EXHIBIT 10.17
RECEIVABLES SALE AGREEMENT
Dated as of
January 23, 2003
by and between
MPOWER COMMUNICATIONS CORP.,
as Seller and Subservicer, and
RFC CAPITAL CORPORATION,
as Purchaser
RECEIVABLES SALE AGREEMENT (the "Agreement"), dated as of January 23,
2003, by and between MPOWER COMMUNICATIONS CORP., a Nevada corporation, as
Seller and Subservicer, and RFC CAPITAL CORPORATION, a Delaware corporation, as
Purchaser.
RECITALS
A. The Seller desires to sell certain of its telecommunication receivables
and the Purchaser is a corporation formed for the purpose of purchasing certain
telecommunication receivables from time to time.
B. The Purchaser shall retain the complete right and ultimate authority to
perform certain servicing, administrative and collection functions in respect of
the receivables purchased by the Purchaser under this Agreement.
C. The Purchaser desires that the Subservicer be appointed to perform
certain servicing, administrative and collection functions in respect of the
Purchased Receivables.
D. The Seller has been requested and is willing to act as the Subservicer.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I - DEFINITIONS
Section 1.1. Certain Defined Terms. In addition to the terms defined
above, the capitalized terms used in this Agreement shall have the following
meanings:
"ADVERSE CLAIM" means any claim of ownership, any lien, security interest
or other charge or encumbrance, or any other type of preferential arrangement
having the effect of a lien or security interest.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person within the meaning of control under Section 15 of the Securities Act
of 1933.
"BASE RATE" means, as of any Purchase Date, a variable rate equal to the
prime lending rate as listed in The Wall Street Journal, Midwest Edition, plus
two percent (2.0%) per annum.
"BILLED AMOUNT" means, with respect to any Receivable the amount billed or
to be billed to the related Payor.
"BILLING AND COLLECTION AGENT" means the party performing billing and
collection services for and on behalf of the Seller pursuant to the terms of a
Billing and Collection Agreement.
"BILLING AND COLLECTION AGREEMENT" means any written agreement whereby a
party is obligated to provide end-user billing and collection services with
respect to the Seller's accounts.
"BILLING DATE" means the date on which the original invoice with respect
to a Receivable was submitted to the related Payor which shall be not more than
45 days from the date on which telecommunication services were provided to the
end user of such services.
"BUSINESS DAY" means any day of the year other than a Saturday, Sunday or
any day on which banks are required, or authorized, by law to close in the State
of Ohio.
"CARRIER" means a provider of telecommunication services which services
are resold by the Seller.
1
"CARRIER AGREEMENT" means any written agreement, contract or arrangement
whereby a Carrier is obligated to provide certain services to the Seller.
"CLEARINGHOUSE AGENT" means the party performing services for and on
behalf of the Seller pursuant to the terms and provisions of a Clearinghouse
Agreement.
"CLEARINGHOUSE AGREEMENT" means any written agreement, contract or
arrangement other than a Carrier Agreement or a Billing and Collection Agreement
whereby a party is obligated to perform certain services for the Seller,
including, without limitation, processing certain information provided by the
Seller to the Clearinghouse Agent and remitting such processed information to
one or more Billing and Collection Agents for billing and collection of Seller's
accounts.
"CLOSING DATE" means January 23, 2003.
"COLLATERAL" shall have the meaning set forth on Exhibit F.
"COLLECTION ACCOUNT" means the account titled "Collection Account"
established pursuant to Section 3.1.
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds of such Receivable.
"COLLECTION ANALYSIS FEE" means an amount, determined by Purchaser in
connection with each of its periodic audits, equal to .5% of all Collections
received in an account other than the Lockbox Account.
"CONCENTRATION LIMIT" means an amount equal to 5% of the aggregate
outstanding Net Value.
"CONTRACT" means an agreement (or agreements) pursuant to, or under which
a Payor shall be obligated to pay for telecommunication services rendered by the
Seller from time to time.
"CREDIT RESERVE REQUIREMENT" means, as of any Purchase Date, an amount
equal to 5.00% of the Net Value of Purchased Receivables including (a) Defaulted
Receivables to the extent not repurchased and (b) those Receivables to be
purchased on such Purchase Date.
"CUSTOMER BASE" means all of the Seller's past, present and future
customer contracts, agreements, LOA's or other arrangements, any customer list
and Record relating thereto and any information regarding prospective customers
and contracts, agreements, LOA's or other arrangements and all of the goodwill
and other intangible assets associated with any of the foregoing.
"DEFAULTED RECEIVABLE" means a Purchased Receivable as to which, on any
Determination Date (a) the Purchaser determines was not an Eligible Receivable
on the Purchase Date relating to that Purchased Receivable; or (b) the Purchaser
otherwise reasonably deems any part of the Net Value thereof to be
uncollectible.
"DEFAULTED RECEIVABLE AMOUNT" means the Net Value of all Purchased
Receivables which have become Defaulted Receivables since the prior Purchase
Date.
"DETERMINATION DATE" means the Business Day preceding the Closing Date and
the Purchase Date of each week.
"ELIGIBLE PAYOR" means a Payor which is (a) (i) a corporation, limited
liability company, partnership or any statutory organization organized under the
laws of any jurisdiction in the United States and having its principal office in
the United States or which is otherwise approved in writing by the Purchaser;
(ii) an individual or sole proprietorship which is a resident of any
jurisdiction in the United States or which is otherwise approved in writing by
the Purchaser; (iii) a Clearinghouse Agent; or (iv) a Billing and Collection
Agent; (b) not an Affiliate of any of the parties hereto; (c) has executed and
delivered to the Seller either (i) a Contract, (ii) an LOA, (iii) a
Clearinghouse Agreement or (iv) a Billing and Collection Agreement; (d) not
subject to bankruptcy or
2
insolvency proceedings at the time of sale of the Receivables to be purchased;
(e) the only obligor with respect to Receivables in which the Purchaser has a
first priority perfected ownership interest; and (f) the only obligor with
respect to a Receivable and has not otherwise assigned, transferred or
compromised its obligation to make payment on any Receivable.
"ELIGIBLE RECEIVABLES" means the portion of the Seller's Receivables
arising in the ordinary course of the Seller's business from the sale of goods
or services to an Eligible Payor. An account shall not be an Eligible Receivable
unless such account (i) is subject to Purchaser's perfected first priority
security interest and no other lien, encumbrance, or security interest, (ii) is
evidenced by an invoice or other documentary evidence satisfactory to Purchaser,
(iii) is unconditionally due and payable in U.S. dollars, and (iv) conforms to
the warranties regarding Purchased Receivables contained in this Agreement.
Notwithstanding the foregoing, Eligible Receivables shall not include any of the
following:
(a) a Receivable that is unpaid more than 90 days after the Billing Date;
(b) a Receivable that arises from a Payor that is a creditor of the
Seller, has or has asserted a right of setoff, has disputed its liability or has
made any claim with respect to its obligation to pay, or an account that is
subject to a levy, prior assignment, claim, lien, subrogation right or security
interest;
(c) a Receivable that arises from an Affiliate;
(d) a Receivable that arises from an employee of Seller or an employee of
an Affiliate;
(e) a Receivable, when combined with the Net Value of Purchased
Receivables and Defaulted Receivables, will result in Seller exceeding the
Concentration Limit;
(f) a Receivable that arises from a Payor (i) that is subject to an
Insolvency Event, is not solvent, has gone out of business; (ii) to whom goods
are being shipped on a "cash on delivery" or C.O.D. basis; or (iii) as to which
Purchaser or Seller is aware of an imminent Insolvency Event or a material
impairment of the financial condition of such Payor;
(g) a Receivable for which Purchaser has notified the Seller that the
Receivable or the Payor is unsatisfactory or unacceptable (which Purchaser
reserves the right to do in its sole good faith discretion at any time);
(h) a Receivable where 50% or more of all amounts due are more than 60
days from the Billing Date; or
(i) a Receivable that is subject to any credit, contra account, allowance,
adjustment, return of goods, or discount.
"ELIGIBLE RECEIVABLE AMOUNT" means, with respect to any Eligible
Receivable, an amount equal to its Billed Amount after giving effect to the
applicable Gross Liquidation Rate.
"EVENT OF SELLER DEFAULT" has the meaning specified in Section 8.1.
"GOVERNMENTAL AUTHORITY" means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"GROSS LIQUIDATION RATE" means a factor, conclusively determined by the
Purchaser from time to time, with respect to a designated Payor Class based on
(i) the Seller's historical experience with respect to Collections for such
Payor Class, (ii) the terms and provisions of any Billing and Collection
Agreement and (iii) the terms and provisions of any Clearinghouse Agreement,
determined on the basis of actual Collections which are expected to be received
on a Receivable within 90 days of its Billing Date; provided, however, that,
barring a material adverse
3
change in the collection performance of the receivables, the initial Gross
Liquidation Rate for billed accounts receivable will be 94%, and the Gross
Liquidation Rate for unbilled accounts receivable will be 74%.
"GUARANTOR" means Mpower Holding Corporation, a Delaware corporation.
"INSOLVENCY EVENT" means, with respect to any person, the occurrence of an
event whereby the Person makes a general assignment for the benefit of
creditors; or where any proceeding is instituted by or against the Person
seeking to adjudicate it a bankrupt or insolvent, or which seeks the
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of the Person or any of its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, custodian or
other similar official for it or for any substantial part of its property.
"LOA" means a letter of agency, or other authorization, obtained by the
Seller from each Payor designating the Seller as its long distance
telecommunications provider and otherwise of a type or in a form acceptable
under applicable laws.
"LOCKBOX ACCOUNT" means the account established pursuant to Section
3.1(a).
"NET VALUE" of any Receivable at any time means an amount (not less than
zero) equal to (a)(i) the Eligible Receivable Amount multiplied by (ii) .90;
minus (b) all Collections received with respect thereto.
"PAID RECEIVABLES AMOUNT" means the amount of Collections up to the
Purchase Price of all Purchased Receivables received in the Lockbox Account
since the prior Determination Date.
"PASS THROUGH COLLECTION AMOUNT" means, as of each Determination Date, the
aggregate amount deposited in the Collection Account in excess of the Net Value
of each Purchased Receivable, including Collections pertaining to Receivables
not purchased under this Agreement, since the prior Determination Date.
"PAYOR" means, the Person obligated to make payments in respect of any
Receivables.
"PAYOR CLASS" means, with respect to any Payor, one of the following: (a)
Clearinghouse Agent; (b) Billing and Collection Agent; (c) statutory
organization; or (d) individuals and sole proprietorships.
"PERSON" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust, voluntary
association, joint venture, a government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"PROGRAM FEE" means an amount equal to, as of any Purchase Date, (i)
7/360, of the annualized Base Rate, multiplied by (ii) the then current Net
Value of all Purchased Receivables including (A) Defaulted Receivables not yet
repurchased by Seller and (B) those Receivables to be purchased on such Purchase
Date; provided, however, that in the event there is more than one Purchase Date
per week, the Program Fee as of each subsequent Purchase Date shall mean an
amount equal to 7/360, of the annualized Base Rate, multiplied by the current
Net Value of the Receivables to be purchased on such Purchase Date; and
provided, further, that if the Program Fee paid in any month is less than
$7,000, an amount equal to the difference between $7,000 and the aggregate
amount of the Program Fees paid in such month shall be paid on the first
Purchase Date of the following month.
"PURCHASE COMMITMENT" means an amount not to exceed $7,500,000.
"PURCHASE COMMITMENT FEE" means, a fee due and owing by the Seller to the
Purchaser equal to $393,750 payable as follows: $131,250 on the Closing Date and
$131,250 on each of the first and second anniversary of such Closing Date. Any
increases in the Purchase Commitment amount will be subject to the payment by
Seller to Purchaser of an additional fee of one and three-quarter percent
(1.75%) per annum of the amount of any such respective increase.
4
"PURCHASE DATE" means the Closing Date and thereafter, such other Business
Day during each week that the Seller and Purchaser mutually agree; provided,
that unless agreed otherwise such day shall be Wednesday of each such week and
in any event there shall occur a "Purchase Date" for purposes of this Agreement
not less than once per week.
"PURCHASE PRICE" has the meaning specified in Section 2.5.
"PURCHASED RECEIVABLE" means any Receivable which has been purchased by
the Purchaser.
"PURCHASER" means RFC Capital Corporation, a Delaware corporation,
together with its successors and assigns.
"RECEIVABLE" means (a) an account or account receivable arising from the
provision or sale of telecommunication services (and any services or sales
ancillary thereto) by the Seller including the right to payment of any interest
or finance charges and other obligations of the Payor with respect thereto; (b)
all security interests or liens and property subject thereto from time to time
purporting to secure payment by the Payor; (c) all rights, remedies, guarantees,
indemnities and warranties and proceeds thereof, proceeds of insurance policies,
UCC financing statements and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such account or
account receivable including, but not limited to, any Billing and Collection
Agreement and any Clearinghouse Agreement, and (d) all Collections, Records and
proceeds with respect to any of the foregoing. In the instance of a Receivable
with respect to which the Payor is a Billing and Collection Agent pursuant to a
Billing and Collection Agreement, the amount owed to the Seller by the Billing
and Collection Agent is the "Receivable" which is eligible for Purchase by the
Purchaser and not the amount owing to, or collected by, the Billing and
Collection Agent from the end user of telecommunication services provided by the
Seller.
"RECORDS" means all Contracts, LOA's and other documents, books, records
and other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Seller or the Subservicer with respect to
Receivables (including Purchased Receivables) and the related Payors.
"RELATED DOCUMENTS" means all documents required to be delivered under
this Agreement.
"REQUIRED INFORMATION" means, with respect to a Receivable, (a) the
identity of the Payor, (b) the Eligible Receivable Amount, (c) the Billing Date,
(d) the Payor telephone number and (e) the Payor account number, if applicable.
"SELLER" means Mpower Communications Corp., a Nevada corporation, together
with its successors and assigns.
"SERVICING RECORDS" means all documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) prepared
and maintained by the Subservicer or the Purchaser with respect to the Purchased
Receivables and the related Payors.
"SUBSERVICER" means the Seller, or any Person designated as Subservicer
hereunder.
"TERMINATION DATE" means the earlier of (a) January 23, 2006; (b) the
occurrence of an Event of Seller Default as set forth in Section 8.1 of this
Agreement; or (c) ninety days following the Seller's delivery of a written
notice to the Purchaser setting forth Seller's desire to terminate this
Agreement and the payment of the Termination Fee with respect thereto.
"TERMINATION FEE" means an amount to be paid by the Seller to the
Purchaser equal to (A) 4.0% of the Purchase Commitment in the event of an
occurrence of an Event of Seller Default resulting in the termination of this
Agreement; or (B) in the event the Seller desires to terminate this Agreement,
such termination shall be
5
effective only in the event that the Seller has (i) provided the Purchaser
ninety days prior written notice thereof and (ii) paid to Purchaser and
Purchaser has received from Seller an amount equal to (a) 4.0% of the Purchase
Commitment if such termination occurs during the one year period commencing on
the Closing Date and ending on the one year anniversary of the Closing Date, or
(b) 2.0% of the Purchase Commitment in the event such termination occurs during
the period commencing the day after the one year anniversary of the Closing Date
through the Termination Date.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the Seller's state of organization.
Section 1.2. Other Terms. (a) All terms defined in Article 9 of the UCC,
and not specifically defined in this Agreement, are used in this Agreement as
defined in such Article 9 of the UCC.
(b) Any accounting terms used in this Agreement or in any Related Document
and not specifically defined herein shall be construed in accordance with the
respective meanings given to such terms under GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto.
(c) Unless the context of this Agreement or any other Related Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, and the term "including" is not
limiting, The words "hereof," "herein," "hereby," "hereunder," and similar terms
in this Agreement or any other Related Document refer to this Agreement or such
other Related Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Related Document, as the case may be.
Article, section, subsection, clause, schedule, and exhibit references herein
are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the other Related Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns.
(d) All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
ARTICLE II - PURCHASE AND SALE; PURCHASER DETERMINATIONS
Section 2.1. Offer to Sell. Seller shall offer to sell, transfer, assign
and set over to Purchaser those Eligible Receivables set forth on a list, in
form satisfactory to Purchaser, delivered by the Seller to the Purchaser no
later than 5:00 p.m. on the Business Day immediately preceding a Purchase Date.
Section 2.2. Purchase of Eligible Receivables. Upon receipt of the list of
Eligible Receivables described in Section 2.1, the Purchaser, in its sole
discretion, will select which of the Eligible Receivables offered by Seller that
the Purchaser will purchase. The closing of the purchase of the Eligible
Receivables selected for purchase by Purchaser shall occur on the Purchase Date
and the Purchase Price shall be determined and paid in accordance with Section
2.5 below.
Section 2.3. Effect of Purchase of Eligible Receivables. Upon payment of
the Purchase Price, Seller will have sold, transferred, assigned, set over and
conveyed to Purchaser all of Seller's right, title and interest in and to the
Purchased Receivables, and title to such Purchased Receivables shall have passed
to Purchaser at such time. The Seller shall not take any action inconsistent
with such ownership and, from and after the date of such transfer, shall not
claim any ownership in any Purchased Receivable.
Section 2.4. Determinations of the Purchaser. On and as of each
Determination Date, which shall occur no less frequently than once per week, the
Purchaser will determine, in good faith, the following:
6
(a) the amount of Eligible Receivables
(b) the Net Value of all Purchased Receivables;
(c) the Paid Receivables Amount;
(d) the Credit Reserve Requirement;
(e) the Defaulted Receivable Amount;
(f) the amount of any accrued and unpaid Program Fee;
(g) the amount of any unpaid Collection Analysis Fee;
(h) any other amounts due and owing Purchaser pursuant to the terms of
this Agreement; and
(i) the Pass Through Collection Amount.
The Purchaser's determinations of the foregoing amounts shall be
conclusive in the absence of manifest error. The Purchaser shall notify the
Seller of such determinations.
Section 2.5. Purchase Price and Payment. (a) The Purchase Price for
Receivables purchased on the initial Purchase Date shall be (i) an amount equal
to the aggregate Net Values of the Eligible Receivables selected for purchase by
Purchaser reduced by (ii) the sum of (A) the Program Fee due as of such initial
Purchase Date; (B) the amount of the Credit Reserve Requirement; (C) the amount
of the Purchase Commitment Fee; and (D) other amounts due the Purchaser in
accordance with this Agreement. The Purchase Price shall be paid by the
Purchaser to the Seller by wire transfer on each Purchase Date.
(b) The Purchase Price for Receivables purchased on each Purchase Date
after the initial Purchase Date shall be (i) an amount equal to the aggregate
Net Values of the Eligible Receivables selected for purchase by Purchaser on the
particular Purchase Date reduced by (ii) the sum of (A) the Program Fee due as
of such Purchase Date; (B) the Credit Reserve Requirement as of such Purchase
Date; (C) any Defaulted Receivable Amount; and (D) other amounts due the
Purchaser in accordance with this Agreement. The Purchase Price shall be paid by
the Purchaser to the Seller by ACH or wire transfer on each Purchase Date.
Section 2.6 Pass Through Collection Amount. On each Purchase Date,
Purchaser shall withdraw the Pass Through Collection Amount from the Collection
Account and, subject to any offset required under Section 5.6 of this Agreement,
remit such amount by wire transfer to an account designated by the Seller;
provided, however, with respect to Receivables processed or cleared pursuant to
any Carrier Agreement, Clearinghouse Agreement or Billing and Collection
Agreement, if applicable, any Pass Through Collection Amount shall be retained
by the Purchaser in the Collection Account until such time that the Seller's
billing cycle (or batch) to which such Pass Through Collection Amount applies is
deemed closed by the Purchaser which, absent the occurrence of an Event of
Seller Default and provided that the Purchaser has received information in
sufficient form and format to allow the Purchaser to properly apply and/or post
Collections against Purchased Receivables, will occur no later than the next
immediate Purchase Date following such determination.
Section 2.7 Limitation. The aggregate Net Value of all Purchased
Receivables shall not at any time exceed the Purchase Commitment.
ARTICLE III - ESTABLISHMENT OF ACCOUNTS; SECURITY INTEREST
Section 3.1. Lockbox and Collection Accounts. (a) Prior to the Closing
Date, Seller and Purchaser will cooperate to establish a Lockbox Account into
which all Collections from Payors with
7
respect to Receivables shall be deposited. The Lockbox Account will be
maintained at the expense of the Seller. The Seller agrees to deposit all
Collections it receives with respect to Receivables in said Lockbox Account and
will instruct in writing all Payors to make all payments on Receivables to said
Lockbox Account. All funds in said Lockbox Account will be remitted to the
Collection Account as instructed by the Purchaser.
(b) Prior to the Closing Date, the Purchaser will establish and maintain a
Collection Account. Funds from the Lockbox Account will be deposited in the
Collection Account. The Purchaser acknowledges that certain amounts deposited in
the Collection Account may relate to Receivables other than Purchased
Receivables and that such amounts continue to be owned by the Seller subject to
the security interest granted to Purchaser pursuant to this Agreement.
(c) The Seller does hereby sell, transfer, assign, set over and convey to
the Purchaser all right, title and interest of the Seller in and to all amounts
deposited, from time to time, in the Lockbox Account and the Collection Account.
Seller hereby acknowledges and agrees that Purchaser shall have sole dominion
and control over the Lockbox Account and the Collection Account. Seller shall
have no right to access or withdraw funds from the Lockbox Account or the
Collection Account. Any Collections relating to Receivables held by the Seller
or the Subservicer pending deposit to the Lockbox Account as provided in this
Agreement, shall be held in trust for the benefit of the Purchaser until such
amounts are deposited into the Lockbox Account. All Collections in respect of
Purchased Receivables received by the Seller and not deposited directly by the
Payor in the Lockbox Account shall be remitted to the Lockbox Account within two
days of receipt, and if such Collections are not remitted by Seller on a timely
basis, in addition to its other remedies hereunder, the Purchaser shall be
entitled to receive a late charge (which shall be in addition to the Program
Fee) equal to the Base Rate plus 4% per annum of such Collections or the maximum
rate legally permitted if less than such rate, calculated as of the first
Business Day of such delinquency.
Section 3.2. Grant of Security Interest. It is the intention of the
parties to this Agreement that each payment of the Purchase Price by the
Purchaser to the Seller for Purchased Receivables to be made under this
Agreement shall constitute payment of consideration for a purchase of such
Purchased Receivables and not a loan. In addition to Purchaser's ownership of
the Purchased Receivables pursuant to this Agreement, it is the intention of the
parties that this Agreement shall constitute a security agreement under the UCC
and any other applicable law, and Seller, in order to secure payment of the
Purchased Receivables and all of Seller's obligations hereunder, hereby grants
to the Purchaser a first priority perfected security interest in all of the
Collateral. Notwithstanding the foregoing, Purchaser acknowledges that the
Seller may desire to sell certain of its Customer Base after the date of this
Agreement. Purchaser hereby agrees that it will not unreasonably withhold its
consent to such sale(s) if, and only if, at the time of such sale: (i) the
portion of Seller's Customer Base subject to the sale does not relate in any way
to any Purchased Receivables, and (ii) no Event of Seller Default exists. If the
conditions set forth in (i) and (ii) above are met, and Purchaser consents to a
sale, Purchaser shall execute and deliver to the Seller an instrument
authorizing the termination of any UCC-1 financing statement filed by Purchaser
that relates to that portion of the Customer Base subject to such sale, but only
to the extent that the particular UCC-1 being terminated relates to such portion
of the Customer Base.
Section 3.3. Further Action Evidencing Purchases. The 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 appropriate, or that the Purchaser may reasonably request, in order
to perfect, protect or more fully evidence the transfer of ownership of the
Purchased Receivables or to enable the Purchaser to exercise or enforce any of
its rights hereunder.
ARTICLE IV - CONDITIONS PRECEDENT
Section 4.1. Conditions Precedent to Purchases. Each Purchase from the
Seller by the Purchaser shall be subject to the following conditions precedent:
8
(a) Prior to the initial Purchase Date,
(i) the Seller shall have delivered to the Purchaser a copy of each
written notice delivered to or received by Payors in the form attached as
Exhibit B;
(ii) Seller shall have delivered to Purchaser (A) audited financial
statements as of December 31, 2001 and for the year then ended, and (B)
unaudited interim financial statements for the year to date period ended
November 30, 2002;
(iii) Seller shall have delivered to Purchaser (A) a secretary's
certificate of Seller in the form attached hereto as Exhibit C; (B) an opinion
of counsel in the form of Exhibit D hereto; (C) evidence, satisfactory to
Purchaser, that Seller's monthly receipts are collected into a lockbox at a
financial institution acceptable to Purchaser; (D) references, satisfactory to
Purchaser, from certain trade vendors; and (E) subordination agreements or
termination statements from creditors of Seller relating to security interests
in Seller's accounts receivable or customer base;
(iv) the Purchaser shall have (A) received background checks on Xxxxx
Xxxx, Xxx Xxxxxx, and Xxxxx Xxxxxxxxx, the results of which shall be
satisfactory to the Purchaser in its sole discretion; (B) completed its due
diligence review of Seller's business; (C) determined, in its sole discretion,
that Seller is in compliance with any and all regulatory and administrative
requirements relating to its business, (D) received and reviewed Seller's Plan
of Reorganization, and (E) received evidence, satisfactory to Purchaser that
Seller's lenders have released any and all security interests in Sellers'
Receivables and Customer Base and that any other Seller debt is fully
subordinated to Purchaser;
(v) Seller shall have paid the Purchase Commitment Fee; and
(vi) Purchaser shall have received the guaranty of Mpower Holding
Corporation in a form acceptable to Purchaser and Seller.
(b) Prior to the initial Purchase Date and each subsequent Purchase Date,
(i) no Event of Seller Default shall have occurred and the Seller shall be
in compliance in all material respects with each of its covenants and
representations set forth in Article V of this Agreement;
(ii) the Termination Date shall not have occurred;
(iii) the Seller shall have delivered to Purchaser a corporate certificate
of Seller in the form attached hereto as Exhibit E;
(iv) the Seller shall have taken such action as is reasonably required to
address issues arising out of the audits conducted by Purchaser as contemplated
by this Agreement; and
(vi) Seller shall have delivered to the Purchaser a complete copy of any
notice referenced in Section 4.1(a)(i) above that Seller has not delivered to
Purchaser in connection with any other Purchase Date.
ARTICLE V - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
Section 5.1. Representations, Warranties and Covenants as to the Seller.
(a) The Seller represents and warrants to the Purchaser, as of the date of this
Agreement and as of each subsequent Purchase Date, as follows:
(i) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and is duly qualified
to do business and is in good standing in each
9
jurisdiction in which it is doing business and has the power and authority to
own and convey all of its properties and assets and to execute and deliver this
Agreement and the Related Documents and to perform the transactions contemplated
thereby; and each is the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms;
(ii) The execution, delivery and performance by the Seller of this
Agreement and the Related Documents and the transactions contemplated thereby
(A) have been duly authorized by all necessary corporate action on the part of
the Seller; (B) do not contravene or cause the Seller to be in default under (1)
any contractual restriction contained in any loan or other agreement or
instrument binding on or affecting the Seller or its property, or (2) any law,
rule, regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Seller or its property; and (C) does not result
in or require the creation of any Adverse Claim upon or with respect to any of
the property of the Seller (other than in favor of the Purchaser as contemplated
hereunder);
(iii) Except as disclosed on the Information Certificate, dated _____,
___, (the "Information Certificate") there is no court order, judgment, writ,
pending or threatened action, suit or proceeding, of a material nature against
or affecting the Seller, its officers or directors, or the property of the
Seller, in any court or tribunal, or before any arbitrator of any kind or before
or by any Governmental Authority (A) asserting the invalidity of this Agreement
or any of the Related Documents; (B) seeking to prevent the sale and assignment
of any Receivable or the consummation of any of the transactions contemplated
thereby; (C) seeking any determination or ruling that might materially and
adversely affect the Seller, this Agreement, the Related Documents, the
Receivables, the Contracts or any LOA; or (D) asserting a claim for payment of
money in excess of $50,000;
(iv) The primary business of the Seller is the provision of
telecommunication services and/or equipment. All license numbers issued to the
Seller by any Governmental Authority are set forth on Schedule I and the Seller
has complied in all material respects with all applicable laws, rules,
regulations, orders and related Contracts and all restrictions contained in any
agreement or instrument binding on or affecting the Seller, and has and
maintains all permits, licenses, certifications, authorizations, registrations,
approvals and consents of Governmental Authorities or any other party necessary
for the business of the Seller and each of its Subsidiaries;
(v) The Seller (A) has filed on a timely basis all tax returns (federal,
state, and local) required to be filed and has paid or made adequate provisions
for the payment of all taxes, assessments, and other governmental charges due
from the Seller; (B) the financial statements of the Seller through November 30,
2002, copies of which have been furnished to the Purchaser, fairly present the
financial condition of the Seller, all in accordance with generally accepted
accounting principles consistently applied; and (C) since November 30, 2002,
there has been no material adverse change in any such condition, business or
operations;
(vi) All information furnished by or on behalf of the Seller to the
Purchaser in connection with this Agreement is true and complete in all material
respects and does not omit to state a material fact and the sales of Purchased
Receivables under this Agreement are made by the Seller in good faith and
without intent to hinder, delay or defraud present or future creditors of the
Seller;
(vii) The Lockbox Account is the only lockbox account to which Payors have
been or will be instructed to direct Receivable proceeds and each Payor of an
Eligible Receivable has been directed upon its receipt of the form of notice
attached hereto as Exhibit B, which such notice was mailed or provided to such
Payors prior to the initial Purchase Date, to remit all payments with respect to
such Receivable for deposit in the Lockbox Account;
(viii) The principal place of business and chief executive office of the
Seller are located at the address of the Seller set forth under its signature
below and there are not now, and during the past four months there have not
been, any other locations where the Seller is located (as that term is used in
the
10
UCC) or keeps Records except as set forth in the designated space beneath its
signature line in this Agreement;
(ix) Except as disclosed on the Information Certificate, the legal name of
the Seller is as set forth at the beginning of this Agreement and the Seller has
not changed its legal name in the last six years, and during such period, the
Seller did not use, nor does the Seller now use any tradenames, fictitious
names, assumed names or "doing business as" names other than those appearing on
the signature page of this Agreement;
(x) The Seller has not done anything to impede or interfere with the
collection by the Purchaser of the Purchased Receivables and has not amended,
waived or otherwise permitted or agreed to any deviation from the terms or
conditions of any Purchased Receivable or any related Carrier Agreement,
Clearinghouse Agreement, Billing and Collection Agreement, Contract or LOA so as
to (A) create an Adverse Claim with respect to any Receivable; or (B) materially
affect the ability of Subservicer or the Purchaser to act in its capacity as
such; and has not allowed any invoice due and owing by the Seller relating to
any Carrier Agreement, Clearinghouse Agreement or Billing and Collection
Agreement to become any more than thirty days past due, unless (i) such invoice
is being contested in good faith and by appropriate proceedings and with respect
to which Seller has established adequate reserves, or (ii) (A) Seller is
negotiating, or already has negotiated, in good faith, an extension with the
payee of such invoice and (B) such payee generally grants such extensions in the
normal course of business; and
(xi) the disclosures made on the Information Certificate are true and
accurate in all material respects.
Section 5.2 Covenants of Seller. The Seller hereby covenants and agrees as
follows:
(i) Seller will deliver to the Purchaser: (A) within 30 days after the end
of each calendar month the financial statements, including balance sheet and
income statement prepared in accordance with generally accepted accounting
principles, of the Seller as of the end of such month as kept by Seller in the
ordinary course of its business; (B) within 90 days after the end of the fiscal
year of the Seller its audited financial statements, including balance sheet and
income statement prepared by Deloitte & Touche LLP or by an accounting firm
acceptable to Purchaser; and (C) within 20 days of the end of each calendar
month, a payables aging report in a form satisfactory to Purchaser.
(ii) Seller will deliver to the Purchaser the following information at the
following times in electronic format: (A) at least once per week, a weekly
accounts payable report in a form acceptable to Purchaser and a customer payment
file showing at least four weeks payment experience; (B) within 20 days of the
end of each calendar month, account obligor demographics information, including
without limitation, name, address, and phone number; and (C) within 10 days of
the end of each billing cycle, a billing file showing new invoices for the most
recent billing cycle.
(iii) The Seller shall file on a timely basis all tax returns (federal,
state, and local) required to be filed and shall pay or make adequate provisions
for the payment of all taxes, assessments, and other governmental charges due
from the Seller, except (A) taxes, assessments, and other governmental charges
that are being contested in good faith by Seller by appropriate proceeding and
for which Seller has set aside on its books adequate reserves; and (B) to the
extent failure to do so would not reasonably be expected to result in a Material
Adverse Effect. Upon the request of Purchaser, Seller shall deliver to Purchaser
evidence reasonably requested by Purchaser demonstrating that Seller is in
material compliance with this covenant;
(iv) The Seller shall indicate in its Records that ownership interest in
any Purchased Receivable is held by the Purchaser. Seller shall respond to any
inquiries with respect to ownership of a Purchased Receivable by stating that it
is no longer the owner of the Purchased Receivable and that ownership of the
Purchased Receivable is held by the Purchaser; and
11
(v) Seller agrees that all documents relating to the Purchased Receivables
shall be held in trust by the Seller and the Subservicer, for the benefit of the
Purchaser as the owner of the Purchased Receivables, and possession of any
Required Information relating to the Purchased Receivables so retained is for
the sole purpose of facilitating the servicing of the Purchased Receivables and
carrying out the terms of this Agreement. Such retention and possession is at
the will of the Purchaser and in a custodial capacity for the benefit of the
Purchaser only.
Section 5.3. Representations and Warranties of the Seller as to Purchased
Receivables. With respect to each Purchased Receivable sold pursuant to this
Agreement the Seller represents and warrants, as of the date hereof and as of
each subsequent Purchase Date, as follows:
(a) Each Purchased Receivable is an Eligible Receivable and (i) includes
all the Required Information; (ii) is the legal, valid and binding obligation of
an Eligible Payor; (iii) was created by the provision or sale of
telecommunication services or equipment by the Seller in the ordinary course of
its business; (iv) has a Purchase Date no later than 90 days from its Billing
Date; (v) is not a Purchased Receivable which with respect to which, as of any
Determination Date, payment by the Payor of such Receivable has been received
and is not duplicative of any other Receivable; and (vi) is owned by the Seller
free and clear of any Adverse Claim, and the Seller has the right to sell,
assign and transfer the same and interests therein as contemplated under this
Agreement and no consent other than those secured and delivered to the Purchaser
on or prior to the Closing Date from any Governmental Authority, the Payor, a
Carrier, the Billing and Collection Agent, the Clearinghouse Agent or any other
Person shall be required to effect the sale of any such Purchased Receivable;
(b) The Billed Amount of each Purchased Receivable is: (i) is net of any
adjustments or other modifications contemplated by any Carrier Agreement,
Clearinghouse Agreement, Billing and Collection Agreement or otherwise; and (ii)
neither the Receivable nor the related Carrier Agreement, Clearinghouse
Agreement, Billing and Collection Agreement or Contract has been compromised,
adjusted, extended, satisfied, subordinated, rescinded, set-off or modified by
the Seller, the Payor, the Carrier, the Clearinghouse Agent or the Billing and
Collection Agent, and is not subject to compromise, adjustment, termination or
modification, whether arising out of transactions concerning the Contract, any
Carrier Agreement, Clearinghouse Agreement, Billing and Collection Agreement or
otherwise; and
(c) There are no procedures or investigations pending or threatened before
any Governmental Authority: (i) asserting the invalidity of any Purchased
Receivable, Carrier Agreement, Clearinghouse Agreement, Billing and Collection
Agreement, LOA or such Contract; (ii) asserting the bankruptcy or insolvency of
the related Payor; (iii) seeking the payment of any Purchased Receivable or
payment and performance of the related Carrier Agreement, Clearinghouse
Agreement, Billing and Collection Agreement, or such other Contract or LOA; or
(iv) seeking any determination or ruling that might materially and adversely
affect the validity or enforceability of such Receivable or the related Carrier
Agreement, Clearinghouse Agreement, Billing and Collection Agreement, or such
other Contract or LOA.
Section 5.4. Negative Covenants of the Seller. The Seller shall not,
without the written consent of the Purchaser, which such consent will not be
unreasonably withheld:
(a) Sell, assign or otherwise dispose of, or create or suffer to exist any
Adverse Claim or lien upon any Receivable and related Contracts, its Customer
Base, the Lockbox Account, the Collection Account, or any other account in which
any Collections of any Receivable are deposited, or assign any right to receive
income in respect of any Receivable;
(b) Submit or permit to be submitted to Payors any invoice for
telecommunication services or equipment rendered by or on behalf of Seller which
contains a "pay to" address other than the Lockbox Account;
12
(c) Make any change to (i) the location of its chief executive office or
the location of the office where Records are kept or (ii) its corporate name or
use any tradenames, fictitious names, assumed names or "doing business as"
names; or
(d) Enter into or execute any Clearinghouse Agreement or Billing and
Collection Agreement (other than those listed on Schedule 3 hereof) or any
amendment or modification thereof.
Section 5.5. Notice of Breach under Article V. Upon discovery by any party
to this Agreement of a breach of any representation, warranty or covenant in
this Article V which materially and adversely affects the value of a Purchased
Receivable or the interests of the Purchaser therein, the party discovering such
breach shall give prompt written notice to the other parties to this Agreement.
Section 5.6. Repurchase Obligations. On each Purchase Date and in
connection with any Termination Date, the Net Value of any Defaulted Receivables
shall be deducted from the amount otherwise payable to the Seller pursuant to
Section 2.5 and, provided the full Net Value of such Defaulted Receivables is
deducted from the Purchase Price or amounts otherwise payable to Seller, such
Defaulted Receivables shall then be considered to have been repurchased by the
Seller. In the event that the full Net Value of such Defaulted Receivables is
not deducted from the Purchase Price or amounts otherwise payable to Seller
pursuant to the foregoing sentence, the Purchaser shall deduct any such
deficiency from the Pass Through Collection Amount or make demand upon the
Seller to pay any such deficiency to the Purchaser. Upon full payment of the
amounts set forth above to the Purchaser, the Seller will be deemed to have
repurchased such Defaulted Receivable. The repurchase obligation described in
this Section 5.6 shall be secured by the Collateral.
ARTICLE VI - ADMINISTRATION OF COLLECTIONS UPON TERMINATION
Section 6.1. Allocation of Moneys following Termination Date. Upon the
occurrence of a Termination Date hereunder, the Purchaser shall continue to
administer and monitor the Lockbox Account and any and all Collections until
such time as Purchaser has received Collections equal to the sum of the
following,: (a) the outstanding Net Value of all Purchased Receivables, (b) the
Defaulted Receivable Amount, (c) any Termination Fee and (d) any other amounts
owing Purchaser hereunder. After Purchaser has received Collections equal to the
sum of the amounts set forth in (a)-(d) above, then Purchaser shall remit any
excess Collections to Seller.
6.2 Fees. In view of the impracticality and difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of lost profits of Purchaser as a result of an early cancellation or
termination, Seller hereby agrees to pay to Purchaser the applicable Termination
Fee and other fees and interest as set forth in this Agreement. The Termination
Fee and any other fee or expense payable to Purchaser in connection with any
Termination Date shall be presumed to be the amount of damages sustained by
Lender as a result of such early termination or cancellation, and Seller agrees
that such amount is reasonable under the circumstances.
ARTICLE VII - APPOINTMENT OF THE SUBSERVICER
Section 7.1. Appointment of the Subservicer. Subject to Section 7.5, as
consideration for the Seller's receipt of that portion of the Pass Through
Collection Amount relating to Purchased Receivables, the Purchaser hereby
appoints the Seller and the Seller hereby accepts such appointment to act as
Subservicer under this Agreement. The Subservicer may, with the prior consent of
the Purchaser, which consent shall not be unreasonably withheld, subcontract
with a subservicer for billing, collection, servicing or administration of the
Receivables. Any termination or resignation of the Subservicer under this
Agreement shall not affect any claims that the Purchaser may have against the
Subservicer for events or actions taken or not taken by the Subservicer arising
prior to any such termination or resignation.
13
Section 7.2. Duties and Obligations of the Subservicer. (a) The
Subservicer shall service the Purchased Receivables and enforce the Purchaser's
respective rights and interests in and under each Purchased Receivable and each
related Contract or LOA; and shall take, or cause to be taken, all such actions
as may be necessary or advisable to service, administer and collect each
Purchased Receivable all in accordance with (i) customary and prudent servicing
procedures for telecommunication receivables of a similar type, and (ii) all
applicable laws, rules and regulations; and shall serve in such capacity until
the termination of its responsibilities pursuant to Section 7.4 or 8.1. The
Subservicer shall at any time permit the Purchaser or any of its representatives
to visit the offices of the Subservicer and examine and make copies of all
Servicing Records;
(b) The Subservicer shall notify the Purchaser of any action, suit,
proceeding, dispute, offset, deduction, defense or counterclaim that is or may
be asserted by any Person with respect to any Purchased Receivable.
(c) The Purchaser shall not have any obligation or liability with respect
to any Purchased Receivables which may arise out of a related Contract, nor
shall it be obligated to perform any of the obligations of the Subservicer
hereunder.
Section 7.3. Subservicing Expenses. The Subservicer shall be required to
pay for all expenses incurred by the Subservicer in connection with its
activities hereunder (including any payments to accountants, counsel or any
other Person) and shall not be entitled to any payment or reimbursement
therefor.
Section 7.4. Subservicer Not to Resign. The Subservicer shall not resign
from the duties and responsibilities hereunder except upon determination that
(a) the performance of its duties hereunder has become impermissible under
applicable law and (b) there is no reasonable action which the Subservicer could
take to make the performance of its duties hereunder permissible under
applicable law evidenced as to clause (a) above by an opinion of counsel to such
effect delivered to the Purchaser.
Section 7.5. Authorization of the Purchaser. The Seller hereby
acknowledges that the Purchaser (including any of its successors or assigns),
shall retain the authority to take any and all reasonable steps in its name and
on its behalf necessary or desirable in the determination of the Purchaser to
collect all amounts due under any and all Purchased Receivables, process all
Collections, commence proceedings with respect to enforcing payment of such
Purchased Receivables and the related Contracts, and adjusting, settling or
compromising the account or payment thereof. The Seller shall furnish the
Purchaser (and any successors thereto) with any powers of attorney and other
documents necessary or appropriate to enable the Purchaser to carry out its
servicing and administrative duties under this Agreement, and shall cooperate
with the Purchaser to the fullest extent in order to facilitate the
collectibility of the Purchased Receivables.
ARTICLE VIII - EVENTS OF SELLER DEFAULT
Section 8.1. Events of Seller Default. If any of the following events
(each, an "Event of Seller Default") shall occur and be continuing:
(a) The Seller (either as Seller or Subservicer) shall materially fail to
perform or observe any term, covenant or agreement contained in this Agreement;
(b) The Seller or Guarantor, any subsidiary of Seller or Guarantor, or any
other Person who owns at least a 51% ownership interest in Seller or Guarantor
defaults: (i) whether as primary or secondary obligor, in the payment of any
principal or interest on any obligation for borrowed money beyond any applicable
grace period or, if such obligation is payable on demand, fails to pay such
obligation upon demand; or (ii) in the observance of any covenant, term or
condition contained in any
14
agreement, if the effect of such default is to cause, or to permit any other
party to such obligation to cause, all or part of such obligation to become due
before its stated maturity;
(c) A Seller Insolvency Event shall have occurred and, other than with
respect to any voluntary Insolvency Event initiated or instituted by the Seller
or an Affiliate, which has not been cured within 30 days of such Insolvency
Event;
(d) There is a material breach of any of the representations and
warranties of the Seller as stated in Sections 5.1 or 5.3 that has remained
uncured for a period of 30 days, or, as such breach may pertain to a Purchased
Receivable, has not been cured pursuant to Section 5.6;
(e) Any Governmental Authority shall file notice of a lien with regard to
any of the assets of the Seller or with regard to the Seller which remains
undischarged for a period of 30 days;
(f) As of the first day of any respective month, the average Net Value of
Purchased Receivables which became Defaulted Receivables during the prior three
month period shall exceed 5.0% of the Net Value of all Purchased Receivables
then owned by the Purchaser at the end of each of such three months;
(g) This Agreement shall for any reason cease to evidence the transfer to
the Purchaser (or its assignees or transferees) of the legal and equitable title
to, and ownership of, the Purchased Receivables;
(h) The termination of any Clearinghouse Agreement, if applicable, and/or
any Carrier Agreement or Billing and Collection Agreement for any reason
whatsoever absent the consummation of a substitute Clearinghouse Agreement,
Carrier Agreement and/or Billing and Collections Agreement, as the case may be,
within ten Business Days of the termination thereof, and/or, any invoice due and
owing by the Seller relating to any Carrier Agreement, Clearinghouse Agreement
or Billing and Collection Agreement has become more than thirty days past due;
or
(i) The amount deposited hereunder (net of withdrawals required hereunder)
in the Seller Credit Reserve Account has remained at less than the Specified
Credit Reserve Balance for fourteen consecutive days;
then and in any such event, the Purchaser may, by notice to the Seller declare
that an Event of Seller Default shall have occurred and, the Termination Date
shall forthwith occur, without demand, protest or further notice of any kind,
and the Purchaser shall make no further Purchases from the Seller. The
Purchaser, in addition to all other rights and remedies under this Agreement,
shall retain all other rights and remedies provided under the UCC and other
applicable law, which rights shall be cumulative.
ARTICLE IX - INDEMNIFICATION
Section 9.1. Indemnities by the Seller. (a) Without limiting any other
rights that the Purchaser or any director, officer, employee or agent of the
Purchaser (each an "Indemnified Party") may have under this Agreement or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, and related costs and expenses of any
nature whatsoever, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts") which
may be imposed on, incurred by or asserted against an Indemnified Party in any
way arising out of or relating to this Agreement or the ownership of the
Purchased Receivables or in respect of any Receivable or any Contract,
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of any Indemnified Party.
(b) Any Indemnified Amounts subject to the indemnification provisions of
this Section shall be paid to the Indemnified Party within five Business Days
following demand therefor, together with
15
interest at Base Rate plus 4% per annum or the highest rate permitted by law
from the date of demand for such Indemnified Amount.
ARTICLE X - MISCELLANEOUS
Section 10.1. Notices, Etc. All notices required hereunder shall be in
writing and mailed or telecommunicated, or delivered as to each party hereto, at
its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other party hereto. All such notices and communications shall be deemed given
(i) on the first business day following receipt of hand delivery; (ii) on the
Business Day following deposit in the U.S. Mail, postage paid, using certified
or registered mail (return receipt requested); (iii) on the date of a telecopy
confirmation provided that the original copy thereof also is sent by certified
or registered mail; or (iv) the next Business Day after deposit with a
nationally recognized overnight delivery service.
Section 10.2. Remedies. No failure or delay on the part of the Purchaser
to exercise any right hereunder shall operate as a waiver or partial waiver
thereof. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 10.3. Binding Effect; Assignability. (a) This Agreement shall be
binding upon and inure to the benefit of the Seller, the Subservicer, the
Purchaser and their respective successors and permitted assigns. Neither the
Seller nor the Subservicer may assign any of their rights and obligations
hereunder or any interest herein without the prior written consent of the
Purchaser. The Purchaser may, at any time, without the consent of the Seller or
the Subservicer, assign any of its rights and obligations hereunder or interest
herein to any Person. Without limiting the generality of the foregoing, the
Seller acknowledges that the Purchaser has assigned its rights hereunder for the
benefit of third parties. The Seller does hereby further agree to execute and
deliver to the Purchaser all documents and amendments presented to the Seller by
the Purchaser in order to effectuate the assignment by the Purchaser in
furtherance of this Section 10.3 consistent with the terms and provisions of
this Agreement. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until its termination; provided, that the rights and
remedies with respect to any breach of any representation and warranty made by
the Seller pursuant to Article V and the indemnification and payment provisions
of Article IX shall be continuing and shall survive any termination of this
Agreement.
(b) The parties have participated jointly in the negotiation and drafting
of this Agreement. Seller acknowledges that it has had the opportunity to
consult with its own legal counsel regarding the terms and conditions set forth
in this Agreement.
Section 10.4. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification under Article IX, the Seller agrees to pay upon demand, all
reasonable costs and expenses in connection with this Agreement and the other
documents to be delivered hereunder, including, without limitation: (i) the
periodic auditing of the Seller and the modification or amendment of this
Agreement; (ii) the reasonable fees and out-of-pocket expenses of counsel for
the Purchaser with respect to (A) advising the Purchaser as to its rights and
remedies under this Agreement or (B) the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement or the other
documents to be delivered hereunder; (iii) any and all accrued Program Fee and
amounts related thereto not yet paid to the Purchaser; (iv) any and all Purchase
Commitment Fees and amounts related thereto not yet paid to the Purchaser; (v)
any and all Termination Fees and amounts related thereto, if applicable, and not
yet paid to the Purchaser; and (vi) any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing or recording of this Agreement or the other
agreements and documents to be delivered hereunder, and agrees to indemnify and
save each Indemnified Party from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees. For purposes of Section 10.4(a)(i), Purchaser may conduct up to
16
four field audits of Seller's business each year, provided that, upon the
occurrence and continuance of an Event of Default, there will be no limit on the
number of field audits that may be conducted by Purchaser.
(b) If the Seller or the Subservicer fails to pay any Lockbox Account fees
or other charges or debits related to such accounts, or to pay or perform any
agreement or obligation contained under this Agreement, the Purchaser may pay or
perform, or cause payment or performance of, such agreement or obligation, and
the expenses of the Purchaser incurred in connection therewith shall be payable
by the party which has failed to so perform.
Section 10.5. Amendments; Waivers; Consents. No modification, amendment or
waiver of, or with respect to, any provision of this Agreement or the Related
Documents, shall be effective unless it shall be in writing and signed by each
of the parties hereto. This Agreement, the Related Documents and the documents
referred to therein embody the entire agreement among the Seller, the
Subservicer and the Purchaser, and supersede all prior agreements and
understandings relating to the subject hereof, whether written or oral.
Section 10.6. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF
THE PURCHASER IN THE PURCHASED RECEIVABLES OR REMEDIES HEREUNDER OR THEREUNDER,
IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF OHIO.
(b) THE SELLER AND THE SUBSERVICER HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF OHIO AND THE UNITED STATES DISTRICT
COURT LOCATED IN THE SOUTHERN DISTRICT OF OHIO, AND EACH WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE SIGNATURE PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE SELLER
AND THE SUBSERVICER EACH HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER
OR ITS PROPERTY, OR THE SUBSERVICER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION. THE SELLER AND THE SUBSERVICER EACH HEREBY AGREE THAT THE
EXCLUSIVE AND APPROPRIATE FORUMS FOR ANY DISPUTE HEREUNDER ARE THE COURTS OF THE
STATE OF OHIO AND THE UNITED STATES DISTRICT COURT LOCATED IN THE SOUTHERN
DISTRICT OF OHIO AND AGREE NOT TO INSTITUTE ANY ACTION IN ANY OTHER FORUM.
(c) THE SELLER, AND THE SUBSERVICER EACH HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
Section 10.7. Execution in Counterparts; Severability. This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity,
17
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 10.8. Confidentiality. The Seller understands and agrees to keep
confidential, and shall cause its respective directors, officers, shareholders,
employees, agents, and attorneys to keep confidential the terms and conditions
of this Agreement, all documents referenced herein and the respective terms
thereof, and any communication between the parties regarding this Agreement or
the services to be provided hereunder hereby, except to the extent that (a) any
party makes any disclosure to his or its auditors, attorneys or other
professional advisors, (b) any disclosure is otherwise required by law or
pursuant to any rule or regulation of any federal, state or other governmental
authority or regulatory agency, provided that Seller provides prior written
notice thereof or (c) the Seller is in receipt of the prior written consent of
Purchaser with respect to any compromise by Seller of the confidentiality
contemplated hereunder. Seller further understands and agrees that the violation
by the Seller or its agents of the foregoing shall entitle the Purchaser, at its
option, to obtain injunctive relief without a showing of irreparable harm or
injury and without bond.
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
MPOWER COMMUNICATIONS CORP., as Seller
and Subservicer
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: President
Address at which the chief executive office
is located:
Address: 000 Xxxxx'x Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Phone number: (000) 000-0000
Telecopier number: (000) 000-0000
Additional locations at which the Seller
does business and maintains Records:
__________________________________________
__________________________________________
Additional names under which Seller does
business:
__________________________________________
__________________________________________
RFC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Vice President
Address: RFC Capital Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: President
Phone number: 000-000-0000
Telecopier number: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Group Counsel
Textron Financial Corporation
00000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone number: 000-000-0000
Telecopier number: 000-000-0000
19
SCHEDULE 1
SELLER'S LICENSE NUMBERS
Name of Seller License Numbers
-------------- -----------------------------------------
Mpower Communications Corp.
Certificate of Public Convenience and
Necessity Granted under Order I.
00-00-000. California
Certificate of Public Convenience and
Necessity, Certificate No. 5752. Florida
Certificate of Public Convenience and
Necessity, Certificate No. R-482. Georgia
Certificate of Public Convenience and
Necessity Granted under Order 97-0165.
Illinois
Certificate of Public Convenience and
Necessity, Granted under Case No.
U-12202. Michigan
Certificate of Public Convenience and
Necessity 2068 Sub 4. Nevada
Certificate of Public Convenience and
Necessity 90-9098. Ohio
Certificate of Public Convenience and
Necessity SPCOA No. 60311. Texas
1-1
SCHEDULE 2
LIST OF NAMES UNDER WHICH SELLER IS DOING BUSINESS
AND ADDRESSES AT WHICH SELLER IS DOING BUSINESS
Names Under Which Seller
Is Doing Business and Payee Names Addresses At Which Seller Is Doing Business
------------------------------------------- -----------------------------------------------
Xxxxx X. Xxxx-President
Mpower Communications Corp. 000 Xxxxx'x Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Ontario Sales Xxxxxx
0000 Xxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxx, XX 00000
San Diego Sales Xxxxxx
0000 Xxxxxx Xxx Xxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
Irvine/Orange County Sales Xxxxxx
0000 Xxxx Xx.
Xxxxx X
Xxxxxx, XX 00000
West LA/South Bay/Orange County Sales
Xxxxxx
00000 X. Xxxxxxx Xxx.
Xxxxx 000
Xxxxxxxx, XX 00000
Canoga Park/San Xxxxxxxx Valley Sales
Xxxxxx
0000 Xxxxxx Xxxxxx Xxxxx 000
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Sacramento Sales Xxxxxx
0000 Xxxxxxx Xxxx Xx.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Walnut Creek Sales Xxxxxx
0000 Xxxxx Xxxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
*Ft. Lauderdale/South Florida
Sales Offices 0000 Xxxxxxx Xx.
Xxxxx 000
Xxxxx, XX 00000
*West Palm Beach Sales Xxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
2-1
Names Under Which Seller
Is Doing Business and Payee Names Addresses At Which Seller Is Doing Business
------------------------------------------- -----------------------------------------------
*Tampa Sales Xxxxxx
0000 X. Xxxxxxx Xxxx.
Xxxxx 000
Xxxxx, XX 00000
*Atlanta Sales Office
Premier Plaza One
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Chicago Sales Xxxxxx
0000 Xxxx Xx.
Xxxxx 0
Xxxxx 000
Xxxxxxx Xxxxxxx, XX 00000
*Detroit/Xxx Arbor Sales Xxxxxx
00 Xxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Las Vegas Sales Xxxxxx
0000 X. Xxxxxxx Xx.
Xxx Xxxxx, XX 00000
*Ohio Sales Xxxxxx
0000 Xxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
*Columbus Sales Xxxxxx
0000 Xxxxxx Xx.
Xxxxxx, XX 00000
*Austin Sales Xxxxxx
0000 Xxxxx Xxxxx
Xxxxx 000 Xxxx. X
Xxxxxx, XX 00000
*Dallas/Fort Worth Sales Xxxxxx
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, XX 00000
*Houston Sales Xxxxxx
0000 Xxxx Xxx Xxxx.
Xxxxx 0000
Xxxxxxx, XX 00000
*San Antonio Sales Office
One International Center
000 X.X. Xxxx 000
Xxxxx 000
Xxx Xxxxxxx, XX 00000
* Mpower has sold the markets of XX,XX,XX ,XX and OH and will be exiting
within the next several months.
2-2
SCHEDULE 3
BILLING AND COLLECTION AGREEMENTS
Billing and Collection Agreement Date
------------------------------------------ ---------------------------------
Two-Party Lockbox agreement-Regulus America Unexecuted copy.
LLC
Collections Agreement-Automated Recovery 4/26/00
Systems, Inc.
Collections Agreement-Executive Financial 7/08/02
Enterprises, Inc.
Collections Agreement-/G/E/T/M/ 2/01/00
Collections Agreement-X.X. XxxXxxxxx Co. 8/30/99
Collections Agreement-XX Xxxxxxx And 7/08/02
Associates LTD.
Collection Service Agreement
Collections Agreement-Sierra Financial 8/23/02
Services
3-1
EXHIBIT B
FORM OF NOTICE TO PAYORS - [LEC PAYORS]
[SELLER LETTERHEAD]
[NAME AND ADDRESS OF PAYOR]
Dear________________:
<> has entered into an agreement with RFC Capital
Corporation ("RFC") under which certain telecommunication receivables, including
the right to payment of any interest, finance charges or late fees with respect
thereto, originated by the Seller ("Receivables") have been and will be sold,
from time to time, to RFC or affiliates of RFC. RFC or such affiliates may, in
turn, from time to time, pledge and or assign such Receivables to such other
third parties as RFC deems necessary. It is contemplated that the Receivables
will continue to be serviced by the Seller.
RFC has established a lockbox (the "Lockbox") for collection of the
Receivables. Accordingly, you are hereby instructed to remit all payments on
Receivables to:
Provident Bank-Lockbox Account (<>) #_______________.
PROVIDENT BANK
00 XXXX XXXXX XXXXXX
XXXXXXXX, XXXX 00000
Payment of such Receivables in this manner will operate to discharge your
obligation with respect thereto (to the extent of such payment), whether or not
ownership has been transferred to RFC. Any prior notice of an assignment of any
interest in the Seller's Receivables previously delivered to you is hereby
superseded by this notice and all prior notices of such assignment are hereby
revoked. This notice shall be considered irrevocable absent written notice
otherwise received by you from RFC. Thank you for your cooperation.
Very truly yours,
<>
_____________________________________
By:
Its:
AGREED TO AND ACKNOWLEDGED BY
ON THIS ____ DAY OF __________, 20__:
[LEC]
By:_________________________________
Name:
Title:
B-1
EXHIBIT B
[SELLER LETTERHEAD]
FORM OF NOTICE TO PAYORS - [INDIVIDUAL PAYORS]
[NAME AND ADDRESS OF PAYOR]
Dear _______:
Because of our continued growth and in an effort to better serve our
valued customers, we have entered into a receivables sale arrangement with RFC
Capital Corporation ("RFC") whereby certain receivables of <> will
be sold from time to time to RFC. One result of this relationship is that your
payments will be received and posted in a more timely manner. Payments should
[for resellers with existing lockboxes] continue to be forwarded to the same
address which is as follows or [for resellers establishing new lockboxes] be
forwarded to the following new address:
[bank name]-Lockbox Account (<>) #______________.
[BANK NAME]
[BANK ADDRESS]
[BANK ABA #]
Your payments will continue to be serviced by, and all inquiries regarding
your service, billing invoices and payments should continue to be directed to
<>'s Customer Service Department at [phone number]. This change is
effective immediately and may not be further amended or modified without the
written consent of RFC.
Thank you for your cooperation and we look forward to continuing to
satisfy your telecommunication needs.
Sincerely,
<>
_________________________________
By: <>
Its: <>
B-2
EXHIBIT C
SECRETARY'S CERTIFICATE
FOR THE GUARANTOR
I, Xxxxxxx X. Xxxxxxxxx, hereby certify that I am the Vice
President/Secretary/General Counsel of Mpower Communications Corp., a Nevada
corporation (the "COMPANY"), and that, as such, I am authorized to execute this
certificate on behalf of the Company, and DO HEREBY FURTHER CERTIFY that:
1. Attached hereto as Exhibit A is a true, correct and complete copy of
(i) the Company's Certificate of Incorporation certified by the
Secretary of State of Nevada and (ii) a certificate as to the good
standing of the Company from the Secretary of State of Nevada dated
as of a recent date. The Company's Certificate of Incorporation has
not been amended since the date of the last amendment thereto shown
on such certificate of good standing and no amendment to the
Company's Certificate of Incorporation has been authorized by the
Board of Directors of the Company.
2. No proceeding for the dissolution, merger, consolidation or
liquidation of the Company or for the sale of all or substantially
all of its assets is pending or, to the best of my knowledge,
threatened and no action has been taken by the Company in
contemplation of the foregoing.
3. Attached hereto as Exhibit B is a true, correct and complete copy of
the By-Laws of the Company as in effect as of the date hereof.
4. Attached hereto as Exhibit C are true, correct and complete copies
of resolutions duly adopted by the Board of Directors of the Company
on January 14, 2003 approving the execution and delivery of the (i)
Receivables Sale Agreement between the Company and RFC Capital
Corporation (the "AGREEMENT") and (ii) the Related Documents (as
defined in the Agreement), and (iii) the transactions contemplated
by the Agreement and the Related Documents. Such resolutions have
not been amended or modified, are in full force and effect in the
form adopted and are the only resolutions adopted by the Board of
Directors or by any committee of or designated by the Board of
Directors relating to the matters set forth therein.
5. Each of the persons listed below has been duly elected to and now
holds the office of the Company below his or her name and is
currently serving in such capacity, and the signature of each such
person set forth opposite his or her name is his or her true and
genuine signature:
Name and Office Signature
Xxxxx X. Xxxx, President ______________________________
S. Xxxxxxx Xxxxxxxxx, Vice President/Treasurer ______________________________
Xxxxxxx Xxxxxxxxxx, Vice President/Asst. ______________________________
Treasurer/ Asst. Secretary
Xxxxxxx X. Xxxxxxxxx, Vice President/Secretary/ ______________________________
General Counsel
C-1
IN WITNESS WHEREOF, I have executed this Certificate this 23rd day of
January, 2003.
By: _____________________
Xxxxxxx X. Xxxxxxxxx
Vice President/Secretary/General Counsel
I, Xxxxx X. Xxxx, President of the Company do hereby certify that
Xxxxxxx X. Xxxxxxxxx is the duly elected, qualified and acting Vice
President/Secretary/General Counsel of the Company and the signature above is
his genuine signature.
By:_____________________
Xxxxx X. Xxxx
President
C-2
CERTIFIED COPY OF RESOLUTION
WHEREAS, at a meeting of the Board of Directors of Mpower Communications
Corp., a corporation organized and existing under the laws of the State of
Nevada, duly and regularly called and held by telephone confirms on the 23rd day
of January, 2003, at which meeting a quorum of said Board was present, the
following resolution was duly adopted by the unanimous vote of all Directors
present, and the same has not been rescinded or modified:
RESOLVED, that the Officers of this corporation be and they are hereby
authorized on behalf of and in the name of this corporation to enter into and
perform that certain "Receivables Sale Agreement" or modifications, amendments,
or supplements thereof or thereto with RFC Capital Corporation (the
"Purchaser"), a corporation organized and existing under the laws of the State
of Delaware, relating to the sale, assignment, transfer, conveyance and/or the
creation of a security interest in 's Receivables, Seller Credit Reserve Account
and Collection Account as defined in said "Receivables Sale Agreement", and to
execute and deliver said "Receivables Sale Agreement" and any other documents to
be executed and delivered in relation to, or pursuant to said "Receivables Sale
Agreement"; and said officers are hereby further authorized at any time to sell,
assign, transfer, convey and/or create a security interest in such Receivables
and related Seller Credit Reserve Account and Collection Account on such terms
and conditions and in such form as may be acceptable to the Purchaser; and said
officers are authorized to execute and deliver all such instruments and
documents and to do all such things as may be required to complete any such
transactions; and all acts and things of the nature herein referred to,
heretofore and hereafter done by the said officers or any of them, are hereby
approved, ratified, and confirmed.
RESOLVED FURTHER, that the authority conferred upon said officers by this
resolution shall remain in full force until written notice of revocation thereof
shall have been received by the Purchaser and a copy of this resolution
certified by Xxxxx X. Xxxx, President, and Xxxxxxx X. Xxxxxxxxx, Vice
President/Secretary/General Counsel with the seal of this corporation affixed,
is delivered to the Purchaser.
We, and, hereby certify that we are the President and Vice
President/Secretary/General Counsel, respectively, of; and that the foregoing
resolution was duly and regularly passed, as above stated, by the said Board of
Directors at a meeting of said Board of Directors, duly and regularly called and
held at the office of said corporation at the time and place hereinbefore
stated.
IN WITNESS WHEREOF, we have hereunto signed our names as President, and,
Vice President/Secretary/General Counsel and affixed the seal of said
corporation as of January 23, 2003.
PRESIDENT VICE PRESIDENT/SECRETARY/
GENERAL COUNSEL
------------------------------- ----------------------------
XXXXX X. XXXX XXXXXXX X. XXXXXXXXX
C-3
EXHIBIT E
OFFICER'S CERTIFICATE
I, Xxxxxxx X. Xxxxxxxxx, hereby certify that I am the Vice
President/Secretary/General Counsel of Mpower Communications Corp. a Nevada
corporation (the "COMPANY"), and that, as such, I am authorized to execute this
certificate on behalf of the Company, and DO HEREBY FURTHER CERTIFY that:
1. This Officer's Certificate is being delivered pursuant to Section
4.1(b)(iii) of the Receivables Sale Agreement dated as of January 23, 2003
by and between the Company and RFC Capital Corporation (the "Agreement").
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Agreement.
2. The representations and warranties of the Company set forth in
the Agreement are true and correct in all material respects.
3. The Company has complied in all material respects with all the
covenants set forth in the Agreement and has satisfied in all material
respects the condition precedent set forth in Section 4.1 of the
Agreement.
4. No Event of Seller Default has occurred and is continuing, nor
has an event occurred which with the passage of time or notice or both
would become such an Event of Seller Default.
The foregoing certifications are made and delivered this 23rd day of
January 2003.
By: ___________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President/Secretary/General
Counsel
E-1
Exhibit F
Description of Collateral to be included on UCC-1
All of Seller's right, title and interest in, to and under the following types
and items of personal property, whether they be accounts, general intangibles or
any other type of personal property, and whether now owned and existing or
hereafter acquired or arising.
(A) All "Accounts" (as defined below) and (1) all payments of principal of
or interest on such Accounts; (2) all amounts on deposit with respect to
Accounts from time to time in the Lockbox Accounts and the Collection Account;
(3) all other rights relating to and payments made in respect of this Agreement;
and (4) all proceeds in respect of all of the foregoing types and items of
property; and
(B) All of Seller's "Customer Base" (as defined below).
As used herein, the following terms have the following meanings:
"Accounts" means (a) an account or account receivable arising from the
provision or sale of telecommunication services (and any services or sales
ancillary thereto) by the Seller including the right to payment of any interest
or finance charges and other obligations of the Payor with respect thereto; (b)
all security interests or liens and property subject thereto from time to time
purporting to secure payment of the Accounts; (c) all guarantees, indemnities
and warranties and proceeds thereof, proceeds of insurance policies, UCC
financing statements and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Account; (d) all cash
collections and other cash proceeds of such Account with respect to any of the
foregoing; (e) all "Records" (as defined below) with respect to any of the
foregoing; and (f) all proceeds of any of the foregoing.
"Contract" means an agreement (or agreements) pursuant to, or under which
a Payor shall be obligated to pay for telecommunication services rendered by the
Seller from time to time.
"Customer Base" means all of the Seller's past, present and future
customer contracts, agreements, LOA's or other arrangements, any customer list
and Record relating thereto and any information regarding prospective customers
and contracts, agreements, LOA's or other arrangements and all of the goodwill
and other intangible assets associated with any of the foregoing.
"Records" means all Contracts, LOA's and other documents, books, records
and other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Seller or its agent with respect to Accounts.
Notwithstanding anything to the contrary herein, the term "Accounts" and
"Customer Base" shall not include those assets, including accounts receivable,
of Seller sold or to be sold pursuant to: (i) that certain Asset Contribution
Agreement, dated as of December 31, 2002, among Xspedius Equipment Leasing, LLC
and Mpower Holding Corporation, (ii) that certain Asset Purchase Agreement,
dated as of January 7, 2003, among LDMI Telecommunications, Inc., Mpower
Communications Corp., and Mpower Lease Corp., (iii) that certain Asset Purchase
Agreement, dated as of January 8, 2003, among Florida Digital Network, Inc.,
Southern Digital Network, Inc., Mpower Holding Corporation, Mpower
Communications Corp., and Mpower Lease Corporation, or (iv) that certain (a)
Letter of Intent dated January 7, 2003; and (b) any Asset Purchase Agreement to
be entered into with respect to the sale of those assets of Seller that relate
to Seller's business and operations in the State of Ohio, including accounts
receivables, between Mpower Holding Corporation and LDMI Telecommunications,
Inc.
F-1
FORM OF SECRETARY'S CERTIFICATE
FOR THE GUARANTOR
I, Xxxxxxx X. Xxxxxxxxx, hereby certify that I am the Senior Vice
President, General Counsel and Corporate Secretary of Mpower Holding
Corporation, a Delaware corporation (the "COMPANY"), and that, as such, I am
authorized to execute this certificate on behalf of the Company, and DO HEREBY
FURTHER CERTIFY that:
1. Attached hereto as Exhibit A is a true, correct and complete copy of
(i) the Company's Certificate of Incorporation certified by the
Secretary of State of Delaware and (ii) a certificate as to the good
standing of the Company from the Secretary of State of Delaware
dated as of a recent date. The Company's Certificate of
Incorporation has not been amended since the date of the last
amendment thereto shown on such certificate of good standing and no
amendment to the Company's Certificate of Incorporation has been
authorized by the Board of Directors of the Company.
2. Attached hereto as Exhibit B is a true, correct and complete copy of
the By-Laws of the Company as in effect as of the date hereof.
3. Attached hereto as Exhibit C are true, correct and complete copies
of resolutions duly adopted by the Board of Directors of the Company
on January 14, 2003 approving the execution and delivery of that
certain Continuing Guaranty Unlimited, dated as of the date hereof,
between the Company and RFC Capital Corporation (the "Guaranty").
Such resolutions have not been amended or modified, are in full
force and effect in the form adopted and are the only resolutions
adopted by the Board of Directors or by any committee of or
designated by the Board of Directors relating to the matters set
forth therein.
4. Each of the persons listed below has been duly elected to and now
holds the office of the Company below his or her name and is
currently serving in such capacity, and the signature of each such
person set forth opposite his or her name is his or her true and
genuine signature:
Name and Office Signature
--------------- ---------
Xxxxx X. Xxxx, Chairman and CEO
-------------------
S. Xxxxxxx Xxxxxxxxx, Executive VP and
Chief Financial Officer
-------------------
Xxxxxx X. Xxxxxx, President and
Chief Operating Officer
-------------------
Xxxxxxx X. Xxxxxxxxx, Senior Vice President,
General Counsel, Corporate Secretary
-------------------
Xxxxxxx Xxxxxxxxxx, Vice President,
Finance, Controller
-------------------
5. No proceeding for the dissolution, merger, consolidation or
liquidation of the Company or for the sale of all or substantially
all of its assets is pending or, to the best of my knowledge,
threatened and no action has been taken by the Company in
contemplation of the foregoing.
6. There is no litigation pending, or to my knowledge, threatened,
which, if determined adversely to the Company, would adversely
affect the execution, delivery or enforceability of the Agreement
IN WITNESS WHEREOF, I have executed this Certificate this 23rd day of
January, 2003.
By: ____________________________
Xxxxxxx X. Xxxxxxxxx
Xx. Vice President, General Counsel and
Corporate Secretary
I, Xxxxx X. Xxxx, Chairman and CEO of the Company do hereby certify
that Xxxxxxx X. Xxxxxxxxx, is the duly elected, qualified and acting Secretary
of the Company and the signature above is his genuine signature.
By:_____________________
Xxxxx X. Xxxx
Chairman and CEO
GUARANTOR: Mpower Holding Corporation OBLIGOR: Mpower Communications Corp.
ADDRESS: ADDRESSS: 000 Xxxxx'x Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
CONTINUING GUARANTY
UNLIMITED
This Continuing Guaranty Unlimited (this "Guaranty") is made as of the
____ day of January, 2003.
WITNESSETH
WHEREAS, Mpower Communications Corp., a Nevada corporation ("Obligor") and
RFC Capital Corporation ("RFC") have or may, from time to time, enter into
agreements, including, but not limited to, that certain Receivables Sale
Agreement of even date herewith (the "Receivables Sale Agreement," and, together
with any document executed or delivered thereunder, the "Transaction
Documents");
WHEREAS, Mpower Holding Corporation ("Guarantor") will directly and
indirectly benefit from the accommodations made to the Obligor pursuant to the
Transaction Documents; and
WHEREAS, in order to induce RFC to continue to make the accommodations
under the Transaction Documents, Guarantor desires to guarantee Obligor's
obligations under the Transaction Documents in accordance with the terms and
conditions of this Guaranty.
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
For the purpose of inducing RFC to enter into agreements with Obligor,
Guarantor hereby unconditionally guarantees the prompt and full payment to RFC
when due, whether by acceleration or otherwise, of all Obligations of any kind
for which Obligor is now or may hereafter become liable to RFC in any manner.
The word "Obligations" means, without limitation, all indebtedness, debts
and liabilities of Obligor to RFC, either created by Obligor alone or together
with another or others, primary or secondary, secured or unsecured, absolute or
contingent, liquidated or unliquidated, direct or
indirect, under the Transaction Documents, or other agreement or instrument, and
any and all renewals of, extensions of or substitutes therefor, pursuant to
terms of the Transaction Documents or such other instruments and related
documents.
Guarantor hereby promises that if one or more of the Obligations are not
paid promptly when due, Guarantor will, upon request of RFC, pay the Obligations
to RFC, irrespective of any action or lack of action on RFC's part in connection
with the acquisition, perfection, possession, enforcement or disposition of any
or all Obligations or any or all security therefor or otherwise, and further
irrespective of any invalidity in any or all Obligations, the unenforceability
thereof or the insufficiency, invalidity or unenforceability of any security
therefor. Guarantor represents, warrants, covenants and agrees that, except with
the prior written consent of RFC, Guarantor shall not make any loan, extension
of credit (excluding accounts receivable arising in the ordinary course of
business on terms customary in the trade), investment in, contribution of
capital to, or purchase from or otherwise acquire the stock, notes, debentures
or other securities of an affiliate.
Guarantor waives notice of any and all acceptances of this Guaranty. This
Guaranty is a continuing guaranty, and, in addition to covering all present
Obligations of Obligor to RFC, will extend to all future Obligations of Obligor
to RFC, whether such Obligations are reduced, amended, or entirely extinguished
and thereafter increased or reincurred. This Guaranty is made and will remain in
effect until the Obligations are paid in full and until the Obligor has no right
to request further advances under the documents or instruments evidencing the
Obligations. RFC's rights hereunder shall be reinstated and revived, and this
Guaranty shall be fully enforceable, with respect to any amount at any time paid
on account of the Obligations which thereafter shall be required to be restored
or returned by RFC upon the bankruptcy, insolvency or reorganization of Obligor,
Guarantor, or any other person, or as a result of any other fact or
circumstance, all as though such amount had not been paid.
In the event Guarantor at any time shall pay any sums on account of any
Obligations or take any other action in performance of any Obligations,
Guarantor shall be subrogated to the rights, powers, privileges and remedies of
the RFC in respect of such Obligations; provided that all such rights of
subrogation and all claims and indebtedness arising therefrom shall be, and
Guarantor hereby agrees that the same are, and shall be at all times, in all
respects subordinate and junior to all Obligations, and provided, further, that
Guarantor hereby agrees that Guarantor shall not seek to exercise any such
rights of subrogation, reimbursement, exoneration, or indemnity whatsoever or
any rights of recourse to any security for any of the Obligations unless or
until all Obligations shall have been indefeasibly paid in full in cash and duly
and fully performed.
Guarantor waives presentment, demand, protest, notice of protest and
notice of dishonor or other nonpayment of any and all Obligations and further
waives notice of sale or other disposition of any collateral or security now
held or hereafter acquired by RFC. Guarantor agrees that no extension of time,
whether one or more, nor any other indulgence granted by RFC to Obligor, or to
Guarantor, and no omission or delay on RFC's part in exercising any right
against, or in taking any action to collect from or pursue RFC's remedies
against Obligor or Guarantor, or any of them, will release, discharge or modify
the duties of Guarantor. Guarantor agrees that RFC may, without notice to or
further consent from Guarantor, release or modify any collateral, security or
other guaranties now held or hereafter acquired, or substitute other collateral,
security or other guaranties, and no such action will release, discharge or
modify the duties of Guarantor hereunder. Guarantor further agrees that RFC will
not be required to pursue or exhaust any of its rights or remedies against
Obligor or Guarantor, or any of them, with respect to payment of any of the
Obligations, or to pursue, exhaust or preserve any of its rights or remedies
with respect to any collateral, security or other guaranties given to secure the
Obligations, or to take any action of any sort, prior to demanding payment from
or pursuing its remedies against Guarantor.
Within 120 days after the end of each fiscal year, Guarantor agrees to
provide to RFC true and complete audited financial statements, including a
balance sheet and statements of income and surplus, and a statement of cash
flows, prepared in accordance with GAAP and reviewed by independent public
accountants satisfactory to RFC. Additionally, Guarantor agrees to provide
completed tax returns together with all schedules thereto within 10 days of
filing. "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board as in effect on the date hereof. Guarantor further agrees that failure to
furnish such financial statements or to perform the covenants set forth below
may constitute or be deemed to constitute a default or event of default of the
Obligations. Guarantor agrees that any legal suit, action or proceeding arising
out of or relating to this Guaranty may be instituted in a state or federal
court of appropriate subject matter jurisdiction in the State of Ohio; waives
any objection which Guarantor may have now or acquire hereafter to the venue of
any such suit, action or proceeding; and irrevocably submits to the jurisdiction
of any such court in any such suit, action or proceeding.
Guarantor agrees that any and all claims of Guarantor against Obligor, any
other Guarantor or any endorser or other guarantor of all or any part of the
Obligations, or against any of their respective properties, shall be
subordinated to all of the Obligations. Notwithstanding any right of Guarantor
to ask, demand, xxx for, take or receive any payment from Obligor, all rights
and liens of Guarantor, whether now or hereafter arising and howsoever existing,
in any assets of Obligor (whether constituting part of the collateral securing
the Obligations or otherwise) shall be and hereby are subordinated to the rights
of RFC in those assets. Guarantor shall have no right to possession of any such
asset or to foreclose upon any such asset, whether by judicial action or
otherwise, unless and until all of the Obligations shall have been fully paid
and satisfied and all financing arrangements between Obligor and RFC have been
terminated.
If all or any part of the assets of Obligor, or the proceeds thereof, are
subject to any distribution, division or application to the creditors of
Obligor, whether partial or complete, voluntary or involuntary, and whether by
reason of liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding, or if the business of
Obligor is dissolved or if substantially all of the assets of Obligor are sold,
then, and
in any such event, any payment or distribution of any kind or character, either
in cash, securities or other property, which shall be payable or deliverable
upon or with respect to any indebtedness of Obligor to Guarantor ("Obligor
Indebtedness") shall be paid or delivered directly to RFC for application on any
of the Obligations, due or to become due, until such Obligations shall have
first been fully paid and satisfied. Guarantor irrevocably authorizes and
empowers RFC to demand, xxx for, collect and receive every such payment or
distribution and give acquittance therefor and to make and present for and on
behalf of Guarantor such proofs of claim and take such other action, in RFC's
own name or in the name of Guarantor or otherwise, as RFC may deem necessary or
advisable for the enforcement of this Guaranty. RFC may vote such proofs of
claim in any such proceeding, receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be paid or
issued and apply the same on account of any of the Obligations. Should any
payment, distribution, security or instrument or proceeds thereof be received by
Guarantor upon or with respect to Obligor Indebtedness prior to the satisfaction
of all of the Obligations and the termination of all financing arrangements
between Obligor and RFC, Guarantor shall receive and hold the same in trust, as
trustee, for the benefit of RFC and shall forthwith deliver the same to RFC, in
precisely the form received (except for the endorsement or assignment of
Guarantor where necessary), for application to any of the Obligations, due or
not due, and, until so delivered, the same shall be held in trust by Guarantor
as the property of RFC. If Guarantor fails to make any such endorsement or
assignment to RFC, RFC or any of its officers or employees are hereby
irrevocably authorized to make the same. Guarantor agrees that until the
Obligations have been paid in full (in cash) and satisfied and all financing
arrangements between Obligor and RFC have been terminated, Guarantor will not
assign or transfer any claim Guarantor has or may have against Obligor.
WAIVER OF RIGHT TO TRIAL BY JURY
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
GUARANTOR OR RFC WITH RESPECT TO THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND GUARANTOR
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT GUARANTOR OR RFC
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER OF THE RIGHT OF
GUARANTOR TO TRIAL BY JURY.
If any Obligation of Obligor is assigned by RFC, this Guaranty will inure
to the benefit of RFC's assignee, and to the benefit of any subsequent assignee,
to the extent of the assignment or assignments, provided that no assignment will
operate to relieve Guarantor from any duty to RFC hereunder with respect to any
unassigned Obligation. In the event that any one or more of the provisions
contained in this Guaranty or any application thereof shall be determined to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and any other
applications thereof shall not in any way be affected or impaired thereby. This
Guaranty shall be construed in accordance with the law of the State of Ohio.
The liabilities evidenced hereby may from time to time be evidenced by
another guaranty or guaranties given in substitution or reaffirmation hereof.
Any security interest or mortgage which secures the liabilities evidenced hereby
shall remain in full force and effect notwithstanding any such substitution or
reaffirmation.
If at the time of payment of the Obligations and any discharge hereof,
Guarantor shall be then directly or contingently liable to RFC as maker,
indorser, surety or guarantor of any other loan or obligation whether the same
shall be evidenced by a note, xxxx of exchange, agreement of guaranty or other
instrument, then RFC may continue to hold any collateral of Guarantor as
security therefor, even though this Guaranty shall have been surrendered to
Guarantor. RFC shall not be bound to take any steps necessary to preserve any
rights in the collateral against prior parties. If any Obligations hereunder are
not paid when due, RFC may, at its option, demand, xxx for, collect or make any
compromise or settlement it deems desirable with reference to any collateral,
and shall have the rights of a secured party under the law of the State of Ohio.
Guarantor shall be liable for any deficiency.
The undersigned, pursuant to due corporate authority as of the date set
forth above.
GUARANTOR:
Mpower Holding Corporation
By:
--------------------------------
Xxxxx X. Xxxx
Its: Chief Executive Officer
--------------------------------
MINUTES OF A SPECIAL MEETING
OF THE BOARD OF DIRECTORS
OF
MPOWER HOLDING CORPORATION
ON JANUARY 14, 2003
A special meeting of the Board of Directors of Mpower Holding Corporation
(the "Company"), was held by telephone conference on January 14, 2003. The
following Directors of the Company were present: Xxxxx X. Xxxx, Chairman of the
Board and Chief Executive Officer, Xxxxxx X. Xxxxxx, President and Chief
Operating Officer, S. Xxxxxxx Xxxxxxxxx, Executive Vice President and Chief
Financial Officer, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx, Xxxxxxx Xxxxxxx and
Xxxxxx X. Xxxxxxx. Also present were Xxxxxxx X. Xxxxxxxxx, Senior Vice
President, General Counsel and Secretary.
The meeting was called to order at 4:00 p.m. by Xx. Xxxx, who served as
chairman of the meeting. Xx. Xxxxxxxxx acted as secretary of the meeting.
The first order of business was a discussion of the need to execute a
guaranty (the "Guaranty") of Mpower Communications Corp.'s obligations to RFC
Capital Corporation ("RFC") pursuant to a Receivables Sale Agreement. Upon
motion of Xx. Xxxx, seconded by Mr. Cahr, the following Resolution was
unanimously adopted.
RESOLVED, that the Officers of this Company be and they hereby are
authorized on behalf of and in the name of this Company to enter into and
perform that certain Guaranty or modifications, amendments or supplements
thereof or thereto, guaranteeing the obligations of Mpower Communications Corp.
to RFC pursuant to a certain Receivables Sale Agreement, and to execute and
deliver said Guaranty and any other documents to be executed in relation to, or
pursuant to said Guaranty; and said Officers are authorized to execute and
deliver all such instruments and documents and do all such things as maybe
required to complete the execution and deliver of the Guaranty; and all acts and
things of the nature herein referred to, heretofore and hereafter done by the
said Officers or any of them, are hereby approved, ratified and confirmed.
RESOLVED FURTHER, that the authority conferred upon said Officers by this
Resolution shall remain in full force until written notice of revocation thereof
shall have been received by RFC Capital Corporation and a copy of this
Resolution, certified by its Chairman and Chief Executive Officer and its
Secretary, respectively, with the seal of this Company affixed, is delivered to
RFC Capital Corporation.
We, Xxxxx X. Xxxx and Xxxxxxx X. Xxxxxxxxx, hereby certify that we are the
Chairman and Chief Executive Officer and Secretary, respectively, of Mpower
Holding Corporation, and that the foregoing Resolution was duly and regularly
passed as stated above, by the said Board of Directors at a meeting of said
Board of Directors, duly and regularly called and held by telephone conference
at the time and place hereinbefore stated.
IN WITNESS WHEREOF, we are hereunto signed our names as Chairman and Chief
Executive Officer and Secretary, an affixed the seal of said Corporation as of
January ___, 2003.
-------------------------------- -------------------------------
Xxxxx X. Xxxx, Chairman and Xxxxxxx X. Xxxxxxxxx, Esq.
Chief Executive Officer Secretary of the meeting
