrator
(in multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Seller
and the Servicer, balance sheets of Solectron, Solectron California
Corporation and the Seller and of Solectron and its subsidiaries on a
consolidated basis as of the end of such quarter, and statements of
income and retained earnings of each of Solectron and Solectron
California Corporation individually and of Solectron and its
subsidiaries on a consolidated basis, for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter,
certified by the chief financial officer of each of Solectron California
Corporation, the Seller and Solectron;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of Solectron, a copy of the annual report
for such year for Solectron and its subsidiaries, containing financial
statements for such year audited by KPMG Peat Marwick or other
independent certified public accountants of national reputation;
(iii) as soon as available and in any event not later than the
tenth calendar day of each month or, if such day is not a Business Day,
the first Business Day thereafter, a Seller Report as of the previous
Month-End Date;
(iv) on the first Business Day of each calendar week, a report
with respect to Solectron's accounts payable as of the last Business Day
of the preceding week, in form and substance satisfactory to the
Administrator, if the rating on the Rated Long Term Debt of Solectron is
no longer Investment Grade;
(v) as soon as possible and in any event within five days after
the occurrence of each Termination Event or event which, with the giving
of notice or lapse of time, or both, would constitute a Termination
Event, a statement of the chief financial officer of the Servicer, the
Seller or Solectron California Corporation setting forth details of such
Termination Event or event and the action that the Seller or Solectron
California Corporation, as the case may be, has taken and proposes to
take with respect thereto;
(vi) promptly after the sending or filing thereof, copies of all
reports that the Servicer, the Seller, Solectron California Corporation
or any of its Subsidiaries sends to any of its security holders, and
copies of all reports and registration statements that the Seller,
Solectron California Corporation, Solectron or any of its subsidiaries
files with the Securities and Exchange Commission or any national
securities exchange;
(vii) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller, Solectron California Corporation,
Solectron or any Affiliate files under ERISA with the Internal Revenue
Service or the PBGC or the U.S. Department of Labor or that the Seller,
Solectron California Corporation, Solectron or any Affiliate receives
from any of the foregoing or from any multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) to which the Seller, Solectron
California Corporation, Solectron or any Affiliate is or was, within the
preceding five years, a contributing employer, in each case in respect
of the assessment of withdrawal liability or an event or condition which
could, in the aggregate, result in the imposition of liability on the
Seller, Solectron California Corporation, Solectron and/or any such
Affiliate in excess of $5,000,000;
(viii) at least thirty days prior to any change in the Seller's or
an Originator's name, or any other change requiring the amendment of UCC
financing statements or the filing of new UCC financing statements in
order to maintain the perfection and priority of the security interest
granted pursuant to SECTION 1.2 of the Agreement, a notice setting forth
such changes and the effective date thereof;
(ix) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller,
Solectron California Corporation, Solectron or any of their respective
Affiliates as the Administrator may from time to time reasonably
request;
(x) promptly after the Seller or the Servicer obtains knowledge
thereof, notice of any (a) litigation, investigation or proceeding which
may exist at any time involving any Solectron Party and any Governmental
Authority which, if not cured or if adversely determined, as the case
may be, would have a material adverse effect (i) on the business,
operations, property or financial or other condition of Solectron or any
of its subsidiaries or (ii) upon the ability of Solectron or any of its
subsidiaries to pay any Indebtedness or (iii) upon the Receivables Pool
or (iv) upon the Seller's receipt of or right to receive Collections; or
(b) litigation or proceeding adversely affecting any Solectron Party or
in which the amount involved is $5,000,000 or more and not covered by
insurance or in which injunctive or similar relief is sought or (c)
litigation or proceeding relating to any Transaction Document; and
(xi) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or
other condition of the Seller or any other Solectron Party.
(m) GENERAL RESTRICTIONS. On and after the Initial Purchase Date,
(i) RESTRICTED PAYMENTS. the Seller shall not (A) pay or declare
any Dividend, (B) lend or advance any funds, or (C) repay any loans or
advances to, for or from any Solectron Party, or (D) make any payments
in respect of the purchase price of Receivables and Related Assets under
the Purchase and Sale Agreement, except in accordance with CLAUSE (o) of
this EXHIBIT IV and this CLAUSE (m). Actions of the type described in
the preceding sentence are herein collectively called "RESTRICTED
PAYMENTS";
(ii) TYPES OF PERMITTED PAYMENTS. subject to the limitations set
forth in CLAUSE (o) below, the Seller may declare and pay Dividends to
any shareholder (provided, that payment of such Dividends must comply
with applicable law; and PROVIDED, FURTHER, that Dividends may not be
paid more frequently than permitted by applicable law;
(iii) ADDITIONAL SPECIFIC RESTRICTIONS. the Seller may make
Restricted Payments only out of Collections paid or released to the
Seller pursuant to SECTIONS 1.4(b)(ii) or 1.4(b)(iv) of the Agreement,
from the proceeds of any Purchased Interest, from the original paid in
capital of the Seller, or from other net income of the Seller; provided,
however, that the Seller shall not pay, make or declare;
(A) any Dividend if, after giving effect thereto, the Seller's
Tangible Net Worth would be less than $20,000,000;
(B) any Restricted Payment if, after giving effect thereto, a
Termination Event or Unmatured Termination Event shall have occurred and
be continuing; or
(C) any Restricted Payment if, after giving effect thereto, the
Seller would not be Solvent.
(n) ERISA MATTERS. It shall notify the Administrator as soon as is
practicable and in any event not later than two Business Days after
(i) the institution of any steps by it or any other Person to terminate
any Pension Plan which is not fully funded, unless adequate reserves
have been set aside for the funding thereof, (ii) the failure to make a
required contribution to any Pension Plan if such failure is sufficient
to give rise to a lien under section 302(f) of ERISA, (iii) the taking
of any action with respect to a Pension Plan which could result in the
requirement that any Solectron Party furnish a bond or other security to
the PBGC or such Pension Plan or (iv) the occurrence of any other event
concerning any Pension Plan which is reasonably likely to result in a
material adverse effect on the business, operations, property or
financial or other condition of any Solectron Party.
(o) MERGERS, ACQUISITIONS, SALES, INVESTMENTS, ETC. It shall cause
the Seller not to:
(i) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person,
(ii) sell, transfer, convey or lease any of its assets other than
pursuant to or as expressly permitted by this Agreement, or
(iii) make, incur or suffer to exist any investment in, equity
contribution to, loan or advance to, or payment obligation in respect of
the deferred purchase price of property from, any other Person, except
as expressly contemplated by this Agreement and the Purchase and Sale
Agreement.
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) The Servicer shall fail to deliver the Seller Report pursuant to
the Agreement and such failure shall remain unremedied for five days, or
(ii) the Seller shall fail to make any payment required under the
Agreement and such failure shall remain unremedied for two Business
Days; or
(b) The Servicer shall fail (i) to transfer to any successor
Servicer when required any rights, pursuant to the Agreement, which the
Servicer then has, or (ii) to make any payment required under the
Agreement; or
(c) Any representation or warranty made or deemed made by the
Seller or the Servicer (or any of their respective officers) under or in
connection with the Agreement or any other Transaction Document or any
information or report delivered by the Seller or the Servicer pursuant
to the Agreement shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered; or
(d) The Seller or the Servicer shall fail to perform or observe (i)
any term, covenant or agreement contained in PARAGRAPHS (d), (e), (f),
(g), (i), (j), (m), (n) or (o) of EXHIBIT IV to the Agreement and, in
the case of any such failure with respect to PARAGRAPHS (i) or (j) that
is solely the result of the termination of the applicable Lockbox
Agreement by Bank of America National Trust and Savings Assocation, such
failure shall remain unremedied for fourteen (14) days, (ii) any term,
covenant or agreement contained in PARAGRAPH (l) of EXHIBIT IV to the
Agreement and such failure shall remain unremedied for five days, or
(iii) any other term, covenant or agreement contained in the Agreement
or any other Transaction Document on its part to be performed or
observed and any such failure shall remain unremedied for thirty (30)
days; or
(e) Any Solectron Party shall be in default with respect to any
payment (whether or principal or interest and regardless of amount) in
respect of any Material Indebtedness and such failure shall continue
beyond the applicable grace period specified in the agreement or
instrument relating to such Material Indebtedness or any Solectron Party
shall default in any obligation under any Material Indebtedness and such
failure shall result in such Material Indebtedness being declared to be
due and payable prior to the stated maturity thereof; or
(f) The Agreement or any purchase or any reinvestment pursuant to
the Agreement shall for any reason (other than pursuant to the terms
hereof) (i) cease to create, or the Purchased Interest shall for any
reason cease to be, a valid and enforceable first priority perfected
undivided percentage ownership interest to the extent of the Purchased
Interest in each Pool Receivable and the Related Security and
Collections and other proceeds with respect thereto, free and clear of
any Adverse Claim or (ii) cease to create with respect to the items
described in SECTION 1.2(d), or the interest of the Administrator, on
its behalf and on behalf of the Issuer, with respect to such items shall
cease to be, a valid and enforceable first priority perfected security
interest, free and clear of any Adverse Claim; or
(g) Solectron or the Seller 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
Solectron or Seller 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 (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period
of 30 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
Solectron or the Seller shall take any corporate action to authorize any
of the actions set forth above in this PARAGRAPH (g); or
(h) As of any Month-End Date on and after the Initial Purchase Date,
(i) the average Sales-Based Dilution Ratio for the three months ended on
such Month-End Date shall exceed 9%, (ii) the average Sales-Based
Default Ratio for the three months ended on such Month-End Date shall
exceed 4% or (iii) the average Delinquency Ratio for the three months
ended on such Month-End Date shall exceed 6%; or
(i) The Purchased Interest shall exceed 100% and such condition
shall have continued for a period of five (5) Business Days following
the earlier of (x) the Servicer's knowledge of such condition and (y)
notice to the Servicer by the Administrator of the occurrence of such
condition; or
(j) An "Event of Default", as defined in the Solectron Credit
Agreement, shall occur and be continuing, or, if the Solectron Credit
Agreement (or the commitments of the lenders thereunder) has expired,
been terminated or is otherwise not in full force and effect, an "Event
of Default" as defined in the Solectron Credit Agreement, as in effect
at the time immediately preceding such expiration, termination or
failure to be in full force and effect, would have occurred and been
continuing if the Solectron Credit Agreement had not so expired,
terminated or failed to be in full force and effect; or
(k) On and after the Initial Purchase Date, the Tangible Net Worth
of Seller shall at anytime be less than $20,000,000; or
(l) Any Change of Control shall occur or Solectron and Solectron
California Corporation shall not own, directly or indirectly, 100% of
all issued and outstanding capital stock of the Seller; or
(m) If Solectron has any Rated Long Term Debt outstanding, the
rating assigned by S&P shall at any time be withdrawn or be less than
"BB"; or
(n) A Purchase and Sale Termination Event shall have occurred.
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK LOCK-BOX ACCOUNT
Bank of America National Trust
and Savings Association
SCHEDULE III
TRADE NAMES
ANNEX A
FORM OF LOCK-BOX AGREEMENT
AGREEMENT RELATING TO LOCKBOX SERVICES
This Agreement is entered into as of September __, 1997 among Solectron
California Corporation ("SCC"), Solectron Corporation ("SOLECTRON" and
together with SCC, the "ORIGINATORS)', Solectron Funding Corporation
("SELLER"), Receivables Capital Corporation ("PURCHASER"), Bank of
America National Trust and Savings Association, as administrator for
Purchaser ("ADMINISTRATOR"), and Bank of America National Trust and
Savings Association ("BANK") with respect to the following:
A. Solectron and Bank have agreed to the Standard Terms and
Conditions, a copy of which is attached as EXHIBIT A and incorporated
herein by reference (the "STANDARD TERMS AND CONDITIONS"), relating to
remittance processing services to be performed by Bank ("REMITTANCE
PROCESSING SERVICE") in relation to the checks and other payment
instruments mailed to the United States Post Office address or addresses
("LOCKBOX ADDRESS OR ADDRESSES") assigned to Solectron (collectively,
the "PAYMENTS") from time to time received or deposited in [Solectron's]
Account No. ___________ with Bank (the "ACCOUNT").
B. Each of the Originators has assigned and/or may hereafter assign
to Seller, and Seller has assigned and/or may hereafter assign to
Purchaser and Administrator an undivided percentage interest in, and has
granted to Administrator for its benefit and the benefit of Purchaser a
security interest in, certain accounts, chattel paper instruments or
general intangibles ("RECEIVABLES") and all proceeds thereof, including
the Payments.
C. Each Originator, Seller, Purchaser, Administrator and Bank are
entering into this Agreement to provide for the assignment of the
Account to Administrator, for its benefit and the benefit of Purchaser,
and the disposition of net proceeds of Payments deposited in the
Account.
ACCORDINGLY, EACH ORIGINATOR, PURCHASER, ADMINISTRATOR AND BANK AGREE AS
FOLLOWS:
1. Assignment of Account:
(a) Each Originator hereby assigns and transfers to Seller, and
Seller hereby assigns and transfers to Administrator, for its benefit
and the benefit of Purchaser, and grants to Administrator, for its
benefit and the benefit of Purchaser, a security interest in, the
Account, all Payments and all other moneys deposited in the Account from
time to time. Subject to the terms hereof, Administrator, for its
benefit and the benefit of Purchaser, shall have exclusive dominion and
control over the Account.
(b) Bank hereby acknowledges receipt of notice of the ownership
and security interest of Administrator, for its benefit and the benefit
of Purchaser, in the Payments, the Account and the amounts from time to
time on deposit therein and agrees that the Account shall be maintained
for the benefit of Administrator, on its behalf and on behalf of
Purchaser, on the terms provided herein).
(c) The Account shall be entitled "Solectron for the benefit of
Bank of America, as Administrator."
(d) Administrator, on behalf of itself and Purchaser, hereby
authorizes Bank to transfer balances in the Account to each Originator
in accordance with instructions to Bank from Solectron, and hereby
authorizes Solectron (in its capacity as servicer of the Receivables) to
accept such transfers and to give such instructions prior to the
Activation Period. The "ACTIVATION PERIOD" means the period of time
commencing on the date [two] Business Days after Bank's receipt of a
written notice from Administrator in the form of Attachment I (the
"NOTICE"). Administrator will simultaneously provide a copy of the
Notice to Solectron.
(e) Bank has sole and exclusive access to items mailed to the
Lockbox Address(es).
2. Bank is hereby authorized (and, in the case of clauses (a), (b) and
(e) below, hereby agrees):
(a) to perform the Remittance Processing Service and to follow its
usual operating procedures for the handling of any Payments, in
accordance with the Standard Terms and Conditions, as modified by this
Agreement;
(b) to charge the Account for all returned Payments, service
charges, and other fees and charges associated with the Remittance
Processing Service and this Agreement;
(c) to follow its usual procedures in the event the Account or any
Payment should be or become the subject of any writ, levy, order or
other similar judicial or regulatory order or process ("ORDER") to
comply with such Order; and
(d) at all times prior to the Activation Period, to transfer all
collected and available balances in the Account to [Solectron] Account
No. __________ at ______________ (or such other account as [Solectron]
may designate by written notice to the Bank and Administrator), and,
notwithstanding anything to the contrary herein or in the Standard Terms
and Conditions, during the Activation Period (i) to refrain from
transferring any balances at the discretion of the Company and (ii) to
transfer all collected and available balances in the Account to such
account as Administrator may designate by written notice to Bank)
pursuant to Administrator's instructions. Funds are not available if,
in the reasonable determination of Bank, they are subject to a hold,
dispute or legal process preventing their withdrawal. Company or
Administrator, as applicable, will give Bank reasonable advance written
notice of any change in the instructions.
3. If the balances in the Account are not sufficient to pay Bank for
any returned check, each Originator agrees to pay Bank on demand the
amount due Bank.
(a) If the balances in the Account are not sufficient to
compensate Bank for any fees or charges due Bank in connection with the
Remittance Processing Service or this Agreement, each Originator agrees
to pay Bank on demand the amount due Bank.
4. Each Originator hereby authorizes Bank, without prior notice, from
time to time to debit any other account either Originator may have with
Bank for the amount or amounts due Bank under subsection 3(a) or 3(b).
Neither Purchaser nor Administrator shall be responsible for payment of
any such amount.
(a) bank agrees it shall not offset against the Account, except as
permitted under this Agreement, until this Agreement has been terminated
pursuant to subsection 5(d) hereof or by agreement of the parties.
5. Termination of this Agreement shall be as follows:
(a) Bank may terminate this Agreement upon 30 days' prior written
notice to each Originator, Seller and Administrator. Purchaser or
Administrator may terminate this Agreement upon 30 days' prior written
notice by Administrator to each Originator, Seller and Bank. Neither of
the Originators nor Seller may terminate this Agreement or the
Remittance Processing Service except with the written consent of
Administrator and upon 30 days' prior written notice to Bank and
Administrator.
(b) Notwithstanding subsection 4(a), Bank may terminate this
Agreement at any time by at least one Business Day's prior written
notice to each Originator, Seller and Administrator if (i) either
Originator or Seller breaches any of the terms of this Agreement, any
other agreement with Bank or any agreement involving the borrowing of
money or the extension of credit; (ii) either Originator or Seller
liquidates, dissolves, merges with or into or consolidates with another
entity or sells, leases or disposes of a substantial portion of its
business or assets; (iii) either Originator, or Seller terminates its
business, fails generally or admits in writing its inability to pay its
debts as they become due; any bankruptcy, reorganization, arrangement,
insolvency, dissolution or similar proceeding is instituted with respect
to either Originator or Seller; either Originator, or Seller makes any
assignment for the benefit of creditors or enters into any composition
with creditors or takes any action in furtherance of any of the
foregoing; or (iv) any material adverse change occurs in each
Originator's or Seller's financial condition, results of operations or
ability to perform its obligations under this Agreement. Each
Originator and Seller shall promptly give written notice to Bank and
Administrator of the occurrence of any of the foregoing events with
respect to itself.
(c) Upon any termination of this Agreement pursuant to subsection
4(a) or 4(b) hereof, and subject to Section 13 hereof, (i) each
Originator shall promptly arrange for Payments received at the Lockbox
Address(es) or otherwise in or for deposit to the Account to be
forwarded to another bank acceptable to Administrator and processed
pursuant to an agreement acceptable to Administrator, and (ii) Bank
shall no longer be required to process Payments, but subject to payment
in advance of Bank's standard charges for such service, shall forward
all Payments then held by Bank and all mail thereafter received at the
Lockbox Address to such address or account as Administrator may direct.
Otherwise the provisions of this Agreement shall remain in effect until
terminated pursuant to subsection 5(d) or by agreement among the
parties.
6. Bank will not be liable to either Originator, Seller, Purchaser or
Administrator for any expense, claim, loss, damage or cost ("DAMAGES")
arising out of or relating to its performance under this Agreement other
than those Damages which result directly from its acts or omissions
constituting negligence or willful misconduct, subject to the limits in
subsection 5(b).
(a) Bank's liability is limited to direct money Damages actually
incurred. In no event will Bank be liable for any special, indirect,
consequential or exemplary damages or for lost profits.
(b) Bank will be excused from failing to act or delay in acting,
and no such failure or delay shall constitute a breach of this Agreement
or otherwise give rise to any liability of Bank, if (i) such failure or
delay is caused by circumstances beyond Bank's reasonable control,
including but not limited to legal constraint, emergency conditions,
action or inaction of governmental, civil or military authority, fire,
strike, lockout or other labor dispute, war, riot, theft, flood,
earthquake or other natural disaster, breakdown of public or private or
common carrier communications or transmission facilities, equipment
failure, or act, negligence or default of either Originator, Seller,
Purchaser or Administrator or (ii) such failure or delay resulted from
Bank's reasonable belief that the action would have violated any
guideline, rule or regulation of any governmental authority. Bank
agrees to give each Originator, Seller and Administrator prompt notice
of any actual or anticipated failure or delay resulting from any of the
foregoing but any failure of Bank to give such notice shall not affect
Bank's rights (or the limitation of its liability) under this subsection
5(b) or 5(c).
(c) Administrator shall notify Bank promptly in writing when
Purchaser has no further ownership interest (or commitment to acquire
any interest) in the Receivables and all of each Originator's and
Seller's, obligations have been paid in full, and this Agreement shall
automatically terminate upon Bank's receipt of such notice.
7. Each Originator shall indemnify Bank against, and hold it harmless
from, any and all liabilities, claims, costs, expenses and damages of
any nature (including but not limited to allocated costs of staff
counsel, other reasonable attorney's fees and any fees and expenses
incurred in enforcing this Agreement) in any way arising out of or
relating to disputes or legal actions concerning Bank's provision of the
Remittance Processing Service, this Agreement, the Lockbox Addresses or
any Payment. This Section does not apply to any cost or damage
attributable to the gross negligence or intentional misconduct of Bank.
Each Originator's obligations under this Section shall survive
termination of this Agreement.
8. The Originators and Seller each represents and warrants to Bank,
Purchaser and Administrator, that (i) each Acceptable Payee has
authorized Payments payable to it to be credited to the Account; (ii)
this Agreement constitutes its duly authorized, legal, valid, binding
and enforceable obligation; (iii) the performance of its obligations
under this Agreement and the consummation of the transactions
contemplated hereunder will not (A) constitute or result in a breach of
its certificate or articles of incorporation, by-laws or partnership
agreement, as applicable, or the provisions of any material contract to
which it is a party or by which it is bound or (B) result in the
violation of any law, regulation, judgment, decree or governmental order
applicable to it; and (iv) all approvals and authorizations required to
permit the execution, delivery, performance and consummation of this
Agreement and the transactions contemplated hereunder have been
obtained.
(a) The Originators and Seller each agrees that it shall be deemed
to make and renew each representation and warranty in subsection 7(a) on
and as of each day on which it uses the Remittance Processing Service.
9. The Originators and Seller each represents and warrants that it has
not assigned or granted a security interest in the Account or any funds
now or hereafter deposited in the Account, except to Seller (in the case
of each Originator and to Purchaser and Administrator.
10. The Originators and Seller each agrees that:
(a) Except as permitted under Section 2(d), it cannot, and will
not, withdraw any monies from the Account until such time as
Administrator advises Bank in writing that Purchaser and Administrator
no longer claim any interest in the Account and the monies deposited and
to be deposited in the Account; and
(b) It will not permit the Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, nature or
description, other than ownership and security interests of Purchaser,
and Administrator on its behalf, hereunder and as referred to herein.
11. Purchaser and Administrator each acknowledges and agrees that Bank
has the right to charge the Account from time to time, as set forth in
this Agreement, and the account agreement, as amended from time to time,
and that Purchaser and Administrator have no right to the sums so
withdrawn by Bank.
12. Each Business Day (as defined below), Bank will prepare a package
of materials for each Lockbox Address which will include, but is not
limited to, any Payments not processed in accordance with the set-up
documents, invoices, any other material received at the Lockbox
Address(es) and information regarding the deposit for such Business Day.
For purposes hereof, "Business Day" shall mean each Monday through
Friday, excluding bank holidays.
(a) Bank will send the materials to the address specified below
for Solectron, with a copy of the deposit advice to the address
specified below for Administrator. In addition to the original statement
which will be provided to Solectron, if requested by Administrator, Bank
will provide Administrator with a duplicate statement.
13. Each Originator agrees to pay to Bank, upon receipt of Bank's
invoice, all costs, expenses and attorneys' fees (including allocated
costs for in-house legal services) incurred by Bank in connection with
the preparation and administration (including any amendments) and
enforcement of this Agreement and any instrument or agreement required
hereunder, including but not limited to any such costs, expenses and
fees arising out of the resolution of any conflict, dispute, motion
regarding entitlement to rights or rights of action, or other action to
enforce Bank's rights in a case arising under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code.
14. Notwithstanding any of the other provisions in this Agreement, in
the event of the commencement of a case pursuant to ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ Code, filed by or against either Originator or Seller, or in the
event of the commencement of any similar case under then applicable
federal or state law providing for the relief of debtors or the
protection of creditors by or against either Originator or Seller, Bank
may take or omit to take any action as Bank reasonably deems necessary
in order to comply with all applicable provisions of governing statutes,
and shall not be liable to the other parties, and each of the other
parties hereby agrees not to assert any claim against Bank, for any
Damages arising from such action or omission.
15. This Agreement may be amended only be a writing signed by each
Originator, Seller, Purchaser, Administrator and Bank; except that
Bank's charges are subject to change by Bank upon 30 days' prior written
notice to each Originator and Seller.
16. This Agreement may be executed in counterparts; all such
counterparts shall constitute but one and the same agreement.
17. Any written notice or other written communication to be given under
this Agreement shall be addressed to each party at its address set forth
on the signature page of this Agreement or to such other address as a
party may specify in writing. Except as otherwise expressly provided
herein, any such notice shall be effective upon receipt.
18. This Agreement controls in the event of any conflict between this
Agreement and or any other document or written or oral statement. This
Agreement supersedes all prior understandings, writings, proposals,
representations and communications, oral or written, of any party
relating to the subject matter hereof.
19. Neither of the Originators nor Seller may assign any of its rights
or obligations under this Agreement without the prior written consent of
Bank. Upon [30 days] prior written notice to Bank, Purchaser may assign
its rights and interests under this Agreement to any assignee of
Purchaser's interest in the Receivables. Administrator may assign its
rights, interests and obligations under this Agreement to any successor
administrator for Purchaser. Administrator agrees to give prompt
written notice to Bank of any such assignment by Purchaser or
Administrator, but no failure to give or delay in giving such notice
shall impair the assignee's interest in the Account or, on and after the
giving of such notice, the rights of the assignee hereunder.
20. Bank hereby agrees that it will not institute, or join any other
person or entity in instituting, any case pursuant to ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ Code, or any similar case under then applicable state or federal
law providing for the relief of debtors or the protection of creditors,
(a) against Purchaser prior to the date which is one year and one day
after payment of all commercial paper or other rated securities now or
hereafter issued by Purchaser or (b) against Seller prior to the date
which is one year and one day after the date on which Purchaser has no
further ownership interest (or commitment to acquire any interest) in
the Receivables and all of Seller's obligations which are secured by the
Receivables, the Payments and the Account are paid in full. This
Section 19 shall survive any termination of this Agreement.
21. This Agreement shall be interpreted in accordance with Illinois law
without reference to Illinois principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this agreement by
their duly authorized officers as of the day and year first above
written.
Solectron Corporation Address for notices:
("Solectron" and "Originator")
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: __________________ Building 5
Name: ________________ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: _______________ Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Solectron California Corporation Addresses for notices
("Originator")
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: __________________ Building 5
Name: ________________ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: _______________ Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Solectron Funding Corporation Address for notices:
("Seller") ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: __________________ Building 5
Name: ________________ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: _______________ Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Receivables Capital Corporation Address for notices:
("Purchaser")
c/o Administrator at its
address shown below
By: __________________ c/o Merrill ▇▇▇▇▇ Money
Markets, Inc.
Name: ________________ World Financial Center,
North Tower
Title: _______________ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of America National Trust Address for notices:
and Savings Association
("Administrator") Asset Securitization Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: __________________ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ________________ Attention: Asset Securitization
Group
Title: _______________ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of America National Trust
and Savings Association
("Bank")
By: __________________
Name: ________________
Title: _______________
By: __________________
Name: ________________
Title: _______________
EXHIBIT A
TO THREE PARTY AGREEMENT RELATING
TO LOCKBOX SERVICES
STANDARD TERMS AND CONDITIONS
The Lockbox Service involves processing checks that are received at a
Lockbox Address. With this Service, Company instructs its customers to
mail checks it wants to have processed under the Service to the Lockbox
Address. Banks picks up mail at the Lockbox Address according to its
mail pick-up schedule. Banks will have unrestricted and exclusive
access to the mail directed to the Lockbox Address. Bank will provide
Company with the Lockbox Service for a Lockbox Address when Company has
completed and Bank has received Bank's then current set-up documents for
the Lockbox Address.
If Bank receives any mail containing Company's Lockbox number at Bank's
lockbox operations location (instead of the Lockbox Address), Bank may
handle the mail as if it had been received at the Lockbox Address.
PROCESSING
Bank will handle checks received at the Lockbox Address according to the
applicable deposit account agreement, if the checks were delivered by
Company to Bank for deposit to the Account, except as modified by this
Agreement.
Bank will open the envelopes picked up from the Lockbox Address and
remove the contents. For the Lockbox Address, checks and other
documents contained in the envelopes will be inspected and handled in
the manner specified in the Company's set-up documents. Bank captures
and reports information related to the lockbox processing, where
available, if Company has specified this option in the set-up documents.
Banks will endorse all checks Bank processes on Company's behalf.
If Bank processes an unsigned check as instructed in the set-up
documents, and the check is paid, but the account owner does not
authorize payment, Company agrees to indemnify Bank, the drawee bank,
(which may include Bank) and any intervening collection bank for any
liability or expense incurred by such indemnitee due to the payment and
collection of the check.
If Company instructs Bank not to process a check bearing a handwritten
or typed notation "Payment in Full" or words of similar import on the
face of the check, Company understands that Bank has adopted procedures
designed to detect checks bearing such notations; however, Bank will not
be liable to Company or any other party for losses suffered if Bank
fails to detect checks bearing such notations.
RETURN CHECK
Unless Company and Bank agree to another processing procedure, Bank will
reclear a check once which has been returned and marked to "Refer to
Maker," "Not Sufficient Funds:" or "Uncollected Funds." If the Check is
returned for any other reason or if the check is returned a second time,
Bank will debit the applicable Account and return the check to Company.
Company agrees that Bank will not send a returned item notice to
Company for a returned check unless Company and Bank have agreed
otherwise.
ACCEPTABLE PAYEES
For the Lockbox Address, Company will provide to Bank the names of
Acceptable Payees ("Acceptable Payee" means Company's name and any other
payee name provided to Bank by Company as an acceptable payee for checks
to be processed under the Lockbox Service). Bank will process a check
only if it is made payable to an Acceptable Payee and if the check is
otherwise processable. Company warrants that each Acceptable Payee has
authorized checks payable to it be credited to the Account Company
designates for the Lockbox Service. Bank may treat as an acceptable
Payee any variation of any Acceptable Payee's name that Bank deems to be
reasonable.
CHANGES TO PROCESSING INSTRUCTIONS
Company may request Bank orally or in writing to make changes to the
processing instructions (including changes to Acceptable Payees) for any
Lockbox Address by contacting its Bank representative . Bank will not
be obligated to implement any requested changes until Bank has actually
received the requests and had a reasonable opportunity to act upon them.
In making changes, Bank is entitled to rely on instructions purporting
to be from Company.
ATTACHMENT I
MULTI PARTY LOCKBOX
Bank of America National Trust and Savings Association
as Administrator
To: Bank of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Solectron Corporation
Account No. ____________
Ladies and Gentlemen:
Reference is made to the Lockbox Agreement dated September __, 1997 (the
"Agreement") among Solectron Corporation, Solectron California
Corporation, Solectron Funding Corporation, Receivables Capital
Corporation, Bank of America National Trust and Savings Association, as
administrator, and you regarding the above-described account (the
"Account"). In accordance with Section 1(d) and 2(d) of the Agreement,
we hereby give you notice of our exercise of control of the Account and
we hereby instruct you to transfer funds to Administrator's account or
otherwise in accordance with Administrator's instructions as follows:
[insert instructions].
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
as Administrator
By: __________________
Name: ________________
Title: _______________
LOCK-BOX AGREEMENT
___________, 1997
[Name and Address of
Lock-Box Bank]
Gentlemen:
Reference is made to lock-box account no. _____ (the "Lock-Box Account")
and deposit account no. _____ (together with the Lock-Box Account, the
"Accounts") maintained by Solectron [California] Corporation ("SOLECTRON
[CALIFORNIA]") with you. Reference is further made to (i) the Purchase
and Sale Agreement dated as of September __, 1997 (as the same may be
amended, amended and restated or otherwise modified from time to time,
the "PURCHASE AND SALE AGREEMENT") among Solectron [California
Corporation ("SOLECTRON CALIFORNIA")], as an Originator, Solectron
Corporation, individually and as Servicer and an Originator, and
Solectron Funding Corporation, as Initial Purchaser ("SOLECTRON
FUNDING"), and (ii) the Receivables Purchase Agreement dated as of
September __, 1997 (as the same may be amended, amended and restated or
otherwise modified from time to time, the "RECEIVABLES PURCHASE
AGREEMENT") among Solectron Funding, as Seller, Solectron, as Servicer,
Receivables Capital Corporation ("RCC"), as Issuer, and Bank of America
National Trust and Savings Association, as administrator (the
"ADMINISTRATOR").
Please be advised that pursuant to the Purchase and Sale Agreement
Solectron [California] has sold to Solectron Funding all of Solectron's
right, title and interest in (but not its obligations under) the
Accounts, all amounts on deposit therein, all certificates and
instruments, if any, evidencing such Accounts and amounts on deposit
therein and all related agreements between you and Solectron
[California]. In addition:
(i) (a) pursuant to the Purchase and Sale Agreement, Solectron
[California] has sold to Solectron Funding and may hereafter sell to
Solectron Funding all of Solectron's [California's] right, title and
interest in accounts, chattel paper, instruments or general intangibles
(collectively, "RECEIVABLES") with respect to which payments are or may
hereafter be made to the Accounts and (b) pursuant to the Receivables
Purchase Agreement, Solectron Funding has assigned and/or may hereafter
assign to RCC one or more undivided percentage interests in Receivables
with respect to which payments are or may hereafter be made to the
Accounts; and
(ii) (a) pursuant to the Purchase and Sale Agreement, Solectron
[California] has granted a security interest in such Receivables, the
Accounts and related property to Solectron Funding and (b) pursuant to
the Receivables Purchase Agreement Solectron Funding has granted a
security interest in such Receivables, the Accounts and related property
to the Administrator (for its benefit and the benefit of RCC).
Your execution of this letter agreement is a condition precedent to
continued maintenance of the Accounts with you.
Solectron [California] and Solectron Funding hereby transfer
exclusive ownership and control of the Accounts to the Administrator on
behalf of RCC, subject only to the condition subsequent that the
Administrator shall have given you notice of its election to assume such
ownership and control, which notice may be in the form attached hereto
as Exhibit A or in any other form that gives you reasonable notice of
such election.
We hereby irrevocably instruct you, at all times from and after the
date of your receipt of notice from the Administrator as described
above, to make all payments to be made by you out of or in connection
with the Accounts directly to the Administrator, at its address set
forth below its signature hereto or as the Administrator otherwise
notifies you for the account of RCC (account # ___________, ABA
#___________), or otherwise in accordance with the instructions of the
Administrator.
We also hereby notify you that, at all times from and after the
date of your receipt of notice from the Administrator as described
above, the Administrator shall be irrevocably entitled to exercise in
our place and stead any and all rights in respect of or in connection
with the Accounts, including, without limitation, (a) the right to
specify when payments are to be made out of or in connection with the
Accounts and (b) the right to require preparation of duplicate monthly
bank statements on the Accounts for the Administrator's audit purposes
and mailing of such statements directly to an address specified by the
Administrator.
Notice from the Administrator may be personally served or sent by
facsimile or U.S. mail, certified return receipt requested, to the
address or facsimile number set forth under your signature to this
letter agreement (or to such other address or facsimile number as to
which you shall notify the Administrator in writing). If notice is
given by facsimile, it will be deemed to have been received when the
notice is sent and receipt is confirmed by telephone or other electronic
means. All other notices will be deemed to have been received when
actually received or, in the case of personal delivery, delivered.
By executing this letter agreement, you acknowledge and consent to
the existence of the Administrator's right to ownership and control of
the Accounts and the Administrator's security interest in the Accounts
and amounts from time to time on deposit therein and agree that from the
date hereof the Accounts shall be maintained by you for the benefit of,
and amounts from time to time therein held by you as agent for, the
Administrator on the terms provided herein. The Accounts are to be
titled "Solectron Funding Corporation and Bank of America National Trust
and Savings Association as the Administrator for Receivables Capital
Corporation". Except as otherwise provided in this letter agreement,
payments to the Accounts are to be processed in accordance with the
standard procedures currently in effect. All service charges and fees
with respect to the Accounts shall continue to be payable by us as under
the arrangements currently in effect.
By executing this letter agreement, you irrevocably waive and agree
not to assert, claim or endeavor to exercise, irrevocably bar and estop
yourself from asserting, claiming or exercising, and acknowledge that
you have not heretofore received a notice, writ, order or any form of
legal process from any other person or entity asserting, claiming or
exercising, any right of set-off, banker's lien or other purported form
of claim with respect to the Accounts or any funds from time to time
therein. Except for your right to payment of your service charges and
fees and to make deductions for returned items, you shall have no rights
in the Accounts or funds therein. To the extent you may ever have such
rights, you hereby expressly subordinate all such rights to all rights
of the Administrator.
You may terminate this letter agreement by canceling the Accounts,
which cancellation and termination shall become effective only upon
thirty days' prior written notice thereof from you to the Administrator.
Incoming mail addressed to or wire transfers to the Accounts received
after such cancellation shall be forwarded in accordance with the
Administrator's instructions. This letter agreement may also be
terminated upon written notice to you by the Administrator stating that
the Receivables Purchase Agreement pursuant to which this letter
agreement was obtained is no longer in effect. Except as otherwise
provided in this paragraph, this letter agreement may not be terminated
or amended without the prior written consent of the Administrator. This
letter agreement may be executed in any number of counterparts, and by
the parties hereto on separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
EACH SOLECTRON PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF THE COURT OF THE STATE OF CALIFORNIA SITTING IN SAN FRANCISCO AND OF
THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF CALIFORNIA,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA
STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
LETTER AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATOR OR THE
ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS LETTER AGREEMENT AGAINST ANY OTHER PARTY HERETO OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION. EACH SOLECTRON PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT IN ANY COURT
REFERRED TO IN THIS CLAUSE (b). EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT. EACH PARTY TO THIS LETTER AGREEMENT IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 5.2 OF THE RECEIVABLES PURCHASE AGREEMENT. NOTHING IN THIS
LETTER AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
Please acknowledge your agreement to the terms set forth in this
letter agreement by signing the two copies of this letter agreement
enclosed herewith in the space provided below, sending one such signed
copy to the Administrator at its address provided above and returning
the other signed copy to us.
Very truly yours,
SOLECTRON CORPORATION
By:
Name:
Title:
SOLECTRON CALIFORNIA CORPORATION
By:
Name:
Title:
SOLECTRON FUNDING CORPORATION
By:
Name:
Title:
Acknowledged and agreed to as of
the date first written above:
RECEIVABLES CAPITAL CORPORATION
By:
Name:
Title:
c/o Merrill ▇▇▇▇▇ Money Markets Inc.
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank of America National Trust
and Savings Association
Asset Securitization Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Securitization
Group
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrator
By:
Name:
Title:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Securitization
Group
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A to
Lock-Box Agreement
[Letterhead of Bank of America National
Trust and Savings Association]
Name and address
of Lock-Box Bank
Re: Solectron
Lock-Box Account No. _____
Deposit Account No. _____
Dear __________:
Reference is made to the letter agreement dated September __, 1997 (the
"Letter Agreement") among Solectron Corporation, Solectron California
Corporation, Solectron Funding Corporation, Receivables Capital
Corporation ("RCC"), the undersigned, as Administrator and you
concerning the above described accounts (the "Accounts"). We hereby
give you notice of our assumption of ownership and control of the
Accounts as provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of or
in connection with the Accounts directly to the undersigned, at our
address set forth above, for the account of RCC (account no.
___________).
[other instructions]
Very truly yours,
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrator
By:
Name:
Title: