EXHIBIT 10.15a
PURCHASE AND SALE AGREEMENT
among
SOLECTRON CORPORATION,
as Originator, Servicer and Guarantor,
SOLECTRON CALIFORNIA CORPORATION,
as Originator,
and
SOLECTRON FUNDING CORPORATION,
as the Initial Purchaser
Dated as of September 17, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.1 Agreement to Purchase and Sell -1-
SECTION 1.2 Timing of Purchases -2-
SECTION 1.3 Calculation of Purchase Price -2-
SECTION 1.4 Definitions and Calculations Related to Purchase
Discount -3-
SECTION 1.5 Purchase Price Payments -5-
SECTION 1.6 The Initial Purchaser Notes -5-
SECTION 1.7 Deemed Collections, Etc. -5-
SECTION 1.8 No Recourse -6-
SECTION 1.9 True Sales -6-
SECTION 1.10 Payments and Computations, Etc -7-
ARTICLE II CONDITIONS TO PURCHASES; REPRESENTATIONS AND WARRANTIES;
COVENANTS; PURCHASE AND SALE TERMINATION EVENTS
SECTION 2.1 Conditions to Purchases -8-
SECTION 2.2 Representations and Warranties; Covenants -8-
SECTION 2.3 Purchase and Sale Termination Events -8-
ARTICLE III INDEMNIFICATION
SECTION 3.1 Indemnities by each Originator -9-
SECTION 3.2 Contribution -10-
ARTICLE IV ADMINISTRATION AND COLLECTIONS; ADDITIONAL RIGHTS AND
OBLIGATIONS IN RESPECT OF THE RECEIVABLES
SECTION 4.1 Servicing of Receivables and Related Assets -11-
SECTION 4.2 Rights of the Initial Purchaser; Enforcement Rights -11-
SECTION 4.3 Responsibilities of each Originator -12-
SECTION 4.4 Further Action Evidencing Purchases -13-
ARTICLE V MISCELLANEOUS
SECTION 5.1 Amendments, Etc. -14-
SECTION 5.2 Notices, Etc. -14-
SECTION 5.3 Acknowledgment and Consent -14-
SECTION 5.4 Binding Effect; Assignability -15-
SECTION 5.5 Costs, Expenses and Taxes -15-
SECTION 5.6 No Proceedings; Limitation on Payments -16-
SECTION 5.7 GOVERNING LAW AND JURISDICTION -16-
SECTION 5.8 Execution in Counterparts -17-
SECTION 5.9 Survival of Termination -17-
SECTION 5.10 WAIVER OF JURY TRIAL -17-
SECTION 5.11 Entire Agreement -18-
SECTION 5.12 Headings -18-
ARTICLE VI GUARANTEE
SECTION 6.1 Guarantee -18-
SECTION 6.2 Representation and Warranty -20-
SECTION 6.3 Subrogation -20-
EXHIBIT I CONDITIONS OF PURCHASES
EXHIBIT II REPRESENTATIONS AND WARRANTIES
EXHIBIT III COVENANTS
EXHIBIT IV PURCHASE AND SALE TERMINATION EVENTS
ANNEX A FORM OF INITIAL PURCHASER NOTE
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is entered into as
of September 17, 1997 among SOLECTRON CORPORATION, a Delaware
corporation ("SOLECTRON"), as Servicer (in such capacity, the
"SERVICER"), as an Originator (in such capacity, an "ORIGINATOR") and as
Guarantor (in such capacity, the "GUARANTOR"), SOLECTRON CALIFORNIA
CORPORATION, a California corporation, as an Originator (in such
capacity, an "ORIGINATOR") and SOLECTRON FUNDING CORPORATION, a Delaware
corporation, as Initial Purchaser (the "INITIAL PURCHASER").
PRELIMINARY STATEMENTS
A. Unless otherwise defined herein or the context otherwise
requires, certain terms that are used throughout this Agreement
(including the Exhibits hereto) are defined in Exhibit I to the
Receivables Purchase Agreement, dated of even date herewith, among the
Initial Purchaser, Solectron, individually and as the Servicer,
Receivables Capital Corporation, as Issuer, and Bank of America National
Trust and Savings Association, as Administrator (as the same may be
amended, amended and restated or otherwise modified from time to time,
the "RECEIVABLES PURCHASE AGREEMENT"). Any reference to "this
Agreement" or "the Purchase and Sale Agreement", including any such
reference in any Exhibit hereto, shall mean this Agreement in its
entirety, including the Exhibits and other attachments hereto, as
amended, modified or supplemented from time to time in accordance with
the terms hereof.
B. Each Originator wishes to sell Receivables that it now owns and
from time to time hereafter will own to the Initial Purchaser, and the
Initial Purchaser is willing, on the terms and subject to the conditions
contained in this Agreement, to purchase such Receivables from the such
Originator at such time.
C. The Initial Purchaser has entered into the Receivables Purchase
Agreement, pursuant to which, among other things, the Initial Purchaser
may sell to the Issuer undivided ownership interests in the Receivables
and the other items specified in Section 1.2(c) of the Receivables
Purchase Agreement.
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. AGREEMENT TO PURCHASE AND SELL. On the terms and
conditions hereinafter set forth, the each Originator agrees to sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from
such Originator, at the times set forth in SECTION 1.2, but prior to the
Purchase and Sale Termination Date, all of such Originator's right,
title, and interest in, to and under (a) all Receivables of such
Originator, (b) all Related Security with respect to such Receivables,
and (c) all Collections with respect to, and other proceeds of, such
Receivables and Related Security. The items listed in CLAUSES (b) and
(c) of the preceding sentence in relation to any Receivables are herein
collectively called the "RELATED ASSETS" or, with respect to any such
Receivable, the "RELATED ASSET".
SECTION 1.2. TIMING OF PURCHASES
(a) INITIAL PURCHASE. All of the Receivables and the Related Assets
of each Originator that exist at the opening of such Originator's
business on the date of the initial purchase by the Issuer under
Section 1.2 of the Receivables Purchase Agreement (the "Initial Purchase
Date") (other than, in the case of Solectron California Corporation,
Receivables contributed to the Initial Purchaser pursuant to the
Subscription Agreement) shall be deemed to have been sold to the Initial
Purchaser on such date without any formal or other instrument of
assignment and without further action by any Person.
(b) REGULAR PURCHASES. After the date of the initial purchase
hereunder until the Purchase and Sale Termination Date, each Receivable
and Related Asset of each Originator shall be deemed to have been sold
to the Initial Purchaser pursuant hereto immediately (and without any
formal or other instrument of assignment and without further action by
any Person) upon the creation of such Receivable.
(c) LOCK-BOX ACCOUNTS. Effective as of the Initial Purchase Date,
each Originator hereby sells to the Initial Purchaser, and the Initial
Purchaser hereby purchases from such Originator, all of such
Originator's right, title and interest in the Lock-Box Accounts and any
related deposit accounts and post office boxes, all monies, instruments,
and other property from time to time held or on deposit therein, all
certificates and instruments, if any, from time to time evidencing such
Lock-Box Accounts, related deposit accounts and post office boxes and
all related agreements between such Originator and the applicable Lock-
Box Banks.
SECTION 1.3. CALCULATION OF PURCHASE PRICE. 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, the
Servicer shall deliver to the Initial Purchaser, the Administrator and
each Originator a Seller Report with respect to the Initial Purchaser's
purchases of Receivables and Related Assets from such Originator during
the immediately preceding Purchase Period. "PURCHASE PERIOD" means,
with respect to any Month-End Date, the calendar month ending on such
Month-End Date. "PAYMENT DATE" means the third Business Day following
the day upon which the Seller Report was delivered by the Servicer as
provided in this SECTION 1.3. The "PURCHASE PRICE" to be paid to such
Originator on each Payment Date for the Receivables and Related Assets
sold by such Originator pursuant to SECTION 1.2 during the Purchase
Period immediately preceding such Payment Date shall be set forth in the
relevant Seller Report and shall be determined in accordance with the
following formula:
PP = AOB - PD
where:
PP = the Purchase Price to be paid to such Originator on the
relevant Payment Date;
AOB = the aggregate Outstanding Balance of the Receivables that
were purchased from such Originator during the Purchase Period
immediately preceding such Payment Date. (For purposes of this
calculation, the Outstanding Balance of a Receivable shall be measured
only at the time of such Receivable's creation and sale to the Initial
Purchaser.)
PD = the Purchase Discount as measured on such Payment Date
pursuant to SECTION 1.4.
SECTION 1.4. DEFINITIONS AND CALCULATIONS RELATED TO PURCHASE DISCOUNT
(a) PURCHASE DISCOUNT. "PURCHASE DISCOUNT" for the Receivables and
Related Assets that were purchased from each Originator during the
Purchase Period immediately preceding a Payment Date shall be determined
in accordance with the following formula:
PD = AOB x (LD + FD)
where:
PD = the Purchase Discount as measured on such Payment Date;
AOB, in respect of such Originator, has the meaning set forth in
SECTION 1.3;
LD = the Loss Discount as measured on such Payment Date, as
determined pursuant to PARAGRAPH (b) below; and
FD = the Funding Discount as measured on such Payment Date, as
determined pursuant to PARAGRAPH (c) below.
(b) LOSS DISCOUNT. "LOSS DISCOUNT" in effect for any day with
respect to an Originator shall mean the lesser of (i) fifteen percent
(15%) and (ii) the result, expressed as a percentage, calculated as of
the most recent Month-End Date, of the quotient of (a) the aggregate
Outstanding Amount of Receivables originated by such Originator that
became Defaulted Receivables during the Purchase Period ending on such
Month-End Date DIVIDED BY (b) the aggregate Outstanding Balance of
Receivables that were originated by such Originator during the Purchase
Period that occurred six calendar months prior to the Purchase Period
ending on such Month-End Date.
(c) FUNDING DISCOUNT. "FUNDING DISCOUNT" with respect to an
Originator, as measured on any Payment Date, means a percentage
determined in accordance with the following formula:
FD = (AM/360) x FR
where:
FD = the Funding Discount as measured on such Payment Date;
AM = the Average Maturity of the Receivables as of the most recent
Month End Date; and
FR = the Funding Rate as measured on such Payment Date, as
determined pursuant to PARAGRAPH (d) below.
(d) FUNDING RATE. "FUNDING RATE" as measured on any Payment Date
means a per annum percentage rate determined in accordance with the
following formula:
FR = 0.02% + DRP + SFP + EXP
where:
FR = the Funding Rate as measured on such Payment Date;
DRP = the "DISCOUNT RATE PERCENTAGE", which shall be equal to a
fraction (expressed as a percentage) (x) the NUMERATOR of which is the
SUM of the PRODUCTS obtained by MULTIPLYING (A) each CP Rate or
Alternate Rate applicable to each Portion of Capital outstanding as of
the first day of the Purchase Period ending on the Month-End Date
immediately preceding such Payment Date, TIMES (B) the amount of the
Portion of Capital to which such CP Rate or Alternate Rate applied on
such first day, and (y) the DENOMINATOR of which is the aggregate
outstanding amount of Capital on such first day;
SFP = the "SERVICER'S FEE PERCENTAGE", which shall be equal to the
per annum percentage rate contemplated by the definition of Servicing
Fee; and
EXP = the amount, expressed as a per annum percentage rate, of any
fees, costs and expenses incurred by the Initial Purchaser during the
Purchase Period preceding such Payment Date (and not accounted for in
the Discount Rate Percentage), including without limitation reserve
costs, tax payments and indemnity obligations of the Initial Purchaser
for which the Initial Purchaser is not indemnified pursuant to this
Agreement; PROVIDED, HOWEVER, that, for purposes of minimizing
fluctuations in the rate calculated as the Funding Rate, the Servicer
may allocate and spread any unscheduled or unaccruable costs and
expenses of the Initial Purchaser over several Payment Dates at the
Servicer's reasonable discretion, subject to the requirement that such
allocation be reasonably calculated to allow the Initial Purchaser to
recover such costs and expenses over a reasonable period of time.
SECTION 1.5. PURCHASE PRICE PAYMENTS. On each Payment Date falling
after the date of the initial purchase pursuant to SECTION 1.2, on the
terms and subject to the conditions of this Agreement, the Initial
Purchaser shall pay to each Originator the Purchase Price for the
Receivables and Related Assets purchased from such Originator during the
immediately preceding Purchase Period as follows:
(i) FIRST, by making a cash payment to or at the direction of
such Originator to the extent that the Initial Purchaser has cash
available to make such payment subject to the terms of clause (m) of
Exhibit IV to the Receivables Purchase Agreement; and
(ii) SECOND, to the extent any portion of the Purchase Price
remains unpaid, the principal amount outstanding under the Initial
Purchaser Note issued to such Originator automatically shall be
increased in an amount equal to such remaining Purchase Price.
SECTION 1.6. THE INITIAL PURCHASER NOTES
(a) On or prior to the date hereof, the Initial Purchaser shall
deliver to each Originator a promissory note in the form of ANNEX A to
this Agreement payable to the order of such Originator (each such
promissory note, as it may be amended, amended and restated, endorsed or
otherwise modified from time to time, together with any promissory notes
issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being called the "INITIAL
PURCHASER NOTE"). The obligations of the Initial Purchaser to each
Originator under the related Initial Purchaser Note shall be
subordinated in accordance with the terms of such Initial Purchaser
Note.
(b) The Servicer shall hold the Initial Purchaser Notes for the
benefit of the Originators, and shall make all appropriate record-
keeping entries with respect to the Initial Purchaser Notes or otherwise
to reflect the payments on and adjustments of such Initial Purchaser
Notes. The Servicer's books and records shall constitute rebuttable
presumptive evidence of the principal amount of and accrued interest on
the Initial Purchaser Notes at any time. By its execution of this
Agreement, the Servicer acknowledges receipt of the Initial Purchaser
Notes relating to the Originators. Each Originator hereby irrevocably
authorizes the Servicer to xxxx its Initial Purchaser Note "CANCELLED"
and to return such Initial Purchaser Note to the Initial Purchaser upon
the full and final payment thereof after the Purchase and Sale
Termination Date.
SECTION I.7. DEEMED COLLECTIONS, ETC. On and after the Initial Purchase
Date:
(a) if on any day the Outstanding Balance of any 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 an Originator, or any setoff or dispute between such Originator and
an Obligor, such Originator shall be deemed to have received on such day
a Collection of such Receivable in an amount equal to the amount of such
reduction or adjustment and shall deliver to the Servicer for
application in accordance with Section 1.4(b) of the Receivables
Purchase Agreement in same day funds an amount equal to the amount of
such reduction or adjustment;
(b) if on any day any of the representations or warranties in
PARAGRAPH (h) of EXHIBIT II hereto is not true with respect to any
Receivable, the applicable Originator shall be deemed to have received
on such day a Collection of such Receivable in an amount equal to the
Outstanding Balance of such Receivable and shall deliver to the Servicer
in same day funds an amount equal to the Outstanding Balance of such
Receivable for application in accordance with Section 1.4(b) of the
Receivables Purchase Agreement;
(c) except as provided in PARAGRAPH (a) or (b) of this Section, or
as otherwise required by applicable law or the relevant Contract, all
Collections received from an Obligor of any Receivables originated by an
Originator shall be applied to such 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
(d) if and to the extent the Initial Purchaser 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 applicable
Originator and, accordingly, the Initial Purchaser shall have a claim
against such Originator for such amount, payable immediately.
SECTION 1.8. NO RECOURSE. Except as specifically provided in this
Agreement, the purchase and sale of Receivables and Related Assets under
this Agreement shall be without recourse to the Originators; PROVIDED
that each Originator shall be liable to the Initial Purchaser for all
representations, warranties, covenants and indemnities made by such
Originator pursuant to the terms of this Agreement, it being understood
that, under the terms of this Agreement, such obligations of such
Originator will not arise on account of the failure of the Obligor for
credit reasons to make any payment in respect of a Receivable.
SECTION 1.9. TRUE SALES.
(a) Each Originator and the Initial Purchaser intend the
transactions hereunder to constitute true sales (or where the
Subscription Agreement applies, true conveyances in the form of capital
contributions) of Receivables, Related Assets and the Lock-Box Accounts
(and the other items described in SECTION 1.2(c)) by such Originator to
the Initial Purchaser providing the Initial Purchaser with the full
benefits of ownership thereof, and no party hereto intends the
transactions contemplated hereunder to be, or for any purpose to be
characterized as, a loan from the Initial Purchaser to the Originators.
(b) In the event (but only to the extent) that the conveyance of
Receivables and Related Assets hereunder is characterized by a court or
other Governmental Authority as a loan rather than a sale, each
Originator shall be deemed hereunder to have granted to the Initial
Purchaser, and such Originator hereby grants to the Initial Purchaser, a
security interest in all of such Originator's right, title and interest
in, to and under all of the following, whether now or hereafter owned,
existing or arising: (A) all Receivables of such Originator, (B) all
Related Security with respect to each such Receivable, (C) all
Collections with respect to each such Receivable, (D) the Lock-Box
Accounts, all amounts on deposit therein, all certificates and
instruments, if any, from time to time evidencing such Lock-Box Accounts
and amounts on deposit therein, and all related agreements between such
Originator and the Lock-Box Banks, and (E) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing. Such
security interest shall secure all of such Originator'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. In the event (but only to the extent) that the conveyance
of Receivables and Related Assets hereunder is characterized by a court
or other Governmental Authority as a loan rather than a sale, the
Initial Purchaser shall have, with respect to the property described in
this SECTION 1.9(b), and in addition to all the other rights and
remedies available to the Initial Purchaser under this Agreement and
applicable law, any additional rights and remedies of a secured party
specified under any applicable UCC, and this Agreement shall constitute
a security agreement under applicable law.
SECTION 1.10. PAYMENTS AND COMPUTATIONS, ETC.
(a) All amounts to be paid or deposited by each Originator or the
Servicer hereunder shall be paid or deposited no later than 12:00 noon
(New York City time) on the day when due in same day funds in United
States dollars. All amounts received after 12:00 noon (New York City
time) will be deemed to have been received on the immediately succeeding
Business Day.
(b) Each Originator shall, to the extent permitted by law, pay
interest on any amount not paid or deposited by such Originator when due
hereunder, at an interest rate per annum equal to 2.0% per annum above
the Base Rate, payable on demand.
(c) All computations of interest under SECTION 1.10(b) and all
computations of the Purchase Price, fees, and other amounts hereunder
shall be made on the basis of a 360-day year and actual 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.
ARTICLE II
CONDITIONS TO PURCHASES; REPRESENTATIONS AND WARRANTIES; COVENANTS;
PURCHASE AND SALE TERMINATION EVENTS
SECTION 2.1. CONDITIONS TO PURCHASES. The obligation of the Initial
Purchaser to make any purchase of Receivables and Related Assets
hereunder is subject to satisfaction of the conditions to purchase set
forth in EXHIBIT I hereto.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each
Originator hereby makes the representations and warranties set forth in
Exhibit II, and hereby agrees to perform and observe the covenants set
forth in EXHIBIT III hereto.
SECTION 2.3. PURCHASE AND SALE TERMINATION EVENTS. If any Purchase and
Sale Termination Event shall occur, the Initial Purchaser may, with the
prior written consent of the Administrator, by notice to each Originator
(with a copy to the Administrator), declare the Purchase and Sale
Termination Date to have occurred; PROVIDED that automatically upon the
occurrence of an event (without any requirement for the passage of time
or the giving of notice) described in CLAUSE (f) of EXHIBIT IV hereto
the Purchase and Sale Termination Date shall occur.
The agreement of each Originator to sell Receivables and Related Assets
hereunder, and the agreement of the Initial Purchaser to purchase
Receivables and Related Assets from such Originator hereunder, shall
terminate automatically on the earlier to occur of (i) the Purchase and
Sale Termination Date and (ii) the Facility Termination Date; provided
that in the event that any such Purchase and Sale Termination Date shall
cease to exist, such agreements of the Originators and Initial Purchaser
shall be automatically reinstated as though such Purchase and Sale
Termination Date had never occurred. Notwithstanding the occurrence of
the Purchase and Sale Termination Date, all obligations of each
Originator under the Transaction Documents that shall have arisen prior
to the Purchase and Sale Termination Date shall survive until each such
obligation has been finally and fully paid and performed by such
Originator.
Upon the occurrence of a Purchase and Sale Termination Event, the
Initial Purchaser shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and
other applicable laws, which rights and remedies shall be cumulative.
Without limiting the foregoing, the occurrence of a Purchase and Sale
Termination Event hereunder shall not deny to the Initial Purchaser any
remedy to which the Initial Purchaser may be otherwise appropriately
entitled, whether by statute or applicable law, at law or in equity.
ARTICLE III
INDEMNIFICATION
SECTION 3.1. INDEMNITIES BY EACH ORIGINATOR. Without limiting any
other rights which the Initial Purchaser or any Indemnified Party may
have hereunder or under applicable law, each Originator hereby agrees to
indemnify the Initial Purchaser and each Indemnified Party from and
against any and all Indemnified Amounts arising out of or resulting from
this Agreement (whether directly or indirectly) or the use of proceeds
of purchases or the ownership of any Receivable or Related Asset,
excluding, however, (a) Indemnified Amounts to the extent resulting from
gross negligence or willful misconduct on the part of the Initial
Purchaser or such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables
or (c) any overall net income taxes or franchise taxes imposed on the
Initial Purchaser or 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, each Originator shall pay on demand to the Initial Purchaser
and each Indemnified Party any and all amounts necessary to indemnify
the Initial Purchaser and 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 information provided by such Originator
to the Initial Purchaser, the Issuer, the Administrator or the Servicer
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 such Originator under or in connection with this
Agreement to have been true and correct in all respects when made;
(iii) the failure by such Originator to comply with any applicable
law, rule or regulation with respect to any Receivable or any Related
Asset; or the failure of any Receivable or Related Asset to conform to
any such applicable law, rule or regulation;
(iv) the failure to vest in the Initial Purchaser a valid and
enforceable (A) perfected ownership interest in each Receivable
originated by such Originator at any time existing and the Related
Assets with respect thereto and in the items covered by SECTION 1.2(c)
and (B) a first priority perfected security interest in the items
described in SECTION 1.9(b) to the extent SECTION 1.9(b) is applicable,
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 originated by such Originator and the Related Assets in
respect thereof, whether at the time of any purchase or at any
subsequent time;
(vi) any dispute, claim, offset, billing adjustment or defense
(other than discharge in bankruptcy of the Obligor) of the Obligor to
the payment of any Receivable originated by such Originator (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 such
Originator, or any of its Affiliates, acting as Servicer or by any agent
or independent contractor retained by such Originator or any of its
Affiliates);
(vii) any failure of such Originator 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 relating to a Receivable originated by such Originator;
(ix) the commingling by any Solectron Party of any portion of
Collections of 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 the ownership of any
Receivable or Related Asset;
(xi) any requirement that all or a portion of the payments or
distributions made to the Initial Purchaser pursuant to this Agreement
shall be rescinded or otherwise must be returned to such Originator for
any reason; or
(xii) 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. CONTRIBUTION. If for any reason the indemnification
provided above in this ARTICLE III (and subject to the exceptions set
forth therein) is unavailable to the Initial Purchaser or an Indemnified
Party or is insufficient to hold the Initial Purchaser or an Indemnified
Party harmless, then each Originator shall contribute to the maximum
amount of Indemnified Amount payable or paid by the Initial Purchaser or
such Indemnified Party in such proportion as is appropriate to reflect
not only the relative benefits received by the Initial Purchaser or such
Indemnified Party on the one hand and such Originator on the other hand,
but also the relative fault of such Indemnified Party (if any) and such
Originator and any other relevant equitable considerations.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS; ADDITIONAL RIGHTS
AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES
SECTION 4.1. SERVICING OF RECEIVABLES AND RELATED ASSETS. Consistent
with the Initial Purchaser's ownership of the Receivables and the
Related Assets, the Initial Purchaser shall have the sole right to
service, administer and collect the Receivables, to assign such right
and to delegate such right to others. In consideration of the Initial
Purchaser's purchase of the Receivables and the Related Assets, each
Originator agrees to cooperate fully with the Initial Purchaser to
facilitate the full and proper performance of such servicing,
administering and collecting for the benefit of the Initial Purchaser,
the Issuer and the Administrator. To the extent that the Initial
Purchaser, individually or through the Servicer, has granted or grants
powers of attorney to the Administrator under the Receivables Purchase
Agreement, each Originator hereby grants a corresponding power of
attorney on the same terms to the Initial Purchaser. Each Originator
hereby acknowledges and agrees that the Initial Purchaser, in all of its
capacities, shall assign to the Administrator for the benefit of the
Issuer and the Administrator such powers of attorney and other rights
and interests granted by such Originator to the Initial Purchaser
hereunder, and agrees to cooperate fully with the Administrator in the
exercise of such rights.
SECTION 4.2. RIGHTS OF THE INITIAL PURCHASER; ENFORCEMENT RIGHTS.
(a) The Initial Purchaser shall have no obligation to account for,
to replace, to substitute or to return any Receivables or Related Assets
to any Originator. Without limiting the foregoing, the Initial
Purchaser shall have no obligation to account for, or to return to any
Originator, Collections, or any interest or other finance charge
collected pursuant thereto, without regard to whether such Collections
and charges are in excess of the Purchase Price for such Receivables and
Related Assets.
(b) The Initial Purchaser shall have the unrestricted right to
further assign, transfer, deliver, hypothecate, subdivide or otherwise
deal with the Receivables and Related Assets (and other items covered by
Section 1.2(c)), and all of the Initial Purchaser's right, title and
interest in, to and under this Agreement, on whatever terms the Initial
Purchaser shall determine, pursuant to the Receivables Purchase
Agreement or otherwise.
(c) The Initial Purchaser shall have the sole right to retain any
gains or profits created by buying, selling or holding the Receivables
and Related Assets and shall have the sole risk of and responsibility
for losses or damages created by such buying, selling or holding, it
being understood that this Section shall not limit the Initial
Purchaser's rights and remedies pursuant to Article III or other
provisions of this Agreement or pursuant to applicable law.
(d) At any time following the designation of a Servicer (other than
Solectron) pursuant to Section 4.1 of the Receivables Purchase
Agreement:
(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 any Originator to give notice
of the Initial Purchaser's or the Issuer's interest in 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 such Originator shall give such notice at the expense of
such Originator; provided, that if such Originator fails to so notify
each Obligor, the Administrator may so notify the Obligors; and
(iii) the Administrator may request such Originator to, and upon
such request such Originator shall, (A) assemble all of the records
necessary or desirable to collect the Receivables and the Related
Assets, and transfer or license the use of, to the new Servicer, all
software necessary or desirable to collect the 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 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.
(e) Each Originator hereby authorizes the Initial Purchaser, and
irrevocably appoints the Initial Purchaser as its attorney-in-fact with
full power of substitution and with full authority in the place and
stead of such Originator, which appointment is coupled with an interest,
to take any and all steps in the name of such Originator and on behalf
of such Originator necessary or desirable, in the determination of such
Originator, to collect any and all amounts or portions thereof due under
any and all Receivables originated by such Originator or Related Assets,
including, without limitation, endorsing the name of such Originator on
checks and other instruments representing Collections and enforcing such
Receivables and Related Assets. Notwithstanding anything to the
contrary contained in this SUBSECTION (e), 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 4.3. RESPONSIBILITIES OF EACH ORIGINATOR. On and after the
Initial Purchase Date, anything herein to the contrary notwithstanding:
(a) Each Originator agrees to deliver any Collections that it
receives, in the form so received, to Lock-Box Accounts in accordance
with clause (j) of Exhibit III and agrees that all such Collections
shall be deemed to be received in trust for the Initial Purchaser and
shall be maintained and segregated separate and apart from all other
funds and moneys of such Originator until such delivery; and
(b) Each Originator shall (i) perform all of its obligations
hereunder and under the Contracts related to the Receivables and Related
Assets (and under its agreements with the Lock-Box Banks) to the same
extent as if the Receivables, Related Assets and Lock-Box Accounts (and
the other items described in SECTION 1.2(c)) had not been sold
hereunder, and the exercise by the Initial Purchaser or its designee or
assignee of the Initial Purchaser's rights hereunder or in connection
herewith shall not relieve such Originator from such obligations and
(ii) pay when due any taxes, including, without limitation any sales
taxes, payable in connection with the Receivables and their creation and
satisfaction. Notwithstanding anything to the contrary in this
Agreement, the Initial Purchaser, the Administrator and the Issuer shall
not have any obligation or liability with respect to any Receivable,
Related Asset, or Lock-Box Account (or any other item described in
SECTION 1.2(c)) nor shall any of them be obligated to perform any of the
obligations of such Originator under any of the foregoing.
SECTION 4.4. FURTHER ACTION EVIDENCING PURCHASES. Each Originator
agrees that from time to time, at its expense, it will promptly execute
and deliver all further instruments, UCC financing statements and
documents, and take all further action, reasonably requested by the
Initial Purchaser or the Administrator in order to perfect, protect or
more fully evidence the purchase of the Receivables and the Related
Assets and Lock-Box Accounts (and the other items described in SECTION
1.2(c)) by the Initial Purchaser hereunder, or to enable the Initial
Purchaser or the Administrator, the Issuer or any other Indemnified
Party to exercise or enforce any of its or their respective rights or
remedies hereunder or under any other Transaction Document or Program
Support Agreement; provided that the Originators shall not be required
pursuant to this SECTION 4.4 to take any action that conflicts with any
other provision of this Agreement or of the Receivables Purchase
Agreement. Without limiting the generality of the foregoing, upon the
request of the Initial Purchaser or the Administrator, such Originator
will:
(a) execute and file such UCC financing or continuation statements,
or amendments thereto or assignments thereof, and such other instruments
or notices, as the Initial Purchaser or the Administrator may reasonably
determine to be necessary or appropriate; and
(b) legend the related Contracts, to reflect the sale of the
Receivables and Related Assets pursuant to this Agreement and the
Receivables Purchase Agreement.
Each Originator hereby authorizes the Initial Purchaser or its designee
or assignee to file one or more UCC financing or continuation
statements, and amendments thereto and assignments thereof, relative to
all or any of the Receivables and Related Assets, in each case whether
now existing or hereafter generated. If any Originator fails to perform
any of its agreements or obligations under this Agreement, the Initial
Purchaser or its designee or assignee may (but shall not be required to)
itself perform, or cause performance of, such agreement or obligation,
and the reasonable expenses of the Initial Purchaser or its designee or
assignee incurred in connection therewith shall be payable by such
Originator under SECTION 5.5.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by an Originator or the
Servicer therefrom shall be effective unless in a writing signed by the
Administrator (and, in the case of an amendment, by the Administrator,
such Originator and the Servicer), and any such 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 Initial Purchaser 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. ACKNOWLEDGMENT AND CONSENT.
(a) Each of the Originators and the Guarantor acknowledges that,
contemporaneously herewith or at any time hereafter, the Initial
Purchaser (i) is assigning or will assign to the Issuer, pursuant to the
Receivables Purchase Agreement, one or more undivided interests in all
of the Initial Purchaser's rights, title and interest in, to and under
the Receivables and Related Assets, and (ii) is assigning to the
Administrator, pursuant to the Receivables Purchase Agreement, all of
the Initial Purchaser's right, title and interest in, to and under this
Agreement and the other Transaction Documents (and all rights, remedies,
powers, privileges and claims of the Initial Purchaser under this
Agreement (including Article VI) and the other Transaction Documents),
it being understood that such assignment shall not relieve any party
hereto from (or require the Issuer or the Administrator to undertake)
the performance of any term, covenant or agreement on the part of any
party hereto to be performed or observed under or in connection with
this Agreement, any other Transaction Document, and any Pool Receivable
or any Related Security. Each of the Originators and the Guarantor
hereby consents to such assignments, including, without limitation, the
assignment by the Initial Purchaser to the Administrator for its benefit
and the benefit of the Issuer of (i) the right of the Initial Purchaser,
at any time, to enforce this Agreement and any other Transaction
Documents against such Originator and the Servicer, (ii) the right to
appoint a successor to the Servicer as set forth therein, (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 this Agreement, any other Transaction Document or the
obligations in respect of such Originator or Guarantor thereunder to the
same extent as the Initial Purchaser may do, and (iv) all of the Initial
Purchaser's rights, remedies, powers, privileges, and claims under or
with respect to this Agreement and the other Transaction Documents
(whether arising pursuant to the terms of this Agreement or any other
Transaction Document or otherwise available at law or in equity). Each
of the parties hereto acknowledges and agrees that the Issuer, the
Administrator and the other Affected Persons are third party
beneficiaries of the rights of the Initial Purchaser arising hereunder
and under the other Transaction Documents to which such Originator and
the Guarantor is a party.
(b) Each of the Originators and the Guarantor hereby agrees to
execute all agreements, instruments and documents, and to take all other
action, that the Initial Purchaser or the Administrator reasonably
determines is necessary or reasonably desirable to evidence its consent
described in SECTION 5.3(a); provided that neither the Originators nor
the Guarantor shall be required pursuant to this Section 5.3 to execute
any agreements, instruments or documents, or take any actions, that
conflict with any other provision of this Agreement or of the
Receivables Purchase Agreement.
(c) Each of the Originators and the Guarantor hereby acknowledges
that its obligations to the Administrator for its benefit and the
benefit of the Issuer are and shall be, to the extent permitted by
applicable law or not prohibited by any order of any court or
administrative or regulatory authority, absolute and unconditional under
any and all circumstances and shall be unaffected by any claims, offsets
or other defenses such Originator or the Guarantor may have against the
Initial Purchaser (other than in respect of the Initial Purchaser Note),
and each of such Originator and the Guarantor agrees that it shall not
interpose any such claims, offsets or defenses as a defense to its
performance of its obligations under the Transaction Documents to which
it is a party.
SECTION 5.4. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. No Originator shall assign
any of its rights or delegate its obligations hereunder or under any
other Transaction Document or any interest herein or therein without the
prior written consent of the Initial Purchaser and the Administrator.
Without limiting any other rights that may be available under applicable
law, the rights of the Initial Purchaser may be enforced through it or
by its agents.
SECTION 5.5. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted under ARTICLE III, each Originator agrees to pay
on demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including, without limitation,
periodic auditing of Receivables) of this Agreement and the other
Transaction Documents, and any amendment, modification or waiver of any
of the foregoing, including, without limitation, Attorney Costs for the
Administrator, the Initial Purchaser and their respective Affiliates and
agents with respect thereto and with respect to advising the
Administrator, the Initial Purchaser 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 Initial Purchaser and their respective Affiliates and agents, in
connection with the enforcement of this Agreement and the other
Transaction Documents.
SECTION 5.6. NO PROCEEDINGS; LIMITATION ON PAYMENTS.
(a) Each party hereto hereby agrees that it will not institute
against, or join any other Person in instituting against, the Initial
Purchaser or 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 is paid in full.
(b) Notwithstanding any provisions contained in this Agreement to
the contrary, the Initial Purchaser shall not, and shall not be
obligated to, pay any amount pursuant to this Agreement unless the
Initial Purchaser has excess cash flow from operations or has received
funds with respect to such obligation which may be used to make such
payment.
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 INITIAL PURCHASER IN THE RECEIVABLES AND THE OTHER
ITEMS DESCRIBED IN SECTION 1.9(b) 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 SECTION 1.10,
SECTION 2.3, ARTICLE III, ARTICLE IV, SECTION 5.3, SECTION 5.5, SECTION
5.6, SECTION 5.7, SECTION 5.10, ARTICLE VI and of this SECTION 5.9,
shall survive any termination of this Agreement.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ITS
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. EACH PARTY
HERETO AGREES 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 OR 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 of the parties hereto, and supersedes all
prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof. The Exhibits,
Schedules and Annexes to this Agreement shall be deemed incorporated by
reference into this Agreement as if set forth herein.
SECTION 5.12. HEADINGS. The captions and headings of this Agreement
and in any Exhibit hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
SECTION 5.13. SEVERAL OBLIGATIONS. The obligations of the Originators
under this Agreement are several but not joint obligations.
ARTICLE VI
GUARANTEE
SECTION 6.1. GUARANTEE. (a) Guarantor hereby unconditionally and
irrevocably covenants and agrees that it will cause Solectron California
Corporation duly and punctually to perform and observe all of the terms,
conditions, covenants, agreements (including, without limitation,
agreements to make payments or deemed Collections) and indemnities under
this Agreement and the other Transaction Documents strictly in
accordance with the terms hereof and thereof and that if for any reason
whatsoever Solectron California Corporation shall fail to so perform and
observe such terms, conditions, covenants, agreements and indemnities,
Guarantor will duly and punctually perform and observe the same.
(b) The liabilities and obligations of Guarantor under this SECTION
6.1 shall be absolute and unconditional under all circumstances and
shall be performed by Guarantor regardless of (i) whether the Initial
Purchaser, the Administrator, or the Issuer shall have taken any steps
to collect from Solectron California Corporation any of the amounts
payable by Solectron California Corporation to the Initial Purchaser or
shall otherwise have exercised any of their rights or remedies under
this Agreement or the other Transaction Documents against Solectron
California Corporation or against any Obligor under any of the Pool
Receivables, (ii) the validity, legality or enforceability of this
Agreement or any other Transaction Documents, or the disaffirmance of
any thereof in any event of bankruptcy relating to Solectron California
Corporation, (iii) any law, regulation or decree now or hereafter in
effect which might in any manner affect any of the terms or provisions
of this Agreement or any other Transaction Document or any of the rights
of Initial Purchaser, the Administrator or the Issuer as against
Solectron California Corporation or as against any Obligor under any of
such Pool Receivables or which might cause or permit to be invoked any
alteration in time, amount, manner of payment or performance of any
amount payable by Solectron California Corporation to the Initial
Purchaser, the Administrator or the Issuer under the Transaction
Documents, (iv) the merger or consolidation of Solectron California
Corporation into or with any corporation or any sale or transfer by
Solectron California Corporation or all or any part of its property, (v)
the existence or assertion of any Adverse Claim with respect to any Pool
Receivable, or (vi) any other circumstance whatsoever (with or without
notice to or knowledge of Guarantor) which may or might in any manner or
to any extent vary the risk of Guarantor, or might otherwise constitute
a legal or equitable discharge of a surety or guarantor, it being the
purpose and intent of Guarantor that the liabilities and obligations of
Guarantor under this SECTION 6.1 shall be absolute and unconditional
under any and all circumstances, and shall not be discharged except by
payment and performance as in this Agreement provided. The guaranty set
forth in this SECTION 6.1 is a guaranty of payment and performance and
not just of collection.
(c) Without in any way affecting or impairing the liabilities and
obligations of Guarantor under this SECTION 6.1, the Initial Purchaser,
the Administrator and the Issuer may at any time and from time to time
in its discretion, without the consent of, or notice to, Guarantor, and
without releasing or affecting Guarantor's liability hereunder, (i)
extend or change the time, manner, place or terms of any Transaction
Document, (ii) settle or compromise any of the amounts payable by
Solectron California Corporation to the Initial Purchaser, the
Administrator or the Issuer under any Transaction Document or
subordinate the same to the claims of others, (iii) retain or obtain a
lien upon or security interest in any property to secure any of the
obligations under any Transaction Document, (iv) retain or obtain the
primary or secondary obligation of any obligor or obligors, in addition
to Guarantor, with respect to any of the obligations due under any
Transaction Document, or (v) release or fail to perfect any lien upon or
security interest in, or impair, surrender, release or permit any
substitution in exchange for, all or any part of any property securing
any of the obligations under any Transaction Document, IT BEING
UNDERSTOOD that nothing contained in this SECTION 6.1(c) shall give the
Initial Purchaser, the Administrator or the Issuer the right to take any
of the foregoing actions if not permitted by the other provisions of
this Agreement, by law or otherwise.
(d) The provisions of this SECTION 6.1 shall continue to be
effective or be reinstated, as the case may be, if at any time payment
of any of the amounts payable by Solectron California Corporation, to
the Initial Purchaser, the Administrator or the Issuer under any
Transaction Document is rescinded or must otherwise be restored or
returned by any of such Persons, as the case may be, upon any event of
bankruptcy involving Solectron California Corporation, or otherwise, all
as though such payment had not been made. Guarantor hereby waives (i)
notices of the occurrence of any default under any Transaction Document,
(ii) any requirement of diligence or promptness on the part of the
Initial Purchaser, the Administrator or the Issuer in making demand,
commencing suit or exercising any other right or remedy under any
Transaction Document, or otherwise, and (iii) any right to require the
Initial Purchaser, the Administrator or the Issuer to exercise any right
or remedy against Solectron California Corporation or the Pool
Receivables prior to enforcing any of their rights against Guarantor
under this SECTION 6.1. Guarantor agrees that, in the event of an event
of bankruptcy with respect to Solectron California Corporation, and if
such event shall occur at a time when all of the indemnified amounts and
other amounts due under any Transaction Document may not then be due and
payable, Guarantor will pay to Initial Purchaser or the Administrator or
the Issuer, as the case may be, forthwith the full amount which would be
payable hereunder by Guarantor if all such indemnified amounts and other
obligations were then due and payable. Without limiting the foregoing,
Guarantor hereby expressly waives any and all benefits of California
Civil Code Sections 2787 through 2855, inclusive, 2899 and 3433 and
California Code of Civil Procedure Sections 580(a), 580(b), 580(d) and
726.
Nothing in this Section 6.1 shall be construed to impose any liability
or obligation on Guarantor for any losses in respect of the
collectibility of any Receivable that would constitute credit recourse
to Solectron California Corporation for the amount of any Receivable or
Related Asset not paid by the applicable Obligor.
SECTION 6.2. REPRESENTATION AND WARRANTY. Guarantor represents and
warrants that it now has, and will continue to have, independent means
of obtaining information concerning the affairs, financial condition and
business of Solectron California Corporation and the Initial Purchaser.
Neither the Administrator or the Issuer shall have any duty or
responsibility to provide Guarantor with any credit or other information
concerning the affairs, financial condition or business of Solectron
California Corporation and the Initial Purchaser which may come into the
possession of the Administrator or the Issuer.
SECTION 6.3. SUBROGATION. Guarantor will not exercise or assert any
rights which it may acquire by way of subrogation under any Transaction
Document unless and until all of the obligations of Solectron California
Corporation shall have been paid and performed in full. If any payment
shall be made to Guarantor on account of any subrogation rights at any
time when all of the obligations of Solectron California Corporation
shall not have been paid and performed in full, each and every amount so
paid will be held in trust for the benefit of the Initial Purchaser, the
Administrator and the Issuer and any other applicable Person and
forthwith be paid to the Administrator to be credited and applied to the
obligations of Solectron California Corporation to the extent then
unsatisfied, in accordance with the terms of the Transaction Documents
or any document delivered in connection with the Transaction Documents,
as the case may be.
[SIGNATURES FOLLOW]
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 CORPORATION, as the Guarantor,
an Originator and as Servicer
s/s By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Senior Vice President and Chief
Financial Officer
000 Xxxxxxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SOLECTRON CALIFORNIA CORPORATION,
as an Originator
s/s By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Senior Vice President and Chief
Financial Officer
000 Xxxxxxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SOLECTRON FUNDING CORPORATION, as Initial
Purchaser
s/s By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Secretary
000 Xxxxxxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
EXHIBIT I
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
under the Purchase and Sale Agreement is subject to the condition
precedent that the Initial Purchaser shall have received each of the
following (with copies to the Administrator), on or before the date of
such purchase, each in form and substance (including the date thereof)
satisfactory to the Initial Purchaser and the Administrator:
(a) The Receivables Purchase Agreement, duly executed by the parties
thereto, together with evidence reasonably satisfactory to the Initial
Purchaser that all conditions precedent to the initial purchase of an
undivided interest thereunder shall have been met;
(b) Duly executed counterparts of the Lock-Box Agreements;
(c) A duly executed counterpart of a subscription and stockholder
agreement (the "SUBSCRIPTION AGREEMENT"), together with evidence that a
capital contribution of Receivables having an aggregate Outstanding
Balance of not less than $30,000,000 shall have been made to the Initial
Purchaser thereunder by Solectron California Corporation in exchange for
common stock of the Initial Purchaser; and
(d) Such other agreements, instruments, UCC financing statements,
certificates, opinions and other documents as the Initial Purchaser or
the Administrator may reasonably request.
2. CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. Each
Originator, by accepting the Purchase Price paid for each purchase of
Receivables and Related Assets on any day, shall be deemed to have
certified that its representations and warranties contained in
PARAGRAPHS (e), (f), (h), (j), (k), (o), (p) and (q), EXHIBIT II to the
Purchase and Sale Agreement are true and correct on and as of such day,
with the same effect as though made on and as of such day.
3. EFFECT OF PAYMENT OF PURCHASE PRICE. Upon the payment of the
Purchase Price (whether in cash or by an increase in the principal
amount outstanding under the applicable Initial Purchaser Note) for any
purchase of Receivables and Related Assets, title to such Receivables
and Related Assets shall vest in the Initial Purchaser, whether or not
the conditions precedent to such purchase were in fact satisfied;
PROVIDED that the Initial Purchaser shall not be deemed to have waived
any claim it may have under the Purchase and Sale Agreement for the
failure by any Originator in fact to satisfy any such condition
precedent.
4. CONDITIONS PRECEDENT TO ALL PURCHASES. Each purchase under the
Purchase and Sale Agreement is subject to the condition precedent that
the agreement of each Originator to sell Receivables and Related Assets,
and the agreement of the Initial Purchaser to purchase Receivables and
Related Assets, shall not have terminated pursuant to Section 2.3 of the
Purchase and Sale Agreement.
EXHIBIT II
REPRESENTATIONS AND WARRANTIES
In order to induce the Initial Purchaser to enter into the Purchase and
Sale Agreement and to make purchases thereunder, each Originator hereby
represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. Such Originator is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its organization, 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 the business, assets,
operations, prospects or condition, financial or otherwise, of such
Originator and any of its subsidiaries taken as a whole, the ability of
such Originator to perform its obligations under the Purchase and Sale
Agreement, or the rights of or benefits available to the Initial
Purchaser hereunder.
(b) DUE QUALIFICATION; NO CONFLICTS. The execution, delivery and
performance by such Originator of the Purchase and Sale Agreement and
the other Transaction Documents to which it is a party, including,
without limitation, such Originator's use of the proceeds of purchases,
(i) are within such Originator's 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) such Originator's
certificate of incorporation or by-laws, (2) any material law, rule or
regulation applicable to such Originator, (3) any contractual
restriction binding on or affecting such Originator or its property
(including, without limitation, the Solectron Credit Agreement) or
(4) any order, writ, judgment, award, injunction or decree binding on or
affecting such Originator 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 Purchase and Sale Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by such Originator.
(c) CONSENTS. No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or any other
Person is required for the due execution, delivery and performance by
such Originator of the Purchase and Sale Agreement or any other
Transaction Document to which it is a party (other than UCC financing
statements filed on or prior to the date of the initial purchase under
the Purchase and Sale Agreement, all of which have been filed in the
appropriate jurisdiction).
(d) BINDING OBLIGATIONS. Each of the Purchase and Sale Agreement
and the other Transaction Documents to which it is a party constitutes
the legal, valid and binding obligation of such Originator enforceable
against such Originator in accordance with its terms.
(e) FINANCIAL STATEMENTS. The balance sheets of Solectron and its
subsidiaries, in each case as at August 31, 1996, and the related
statements of income and retained earnings of Solectron 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 Solectron and its subsidiaries, as at such date
and the results of the operations of Solectron and its subsidiaries, for
the period ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since August 31, 1996
there has been no material adverse change in the business, operations,
property or financial or other condition or operations of Solectron any
of its subsidiaries, the ability of either Originator to perform its
obligations under the Purchase and Sale Agreement or the other
Transaction Documents, the collectibility of the Receivables, or which
affects the legality, validity or enforceability of the Purchase and
Sale Agreement or the other Transaction Documents.
(f) NO PROCEEDINGS. There is no pending or threatened action or
proceeding affecting such Originator or any of its subsidiaries before
any Governmental Authority or arbitrator which could reasonably be
expected to materially adversely affect the business, operations,
property, financial or other condition or operations of such Originator
or any of its subsidiaries, the ability of such Originator to perform
its obligations under the Purchase and Sale Agreement or the other
Transaction Documents or the collectibility of the Receivables, or which
affects or purports to affect the legality, validity or enforceability
of the Purchase and Sale Agreement or the other Transaction Documents.
(g) SECURITIES EXCHANGE ACT. No proceeds of any purchase 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) QUALITY OF TITLE; VALID SALE; ETC. Upon its creation and prior
to its sale (or contribution) to the Initial Purchaser under the
Purchase and Sale Agreement, such Originator is the legal and beneficial
owner of each of the Receivables and Related Assets and the items
described in Section 1.2(c) of the Purchase and Sale Agreement free and
clear of any Adverse Claim; and (i) upon each purchase (or contribution)
the Initial Purchaser shall acquire a valid and enforceable first
priority perfected ownership interest in each Receivable then existing
or thereafter arising, in the Related Assets with respect thereto, and
the items described in Section 1.2(c) of the Purchase and Sale
Agreement, free and clear of any Adverse Claim; or (ii) the Purchase and
Sale Agreement creates a security interest in favor of the Initial
Purchaser in the items described in Section 1.9(b) of the Purchase and
Sale Agreement, and the Initial Purchaser 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 UCC financing statement or other instrument similar
in effect covering any Receivable or Related Asset with respect thereto
or any Lock-Box Account or any other item described in Section 1.9(b) of
the Purchase and Sale Agreement is on file in any recording office,
except those filed in favor of the Initial Purchaser pursuant to the
Purchase and Sale Agreement and in favor of the Administrator pursuant
to the Receivables Purchase Agreement.
(i) ACCURACY OF INFORMATION. Each report, information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of such Originator to the Initial
Purchaser or the Administrator in connection with this 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) PRINCIPAL PLACE OF BUSINESS. The principal place of business
and chief executive office (as such terms are used in the UCC) of such
Originator and the office where such Originator keeps its records
concerning the Receivables are located at the address referred to in
paragraph (b) of Exhibit III to the Purchase and Sale Agreement (or at
such other addresses designated in accordance with such paragraph (b)),
and during the six years prior to the initial purchase under the
Purchase and Sale Agreement such principal place of business, chief
executive office and office were located at such address.
(k) LOCK-BOX BANKS, ACCOUNTS. Such Originator has irrevocably
instructed all of the Obligors to make payments on the Receivables only
to the Lock-Box Accounts or to one or more post office boxes covered by
a Lock-Box Agreement; PROVIDED that, consistent with its efforts to
maximize Collections and its month-end collection practices in effect as
of the date of the Purchase and Sale Agreement, such Originator may
permit Obligors to make payments on Receivables directly to such
Originator so long as the Rated Long Term Debt of Solectron is
Investment Grade or otherwise with the prior written consent of the
Administrator. Except as contemplated by the Lock-Box Agreements, no
Person other than employees of such Originator has signing authority
with respect to, or otherwise has the power to withdraw funds from or to
direct amounts on deposit in, the Lock-Box Accounts and any related
deposit accounts or post office boxes. The names and addresses of all
the Lock-Box Banks, together with the account numbers of the Lock-Box
Accounts at such Lock-Box Banks, are specified in Schedule II to the
Receivables Purchase Agreement (except as permitted by paragraph (i) of
EXHIBIT III to the Purchase and Sale Agreement). Each Lock-Box Bank has
complied with all the terms of its Lock-Box Agreement.
(l) NO VIOLATION. Such Originator is not in violation of any order
of any court, arbitrator or Governmental Authority.
(m) PROCEEDS. No proceeds of any purchase 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.
(n) NO PURCHASE AND SALE TERMINATION EVENTS. No event has occurred
and is continuing, or would result from a purchase, in respect of the
Receivables or Related Assets or from the application of the proceeds
therefrom, which constitutes a Purchase and Sale Termination Event.
(o) MAINTENANCE OF BOOKS AND RECORDS; TAXES. Such Originator has
accounted for each sale (and contribution) of Receivables and Related
Assets in its books and financial statements as sales (or, in the case
of contributions, as capital contributions), consistent with Generally
Accepted Accounting Principles. In addition, each Originator shall
treat, and, to the extent such treatment affects its returns or tax
liabilities, report, the sale of Receivables and Related Assets as a
true sale for tax purposes.
(p) CREDIT AND COLLECTION POLICY. Such Originator has complied in
all material respects with the Credit and Collection Policy with regard
to each Receivable.
(q) SOLVENCY. Such Originator is Solvent; and at the time of (and
immediately after) each purchase pursuant to the Purchase and Sale
Agreement, such Originator shall have been Solvent.
(r) COMPLIANCE WITH TRANSACTION DOCUMENTS. Such Originator has
complied with all of the terms, covenants and agreements contained in
the Purchase and Sale Agreement and the other Transaction Documents and
applicable to it.
(s) CORPORATE NAME. Such Originator's complete corporate name is
set forth in the preamble to the Purchase and Sale Agreement, and such
Originator 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 for names first used after the date of the Purchase and
Sale Agreement and set forth in a notice delivered to the Administrator
pursuant to clause (b) of Exhibit III to the Purchase and Sale
Agreement.
(t) NO LABOR DISPUTES. There are no strikes, lockouts or other
labor disputes against such Originator or any of its subsidiaries, or,
to the best of such Originator's knowledge, threatened against or
affecting such Originator or any of its subsidiaries, and no significant
unfair labor practice complaint is pending against such Originator or
any of its subsidiaries or, to the best knowledge of such Originator,
threatened against any of them by or before any Governmental Authority.
(u) PENSION PLANS. During the preceding twelve months, no steps
have been taken to terminate any Pension Plan, and no contribution
failure has occurred with respect to any Pension Plan sufficient to give
rise to a lien under section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which
could result in the incurrence by such Originator of any material
liability, fine or penalty. Such Originator has no contingent liability
with respect to any post-retirement benefit under a Welfare Plan, other
than liability for continuation coverage described in Part 6 of title I
of ERISA.
(v) INVESTMENT COMPANY ACT. Such Originator 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 III
COVENANTS
Until the later of the Purchase and Sale Termination Date and the Final
Payout Date each Originator covenants and agrees, as to itself, as
follows:
(a) COMPLIANCE WITH LAWS, ETC. Such Originator 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 the ability of such Originator to perform its obligations
under any related Contract or under the Purchase and Sale Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT; ETC. Such Originator:
(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 of
such Originator set forth under its name on the signature page to the
Purchase and Sale 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 interest of the Initial
Purchaser, the Administrator and the Issuer in the Receivables and
related items (including without limitation the items described in
Section 1.9(b) of the Purchase and Sale Agreement) have been taken and
completed; and
(ii) shall provide the Administrator with at least 30 days'
written notice prior to making any change in such Originator's name or
making any other change in such Originator's identity or corporate
structure (including, without limitation, a merger) which could render
any UCC financing statement filed in connection with the Purchase and
Sale 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.
Such Originator 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. Such Originator shall at its expense, timely and
fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts related
to the 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. Such Originator shall, at its expense,
take all action necessary or desirable to establish and maintain a valid
and enforceable first priority perfected ownership interest in the
Receivables, the Related Assets, and the items described in Section
1.2(c) of the Purchase and Sale Agreement to the extent transferred
pursuant to the terms of Section 1.2 of the Purchase and Sale Agreement,
or a first priority perfected security interest in the items described
in Section 1.9(b) of the Purchase and Sale Agreement, in each case free
and clear of any Adverse Claim, in favor of the Initial Purchaser,
including, without limitation, taking such action to perfect, protect or
more fully evidence the interest of the Initial Purchaser under the
Purchase and Sale Agreement as the Administrator may reasonably request.
(e) SALES, LIENS, ETC. Other than a sale to the Initial Purchaser
as contemplated by the Purchase and Sale Agreement, such Originator
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,
(i) any item described in Section 1.2(c) or Section 1.9(b) of the
Purchase and Sale Agreement or (ii) any post office box to which any
payments in respect of any Receivable are sent, including, without
limitation, any assignment of any right to receive income in respect of
items contemplated by clause (i) or (ii) of this paragraph (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. On and after the Initial
Purchase Date, such Originator shall not extend the maturity or adjust
the Outstanding Balance or otherwise modify the terms of any Receivable,
or amend, modify or waive any term or condition of any related Contract;
PROVIDED that this clause (f) shall not limit the ability of the
Servicer to take such actions pursuant to the Receivables Purchase
Agreement.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Such
Originator 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 or the enforceability of
any related Contract or the ability of such Originator to perform its
obligations under any related Contract or under the Purchase and Sale
Agreement without the prior written consent of the Administrator.
(h) AUDITS. Such Originator 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 abstracts from
all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of such
Originator relating to Receivables and the Related Assets (including,
without limitation, the related Contracts and any books, records and
documents relating to the identification of Obligors and agings, charge-
offs, offsets and delinquencies of Receivables), and (ii) to visit the
offices and properties of such Originator for the purpose of examining
such materials described in clause (i) above, and to discuss matters
relating to Receivables and the Related Assets or such Originator's
performance hereunder or under the Contracts with any of the officers,
employees, agents or contractors of such Originator having knowledge of
such matters.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT
INSTRUCTIONS TO OBLIGORS. Such Originator 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 Receivables Purchase Agreement, or
make any change in its instructions to Obligors regarding payments to be
made to such Originator or 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 reasonably request in connection
therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. Such Originator 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 Lock-Box Agreements 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
Purchase and Sale Agreement, such Originator may permit Obligors to make
payments on Receivables directly to such 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 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 (iii0 deposit, or cause to be
deposited, any Collections of Receivables received by it into Lock-Box
Accounts not later than three Business Days after receipt thereof. Each
Originator will not deposit or otherwise credit, or cause or permit to
be deposited or credited, to any Lock-Box Account cash or cash proceeds
other than Collections of Receivables or interest accruing on amounts
held in such account.
(k) MARKING OF RECORDS. At its expense, on or before the Initial
Purchase Date, such Originator shall xxxx its master data processing
records relating to Receivables and related Contracts, including with a
legend evidencing that the Receivables and related Contracts (and
interests therein) have been sold (or, in the case of contributions,
transferred as a capital contribution) in accordance with the Purchase
and Sale Agreement and the Receivables Purchase Agreement.
(l) ERISA MATTERS. Such Originator 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 such Originator or any
other Person to terminate any Pension Plan, (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 such Originator 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 such Originator or any other Solectron
Party.
(m) SEPARATE CORPORATE EXISTENCE OF THE INITIAL PURCHASER. Each of
the Initial Purchaser, such Originator and Solectron hereby acknowledges
that the Initial Purchaser, the Issuer and the Administrator are
entering into the transactions contemplated by this Agreement and by the
Receivables Purchase Agreement in reliance upon the Initial Purchaser's
identity as a legal entity separate from its Affiliates. Therefore,
each of the Initial Purchaser, such Originator and Solectron shall take
all steps to continue the Initial Purchaser's identity as such a
separate legal entity and to make it apparent to third Persons that the
Initial Purchaser is an entity with assets and liabilities distinct from
those of its Affiliates and those of any other Person, and not a
division of any of its Affiliates or any other Person. Without limiting
the generality of the foregoing, each of the Initial Purchaser, each
Originator and Solectron will, and will cause its Affiliates to, take
such actions as shall be required in order that:
(i) The Initial Purchaser will be a limited purpose corporation
whose primary activities are restricted in its articles of incorporation
to purchasing Pool Receivables from such Originator (or other Persons
approved in writing by the Administrator), entering into agreements for
the servicing of such Pool Receivables, selling undivided interests in
the Pool Receivables to the Issuer and conducting such other activities
as it deems necessary or appropriate to carry out its primary
activities;
(ii) At all times, at least one member of the Initial Purchaser's
Board of Directors shall be an individual who is and has never been a
direct, indirect or beneficial stockholder, officer, director (except in
his capacity as a member of the Initial Purchaser's Board of Directors),
employee, Affiliate, associate, customer or supplier of any of the
Initial Purchaser or of any of the Initial Purchaser's Affiliates;
(iii) No director or officer of the Initial Purchaser shall at any
time serve as a trustee in bankruptcy for any of its Affiliates;
(iv) Any employee, consultant or agent of the Initial Purchaser
will be compensated from the Initial Purchaser's own bank accounts for
services provided to the Initial Purchaser except as provided in the
Agreement in respect of the Servicing Fee. The Initial Purchaser will
engage no agents other than a Servicer for the Pool Receivables, which
Servicer (if an Affiliate) will be fully compensated for its services to
the Initial Purchaser by payment of the Servicing Fee;
(v) The Initial Purchaser may incur indirect or overhead
expenses for items shared between the Initial Purchaser and any of its
Affiliates which are not reflected in the Servicing Fee, such as legal,
auditing and other professional services, but such expenses will be
allocated to the extent practical on the basis of cost, it being
understood that Solectron shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including legal and other fees;
(vi) The Initial Purchaser's operating expenses will not be paid
by any of its Affiliates;
(vii) The Initial Purchaser will have its own separate telephone
number, stationery and bank checks signed by it and in its own name and,
if it uses premises leased, owned or occupied by any of its Affiliates,
its portion of such premises will be defined and separately identified
and it will pay such other Affiliates reasonable compensation for the
use of such premises;
(viii) The books and records of the Initial Purchaser will be
maintained separately from those of its Affiliates;
(ix) The assets of the Initial Purchaser will be maintained in a
manner that facilitates their identification and segregation from those
of its Affiliates; and the Initial Purchaser will strictly observe
corporate formalities in its dealings with each of its Affiliates;
(x) The Initial Purchaser shall not maintain joint bank accounts
with any of its Affiliates or other depository accounts to which any of
its Affiliates (other than Solectron (or any of its Affiliates) in its
capacity as the Servicer under this Agreement or under the Receivables
Purchase Agreement) has independent access;
(xi) The Initial Purchaser shall not, directly or indirectly, be
named and shall not enter into any agreement to be named as a direct or
contingent beneficiary or loss payee on any insurance policy covering
the property of any other Solectron Party or any Affiliate of any other
Solectron Party unless it pays a proportional share of the premium
relating to any such insurance policy;
(xii) The Initial Purchaser will maintain arm's-length relationships
with each of its Affiliates. Any of its Affiliates that renders or
otherwise furnishes services or merchandise to the Initial Purchaser
will be compensated by the Initial Purchaser at market rates for such
services or merchandise;
(xiii) Neither the Initial Purchaser, on the one hand, nor any of
its Affiliates, on the other hand, will be or will hold itself out to be
responsible for the debts of the other or the decisions or actions in
respect of the daily business and affairs of the other; and
(xiv) Every representation and warranty of the Initial Purchaser,
such Originator and Solectron contained in the officer's certificates
delivered in connection with the opinion of Xxxxxx, Xxxx & Xxxxxx
pursuant to Section 1(j) of Exhibit II of the Receivables Purchase
Agreement, is true and correct in all material respects as of the date
hereof; and each of the Initial Purchaser, such Originator and Solectron
shall comply with all of the assumptions set forth in such opinion and
with all of its respective covenants and other obligations set forth in
such officer's certificates.
EXHIBIT IV
PURCHASE AND SALE TERMINATION EVENTS
Each of the following events or occurrences described in this EXHIBIT IV
shall constitute a "PURCHASE AND SALE TERMINATION EVENT":
(a) The Servicer shall (i) fail to deliver the Seller Report
pursuant to the Purchase and Sale Agreement and such failure shall
remain unremedied for five days, (ii) fail to make when due any payment
or deposit to be made by it under the Purchase and Sale Agreement, or
(iii) fail to perform or observe any other term, covenant or agreement
under the Purchase and Sale Agreement and such failure shall remain
unremedied for ten (10) days; or
(b) Any Originator or the Guarantor shall fail to make any payment
required under the Purchase and Sale Agreement and such failure shall
remain unremedied for two Business Days; or
(c) Any representation or warranty made or deemed to be made by any
Originator (or any of its officers) under or in connection with the
Purchase and Sale Agreement or any other information or report delivered
by such Originator or the Servicer pursuant to the Purchase and Sale
Agreement shall prove to have been incorrect or untrue in any material
respect when made or deemed made or delivered; or
(d) Any Originator or the Guarantor shall fail to perform or observe
(i) any term, covenant or agreement contained in PARAGRAPHS (d), (f),
(g), (i), (j) and (l) of EXHIBIT III to the Purchase and Sale Agreement
and, in the case of any such failure to PARAGRAPHS (i) and (j) that is
solely the result of the termination of the applicable Lock-Box
Agreement by Bank of America National Trust and Savings Association,
such failure shall remain unremedied for fourteen (14) days or (ii) any
other term, covenant or agreement contained in the Purchase and Sale
Agreement on its part to be performed or observed and the failure to
perform such other term, covenant or agreement referred to in this
clause (ii) shall remain unremedied for thirty (30) days; or
(e) The Purchase and Sale Agreement shall for any reason (other than
pursuant to the terms thereof) (i) cease to create in favor of the
Initial Purchaser a valid and enforceable first priority perfected
ownership interest in each Receivable, the Related Assets, and the items
described in Section 1.2(c) of the Purchase and Sale Agreement, or (ii)
cease to create, with respect to the items described in Section 1.9(b)
of the Purchase and Sale Agreement, a valid and enforceable first
priority perfected security interest in favor of the Initial Purchaser,
in each case free and clear of any Adverse Claim; or
(f) Any Originator or any of its subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by
or against such Originator or any of its subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against it (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 such Originator or any
of its subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this clause (f); or
(g) Any Change of Control shall occur; or
(h) A Termination Event shall have occurred.
ANNEX A
FORM OF INITIAL PURCHASER NOTE
NON-NEGOTIABLE PROMISSORY NOTE
Chicago, Illinois
September 17, 1997
FOR VALUE RECEIVED, the undersigned, SOLECTRON FUNDING CORPORATION, a
Delaware corporation (the "INITIAL PURCHASER"), promises to pay to [NAME
OF ORIGINATOR], a [California] [Delaware] corporation (the
"ORIGINATOR"), on the terms and subject to the conditions set forth
herein and in the Purchase and Sale Agreement referred to below, the
aggregate unpaid Purchase Price of all Receivables and Related Assets
purchased and to be purchased by the Initial Purchaser pursuant to the
Purchase and Sale Agreement (subject to adjustment pursuant to Section
1.8 of such Purchase and Sale Agreement).
1. PURCHASE AND SALE AGREEMENT. This Non-Negotiable Promissory Note
(this "NOTE") is the "Initial Purchaser Note" described in, and is
subject to the terms and conditions set forth in, that certain Purchase
and Sale Agreement, dated as of September 17, 1997 (as the same may be
amended, amended and restated, or otherwise modified in accordance with
its terms, the "PURCHASE AND SALE AGREEMENT"), among the Originator, the
other "Originator" referred to therein, Solectron Corporation, as
Servicer and Guarantor, and the Initial Purchaser. Reference is hereby
made to the Purchase and Sale Agreement for a statement of certain other
rights and obligations of the Initial Purchaser and the Originator. In
the case of any conflict or inconsistency between the terms of this Note
and the terms of the Purchase and Sale Agreement, the terms of the
Purchase and Sale Agreement shall control.
2. DEFINITIONS. Capitalized terms used (but not defined) herein have
the meanings ascribed thereto in the Purchase and Sale Agreement. In
addition, as used herein, the following terms have the following
meanings:
"FINAL MATURITY DATE" means the date that falls ninety one (91) days
after the later of (x) the Purchase and Sale Termination Date and (y)
the date all amounts due to the Issuer, the Administrator, any
Indemnified Party or any Affected Person under the Receivables Purchase
Agreement have been paid in full.
"JUNIOR LIABILITIES" means all obligations of the Initial Purchaser to
the Originator under this Note.
"SENIOR AGENT" means the Administrator.
"SENIOR INTERESTS" means (a) the undivided percentage ownership
interests acquired by the Issuer pursuant to the Receivables Purchase
Agreement and (b) all obligations of the Initial Purchaser to the Senior
Interest Holders, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due on or before the Final Maturity Date.
"SENIOR INTEREST HOLDERS" means, collectively, the Issuer, the
Administrator, and the other Affected Persons and Indemnified Parties.
"SUBORDINATION PROVISIONS" means, collectively, CLAUSES (a) through (k)
of Section 7 hereof.
3. INTEREST. Subject to the Subordination Provisions, the Initial
Purchaser promises to pay interest on the aggregate unpaid principal
amount of this Note outstanding on each day (a) prior to the final
payment in full and in cash of the Senior Interests, at a variable rate
PER ANNUM equal to the Discount Rate Percentage, determined as of the
then most recent Payment Date, and (b) after such final payment, at a
variable rate PER ANNUM equal to the Base Rate, as determined by the
Servicer.
4. INTEREST PAYMENT DATES. Subject to the Subordination Provisions,
the Initial Purchaser shall pay accrued interest on this Note on June 1
and November 1 of each calendar year and on the Final Maturity Date (or,
if any such day is not a Business Day, the next succeeding Business
Day). The Initial Purchaser also shall pay accrued interest on the
principal amount of each prepayment hereof on the date of each such
prepayment.
5. BASIS OF COMPUTATION. Interest accrued hereunder shall be computed
for the actual number of days elapsed on the basis of a 360-day year.
6. PRINCIPAL PAYMENT DATES. Subject to the Subordination Provisions,
any unpaid principal of this Note shall be paid on the Final Maturity
Date (or, if such date is not a Business Day, the next succeeding
Business Day). Subject to the Subordination Provisions, the principal
amount of and accrued interest on this Note may be prepaid on any
Business Day without premium or penalty.
7. SUBORDINATION PROVISIONS. The Initial Purchaser covenants and
agrees, and the [name of Originator], by its acceptance of this Note,
likewise covenants and agrees, that the payment of all Junior
Liabilities is hereby expressly subordinated in right of payment to the
payment and performance of the Senior Interests to the extent and in the
manner set forth in the following clauses of this SECTION 7:
(a) No payment or other distribution of the Initial Purchaser's
assets of any kind or character, whether in cash, securities, or other
rights or property, shall be made on account of this Note except to the
extent such payment or other distribution is permitted under (i) clause
(m) of Exhibit IV to the Receivables Purchase Agreement and (ii) SECTION
4 or SECTION 6 of this Note;
(b) (i) In the event of any Insolvency Proceeding with respect to
the Initial Purchaser, and (ii) on and after the occurrence of the
Purchase and Sale Termination Date, the Senior Interests shall first be
paid and performed in full and in cash before each Originator shall be
entitled to receive and to retain any payment or distribution in respect
of the Junior Liabilities. In order to implement the foregoing: (x) all
payments and distributions of any kind or character in respect of the
Junior Liabilities to which the Originator would be entitled except for
this SUBSECTION 7(b) shall be made directly to the Senior Agent (for the
benefit of the Senior Interest Holders); and (y) the Originator hereby
irrevocably agrees that the Issuer (or the Senior Agent acting on its
behalf), in the name of the Originator or otherwise, may demand, xxx
for, collect, receive and receipt for any and all such payments or
distributions, and file, prove and vote or consent in any such
Insolvency Proceeding with respect to any and all claims of the
Originator relating to the Junior Liabilities, in each case until the
Senior Interests shall have been paid and performed in full and in cash.
(c) In the event that the Originator receives any payment or other
distribution of any kind or character from the Initial Purchaser or from
any other source whatsoever in respect of the Junior Liabilities, other
than as expressly permitted by the terms of this Note, such payment or
other distribution shall be received in trust for the Senior Interest
Holders and shall be turned over by the Originator to the Senior Agent
(for the benefit of the Senior Interest Holders) forthwith. All
payments and distributions received by the Senior Agent in respect of
this Note, to the extent received in or converted into cash, may be
applied by the Senior Agent (for the benefit of the Senior Interest
Holders) first to the payment of any and all reasonable expenses
(including, without limitation, reasonable attorneys' fees and other
legal expenses) paid or incurred by the Senior Agent or the Senior
Interest Holders in enforcing these Subordination Provisions, or in
endeavoring to collect or realize upon the Junior Liabilities, and any
balance thereof shall, solely as between the Originator and the Senior
Interest Holders, be applied by the Senior Agent toward the payment of
the Senior Interests in a manner determined by the Senior Agent to be in
accordance with the Receivables Purchase Agreement; but as between the
Initial Purchaser and its creditors, no such payments or distributions
of any kind or character shall be deemed to be payments or distributions
in respect of the Senior Interests.
(d) Upon the final payment in full and in cash of all Senior
Interests, the Originator shall be subrogated to the rights of the
Senior Interest Holders to receive payments or distributions from the
Initial Purchaser that are applicable to the Senior Interests until the
Junior Liabilities are paid in full.
(e) These Subordination Provisions are intended solely for the
purpose of defining the relative rights of the Originator, on the one
hand, and the Senior Interest Holders, on the other hand. Nothing
contained in the Subordination Provisions or elsewhere in this Note is
intended to or shall impair, as between the Initial Purchaser, its
creditors (other than the Senior Interest Holders) and the Originator,
the Initial Purchaser's obligation, which is unconditional and absolute,
to pay the Junior Liabilities as and when the same shall become due and
payable in accordance with the terms hereof and of the Purchase and Sale
Agreement or to affect the relative rights of such Originator and
creditors of the Initial Purchaser (other than the Senior Interest
Holders).
(f) The Originator shall not, until the Senior Interests have been
finally paid and performed in full and in cash, (i) cancel, waive,
forgive, transfer or assign, or commence legal proceedings to enforce or
collect, or subordinate to, any obligation of the Initial Purchaser,
howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or to
become due, (other than as permitted by this Note) or (ii) convert the
Junior Liabilities into an equity interest in the Initial Purchaser,
unless, in the case of each of CLAUSES (i) and (ii) above, the
Originator shall have received the prior written consent of the
Administrator in each case.
(g) The Originator shall not, without the advance written consent of
the Administrator, commence, or join with any other Person in
commencing, any Insolvency Proceedings with respect to the Initial
Purchaser until at least one year and one day shall have passed since
the Senior Interests shall have been finally paid and performed in full
and in cash.
(h) If, at any time, any payment (in whole or in part) made with
respect to any Senior Interest is rescinded or must be restored or
returned by a Senior Interest Holder (whether in connection with any
Insolvency Proceedings or otherwise), these Subordination Provisions
shall continue to be effective or shall be reinstated, as the case may
be, as though such payment had not been made.
(i) Each of the Senior Interest Holders may, from time to time, at
its sole discretion, without notice to the Originator, and without
waiving any of its rights under these Subordination Provisions, take any
or all of the following actions: (i) retain or obtain an interest in
any property to secure any of the Senior Interests; (ii) retain or
obtain the primary or secondary obligations of any other obligor or
obligors with respect to any of the Senior Interests; (iii) extend or
renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Interests, or release or
compromise any obligation of any nature with respect to any of the
Senior Interests; (iv) amend, supplement, or otherwise modify any
Transaction Document; and (v) release its security interest in, or
surrender, release or permit any substitution or exchange for all or any
part of any rights or property securing any of the Senior Interests, or
extend or renew for one or more periods (whether or not longer than the
original period), or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such rights
or property.
(j) The Originator hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Senior Interest Holders;
(ii) notice of the existence, creation, non-payment or non-performance
of all or any of the Senior Interests; and (iii) all diligence in
enforcement, collection or protection of, or realization upon the Senior
Interests, or any thereof, or any security therefor.
(k) These Subordination Provisions constitute a continuing offer
from the Initial Purchaser to all Persons who become the holders of, or
who continue to hold, Senior Interests; and these Subordination
Provisions are made for the benefit of the Senior Interest Holders, and
the Senior Agent may proceed to enforce such provisions on behalf of
each of such Persons.
8. AMENDMENTS, ETC. No failure or delay on the part of the Originator,
the Senior Agent or the Senior Interest Holders in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other
or further exercise thereof or the exercise of any other power or right.
No amendment, modification or waiver of, or consent with respect to,
any provision of this Note shall in any event be effective unless
(a) the same shall be in writing and signed and delivered by the Initial
Purchaser and the Originator and the Senior Agent, and (b) all consents
required for such actions under the Transaction Documents shall have
been received by the appropriate Persons.
9. LIMITATION ON INTEREST. Notwithstanding anything in this Note to
the contrary, the Initial Purchaser shall never be required to pay
unearned interest on any amount outstanding hereunder, and shall never
be required to pay interest on the principal amount outstanding
hereunder, at a rate in excess of the maximum interest rate that may be
contracted for, charged or received without violating applicable federal
or state law.
10. NO NEGOTIATION. This Note is not negotiable.
11. GOVERNING LAW. THIS NOTE SHALL GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
12. CAPTIONS. Paragraph captions used in this Note are provided solely
for convenience of reference only and shall not affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officer thereunto duly authorized on the date first above
written.
SOLECTRON FUNDING CORPORATION,
a Delaware corporation
By:
Title:
