Receivables Purchase Agreement - Sun Microsystems Inc. and J. P. Morgan Delaware
EXECUTED COPY
RECEIVABLES PURCHASE AGREEMENT
dated as of August 5, 1994
among
SUN MICROSYSTEMS, INC.
and
THE SUBSIDIARY SELLERS LISTED HEREIN,
as Sellers
The PURCHASERS Listed Herein
and
J. P. MORGAN DELAWARE
as Agent
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms and Determinations . . . 16
Section 1.03. UCC Terms . . . . . . . . . . . . . . . . 16
ARTICLE II
PURCHASES AND SALES
Section 2.01. Agreement to Purchase . . . . . . . . . . 17
Section 2.02. Sales Procedures. . . . . . . . . . . . . 17
Section 2.03. Participation Percentage. . . . . . . . . 18
Section 2.04. Discount Calculations . . . . . . . . . . 18
Section 2.05. Loss Reserve. . . . . . . . . . . . . . . 20
Section 2.06. Settlement Statement. . . . . . . . . . . 20
Section 2.07. Commitment Fees; Termination or
Reduction of Commitment. . . . . . . . . 20
Section 2.08. Failure to Sell . . . . . . . . . . . . . 21
Section 2.09. Payments. . . . . . . . . . . . . . . . . 21
Section 2.10. Rate Basis. . . . . . . . . . . . . . . . 21
Section 2.11. No Recourse; Seller Liability . . . . . . 21
Section 2.12. No Assumption of Obligations. . . . . . . 22
Section 2.13. Repurchase of Pool Participation. . . . . 22
Section 2.14. Additional State Income Taxes . . . . . . 22
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.01. All Purchase Dates. . . . . . . . . . . . 23
Section 3.02. First Purchase Date . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence and Power . . . . . . 24
Section 4.02. Corporate and Governmental
Authorization; Contravention. . . . . . . 25
Section 4.03. Binding Effect. . . . . . . . . . . . . . 25
Section 4.04. Perfection. . . . . . . . . . . . . . . . 25
Section 4.05. Accuracy of Information . . . . . . . . . 25
<PAGE> 3
ARTICLE V
COVENANTS
Section 5.01. Maintenance of Records. . . . . . . . . . 26
Section 5.02. Protection of Participating Interests
of Purchasers. . . . . .. . . . . . . . . 26
Section 5.03. Performance of Contracts. . . . . . . . . 27
Section 5.04. Furnishing of Account Information;
Inspection of Records. . . . . . . . . . 27
Section 5.05. Maintenance of Qualification
and Credit Policies. . . . . . . . . . . 29
Section 5.06. Modification of Accounts. . . . . . . . . 29
Section 5.07. Supplemental Opinions of Counsel. . . . . 29
Section 5.08. Maintenance of Ownership. . . . . . . . . 30
Section 5.09. No Disposition. . . . . . . . . . . . . . 30
Section 5.10. File Search Reports . . . . . . . . . . . 30
Section 5.11. Financial Information . . . . . . . . . . 30
Section 5.12. Conduct of Business and Maintenance
of Existence. . . . . . . . . . . . . . . 32
Section 5.13. Minimum Tangible Net Worth. . . . . . . . 33
Section 5.14. Consolidations, Mergers and Sales
of Assets . . . . . . . . . . . . . . . . 33
Section 5.15. Use of Proceeds . . . . . . . . . . . . . 33
ARTICLE VI
TERMINATION OF COMMITMENT
Section 6.01. Termination Events. . . . . . . . . . . . 34
Section 6.02. Notice of Parent. . . . . . . . . . . . . 36
ARTICLE VII
THE AGENT
Section 7.01. Appointment and Authorization . . . . . . 36
Section 7.02. Agent and Affiliates. . . . . . . . . . . 37
Section 7.03. Action by Agent . . . . . . . . . . . . . 37
Section 7.04. Consultation with Experts . . . . . . . . 37
Section 7.05. Liability of Agent. . . . . . . . . . . . 37
Section 7.06. Indemnification . . . . . . . . . . . . . 38
Section 7.07. Credit Decision . . . . . . . . . . . . . 38
Section 7.08. Successor Agent . . . . . . . . . . . . . 38
Section 7.09. Agent's Fees. . . . . . . . . . . . . . . 38
ARTICLE VIII
SELLERS' INDEMNITIES
Section 8.01. Breach of Warranty or Agreement . . . . . 39
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Section 8.02. Tax Indemnification . . . . . . . . . . . 40
Section 8.03. Increased Cost and Reduced Return . . . . 40
Section 8.04. Notice to Parent. . . . . . . . . . . . . 42
Section 8.05. Expenses Included . . . . . . . . . . . . 42
ARTICLE IX
ADMINISTRATION, SERVICING AND
COLLECTION OF POOL ACCOUNTS
Section 9.01. Appointment of Collection Agent . . . . . 42
Section 9.02. Collection of Pool Accounts . . . . . . . 43
Section 9.03. Rebates, Refunds, Credits and Other
Adjustments. . . . . . . . . . . . . . . 43
Section 9.04. Change of Collection Agent. . . . . . . . 44
Section 9.05. Remittance of Collections; Reinvestment . 45
Section 9.06. Holding of Proceeds Pending
Settlements . . . . . . . . . . . . . . . 49
Section 9.07. Servicing Fee . . . . . . . . . . . . . . 49
Section 9.08. Compensation of Successor
Collection Agent. . . . . . . . . . . . . 49
Section 9.09. Termination of Collection Agency. . . . . 49
Section 9.10. Responsibilities of Agent and
Purchasers. . . . . . . . . . . . . . . . 50
Section 9.11. Lockboxes . . . . . . . . . . . . . . . . 50
ARTICLE X
MISCELLANEOUS
Section 10.01. Term of Agreement. . . . . . . . . . . . 51
Section 10.02. No Waivers . . . . . . . . . . . . . . . 51
Section 10.03. Notices. . . . . . . . . . . . . . . . . 51
Section 10.04. Counterparts; Effectiveness. . . . . . . 51
Section 10.05. Amendments . . . . . . . . . . . . . . . 52
Section 10.06. Expenses; Documentary Taxes;
Litigation Indemnity . . . . . . . . . . 52
Section 10.07. Governing Law; Submission to
Jurisdiction; Waiver of
Jury Trial . . . . . . . . . . . . . . . 53
Section 10.08. Successors and Assigns;
Participations; Novation . . . . . . . . 53
Section 10.09. Confidentiality. . . . . . . . . . . . . 55
Section 10.10. Termination by Seller. . . . . . . . . . 56
Section 10.11. Effect on 1991 Agreement . . . . . . . . 56
<PAGE> 5
ARTICLE XI
GUARANTY
Section 11.01. The Guaranty . . . . . . . . . . . . . . 56
Section 11.02. Guaranty Unconditional . . . . . . . . . 56
Section 11.03. Discharge only upon Payment in
Full; Reinstatement in Certain
Circumstances. . . . . . . . . . . . . . 57
Section 11.04. Waiver by the Parent . . . . . . . . . . 58
Section 11.05. Subrogation. . . . . . . . . . . . . . . 58
EXHIBITS
Exhibit A - Form of Assignment
Exhibit B - Form of Perfection Certificate
Schedule 4(A) - Description of Collateral
Schedule 5 - Schedule of Filings
Exhibit C-1 - Form of Opinion of Wilson, Sonsini, Goodrich
& Rosati, Counsel for the Sellers
Exhibit C-2 - Form of Opinion of Counsel for the Agent
Exhibit D-1 - Government Contracts
Exhibit D-2 - Form of Government Contract Assignment
Exhibit D-3 - Form of Notice of Assignment
Exhibit E - Certain Obligors
Exhibit F - Lockbox Banks, Lockbox Account
Numbers and Lockboxes
Exhibit G - Form of Lockbox Letter
<PAGE> 6
RECEIVABLES PURCHASE AGREEMENT
AGREEMENT dated as of August 5, 1994 among SUN MICROSYSTEMS,
INC., the SUBSIDIARY SELLERS listed on the signature pages hereof, the
PURCHASERS listed on the signature pages hereof and J.P. MORGAN DELAWARE, as
Agent.
RECITALS
WHEREAS, each Seller in the ordinary course of its business
generates trade and/or retail or consumer receivables resulting from the sale
of goods or services to its customers;
WHEREAS, the Sellers may from time to time sell to the
Purchasers undivided percentage ownership interests in such receivables
pursuant to and in accordance with the terms hereof;
WHEREAS, the Purchasers may from time to time purchase from the
Sellers undivided percentage ownership interests in such receivables pursuant
to and in accordance with the terms hereof; and
WHEREAS, the Purchasers may in the future decide to sell,
assign or otherwise dispose of undivided interests in their ownership interests
pursuant to and in accordance with the terms hereof.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. The following terms, as used
herein, have the following meanings:
"Account" means any right of a Seller to payment in Dollars for
goods which have been sold, licensed, leased or otherwise disposed of, or for
services which have been or are to be rendered, by or on behalf of such Seller.
Each such right evidenced by or arising under a separate Contract (including a
separate invoice) shall constitute a separate Account.
"Accounting Period" means each fiscal month of the Sellers
during the term of this Agreement.
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"Affiliate" means with reference to the Parent (or, if such
term is used with reference to any other Person, such other Person) (the
"Controlled Person") (i) any Person that directly, or indirectly through one or
more intermediaries, controls the Controlled Person (a "Controlling Person") or
(ii) any Person (other than the Controlled Person or a Subsidiary of the
Controlled Person or, in the case of any Subsidiary of the Parent, the Parent)
which is controlled by or is under common control with a Controlling Person.
As used herein, the term "control" means possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means J.P. Morgan Delaware, in its capacity as agent
for the Purchasers hereunder, and its successors in such capacity.
"Agreement" means this Receivables Purchase Agreement, as the
same may be amended from time to time.
"Applicable Discount Rate" has the meaning set forth in
Section 2.04.
"Applicable Margin" has the meaning set forth in Section 2.04.
"Assignment" means an instrument of assignment creating a
Participating Interest, substantially in the form of Exhibit A hereto.
"Average Prime Rate" means, with respect to any Discount
Period, the sum of the Prime Rates in effect on each day from and including the
first day of such Discount Period to but not including the last day thereof,
divided by the number of such days.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Business Day" means a day (i) other than a Saturday, Sunday or
other day on which commercial banks in New York City or Wilmington, Delaware or
San Francisco, California are authorized by law to close and (ii) on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Collection Agent" means the Person from time to time appointed
as Collection Agent pursuant to Section 9.01.
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"Collections" means all amounts received in payment of any
amount owed by the related Obligor in respect of any Pool Account or applied to
any amount owed in respect of any Pool Account. Collections shall include all
amounts payable by the Sellers pursuant to Section 9.03.
"Commitment" means the amount of $125,000,000, or the several
agreements of the Purchasers to purchase Participating Interests in Pool
Accounts from time to time hereunder, as the context may require.
"Commitment Percentage" means, as to any Purchaser, the
percentage equivalent of a fraction the numerator of which is the "Committed
Amount" set forth opposite its name on the signature pages hereof and the
denominator of which is $125,000,000.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Parent in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means the excess of
consolidated total assets over consolidated total liabilities, consolidated
total assets and consolidated total liabilities each to be determined on a
consolidated basis for the Parent in accordance with generally accepted
accounting principles, excluding, however, from the determination of
consolidated total assets (i) goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other similar
intangibles, (ii) all unamortized debt discount and expense, (iii) asset,
liability, contingency and other appropriate reserves, including reserves for
depreciation and for deferred income taxes, (iv) treasury stock, (v) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to June 30, 1993, (vi) the book value of investments in Persons that
are not Subsidiaries (unless the same are readily marketable), and (vii) any
items not included in clauses (i) through (vi) above which are treated as
intangibles in conformity with generally accepted accounting principles.
"Contract" means an agreement between the related Seller and
the Obligor on an Account or, in the case of an Account arising on open account
terms, the invoice evidencing such Account, in either case pursuant to which
such Obligor shall be obligated to make payments in the amounts and at the
times set forth therein.
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"Credit Agreement" means the Credit Agreement dated as of June
1, 1994 among the Parent, the banks listed on the signature pages thereof and
Citicorp USA Inc., as agent for such banks, a true and correct copy of which as
in effect on the date hereof has heretofore been furnished to each Purchaser by
the Parent, as amended by First Amendment to Credit Agreement thereto dated as
of August 5, 1994 and as the same may be further amended from time to time.
"Current Purchase Price" has the meaning set forth in
Section 2.02.
"Debt" of any Person means (i) indebtedness for borrowed money,
(ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of property
or services (excluding ordinary trade payables incurred in the ordinary course
of business), (iv) obligations as lessee under leases which shall have been or
should be, in accordance with generally accepted accounting principles,
recorded as capital leases, (v) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi) any
reimbursement obligations of such Person to the issuer of a letter of credit or
similar instrument, (vii) all indebtedness or obligations of others secured by
a Lien on any asset of such Person, whether or not such indebtedness or
obligations are assumed by such Person (to the extent of the value of the
asset), (viii) any reimbursement obligation of such Person or other arrangement
of whatever nature having the effect of assuring or holding harmless any other
Person against loss with respect to any real property owned by such other
Person, including, without limitation, assuring or guaranteeing that such other
Person shall receive a specified amount in connection with the conveyance of
such real property, (ix) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (viii) above, and (x) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA.
"Defaulted Account" means at any time an Account (i) under
which any amount remains unpaid for more than 90 days after the date for
payment stated in the related invoice, (ii) as to which the related Obligor is
at such time the subject of bankruptcy, insolvency or similar proceedings or
(iii) as to which a reserve for bad debt has been specifically provided or on
which an estimated or actual bad debt has been incurred or which has become
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uncollectible as a consequence of a circumstance or event relating to the
creditworthiness of the related Obligor, in each case as determined in
accordance with the related Seller's usual practice.
"Determination Date" means each Business Day from and including
the first Purchase Date to and including the Termination Date.
"Discount" means at any date an amount accruing (or accrued) in
respect of the Unrecovered Purchase Price for each day from and including the
first day of each Discount Period to but not including the last day thereof (or
such date) at the Applicable Discount Rate.
"Discount Period" means, (i) in respect of the portion of the
Unrecovered Purchase Price outstanding on the first day of any Settlement
Period (after giving effect to any purchases and/or settlements on such date),
the period from the first day of such Settlement Period to and including the
first day of the next succeeding Settlement Period and (ii) in respect of the
portion of the Unrecovered Purchase Price attributable to any purchase during
any Settlement Period, the period from and including the related Purchase Date
to and including the first day of the next succeeding Settlement Period.
"Discount Reserve" means, at any date, an amount equal to the
sum of (i) accrued Discount at such date plus (ii) an amount equal to the
product of (x) the Unrecovered Purchase Price at such date times (y) the Prime
Rate + 1% at such date times (z) a fraction the numerator of which is the
number of days in the Estimated Liquidation Period and the denominator of which
is 360.
"Dollars" means lawful currency of the United States.
"Effective Date" means the date on which this Agreement becomes
effective in accordance with Section 10.04.
"Eligible Account" means at any time an Account arising in the
ordinary course of business of the related Seller:
(a) which complies with all applicable legal requirements,
including, without limitation, all laws, rules, regulations and orders of any
governmental or judicial authority relating to truth in lending, billing
practices, fair credit reporting, equal credit opportunity, debt collection
practices and consumer debtor protection,
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(b) which constitutes an "account" as defined in the Uniform
Commercial Code as in effect in the jurisdiction whose law governs the
perfection of the Purchasers' ownership interests therein,
(c) which, together with the related Contract, constitutes a
legal, valid and binding irrevocable payment obligation of the related Obligor
in accordance with its terms, subject to no dispute, claim for offset,
counterclaim or other defense (except to the extent that the amount of such
dispute, offset or counterclaim has theretofore been subtracted from the Unpaid
Balance of such Account in the calculation of the Net Eligible Account
Balance),
(d) which is payable in the United States in Dollars,
(e) as to which the related Obligor, or a guarantor providing
a full and unconditional guaranty in respect of such account, is a Qualifying
Obligor and, if such Account arises under a Government Contract, such
Government Contract is a Qualifying Government Contract; provided that this
clause (e) need not be met as to any Account payment of which is supported by a
letter of credit, bank guarantee or similar arrangement,
(f) as to which an invoice has been issued and which is
payable by the related Obligor not later than 60 days after the date of such
invoice,
(g) which is not a Defaulted Account, and
(h) as to which the Seller has good and marketable title, free
and clear of any Title Defect (other than the Participating Interests and any
Permitted Subordinated Interest).
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
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chemicals or industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Parent and all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Parent, are treated
as a single employer under Section 414 of the Internal Revenue Code.
"Estimated Liquidation Period" means, at any Determination
Date, the period from and including such Determination Date to but not
including the Settlement Date which follows such Determination Date by at least
35 days (or such greater number of days as the Agent may specify by notice to
the Parent, the Collection Agent (if other than the Parent) and the Purchasers
as more accurately representing the weighted average life of the Pool Accounts
at such time).
"Facility Office" means, as to each Purchaser, its office,
branch or affiliate located at its address set forth on the signature pages
hereof, or such other office, branch or affiliate of such Purchaser as it may
hereafter designate as its Facility Office by notice to the Parent and the
Agent.
"Government Contract" means a Contract in respect of which the
related Obligor is a federal governmental entity or agency.
"Indemnitee" has the meaning set forth in Section 8.01.
"Ineligible Account" has the meaning set forth in
Section 5.04(a).
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"License Account" means at any date any Account or portion of
an Account in respect of licenses by any Seller of intellectual property rights
of such Seller.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
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jurisdiction). Customary bankers' rights of set-off arising by operation
of law or by contract in connection with working capital facilities,
lines of credit, term loans and letter of credit facilities and other
contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of this Agreement.
"Lockbox" means a post office box or other mailing location
identified on Exhibit F hereto maintained by a Lockbox Bank pursuant to a
Lockbox Letter for the purpose of receiving payments made by the Obligors for
subsequent deposit into a related Lockbox Account, or such other post office
box or mailing location as the Parent may identify as such to the Agent from
time to time.
"Lockbox Account" means a demand deposit account maintained
with a Lockbox Bank pursuant to a Lockbox Letter for the purpose of depositing
payments made by the Obligors.
"Lockbox Bank" means a bank identified on Exhibit F hereto or
such other bank as the Parent may identify as such to the Agent from time to
time.
"Lockbox Letter" means a letter relating to a Lockbox Account
which is in compliance with Section 9.11 hereof and in substantially the form
attached hereto as Exhibit G or otherwise in form and substance satisfactory to
the Agent, which has been executed and delivered by the Parent to a Lockbox
Bank.
"Lockbox Transfer Letter" means a letter from the Agent to a
Lockbox Bank substantially in the form of Annex I to Exhibit G hereto.
"Loss Ratio" means at any date the percentage obtained by
dividing (i) the sum (or difference) of (x) gross bad debt write-offs and (y)
the net increase (or decrease) in bad debt reserves by (ii) the sum (or
difference) of (x) the gross cash receipts and (y) the net increase (or
decrease) in the cash-in-advance accounts, in each case for Pool Accounts and
for the period of twelve consecutive Accounting Periods most recently ended on
or prior to such date.
"Loss Reserve" means an amount determined in accordance with
Section 2.05.
"Loss Reserve Percentage" means at any date the greater of (i)
10% or (ii) a percentage equal to five times the Loss Ratio as at the last day
of the Accounting Period most recently ended twelve or more Business Days prior
to such date.
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"Majority Purchasers" means Purchasers having Commitment
Percentages aggregating at least 66 2/3%.
"Material Debt" means any Debt of the Parent or a Subsidiary of
the Parent which is outstanding in a principal amount of at least $25,000,000
in the aggregate.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $25,000,000.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the ERISA Group during such five year period. "Net Eligible Account
Balance" means (i) the sum of the aggregate Unpaid Balances of all Eligible
Accounts minus (ii) (x) the amount by which total License Accounts otherwise
included in Eligible Accounts as estimated on the most recent Settlement
Statement exceeded $30,000,000 and (y) the amount by which total Service
Accounts otherwise included in Eligible Accounts as estimated on the most recent
Settlement Statement exceeded $30,000,000.
"Net Reinvestment Gain" has the meaning set forth in
Section 9.05.
"Net Reinvestment Loss" has the meaning set forth in
Section 9.05.
"1991 Receivables Purchase Agreement" means the Receivables
Purchase Agreement dated as of June 27, 1991 among the Parent, the Subsidiary
Sellers listed on the signature pages thereof, the Purchasers listed on the
signature pages thereof and J.P. Morgan Delaware, as Agent, as amended.
"New Purchaser" has the meaning set forth in Section 10.08.
"Notice of Sale" has the meaning set forth in Section 2.02.
"Obligor" means the Person obligated under any Pool Account or
any related Contract, and "related Obligor" means, when used with respect to
any Contract or any Pool Account, the Obligor thereunder.
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"Parent" means Sun Microsystems, Inc., a Delaware corporation,
and its successors.
"Participant" has the meaning set forth in Section 10.08(b).
"Participating Interest" means an undivided percentage
ownership interest of a Purchaser, to the extent of its Commitment Percentage,
in and to the Pool Participation.
"Participation Percentage" means at any time the applicable
percentage most recently determined by the Collection Agent pursuant to
Section 2.03.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Subordinated Interest" means any lien on or other
security interest in the Sellers' Residual Interest that is expressly made
subordinate to the rights of the Purchasers and the obligations of the Sellers
and the Parent under this Agreement, as it may from time to time be amended,
renewed, extended, increased or refinanced (for purposes of this definition,
the "Agreement"), pursuant to a written agreement whereby the holder of such
interest agrees to provisions no less favorable to the Purchasers than the
following:
(i) acknowledging the rights of (x) the parties hereunder to
renew, extend, increase, modify, amend, accelerate, compromise, supplement,
terminate, exchange, waive or release in whole or in part any of the rights or
obligations of the parties hereunder (including any increase in the amount of
the Participation Percentage, Unrecovered Purchase Price or Applicable Discount
Rate) or with respect to the Pool Assets, and to reduce, diminish or otherwise
amend in any respect the Sellers' Residual Interest and (y) the Purchasers and
the Agent to exercise or refrain from exercising any and all rights, remedies
and powers granted by or in connection with this Agreement or any other
agreements relating hereto (including termination of the Collection Agent and
appointment of a substitute Collection Agent) and otherwise to take any action
with or with respect to the Parent, the Sellers, the Collection Agent and the
Pool Assets, all at such times and from time to time and in such manner as the
Purchasers and the Agent may in their sole discretion determine, and all
without notice to or consent from any holder of such Permitted Subordinated
Interest;
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(ii) acknowledging that any action taken pursuant to clause (i)
above or any change in the Sellers' Residual Interest by operation of the terms
of this Agreement may have the effect of reducing, diminishing, impairing or
otherwise altering the Permitted Subordinated Interest, and that any such
reduction, diminution, impairment or alteration shall, without notice or
consent, be binding on each holder of the Permitted Subordinated Interest; and
(iii) subordinating all right of enforcement and satisfaction of
the Permitted Subordinated Interest to payment of the Participating Interests
and all other amounts owing to the Purchasers hereunder, and agreeing that,
until such Participating Interests shall have been satisfied in full and the
Commitment shall have been terminated, the holder of such Permitted
Subordinated Interest will not exercise or attempt to exercise any rights,
remedies or powers or to take any other action with respect to the Permitted
Subordinated Interest against the Parent, the Sellers, the Collection Agent or
the Pool Assets.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Pool Account" means all Accounts other than each Account that
has been designated as an Ineligible Account (as defined in Section 5.04(a)) in
accordance with Section 5.04(a); provided that on and after the Termination
Date, the term "Pool Account" shall refer only to those accounts which were
Pool Accounts as of the Termination Date.
"Pool Assets" means all of the following, whether now owned or
hereafter acquired or coming into existence, wherever located: (i) all Pool
Accounts outstanding at the opening of business on the related Determination
Date, (ii) all rights of ownership with respect thereto, including without
limitation any direct or indirect security therefor or guaranty thereof, any
repossessed, returned or rejected goods relating thereto held by the Seller,
any related
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insurance or letter of credit and any other form of direct or
indirect recourse in respect thereof, (iii) all Collections, (iv) all Records
and (v) all proceeds of the foregoing.
"Pool Participation" means an undivided ownership interest to
the extent of the Participation Percentage determined from time to time in and
to the Pool Assets.
"Potential Termination Event" means any condition or event
which with the giving of notice or lapse of time or both would, unless cured or
waived, become a Termination Event.
"Prime Rate" means the rate of interest publicly announced by
J.P. Morgan Delaware in Wilmington, Delaware from time to time as its "prime
rate".
"Purchase Date" means each date on which the Purchasers
purchase initial or incremental Participating Interests, as designated by the
Parent in a Notice of Sale.
"Purchaser" means each financial institution listed on the
signature pages hereof, and its successors and permitted assigns, and
"Purchasers" means all of the foregoing.
"Purchasers' Collection Amount" means the amount of Unrecovered
Purchase Price plus the Discount with respect thereto.
"Qualifying Government Contract" means (i) any Government
Contract under which the aggregate amounts payable by the related Obligor do
not exceed $5,000,000 and (ii) any other Government Contract (A) which is set
forth in Exhibit D-1 hereto (or in a supplement to Exhibit D-1 delivered by the
Parent to the Purchasers with respect to such Government Contract at least 15
days prior to any purchase and sale hereunder as to which Pool Accounts arising
thereunder are to be treated as Eligible Accounts) and (B) as to which the
related Seller shall have delivered to the Agent a duly executed instrument of
assignment substantially in the form of Exhibit D-2 and a duly completed (but
unacknowledged) notice of assignment substantially in the form of Exhibit D-3,
in each case with such modifications as may be necessary or advisable in order
to comply with any law applicable to transactions with the related Obligor.
"Qualifying Obligor" means an Obligor which (i) is not the
Parent or any of the Parent's Subsidiaries or Affiliates, (ii) has not, within
the three year period ending on the date of determination, been the related
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Obligor on any Account which constituted a Defaulted Account by reason of
clause (ii) or (iii) of the definition thereof, (iii) is located in the United
States and (iv) has not been designated by notice to the Parent from the Agent
at the request of the Majority Purchasers (which request shall be made upon a
good faith determination that such Obligor is or may be insufficiently
creditworthy at such time) as an unacceptable Obligor for purposes of this
Agreement; provided that the aggregate Unpaid Balance of Pool Accounts included
in the calculation of any Net Eligible Account Balance as to which any one
Obligor (or a Subsidiary or Affiliate of such Obligor) is the related Obligor
shall be limited (in inverse chronological order) to the extent necessary so as
not to exceed (x) 10% of the Net Eligible Account Balance, as to any Obligor
set forth in Part 1 of Exhibit E hereto or (y) 5% of the Net Eligible Account
Balance, as to any Obligor set forth in Part 2 of Exhibit E hereto, so long as
the Agent has not given the Parent notice that, in the reasonable judgment of
the Majority Purchasers, there has been a material adverse change in the
creditworthiness of any such Obligor, or (z) 3% of the Net Eligible Account
Balance, in the case of any other Obligor. Exhibit E may be amended or
supplemented from time to time with the consent (after good faith consideration
of any proposals for any such amendment or supplement made by the Parent) of
the Majority Purchasers.
"Records" means all Contracts and other documents, books,
records and other information (including without limitation tapes, discs, punch
cards and related property and rights) of the Sellers maintained by the Sellers
with respect to Pool Accounts and the related Obligors.
"Reference Bank" means Morgan Guaranty Trust Company of New
York, and any additional or substitute Reference Bank or Banks appointed by the
Parent and the Agent with the consent of Majority Purchasers.
"Regulatory Change" has the meaning set forth in Section 8.03.
"Reinvestment Period" means the period from and including the
first Purchase Date to but not including the Termination Date.
"Responsible Financial Officer" means the chief financial
officer, the controller, the treasurer or any assistant treasurer of the
Parent.
"Responsible Officer" means the individuals occupying the
executive offices of the president - chief executive officer, vice president -
chief financial officer, vice president - chief technical officer, vice
president -
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general counsel and secretary, vice president - treasurer, and vice
president - corporate planning and development of the Parent and any successors
to such offices, and the individuals occupying any other executive offices of
the Parent which at any time have the authority, functions and responsibilities
as such offices.
"Seller" means each of the Parent and the Subsidiary Sellers;
and "related Seller" means, with reference to any Pool Account, the Seller
originating such Pool Account.
"Sellers' Residual Interest" means (i) an undivided ownership
interest to the extent of a percentage equal to 100% minus the Participation
Percentage determined from time to time in and to the Pool Assets and (ii)
amounts (if any) to be paid to the Sellers pursuant to Sections 9.05 and 10.01.
"Service Account" means at any date any Account or portion of
any Account that arose for performance of services not yet rendered.
"Settlement Date" means the twelfth Business Day (or, in the
case of January and July, the seventeenth Business Day) following the last day
of each Accounting Period (or such other day of the month as to which the
Parent and the Agent may from time to time agree).
"Settlement Period" means (i) initially, the period from and
including the first Purchase Date to and excluding the first Settlement Date,
and (ii) thereafter, each period from and including each Settlement Date to and
excluding the next succeeding Settlement Date.
"Settlement Statement" means a monthly settlement statement
prepared by the Collection Agent in form and substance reasonably satisfactory
to the Purchasers.
"Special Account" means Account No. 230-47-534 at J.P. Morgan
Delaware, an account in the name of Agent.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Parent (or, if
such term is used with reference to any other Person, by such other Person).
"Subsidiary Seller" means each of the Persons listed as a
"Subsidiary Seller" of the Parent listed on the signature pages hereof, and
their respective successors.
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"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Corporation and P-1 by Moody's
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$250,000,000 or (iv) repurchase agreements with respect to securities described
in clause (i) above entered into with an office of a bank or trust company
meeting the criteria specified in clause (iii) above, provided in each case
that such Investment matures within one year from the date of acquisition
thereof.
"Termination Date" means the earlier of (a) August 5, 1997 and
(b) the date on which the Commitment shall have been terminated pursuant to
Section 2.07 or 6.01.
"Termination Event" has the meaning set forth in Section 6.01.
"Title Defect" means, as to any asset of any Person, any lien,
encumbrance, security interest or other right, claim or charge (other than
unasserted banker's rights of offset) with respect to such asset which may be
asserted by any other Person.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
its fifty States and the District of Columbia, but excluding its territories
and possessions.
"Unpaid Balance" means, in relation to any Account at any date,
all amounts posted by the related Seller in its records in accordance with its
customary accounting procedures as being payable by the related Obligor under
such Account at such date (net of any discount, rebate, refund, credit or other
adjustment reflected as being available to or for the benefit of the related
Obligor under such Account at such date).
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"Unrecovered Purchase Price" means, at any date, the excess, if
any, of (i) the sum of all Current Purchase Prices paid to the Parent for the
account of the Sellers on or prior to such date for the Participating Interests
over (ii) the aggregate amount received by the Agent and applied with respect
thereto on or prior to such date pursuant to Section 9.05.
"Unused Commitment" means, at any date, the excess, if any, of
the Commitment over the Unrecovered Purchase Price at such date.
"Utilization Limit" means, at any date, an amount equal to the
least of the following amounts: (i) the Commitment at such date and (ii) an
amount such that, if the Unrecovered Purchase Price equalled such amount, the
Participation Percentage at such date would equal 100%.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Parent's independent public accountants) with the audited consolidated
financial statements of the Parent and its Consolidated Subsidiaries filed with
the Parent's Report on Form 10-K filed with the Securities and Exchange
Commission for fiscal year 1993 or, if later, the most recent such statements
delivered to the Purchasers pursuant to Section 5.11; provided that, if the
Parent notifies the Agent that the Parent wishes to amend any covenant in
Article V to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if the Agent
notifies the Parent that the Majority Purchasers wish to amend Article V for
such purpose), then the Parent's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Parent and the Majority
Purchasers.
SECTION 1.03. UCC Terms. Terms not otherwise defined herein
which are defined in the Uniform Commercial Code as in effect on the date
hereof in the State of New York shall, unless the context otherwise requires,
have the meanings set forth therein.
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ARTICLE II
PURCHASES AND SALES
SECTION 2.01. Agreement to Purchase. Upon the basis of the
Sellers' representations and warranties contained in Article IV and pursuant to
Section 3.01 hereof and subject to the terms and conditions of this Agreement,
the Sellers may at their option sell to the Purchasers, and each Purchaser
severally agrees to purchase from the Sellers, on any Purchase Date during the
period from the Effective Date to but not including the Termination Date,
initial and incremental Participating Interests to the extent that, after
giving effect to such purchase and to any contemporaneous settlement pursuant
to Section 2.06, such Purchaser's Commitment Percentage of the Unrecovered
Purchase Price does not exceed its Commitment Percentage of the Commitment.
Notwithstanding the foregoing, on the initial Purchase Date, the Purchasers
shall make such purchase from the Sellers and from the Purchasers under and as
defined in the 1991 Receivables Purchase Agreement by directing to the Agent
under the 1991 Receivables Purchase Agreement such portion of the Current
Purchase Price paid hereunder as will, together with other amounts provided by
the Sellers, be sufficient to pay to the Purchasers under and as defined in the
1991 Receivables Purchase Agreement all Unrecovered Purchase Price and Accrued
Discount thereunder, in each case, as defined therein, with any balance of the
Current Purchase Price paid hereunder to be paid to the Sellers hereunder.
SECTION 2.02. Sales Procedures. (a) The Parent shall
designate each Purchase Date by at least three Business Days' notice to the
Agent (a "Notice of Sale"), setting forth:
(i) the proposed Purchase Date, which shall be a Business Day, and
(ii) the aggregate amount to be paid by the Purchasers on such
Purchase Date for the initial or incremental Participating Interests to be sold
on such Purchase Date (the "Current Purchase Price"), which shall be an
aggregate amount of $10,000,000 or any larger multiple of $1,000,000 (except
that any such sale may be for a Current Purchase Price equal to the maximum
amount permitted to be sold in compliance with Sections 2.01 and 3.01(d)).
(b) As soon as practicable after receipt of a Notice of Sale,
the Agent shall notify each Purchaser of the contents thereof and of such
Purchaser's ratable share of the Current Purchase Price. Upon receipt of a
Notice of
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Sale by the Agent, such Notice of Sale shall not be revocable by the
Parent or any Seller.
(c) Not later than 12:00 noon (Wilmington, Delaware time) on
each Purchase Date, each Purchaser shall make available its ratable share of
the Current Purchase Price, in Dollars in immediately available funds, at the
office of the Agent referred to in Section 10.03. Unless the Agent determines
that any applicable condition specified in Article III has not been satisfied
or expressly waived, the Agent will make the funds so received from the
Purchasers promptly available to the Parent for the account of the Sellers.
SECTION 2.03. Participation Percentage. The Participation
Percentage for each day, applicable for purposes of computations under this
Agreement on such day (and for all purposes of this Agreement until
determination of a new Participation Percentage on the next succeeding
Determination Date, if any), shall be an amount for each Determination Date
determined in accordance with the following formula (rounded to four decimal
places):
PP = UPP + DR + LR
-------------
NEAB
PP = Participation Percentage
UPP = Unrecovered Purchase Price at such
Determination Date (giving effect
to any purchase and/or settlement
on such date)
DR = Discount Reserve at such Determination
Date
LR = Loss Reserve at such Determination Date
NEAB = Net Eligible Account Balance at such
Determination Date
provided that the Participation Percentage shall not, in any event, exceed
100%; provided further that the Participation Percentage shall be for each day
after the Termination Date until (x) the date on which the Purchasers'
Collection Amount is zero and all other amounts payable hereunder to the Agent
and the Purchasers have been paid in full, as calculated on the Termination
Date, and (y) thereafter, zero.
SECTION 2.04. Discount Calculations. (a) The Agent shall
determine the Applicable Discount Rate for each Discount Period and shall
promptly notify the Parent, the Collection Agent and each Purchaser of each
Applicable Discount Rate so determined by it.
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Subject to subsection (b) below, the "Applicable Discount Rate"
for any Discount Period is the sum of the Applicable Margin plus the applicable
Adjusted London Interbank Offered Rate.
The "Applicable Margin" for any Discount Period is 1.40%.
The "Adjusted London Interbank Offered Rate" applicable to any
Discount Period is a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage as of the first day of such Discount Period.
The "London Interbank Offered Rate" applicable to any Discount
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in Dollars are
offered to each of the Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Business Days before the first day
of such Discount Period in an amount approximately equal to the Commitment
Percentage of such Reference Bank of the Unrecovered Purchase Price as of the
first day of such Discount Period and for a period of time comparable to such
Discount Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
London Interbank Offered Rate is determined or any category of extensions of
credit or other assets which includes extensions of credit by a non-United
States office of any Purchaser to United States residents).
(b) If prior to the first day of any Discount Period:
(i) the Agent is advised by the Reference Banks that deposits
in Dollars (in the applicable amounts) are not being offered to the Reference
Banks in the London interbank market for such Discount Period; or
(ii) any Purchaser shall notify the Agent that, as a result of a
Regulatory Change, it is unlawful or impossible for such Purchaser to fund its
Participating
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<PAGE> 25
Interest in the London interbank market for such Discount Period;
the Agent shall forthwith give notice thereof to the Parent, the Collection
Agent and the Purchasers, and the Applicable Discount Rate for such Discount
Period shall be the Average Prime Rate plus 1% for such Discount Period.
SECTION 2.05. Loss Reserve. The Loss Reserve for each day,
applicable for purposes of computations under this Agreement on such day (and
for all purposes of this Agreement until determination of a new Loss Reserve on
the next succeeding Determination Date, if any), shall be an amount for each
Determination Date determined in accordance with the following formula:
( (UPP + DR) )
LR = LRP X ( -------------)
( (1 - LRP) )
LR = Loss Reserve at such Determination
Date
UPP = Unrecovered Purchase Price at such
Determination Date
LRP = Loss Reserve Percentage at such
Determination Date
DR = Discount Reserve at such Determination
Date
SECTION 2.06. Settlement Statement. At least three Business
Days prior to each Settlement Date, the Collection Agent shall deliver
to the Agent a duly completed Settlement Statement. Such Settlement
Statement shall be accompanied by such information as the Agent or any
Purchaser may reasonably request for the purpose of effecting an
accounting and settlement hereunder on such Settlement Date. SECTION
2.07. Commitment Fees; Termination or Reduction of Commitment. (a)
The Sellers shall pay commitment fees to the Agent for the account of
the Purchasers ratably in proportion to their Commitment Percentages in
arrears on each March 31, June 30, September 30 and December 31 prior
to the Termination Date and on the Termination Date. Such commitment
fees shall accrue for each day from and including the Effective Date
to but excluding the Termination Date at the rate of .175 of 1% per
annum on the Unused Commitment.
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<PAGE> 26
(b) The Parent may, upon at least three Business Days' notice
to the Agent, terminate at any time, or reduce from time to time by an amount
of $10,000,000 or any larger multiple thereof, the amount of the Commitment.
SECTION 2.08. Failure to Sell. If for any reason sales are
not consummated on a Purchase Date after notice has been given to the
Purchasers in accordance with Section 2.02(b), other than any such sale which
is not consummated because a Purchaser has failed to make available its ratable
share of the Current Purchase Price despite the satisfaction of all applicable
conditions specified in Article III, the Sellers shall reimburse each Purchaser
on demand for any resulting loss or expense incurred by it (or by any existing
or prospective participant in its Participating Interest), including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties in order to fund its Participating Interest, provided that
such Purchaser shall have delivered to the Parent a certificate prepared in
good faith and setting forth in reasonable detail its calculation of the amount
of such loss or expense, which certificate shall be conclusive in the absence
of manifest error. In determining such amount, such Purchaser may use any
reasonable averaging and attribution methods.
SECTION 2.09. Payments. Each payment to be made to the Agent
hereunder shall be made not later than 12:00 Noon (Wilmington, Delaware time)
on the required payment date in Dollars in immediately available funds at the
office of the Agent referred to in Section 10.03. The Agent will promptly
distribute to each Purchaser in like funds its ratable share of each such
payment received by the Agent for the account of the Purchasers. Overdue
payments shall bear interest, payable on demand, accruing from the date payment
thereof was due to the date of payment thereof, at a rate per annum for each
day equal to the sum of 2% plus the Prime Rate for such day.
SECTION 2.10. Rate Basis. Discount and commitment fees
hereunder shall be computed on the basis of the actual number of days elapsed
or to elapse (including the first day but excluding the last day of any
relevant period) in a year of 360 days.
SECTION 2.11. No Recourse; Seller Liability. Each sale of
Participating Interests hereunder shall be made without recourse to the Sellers
(including the Parent under Article XI). Each such sale shall be made pursuant
to and in reliance upon the warranties and agreements on the part of the
Sellers contained in this Agreement. All obligations of the Sellers or any of
them contained in this Agreement shall be the joint and several obligation of
each Seller.
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Each Seller other than the Parent hereby irrevocably appoints the
Parent as its agent hereunder and authorizes the Parent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Parent by the terms hereof, together with all such powers as
are reasonably incidental thereto. Each such Seller shall be bound by any
action taken by the Parent as its agent hereunder.
SECTION 2.12. No Assumption of Obligations. No obligation or
liability to any Obligor under any Account or Contract is assumed by the Agent
or any Purchaser hereunder or under any Assignment and any such assumption is
hereby expressly disclaimed.
SECTION 2.13. Repurchase of Pool Participation. If the Parent
shall have requested, the Parent may on any Settlement Date after the
Termination Date repurchase the Purchasers' aggregate Pool Participation at
such date at a price equal to the Purchasers' Collection Amount at such date;
provided that the Purchasers' Collection Amount at such date is not more than
the lesser of (x) $10,000,000 or (y) an amount equal to 10% of the largest
Purchasers' Collection Amount outstanding at any time under this Agreement.
Such repurchase shall be without recourse, representation or warranty except as
to the absence of encumbrances created by the Purchasers. On or after such
repurchase, the Purchasers shall, at the Parent's expense and upon the Parent's
payment therefor, take all actions reasonably requested by the Parent to fully
effectuate such repurchase.
SECTION 2.14. Additional State Income Taxes. If any tax, fee
or similar charge measured by net income or profits is imposed on or with
respect to any payment for the account of any Purchaser provided for in this
Agreement by any State or political subdivision thereof (other than a
jurisdiction in which such Purchaser's principal executive office or Facility
Office is located), the Sellers shall cooperate with the Purchasers to mitigate
the effect of such tax, fee or similar charge. If the Purchaser determines
that, notwithstanding any such action, the result of any of the foregoing is to
increase the cost to such Purchaser of purchasing its Participating Interest or
to reduce the amount of any sum received or receivable by such Purchaser under
this Agreement, by an amount deemed by such Purchaser in good faith to be
material, then, upon 30 days written notice from the Agent (with the consent of
all the Purchasers) to the Parent, the Commitment shall terminate.
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<PAGE> 28
ARTICLE III
CONDITIONS TO PURCHASES
The obligation of each Purchaser to purchase an initial or
incremental Participating Interest on any Purchase Date is subject to the
satisfaction of such of the following conditions as shall not have been
expressly waived in writing by the Agent with the consent of the Majority
Purchasers:
SECTION 3.01. All Purchase Dates. In the case of each
Purchase Date:
(a) receipt by the Agent of a Notice of Sale as required by
Section 2.02;
(b) the fact that, immediately before and after giving effect
to the purchases and sales on such Purchase Date, no Termination Event and no
Potential Termination Event shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Sellers contained in Article IV of this Agreement shall be true and correct on
and as of such Purchase Date; and
(d) the fact that, immediately after giving effect to the
purchases and sales on such Purchase Date, the Unrecovered Purchase Price shall
not exceed the Utilization Limit.
Each Notice of Sale hereunder shall be deemed to be a representation and
warranty by the Sellers as of the related Purchase Date as to the facts
specified in clauses (b), (c) and (d) of this Section.
SECTION 3.02. First Purchase Date. In the case of the first
Purchase Date, receipt by the Agent of:
(a) for the account of each Purchaser, a duly executed
Assignment in the form of Exhibit A hereto dated on or before such Purchase
Date;
(b) an opinion of Wilson, Sonsini, Goodrich & Rosati, counsel
for the Sellers, substantially in the form of Exhibit C-1 hereto and covering
such additional matters relating to the transactions contemplated hereby as the
Majority Purchasers may reasonably request;
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<PAGE> 29
(c) an opinion of Davis Polk & Wardwell, special counsel for
the Agent, substantially in the form of Exhibit C-2 hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Majority Purchasers may reasonably request;
(d) a perfection certificate, substantially in the form of
Exhibit B, duly completed and having annexed thereto all schedules and exhibits
contemplated thereby, signed by the chief financial officer and the chief legal
officer of the Parent;
(e) the arrangement fee described in the fee letter with
J.P. Morgan Delaware dated the Effective Date;
(f) payment in full of all amounts payable under the 1991
Receivables Purchase Agreement;
(g) a Settlement Statement for the Accounting Period ended
not less than 12 Business Days prior to the initial Purchase Date; and
(h) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Sellers, the corporate authority for
and the validity of this Agreement and the Assignments, and any other matters
relevant hereto, all in form and substance satisfactory to the Agent.
The documents referred to in this Section shall be delivered to the Agent no
later than the first Purchase Date. The opinions and certificate referred to
in clauses (b), (c) and (d) above shall be dated the first Purchase Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Sellers represent and warrant that:
SECTION 4.01. Corporate Existence and Power. Each Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Each Seller is duly qualified as a
foreign corporation and is licensed and in good standing in each jurisdiction
where qualification or licensing is required by the nature of its business or
the character and location of its property, business or customers and in which
the failure
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<PAGE> 30
so to qualify or be licensed, as the case may be, in the aggregate,
could reasonably be expected to have a material adverse effect on the business,
financial position or results of operations of the Parent and its consolidated
Subsidiaries taken as a whole.
SECTION 4.02. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by each Seller of this
Agreement and the Assignments are within such Seller's corporate powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official
(except as contemplated by Section 4.04) and do not contravene in any material
respect any provision of applicable law or regulation, or contravene, or
constitute a default under, the certificate of incorporation or by-laws of such
Seller or of any judgment, injunction, order, decree, Debt agreement or
instrument or any other material agreement or instrument binding upon the
Parent or any of its Subsidiaries or result in the creation or imposition of
any lien, pledge, charge, security interest or encumbrance of any kind (except
the security interests created hereunder) on any asset of the Parent or any of
its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of each Seller enforceable in accordance with its
terms except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by equitable principles of
general applicability. Each Assignment, when executed and delivered in
accordance with this Agreement, will constitute a valid and effective
assignment of the Participating Interest identified therein.
SECTION 4.04. Perfection. On or prior to each Purchase Date,
all financing statements and other documents required to be recorded or filed
in order to perfect and protect the Participating Interests against all
creditors of and purchasers from each Seller will have been duly filed in each
filing office necessary for such purpose and all filing fees and taxes, if any,
payable in connection with such filings will have been paid in full.
SECTION 4.05. Accuracy of Information. All information
heretofore furnished by any Seller in writing to the Agent or any Purchaser for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by any
Seller in writing to the Agent or any Purchaser will be, true and accurate in
all material respects or based on reasonable estimates on the date as of which
such information is stated or certified.
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ARTICLE V
COVENANTS
The Sellers agree with the Agent and the Purchasers that,
unless compliance is expressly waived in accordance with Section 10.05 hereof:
SECTION 5.01. Maintenance of Records. (a) Subject to Section
9.04(a), the Sellers shall maintain all such Records as may be necessary or
advisable for the administration, servicing and collection of all Pool Accounts
(including, without limitation, duplicate records and/or system redundancy so
as to enable the reconstruction of essential records in the event of any
reasonably foreseeable casualty) .
(b) Subject to Section 9.04(a), the Sellers shall hold in
trust for the Purchasers all Records, and shall maintain and mark the
appropriate Records as necessary to indicate that the Purchasers have an
interest in the Pool Accounts.
SECTION 5.02. Protection of Participating Interests of
Purchasers. (a) The Sellers shall, from time to time, do and perform any and
all acts and execute any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing statements and
continuation statements for filing under the provisions of the Uniform
Commercial Code of any applicable jurisdiction and of any documents appropriate
for filing under the provisions of applicable law to perfect and protect the
Participating Interests in any jurisdiction in which the Uniform Commercial
Code is not in effect, the execution, amendment or supplementation of any
instrument of transfer, the giving of notice of the Participating Interests to
any Obligor and the making of notations in the Records) as may be necessary, or
as may be reasonably requested by the Agent, in order to effect the purposes of
this Agreement and the sale of Participating Interests hereunder and to protect
the Participating Interests against all Persons whomsoever; provided that
nothing in this Section 5.02(a) shall prohibit the granting of any Permitted
Subordinated Interest.
(b) No Seller shall change its name, identity or corporate
structure (within the meaning of section 9-402(7) of any applicable enactment
of the Uniform Commercial Code) unless the Parent shall have (i) given the
Agent at least 30 days' prior notice thereof and (ii) delivered an opinion of
counsel with respect thereto in accordance with Section 5.07.
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(c) No Seller shall relocate its chief executive office unless
the Parent shall have (i) given the Agent at least 30 days' prior notice
thereof and (ii) in the case of any relocation of such chief executive office
to a place outside of the State of California, delivered an opinion of counsel
with respect thereto in accordance with Section 5.07.
(d) Each Seller shall at all times maintain its chief
executive office within a jurisdiction in the United States (i) other than the
States of Florida, Maryland, Minnesota and Tennessee and (ii) in which article
9 of the Uniform Commercial Code (1972 or later revision) is in effect.
(e) To the fullest extent permitted by applicable law, the
Agent shall be permitted to sign and file financing and continuation statements
with respect to the Participating Interests and amendments thereto without any
Seller's execution thereof. The Agent will promptly send to the Parent copies
of any such documents so signed and filed; provided that no failure by the
Agent to send such copies to the Parent shall affect the validity or
effectiveness of any such document.
SECTION 5.03. Performance of Contracts. Each Seller shall at
all times observe and perform, or cause to be observed and performed, all
contractual undertakings and other legal obligations owed by it to each Obligor
that is the related Obligor on a Pool Account (except for such immaterial
failures to perform that could not, in the aggregate, reasonably be expected to
affect, and do not affect, the obligations of such Obligor), and, subject to
Section 5.06, shall do nothing to impair the rights of the Purchasers in and to
the Pool Accounts; provided that nothing in this Section 5.03 shall prohibit
the granting of any Permitted Subordinated Interest.
SECTION 5.04. Furnishing of Account Information; Inspection of
Records. (a) Each Seller shall maintain for each Determination Date a list of
Accounts of such Seller which are not included in the calculation of the Net
Eligible Account Balance by virtue of the fact that they are not Eligible
Accounts (such accounts for any Determination Date, the "Ineligible Accounts").
On each Settlement Date, each Seller, or the Collection Agent on behalf of each
Seller, shall prepare and make available a list identifying the Obligor and
Unpaid Balance for each Pool Account as of the last day of the Accounting
Period then most recently ended, a calculation of the Net Reinvestment Gain or
Net Reinvestment Loss then payable, and an estimate of the Unpaid Balances of
License Accounts and Service Accounts, and shall furnish to the Agent and each
Purchaser a summary
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statement of such information in form acceptable to the
Purchasers and, within three Business Days after any request therefor, a copy
of the listing of Pool Accounts, and the related Obligors and Unpaid Balances.
(b) Each Seller shall furnish to the Agent and each Purchaser,
within five Business Days after the Termination Date and on each Settlement
Date thereafter and within eight Business Days after written request therefor
by the Agent at the request of either Purchaser (based upon a good faith
concern for protection of such Purchaser's interests hereunder), a written
report, signed by the chief financial officer or a treasurer or assistant
treasurer of such Seller, containing, with respect to each Participating
Interest (itemized for each Obligor), (x) a list of all Pool Accounts, together
with, for each Pool Account, the Unpaid Balance thereof and all Collections,
charge-offs, write-offs, discounts or other adjustments with respect thereto
since the date of the last such report delivered to such Purchaser pursuant to
this clause (b), an aging of all Pool Accounts and such other information as
the Agent or any Purchaser may reasonably request, all as of the last day of
the Accounting Period then most recently ended (or, if after a written request,
as of the third Business Day after the date of such request); and (y) an
analysis and explanation of significant variances, if any, between actual
Collections by each Seller of Pool Accounts during the Accounting Period then
most recently ended and historical collections experience of such Seller.
(c) The Collection Agent is, and shall at all times remain,
capable of determining on each Determination Date the Participation Percentage
for such Determination Date. To mitigate the administrative cost to the
Collection Agent of performing its duties under this Agreement, the parties
acknowledge that the Collection Agent need not determine the Participation
Percentage for any Determination Date, provided that (x) at the opening of
business on (i) each Purchase Date, (ii) the Termination Date (and each
Business Day thereafter) and (iii) any Business Day on which the Unrecovered
Purchase Price shall exceed the Utilization Limit (using, in determining such
Participation Percentage, the Net Eligible Account Balance as of the close of
business of the immediately preceding Determination Date), (y) on each
Settlement Date, as of the last day of the Accounting Period then most recently
ended, and (z) on the eighth Business Day after a written request from the
Purchaser or the Agent, as of the opening of business of the Determination Date
occurring three Business Days after such request, the Collection Agent shall
determine the Participation Percentage for such day and promptly notify the
Parent, the Agent and each Purchaser thereof.
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(d) Each Seller shall furnish to the Agent and each Purchaser
from time to time such additional information with respect to the Pool Accounts
as the Agent or any Purchaser may reasonably request.
(e) Each Seller shall permit representatives of the Agent or
any Purchaser from time to time during its normal business hours and upon
reasonable notice to inspect, audit and make copies of any and all Records.
SECTION 5.05. Maintenance of Qualification and Credit
Policies. Each Seller shall maintain all of its rights, powers and privileges
material to its ability to conduct business in all jurisdictions in which any
Obligor on any Pool Account of such Seller is located, on which may be
conditioned the ability of the Seller to commence or maintain legal proceedings
against such an Obligor in the courts of such jurisdiction, except, in the case
of any jurisdiction in which Obligors of an immaterial amount of the Pool
Accounts are located that may be satisfied or obtained without significant
penalty at the time any such legal proceeding is sought to be commenced or
maintained. No Seller shall change in any material respect its credit
extension and administration policies and procedures from those heretofore
described to the Purchasers in any manner that could adversely affect the
rights of the Purchasers hereunder. No Seller shall change its current
practices with respect to the recognition of estimated or actual loss on Pool
Accounts in any manner which would materially affect the incidence of Defaulted
Accounts.
SECTION 5.06. Modification of Accounts. No Seller shall
modify the terms of any Pool Account without the prior written consent of the
Majority Purchasers; provided that, while acting as Collection Agent, the
Parent may modify the terms of any Pool Account in accordance with Sections
9.01, 9.02 and 9.03.
SECTION 5.07. Supplemental Opinions of Counsel. Not more than
six months nor less than 15 days prior to each date on which any Seller
proposes to take any action contemplated by Section 5.02(b) or (c), the Parent
shall, to the extent required by such Sections, at its cost and expense, cause
to be delivered to the Purchasers an opinion of counsel (which may be an
opinion of in-house counsel), satisfactory to the Agent, to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect the Participating Interests, for a period, specified in such opinion,
against all creditors of and purchasers from any Seller have been filed in each
filing office necessary for such purpose and
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that all filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
SECTION 5.08. Maintenance of Ownership. Except as a result of
any transaction consummated in accordance with the proviso of Section 5.14, the
Parent shall at all times retain direct or indirect ownership, free and clear
of any Title Defect, of all outstanding shares of capital stock (except
directors' qualifying shares) of each other Seller.
SECTION 5.09. No Disposition. No Seller shall sell, assign or
otherwise dispose of, or create or suffer to exist any Title Defect (other than
the Participating Interests and any Permitted Subordinated Interest) with
respect to, its interest in any Pool Account and the proceeds thereof.
SECTION 5.10. File Search Reports. Not later than 60 days
after Effective Date, the Parent shall furnish to the Agent file search reports
from the Uniform Commercial Code filing officer in each of the relevant
jurisdictions confirming the filing of the financing statements required in
connection with this Agreement.
SECTION 5.11. Financial Information. The Parent will deliver
to each of the Purchasers:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Parent, a consolidated balance sheet of the
Parent and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, stockholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner acceptable to
the Securities and Exchange Commission by Ernst & Young or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Parent, the unaudited consolidated balance sheet of the Parent and its
Consolidated Subsidiaries as of the end of such quarter, and consolidated
unaudited statements of income and cash flow of the Parent and its Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in comparative form the
figures for the corresponding portion in the immediately preceding fiscal year,
in the case of such statements of income and cash flow, and figures for the
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preceding fiscal year in the case of such balance sheet, all certified (subject
to normal year-end adjustments) as to fairness of presentation, generally
accepted accounting principles and consistency by a Responsible Financial
Officer of the Parent;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of a
Responsible Financial Officer of the Parent (i) stating whether any Termination
Event or Potential Termination Event existed on the date of such financial
statements and, if any Termination Event or Potential Termination Event then
exists, stating the nature thereof and the action which the Parent is taking or
proposes to take with respect thereto and (ii) setting forth in reasonable
detail the calculations required to establish whether the Parent was in
compliance with the requirements of Section 5.13 on the date of such financial
statements;
(d) within five days after any Responsible Officer or
Responsible Financial Officer obtains knowledge of any Termination Event or
Potential Termination Event, if such Termination Event or Potential Termination
Event is then continuing, a certificate of a Responsible Financial Officer of
the Parent setting forth the details thereof and the action which the Parent is
taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of
the Parent generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly after the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) (other than the exhibits thereto unless requested by
any Purchaser) which the Parent shall have then filed with the Securities and
Exchange Commission;
(g) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the
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PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution of more than
$500,000 to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond
or other security, a certificate of the chief financial officer or the chief
accounting officer of the Parent setting forth details as to such occurrence
and action, if any, which the Parent or applicable member of the ERISA Group is
required or proposes to take; and
(h) from time to time such additional information regarding
the consolidated financial position or business of the Parent and its
Subsidiaries as the Agent, at the request of any Purchaser, may reasonably
request.
SECTION 5.12. Conduct of Business and Maintenance of
Existence. The Parent shall not make, nor permit any Subsidiary to make, any
material change in the nature of its business as carried on at the date hereof;
provided, however, that the Parent and its Subsidiaries may enter into
businesses which are appropriate extensions of or are reasonably related or
incidental to the current businesses of the Parent and its Subsidiaries. The
Parent shall at all times preserve and keep in full force and effect its
corporate existence, and rights and franchises material to its business, and
those of each Seller, except as otherwise specifically permitted by Sections
5.08 and 5.14, and will qualify, and cause each of its Subsidiaries to qualify,
to do business in any jurisdiction where the failure to do so would have a
material adverse effect on the business, condition (financial or other),
assets, properties, operations or prospects of the Parent or the Parent and its
Subsidiaries taken as a whole.
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SECTION 5.13. Minimum Tangible Net Worth. Consolidated
Tangible Net Worth will at no time be less than $1,000,000,000.
SECTION 5.14. Consolidations, Mergers and Sales of Assets.
Neither the Parent nor any other Seller will (i) consolidate or merge with or
into any other Person or (ii) sell, lease or otherwise transfer, directly or
indirectly (in a single transaction or series of transactions), all or
substantially all of its assets to any other Person, provided that (i) any
Seller (other than the Parent) may merge or consolidate with, or transfer all
or substantially all of its assets to, any other Subsidiary of the Parent and
any Seller may merge into, or transfer all or substantially all of its assets
to, the Parent, (ii) the Parent may merge or consolidate with any other
corporation provided that either (1) the Parent shall be the continuing or
surviving corporation, or (2) the successor corporation shall be a solvent
corporation organized under the laws of any State of the United States of
America with a financial condition at least equal to that of the Parent at the
time of such merger or consolidation, and such corporation shall expressly
assume in writing all of the obligations of the Parent under this Agreement,
including all covenants herein contained, and such successor shall be
substituted for the Parent with the same effect as if it had been named herein
as a party hereto, and (iii) a Seller may merge into or consolidate with a
corporation in connection with such corporation becoming a Subsidiary of the
Parent or being combined with any existing Subsidiary of the Parent; provided
further that in the case of any of (i), (ii) and (iii), (x) measures
satisfactory to the Agent have been implemented so as to assure that the
Accounts and the collections thereon will not be commingled with any other
accounts receivable and the collections thereon, (y) immediately after and
giving effect to such transaction, no Termination Event or Potential
Termination Event shall have occurred and be continuing, and (z) such
transaction shall not result in a material adverse change in the nature or
credit quality of the Pool Accounts, as reasonably determined by the Agent.
SECTION 5.15. Use of Proceeds. The proceeds of the purchases
of Participating Interests and the reinvestment of the Collections thereof will
be used by the Sellers for general corporate purposes. None of such proceeds
will be used in violation of any applicable law or regulation.
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ARTICLE VI
TERMINATION OF COMMITMENT
SECTION 6.01. Termination Events. If any of the following
events (herein called "Termination Events") shall have occurred and be
continuing:
(a) the Sellers shall fail (i) on any Settlement Date, to make
any payment reflected in the related Settlement Statement as being payable on
such Settlement Date or (ii) to make any other payment hereunder within five
days of the due date thereof;
(b) any Seller shall fail to observe or perform any covenant
contained in Section 5.06, 5.09 or 5.14, or the Parent shall fail to observe or
perform any covenant contained in Section 5.08 or 5.13 inclusive;
(c) any Seller shall default in the performance of any
agreement or undertaking hereunder (other than those covered by clause (a) or
(b) above) and such default shall continue for 30 days after written notice
thereof has been given to the Parent by the Agent at the request of any
Purchaser;
(d) any representation, warranty, certification or statement
made by any Seller in this Agreement or in any certificate or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Parent or any Subsidiary shall fail to make any
payment of principal or interest in respect of any Material Debt when due or
within any applicable grace period;
(f) an Event of Default under Section 6.01(a), (f), (g) or (h)
or with respect to Section 5.01(a), (b), (c), (h) or (i) or 5.02(h) of the
Credit Agreement (or in each case any successor provision thereto) shall have
occurred and be continuing; or any event or condition shall occur which results
in the acceleration of the maturity of any Material Debt or any event or
condition shall occur and be continuing which enables (with the giving of
notice of acceleration, if required) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(g) the Loss Ratio as determined at any date shall
exceed 4%;
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(h) the Participation Percentage as determined on any date
shall exceed 100% (determined for purposes of this Section 6.01(h) without
regard to the proviso to Section 2.03);
(i) the Parent or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(j) an involuntary case or other proceeding shall be
commenced against the Parent or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of 60 days; or an order for relief shall be entered against the Parent
or any Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(k) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any member
of the ERISA Group, any plan administrator or any combination of the foregoing;
or the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4210( c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or more
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members of the ERISA Group to incur a current payment obligation in excess of
$10,000,000;
(l) a judgment or order for the payment of money in excess
of $10,000,000 shall be rendered against the Parent or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period of 30
days; or
(m) (i) any corporation or Person, or a group of related
corporations or Persons, shall acquire (a) beneficial ownership in excess of
50% of the outstanding common stock of the Parent or (b) all or substantially
all of the assets of the Parent, or (ii) a majority of the Board of Directors
of the Parent is, at any time, composed of persons other than (a) persons who
were members of such Board on the date of this Agreement, (b) successors to
such persons elected or nominated in the ordinary course of business, and (c)
any person who has served as a member of such Board for at least the prior 12
months;
then, and in any such event,
(x) if such event is a Termination Event specified in clause
(i) or (j) above with respect to any Seller, automatically the Commitment shall
terminate, without any notice to any Seller or any other action by the Agent or
any Purchaser, and
(y) if such an event is any other Termination Event, the Agent
shall, if so instructed by the Majority Purchasers, by notice to the Parent
declare the Commitment terminated in which event the Commitment shall thereupon
terminate.
SECTION 6.02. Notice to Parent. The Agent shall give notice
to the Parent under Section 6.01(c) promptly upon being requested to do so by
any Purchaser and shall thereupon notify all Purchasers thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Purchaser
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with all such powers as are reasonably
incidental thereto.
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SECTION 7.02. Agent and Affiliates. J.P. Morgan Delaware
shall have the same rights and powers under this Agreement as any other
Purchaser and may exercise or refrain from exercising the same as though it
were not the Agent, and J.P. Morgan Delaware and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Parent or any Subsidiary or Affiliate of the Parent as if it were not the
Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Termination Event, except as expressly provided in Article
VI. Any action taken by the Agent with the consent or at the request of the
Majority Purchasers shall be binding upon all Purchasers.
SECTION 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for a Seller), independent
public accountants and other experts selected by it and shall not be liable to
the Purchasers for any action taken or omitted to be taken by it in good faith
in accordance with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable to any
Purchaser for any action taken or not taken by it in connection herewith (i)
with the consent or at the request of the Majority Purchasers or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any
purchase hereunder; (ii) the performance or observance of any of the covenants
or agreements of any Seller; (iii) the satisfaction of any condition specified
in Article III, except receipt of items required to be delivered to the Agent;
or (iv) the validity, effectiveness or genuineness of this Agreement, the
Assignments, the Pool Accounts and related Contracts or any other instrument or
writing furnished in connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, telecopy,
electronic facsimile transmission or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
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SECTION 7.06. Indemnification. Each Purchaser shall, ratably
in accordance with its Commitment Percentage, indemnify the Agent (to the
extent not reimbursed by the Sellers) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the Agent's gross negligence or willful misconduct)
that the Agent may suffer or incur in connection with this Agreement or any
action taken or omitted by the Agent hereunder.
SECTION 7.07. Credit Decision. Each Purchaser acknowledges
that it has, independently and without reliance upon the Agent or any other
Purchaser, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Purchaser also acknowledges that it will, independently and
without reliance upon the Agent or any other Purchaser, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking any action under this
Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Purchasers and the Parent. Upon
any such resignation, the Parent shall have the right, with the consent of the
Majority Purchasers (which consent shall not be unreasonably withheld), to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Parent and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $100,000,000. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fees. The Parent shall pay to the Agent
for its own account arrangement and administrative fees as previously agreed
between them.
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ARTICLE VIII
SELLERS' INDEMNITIES
SECTION 8.01. Breach of Warranty or Agreement. The Sellers
agree to indemnify the Agent, the Collection Agent (if other than the Parent)
and each Purchaser (an "Indemnitee"), and to hold each Indemnitee harmless
against, any loss, cost, expense, damage or liability arising out of or
resulting from the inaccuracy when made of any representation or warranty made
by any Seller in this Agreement or in writing pursuant hereto (including,
without limitation, any information set forth in any document delivered by any
Seller pursuant hereto), from the failure by any Seller to observe or perform
any agreement or undertaking made by it in this Agreement or pursuant hereto;
provided that no Indemnitee shall have the right to be indemnified hereunder
for its own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Sellers shall indemnify
and hold each Indemnitee harmless against (i) all costs, expenses and
liabilities arising out of or resulting from any Pool Account or related
Contract not complying with applicable law, including, without limitation, all
laws, rules, regulations and orders of any governmental or judicial authority
relating to truth in lending, billing practices, fair credit reporting, equal
credit opportunity, debt collection practices and consumer debtor protection,
(ii) all costs, expenses, losses, claims and liabilities arising out of or
resulting from any action of the Parent in its capacity as Collection Agent in
violation of applicable law or otherwise in contravention of the legal rights
of any Obligor, (iii) all losses attributable to any inaccuracy in a Net
Eligible Account Balance at any time determined hereunder, whether or not such
inaccuracy would constitute a breach of the warranties set forth in Section
4.05 or was otherwise within the ability of any Seller to prevent, (iv) all
losses (including losses by reason of an Obligor's failure to pay) attributable
to any failure or alleged failure to vest and maintain vested in the Purchasers
a perfected undivided percentage ownership interest (to the extent of their
respective Commitment Percentages) in each and every right, title and interest
included or purported to be included in the Pool Participation, free of any
Title Defect (other than any Permitted Subordinated Interest) asserted by any
Person claiming by, through or under any Seller or any Affiliate of any Seller
(including without limitation any such consequence of the commencement of
bankruptcy, insolvency or similar proceedings with respect to any Seller or any
Affiliate of any Seller), (v) all costs, expenses, losses, claims and
liabilities arising out of or resulting from the manufacture, sale, use or
ownership of goods or receipt of services which at any time are or
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shall have
been the subject of any Pool Account or related Contract and (vi) any
obligation or liability of any Seller or any Affiliate of any Seller to any
Obligor which any court of competent jurisdiction may determine has been
assumed by any Indemnitee. The representations, warranties and indemnities of
the Sellers hereunder shall be continuing and shall inure to the benefit of all
Indemnitees without regard to any investigation by or knowledge on the part of
any Indemnitee.
SECTION 8.02. Tax Indemnification. The Sellers agree to pay,
and to indemnify, defend and hold harmless each Indemnitee from and against,
any taxes which may at any time be asserted in respect of this transaction or
the subject matter hereof (including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes,
but not including any taxes imposed upon such Indemnitee with respect to its
net income or profits arising out of the transactions contemplated hereby),
whether arising by reason of the acts to be performed by the Sellers hereunder
or imposed against a Seller, an Affiliate of any Seller, an Indemnitee, the
property involved or otherwise.
SECTION 8.03. Increased Cost and Reduced Return. (a) If
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Purchaser (or its Facility Office) with any request or directive of
general applicability (whether or not having the force of law) of any such
authority, central bank or comparable agency (a "Regulatory Change"):
(i) shall subject any Purchaser (or its Facility Office) to
any tax, duty or other charge with respect to its Participating Interest or its
obligations hereunder (other than any franchise tax or any tax imposed on the
overall net income of such Purchaser or its Facility Office), or shall change
the basis of taxation of payments to any Purchaser (or its Facility Office) of
any amounts payable under this Agreement (other than any change in any
franchise tax or any tax imposed on the overall net income of such Purchaser or
its Facility Office); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit, insurance assessment or similar requirement (including,
without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding any such
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requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended by,
any Purchaser (or its Facility Office) or shall impose on any Purchaser (or its
Facility Office) or on the London interbank market any other condition
affecting its Participating Interest or its obligations hereunder;
and the result of any of the foregoing is to increase the cost to such
Purchaser (or its Facility Office) of purchasing or holding its Participating
Interest, or to reduce the amount of any sum received or receivable by such
Purchaser (or its Facility Office) under this Agreement, by an amount deemed by
such Purchaser in good faith to be material, then, within 15 days after demand
by such Purchaser upon the Parent (with a copy to the Agent), the Sellers shall
pay to such Purchaser such additional amount or amounts as will compensate such
Purchaser for such increased cost or reduction.
(b) If after the date hereof, any Purchaser shall have
determined that the adoption of any applicable law, rule or regulation of
general applicability regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Purchaser (or its Facility Office)
with any request or directive of general applicability regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Purchaser's capital as a consequence of its obligations
hereunder to a level below that which such Purchaser could have achieved
hereunder but for such adoption, change or compliance (taking into
consideration such Purchaser's policies with respect to capital adequacy) by an
amount deemed in good faith by such Purchaser to be material, then from time to
time, within 15 days after demand by such Purchaser upon the Parent (with a
copy to the Agent), the Sellers shall pay to such Purchaser such additional
amount or amounts as will compensate such Purchaser for such reduction.
(c) Each Purchaser will promptly notify the Parent and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Purchaser to compensation pursuant to this Section.
Notwithstanding the foregoing subsections (a) and (b) of this Section, the
Parent shall only be obligated to compensate any Purchaser for any amount
arising or accruing during (x) any time or period commencing not more than six
months prior to the date on which such Purchaser notifies
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the Agent and the Parent that it proposes to demand such compensation
and identifies to the Agent and the Parent the statute, regulation or other
basis upon which the claimed compensation is or will be based and (y) any time
or period during which, because of the retroactive application of such statute,
regulation or other basis, such Purchaser did not know that such amount would
arise or accrue.
SECTION 8.04. Notice to Parent. Each Purchaser will promptly
notify the Parent and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Purchaser to
compensation pursuant to this Article and will designate a different Facility
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the good faith judgment of such Purchaser,
be otherwise disadvantageous to such Purchaser. Any claim for compensation
under this Article VIII shall be accompanied by a certificate prepared in good
faith by the relevant Purchaser and signed by a responsible officer setting
forth in reasonable detail its calculation of the additional amount or amounts
to be paid to it hereunder. Such certificate shall be conclusive in the
absence of manifest error. In determining such amount, such Purchaser may use
any reasonable averaging and attribution methods.
SECTION 8.05. Expenses Included. Indemnification under this
Article shall include, without limitation, reasonable counsel fees and expenses
and other out-of-pocket expenses, including expenses of investigation, to the
extent incurred in connection with the matter or transaction giving rise to a
claim for indemnification hereunder.
ARTICLE IX
ADMINISTRATION, SERVICING AND
COLLECTION OF POOL ACCOUNTS
SECTION 9.01. Appointment of Collection Agent. The
administration, servicing and collection of the Pool Accounts shall be the
responsibility of the Person from time to time appointed as Collection Agent
pursuant to this Section. Until such time, if any, following (i) the
occurrence of a Termination Event or (ii) the occurrence and continuance of a
Potential Termination Event for 5 Business Days after written notice thereof
has been given to the Parent by the Agent at the request of any Purchaser, as
the Agent acting upon the instructions of the Majority Purchasers shall notify
the Parent of the appointment of a substitute Collection Agent, the Parent is
hereby appointed as, and hereby agrees to perform the duties and obligations
of, the Collection Agent in accordance with this Agreement.
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With the consent of the Majority Purchasers, the Agent may at any time and
from time to time following (i) the occurrence of a Termination Event or (ii)
the occurrence and continuance of a Potential Termination Event for 5 Business
Days after written notice thereof has been given to the Parent by the Agent at
the request of any Purchaser, appoint a substitute Collection Agent (which may
be, but need not be, the Agent or a Purchaser or an Affiliate of any of the
foregoing) to perform such administrative, servicing and collection functions.
The Sellers and each Purchaser, to the extent of their respective interests (if
any) in the Pool Accounts, hereby authorize the Collection Agent to exercise as
their agent the rights and powers conferred upon the Collection Agent in this
Agreement.
SECTION 9.02. Collection of Pool Accounts. The Collection
Agent shall endeavor, in accordance with all applicable laws and regulations
and with reasonable care and diligence (and so long as the Collection Agent is
the Parent, each Seller shall (with respect to Pool Accounts of such Seller)
cause the Collection Agent to endeavor), to collect or cause to be collected
from the Obligor under each Pool Account, as and when due, all amounts payable
thereunder; and the Collection Agent may take or permit to be taken such action
with respect thereto as it may deem advisable, including resale of any
repossessed, returned or rejected goods and rescheduling through extension or
otherwise of payments due under any Pool Account if reasonable business
judgment indicates such rescheduling would enhance collection results. The
Collection Agent shall comply (and so long as the Collection Agent is the
Parent, each Seller shall cause the Collection Agent to comply) with all
applicable legal requirements in the performance of its administrative,
servicing and collection functions hereunder. In the event of a default under
any Pool Account, the Collection Agent shall be entitled to sue thereon in the
name of the related Seller; provided that the Collection Agent shall be
entitled to sue thereon as agent of the Purchasers if and only if the Agent,
acting upon the instructions of the Majority Purchasers, consents thereto in
writing. Payments from Obligors shall be applied to Pool Accounts or portions
thereof as specified by the related Obligor or, in the absence of such
specification, first to the Pool Accounts of such Obligor in the chronological
order in which the Pool Accounts of such Obligor arose and second to any other
Accounts of such Obligor.
SECTION 9.03. Rebates, Refunds, Credits and Other Adjustments.
(a) The Sellers may grant, or permit to be granted to the Obligor under any
Pool Account, any rebate, refund, credit or other adjustment which such Seller
in good faith believes is justified. In the event any rebate, refund, credit
or other adjustment is granted to the Obligor
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under any Pool Account, the
Sellers shall pay to the Collection Agent, on the date on which such adjustment
is granted, an amount equal to the amount of such adjustment. For the purposes
of this Section, "adjustment" shall not include (i) charge-offs or write-offs
of Pool Accounts for uncollectibility or (ii) any discount or other adjustment
reflected in the Unpaid Balance of a Pool Account utilized in the calculation
of each Net Eligible Account Balance in which such Pool Account is included as
an Eligible Account.
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under any Pool Account, the Sellers shall pay to the Collection Agent,on the
date on which such adjustment is granted, an amount equal to the amount
of such adjustment. For the purposes of this Section, "adjustment" shall not
include (i) charge-offs or write-offs of Pool Accounts for uncollectibility or
(ii) any discount or other adjustment reflected in the Unpaid Balance of a Pool
Account utilized in the calculation of each Net Eligible Account Balance in
which such Pool Account is included as an Eligible Account.
(b) The Parent shall pay to the Collection Agent (and each
Seller shall cause the Parent to make such payment) an amount equal to the
Unpaid Balance of any Pool Account included in the calculation of the Net
Eligible Account Balance on any Determination Date if such Pool Account was not
an Eligible Account on such Determination Date. Each such payment shall be
made within three Business Days of the date on which the state of facts giving
rise to the payment obligation under the preceding sentence becomes known to
the Parent.
SECTION 9.04. Change of Collection Agent. If at any time a
substitute Collection Agent for the Parent shall be appointed pursuant to
Section 9.01:
(a) The Sellers shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Sellers and the Purchasers, all
such Records as the Collection Agent or the Agent may reasonably request to
enforce the rights or protect the interests of the Purchasers hereunder or in
the Pool Participation.
(b) The Sellers shall, as promptly as practicable thereafter,
cause to be transmitted and delivered directly to the Collection Agent,
forthwith upon receipt and in the exact form received, cash, checks, drafts
and other instruments for the payment of money (properly endorsed, where
required, for collection) which may be received by it as payment on account or
otherwise in respect of any Pool Account. Each Seller hereby grants the
Collection Agent an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of such Seller all
steps necessary or advisable to endorse, negotiate or otherwise realize on any
instrument or other writing in connection with any Pool Account.
(c) The Agent shall be entitled to notify any or all of the
Obligors to make payment directly to the Collection Agent of amounts payable in
respect of any Pool Account. Upon request of the Agent, each related Seller
shall so notify such Obligors. Without limiting the generality of the
foregoing, the Agent shall, if so
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instructed by the Majority Purchasers,
deliver to the Obligor under any Qualifying Government Contract, the related
notice of assignment furnished by the related Seller directing that all
payments under such Qualifying Government Contract be made to the Collection
Agent.
SECTION 9.05. Remittance of Collections; Reinvestment. (a)
On each Business Day during the Reinvestment Period, the Collection Agent shall
(i) subject to subsection (c) below, reinvest, until the next succeeding
Settlement Date, the Participation Percentage of Collections received since the
next preceding Determination Date, for the account of the Purchasers, in
accordance with the Participation Percentage determined pursuant to Section
2.03 as of the opening of business of the next succeeding Determination Date by
paying the Participation Percentage of Collections to the Parent for the
account of the Sellers and (ii) pay the remainder of Collections to the Parent
for the account of the Sellers; provided that, the amount referred to in clause
(i) above shall be set aside and held in trust for the Purchasers to the extent
that the Unrecovered Purchase Price minus any amounts so held in trust at such
date exceeds the Utilization Limit at such date, and shall be so held in trust
for the Purchasers until the earlier of (A) the next succeeding Determination
Date (if any) when such monies may be reinvested as set forth above without
causing the Unrecovered Purchase Price minus any amounts so held in trust
(after giving effect to such reinvestment) to exceed the Utilization Limit, on
which date such monies shall be so reinvested or (B) the next succeeding
Settlement Date falling at least three Business Days after such date, on which
date such monies shall be remitted to the Agent for application in accordance
with subsection (c) or (d) below.
(b) On each Business Day on or after the Termination Date
(unless such day is a Settlement Date), the Collection Agent shall set aside
and hold in trust from Collections received since the preceding Business Day:
(i) for the Collection Agent any accrued and unpaid servicing
fee payable by the Parent; and
(ii) for the Purchasers the Participation Percentage of such
Collections.
(c) on each Settlement Date prior to the Termination Date, the
Collection Agent shall remit or cause to be remitted to:
(i) the Collection Agent the servicing fee then payable by the
Purchasers under Section 9.07 or 9.08; and
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(ii) the Agent (and so long as the Collection Agent is the Parent,
each Seller shall cause to be remitted to the Agent) the lesser of (x) the
Purchasers' Collection Amount and (y) the Participation Percentage of
Collections received on or after the next preceding Settlement Date; provided
that the portion thereof in excess of Discount (and only such amount) shall
continue to be reinvested in accordance with subsection (a) above; provided,
further, that the amount remitted pursuant to this clause (ii) shall be reduced
by the portion of the servicing fee then payable by the Purchasers and remitted
to the Collection Agent pursuant to the preceding clause (i); provided,
further, any such amount so remitted to the Collection Agent shall be treated
as a remittance to the Agent to be applied in reduction of the Purchasers'
Collection Amount.
On each Settlement Date on or after the Termination Date, the Collection Agent
shall remit or cause to be remitted from the amounts set aside and held in
trust pursuant to subsection (b) above to
(1) the Collection Agent the servicing fee then payable under
Section 9.07 or 9.08; and
(2) the Agent (and so long as the Collection Agent is the Parent, each
Seller shall cause to be remitted to the Agent) the amount set aside and held
in trust for the Purchasers in accordance with subsection (b) above, and the
Agent shall apply the same to the Purchasers' Collection Amount, and when the
Purchasers' Collection Amount has been reduced to zero, to any other amounts
payable hereunder to the Agent and the Purchasers, with any remainder being
returned to the Parent for the several accounts of the Sellers; provided that
the amounts remitted the Agent pursuant to this clause (2) shall be reduced by
the portion of the servicing fee then payable by the Purchasers and remitted to
the Collection Agent pursuant to the preceding clause (1); provided, further,
that any such amount so remitted to the Collection Agent shall be treated as a
remittance to the Agent to be applied to the Purchasers' Collection Amount.
(d) The Collection Agent shall promptly remit to the Parent
for the respective accounts of the Sellers all Collections not required to be
set aside and held in trust for the Collection Agent or the Purchasers in
accordance with subsections (a) or (b) above and all other collections on
Accounts which do not constitute Collections.
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(e) The Purchasers and the Sellers agree that any
reinvestment for the Purchasers' account shall be made at discount rates,
priced on a basis comparable to that of the Applicable Discount Rate, that
prevail at the time of reinvestment, and in amounts proportionate to the rate
at which Collections are actually so reinvested. The parties accordingly agree
that, on each Settlement Date, the Parent shall pay to the Purchasers, ratably,
any Net Reinvestment Gain, and the Purchasers, ratably, shall pay to the Parent
any Net Reinvestment Loss.
As used in this Section:
"Actual Reinvestment Proceeds" means for any Weekly Period the
product of:
(i) the aggregate amount of Deemed Collections during
such period multiplied by a fraction, determined at the close of business on
the last Business Day of the preceding Weekly Period, equal to (x) the
Purchasers' Collection Amount at such time divided by (y) the Net Eligible
Account Balance at such time;
multiplied by
(ii) the Reinvestment Discount Rate for such Weekly Period
multiplied by seven and divided by 360.
"Average Collection Period" for an Accounting Period is equal
to the Average Net Eligible Account Balance for the Accounting Period divided
by aggregate Collections for the Accounting Period times 30.
"Deemed Collections" means, for any Weekly Period, (i) if
Seller can calculate the amount of actual Collections for such Weekly Period,
such amount, or (ii) otherwise, the amount of actual collections on all
Accounts of such Seller, multiplied by (x) the aggregate Unpaid Balances of
Pool Accounts of such Seller as of the close of business on the last Business
Day of the preceding Weekly Period divided by (y) the aggregate Unpaid Balances
of all Accounts of such Seller as of the close of business on the last Business
Day of the preceding Weekly Period.
"Expected Collections" means for any Weekly Period an amount
equal to (i) the Net Eligible Account Balance on the last Business Day of the
preceding Weekly Period divided by the Average Collection Period indicated on
the most recent Settlement Statement multiplied by (ii) seven.
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"Expected Reinvestment Proceeds" means for any Weekly Period
the product of:
(i) the aggregate amount of Expected Collections
during such period multiplied by a fraction, determined at the close of
business on the last Business Day of the preceding Weekly Period, equal to (x)
the Purchasers' Collection Amount time divided by (y) the Net Eligible Account
Balance at such time;
multiplied by
(ii) the weighted average Applicable Discount Rate during
such Weekly Period (expressed as a rate per annum) multiplied by seven and
divided by 360.
"Net Reinvestment Gain" means the amount (if any) by which the
aggregate Actual Reinvestment Proceeds for all Weekly Periods ended during the
related Accounting Period exceeds the aggregate Expected Reinvestment Proceeds
for such period.
"Net Reinvestment Loss" means the amount (if any) by which the
aggregate Expected Reinvestment Proceeds for all Weekly Periods ended during
the related Accounting Period exceeds the aggregate Actual Reinvestment
Proceeds for such period.
"Reinvestment Discount Rate" means for any Weekly Period the
average daily Applicable Discount Rate, estimated by the Agent and expressed as
a rate per annum, for each day during such Weekly Period, determined on a basis
comparable to that on which such Applicable Discount Rate was initially
determined but as though such Applicable Discount Rate were established on such
day.
"Weekly Period" means each period of seven days beginning on a
Monday.
(f) If and for so long as any of Participation Percentage
of Collections are not reinvested pursuant to subsection (a) above and this
Agreement has not terminated pursuant to Section 10.01, the Collection Agent
shall set aside and hold in trust for the Purchasers such Collections and shall
remit to the Agent for distribution to the Purchasers any such amounts not
reinvested on the next Settlement Date and shall, until such date, invest such
amounts in Temporary Cash Investments as directed by the Agent for the account
of the Purchasers.
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SECTION 9.06. Holding of Proceeds Pending Settlements. If at
any time the Agent, acting pursuant to the instructions of Majority Purchasers,
shall so require by notice to the Collection Agent, then the Participation
Percentage of Collections shall be deposited into and collected in the Special
Account as promptly as is practicable and in any event within 10 days of
initial receipt by the Collection Agent. The Agent alone (to the exclusion of
the Collection Agent and the Sellers but subject to instructions from the
Majority Purchasers) shall have exclusive power to authorize debits to the
Special Account. The Agent shall invest amounts held from time to time in the
Special Account in the Temporary Cash Investments designated by the Parent, and
any investment income shall be treated as additional Collections. The Agent
shall cause all amounts deposited into and collected in the Special Account to
be applied in accordance with Section 9.05 (as if the Agent were the Collection
Agent).
SECTION 9.07. Servicing Fee. The Collection Agent's
compensation for performing its responsibility as the Collection Agent
hereunder shall be equal for each day to the quotient of (A) the product of (1)
1%, expressed as a decimal, and (2) the Unpaid Balances of all Pool Accounts on
such day, divided by (B) 360. The Collection Agent's compensation shall be
payable on each Settlement Date for the most recently ended Accounting Period
to the Collection Agent by the Parent and by the Purchasers, ratably based on
the average Unrecovered Purchase Price, in the case of the Purchasers for such
Accounting Period, with the balance paid by the Sellers.
SECTION 9.08. Compensation of Successor Collection Agent. In
the event a substitute Collection Agent is appointed in accordance with Section
9.01, the servicing fee provided for in Section 9.07 shall be payable to such
substitute Collection Agent rather than the Parent, the Sellers shall be
obligated to pay all reasonable expenses incurred in effecting the transfer of
such functions to such substitute Collection Agent, and any accrued and unpaid
servicing fee payable by the Parent may be withheld by the Collection Agent
from any amount otherwise payable for the account of the Sellers pursuant to
Section 9.05.
SECTION 9.09. Termination of Collection Agency. The rights
and powers granted to the Collection Agent appointed from time to time under
this Agreement shall be irrevocable by the Sellers and the Purchasers (subject
to Section 9.01) during the term of this Agreement. Upon termination of this
Agreement in accordance with Section 10.01, such appointment shall terminate
without further action by any party to this Agreement. Upon such
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termination, the Collection Agent if other than the Parent shall return
to the Sellers all Records held by it, and such Collection Agent, the Agent and
each Purchaser shall do such further acts and things, and execute such further
documents and instruments, at the request and expense of the Sellers, as may be
reasonably required to evidence such termination.
SECTION 9.10. Responsibilities of Agent and Purchasers. For so long
as the Parent is acting as the Collection Agent, neither the Agent nor any
Purchaser shall have any obligation to the Sellers to take any action or
commence any proceeding to realize upon any Pool Account or to enforce any of
its rights or remedies with respect thereto. Thereafter, the Purchasers,
severally in proportion to their Commitment Percentages, shall to the extent
required by law be responsible to the Sellers for the performance of such
functions in a commercially reasonable manner, and shall furnish or cause to be
furnished to the Sellers such information as the Parent may reasonably request,
including such information as the Sellers need to perform their duties
hereunder.
SECTION 9.11. Lockboxes. Each Seller hereby agrees (i) to
instruct all Obligors to cause all Collections to be mailed directly to a
Lockbox; (ii) to use its best efforts to ensure that no funds other than
collections on Accounts are mailed to Lockboxes or deposited into related
Lockbox Accounts; (iii) to make or cause the Collection Agent to make the
necessary bookkeeping entries to reflect Collections on the Records; (iv) to
apply or cause the Collection Agent to apply all such Collections as provided
in this Agreement; and (v) not to rescind, or amend or modify in any material
respect, any term of any Lockbox without the prior written consent of the Agent
to such amendment or modification. Each Seller hereby irrevocably authorizes
the Agent, during the continuance of any Potential Termination Event or
Termination Event, to date and deliver a Lockbox Transfer Letter to each
Lockbox Bank and that the Seller shall cooperate fully with the Agent in
effecting any such transfer of control. The Sellers agree to deliver to the
Agent executed and countersigned Lockbox Letters within 45 days of the first
Purchase Date. The Collection Agent shall apply all Collections and all other
collections on Accounts deposited into Lockbox Accounts as provided in Section
9.05 and on and after delivery of a Lockbox Transfer Letter the Agent shall
apply all such Collections and all other collections on Accounts deposited into
Lockbox Accounts as provided in Section 9.05 (as if the Agent were the
Collection Agent).
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Term of Agreement. This Agreement shall
terminate at the earliest time when both (i) the Termination Date shall have
occurred and (ii) the Purchasers' Collection Amount shall have been reduced to
zero and all other amounts payable hereunder by the Sellers have been paid in
full; provided that the provisions of Article VIII and this Article X shall
survive termination of this Agreement. Any Collections received after such
termination and other collections received on Accounts on or prior to or after
such termination and not required to be applied to reduce the Purchasers'
Collection Amount to zero shall, upon such termination, be remitted to the
Parent for the account of the Sellers.
SECTION 10.02. No Waivers. No failure or delay on the part of
the Agent or any Purchaser in exercising any power, right or remedy under this
Agreement or any Assignment shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any
other or further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.03. Notices. All communications and notices
pursuant hereto to any party shall be in writing (including bank wire, telex,
telecopy, electronic facsimile transmission or similar writing) and shall be
given to any party at its address or telex number set forth on the signature
pages hereof or at such other address or telex number as such party may
hereafter specify for the purpose of notice to the Parent and the Agent. Each
such notice or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section
and the appropriate answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, (iii) if given by telecopy or electronic facsimile transmission, when
such notice is transmitted to the number specified in this Section and the
sender confirms by telephone at the appropriate number the receipt of such
notice or (iv) if given by any other means, when received at the address
specified in this Section.
SECTION 10.04. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when the
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Agent shall have received counterparts hereof signed by all of the parties
hereto.
SECTION 10.05. Amendments. Any provision of this Agreement
may be amended or waived if, but only if, such amendment is in writing and is
signed by the Sellers and the Majority Purchasers (and, if the rights or duties
of the Agent are affected thereby, by the Agent); provided that no such
amendment or waiver shall, unless signed by all the Purchasers, (i) increase or
decrease the Commitment Percentage of any Purchaser or subject any Purchaser to
any additional obligation, (ii) reduce (directly or indirectly) or change the
calculation of the Participation Percentage, the Discount Rate, the Unrecovered
Purchase Price or the accrued Discount or any other amount payable to the
Purchasers hereunder, (iii) postpone the date fixed for any payment of any
amount due to the Purchasers hereunder or the Termination Date, or (iv) change
the percentage of the Commitment Percentages or the number of Purchasers
required for the Purchasers or any of them to take any action under this
Section or any other provision of this Agreement.
SECTION 10.06. Expenses; Documentary Taxes; Litigation
Indemnity. (a) The Sellers shall pay (i) all reasonable out-of-pocket
expenses of the Agent, including reasonable fees and disbursements of Davis
Polk & Wardwell, in connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any default or alleged
default hereunder or in connection with the perfection against all third
parties of the Participating Interests and (ii) all reasonable out-of-pocket
expenses incurred by the Agent or any Purchaser, including fees and
disbursements of counsel, in connection with the enforcement of this Agreement.
The Sellers shall indemnify the Agent and each Purchaser against any transfer
taxes, documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement or the
Assignments.
(b) The Sellers agree to indemnify each Purchaser and hold
each Purchaser harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including, without limitation, the
reasonable fees and disbursements of counsel for any Purchaser (including
reasonable allocated costs of in-house counsel) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Purchaser shall be designated a party thereto) which (i) may be incurred by
such Purchaser (or by the Agent in connection with its actions as Agent
hereunder), relating to or arising out of this Agreement and (ii) would not
have been imposed on, incurred by or asserted against the Purchasers (or Agent)
but for its having entered into this Agreement; provided
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that no Purchaser shall have the right to be indemnified hereunder for its
own gross negligence or willful misconduct.
SECTION 10.07. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial. This Agreement and each Assignment shall be governed by
and construed in accordance with the laws of the State of New York (without
regard to any choice of law provisions thereof). Each Seller hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each Seller
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum. Each of the Sellers, the
Agent and the Purchasers hereby irrevocably waives any and all right to trial
by jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
SECTION 10.08. Successors and Assigns; Participations;
Novation. (a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
no Seller may assign or transfer any of its rights or obligations under this
Agreement without the consent of all Purchasers.
(b) Any Purchaser may at any time sell to one or more Persons
(each a "Participant") participating interests in its Participating Interest,
its Commitment Percentage of the Commitment hereunder or any other interest of
such Purchaser hereunder. In the event of any such sale by a Purchaser of a
participating interest to a Participant, such Purchaser's obligations under
this Agreement shall remain unchanged, such Purchaser shall remain solely
responsible for the performance thereof, such Purchaser shall remain the holder
of its Participating Interest for all purposes under this Agreement, and the
Sellers and the Agent shall continue to deal solely and directly with such
Purchaser in connection with such Purchaser's rights and obligations under this
Agreement. Any agreement pursuant to which any Purchaser may grant such a
participating interest shall provide that such Purchaser shall retain the sole
right and responsibility to enforce the obligations of the Sellers hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such
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participation agreement may provide that such Purchaser will not agree to any
modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 10.05 without the consent of the Participant.
Subject to the provisions of subsection (f) of this Section, each Purchaser
shall be entitled to obtain (on behalf of the Participants) the benefits of
Article VIII with respect to all participations in the Participating Interest
of such Purchaser.
(c) Any Purchaser may at any time sell to one or more Persons
(each a "New Purchaser") all, or a proportionate part of all, of its rights and
obligations under this Agreement, and such New Purchaser shall assume all such
rights and obligations, pursuant to an instrument executed by such New
Purchaser and such transferor Purchaser. Upon (i) such execution of such an
instrument, (ii) delivery by the transferor Purchaser of an executed copy
thereof, together with notice that the payment referred to in clause (iii)
shall have been made, to the Parent, the Agent and each Purchaser and (iii)
payment by such New Purchaser to such transferor of an amount equal to the
purchase price agreed between such transferor Purchaser and such New Purchaser,
such New Purchaser shall for all purposes be a Purchaser party to this
Agreement and shall have all the rights and obligations of a Purchaser under
this Agreement to the same extent as if it were an original party hereto with a
Committed Amount as set forth in such instrument of assumption, and the
transferor Purchaser shall surrender such rights and be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any Seller, any Purchaser or the Agent shall be required. Upon the
consummation of any transfer to a New Purchaser pursuant to this paragraph (c),
the transferor Purchaser, the Agent and the Sellers shall make appropriate
arrangements so that, if required, a new Assignment is issued to such New
Purchaser.
(d) The Sellers authorize each Purchaser to disclose to any
Participant or New Purchaser (each a "Transferee") and any prospective
Transferee any and all information in such Purchaser's possession concerning
the Sellers or the Pool Accounts which has been delivered to such Purchaser by
them pursuant to this Agreement or which has been delivered to such Purchaser
by them in connection with such Purchaser's credit evaluation prior to entering
into this Agreement.
(e) If pursuant to paragraph (c) of this Section any interest
in this Agreement or the Participating Interests is transferred to any New
Purchaser which is organized under the laws of any jurisdiction other than the
United States of America or any State thereof, the
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transferor Purchaser shall cause such New Purchaser, concurrently with
the effectiveness of such transfer, (i) to represent to the transferor
Purchaser (for the benefit of the transferor Purchaser, the Agent and the
Sellers) that under applicable law and treaties no taxes will be required to be
withheld by the Agent, the Sellers or the transferor Purchaser with respect to
any payments to be made to such New Purchaser in respect of the Pool Accounts
and (ii) to furnish to the transferor Purchaser, the Agent and the Sellers such
forms and/or statements in accordance with applicable laws and regulations as
may be necessary to verify such exemption from United States federal
withholding tax under United States laws and regulations as in effect on the
date of such transfer.
(f) No Transferee (including for this purpose a different
Facility Office of a Purchaser) shall be entitled to receive any greater
payment under Article VIII than the transferor Purchaser would have been
entitled to receive with respect to the rights assigned, unless such assignment
is made by reason of the provisions of Section 8.04 requiring such Purchaser to
designate a different Facility Office under certain circumstances or at a time
when the circumstances giving rise to such greater payment did not exist.
SECTION 10.09. Confidentiality. Each Purchaser and the Agent
represent that they will maintain the confidentiality of, and will not use for
any purpose other than for exercising, protecting and enforcing their
respective rights and interests under this Agreement and the Assignments and in
respect of the Participating Interests, any written or oral information,
provided under this Agreement by or on behalf of the Sellers that has been
identified by its source as confidential (hereinafter collectively called
"Confidential Information"), subject to the Agent's and each Purchaser's (i)
obligation to disclose any such Confidential Information pursuant to a request
or order under applicable laws and regulations or pursuant to a subpoena or
other legal process, (ii) right to disclose any such Confidential Information
to its bank examiners, affiliates, auditors, counsel and other professional
advisors and to other Purchasers, (iii) right to disclose any relevant such
Confidential Information in connection with any litigation or dispute involving
the Purchasers and any Seller or any of their Subsidiaries and Affiliates, or
any Obligor with respect to any Pool Account and (iv) right to provide such
information to Participants or New Purchasers and prospective Participants and
New Purchasers if (x) such Person agrees in writing to maintain the
confidentiality of such information on terms substantially similar to those of
this Section 10.09 as if it were a "Purchaser" party hereto and (ii) the Parent
receives copies
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of such written agreement prior to the release of such information.
Notwithstanding the foregoing, any such information supplied to a Purchaser or
a Participant under this Agreement shall cease to be Confidential Information
if it is or becomes known to such Purchaser or Participant by other than
unauthorized disclosure, or if it becomes a matter of public knowledge.
SECTION 10.10. Termination by Seller. Any Seller, other than
the Parent, may by notice to the Agent terminate this Agreement as to itself,
provided that such termination shall not be effective as to any Accounts of
such Seller then outstanding or thereafter arising unless and until measures
satisfactory to the Agent are implemented so as to assure that such Accounts
and the collections thereon will not be commingled with the Accounts of the
other Sellers and the collections thereon. At such time as the termination
becomes effective as aforesaid, the Accounts of such Seller will no longer be
purchased and sold pursuant hereto.
SECTION 10.11. Effect on 1991 Agreement. Upon the first
Purchase Date hereunder, the 1991 Agreement will be terminated and of no
further force and effect, except that expense and indemnity provisions
contained in Article VIII and Section 10.06 thereof, and in Article XI in
respect of such provisions, shall survive.
ARTICLE XI
GUARANTY
The obligations of the Sellers hereunder are joint and several.
In furtherance and not in limitation of the foregoing, the Parent hereby agrees
as follows:
SECTION 11.01. The Guaranty. The Parent hereby
unconditionally guarantees the full and punctual performance of all obligations
of each Subsidiary Seller and (if the Collection Agent is a Subsidiary of the
Parent) the Collection Agent under this Agreement. The Subsidiary Sellers and
the Collection Agent, so long as it is a Subsidiary of the Parent, are referred
to in this Article as the "Guaranteed Parties". Upon failure by any Guaranteed
Party to perform any such obligation (including the payment of all amounts),
the Parent shall forthwith on demand perform such obligation not so performed
(including by payment of any amount not so paid) at the place and in the manner
specified in this Agreement.
SECTION 11.02. Guaranty Unconditional. The obligations of the
Parent hereunder shall be unconditional
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and absolute and, without limiting the generality of the foregoing,
shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Guaranteed Party under this
Agreement, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of any Guaranteed Party under this
Agreement;
(iv) any change in the corporate existence, structure or ownership
of any Guaranteed Party, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Guaranteed Party or its assets or any
resulting release or discharge of any obligation of any Guaranteed Party
contained in this Agreement;
(v) the existence of any claim, set-off or other rights which
the Parent may have at any time against any Guaranteed Party, the Agent, any
Purchaser or any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
Guaranteed Party for any reason of this Agreement, or any provision of
applicable law or regulation purporting to prohibit the payment by any
Guaranteed Party of any amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by any
Guaranteed Party, the Agent, any Purchaser or any other Person or any other
circumstance whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Parent's obligations
hereunder.
SECTION 11.03. Discharge only upon Payment in Full;
Reinstatement in Certain Circumstances. The Parent's obligations hereunder
shall remain in full force and effect until the Commitment shall have
terminated and all obligations due and amounts payable by the Parent and each
Guaranteed Party under this Agreement shall have been paid in full. If at any
time any payment of any amount payable by any Guaranteed Party under this
Agreement is rescinded or
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must be otherwise restored or returned upon the insolvency, bankruptcy
or reorganization of any Guaranteed Party or otherwise, the Parent's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
SECTION 11.04. Waiver by the Parent. The Parent irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against any Guaranteed Party or any other Person.
SECTION 11.05. Subrogation. The Parent irrevocably waives any
and all rights to which it may be entitled, by operation of law or otherwise,
upon making any payment hereunder to be subrogated to the rights of the payee
against a Guaranteed Party with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by a Guaranteed Party in respect thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
SUN MICROSYSTEMS, INC.
By /s/ Michael E. Lehman
Title: Vice President,
Chief Financial Officer
910 San Antonio Road
Palo Alto, CA 94306
Telephone number:
Telex number:
SUBSIDIARY SELLERS:
SUNEXPRESS, INC.
By /s/ Michael E. Lehman
Title: Chief Financial Officer
2 Elizabeth Drive
Chelmsford, MA 01824
Telephone number:
Telex number:
SUN MICROSYSTEMS FEDERAL, INC.
By /s/ Michael E. Lehman
Title: Chief Financial Officer
2650 Park Tower Drive
Suite 500
Vienna, VA 22180
Telephone number:
Telex number:
<PAGE> 66
SUNSOFT, INC.
By /s/ Michael E. Lehman
Title: Chief Financial Officer
2550 Garcia Avenue
Mountain View, CA 94043
Telephone number:
Telex number:
PURCHASERS:
Committed
Amount
$87,500,000 J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
902 North Market Street
Wilmington, Delaware 19801
Telephone number:
Telex number:
$37,500,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ David T. Ellis
Title: Vice President
c/o MORGAN CHRISTIANA CORP.
Euro-Loan Servicing Unit
Wilmington, Delaware 19801
Telephone number:
Telex number:
____________
$125,000,000
AGENT:
J.P. MORGAN DELAWARE,
as Agent
By /s/ Philip S. Detjens
Title: Vice President
902 Market Street
Wilmington, Delaware 19801
Telephone number:
Telex No:
<PAGE> 67
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Receivables Purchase
Agreement dated as of August 5, 1994 (as the same may be amended from time to
time, the "Agreement") among the undersigned, the Purchasers named therein and
J.P. Morgan Delaware, as Agent, the undersigned do hereby sell, assign and
transfer unto [Name of Purchaser] an undivided percentage ownership interest,
to the extent of ______% , in and to the Pool Participation (as defined in the
Agreement).
This Assignment is made without recourse to the undersigned,
and upon the warranties and agreements on the part of the undersigned contained
in the Agreement. This Assignment is to be governed by and construed in
accordance with the Agreement and the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, through their duly
authorized officers, have caused this Assignment to be duly executed this __
day of August, 1994.
SUN MICROSYSTEMS, INC.
By ______________________
Title:
[CORPORATE SEAL]
Witness: _______________
<PAGE> 68
SUNEXPRESS, INC.
By ______________________
Title:
[CORPORATE SEAL]
Witness: _______________
SUN MICROSYSTEMS FEDERAL, INC.
By ______________________
Title:
[CORPORATE SEAL]
Witness: _______________
SUNSOFT, INC.
By ______________________
Title:
[CORPORATE SEAL]
Witness: _______________
2
<PAGE> 69
EXHIBIT B
PERFECTION CERTIFICATE
The undersigned, the chief executive officer and chief legal
officer of SUN MICROSYSTEMS, INC., a Delaware corporation (the "Parent"),
hereby certify with reference to the Receivables Purchase Agreement dated as of
August 5, 1994 among the Parent and the other Sellers listed therein, the
Purchasers listed therein and J.P. Morgan Delaware, as Agent (terms defined
therein being used herein as therein defined), to the Agent and each Purchaser
as follows:
1. Locations. (a) The chief executive offices of the Sellers
are located at the following respective addresses:
Mailing
Name Address County State
(b) The following are all the locations where any Seller
maintains any Records:
Mailing
Name Address County State
(c) The following are all the locations of inventory:
Mailing
Name Address County State
2. Other Names. The following is a list of all names
(including trade names or similar appellations) used by any
Seller or any of their respective divisions or other
business units:
Corporate Trade
Name Names
<PAGE> 70
3. File Search Reports. Attached hereto as Schedule 3(A) is a
true copy of a file search report from the Uniform Commercial Code
filing officer in each jurisdiction identified in paragraph 1 above
with respect to each related name set forth in paragraph 2 above.
Attached hereto as Schedule 3(B) is a true copy of each financing
statement or other filing identified in such file search reports.
4. UCC Filings Against Seller. A financing statement on Form
UCC-1 in substantially the form of Schedule 4(A) hereto duly signed
by each Seller has been duly filed in the Uniform Commercial Code
filing office in each jurisdiction identified with respect to such
Seller in paragraph 1 hereof.
5. Schedule of Filings. Attached hereto as Schedule 5 is a
schedule setting forth filing information with respect to
the filings described in paragraph 4 above.
6. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 4 above
have been paid.
IN WITNESS WHEREOF, we have hereunto set our hands this__ day
ofAugust, 1994.
___________________________
Title:
___________________________
Title:
2
<PAGE> 71
SCHEDULE 4(A)
Description of Collateral
Box:
Accounts, chattel paper, contract rights and general
intangibles, and related inventory, equipment and documents, now owned or
hereafter acquired. See Exhibit A.
Exhibit A:
The collateral subject to the security interest includes the
following (and an undivided interest in debtor's right, title and interest in
the following), whether now owned or hereafter at any time acquired or coming
into existence, wherever located:
1. Rights to payment for goods which have been or are to be
sold, leased or otherwise disposed of, or for services
rendered or to be rendered, including the licensing of
intellectual property rights.
2. All rights of ownership with respect thereto, including
without limitation any direct or indirect security therefor
or guaranty thereof, any repossessed, returned or rejected
goods relating thereto, any related insurance or letter of
credit and any other form of direct or indirect recourse in
respect thereof.
3. All contracts, agreements and invoices and other documents,
books, records and other information (including without
limitation computer programs, tapes, discs, punch cards,
data processing software and related property and rights)
relating to the foregoing.
4. All collections and other proceeds of any of the foregoing.
<PAGE> 72
SCHEDULE 5
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing
_____
*Indicate lapse date, if other than fifth anniversary.
<PAGE> 73
EXHIBIT C-1
OPINION OF
WILSON, SONSINI, GOODRICH & ROSATI,
COUNSEL FOR THE SELLERS
August __, 1994
To the Purchasers and the Agent
Referred to Below
c/o J.P. Morgan Delaware,
as Agent
902 Market Street
Wilmington, Delaware 19801
Dear Sirs:
We have acted as special counsel to Sun Microsystems, Inc., a
Delaware corporation, SunExpress, Inc., a California corporation, Sun
Microsystems Federal, Inc., a California corporation and SunSoft, Inc., a
California corporation, (each, a "Seller"; and together, the "Sellers", with
Sun Microsystems, Inc. sometimes hereinafter referred to as the "Parent") in
connection with the Receivables Purchase Agreement, dated as of August 5, 1994
(the "Agreement"), among the Sellers, the Purchasers listed on the signature
pages thereof (the "Purchasers") and J.P. Morgan Delaware, as Agent for the
Purchasers (the "Agent"). Capitalized terms used herein and defined in the
Agreement have the respective meanings given them in the Agreement, unless
otherwise defined herein. This opinion is delivered to you pursuant to Section
3.02(b) of the Agreement.
In connection with the opinions rendered herein, we have
reviewed the following documents:
(a) the Agreement;
(b) separate UCC-1 Financing Statements executed by each
Seller for filing with the Office of the Secretary of State of California (the
"California Financing Statements");
(c) separate Assignments, dated as of August __, 1994,
executed by each Seller;
(d) a perfection certificate, dated as of August __, 1994,
substantially in the form of Exhibit B to the Receivables Purchase Agreement
(the "Perfection Certificate"), executed by the chief financial officer and
chief legal officer of Sun;
<PAGE> 74
(e) [list good standing certificates, tax status
certificates and other similar documents, as well as telegram or telephonic
bringdowns, obtained in conjunction with the closing];
(f) the other documents delivered to you at the closing by the Sellers; and
(g) such other documents, instruments and agreements as we
have deemed advisable or necessary in connection with the opinion.
In addition, we have made such legal and factual examinations
and inquiries as we have deemed advisable or necessary for the purpose of
rendering this opinion. The documents listed as items (a) through (d) above
are referred to herein collectively as the "Transaction Documents."
With your permission and without verification by us, we have
assumed the following for the purpose of rendering the opinions set forth
herein:
A. All signatures on the Transaction Documents and the other
instruments we have received for review are genuine, all natural persons who
are signatories have the legal capacity to execute and deliver said documents,
all documents and instruments submitted to us as originals are authentic and
complete, all documents and instruments submitted as copies conform to the
original and are complete and accurate, none of the aforesaid documents has
been subsequently modified or terminated and one of the rights or obligations
under said documents have been waived or released.
B. Each Transaction Document has been duly authorized, executed and
delivered by each Purchaser and the Agent and each other document or instrument
submitted to us for review has been duly authorized, executed and delivered by
each party thereto. Each Transaction Document to which a Purchaser or the
Agent is a party is the legal, valid and binding obligation of such party,
enforceable as to each such party, in accordance with its terms. All
signatories to the Transaction Documents executing such documents on behalf of
the Purchasers and the Agent have been duly authorized and each of the
Purchasers and the Agent is duly organized and validly existing and has the
power and authority (corporate or otherwise) to execute, deliver and perform
such documents.
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C. Except to the extent expressly covered by our opinion set forth in
paragraph 2 below, the execution, delivery and performance of the Transaction
Documents or any other documents executed in connection with the Transaction
Documents does not violate any restriction, rule, regulation, law, statute,
contract or agreement binding upon the parties thereto.
D. With respect to our opinion set forth in Paragraph 6 below, the
description of the Pool Assets (other than "accounts" as such term is defined
in the California Uniform Commercial Code) contained in the California
Financing Statements is sufficient, as a factual matter, to enable a subsequent
purchaser of such property to identify such Pool Assets (or interests therein)
encumbered or deemed encumbered by the Transaction Documents.
E. The Perfection Certificate correctly indicates (i) the chief
executive office of each Seller and (ii) the location of all records that
relate to the Pool Assets. The Sellers have not at any time conducted business
under any other name, other than as set forth in the Perfection Certificate.
F. With respect to our opinion set forth in Paragraph 5 below, that
each Purchaser is a "bona fide purchaser" who purchases its undivided interest
in the Pool Assets for good value and without notice of an adverse claim.
G. All parties to the Purchase Agreement (other than the Sellers) have
filed all required franchise and income tax returns, if any, and paid all
required taxes, if any, under the California Revenue and Taxation Code.
H. With respect to matters of fact (as distinguished from matters of
law), we also have relied upon and assumed that the representations of the
Sellers and the other parties set forth in the Transaction Documents and any
other certificates, instruments or agreements executed in connection therewith
or delivered to us are true, correct, complete and not misleading.
As used in this opinion, the expression "to our knowledge,"
"known to us" or words to similar effect with
reference to matters of fact means that during the course of
our representation of the Sellers in connection with the
Transaction Documents no information has come to the attention
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<PAGE> 76
of the attorneys of our firm involved in this engagement which would
give them actual knowledge of the existence or absence of such facts; however,
except to the extent expressly set forth above, we have made no independent
investigation to determine the existence or absence of such facts, and any
limited inquiry undertaken by us during the preparation of this opinion should
not be regarded as such an investigation. No inference as to our knowledge of
the existence or absence of such facts should be drawn from the fact of our
representation of the Sellers. In rendering the opinion set forth in paragraph
3 below, we have not made any independent investigation of court records to
determine whether any actions have been filed.
Based on the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we advise you that
we are of the opinion that:
1. The Parent is a corporation duly incorporated and validly existing
as a corporation in good standing under the laws of the State of Delaware, and
has all corporate powers required to conduct its business as now conducted.
The Parent is duly qualified to do business as a foreign corporation and is in
good standing in each of the State of California and the Commonwealth of
Massachusetts. Each of the Subsidiary Sellers is a corporation duly
incorporated and validly existing as a corporation in good standing under the
laws of the State of California, and has all corporate powers required to
conduct its business as now conducted. Each of the Subsidiary Sellers is duly
qualified to do business as a foreign corporation and is in good standing in
the Commonwealth of Massachusetts.
2. The execution, delivery and performance by each Seller of the
Transaction Documents to which it is a party in accordance with their terms are
within each Seller's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of or filing
with, any United States federal, California or Delaware governmental body,
agency or official (except as contemplated by the Transaction Documents), and
do not contravene, or constitute a default under, the (i) charter or the
by-laws of any Seller, (ii) any Reviewed Agreement, (iii) to our knowledge, any
provision of applicable law, regulation, injunction, order or decree binding
upon the Sellers or (iv) as a result of any provision contained in the Reviewed
Agreements, result in the creation or imposition of any lien, pledge, charge,
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security interest or encumbrance on any asset of the Sellers.
3. To our knowledge, there is no action, suit or proceeding pending or
overtly threatened in writing against any Seller or before any court or
arbitrator or any governmental body, agency or official, except as disclosed in
the Parent's filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, which could reasonably be expected
to materially and adversely affect the ability of the Sellers to perform their
respective obligations under the Transaction Documents or which challenge the
validity or enforceability of any Transaction Document or seeks to prevent the
consummation of any of the transactions contemplated thereby.
4. The Agreement constitutes a valid and binding agreement of each
Seller.
5. The Agreement and the Assignments are sufficient to effect
valid transfers to the Purchasers of undivided interests to Sellers' right,
title and interest in and to the Pool Assets to the extent of their respective
Participating Interests, subject to the effect of (i) provisions of the
California Uniform Commercial Code, including Sections 9201 and 1201(37)
thereof, which provide that, subject to certain exceptions which we believe are
inapplicable to the transactions contemplated by the Transaction Documents, the
interest of a purchaser of "accounts" (as such term is defined in the
California Uniform Commercial Code) in such "accounts" is a security interest
subject to Division 9 of the California Uniform Commercial Code and (ii)
applicable laws (including, without limitation, the California Uniform
Commercial Code) under which the purported sale of undivided interests in all
or a portion of the Pool Assets may be recharacterized as loans made by the
Purchasers secured by a security interest in the Participating Interests to the
extent of the purported transfer, instead of a valid transfer of Seller's
right, title and interest in the Participating Interests.
6. Each California Financing Statement is in adequate and legally
sufficient form to perfect a security interest (to the extent the Agreement and
Assignments are construed as creating such a security interest in favor of the
Agent for the benefit of the Purchasers) in favor of the Agent for the benefit
of the Purchasers in the right, title and interest of each Seller in the Pool
Participation to the extent the assets included in
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<PAGE> 78
Pool Participation and the Pool Assets are described in such financing
statement, and the Pool Assets are located in the State of California and such
assets are of a type for which perfection under Division 9 of the California
Uniform Commercial Code may occur by the filing of a UCC-1 financing statement
with the Secretary of State of the State of California. In this regard, we
advise you that, with certain exceptions (none of which we believe are relevant
to the Participation Percentage or the assets of the type likely to be included
in the Pool Assets), the only office for the filing of UCC-1 financing
statements in the State of California is the Office of the Secretary of State,
except that a fixture filing with the County Recorder of each county in the
State of California in which any collateral that is a fixture is located also
must be made in order to perfect a security interest in collateral consisting
of fixtures (as such term is defined in the California Uniform Commercial
Code). We also call your attention to the necessity of filing continuation
statements and modification statements from time to time (for which we assume
no responsibility) in order to preserve the perfection of the security
interest, and the requirement or advisability of a supplemental filing in order
to perfect and maintain the priority of a security interest in certain after
acquired collateral, or to correct any filing which has become seriously
misleading, and upon the happening of certain other events (including, without
limitation, additional advances not pursuant to a commitment, a change in the
secured party's or the debtor's name, identity or corporate structure, a change
in their respective places of business, or a transfer of the secured party's
interest).
Notwithstanding any other provision hereof, the opinions
hereinabove expressed are subject to the following exceptions, qualifications,
limitations and assumptions:
We are admitted to practice law in the State of California and express
no opinion as to any matter relating to laws of any jurisdiction other than the
laws of the State of California, the General Corporation Law of the State of
Delaware and the federal laws of the United States as such are in effect on the
date hereof. The Agreement and Assignments provide that they are to be
governed by and construed in accordance with the laws of the State of New York.
We understand that you are relying on the advice of your special counsel,
Davis, Polk & Wardwell, with respect to all matters
6
<PAGE> 79
of New York law, and we have made no independent examination of the
laws of such jurisdiction. Our opinions set forth in paragraphs 4, 5 and 6 are
given as if the Agreement and the Assignments and the transactions contemplated
thereby are governed by and construed in accordance with the internal
substantive laws of the State of California. Our opinions as to the General
Corporation Law of the State of Delaware are based solely on our review of the
official statutes of the State of Delaware. In addition, we express no opinion
as to whether a California court would uphold the selection of the laws of the
State of New York to govern the provisions of the Agreement and the
Assignments.
We express no opinion with respect to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors or secured parties.
We express no opinion with respect to the application of the general
principles of equity (regardless of whether such remedy is considered
in a proceeding in equity or at law), including, but not limited to,
(i) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy, and (ii) concepts of materiality,
reasonableness, good faith and fair dealing. We express no opinion
with respect to the enforceability of the second or fourth sentence of
Section 10.07 of the Agreement.
We express no opinion with respect to the effect of laws and
judicial decisions (i) which exonerate a surety, if the creditor materially
alters the original obligation of the principal without the consent of the
surety, if the lender exercises remedies for default that impair the
subrogation rights of the surety against the principal, or otherwise takes
action which materially prejudices the surety, without obtaining consent of the
surety, (ii) relating to waivers or subordination by a surety of its
subrogation rights against the principal, its contribution rights, or other
common law and statutory protections of a surety, (iii) which limit the
liability of the surety to be no greater than the liability of the principal,
(iv) which exonerate a surety if a guaranty is not given for fair consideration
or reasonably equivalent value, (v) which permit a trustee in bankruptcy to
avoid payments made by a principal to a credit or holding insider guarantees of
the principal's obligations and (vi) which estop a creditor from enforcing the
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<PAGE> 80
obligations of a surety if the creditor fails to perfect or protect its rights
in collateral.
Except as set forth in Paragraphs 5 and 6 above, we express no
opinion as to (i) the effect of the purported transfer under the Transaction
Documents to the Purchasers of the Pool Participation, (ii) any security
interest in the Pool Participation or any Pool Assets (or the perfection or
ability to realize thereon), or (iii) as to any action by or in respect of or
filing with any governmental body, agency or official required to perfect such
purported transfer or to create, perfect or realize upon any security interest
in the Pool Participation or Pool Assets.
With respect to our opinions set forth in Paragraphs 5 and 6 above, we
express no opinion as to the effect of the rights of related Obligors, if any,
against any Seller, relating to the transactions pursuant to which the Pool
Assets have arisen or otherwise, on the rights of the Purchasers and the Agent
in the Pool Assets assigned pursuant to the Transaction Documents or the
protection afforded the Agent and Purchasers by the filing of the California
Financing Statements.
We express no opinion as to the effect, if any, of the usury laws of
any jurisdiction other than the laws of the State of California. With respect
to the application of the usury laws of the State of California, we have
assumed (without any independent verification by us) that the Agent and each of
the Purchasers is a member of an "exempted class of persons" as such term is
used in Section 1 of Article XV of the California Constitution.
We express no opinion as to the applicability to, or effect upon, the
obligations of Sellers under any of the Transaction Documents or the
assignments of interests in Pool Assets, of Section 544, 547 or 548 of the
United States Bankruptcy Code, California Civil Code Sections 3439 et seq. or
any other federal or state law relating to fraudulent transfers, conveyances
and obligations, and preferences or of provisions of the law of the state of
organization of any of the Seller's restricting dividends, loans or other
distributions by a corporation to or for the benefit of its stockholders.
We express no opinion with respect to the effect of California Civil
Code Section 1717 and other applicable statutes and judicial decisions
8
<PAGE> 81
which provide, among other things, that attorneys' fees must be
reasonable and may be granted only to a prevailing party and that a contractual
provision for attorneys' fees is deemed to extend to both parties
(notwithstanding that such provision by its express terms benefits only one
party).
We express no opinion with respect to the effect of California Civil
Code Section 1698 and similar statutes and federal laws and judicial decisions
(i) providing that oral modifications to a contract or waivers of contractual
provisions may be enforceable, if the modification was performed,
notwithstanding any express provision in the agreement that the agreement may
only be modified or an obligation thereunder waived in writing, or (ii)
creating an implied agreement from trade practices or course of conduct.
We express no opinion as to the effect of statutory and judicial
decisions which limit enforcement of an exculpatory or indemnity provision, or
realization upon any security provided therefor, (including, without
limitation, limitations on the enforcement of provisions which encompass
indemnification or exculpation with respect to (a) the negligence or willful
misconduct of the party seeking relief or of persons for whom said party is
legally responsible, (b) violations of law, or (c) matters found to be contrary
to statute or public policy). We express no opinion as to the effect of
judicial decisions and statutory law restricting enforcement of certain
covenants, acceleration of the repayment date of indebtedness and the
availability of specific performance or any other remedy of a lender, if the
violation of a covenant is not material, if the value of the collateral is not
impaired, if the debtor's ability to repay is not impaired, if enforcement of
the covenant or acceleration of the debtor's obligations would be unreasonable,
if the action is not undertaken in good faith under the then existing
circumstances or is otherwise contrary to applicable laws or judicial
precedent, or if a loan document purports to give a lender the right to make a
conclusive determination in its sole discretion.
We express no opinion with respect to the effect of judicial decisions
and statutes which may render unenforceable contractual provisions (i) waiving
broadly or vaguely stated rights, statutory protections, unknown future rights,
rights of redemption, trial by jury or other common law
9
<PAGE> 82
protections of a borrower, (ii) providing that rights or remedies are
not exclusive, but that every right or remedy is cumulative and may be
exercised in addition to or with any other right or remedy, (iii) providing
that the election of a particular remedy does not preclude recourse to another
remedy or (iv) providing that a lender may exercise its remedies without notice
to the borrower or a surety.
We express no opinion as to the effect of laws and judicial decisions
impliedly incorporating the covenant of good faith and fair dealing into loan
documents and other contracts and limiting the lender's right to take action,
unless it is shown that such action is reasonably necessary for the protection
of the lender or the collateral.
We express no opinion with respect to the effect of California Civil
Code Section 1670.5 and comparable laws and judicial decisions concerning the
enforceability of contractual provisions which are unconscionable at the time
the contract was made.
We express no opinion with respect to the effect of judicial decisions
and statutes limiting the enforceability of provisions requiring payment of
additional consideration or a higher rate of interest upon late payment,
particularly in cases where the additional amount bears no reasonable relation
to the damage suffered by the lender or is otherwise held to be a penalty (see
e.g., Lazzarechi Inv. Co. v. San Francisco Federal Savings and Loan Assoc. 22
Cal. 3d 303 (1971) and Hellbaum v. Lytton Savings & Loan Association 274 Cal.
App. 2nd 456 (1969)).
We express no opinion with respect to the effect of (i) the compliance
or non-compliance of a Purchaser or the Agent with any federal, state or other
law applicable to it, or (ii) the legal or regulatory status or the nature of
the business of any Purchaser.
We express no opinion with respect to the effect of the
unenforceability of any Transaction Document under the laws of any
jurisdiction, other than the State of California.
We express no opinion with respect to the state of the Sellers' rights
in or title to any item included in the Pool Assets.
10
<PAGE> 83
We express no opinion with respect to the effect of California Uniform
Commercial Code provisions relating to changes in a borrower's or lender's
name, identity, corporate structure, or location or to financing statements
that become seriously misleading.
We express no opinion with respect to any matter or Pool Assets
governed by, any compliance or non-compliance with, or any other application
of, that body of federal law administered by the Patent and Trademark Office or
the Copyright Office of the United States, and the rules and regulations
relating thereto, or any other law or judicial decisions relating to patents,
copyrights, trademarks, applications of the same, or any other intellectual
property right.
We express no opinion with respect to the state of the Sellers' rights
in or title to any Pool Assets, the priority of any security interest in any
Pool Assets over any other interest therein, or the ability of any Purchaser to
realize upon any particular Pool Assets in which any other person (other than
the Sellers) has an interest.
We express no opinion with respect to the enforceability of any
provision of the Transaction Documents which purports to impose on the
Purchasers or the Agent a standard for care of the Pool Assets and other
property in its possession not consistent with California law, which may impose
a duty of reasonable commercial care.
We express no opinion with respect to any matter concerning perfection
or continuation of a security interest in, or the ability of the Purchasers or
the Agent to realize upon, any (i) Pool Assets located, or deemed located, in
any jurisdiction other than the State of California and (ii) Pool Assets moved
(or deemed moved) outside of the State of California at any time.
We express no opinion with respect to any matter concerning perfection
or continuation of a security interest in, or the ability of the Purchasers or
the Agent to realize upon, any pool Assets (or the interest of any party with
respect thereto) (i) governed by laws other than solely those of the State of
California, (ii) described in or subject to the provisions of California
Uniform Commercial Code Section 9104 or 9302, (iii) which are consigned goods
or in the possession of the
11
<PAGE> 84
issuer of a negotiable document therefor as
contemplated by California Uniform Commercial Code Section 9304, (iv) which are
instruments within the meaning of the California Uniform Commercial Code
Section 9304, (v) consisting of cash, cash equivalents, deposit and deposit
accounts, insurance policies, indemnity agreements, chattel paper or documents
(as such term is defined in the California Uniform Commercial Code), (vi) which
are accounts due from or claims against the United States, or any state or
other governmental authority, (vii) which are certificated or uncertificated
securities, subject to Division 8 of the California Uniform Commercial Code or
other property in which a perfected security interest may be created only by
possession, (viii) which are proceeds of any other Pool Assets, including,
without limitation, insurance proceeds, (ix) which are subject to a statute,
regulation or treaty which provides for a state, national or international
registration or evidenced by a state, national or international certificate or
a document of title or similar instrument, or (x) which are repossessed,
returned or rejected goods relating to Pool Accounts or a guaranty of a Pool
Account.
We call to your attention that the security interest of the Agent for
the benefit of the Purchasers consisting of proceeds is limited to the extent
set forth in Section 9306 of the California Uniform Commercial Code.
We advise you that the Agent's and Purchasers' rights in the Pool
Assets are subject to California Uniform Commercial Code Sections 9501 et seq.
Our opinion in paragraph 2 above that the execution, delivery
and performance by each Seller of the Transaction Documents to which it is a
party do not contravene, or constitute a default under, any applicable law,
regulation, judgment, injunction, order or decree is intended to express our
opinion that the execution, delivery and performance by each such Seller of the
Transaction Documents to which it is a party are neither prohibited by, nor
subject such Seller to a fine, penalty or similar sanction that would be
materially adverse to the Parent and its subsidiaries, taken as a whole, under,
any law or regulation of the State of California, federal law or the Delaware
General Corporation Law or, to our knowledge, any judgment, injunction, order
or decree of any California or federal governmental entity, body or court, in
each case, that a lawyer in the State of California exercising customary
professional diligence
12
<PAGE> 85
would reasonably recognize to be directly applicable to
the transactions contemplated by the Transaction Documents.
Our opinion set forth in paragraph 1 above as to due
incorporation, valid existence and good standing is based solely on the
certificates referenced in Paragraph (e) above (copies of which have been
furnished to you), and, to the extent available, telephonic or telegram
confirmations of the matters set forth therein.
This opinion is rendered based on the facts and circumstances,
together with applicable law, existing on the date of this opinion, and
express no opinion as to the effect on the Transaction Documents and the
rights of the Purchasers under any statute, rule, regulation or other law
enacted, of any court decision rendered, or of the conduct of any person,
which occurs after the date of this opinion. Moreover, we assume no
obligation to advise you or any other person of any change, whether factual or
legal, or whether or not material, that may hereafter arise or be brought to
our attention after the date hereof.
This opinion is intended solely for your benefit in connection
with the transactions contemplated by the Transaction Documents. This opinion
may not be relied upon by you for any other purpose or relied upon or furnished
to any other person without our prior written consent.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
13
<PAGE> 86
EXHIBIT A
REVIEWED AGREEMENTS*
1. Credit Agreement dated June 1, 1994, between Sun Microsystems, Inc.,
Bank of America National Trust and Savings Association, ABN Amro Bank N.V. San
Francisco International Branch, The First National Bank of Boston, Barclays
Bank PLC, Morgan Guaranty Trust Company of New York, The Fuji Bank, Limited,
San Francisco Agency, the Bank of California, N.A., The Sakura Bank, Limited,
San Francisco Agency, Banque Nationale de Paris, Bayerische Vereinsbank AG, Los
Angeles Agency, The Industrial Bank of Japan, Limited, San Francisco Agency,
Swiss Bank Corporation, and Citicorp USA, Inc. as agent for the banks, as
amended by First Amendment to Credit Agreement, dated as of July __, 1994.
2. Bill of Sale and Agreement, dated February 27, 1982, by VLSI Systems,
Inc., a California corporation, and Andreas Bechtolsheim, and Sun
Workstation, Inc., a California corporation, and the related Assumption
Agreement, dated February 27, 1982, by Sun Workstation, Inc., a
California corporation.
3. License Agreement, dated July 26, 1983, by and between The Regents of
the University of California and Sun Microsystems, Inc., a California
corporation.
4. American Telephone & Telegraph (AT&T) Agreements:
A. Software Agreement dated April 24, 1986 between the Company and
AT&T Information Systems Inc.
B. Sublicensing Agreement dated August 7, 1986 between the Company
and AT&T Information Systems Inc.
C. Substitution Agreement dated March 2, 1987 between the Company
and AT&T Information Systems Inc.
5. Building Loan Agreement, dated May 11, 1989, between Sun Microsystems
Properties, Inc. and the Toyo Trust and Banking Company, Limited, New York
Branch and the following related documents of even date therewith: Promissory
Note; First Deed of Trust, Assignment of Leases, Rents and Other Income and
Security Agreement; Guaranty of Payment; Guaranty of Completion (Sun
Microsystems, Inc.); Shortfall Agreement and Indemnity.
6. Common Shares Rights Agreement, dated May 15, 1989, between the Company
and The First National Bank of Boston, as Rights Agent, as amended by First
Amended and
<PAGE> 87
Restated Common Shares Rights Agreement, dated December 14, 1989,
between the Company and Rights Agent, as amended by Amendment, dated October
28, 1992 to the First Amended and Restated Common Shares Rights Agreement
between the Company and Rights Agent and as amended by Second Amendment, dated
December 14, 1992, to the First Amended and Restated Shares Rights Agreement
between the Company and Rights Agent.
7. Note and Warrant Purchase Agreements:
A. Note and Warrant Purchase Agreements, dated September 26, 1989,
among the Company and certain purchasers listed on the Purchaser Schedule
attached thereto ("Purchasers") providing for the issuance by the Company of
$126,000,000 principal amount of 10.55% Senior Notes due September 26, 1996, as
amended by Form or Letter dated June 25, 1991 between the Company and
Purchasers regarding the Note and Warrant Purchase Agreements, and as further
amended by Amendments, dated May 26, 1993, to the Note and Warrant Purchase
Agreements between the Company and purchasers identified therein.
B. Note and Warrant Purchase Agreements, dated December 15, 1989,
among the Company and certain purchasers listed on the Purchaser Schedule
attached thereto ("Purchasers") providing for the issuance by the Company of
$41,000,000 principal amount of 10.55% Senior Notes due September 26, 1996, as
amended by Form of Letter dated June 25, 1991 between the Company and
Purchasers regarding the Note and Warrant Purchase Agreements, and as further
amended by Amendments, dated May 26, 1993, to the Note and Warrant Purchase
Agreements between the Company and purchasers identified therein.
C. Note and Warrant Purchase Agreement, dated December 15, 1989,
between the Company and Metropolitan Life Insurance Company ("Purchaser")
providing for the issuance by the Company of $25,000,000 principal amount of
10.55% Senior Notes due September 26, 1996, as amended by Form of Letter dated
June 25, 1991 between the Company and Purchasers regarding the Note and Warrant
Purchase Agreements, and as further amended by Amendments, dated May 26, 1993,
to the Note and Warrant Purchase Agreements between the Company and purchasers
identified therein.
8. Letter from Texas Instruments to the Company, dated March 14, 1990.
2
<PAGE> 88
9. Lease Agreements, dated September 25, 1992, between the Company and BNP
Leasing Corporation; and the following related documents of even date
therewith: Purchase Agreements, dated September 25, 1992, between the
Company and BNP Leasing Corporation, Memoranda of Agreements,
Environmental Indemnity Agreement, Estoppel Letters.
10. Software License and Distribution Agreement, dated as of January 1,
1994 by and between the Company and UNIX System Laboratories, Inc.
11. Sun Microsystems, Inc. 1992 Incentive Option Plan (as amended and
restated on November 7, 1991).
12. Sun Microsystems, Inc. 1987 Stock Option Plan (as amended and restated
on November 7, 1991).
13. Sun Microsystems, Inc. 1988 Directors' Stock Option Plan (as adopted by
the Board of Directors on January 4, 1988 and amended as of March 1,
1992 and August 11, 1993).
14. Sun Microsystems, Inc. 1990 Long-Term Equity Incentive Plan (as amended
and restated as of November 7, 1992).
15. Sun Microsystems, Inc. 1990 Employee Stock Purchase Plan (as amended
and restated as of November 7, 1991).
16. Sun Microsystems, Inc. Restricted Stock Plan (as amended and restated
on November 1991).
_______________
* Reference herein to "Company" or "Sun Microsystems, Inc." with respect
to agreements entered into on or prior to June 1987 mean Sun Microsystems,
Inc., a California corporation, and after such date, Sun Microsystems, Inc., a
Delaware corporation.
3
<PAGE> 89
EXHIBIT C-2
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Closing Date]
To the Purchasers and the Agent
Referred to Below
c/o J.P. Morgan Delaware
902 Market Street
Wilmington, Delaware 19801
Dear Sirs:
We have participated in the preparation of the Receivables
Purchase Agreement (the "Receivables Purchase Agreement") dated as of August 5,
1994, among Sun Microsystems, Inc., a Delaware corporation (the "Parent"), the
Subsidiary Sellers listed therein (together with the Parent, the "Sellers"),
the Purchasers listed on the signature pages thereof (the "Purchasers") and
J.P. Morgan Delaware, as Agent (the "Agent"), and have acted as special counsel
for the Agent for the purpose of rendering this opinion pursuant to Section
3.02(c) of the Receivables Purchase Agreement. Terms defined in the
Receivables Purchase Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Parent of the
Receivables Purchase Agreement and the Assignments are within its corporate
powers and have been duly authorized by all necessary corporate action.
2. The Receivables Purchase Agreement and the Assignments
constitute valid and binding agreements of each Seller, in each case
enforceable against such Seller in accordance with their respective terms,
subject to bankruptcy, fraudulent conveyance, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights and by
general equitable principles (regardless of whether the
<PAGE> 90
issue of enforceability
is considered in a proceeding in equity or at law).
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. Insofar as the foregoing opinion involves matters governed
by the laws of the State of California, we have relied, without independent
investigation, upon the opinion of Wilson, Sonsini, Goodrich & Rosati, a copy
of which has been delivered to you.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
2
<PAGE> 91
EXHIBIT D-1
GOVERNMENT CONTRACTS
Contract
Obligor:
Number:
Description:
Payment terms:
Assignment:
__ Permitted
__ Restricted
__ No applicable provision
Offset rights:
__ Retained
__ Waived
__ No applicable provision
[To be completed by Sellers.]
<PAGE> 92
EXHIBIT D-2
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned does hereby sell, assign
and transfer unto J.P. Morgan Delaware all monies due or to become due under
[identify Qualifying Government Contract].
IN WITNESS WHEREOF, the undersigned, through its duly
authorized officer, has caused this Agreement to be duly executed this __ day
of _______, 19__.
[RELATED SELLER]
By ______________________
Title:
[CORPORATE SEAL]
Witness: ____________________
<PAGE> 93
EXHIBIT D-3
NOTICE OF ASSIGNMENT
TO: ________________ [address to one of the parties specified in FAR
32.802(e)].
This has reference to Contract No. ________ dated ________,
entered into between [related Seller], [address], and ___________ [government
agency, name of office, and address], for ____________ [describe nature of the
contract.]
Moneys due or to become due under the contract described above
have been assigned to the undersigned under the provisions of the Assignment of
Claims Act of 1940, as amended, 31 U.S.C. Section 203, 41 U.S.C. Section 15.
A true copy of the instrument of assignment executed by the
Contractor on __________ [date], is attached to the original notice.
Payments due or to become due under this contract should be
made to the undersigned assignee.
Please return to the undersigned the three enclosed copies of
this notice with appropriate notations showing the date and hour of receipt,
and signed by the person acknowledging receipt on behalf of the addressee.
Very truly yours,
J.P. MORGAN DELAWARE
By _________________________
Title:
ACKNOWLEDGEMENT
Receipt is acknowledged of the above notice and of a copy of
the instrument of assignment. They were received at _____ (a.m.) (p.m.) on
________, 19__.
________________________
[signature and title]
<PAGE> 94
EXHIBIT E
CERTAIN OBLIGORS
PART 1: Obligors with up to 10% of the
Net Eligible Account Balance
AT&T
Boeing
General Electric
University of California
US West
PART 2: Obligors with up to 5% of the
Net Eligible Account Balance
American Express
Bell Atlantic
Bell Communications
Eastern Kodak
EDS
NYNEX
Salomon Brothers
Xerox
<PAGE> 95
EXHIBIT F
Lockbox Banks, Lockbox Account
Numbers and Lockboxes
Bank Bank Account Name Account Number Lockbox Address
Bank of America-Concord Sun Microsystems Inc. - Lockbox 12332-56405 Dept 1489
1850 Gateway Blvd. Lockbox #1489 P.O. Box 61000
Concord, CA San Francisco, CA 94161
Bank of America-Concord Sun Microsystems Inc. - Lockbox 12332-56405 File #56340
1850 Gateway Blvd. Lockbox #56340 Los Angeles, CA 90074-3640
Concord, CA
Bank of America-Concord Sun Technology Enterprises Inc. 12331-13463 File #52558
1850 Gateway Blvd. Lockbox #55258 Los Angeles, CA 90074-2558
Concord, CA
Bank of America-Concord SunSoft, Inc. 12333-5653 File #72612
1850 Gateway Blvd. Lockbox #72612 San Francisco, CA 94160-2612
Concord, CA
Nationsbank Sun Microsystems, Inc. 008-49-778 Drawer CS198330
P.O. Box 4899 Lockbox #CS198330 Atlanta, GA 30384-8330
Atlanta, GA
Northern Trust Sun Express Inc. 30162545 P.O. Box 75654
50 S. La Salle St. Lockbox #75654 Chicago, IL 60675-5654
Chicago, IL 60675
Northern Trust Sun Microsystems, Inc. 30262545 P.O. Box 75640
50 S. La Salle St. Lockbox #75640 Chicago, IL 60675-5640
Chicago, IL 60675
Philadelphia National Bank Sun Microsystems, Inc. 0108-7021 P.O. Box 8500 (S-4020)
FC 98-2-1, Suite 4330 Lockbox #s-4020 Philadelphia, PA 19178-4020
707 Wilshire Blvd.
Los Angeles, CA 90071
<PAGE> 96
EXHIBIT G
[Letterhead of Sun Microsystems, Inc.]
August __, 1994
[Name and Address of
Lockbox Bank]
Gentlemen:
Reference is made to the lockbox account no. __________ maintained
with you (the "Account") and the related lockbox. Pursuant to a Receivables
Purchase Agreement dated as of August 5, 1994 among us, certain of our
subsidiaries and J.P. Morgan Delaware, as Agent, we have assigned to the Agent,
for the benefit of the Purchasers (as defined in the Receivables Purchase
Agreement) one or more undivided percentage interests in certain of the
accounts, chattel paper, instruments or general intangibles (collectively,
"Receivables") with respect to which payments are or may hereafter be made to
the Account [and the related lockbox].
Except as otherwise provided in this letter agreement, payments to the
Account are to be processed in accordance with the standard procedures
currently in effect. All service charges and fees with respect to the Account
shall continue to be payable by us as under the arrangements currently in
effect.
Upon your receipt of a letter from the Agent substantially in the form of
Annex 1 hereto you are hereby instructed to comply with the terms thereof.
By executing this letter agreement, you irrevocably waive and agree not
to assert, claim or endeavor to exercise, irrevocably bar and estop yourself
from asserting, claiming or exercising, and acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other party asserting, claiming or exercising, any right of set-off, banker's
lien or other purported form of claim with respect to the Account or any funds
from time to time therein. Except for your right to payment of your
<PAGE> 97
service charges and fees and to make deductions for returned items, you shall
have no rights in the Account or funds therein.
You may terminate this letter agreement by canceling the Account
maintained with you, which cancellation and termination shall become effective
only upon thirty days' prior written notice thereof from you to the Agent.
Incoming mail addressed to or wire transfers to the Account received after such
cancellation shall be forwarded in accordance with the Agent's instructions.
This letter agreement may also be terminated upon written notice to you by the
Agent stating that the Receivables Purchase Agreement pursuant to which this
letter agreement was obtained is no longer in effect. Except as otherwise
provided in this paragraph, this letter agreement may not be terminated or
amended without the prior written consent of the Agent. This letter agreement
may be executed in any number of counterparts, and by the parties hereto on
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the two copies of this letter agreement enclosed herewith
in the space provided below, sending one such signed copy to the Agent at its
address provided below and returning the other signed copy to us.
Very truly yours,
SUN MICROSYSTEMS, INC.
By:______________________
Name:____________________
Title:___________________
<PAGE> 98
[NAME OF LOCK-BOX/BANK]
By:______________________
Name:____________________
Title:___________________
Address for notice:
Attention:____________________
Telex No.:____________________
(Answerback:__________________)
Facsimile No.:________________
<PAGE> 99
ANNEX 1 TO EXHIBIT G
[LETTERHEAD OF J.P. MORGAN DELAWARE]
___________ 19,__
Re: Lockbox Transfer Letter
Gentlemen:
We hereby notify you that control of the post office box or other
mailing location located at _______________________ that receives payments made
to Sun Microsystems, Inc. or a subsidiary of Sun Microsystems, Inc. (the
"Lockbox") and the related lock-box account No. ________ maintained with you
(the "Lockbox Account") are hereby transferred to J.P. Morgan Delaware, as
Agent, 902 Market Street, Wilmington, Delaware 19801 (the "Agent").
You are hereby irrevocably instructed to make all payments to be made
by you out of or in connection with the Lockbox Account directly to J.P. Morgan
Delaware, for the account of the Agent, to account No. ________ or otherwise in
accordance with the instructions of the Agent.
You are hereby irrevocably instructed to disregard any and all previous
instructions or agreements, if any, given or made which are or may be
inconsistent with this letter, all of which are hereby superseded by this
letter.
You are also hereby notified that the Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with the
Lockbox Account, including, without limitation, the right to specify when
payments are to be made out of or in connection with the Lockbox Account. The
funds deposited into the Lockbox Account will not be subject to deduction,
set-off, banker's lien or any other right in favor of any person other than the
Agent.
Please agree to the terms of, and acknowledge receipt of, this notice
by signing in the space provided below on a copy
<PAGE> 100
hereof sent herewith and send one signed copy to the Agent, at its
address referred to above, Attention of Structured Finance Group.
Very truly yours,
J.P. MORGAN DELAWARE
By:____________________
____________________
name
____________________
title
Agreed and acknowledged:
[Lockbox Bank]
By:_____________________
Title: