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EXHIBIT 10.18
RECEIVABLES SALE AGREEMENT
Dated as of October 8, 1998
by and between
VSI NETWORK SOLUTIONS, INC.,
as Seller, and
RFC CAPITAL CORPORATION,
as Purchaser and Master Servicer
RECEIVABLES SALE AGREEMENT (the "Agreement"), dated as of October 8,
1998, by and between VSI NETWORK SOLUTIONS, INC., a Delaware corporation, as
Seller and Subservicer, and RFC CAPITAL CORPORATION, a Delaware corporation, as
Purchaser and Master Servicer.
WITNESSETH:
WHEREAS, 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;
WHEREAS, the Purchaser shall act in its capacity as the Master
Servicer to perform certain servicing, administrative and collection functions
in respect of the receivables purchased by the Purchaser under this Agreement
(the "Purchased Receivables");
WHEREAS, the Purchaser and the Master Servicer desire that the
Subservicer be appointed to perform certain servicing, administrative and
collection functions in respect of the Purchased Receivables; and
WHEREAS, 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. The terms used in this
Agreement shall have the respective meanings set forth on Exhibit A.
Section 1.2. Other Terms. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC, and not
specifically defined in this Agreement, are used in this Agreement as defined
in such Article 9.
ARTICLE II - PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS
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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
of such Eligible Receivables which such list shall be delivered by the Seller
to the Purchaser no later than three (3) Business Days prior to each Purchase
Date.
Section 2.2. Purchase of Receivables. Upon receipt of the list of
Eligible Receivables pursuant to Section 2.1, the Master Servicer, in its sole
discretion, will confirm which of the Eligible Receivables offered by Seller
that the Purchaser will Purchase. The Purchase of such Receivables shall occur
upon payment of the Purchase Price. Upon Purchase of the Receivables, Seller
will have sold, transferred, assigned, set over and conveyed to Purchaser,
without recourse except as expressly provided herein, all of Seller's right,
title and interest in and to the Purchased Receivables. The Seller shall not
take any action inconsistent with such ownership and shall not claim any
ownership in any Purchased Receivable. The Seller shall indicate in its Records
that ownership interest in any Purchased Receivable is held by the Purchaser.
In addition, the Seller shall respond to any inquiries with respect to
ownership of a Purchased Receivable by stating that it is no longer the owner
of such Purchased Receivable and that ownership of such Purchased Receivable is
held by the Purchaser. 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 2.3. Purchase Price and Payment. The Purchase Price for
Receivables purchased on any Purchase Date and paid by the Purchaser to the
Seller shall be an amount equal to the aggregate Net Values of such Purchased
Receivables. The Purchase Price to be paid on such Purchase Date shall be
reduced by (a) the Program Fees as of such Purchase Date, (b) the amount, if
any, by which the Seller Credit Reserve Account (net of withdrawals required
hereunder) is less than the Specified Credit Reserve Balance as of such
Purchase Date, (c) any Rejected Receivable Amount, and (d) other amounts due
the Purchaser in accordance with this Agreement. At any time the Net Value of
Purchased Receivables plus the Purchase Price paid on any Purchase Date shall
not exceed the Purchase Commitment.
Section 2.4. Establishment of Accounts; Conveyance of Interests
Therein; Investments. (a) A Lockbox Account will be established or assigned, as
the case may be, for the benefit of the Purchaser into which all Collections
from Payors with 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 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 Master Servicer.
(b) The Purchaser has established and shall maintain the
"Collection Account" (the "Collection Account") and the "Seller Credit Reserve
Account" (the "Seller Credit Reserve Account").
(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, the
Collection Account and the Seller Credit Reserve 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 on the day of receipt or the following
Business Day if the day of receipt is not a Business Day or if received after
3:00 p.m. on a Business Day, and if such Collections are not remitted 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 12% per annum or the maximum rate legally permitted if less than
such rate, calculated as of the first Business Day of such delinquency.
Section 2.5. 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 a sale of such Purchased Receivables and not a loan.
In the event, however, that a court of competent jurisdiction were to hold that
the transaction evidenced by this Agreement constitutes a loan and not a
purchase and sale, it
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is the intention of the parties that this Agreement shall constitute a security
agreement under the UCC and any other applicable law, and that the Seller shall
be deemed to have granted to the Purchaser a first priority perfected security
interest in all of the Seller's right, title and interest in, to and under the
Purchased Receivables; all payments of principal of or interest on such
Purchased Receivables; all amounts on deposit from time to time in the Lockbox
Account, the Collection Account and the Seller Credit Reserve Account; all
other rights relating to and payments made under this Agreement, and all
proceeds of any of the foregoing.
Section 2.6. 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 III - CONDITIONS OF PURCHASES
Section 3.1. Conditions Precedent to All Purchases. Each Purchase
from the Seller by the Purchaser shall be subject to the conditions precedent
that:
(a) No Event of Seller Default has occurred and the Seller is in
compliance with each of its covenants and representations set forth in Sections
4.1 and 4.2 of this Agreement;
(b) The Seller shall have delivered to the Purchaser a complete
copy of each of the then current Carrier Agreements, Clearinghouse Agreements
and Billing and Collection Agreements and any amendment or modification of such
agreements;
(c) The Seller shall have delivered to the Purchaser a copy of
each written notice delivered by or received by either the Carrier, Billing and
Collection Agent, Clearinghouse Agent or the Seller with respect to any Carrier
Agreements, Clearinghouse Agreements and/or the Billing and Collection
Agreements;
(d) Commencing with the quarter ending September 30, 1998, the
Seller shall direct its auditors, Xxxxxx Xxxxxxxx, to perform certain agreed
upon procedures as set forth on Schedule 4 attached hereto on behalf of
Purchaser, and shall deliver the results thereof to Purchaser within forty five
(45) days following the end of each such quarter;
(e) The Termination Date shall not have occurred; and
(f) The Seller shall have taken such other action, including but
not limited to delivery of an opinion of counsel in the form of Exhibit D
hereto, or delivered such other approvals, opinions or documents to the
Purchaser, as the Purchaser may reasonably request.
ARTICLE IV - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
Section 4.1. Representations, Warranties and Covenants as to the
Seller. The Seller represents and warrants to the Purchaser and Master
Servicer, as of the date of this Agreement and on each subsequent Purchase
Date, as follows:
(a) 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 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;
(b) The execution, delivery and performance by the Seller of this
Agreement and the Related Documents and the transactions contemplated thereby
(i) have been duly authorized by all necessary corporate or other action on the
part
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of the Seller, (ii) do not contravene or cause the Seller to be in default
under (A) any contractual restriction contained in any loan or other agreement
or instrument binding on or affecting the Seller or its property; or (B) any
law, rule, regulation, order, writ, judgment, award, injunction, or decree
applicable to, binding on or affecting the Seller or its property and (iii)
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);
(c) 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 (i) asserting the invalidity of this Agreement or
any of the Related Documents, (ii) seeking to prevent the sale and assignment
of any Receivable or the consummation of any of the transactions contemplated
thereby, (iii) 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 (iv) asserting a claim for payment of
money in excess of $50,000;
(d) 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;
(e) The Seller (i) 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; (ii) the financial statements of the Seller,
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; (iii) since March 31, 1998, there
has been no material adverse change in any such condition, business or
operations; and (iv) the Seller has delivered to the Purchaser within 45 days
after the end of each subsequent three-month period 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
three-month period, certified by an officer of the Seller;
(f) All information furnished by or on behalf of the Seller to
the Master Servicer or 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;
(g) 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
notice attached hereto as Exhibit B, which such notice was mailed within two
Business Days following the Closing Date, to remit all payments with respect to
such Receivable for deposit in the Lockbox Account;
(h) 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 UCC) or keeps Records except as set forth in the designated space
beneath its signature line in this Agreement;
(i) 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;
(j) The Seller has not done anything to impede or interfere with
the collection by the Purchaser of the Purchased Receivables and shall not
amend, waive or otherwise permit or agree 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
which (i) may create an Adverse Claim with respect to any Receivable or (ii)
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would materially affect the ability of Subservicer or the Master Servicer to
act in each's capacity as such; and shall not allow 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;
and
(k) For federal income tax reporting and accounting purposes, the
Seller will treat the sale of each Purchased Receivable pursuant to this
Agreement as a sale of, or absolute assignment of its full right, title and
ownership interest in such Purchased Receivable to the Purchaser.
Section 4.2. 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
on each subsequent Purchase Date, as follows:
(a) Such Purchased Receivable (i) consists of all the Required
Information; (ii) is the liability of an Eligible Payor and (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, is not a Purchased Receivable 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 (v) 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 Purchased
Receivables;
(b) The Eligible Receivable Amount set forth in the applicable
Required Information of such Receivable is payable in United States Dollars and
is not in excess of $15,000, or such other amount as the Purchaser and Seller
may mutually agree in writing, with respect to any one individual Payor of any
Payor Class other than an Eligible Receivable payable under a Billing and
Collection Agreement as set forth on the attached Schedule 3, and is net of any
adjustments or other modifications contemplated by any Carrier Agreement,
Clearinghouse Agreement, Billing and Collection Agreement or otherwise and
neither the Receivable nor the related Carrier Agreement, Clearinghouse
Agreement, Billing and Collection Agreement or Contract has or will be
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 nor will be 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
such 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 such Receivable
or payment and performance of the related Carrier Agreement, Clearinghouse
Agreement, Billing and Collection Agreement, or such other Contract or LOA,
(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 4.3. Negative Covenants of the Seller. The Seller shall
not, without the written consent of the Purchaser and the Master Servicer,
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;
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(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 Exhibit 3 hereof) or any
amendment or modification thereof.
Section 4.4. Repurchase Obligations. Upon discovery by any party
to this Agreement of a breach of any representation or warranty in this Article
IV which materially and adversely affects the value of a Purchased Receivable
or the interests of the Purchaser therein (herein a "Rejected Receivable"), the
party discovering such breach shall give prompt written notice to the other
parties to this Agreement. Thereafter, on the next Purchase Date, the Net Value
of the Rejected Receivables shall be deducted from the amount otherwise payable
to the Seller pursuant to Section 2.3 and deposited in the Collection Account.
In the event that the full Net Value of such Rejected Receivables is not
deposited in the Collection Account pursuant to the foregoing sentence, the
Purchaser shall deduct any such deficiency from the Excess Collection Amount
and/or make demand upon the Seller to pay any such deficiency to the Purchaser
for deposit to the Collection Account.
ARTICLE V - ACCOUNTS ADMINISTRATION
Section 5.1. Collection Account. The Purchaser and the Master
Servicer acknowledge 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. All such amounts shall be
administered in accordance with Section 5.3.
Section 5.2. Determinations of the Master Servicer. On each
Determination Date, the Master Servicer will determine:
(a) the Net Value of all Purchased Receivables which have become
Rejected Receivables since the prior Purchase Date (the "Rejected Receivable
Amount");
(b) the amount of Collections up to the Purchase Price of all
Purchased Receivables received since the prior Determination Date (the "Paid
Receivables Amount");
(c) the Net Value of all Purchased Receivables which have become
Defaulted Receivables since the prior Purchase Date (the "Defaulted Receivable
Amount");
(d) the aggregate amount deposited in the Collection Account in
excess of the Purchase Price of each Purchased Receivable since the prior
Determination Date (the "Excess Collection Amount"); and
(e) the Net Value of all Purchased Receivables less the Rejected
Receivable Amount and the Defaulted Receivable Amount as of the current
Determination Date.
The Master Servicer's determinations of the foregoing amounts shall be
conclusive in the absence of manifest error. The Master Servicer shall notify
the Purchaser and Seller of such determinations.
Section 5.3. Distributions from Accounts. (a) No later than 11:00
a.m. on each Determination Date, following the determinations set forth in
Section 5.2, the Master Servicer will make the following withdrawals and
deposits:
(i) the Paid Receivables Amount and the Rejected
Receivable Amount plus any outstanding Rejected Receivable Amount applicable to
any prior period, to the extent such Rejected Receivable Amount is not paid to
the Purchaser as a reduction in Purchase Price to be paid to the Seller, from
the Collection Account and deposit such amount in the Purchase Account;
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(ii) the Defaulted Receivable Amount from the Seller
Credit Reserve Account and deposit such amount in the Collection Account; and
(iii) the Excess Collection Amount and deposit such amount
in the Seller Credit Reserve Account to the extent that the Seller Credit
Reserve Account is less than the Specified Credit Reserve Balance.
(b) Until the Termination Date, with reasonable best efforts on
each Purchase Date or in any event within two Business Days of each such
Purchase Date, the Master Servicer shall withdraw all amounts deposited
hereunder (net of withdrawals required hereunder) from the Seller Credit
Reserve Account in excess of the Specified Credit Reserve Balance and shall pay
to the Purchaser all amounts due and owing the Purchaser in accordance with
Sections 2.3, 4.4, 5.2, 7.1(a) and (b), 8.1 and 9.4 and pay the balance, if
any, to the Seller by wire transfer; provided, however, with respect to
Receivables processed or cleared pursuant to any Carrier Agreement,
Clearinghouse Agreement or Billing and Collection Agreement, if applicable, any
Excess Collection Amount shall be retained by the Purchaser until such time
that the Seller's billing cycle (or batch) to which such Excess 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 to an
account designated by the Seller.
Section 5.4. Allocation of Moneys following Termination Date. (a)
Following the Termination Date and the Purchaser's receipt of the Termination
Fee, if applicable, from the Seller, the Master Servicer shall, to the extent
funds deposited hereunder (net of withdrawals required hereunder) are
sufficient, withdraw an amount equal to the Program Fee from the Seller Credit
Reserve Account on each Purchase Date and deposit it in the Purchase Account.
To the extent that such funds do not equal the Program Fee, the Seller shall
deposit in the Purchase Account the balance of the Program Fee within five
Business Days following demand therefor. In any event, following the
Termination Date and the Purchaser's receipt of the Termination Fee, if any,
the Seller may repurchase all previously Purchased Receivables by depositing
with the Purchaser the then aggregate Net Value of Purchased Receivables.
Following such payment and any other amount due and owing the Purchaser under
this Agreement, this Agreement shall be deemed terminated.
(b) On the first Determination Date on which the aggregate Net
Value of all Purchased Receivables (other than Defaulted Receivables) (i) is
less than 10% of the aggregate Net Value of Purchased Receivables (other than
Defaulted Receivables) on the Termination Date and (ii) is less than the
aggregate amount remaining in the Seller Credit Reserve Account, the Master
Servicer shall withdraw an amount equal to such aggregate Net Value from such
accounts and deposit it in the Purchase Account. Thereupon the Master Servicer
shall disburse all remaining amounts held in the Seller Credit Reserve Account
to the Seller and all interests of the Purchaser in all Purchased Receivables
owned by the Purchaser shall be reconveyed by the Purchaser to the Seller.
Following such disbursement and reconveyance, this Agreement shall be deemed
terminated.
ARTICLE VI - APPOINTMENT OF THE SUBSERVICER
Section 6.1. Appointment of the Subservicer. As consideration for
the Seller's receipt of Excess Collection Amount, the Master Servicer and the
Purchaser hereby appoint the Seller and the Seller hereby accepts such
appointment to act as Subservicer under this Agreement. 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 6.4 or 7. 1. 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.
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Section 6.2. Duties and Obligations of the Subservicer. (a) 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 or related Contracts, nor shall it be
obligated to perform any of the obligations of the Subservicer hereunder.
Section 6.3. 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 by the Master Servicer or Purchaser.
Section 6.4. 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 6.5. Authorization of the Master Servicer. The Seller
hereby authorizes the Master Servicer (including any successors thereto) to
take any and all reasonable steps in its name and on its behalf necessary or
desirable in the determination of the Master Servicer 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 Master Servicer (and any
successors thereto) with any powers of attorney and other documents necessary
or appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement, and shall cooperate with the Master
Servicer to the fullest extent in order to ensure the collectibility of the
Purchased Receivables.
ARTICLE VII - EVENTS OF SELLER DEFAULT
Section 7.1. 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) An Insolvency Event shall have occurred;
(c) There is a material breach of any of the representations and
warranties of the Seller as stated in Sections 4.1 that has remained uncured
for a period of 30 days, or with respect to a representation and warranty as
stated in Section 4.2 as to which Seller has not repurchased such Rejected
Receivable pursuant to Section 4.4;
(d) 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;
(e) As of the first day of any month, the aggregate Net Value of
Purchased Receivables which became Defaulted Receivables or Rejected
Receivables during the prior three-month period shall exceed 5.0% of the
average aggregate Net Values of all Purchased Receivables then owned by the
Purchaser at the end of each of such three months;
(f) 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;
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(g) 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;
(h) 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; or
(i) A Termination Event shall have occurred;
then and in any such event, the Master Servicer may, by notice to the Seller
and the Purchaser 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 and the Master Servicer shall have, in addition
to all other rights and remedies under this Agreement, all other rights and
remedies provided under the UCC and other applicable law, which rights shall be
cumulative.
ARTICLE VIII - INDEMNIFICATION AND SECURITY INTEREST
Section 8.1. Indemnities by the Seller. (a) Without limiting any
other rights that the Purchaser, the Master Servicer, or any director, officer,
employee or agent of either such party (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
such 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 interest at the lesser
of 12% per annum or the highest rate permitted by law from the date of demand
for such Indemnified Amount.
Section 8.2 Security Interest. The Seller hereby grants to the
Purchaser a first priority perfected security interest in the Seller's Customer
Base, including but not limited to, all past, present and future customer
contracts, lists, agreements, LOA's or arrangements relating thereto; all of
the Seller's right, title and interest in, to and under all of the Seller's
Receivables not sold to the Purchaser hereunder, including all rights to
payments under any related Contracts, contract rights, instruments, documents,
chattel paper, general intangibles, LOA's or other agreements with all Payors
and all the Collections, Records and proceeds thereof; any other obligations or
rights of Seller to receive any payments in money or kind; all cash or non-cash
proceeds of the foregoing; all of the right, title and interest of the Seller
in and with respect to the goods, services or other property which gave rise to
or which secure any of the foregoing as security for the timely payment and
performance of any and all obligations the Seller or the Subservicer may owe
the Purchaser under Sections 2.4, 4.4, 5.2, 7. 1 (a) and (b), 8.1 and 9.4, but
excluding recourse for unpaid Purchased Receivables. This Section 8.2 shall
constitute a security agreement under the UCC and any other applicable law and
the Purchaser shall have the rights and remedies of a secured party thereunder.
Such security interest shall be further evidenced by Seller's execution of
appropriate UCC-I financing statements prepared by and acceptable to the
Purchaser, and such other further assurances that may be reasonably requested
by the Purchaser from time to time.
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ARTICLE IX - MISCELLANEOUS
Section 9.1. Notices, Etc. All notices, 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
parties hereto. All such notices and communications shall not be effective
until received by the party to whom such notice or communication is addressed.
Section 9.2. Remedies. No failure or delay on the part of the
Purchaser or the Master Servicer 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 9.3. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of the Seller, the Subservicer, the
Purchaser, the Master Servicer 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 and the Master Servicer. 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 collateral 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 9.3 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 or the Master
Servicer pursuant to Article IV and the indemnification and payment provisions
of Article VIII shall be continuing and shall survive any termination of this
Agreement.
Section 9.4. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification under Article VIII, the Seller agrees to pay upon
demand, all reasonable costs and expenses in connection with the administration
(including periodic auditing, modification and amendment) of this Agreement,
and the other documents to be delivered hereunder, including, without
limitation: (i) the reasonable fees and out-of-pocket expenses of counsel for
the Purchaser or the Master Servicer 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; (ii) any and all
accrued Program Fee and amounts related thereto not yet paid to the Purchaser;
and (iii) 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.
(b) If the Seller or the Subservicer fails to pay any Lockbox
Account fees or other charges or debits related to such accounts, to pay or
perform any agreement or obligation contained under this Agreement, the
Purchaser may, or may direct the Master Servicer to pay or perform, or cause
payment or performance of, such agreement or obligation, and the expenses of
the Purchaser or the Master Servicer incurred in connection therewith shall be
payable by the party which has failed to so perform.
Section 9.5. 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, the Purchaser and the Master Servicer, and supersede all prior
agreements and understandings relating to the subject hereof, whether written
or oral.
Section 9.6. 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
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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 9.7. 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, 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.
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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.
VSI NETWORK SOLUTIONS, INC., as Seller and as Subservicer
By: /s/ Xxxxx Xxxxxx
---------------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
Address at which the chief executive office is located:
Address: 000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Phone number: 000-000-0000
Telecopier number: 401/739-7072
Additional locations at which the Seller does business
and maintains Records:
000 Xxxxxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
0 Xxxxxxxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Additional names under which Seller does business:
Eastern Telecom
Eastern Telecom of New York
Eastern Telecom of Connecticut
RFC CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Phone number: (000) 000-0000
Telecopier number: (000) 000-0000
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EXHIBIT A
DEFINITIONS
"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 percentage equal to the
then applicable Provident Bank prime lending rate plus 3.25% per annum;
provided that upon Purchaser's satisfactory receipt of audited data, in a form
acceptable to Purchaser, evidencing and confirming that Seller's attrition rate
for customers originated by Seller for Xxxx Atlantic and SNET is an amount
equal to or less than fifteen percent (15%) for two consecutive quarterly
periods, the Base Rate shall mean, as of any Purchase Date, a percentage equal
to the then applicable Provident Bank prime lending rate plus 2.75% per annum.
"BILLED AMOUNT" means, with respect to any Receivable the amount
billed or to be billed to the related Payor with respect thereto prior to the
application of any Gross Liquidation Rate.
"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 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 such
services are resold by the Seller.
"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 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 October 8, 1998.
"COLLECTION ACCOUNT" means the account established pursuant to Section
2.4(b).
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
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"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
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 Receivable as to which, on any
Determination Date (a) any part of the Net Value thereof remains unpaid for
more than 90 days from the Billing Date for such Receivable; or (b) the Payor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 7.1(f) or (g); or (c) the Master Servicer otherwise deems
any part of the Net Value thereof to be uncollectible for reasons other than a
breach of a representation or warranty under Article IV hereof.
"DEFAULTED RECEIVABLE AMOUNT" has the meaning specified in Section
5.2(c).
"DETERMINATION DATE" means the Business Day preceding the Purchase
Date of each week.
"ELIGIBLE PAYOR" means a Payor which is (a) (i) a corporation, limited
liability company, partnership or any other statutory organization organized
under the laws of any jurisdiction in the United States and having its
principal office in the United States; (ii) an individual or sole
proprietorship which is a resident of any jurisdiction in the United States;
(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; and (d) not subject to bankruptcy or
insolvency proceedings at the time of sale of the Receivables to be purchased.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable as to which the
representations and warranties of Section 4.2 are true and correct in all
respects at the time of Purchase.
"ELIGIBLE RECEIVABLE AMOUNT" means, with respect to any Eligible
Receivable, an amount equal to its Billed Amount after giving effect to the
Gross Liquidation Rate associated with the Payor Class with respect to such
Eligible Receivable.
"EVENT OF SELLER DEFAULT" has the meaning specified in Section 7.1.
"EXCESS COLLECTION AMOUNT" has the meaning specified in Section
5.2(d).
"GOVERNMENTAL AUTHORITY" means the United States of America, Federal,
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, determined in good faith by
the Master Servicer 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.
"INSOLVENCY EVENT" means the occurrence of an event whereby the Seller
makes a general assignment for the benefit of creditors; or where any
proceeding is instituted by or against the Seller seeking to adjudicate it a
bankrupt or insolvent, or which seeks the liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
the Seller 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.
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"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
2.4(a).
"MASTER SERVICER" means RFC Capital Corporation, a Delaware
corporation, or any Person designated as the successor Master Servicer, and its
successors and assigns, from time to time.
"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; provided, that if
the Master Servicer makes a determination that all payments by the Payor with
respect to such Receivable have been made, the Net Value shall be zero.
"PAID RECEIVABLES AMOUNT" has the meaning specified in Section 5.2(b).
"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 as of each Purchase Date, an amount equal to (i)
7/360 of the annualized Base Rate multiplied by (ii) the then current Net Value
of all Purchased Receivables including (A) Rejected Receivables and (B) those
Receivables to be purchased on such Purchase Date.
"PURCHASE" means a purchase by the Purchaser of Eligible Receivables
from the Seller pursuant to Section 2.2.
"PURCHASE ACCOUNT" means the account of the Purchaser titled "Purchase
Account."
"PURCHASE COMMITMENT" means an amount not to exceed $1,500,000;
provided, however, that with respect to the initial Purchase Date, such amount
shall not exceed $1,100,000 and other than with respect to the initial Purchase
Date, the aggregate Net Value of Purchased Receivables on the first Purchase
Date of any month may not be greater than $200,000, or such other amount as the
Purchaser and Seller may otherwise agree in writing, over the highest aggregate
Net Value of Purchased Receivables at any time during the immediately preceding
month. Subject to the prior written approval by the Purchaser and payment by
the Seller of all applicable fees as agreed by and between the Seller and
Purchaser, the Seller may request, in writing, that the Purchase Commitment be
increased to $5,000,000 provided, however, that no single incremental increase
in such Purchase Commitment may be less than $500,000.
"PURCHASE DATE" means the date on which the Purchaser initially
Purchases Receivables from the Seller and thereafter, such other date of each
week or month, as the case may be, that the Seller and Purchaser mutually
agree.
"PURCHASE PRICE" has the meaning specified in Section 2.3.
"PURCHASED RECEIVABLE" means any Receivable which has been purchased
by the Purchaser hereunder including a Rejected Receivable prior to its
repurchase.
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"PURCHASER" means RFC Capital Corporation, a Delaware corporation,
together with its successors and assigns.
"RECEIVABLE" means (a) an 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 such 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 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, the Subservicer or
Additional Subservicer with respect to Receivables (including Purchased
Receivables) and the related Payors.
"REJECTED RECEIVABLE AMOUNT" has the meaning specified in Section
5.2(a).
"REJECTED RECEIVABLE" has the meaning specified in Section 4.4.
"RELATED DOCUMENTS" means all documents required to be delivered
thereunder and under this Agreement.
"REQUIRED INFORMATION" means, with respect to a Receivable, (a) 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 VSI Network Solutions, Inc., a Delaware corporation,
together with its successors and assigns.
"SELLER CREDIT RESERVE ACCOUNT" means the account established pursuant
to Section 2.4(b).
"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, Additional Subservicer or the Master
Servicer with respect to the Purchased Receivables and the related Payors.
"SPECIFIED CREDIT RESERVE BALANCE" means, as of any Purchase Date, an
amount equal to 5.00% of the Net Value of Purchased Receivables including (a)
Rejected Receivables (net of recoveries) and (b) those Receivables to be
purchased on such Purchase Date.
"SUBSERVICER" means the Seller, or any Person designated as
Subservicer hereunder.
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"TERMINATION DATE" means the earlier of (a) October 8, 2000; (b) a
Termination Event; (c) the occurrence of an Event of Seller Default as set
forth in Section 7.1 of this Agreement; or (d) 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 EVENT" means the occurrence of an event under any loan
agreement, indenture or governing document following which the funding of the
Purchaser to be utilized in purchasing Receivables hereunder may be terminated.
"TERMINATION FEE" means an amount to be paid by the Seller to the
Purchaser equal to 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 in the event the Seller desires to terminate this Agreement,
whereby such termination shall be effective only in the event that (a) the
Seller has provided the Purchaser prior written notice thereof; and (b) the
Seller has paid to Purchaser and Purchaser has received from Seller an amount
equal to (i) 4.0% of the Purchase Commitment if such notice of termination is
provided to the Purchaser during the one year period commencing on the Closing
Date and ending on the one year anniversary of the Closing Date, or (ii) 3.0%
in the event such notice of termination is provided to the Purchaser 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 state of the location of the Seller's chief executive office.
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