RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT ("Agreement") is dated
as of the 26th day of January, 1999, by and between APPLIED
MATERIALS, INC., a Delaware corporation ("Seller") and DEUTSCHE
FINANCIAL SERVICES (UK) LIMITED, a corporation registered in
England and Wales ("Purchaser").
R E C I T A L S
A. Among other things, Seller sells certain manufacturing
products and provides services related thereto in the ordinary
course of its business throughout Europe (the "Products" and
the "Services", respectively, or collectively, the "Goods").
B. Seller may sell and Purchaser may purchase from time to
time, on the terms and conditions set forth herein, all of
Seller's right, title and interest in and to payment for the
Products sold and Services rendered by Seller to the Obligors
(as defined herein) (such accounts collectively referred to
herein as the "Receivables" or, individually, a "Receivable").
C. Purchaser wishes that Seller act as Purchaser's initial
Collection Agent with respect to Receivables sold by Seller in
connection with the collection of the amounts owing on the
Receivables, and wishes to pay the Seller a Collection Agent
Fee, as herein defined, in return for the Seller's services as
Collection Agent.
D. Seller and Purchaser desire to enter into this
Agreement to govern the purchase and sale of the Receivables,
the administration and collection thereof, and related matters.
NOW, THEREFORE, in consideration of the agreements
contained herein and for other good and valuable consideration,
the parties hereto mutually agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions.
Except as otherwise specified in this Agreement, all
references (i) to any Person, other than Seller, shall be
deemed to include such Person's successors and assigns, and
(ii) to any law, agreement, statute or contract specifically
defined or referred to in this Agreement shall be deemed
references to such agreement, or contract as the same may be
supplemented, amended, waived, consolidated, replaced or
modified from time to time, but only to the extent permitted
by, and effected in accordance with, the terms hereof. The
words "herein," "hereof" and "hereunder" and words of similar
import, when used in this Agreement shall refer to this
Agreement as a whole and not to any provision of this
Agreement, and "Article," "Section," "paragraph," "Schedule"
and respective references are to this Agreement unless
otherwise specified. Whenever the context so requires, words
importing any gender include the other genders. Any of the
terms defined in this Article 1 may, unless the context
otherwise requires, be used in the singular or the plural
depending on the reference; the singular includes the plural
and the plural includes the singular.
All terms defined in this Article 1 shall have the defined
meanings when used in this Agreement or, except as otherwise
expressly stated therein, any certificate, opinion or other
document delivered pursuant to this Agreement.
All accounting terms not otherwise defined in this Article
1 or elsewhere in this Agreement shall have the meanings
assigned them in conformity with GAAP.
All terms used in Article 9 of the UCC and not specifically
defined in Article 1 or elsewhere in this Agreement shall be
defined herein as such terms are defined in the UCC as in
effect in the State of California on the date hereof.
References to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible
visible form. References to "written" include "printed,"
"typed," "lithographed" and other adjectives relating to words
reproduced in a tangible visible form consistent with the
preceding sentence including electronic mail. The words
"including," "includes" and "include" shall be deemed to be
followed by the words "without limitation."
A/R Limit. As defined in Section 2.1.B.
Balance. As defined in Section 2.1.B.
Billing Date. The date on which an invoice is issued with
respect to the sale of Goods resulting in the creation of a
Receivable.
Business Day. Any day on which dealings in currencies and
exchange may be carried on in the interbank eurodollar market,
excluding Saturday, Sunday and any day which is a day on which
banking institutions in London are authorized or required by
law or other governmental action to close.
Collateral. As defined in Section 5.1.
Collection Agent. A Person that is selected and appointed
by Purchaser, in accordance with Section 3.1, to act on
Purchaser's behalf in the administration, servicing and
collection of the Sold Receivables. Such Person may be Seller.
The term "Collection Agent" includes a Successor Collection
Agent.
Collection Agent Fee. A fee calculated and payable by
Purchaser to Seller in accordance with the terms of Article 4
hereof.
Collection Settlement Date. With respect to each Funding
Date in connection with the sale of Sold Receivables to
Purchaser, the related First Collection Settlement Date (the
75th day after such Funding Date or if such date is not a
Business Day, the Business Day thereafter), and to the extent
the Outstanding Balances of such Sold Receivables have not been
reduced to zero, each succeeding Business Day.
Collections. All amounts received by the Collection Agent
or Purchaser from any Obligor as a payment with respect to a
Sold Receivable.
Contract. An agreement pursuant to which an Obligor agrees
to pay money to Seller for Products sold or Services rendered
by Seller in the ordinary course of its business.
Credit Adjustment. Any refund, rebate, credit, early pay
discount or other adjustment granted to an Obligor with respect
to a Sold Receivable after such Receivable is sold to
Purchaser.
Defaulted Receivable. (i) A Sold Receivable that the
Collection Agent determines in good faith to be uncollectible,
or (ii) a Sold Receivable which remains unpaid, for any reason,
including without limitation, set off by the Obligor (whether
in connection with the same or a related transaction or
unrelated transaction) or a bankruptcy or insolvency proceeding
of the Obligor where the Obligor is the debtor, more than 60
days from the Billing Date.
Discount. [ * ].
Dollars. Lawful money of the United States of America.
[ * ] Confidential portions omitted and filed separately
with the Securities and Exchange Commission.
Eligible Receivable. Any Receivable which does not
otherwise constitute an Ineligible Receivable.
Event of Default. As defined in Section 12.1.
Facility Termination Date. The earlier of the Termination
Date or when Purchaser terminates this Agreement under Section
12.2.
Federal Bankruptcy Code. The bankruptcy code of the United
States of America codified in Title 11 of the United States
Code, as amended.
Financing Statement. The financing statements that are
properly filed with the various Secretaries of State or other
jurisdictions to perfect security interests in any property
described by such financing statements.
First Collection Settlement Date. With respect to each
Funding Date that date which is seventy-five (75) days after
such Funding Date, provided that if such date is not a Business
Day, then the First Collection Settlement Date shall be the
next succeeding Business Day.
Funding Date. The Initial Funding Date, and such other and
further dates as the parties hereto may agree to in writing as
of the date on which Purchaser acquires additional Receivables
hereunder.
GAAP. Generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the
accounting profession, which are applicable to the
circumstances as of the date of determination.
Goods. As defined in the Recitals to this Agreement.
Indemnitees. As defined in Section 10.1.
Ineligible Receivables. Shall mean any of the following,
as determined by Purchaser in its reasonable discretion, at the
time of each Purchase hereunder:
(a) Receivables created from the sale of Goods and Services
not in accordance with Seller's Payment Terms as
described in Exhibit III attached hereto;
(b) [ * ];
(c) [ * ];
(d) [ * ];
(e) Receivables with respect to which the Obligor is an
officer, employee, agent, parent, Subsidiary or
affiliate of Seller or has common officers or directors
with Seller;
(f) Receivables arising out of any consignment sale;
[ * ] Confidential portions omitted and filed separately
with the Securities and Exchange Commission.
(g) Receivables with respect to which the payment by the
Obligor is conditional, other than as may be required
by applicable statute;
(h) Receivables with respect to which the Obligor is not a
commercial or institutional entity;
(i) Receivables with respect to which Seller is or may
become liable to the Obligor thereof for goods sold or
services rendered by such Obligor to Seller, other than
as may be required by applicable statute;
(j) Receivables with respect to which any warranty or
representation provided in Sections 7.3, 8.4 or 8.8 is
not true and correct;
(k) Receivables which represent goods purchased for a
personal, family or household purpose;
(l) Receivables which are progress payment, retention or
contra accounts;
(m) Receivables with respect to which the Obligor is in
default of any material provision of any agreement
between Seller and Obligor governing such Receivable,
including, without limitation, Receivables paid with
checks returned and marked "Insufficient Funds" and
Receivables which are otherwise in dispute and, in each
case, not resolved within thirty (30) days;
(n) Receivables arising pursuant to documentation not
satisfactory to Purchaser in its sole discretion;
(o) Receivables on which the Obligor is not located in
Europe and Israel if such Receivable is not fully
secured by foreign credit insurance or letter of
credit, in each case acceptable to Purchaser in its
sole discretion;
(p) Receivables which were not incurred in the ordinary
course of Seller's business;
(q) Receivables which, prior to sale, were not owned by
Seller; or
(r) any and all other Receivables which Purchaser deems to
be unacceptable; provided, however, that Receivables of
the Obligors listed on Schedule B hereto which also
satisfy paragraphs (c) through (q) above, shall be
deemed acceptable to Purchaser, subject to any
limitations in such Schedule B;
provided, however, that Seller and Purchaser may agree
in writing that any Receivable that would otherwise be
an Ineligible Receivable shall be treated for all
purposes as an Eligible Receivable.
Initial Funding Date. The date that Purchaser makes its
initial Purchase of Receivables, in accordance with Section
2.1, which, unless otherwise agreed to by the parties in
writing, shall be January 28, 1999.
LIMEAN Rate-One Month. Shall mean, for purposes solely of
calculation of the Collection Agent Fee, the London Interbank
Mean Rate (LIMEAN) for one-month deposits in U.S. Dollars that
appears on the London Interbank Rates Page (referenced as
LIUSO1M) of the Bloomberg News Service (or any other page that
may replace any such page on such service in the reasonable
judgment of Purchaser) for the Business Day of any such
Collection Agent Fee payment.
LIBOR Rate-Two Month. Shall mean for any Purchase, the
London Interbank Offered Rate (LIBOR) for two-month deposits in
U.S. Dollars that appears on Page 3745 of the Bloomberg News
Service (or any other page that may replace any such page on
such service in the reasonable judgment of Purchaser) on the
third Business Day immediately preceding a Funding Date.
Lien. A mortgage, pledge, lien, security interest or other
charge or encumbrance of any kind (including without limitation
any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any
security interest).
Net Purchase Price. [ * ].
Notices. All notices, requests, demands and other
communications provided for under this Agreement.
Obligor. Each customer to whom Seller has sold Products or
provided Services and who has agreed to pay money to Seller
therefor whether or not pursuant to a Contract.
Officer's Certificate. A certificate executed on behalf of
Seller by its chief financial officer, treasurer or other
authorized officer.
Outstanding Balance. With respect to any Sold Receivable
as of any date, the total outstanding principal balance thereof
as of such date.
Outstanding Eligible Receivables. As at any moment, all
Eligible Receivables which are then outstanding (i.e., not yet
paid by their respective Obligors).
Party. Seller or Purchaser, as defined.
Person. Natural persons, corporations, limited
partnerships, general partnerships, joint stock companies,
joint ventures, incorporated or unincorporated associations,
companies, limited liability companies, trusts or other
organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof, or any other
entity of any kind.
Prime Rate. The prime rate as published in The Wall Street
Journal. The Prime Rate will change and take effect for
purposes of this Agreement on the day of any change in the
prime rate published in The Wall Street Journal.
Products. As defined in the Recitals to this Agreement.
Purchase. A purchase of Receivables made by Purchaser
pursuant to Section 2.1.
Receivables. As defined in the Recitals to this Agreement.
Receivables Purchase Settlement Statement. A statement
substantially in the form of Exhibit II to be executed by
Seller and Purchaser, prepared in accordance with Section 2.1.C
and other provisions of this Agreement.
Releases. The termination statements or other documents
that are filed with the various Secretaries of State or other
jurisdictions for the purpose of releasing any security
interests that have been filed or perfected through the filing
of one or more Financing Statements.
Request for Information or Copies. The documents that are
submitted to the various Secretaries of State or other
jurisdictions for the purpose of ascertaining whether or not
any financing statements, tax liens, judgment liens or other
filings have been filed with respect to some item of property.
Secretary of State. Any Secretary of State, or any person
acting in an official capacity for such person or for other
jurisdictions, elected or appointed, to receive filings of
Financing Statements, articles of
[ * ] Confidential portions omitted and filed separately
with the Securities and Exchange Commission.
incorporation or other documents pertaining to the business
structure or operation of any of the entities referred to in
this Agreement.
Services. As defined in the Recitals to this Agreement.
Settlement Date. The first Business Day immediately
preceding each Funding Date, and such other dates as may be
agreed to in writing by Seller and Purchaser.
Sold Receivable. A Receivable purchased by Purchaser until
paid in full by the Obligor.
Status Report. As defined in Section 3.2.B.
Subsidiary. With respect to any Person, any corporation,
association or other business entity of which more than 50% of
the total voting power of shares of common stock or units of
ownership or beneficial interest entitled to vote in the
election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such
Person.
Successor Collection Agent. As defined in Section 3.1.C.
Termination Date. As defined in Section 11.1.
UCC. The California Uniform Commercial Code.
ARTICLE 2
Amount and Terms of Purchase Commitments
Section 2.1. Purchase of Receivables.
A. Sale; Effective Date of Sale.
(i) Generally. On each Funding Date, Purchaser shall
Purchase the Eligible Receivables from Seller, in accordance
with the terms hereof, that Purchaser has elected, in its sole
discretion, to Purchase. Purchaser's decision to make a
Purchase hereunder will not be binding until the funds are
actually paid. A condition of each Purchase on any Funding Date
shall be delivery by Seller of the Receivables Purchase
Settlement Statement required pursuant to Section 2.1.C on the
Settlement Date. No Purchase shall occur after the Facility
Termination Date or if Purchaser exercises its rights under
Section 12.2.
(ii) Limitations. Notwithstanding anything herein,
Seller shall have no obligation to sell, and Purchaser shall
have no obligation to Purchase, any Receivables: (1) on any
dates other than the Funding Dates, and (2) which fail to
comply with the terms hereof.
B. Purchase; Transfer of Receivables. Each Purchase
hereunder shall take place on the applicable Funding Date, at
the office of Seller at 3050 Bowers Avenue, Santa Clara, CA
95054, or such other place as may be mutually agreed upon by
Seller and Purchaser. Purchaser shall purchase the applicable
Receivables on any Funding Date for an aggregate purchase price
equal to the Net Purchase Price of the Eligible Receivables
reflected on the Receivables Purchase Settlement Statement
prepared in connection with such Purchase. Seller agrees
further that, at all times during the term of this Agreement,
the aggregate cumulative amount of all Net Purchase Prices
received by Seller in respect of the then Outstanding Eligible
Receivables, minus all Collections received thereon (the
"Balance"), shall not exceed One Hundred Million Dollars
($100,000,000) (the "A/R Limit"). Title to all Receivables
which are acquired by Purchaser shall pass to Purchaser on the
applicable Funding Date. Each Purchase shall be made without
recourse, except as specifically provided herein.
C. Receivables Purchase Settlement Statements. On each
Settlement Date, Seller shall execute a Receivables Purchase
Settlement Statement, dated as of such date, which, among other
things: (i) assigns and transfers to Purchaser, effective as of
the Funding Date, all right, title and interest of Seller in
and to the Sold Receivables described in the schedule attached
to such Receivables Purchase Settlement Statement, free and
clear of all security interests, liens, charges, encumbrances
and rights of others, other than the respective Obligor's
interest in the Products and/or Services, as appropriate,
relating thereto, (ii) includes copies of all invoices and a
summary of all sales resulting in Sold Receivables, and a
calculation of the Eligible Receivables to be sold, a schedule
of the Sold Receivables, and the Net Purchase Price, and (iii)
provides such other information as Purchaser may reasonably
request at least five (5) days in advance of such Settlement
Date for the purpose of effecting the transactions contemplated
hereby.
D. Collateral Assignment. Certain of the Obligors have
granted Seller a Lien on certain of such Obligor's assets as
security for the obligations of such Obligor to Seller. On or
prior to each Settlement Date, Seller shall deliver to
Purchaser, assignments of all security agreements, instruments
or other documents pursuant to which such Obligors have granted
Seller such a Lien in its assets.
E. Power of Attorney. Seller hereby grants to Purchaser
an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of
Seller or in Purchaser's own name all steps necessary or
advisable to (i) whether or not an Event of Default has
occurred and is continuing, endorse and negotiate any writing
or other right of any kind held or owned by Seller or
transmitted to or received by Purchaser as payment on account
or otherwise in respect of any Sold Receivables, and (ii)
effective upon the occurrence and during the continuance of any
Event of Default, enforce, foreclose, demand or accelerate on
any writing or other right of any kind held or owned by Seller
or transmitted to or received by Purchaser as payment on
account or otherwise in respect of any Sold Receivable.
ARTICLE 3
Collections; Maintenance of Records;
Disbursements of Collections
Section 3.1. Collection Procedure.
A. Appointment of Seller as Collection Agent. Purchaser
hereby appoints Seller to act as Collection Agent with respect
to Sold Receivables and Seller hereby accepts such appointment
until a Successor Collection Agent is appointed in accordance
with the terms hereof.
B. Duties and Standard of Care as Collection Agent.
(1) The Collection Agent will endeavor to collect the
amount owing to Purchaser on each Sold Receivable in accordance
with terms hereof, as and when the same becomes due, at
Seller's cost and expense and as agent for Purchaser, but
subject to the right of Purchaser to direct and control such
activities in accordance with the terms hereof.
(2) In performing its functions and duties on behalf
of Purchaser as the Collection Agent, Seller shall exercise the
same care that it would exercise in the collection of
Receivables for its own account, in accordance with, among
other things, Seller's current Collection Procedures attached
hereto as Exhibit IV, which standard of care shall not be less
than the standard of care prevalent in the industry in which
Seller engages. Collection Agent may amend, from time to time,
its Collection Procedures with the consent of Purchaser, such
consent not to be unreasonably withheld.
(3) The Collection Agent may allow such Credit
Adjustments for Purchaser's account as the Collection Agent may
determine in good faith to be either (i) appropriate to
facilitate maximum Collections or (ii) required by applicable
law or any applicable Contract and may receive any Products
relating thereto, subject to Purchaser's aforesaid interests,
as may be returned or rejected by, or repossessed from, the
Obligors; provided, however, that any Credit Adjustment shall
be reflected in a Status Report or other writing delivered by
Collection Agent to Purchaser prepared for the period in which
the Credit Adjustment was made,
and the amount of any such Credit Adjustment shall be paid to
Purchaser in full, in good funds, on each Collection Settlement
Date. With respect to each Defaulted Receivable, the
Collection Agent shall have the power and authority, on behalf
of Purchaser, to take action in accordance with Seller's
standard collection policies (including, in the case of any
such Receivable in respect of which a security interest in
Products shall have been obtained, the repossession and resale
of such Products). Purchaser may request, to the extent
reasonable, from time to time information relating to any
Defaulted Receivable. A Collection Agent other than Seller may
also make Credit Adjustments for Purchaser's account with the
consent of Purchaser. Any such Credit Adjustment made pursuant
to clause (ii) above by a Collection Agent other than Seller,
shall be treated the same as a Credit Adjustment made by Seller
as Collection Agent, including for purposes of requiring
payment or credit by Seller.
(4) In the enforcement or collection of any Sold
Receivable, the Collection Agent must obtain Purchaser's prior
written consent to name Purchaser as a party in any legal
proceeding; provided, however, that nothing contained herein
shall limit Purchaser's right, exercisable in its sole
discretion, following demand made by Purchaser on Seller and
Seller's refusal or inability to proceed against an Obligor, to
sue or proceed against any Obligor in its own name at any time
upon two (2) days prior written notice to Seller after the 75th
day after the applicable Funding Date. Moreover,
notwithstanding the foregoing, (i) following the occurrence and
during the continuance of any Event of Default after notice to
Seller, (ii) if Seller has determined in good faith that a Sold
Receivable is uncollectible, or (iii) if (1) an Obligor becomes
insolvent or becomes subject to the Federal Bankruptcy Code,
any insolvency law or any similar law, as a debtor, (2) an
Obligor makes a general assignment for the benefit of
creditors, or (3) a receiver is appointed for any assets of an
Obligor; no demand by Purchaser on Seller shall be required
before Purchaser may sue or proceed against any Obligor in its
own name.
(5) Purchaser may at any time with contemporaneous
notice to Seller, contact any Obligor utilizing the form of
verification letter attached hereto as Schedule C, for any
purpose related to the performance of audits and verification
analyses, and the determination of account balances and other
data maintained by Seller. Except for sending the verification
letter to the Obligors and except as otherwise provided herein,
Purchaser shall not contact any Obligor with respect to the
transactions contemplated herein. Purchaser may at any time
following (i) the occurrence and during the continuance of an
Event of Default; or (ii) the termination of Seller as
Collection Agent: (a) notify any Obligor of the purchase by
Purchaser of any Sold Receivable hereunder; (b) direct any
Obligor to make all payments in respect of Sold Receivables
directly to Purchaser at an address designated by Purchaser, or
to a third party or a bank or depositary designated by
Purchaser; and/or (c) proceed directly against any Obligor,
either with respect to the collection of any Sold Receivable or
any related matter.
(6) All Collections received by the Collections Agent
on and prior to the related First Collection Settlement Date
shall be paid on each Wednesday (for Collections received by
the Collection Agent during the immediately preceding calendar
week), directly to the Purchaser as provided in Section 3.3.
All Collections received by the Collections Agent after the
related First Collection Settlement Date, shall be paid within
two Business Days directly to the Purchaser as provided in
Section 3.3. On any Collection Settlement Date, Seller shall
remit to Purchaser, for Purchaser's own account, all amounts
representing Credit Adjustments which relate to the Sold
Receivables which are applicable to each such Collection
Settlement Date. All payments and all amounts received in
settlement, adjustment or liquidation of any Sold Receivable
will be credited by Purchaser on the Business Day good funds
are received by Purchaser. All payments in respect of Sold
Receivables of a particular Obligor shall be applied against
specific items of Sold Receivables as specifically identified
in writing by the Obligor thereon. If an Obligor fails to so
specify, then the Collection Agent shall use its best efforts,
including contacting such Obligor, to determine the appropriate
application of the payment.
C. Termination of Appointment. Upon the occurrence and
continuance of an Event of Default or upon termination of this
Agreement, Purchaser may at any time immediately terminate
Seller's appointment as the Collection Agent by delivery of a
notice of such termination in writing to Seller, provided,
however, that if there exists no Event of Default, Purchaser's
termination of Seller as Collection Agent shall be effective
fifteen (15) days after Purchaser's giving of notification
thereof to Seller. Upon the termination of Seller as the
Collection Agent, without limitation, (i) Purchaser, or a
financial institution designated by Purchaser (Purchaser in
such capacity or such third party, a "Successor Collection
Agent"), shall administer the administrative, servicing and
collection functions with respect to Purchases from Seller in
any commercially reasonable manner and in accordance with this
Agreement; (ii) Purchaser shall, at any time thereafter, be
entitled to notify the Obligors on any Sold Receivables to make
payment of amounts due thereunder directly to Purchaser at an
address designated by Purchaser or to such third party or to a
bank or other depositary designated by Purchaser; and (iii)
Seller shall, at its own expense, (a) if so requested by
Purchaser, endorse each instrument, if any, evidencing any Sold
Receivable to Purchaser in such manner as Purchaser shall
reasonably direct and (b) perform any and all acts and execute
any and all documents as may be reasonably requested by
Purchaser in order to effect the purposes of this Agreement and
the Purchase of Receivables and to perfect and protect the
ownership interest of Purchaser in the Sold Receivables.
Section 3.2. Records and Reports.
A. Maintenance of Records. Until the earlier of the
termination of this Agreement or until each Sold Receivable has
been paid in full, Purchaser shall have the right (but not the
obligation), for the purposes hereunder described, to enter
upon Seller's premises from time to time during normal business
hours following three (3) Business Days notice to Seller
(unless an Event of Default has occurred and is continuing, in
which event no advance notice will be required hereunder, but
such entry shall be during normal business hours) during the
term of this Agreement. The purposes for which Purchaser may
enter pursuant to the terms of this Section 3.2 are as follows:
(i) to examine Seller's books, accounts, records or other
papers pertaining to Sold Receivables and otherwise pertaining
to the transactions which are the subject of this Agreement,
and for no other purposes; (ii) to examine the Collateral;
(iii) to appraise the Collateral as security; (iv) to verify
the condition of the Collateral; (v) to verify that all
Collateral has been properly accounted for; and (vi) to verify
that Seller is in compliance with all terms and provisions of
this Agreement; provided, in all cases, that Purchaser shall
have no right to examine any documents covered by attorney-
client privileges or attorney work-product. Any fees, costs or
expenses incurred by Purchaser in connection with such
inspections, audits and examinations as aforesaid, shall be the
sole responsibility of Purchaser (unless an Event of Default
has occurred and is continuing, in which event Seller shall be
solely responsible for such fees, costs and expenses). From
time to time upon the reasonable written request of Purchaser,
Seller, at its own expense, will deliver to Purchaser, or any
agent selected by Purchaser (which agent Seller shall have
consented to, such consent not to be unreasonably withheld), as
the case may be: (i) a schedule of the Sold Receivables (or
Sold Receivables relating to such Obligors as Purchaser may
specify) sold by Seller to Purchaser indicating as to each such
Sold Receivable information as to the Obligor thereon, the
Outstanding Balance thereof, the location of any Contract
evidencing such Sold Receivable and such other information as
Purchaser may reasonably deem appropriate; and (ii) copies of
any such Contract and such records and invoices pertaining
thereto and evidence thereof as Purchaser may reasonably deem
necessary to enable Purchaser to enforce its rights thereunder.
At Purchaser's request, Seller shall: (a) identify and hold as
agent for Purchaser at the offices of Seller listed in Schedule
A hereto (including without limitation for the purpose of
protecting Purchaser's ownership interest therein) all books,
records and documents evidencing or relating to the Sold
Receivables, including any underlying Contracts, and maintain a
current record of all Sold Receivables owned by Purchaser at
any time in such reasonable detail and in form and substance
satisfactory to Purchaser; (b) mark the legend "Receivables
assigned to Deutsche Financial Services (UK) Limited, under a
Receivables Purchase Agreement, dated as of January 26,1999" on
Seller's aging schedule applicable to the Sold Receivables, and
upon the occurrence of an Event of Default, on such instruments
as Purchaser may from time to time reasonably designate; and/or
(c) maintain and implement administrative and operating
procedures (including without limitation an ability to recreate
records evidencing the Sold Receivables in the event of the
destruction of the original records), and keep and maintain all
documents, books, records and other information reasonably
necessary for the collection of the Sold Receivables for
Purchaser.
B. Status Reports. Seller shall submit to Purchaser a
Status Report on the dates specified in the immediately
following sentence, substantially in the form of Exhibit V
("Status Report") consisting of information concerning
Collections, Credit Adjustments, and Defaulted Receivables.
Seller shall submit a Status Report to Purchaser (i) no later
than the thirty-fifth (35th) day after a Funding Date, with
respect to the
30-day period which commenced on such Funding Date; (ii) no
later than the sixty-fifth (65th) day after a Funding Date,
with respect to the 30-day period immediately following the 30-
day period referenced in (i); and (iii) no later than two (2)
days after a First Collection Settlement Date, with respect to
the 15-day period immediately preceding such First Collection
Settlement Date. The Status Report shall include such other
reports as Purchaser shall reasonably request. If any date for
the delivery of a Status Report is not a Business Day, then
such report shall be due on the next succeeding Business Day.
Section 3.3. Manner and Time of Payments.
A. Payments to Seller. (i) On the Funding Date. With
respect to any Funding Date, so long as Purchaser receives the
Receivables Purchase Settlement Statement by 10:00 a.m.,
Pacific time, on the related Settlement Date, Purchaser shall
pay the amounts that are payable to Seller hereunder on such
Funding Date, as applicable, in immediately available funds
deposited to the account of Seller listed in Section 13.2
hereof, no later than 11:30 a.m., Pacific time, and subject to
the provisions of any other information reasonably requested by
Purchaser from Seller in connection therewith in effect on or
prior to such date. (ii) Collection Agent Fee. Purchaser's
payment of the Collection Agent Fee to Seller shall be made in
immediately available funds deposited to the account of Seller
listed in Section 13.2 hereof, no later than 2:00 p.m., Pacific
time, on the dates and as otherwise provided under the terms of
Article 4 hereof. (iii) Generally. The foregoing
notwithstanding, any amounts due Purchaser from Seller
hereunder or in connection herewith, may be deducted by
Purchaser from any amounts owed to Seller, with notice to
Seller.
B. Payments to Purchaser. Seller shall pay the amounts
that are payable to Purchaser hereunder, in immediately
available funds, deposited to the account of Purchaser listed
in Section 13.2 hereof, no later than 11:30 a.m., London time,
on any Collection Settlement Date, or as otherwise provided,
subject to the provisions of any Status Report, or other
information reasonably requested by Purchaser from Seller in
connection therewith in effect on or prior to such date. In no
way limiting the foregoing, Seller agrees to pay Purchaser the
following:
(i) Delinquent Receivables. If the Outstanding Balance
of a Sold Receivable has not been paid in full on or before the
[ * ] day after the Funding Date on which the Purchaser
purchased such Sold Receivable, then, the Seller shall pay to
the Purchaser an amount equal to the Payment Percentage of the
unpaid Outstanding Balance of such Sold Receivable for each day
after such [ * ] day that the Outstanding Balance is greater
than zero until the earlier of (A) the date on which the Seller
notifies Purchaser that it has determined in good faith that
such Sold Receivable is uncollectible, (B) the date that is the
[ * ] day after the Funding Date on which the Purchaser
purchased such Sold Receivable, and (C) the date on which the
Outstanding Balance is reduced to zero. Any amount required to
be paid under this paragraph shall be paid to the Purchaser on
the immediately following Collection Settlement Date. As used
herein, the "Payment Percentage" [ * ].
Section 3.4. Eurodollar Deposits Unavailable or Rate
Unascertainable. In the event that on or prior to the date
the LIBOR Rate-Two Month is determined, Purchaser shall have
determined (which determination shall be conclusive and binding
on the parties hereto) that by reason of circumstances
affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate-
Two Month applicable to a Purchase, Purchaser shall promptly
give notice of such determination to Seller, and any such
Purchase shall be made using a Discount based upon the Prime
Rate less the difference in the per annum interest rate between
the Prime Rate (at the date the LIBOR Rate-Two Month ceased to
exist) and the average of the LIBOR Rate-Two Month over the 30-
day period immediately preceding the date the LIBOR Rate-Two
Month ceased to exist.
ARTICLE 4
Collection Agent Fee
[ * ] Confidential portions omitted and filed separately
with the Securities and Exchange Commission.
Section 4.1. Collection Agent Fee. A fee shall be
payable by Purchaser to Seller in its capacity as Collection
Agent (the "Collection Agent Fee"), in an amount equal to [ * ]
on the average daily balance of the Collections received by
Purchaser during the 30-day period or the 15-day period, as
applicable, preceding each Collection Agent Fee payment date
specified in the immediately following sentence. The
Collection Agent Fee shall be payable, in arrears, on that date
which is thirty (30) days after a Funding Date (for the 30-day
period preceding such payment date), the date which is 60 days
after a Funding Date (for the 30-day period preceding such
payment date), and the First Collection Settlement Date ( for
the 15-day period preceding such payment date); provided that
if any of such dates is not a Business Day, then on the next
succeeding Business Day). In no event, however, shall any
Collection Agent Fee be payable to Seller for Collections
relating to the applicable Sold Receivables received after the
related First Collection Settlement Date. The Collection Agent
Fee is to be paid by the Purchaser to the Seller as Collection
Agent in consideration of Seller's agreement to serve as a
Collection Agent and as compensation for such Collection
Agent's services. Any amounts due to Purchaser from Seller
hereunder, may be deducted from any Collection Agent Fee and
credited to Purchaser, upon notice to Seller. Following the
termination of Seller as a Collection Agent, Seller shall not
continue to earn any Collection Fees.
ARTICLE 5
Security Interest
Section 5.1. Sale; Grant of Security Interest. The
parties hereto intend that the Purchase by Purchaser of Sold
Receivables pursuant to this Agreement shall constitute a sale
under all applicable laws. Notwithstanding such intent, if for
any reason the Sold Receivables are not under applicable law
deemed to have been Purchased by Purchaser, Purchaser shall be
deemed to have made a loan to Seller in the amount of the
purchase price paid to Seller, secured by the following grant
of security in Seller's assets. In the event of any such
designation as a loan, all provisions of this Agreement
referring to the sale of the Sold Receivables shall be
construed as the context may require as references to the grant
of a security interest in such Receivables. In such regard and
in any event to secure all of Seller's current and future debts
to Purchaser under this Agreement or any side letters entered
into between Purchaser and Seller in connection with this
Agreement, whether now or hereafter existing, due or to become
due, direct or indirect, or absolute or contingent,
indemnification obligations pursuant to Section 10.1 and
payments on account of Collections received, Seller hereby
assigns and grants to Purchaser a security interest in all of
Seller's right, title and interest now or hereafter existing
in, to and under (i) all Sold Receivables, now owned or
hereafter acquired, (ii) all contract rights, chattel paper,
security agreements, instruments, documents of title, deposit
accounts, reserves and general intangibles, now owned or
hereafter acquired, all returned, reclaimed or repossessed
inventory and Products, in each case securing or otherwise
supporting such Sold Receivables, and (iii) all proceeds of any
of the foregoing (the "Collateral"). To the extent so defined,
the above assets shall have the same meanings as in Article 9
of the UCC. Seller will hold all of the Collateral in trust
for Purchaser and will account for and remit directly to
Purchaser all such proceeds when payment is required under
terms of this Agreement. Purchaser's lien or security interest
will not be impaired by any payments Seller may make to any
other person or entity. This Agreement shall constitute a
security agreement under applicable law with regard to the
security interest granted pursuant to this Section 5.1.
ARTICLE 6
Seller's Affirmative Covenants
Seller covenants and agrees that, unless Purchaser shall
otherwise give its express prior written consent, until the
earlier of the termination of this Agreement or each Sold
Receivable has been paid in full, Seller shall comply with and
perform in accordance with all covenants contained in this
Article 6.
Section 6.1. Financial Statements and Other Reports.
Seller will maintain a system of accounting established and
administered in accordance with sound business practices to
permit preparation of financial statements of Seller in
conformity with GAAP. Seller will deliver to Purchaser:
A. as soon as available and in any event within 50
days after the end of each of the first three quarters of each
fiscal year of Seller, consolidated balance sheets of Seller
as of the end of such quarter and
[ * ] Confidential portions omitted and filed separately
with the Securities and Exchange Commission.
consolidated statements of income and of cash flows of Seller
for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by the
Treasurer of Seller; provided that Seller may satisfy this
obligation by filing its Form 10-Q for such fiscal quarter with
the Securities and Exchange Commission;
B. as soon as available and in any event within 105
days after the end of each fiscal year of Seller a copy of the
annual report of such year for Seller containing consolidated
financial statements for such year certified by Seller's
independent public accountants; provided that Seller may
satisfy this obligation by filing its Form 10-K for such fiscal
year with the Securities and Exchange Commission;
C. promptly after the sending or filing thereof,
copies of all reports which Seller sends to its security
holders generally, and copies of all registration statements
which Seller files with the Securities and Exchange Commission
or any national securities exchange (other than those on Form
S-8); provided that Seller may satisfy this obligation by
filing its reports with the SEC;
D. promptly upon any vice president or president of
Seller obtaining knowledge or becoming aware of an occurrence
of a breach of Seller's obligations under this Agreement which
would give rise to an Event of Default, an Officer's
Certificate specifying the nature and period of existence of
any such breach, condition or event, or specifying the notice
given or action taken by such holder or Person and the nature
of such claimed breach, event or condition, and what action, if
any, Seller has taken, is taking and proposes to take with
respect thereto;
E. thirty (30) days' notice prior to Seller's changing
its name or any name under which it does business or relocating
its chief executive offices or relocating the books, records
and documents evidencing the Receivables owned or to be
purchased by Purchaser hereunder;
F. prior to the implementation of any material change
in Seller's policies, procedures or practices with respect to
extending credit to its customers, making Credit Adjustments or
collecting amounts owed by customers, in each case that would
affect Sold Receivables, a written description of such proposed
change at least ten (10) days in advance of such change;
G. with reasonable promptness, such other information,
reports or documents concerning the Receivables which are owned
or to be purchased by Purchaser hereunder, the underlying
Contracts, or the credit or collection policies, practices and
procedures of Seller, as Purchaser may from time to time
reasonably request; and
H. such other information respecting the financial
condition or operations of Seller as Purchaser may from time to
time reasonably request.
Section 6.2. Corporate Existence, etc. Subject to Section
7.5 hereof, Seller will at all times preserve and keep in full
force and effect its corporate existence and all material
licenses, rights and privileges relating to Sold Receivables,
and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is necessary to
avoid a material adverse effect on the validity, enforceability
and collectibility of Sold Receivables.
Section 6.3. Compliance with Laws, etc. Seller will
comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would
adversely affect the validity, enforceability or collectibility
of Sold Receivables.
Section 6.4. Transfer of Receivables. Seller shall take
all steps necessary or, in the reasonable opinion of Purchaser,
advisable to validate or protect the ownership interest of
Purchaser in, or to defeat the assertion by any third party of
any adverse claims with respect to, the Sold Receivables or any
underlying Contracts. If an Event of Default by Seller
hereunder has occurred and is continuing, Seller hereby
irrevocably authorizes Purchaser to execute and deliver, in
Seller's name and on Seller's behalf, such
instruments and documents (including bills of sale and
assignments) necessary or desirable to evidence or protect
Purchaser's ownership interest in the Sold Receivables.
Regardless of whether an Event of Default by Seller has
occurred and is continuing, Seller hereby irrevocably
authorizes Purchaser to execute and file, in Seller's name and
on Seller's behalf, financing statements (including amendments
and continuation statements) under the UCC (or similar law
where the UCC is not enacted) in such jurisdictions where it
may be necessary to validate or protect Purchaser's position as
owner of, or, as provided in Section 5.1, secured party with
respect to, such Sold Receivables. Seller shall execute and
deliver such additional documents and shall take such further
action as Purchaser may reasonably request to effect or
evidence the transfer of the Sold Receivables and shall execute
and deliver to Purchaser such powers-of-attorney as may be
necessary or appropriate to enable Purchaser to endorse for
payment any check, draft or other instrument delivered in
payment of any amount under or in respect of a Sold Receivable.
If, at any time, Seller receives any cash or checks, drafts or
other instruments for the payment of money on account or
otherwise in respect of Sold Receivables, Seller shall
segregate such cash and other items, hold such cash and other
items (properly endorsed, where required, so that such items
may be collected by Purchaser) in trust for Purchaser, and
promptly paid directly to Purchaser in accordance with Section
3.1.B(6).
Section 6.5. Assignment of Contracts; Instruments. Seller
hereby assigns to Purchaser all rights of Seller under each
Contract underlying a Sold Receivable relating to the
collectibility of payments thereunder, security interests and
other liens created in connection therewith and the enforcement
thereof, but Purchaser does not and shall not thereby assume
any obligations of Seller under any such Contract. Such
assignment shall include without limitation security interests
in favor of Seller in any property (including without
limitation any Goods) securing any Sold Receivable, whether
pursuant to the contract underlying such Sold Receivables or
otherwise, and all terms and conditions of this Agreement shall
be deemed applicable to such assigned security interests
generally in the same manner and to the same extent as applied
to the related Sold Receivable. In the event any Sold
Receivable becomes, either at the time of creation of such Sold
Receivable or any time thereafter, evidenced by a promissory
note or other document or instrument (other than a Contract),
Seller will promptly endorse and physically deliver such
promissory note, document or instrument to Purchaser.
ARTICLE 7
Seller's Negative Covenants
Until the earlier of the termination of this Agreement or
each Sold Receivable has been paid in full, unless Purchaser
shall otherwise give prior written consent, Seller will perform
all covenants contained in this Article 7.
Section 7.1. Character of Business. Seller will make no
material change in its Collection Procedures that would
adversely affect the validity, enforceability or collectibility
of the Sold Receivables or materially adversely affect the
ability of Seller to perform its obligations hereunder without
the consent of Purchaser.
Section 7.2. Modification of Contracts. Except as set
forth in Section 3.1.B(3), without the prior written consent of
Purchaser, Seller will not amend, modify or waive any term or
condition of any Contract underlying any Sold Receivable, which
amendment, modification or waiver would adversely affect the
validity, enforceability or collectibility of such Receivable
or adversely affect Purchaser's right to collect any Sold
Receivables.
Section 7.3. Quality of Receivables. Seller will not sell
to Purchaser any Receivable that is not an Eligible Receivable
on the date of sale. Seller will not sell to Purchaser any
Receivable, that, on the date of sale : (i) is an Ineligible
Receivable; (ii) is evidenced by a promissory note or other
document or instrument (other than a Contract); (iii) does not
conform with applicable laws, rules or regulations or is based
on a Contract that does not conform in all material respects
with applicable laws, rules or regulations; (iv) is a Defaulted
Receivable; (v) is a Receivable with respect to which Seller is
engaged in any dispute or warranty claim or which is subject to
any lien, claim, security interest, offset, counterclaims or
defense; (vi) permits the Obligor to pay less than the
Outstanding Balance for any reason other than a Credit
Adjustment; (vii) does not satisfy the requirements of Sections
8.4 and 8.8 hereof in all material respects; or (viii) the
Purchase of
which by Purchaser, or the sale of which by Seller, is subject
to any order, judgment or decree of any court, arbitrator or
similar tribunal or governmental authority, or is the subject
of any proceedings before any such court, arbitrator or similar
tribunal or government authority purporting to enjoin or
restrain Purchaser from making any Purchase, Seller from
selling such Receivable or the Collection Agent or Purchaser
from making any Collection of such Receivables. Purchaser may
from time to time, in its discretion, upon advance written
notification to Seller, withdraw its approval of any or all of
the Obligors, including but not limited to those listed on
Schedule B hereto.
Section 7.4. Financial Statements. Seller will not
prepare, or permit the preparation of, any financial statements
which shall account for the transactions contemplated hereby in
a manner that is inconsistent with Purchaser's ownership
interest in the Sold Receivables.
Section 7.5. Restriction on Fundamental Changes. Seller
can merge with another Person if immediately thereafter, giving
effect to such merger, no Event of Default exists and either
(i) the Seller survives the merger or (ii) the successor agrees
to be bound by this Agreement.
Section 7.6. Seller's Interest. Seller will not retain
any interest in any Sold Receivable hereunder and each sale of
a Sold Receivable hereunder shall be of all of Seller's right,
title and interest in such Sold Receivable.
Section 7.7. Negative Pledge. Seller will not mortgage,
pledge, grant or permit to exist a security interest or Lien
caused by it, in or upon any of the Sold Receivables or the
Collateral.
ARTICLE 8
Seller's Representations and Warranties
In order to induce Purchaser to enter into this Agreement
and to make the Purchases, Seller represents and warrants to
Purchaser that the following statements are true, correct and
complete in all material respects (except to the extent such
representations and warranties are already qualified as to
materiality in which case they are true, correct and complete)
as of the date hereof and as of the date of each sale of
Receivables hereunder (all representations and warranties
concerning Receivables shall be made solely as of the date of
the sale of such Receivables hereunder):
Section 8.1. Organization, Powers and Good Standing.
A. Organization and Powers. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Seller has all requisite
corporate power and authority to own and operate its
properties, to carry on its business as such business is now
conducted and as it is proposed to be conducted hereunder, to
enter into this Agreement and to carry out the transactions
contemplated hereby, except where failure to have such licenses
and permits would not have a material adverse effect on the
financial condition or assets of Seller.
B. Good Standing. Seller is in good standing wherever
necessary to carry on its present business and operations,
except in jurisdictions in which the failure to be in good
standing has and will have no material adverse effect on the
conduct of the business of Seller or any adverse effect on the
validity, enforceability or collectibility of any Sold
Receivable.
Section 8.2. Authorization of Sales, etc.
A. Authorization of Sales. The execution, delivery and
performance of this Agreement and the sales of Receivables sold
and to be sold to Purchaser hereunder and the grant of the
security interest in the Collateral have been duly authorized
by all necessary corporate action by Seller.
B. No Conflict. The execution, delivery and performance
by Seller of this Agreement and the sales of Receivables do not
and will not: (i) violate any provision of law applicable to
Seller, the Certificate of Incorporation or Bylaws of Seller,
or any order, judgment or decree of any court or other agency
of government binding on Seller; (ii) conflict with, result in
a breach of or constitute (with due notice or lapse of time or
both) a default under or permit an acceleration or increased
amortization of any material obligation of Seller; (iii) result
in or require the creation or imposition of any Lien, charge or
encumbrance of any nature whatsoever upon any of the properties
or assets of Seller except as provided herein or pursuant to
the terms hereof; or (iv) require any approval of stockholders
or any approval or consent of any Person under any obligation
of Seller or Contract to which Seller is a party other than
approvals or consents that have been obtained and disclosed in
writing to Purchaser.
C. Governmental Consents. The execution, delivery and
performance by Seller of this Agreement and the Purchases of
Receivables do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with
or by, any federal, state or other governmental authority or
regulatory body or other Person, other than a filing with
certain Secretaries of State and other jurisdictions evidencing
the Purchase of Receivables hereunder, and no transaction
contemplated hereby requires compliance with any bulk sales act
or similar law.
D. Binding Obligation. This Agreement creates and
constitutes legal, valid and binding obligations of Seller,
enforceable in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency or similar
laws and principles of equity.
Section 8.3. No Material Adverse Change. Since January
20, 1999, there has been no material adverse change in the
business, operations, properties, or financial position of the
Seller and its subsidiaries taken as a whole.
Section 8.4. Protection of Ownership Interest. All
filings or other actions under the UCC have been made or taken
in each jurisdiction that are necessary or appropriate to
validate and perfect Purchaser's ownership interest in and
rights to collect any and all Sold Receivables and the proceeds
thereof; Purchaser has a valid and perfected ownership or
security interest in the Sold Receivables and the proceeds
thereof, free and clear of all security interests, liens,
charges, encumbrances or rights of others except as otherwise
expressly provided herein; and no effective financing statement
or other instrument similar in effect covering all or any part
of the Sold Receivables is currently on file or of record at
any location except as has been filed or recorded from time to
time in favor of Purchaser in accordance with this Agreement.
Section 8.5. Office Locations. As of the date hereof, the
chief executive office of Seller is located at the address of
Seller's business office appearing in Schedule A hereof, and
the books, records and documents evidencing the Receivables to
be sold hereunder are located at Seller's business offices
located at the address appearing in Schedule A hereof.
Section 8.6. Taxes, etc. Seller's federal tax
identification number is 94-1655526. There is no federal,
state or local law or ordinance (other than income or franchise
tax laws applicable to Purchaser generally) under which any
Receivable which is sold to Purchaser under this Agreement
shall be subjected to any property, excise, sales or other tax,
assessment or governmental charge other than income or
franchise taxes of Purchaser. To the extent any such
Receivable is subject to any such tax, assessment or
governmental charge, Seller hereby agrees to pay all such
taxes, assessments and governmental charges.
Section 8.7. Disclosure. No representation or warranty of
Seller contained in this Agreement or any other document,
certificate or written statement furnished to Purchaser by
Seller in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading;
provided that any projections, proforma or preliminary
financial information furnished are based on good faith
estimates and assumptions believed to be reasonable at the time
made and Purchaser acknowledges that such projections as to
future events are not to be viewed as facts and that actual
results for such period may differ from such projected results.
There is
no fact known to Seller (other than matters of a general
economic nature) that materially adversely affects the
business, operations, property, assets or condition (financial
or otherwise) of Seller and its Subsidiaries, taken as a whole,
that has not been disclosed herein or in such other documents,
certificates and statements furnished to Purchaser for use in
connection with the transactions contemplated hereby.
Section 8.8. Receivables Valid and Binding; No Litigation.
Each Receivable sold to Purchaser hereunder constitutes at the
time of sale the legal, valid and binding obligation of the
Obligor to Seller, subject to laws affecting the rights of
creditors generally. Each such Receivable complies at the time
of sale with the provisions of all applicable laws and
regulations, whether federal, state or local, applicable
thereto, other than provisions as to which the failure to
comply would not adversely affect the validity, enforceability
or collectibility of the Receivables, and satisfies at the time
of sale the requirements of Section 7.3 hereof in all respects.
Each such Receivable is denominated and payable in Dollars.
There are no known counterclaims or rights of set-off limiting
the right of Purchaser to collect the Outstanding Balance, as
adjusted for Credit Adjustments, of each such Receivable. To
the best of Seller's knowledge, there is no order, judgment or
decree of any court, arbitrator or similar tribunal or
governmental authority purporting to enjoin or restrain
Purchaser from making any Purchase, Seller from selling any
Receivable or the Collection Agent or Purchaser from making any
Collection, or which might otherwise adversely affect Seller's
ability to perform its obligations hereunder. To the best of
Seller's knowledge, there are no proceedings before any court,
arbitrator or similar tribunal or governmental authority
seeking to enjoin or restrain Purchaser from making any
Purchase, Seller from selling any Receivable or the Collection
Agent or Purchaser from making any Collection, or which might
otherwise adversely affect Seller's ability to perform its
obligations hereunder.
Section 8.9. Satisfaction of Conditions Precedent. At the
time of each Purchase hereunder, each of the conditions
precedent to such Purchase set forth in Article 9 will have
been (i) waived in writing by Purchaser, or (ii) satisfied.
ARTICLE 9
Conditions To Purchases
Section 9.1. Conditions to Initial Purchases. The
obligation of Purchaser to make its initial Purchase is, in
addition to the conditions precedent specified in Sections 9.2
and 9.3 hereof, subject to prior or concurrent satisfaction of
the following conditions. On or before the Initial Closing
Date, Seller shall deliver to Purchaser:
A. Good Standing, Etc. Evidence reasonably satisfactory
to Purchaser that Seller is duly organized and existing under
the laws of Seller's state of incorporation and in California;
B. Corporate Resolutions. Resolutions of the Board of
Directors of Seller approving and authorizing the execution,
delivery and performance of this Agreement and the sales of
Receivables to be made hereunder, certified as of the Initial
Funding Date by its corporate secretary or an assistant
secretary;
C. Signature and Incumbency Certificate. Signature and
incumbency certificates of the officers of Seller executing
this Agreement;
D. UCC Searches. A certificate copy of each Request for
Information or Copies (Form UCC-11) (or a similar search report
acceptable to Purchaser) listing the Financing Statements filed
with respect to the Collateral (or similar search reports for
jurisdictions where the UCC is not enacted), and showing that
no Financing Statements have been filed with respect to, and
presently cover, such Receivables (except those filed pursuant
to this Agreement); the foregoing notwithstanding, Purchaser
hereby confirms that with respect to the Initial Funding Date,
Purchaser shall obtain such searches required hereunder;
E. Agreement. Executed original of this Agreement;
F. Opinion of Counsel. Executed original of one or more
favorable written opinions of counsel, substantially in the
form of Exhibit I hereto, reasonably satisfactory to Purchaser,
dated as of the Initial Funding Date;
G. UCC-1s. Purchaser shall have received from Seller
acknowledgment copies of all Financing Statements (Form UCC-1)
filed with respect to the Collateral in each jurisdiction where
necessary or appropriate to perfect Purchaser's ownership
interest in such Collateral (or evidence of the satisfaction of
such similar filing or other requirements as may be so
necessary in each jurisdiction where the UCC is not enacted),
Purchaser hereby agreeing that with respect to the Initial
Funding Date, if Purchaser has received duly executed originals
of the Financing Statements required hereunder at least two (2)
days prior to the Initial Funding Date, then the acknowledgment
copies of such filings required hereunder will be acceptable if
received by Purchaser no later than ten (10) Business Days
after such Initial Funding Date;
H. Receivables Purchase Settlement Statement. As of the
Settlement Date in respect of the Initial Funding Date, Seller
shall deliver the Receivables Purchase Settlement Statement
required by Section 2.1.C;
I. Subordination Agreements. Subordination agreements in
form and substance acceptable to Purchaser from any and all
prior filers with conflicting security interests in the
Collateral; and
J. Other Documents. Such other documents, certificates,
submissions, instruments, and agreements as reasonably
requested by Purchaser relating to the transaction herein
contemplated.
Section 9.2. Conditions to All Purchases. The obligation
of Purchaser to make each Purchase, including the initial
Purchase, is subject to the following further conditions
precedent:
A. Purchaser shall have received, in accordance with the
provisions of Section 2.1 as of any Settlement Date, an
originally executed Receivables Purchase Settlement Statement
relating to such Purchase, signed by the chief executive
officer, the chief financial officer, the treasurer or any
other authorized officer or designee of Seller on behalf of
Seller.
B. As of the date of any Purchase:
1. The representations and warranties of Seller contained
herein shall be true, correct and complete in all material
respects on and as of the date of Purchase to the same
extent as though made on and as of that date;
2. All Receivables sold by Seller on such date hereunder
shall comply in all material respects with Section 7.3
hereof;
3. No event shall have occurred and be continuing or would
result from the consummation of the Purchase contemplated
by such Receivables Purchase Settlement Statement that
would constitute an Event of Default or permit the
acceleration or the increased amortization of the
obligations created, or but for the passage of time or the
giving of notice or both would constitute an Event of
Default or permit the acceleration or the increased
amortization of the obligations created, under this
Agreement or any other agreement to which Seller is a
party;
4. Seller shall have performed in all material respects
all agreements and satisfied all conditions which this
Agreement provides shall be performed by it on or before
such date of Purchase;
5. Seller shall have delivered such other and further
Receivables Purchase Settlement Statements as may be
required hereunder;
6. There shall not have occurred and be continuing an
Event of Default by Seller under this Agreement;
7. Seller shall have delivered such other and further UCC-
1s, amendments thereto and Subordination Agreements as
Purchaser shall deem reasonably necessary; and
8. Seller shall have delivered such other documents,
certificates, submissions, instruments, and agreements as
reasonably requested by Purchaser relating to the
transaction herein contemplated.
ARTICLE 10
Indemnities By Seller
Section 10.1. Right to Indemnification. Without prejudice
to any other rights that Purchaser may have hereunder or under
applicable law, Seller agrees to indemnify, pay and hold
Purchaser and the employees and agents of Purchaser
(collectively called the "Indemnitees") harmless from and
against, any and all liabilities, obligations, losses, damages
(including consequential damages, except as expressly set forth
below), penalties, actions, judgments, suits, claims, costs and
expenses (including without limitation the reasonable fees and
disbursements of counsel for such Indemnitees and reasonable
costs of investigation and accountants) (collectively,
"Indemnified Amounts"), which arise or result from: (i) any
breach by Seller of its duties hereunder individually or as the
Collection Agent, in connection with the collection of Sold
Receivables; (ii) any dispute, claim, offset or defense of any
Obligor (other than as a result of the Obligor's bankruptcy or
insolvency) to the payment of any Receivable owned by Purchaser
(including without limitation a defense based on such
Receivable or the underlying Contract not being the legal,
valid and binding obligation of such Obligor enforceable
against such Obligor in accordance with its terms), in either
case other than as a result of an act or omission of Purchaser
not required or permitted under this Agreement; (iii) any other
claim resulting from the sale of the Products and Services
underlying the Receivable (including without limitation any
warranty or product liability claims); or (iv) any breach by
Seller of any of the terms, covenants, conditions or
representations of this Agreement; excluding, in all cases
however, (A) Indemnified Amounts to the extent resulting from
gross negligence or willful misconduct on the part of such
Indemnitee, (B) consequential, indirect, punitive or exemplary
damages, except such damages which are imposed on the
Indemnitee in favor of any third party in connection with the
actions described in (i) through (iv) above, and (C) recourse
for uncollectible Receivables and all income and franchise
taxes on Purchaser; provided, further, that if an arbitrator or
court of competent jurisdiction in a final non-appealable order
determines that such Indemnified Amounts arose in part from
such Indemnitee's gross negligence or willful misconduct,
Seller shall reimburse such Indemnitee for the portion of such
claim not resulting from such Indemnitee's gross negligence or
willful misconduct. The obligations of Seller pursuant to this
Section 10.1 shall survive any termination of this Agreement.
Section 10.2. Notification of Potential Liability. Each
party will make good faith efforts to identify potential
situations involving possible liability under this Article 10,
and to determine the amount, if any, of such liability or
obligations, and will, upon learning of such potential
situations, promptly advise the other party.
Section 10.3. Litigation. The Seller agrees at its
expense, at the Purchaser's request, to cooperate with the
Purchaser in any action, suit or proceeding brought by or
against the Purchaser relating to any of the transactions
contemplated by this Agreement or to any of the Sold
Receivables owned by the Purchaser (other than an action, suit
or proceeding by the Seller against the Purchaser). In
addition, the Seller agrees to notify the Purchaser and the
Purchaser agrees to notify the Seller, at the Seller's expense,
promptly upon learning of any pending or threatened action,
suit or proceeding if the judgment or expenses of defending
such action, suit or proceeding would be covered by Section
10.1 and (except for an action, suit or proceeding by the
Seller against the Purchaser) to consult with the Purchaser,
concerning the defense and prior to settlement; provided,
however, that if (i) the Seller shall have acknowledged that
Section 10.1 would cover any judgment or expenses in any
action, suit or proceeding and (ii) in the Purchaser's sole
determination, the Seller has the financial ability to satisfy
such judgment or expenses, then the Seller shall have the
right, on the Purchaser's behalf but at the Seller's expense,
to defend such action, suit or proceeding with counsel selected
by the Seller and shall have sole discretion as to whether to
litigate, appeal or enter into an exclusively monetary
settlement; and provided further that (i) the Purchaser's
failure to provide any notice pursuant to this Section 10.3
shall not affect the indemnification of any party by the Seller
hereunder, and (ii) the Seller's sole and exclusive remedy in
the event of any such failure to give notice by the Purchaser
shall be a separate action against the Purchaser for damages
actually incurred by the Seller as a direct result of the
Purchaser's failure to provide such notice.
Section 10.4. Seller to Remain Obligated. Anything herein
to the contrary notwithstanding: (i) Seller shall remain
responsible and liable under the Contracts to the extent set
forth in such Contracts or otherwise to perform all of its
duties and obligations thereunder to the same extent as if the
Sold Receivables applicable to such Contracts had not been sold
to Purchaser hereunder; (ii) the exercise by Purchaser of any
of its rights hereunder shall not release Seller from any of
its duties or obligations under such Contracts; and (iii)
Purchaser shall not have any obligation or liability under such
Contracts by reason of the purchase of the applicable Sold
Receivables hereunder, nor shall Purchaser be obligated to
perform any of the obligations or duties of Seller thereunder.
ARTICLE 11
Termination
Section 11.1. Termination. Absent termination of this
Agreement pursuant to Article 12, this Agreement shall continue
in full force and effect until the earlier of the date (i)
which is ninety (90) days after written notice from any Party
to the other Party of its election to terminate this Agreement,
or (ii) on which all obligations of Seller to Purchaser and
Purchaser to Seller, have been satisfied in full (the
"Termination Date"). Subject to the provisions of Article 12,
(i) no termination of this Agreement shall affect any monetary
obligations hereunder of any Party arising prior to the
effective date of such termination, (ii) no termination of this
Agreement shall affect the obligation of Seller to make any
payments to Purchaser required hereunder, including but not
limited to payments of Credit Adjustments, (iii) no termination
of this Agreement shall affect any obligations which,
specifically by their terms, survive termination hereof,
including but not limited to, Seller's indemnification
obligations hereunder, and (iv) payments of any and all amounts
from Obligors with respect to Sold Receivables (regardless of
the existence of any other obligation or indebtedness of such
Obligors then owed to the Seller or any other person or entity)
to the Seller shall continue to be treated as Collections and
shall be applied to repayment of Sold Receivables as set forth
herein. Notwithstanding any such termination, Seller agrees
that from time to time thereafter it will promptly execute and
deliver all further instruments and documents, and take all
further actions, that may be necessary or that Purchaser may
reasonably request, in order to perfect, protect or more fully
evidence Purchaser's right, title and interest in and to the
Sold Receivables owned by Purchaser hereunder; to enable
Purchaser to exercise or enforce any such rights; to facilitate
maximum Collections; and/or otherwise to effectuate the intent
of the Parties hereto with respect to the Sold Receivables and
Collections.
ARTICLE 12
Events of Default
Section 12.1. Events of Default. Any of the following
events will constitute an Event of Default by Seller under this
Agreement:
(a) Except for the breach described in Section 12.1(c)
below, Seller fails to perform any of its obligations contained
herein or in any other related agreements between Seller and
Purchaser, and such breach is not cured within thirty (30) days
of Seller's receipt of written notice of such breach from
Purchaser;
(b) any representation, statement, report, or
certificate made or delivered by Seller to Purchaser is not
accurate in all material respects when made (or when deemed
made);
(c) Seller fails to pay any of its monetary obligations
payable to Purchaser hereunder or under any other agreements
related to this Agreement within five (5) days of when due and
payable;
(d) any event or condition shall occur which results in
the acceleration of the maturity of any debt of Seller or any
subsidiary of Seller to a third party in excess of $50,000,000
or enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of
such debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(e) final judgments or orders for the payment of money
in excess of $50,000,000 in the aggregate (excluding amounts
with respect to which a financially sound and reputable insurer
has admitted liability) shall be rendered against the Seller or
any subsidiary of Seller and such judgments or orders shall
continue unsatisfied or unstayed for a period of thirty (30)
consecutive days;
(f) Seller shall cease existence as a corporation,
other than as permitted under Section 7.5 hereof;
(g) Seller or any subsidiary of Seller 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; provided, however, that no
event that would otherwise constitute an Event of Default under
this Section 12.1(g) shall be an Event of Default if the total
assets of all entities with respect to which such event has
occurred which would otherwise have constituted an Event of
Default under Sections 12.1 , (g), or (h) do not exceed
$50,000,000 in the aggregate; or
(h) an involuntary case or other proceeding shall be
commenced against Seller or any subsidiary of Seller 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 Seller or any subsidiary of
Seller under the federal bankruptcy laws as now or hereafter in
effect; provided, however, that no event that would otherwise
constitute an Event of Default under this Section 12.1(h) shall
be an Event of Default if the total assets of all entities with
respect to which such event has occurred which would otherwise
have constituted an Event of Default under Sections 12.1 (g) or
(h) do not exceed $50,000,000 in the aggregate.
Section 12.2. Remedies. If any Event of Default is not
cured within the period specified above, (with respect to
Sections 12.1 (g) or (h) Purchaser may act immediately upon the
occurrence of any such Event of Default), Purchaser may, at any
time of its election, without prior notice or demand to Seller,
do any one or more of the following: (i) cease making
Purchases hereunder; (ii) declare the Facility Termination Date
to have occurred; (iii) apply a default charge to Seller's
outstanding monetary obligations then due and payable to
Purchaser hereunder equal to the lesser of four percent (4%)
per annum in excess of the Prime Rate, or the highest lawful
contract rate of interest permitted by applicable law;
provided, however, that such default charge shall accrue only
during the continuance of an Event of Default or until payment
of such monetary obligation and only be applicable to (A)
Collections which Seller has failed to pay to Purchaser in
accordance with the terms hereof after the applicable First
Collection Settlement Date, and (B) Credit Adjustments, any
delinquent Receivables payments described in Section 3.3.B(i)
hereof, and any other obligations payable by Seller to
Purchaser hereunder or under any other related agreements,
which Seller has failed to pay to Purchaser when due (other
than any indemnification obligations), or (iv) exercise any or
all rights under applicable law. All Purchaser's rights and
remedies are cumulative. The Purchaser's failure to exercise
any of its rights or remedies hereunder will not waive any of
its rights or remedies as to any past, current or future Event
of Default.
ARTICLE 13
Miscellaneous
Section 13.1. Costs and Expenses. Seller shall pay on
demand all costs and expenses incurred by Purchaser in
connection with enforcement of this Agreement and the other
documents to be delivered hereunder, including accountants' and
attorneys' fees and expenses. The obligations of Seller under
this Section 13.1 shall survive the termination of this
Agreement.
Section 13.2. Addresses. All Notices provided for
hereunder shall be in writing (including facsimile
transmissions or telegraphic or telex communications) and
mailed (return receipt requested), telecopied, telegraphed,
telexed or delivered, as appropriate, to each party at the
address set forth as follows or at such other address as the
party affected may designate in a written notice to the other
parties hereto complying as to delivery with the terms of this
Article 13. All such Notices and fund transfers shall be
effective when received.
If Notice to Purchaser:
Deutsche Financial Services (UK) Limited
1 Station View
Guildford, Surrey
England, GU1 4JY
Attention: Senior Vice-President
Facsimile No. 011-44-1-483-500340
With a copy to:
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, MO 63141-5832
Attention: General Counsel
Facsimile No.: (314) 523-3190
If Notice to Seller:
Applied Materials, Inc.
3050 Bowers Avenue, M/S 2036
Santa Clara, CA 95054
Attention: Diane Gale, Assistant Treasurer
Facsimile No.: (408) 986-7825
With a copy to:
Applied Materials, Inc.
3050 Bowers Avenue, M/S 2062
Santa Clara, CA 95054
Attention: Barry Quan, Managing Director, Legal Affairs
Facsimile No.: (408) 986-2836
All funds transfers shall be made as follows:
If funds transfer to Purchaser:
Bank: Deutsche Bank London
Swift # : DEUTGB2LXXX:
Account No.: 0154344-001
Reference: Deutsche Financial Services
If funds transfer to Seller:
Bank: Mellon Bank, Pittsburgh, PA.
ABA Routing No.: 043000261
Account No.: 020 8830
Reference: Applied Materials Inc.
Section 13.3. Further Cooperation. Seller agrees that from
time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be necessary or that Purchaser may
reasonably request, in order to perfect, protect or more fully
evidence Purchaser's right, title and interest in and to the
Sold Receivables owned by Purchaser hereunder or to enable
Purchaser to exercise or enforce any such rights. Purchaser
will promptly execute and deliver any release or termination
statement required under the UCC when this Agreement shall have
terminated and all Sold Receivables shall have either been
collected in full or otherwise discharged in a manner
reasonably satisfactory to Purchaser.
Section 13.4. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction,
shall, to the extent permitted by law, not in any way be
affected or impaired thereby.
Section 13.5. Amendments and Waivers. No amendment or
waiver of any provision of this Agreement, nor consent to any
departure by Seller or Purchaser therefrom, shall in any event
be effective unless the same shall be in writing and signed by
Seller and Purchaser, and then such waiver or consent shall be
effective only in the specified instance and for the specific
purpose for which given.
Section 13.6. Cumulative Rights. All rights and remedies
of the parties hereto under this Agreement shall, except as
otherwise specifically provided herein, be cumulative and
nonexclusive of any rights and remedies which they may have
under any other agreement or instrument, by operation of law,
or otherwise.
Section 13.7. Effectiveness. This Agreement shall become
effective when it shall have been executed and delivered by all
parties hereto and thereafter shall be binding upon and inure
to the benefit of Seller and Purchaser and their respective
successors and assigns, except that neither party shall have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the other party, which
consent may in the discretion of such other party be withheld;
provided, however, that Purchaser may participate any of its
interest in this Agreement and the Sold Receivables to a third
party, with the consent of Seller if no Event of Default exists
and no consent of Seller but with notice to Seller if an Event
of Default exists.
Section 13.8. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which
taken together shall constitute one and the same Agreement.
Section 13.9. Confidentiality. The Purchaser and the Seller
each shall hold all non-public information obtained pursuant to
this Agreement and the transactions contemplated hereby or
effected in connection herewith confidential. Purchaser may
make disclosure reasonably required by any bona fide transferee
or prospective transferee in connection with the contemplated
transfer of any Sold Receivable or participation in this
Agreement by the Purchaser so long as such Person signs a
confidentiality agreement. Either Party may disclose
confidential information as required by law or as requested by
any governmental agency or representative thereof or pursuant
to legal process; provided that, unless specifically prohibited
by applicable law or court order, each party hereto shall
notify the other parties hereto of any request by any
governmental agency or representative thereof (other than any
such request in connection with an examination of the financial
condition of the Purchaser by such governmental agency) for
disclosure of any such non-public information prior to
disclosure of such information to permit the party affected to
contest such disclosure, if
possible; provided further that in no event shall the Purchaser
be obligated or required to return any materials furnished by
the Seller.
Section 13.10. No Affiliation. Purchaser and Seller each
hereby represents and warrants that neither Purchaser nor
Seller is under common control or ownership with the other.
Neither Seller nor Purchaser shall have any right or authority
to bind the other or create any obligation or responsibility,
express or implied, on behalf of the other, or in the other's
name, except as may be herein expressly permitted. Nothing
stated in this Agreement shall be construed as constituting
Seller and Purchaser as partners or joint venturers, or as
creating the relationship of employer and employee, master and
servant, franchisor and franchisee, or principal and, except
for Seller being Collection Agent, agent between Seller and
Purchaser.
Section 13.11. List of Schedules and Exhibits. The
following Schedules and Exhibits are attached to this Agreement
and are incorporated herein by this reference:
Schedule A - Seller's Chief Executive Offices
Schedule B - Acceptable Obligors
Schedule C - Form of Receivable Verification Letter
Exhibit I - Forms of Opinions of Counsel
Exhibit II - Form of Receivables Purchase
Settlement Statement
Exhibit III - Seller's Payment Terms
Exhibit IV - Seller's Collection Procedures
Exhibit V - Form of Monthly Status Report
Section 13.12. Limitation on Damages. Except as may be
expressly provided for in this Agreement or any other agreement
between them, neither Purchaser nor Seller shall be liable to
the other for exemplary, consequential or punitive damages.
Section 13.13. Jurisdiction; Jury Trial Waiver, Etc. ANY
LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE OR OTHER MATTER
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE
DOCUMENTS INSTRUMENTS OR AGREEMENTS RELATED HERETO WILL BE
TRIED IN A COURT OF COMPETENT JURISDICTION LOCATED IN SANTA
CLARA COUNTY, CALIFORNIA, BY A JUDGE WITHOUT A JURY. SELLER AND
PURCHASER WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH
PROCEEDING. SELLER AND PURCHASER FURTHER WAIVE ANY RIGHT TO
CLAIM ANY EXEMPLARY OR PUNITIVE DAMAGES IN ANY SUCH PROCEEDING.
Section 14. Governing Law. Purchaser and Seller acknowledge
and agree that this and all other agreements between Purchaser
and Seller have been substantially negotiated, and will be
substantially performed, in the State of California.
Accordingly, Purchaser and Seller agree that this Agreement and
all matters relating hereto shall be governed by and construed
in accordance with the laws of the State of California.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement by their officers thereunto duly
authorized as of the date first above written.
THIS AGREEMENT CONTAINS JURY WAIVER AND PUNITIVE DAMAGES
WAIVER PROVISIONS.
APPLIED MATERIALS, INC.
By: /s/ Nancy H. Handel
Title: Vice President Global
Finance and Treasurer
By: /s/ Joseph R. Bronson
Title: Senior Vice President,
Chief Financial Officer and
Chief Administrative Officer
DEUTSCHE FINANCIAL SERVICES
(UK) LIMITED
By: /s/ Richard C. Goldman
Title: Director
SCHEDULE A
CHIEF EXECUTIVE OFFICES
Applied Materials, Inc.
3050 Bowers Avenue,
Santa Clara, CA 95054
SCHEDULE B
ACCEPTABLE OBLIGORS
The following Obligors shall be deemed acceptable, subject
in all events to the terms of the Agreement and subject further
to the maximum Outstanding Balance limitation set forth
opposite such Obligor's name, which additionally are subject,
in all events to the A/R Limit:
OBLIGOR MAXIMUM
OUTSTANDING
BALANCE LIMITATION
Advanced Micro Devices-Saxony $10,213,579.15
Compagnie IBM France $3,872,538.16
Intel Electronics Ltd. $1,822,071.56
Micron Technology Italia S.R.L. $5,146,919.68
Philips Bedrijven $1,000,000.00
Siemens AG $849,150.00
STMicroelectronics $1,852,668.00
SCHEDULE C
FORM OF RECEIVABLE VERIFICATION LETTER
SCHEDULE C
Applied Materials, Inc.
1 Station View
Guildford, Surrey
England GU1 4JY
For Comparison Purposes Only
This is not a request for remittance
________________
Gentlemen,
We are conducting an audit of our Invoice Processing
System. Please advise whether the following unpaid charges
against your account as of _______ are in agreement with your
records.
The items indicated may or may not include all of the current
charges. Verification of only those listed is requested.
In either case, please sign below in the space provided and
return this form directly to Applied Materials Inc. at the
address listed above in the postage prepaid envelope enclosed
for your convenience. Please do not make any payments to this
address.
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Invoice Number Invoice Date P.O. Number Amount Due
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --
Total:
Remarks:
- ---------------------------------------------------------------
- ---------------------------------------------------------------
THE ABOVE LISTED INVOICES, NUMBERS, DATES, AND AMOUNTS
Do agree with our records
Do not agree with our records
Authorized Signature
If you have any questions, please call Dan Clayton at (408) 563-7315.
EXHIBIT I
FORMS OF OPINIONS OF COUNSEL
January 28, 1999
Deutsche Financial Services (UK) Limited
1 Station View
Guilford, Surrey, England, GU1 4JY
Ladies and Gentlemen:
We have acted as counsel to Applied Materials, Inc., a Delaware
corporation (the "Company") in connection with that certain
Receivable Purchase Agreement (the "Agreement") dated as of
January 26, 1999 between the Company and you.
In this regard, we have examined executed originals or copies
of the Agreement, a copy of which have been delivered to you,
including the letter from the Company to you (the
"Assignment") dated January 28, 1999 titled Receivables
Purchase Settlement Statement (Including Assignment of
Receivables) delivered in connection therewith, together with
such other exhibits and schedules delivered in connection with
the Agreement.
Based upon such examination and having regard for legal
considerations which we deem relevant, we are of the opinion
that each of the Agreement and the Assignment are the legal,
valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms.
With your permission we have assumed the following
(a) authenticity of original documents and the genuineness of
all signatures; (b) the conformity to the originals of all
documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations and
warranties contained in the records, documents, instruments and
certificates we have reviewed; (d) that the documents referred
to herein were duly authorized, executed and delivered on
behalf of the respective parties thereto and, other than with
respect to the Company, are legal, valid, and binding
obligations of such parties; (e) the compliance by you with any
applicable requirements to file returns and pay taxes under the
California Franchise Tax Law; (f) the compliance by you with
any state or federal laws or regulations applicable to you in
connection with the transactions described in the Agreement and
(g) the absence of any evidence extrinsic to the provisions of
the written agreements between the parties that the parties
intended a meeting contrary to that expressed by those
provisions.
We express no opinion as to matters of law in jurisdictions
other that the State of California and the United States.
Our opinion that any document is legal, valid, binding, or
enforceable in accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance,
moratorium, or other similar laws relating to or affecting
the enforcement of creditors' rights generally;
(b) general principles of equity, including without
limitation concepts of mutuality, reasonableness, good
faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding
in equity or at law;
(c) rights to indemnification and contribution which
may be limited by applicable law and equitable principles;
and
(d) the unenforceability under certain circumstances
of provisions expressly or by implication waiving
broadly or vaguely stated rights (including,
without limitation, waivers of any objection to
venue and forum non conveniens and the right to a
jury trial), the benefits of statutory
constitutional provisions, unknown future rights,
and defenses to obligations or rights granted by
law, where such waivers are against public policy
or prohibited by law.
We note that you are receiving of even date herewith the
opinion of Barry Quan, Managing Director, Legal Affairs of the
Company, as to certain matters relating to the Company. We
have made no independent examination of such matters.
This opinion is solely for the benefit of Deutsche Financial
Services (UK) Limited in connection with the transaction
covered by the first paragraph of this letter and may not be
relied upon, used, circulated, quoted or referred to by, nor
may copies hereof be delivered to, any other person without our
prior written approval. We disclaim any obligation to update
this opinion letter for events occurring or coming to our
attention after the date hereof.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE
LLP
EXHIBIT II
FORM OF RECEIVABLES PURCHASE SETTLEMENT STATEMENT
RECEIVABLES PURCHASE SETTLEMENT STATEMENT
(Including Assignment of Receivables)
Deutsche Financial Services (UK) Limited
1 Station View
Guildford, Surrey
England GU1 4JY
Attention: Senior Vice President
Re: Assignment of Receivables
Pursuant to Section 2.1.C of the Receivables Purchase
Agreement (the "Agreement") dated as of January 26, 1999 by and
between Applied Materials, Inc. ("Seller"), as Seller, and
Deutsche Financial Services (UK) Limited ("Purchaser"), as
Purchaser, Seller hereby sells, transfers and assigns to
Purchaser, without recourse, except as provided in the
Agreement, Seller's right, title and interest in and to all of
the Receivables described on the Attachment 1 hereto, and all
collateral, if any, securing such Receivables. Such
Receivables satisfy the requirements of the Agreement for
Purchase by Purchaser, including without limitation Section 7.3
thereof. Seller represents that all such Receivables are free
and clear of all security interests, liens, charges,
encumbrances and rights of others other than the respective
Obligor's interest in the Products and/or Services relating
thereto, and other than as otherwise expressly permitted in the
Agreement. Terms utilized herein which are not otherwise
defined shall bear the meanings set forth in the Agreement.
Seller further certifies that (i) Attachment 1 hereto
is accurate and complete on and as of this date and each
Receivable and Obligor reflected thereon or covered thereby
complies in all respects with Section 7.3 of the Agreement;
(ii) Seller is in compliance in all material respects with all
terms and covenants set forth in the Agreement on and as of
this date, (iii) Seller's representations and warranties set
forth in the Agreement are true, correct and complete in all
material respects on and as of this date to the same extent as
though made on and as of this date; provided, however, no
representation or warranty is made as to any Receivable other
than the Receivables described on Attachment 1; (iv) no event
has occurred and is continuing or will result from the
consummation of the Purchase contemplated hereby that would
constitute an Event of Default, or but for the passage of time
or the giving of notice or both would constitute an Event of
Default under the Agreement; and (v) Seller has performed in
all material respects all agreements and has satisfied all
conditions which the Agreement provides shall be performed by
it on or before this date.
APPLIED MATERIALS, INC.
By:
___________________________
Title:
__________________________
Date:
__________________________
Deutsche Financial Services (UK) Limited, as Purchaser under
the Agreement, hereby accepts the Assignment of Receivables set
forth above.
DEUTSCHE FINANCIAL SERVICES
(UK) LIMITED
By:
___________________________
Title:
__________________________
Date:
__________________________
Exhibit III
Seller's Payment Terms
Payment Terms
Standard payment terms for Systems shipments for the Applied
Materials Europe (AME) region are "90% due in 30 days from
receipt of equipment not to exceed 45 days from shipment, and
10% not to exceed 75 days from shipment, if no fault of Applied
Materials". Exceptions to the standard payment terms are
often made to accommodate high volume purchase agreements,
customer-satisfaction issues, and competitive issues.
The exceptions normally include a smaller percentage due in 30
days (i.e. 80% due in 30 days, 20% not to exceed 75 days....),
or longer pay periods attached to the first-tier invoice (90%
due in 60 days, ......), or longer pay periods attached to the
second-tier invoice (......, 20% not to exceed 90 days, if no
fault of Applied Materials).
The first-tier invoice is always due based on invoice date
(which approximates the ship date), and is not subject to
technical acceptance or any other measure. The second-tier
invoice is payable subject to technical acceptance (according
to the specifications on the Purchase Order) by the customer.
Exhibit IV
Seller's Collection Procedures
Applied Materials, Inc.
Accounts Receivable Collections Procedure
The standard systems collections procedure for the first-tier
invoice (which implies that there is no technical acceptance
requirement) is as follows:
a) No later than 5 days prior to the payment due date, the
Applied Materials Inc. (AMAT) collection representative
contacts the Obligor's accounts payable department for
payment status on the invoice.
b) If the Obligor's accounts payable department requires a copy
of the invoice, the AMAT collection representative will
deliver this to the customer on the same day via fax, or
overnight if original copy is required.
c) If there is a pricing or proof of delivery issue, the
collection representative will follow-up with the product
business group and the invoicing group to verify prices
listing vs. purchase order information and obtain a copy of
the airway bill or proof of delivery.
d) Issues that delay or prohibit payment by the Obligor are
immediately escalated to the Obligor's purchasing department
and to the AMAT account team, so that resolution is obtained
as soon as possible.
e) If an Obligor is not paying or slow-paying an invoice(s) for
an undetermined reason, the issue is immediately escalated
to the account team and the global credit & collections
manager. The non-payment issue is escalated within the
Obligor's organization at the purchasing, accounts payable,
and corporate finance levels.
f) Non-payment of a first-tier invoice beyond 30 days from due
date, with no known set payment date or an unacceptable
payment date, results in a "demand" letter that outlines
the total amount due and the expected payment date. Failure
by the Obligor to settle the terms of the "demand" letter
results in a credit hold. The credit hold represents no
shipments or limited shipments, and may impact all systems,
spares, service agreement, labor, etc. services and product
shipments.
g) At the point that a "demand" letter is sent to a customer,
the issue is also escalated internally within AMAT to the
Treasurer, Global Operations Finance Director, Regional
President, and Regional Finance Director levels.
h) In some cases, longer short-term (1-2 months) payment
schedules are agreed to accommodate cash-flow issues.
i) Only as a last resort, collections suits and repossession of
product activities occur.
Exhibit V
Form of Monthly Status Report
(Seller to Supply)
Receivables Assigned to Deutsche Financial Services (UK) Limited
Under A Receivables Purchase Agreement, Dated As Of Jan. 26, 1999.
Initial Funding Date: 01/28/99
First Collection Settlement Date: 04/13/99
Report Date: 02/27/99
Receivables Status Report
Date of Inelig- Date Balance
Invoice to DFS Invoice ible Collected Date Wired to Out-
Obligor Invoice # Date Due Date Sale Amount($) Amount Amount Collected DFS Aging standing Comments
Sub-Total By Customer:
Grand Total: