RECEIVABLES SALE AGREEMENT
Dated as of
April __, 2001
by and between
XXXXXXXXXXXX.XXX, INC.
as Seller and Subservicer, and
RFC CAPITAL CORPORATION,
as Purchaser
RECEIVABLES SALE AGREEMENT (this "Agreement"), dated as of April __, 2001, by
and between XXXXXXXXXXXX.XXX, INC., a Delaware corporation, as Seller and
Subservicer, and RFC CAPITAL CORPORATION, a Delaware corporation, as Purchaser.
WITNESSETH:
WHEREAS, the Seller desires to sell certain of its telecommunications
receivables and the Purchaser is a corporation formed for the purpose of
purchasing certain telecommunications receivables from time to time;
WHEREAS, 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;
WHEREAS, the Purchaser desires 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 capitalized terms used in
this Agreement shall have the respective meanings set forth on Exhibit A
to this Agreement.
Section 1.2. Other Terms. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with generally
accepted accounting principles, consistently applied. 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.
ARTICLE II - PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS
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 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. Until the occurrence of a
Termination Date, upon receipt of the list of Eligible Receivables and
offer to sell pursuant to Section 2.1, the Purchaser, 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 applicable Purchase Price, as provided at
Section 2.3 of this Agreement. 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, 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. 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.
(b) If, in the event the Purchaser determines, in its sole
discretion, not to Purchase Eligible Receivables of like character and
quality as those previously purchased under this Section 2.2, and provided
there has not occurred any Event of Seller Default or material adverse
change in the business or financial condition of the Seller, the Purchaser
shall provide the Seller with notice of the same within three (3) Business
Days of Purchaser's receipt of the Seller's list of Eligible Receivables
pursuant to Section 2.1 and if, as a result thereof, Seller elects to
provide written notice to the Purchaser of its intention to terminate this
Agreement resulting in the occurrence of a Termination Date, then the
Seller shall not be obligated to pay to the Purchaser a Termination Fee.
Furthermore, solely in connection with the initial Purchase Date, if the
Seller offers to sell Eligible Receivables to Purchaser pursuant to
section 2.1 of this Agreement and Purchaser determines, in its sole
discretion, not to purchase any such Eligible Receivables offered for sale
pursuant to this Agreement notwithstanding that the tendered Receivables
were Eligible Receivables and all conditions precedent to purchase set
forth in Section 3.1 hereof were satisfied, then Seller shall be entitled
to terminate this Agreement upon three (3) days written notice to
Purchaser and, provided further, that in such event, Seller shall not be
obligated to pay to the Purchaser a Termination Fee.
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 and shall be paid by the Purchaser to the Seller by
wire transfer on such respective Purchase Date. 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 aggregate Net Value of
all Purchased Receivables 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 Purchaser.
(b) The Purchaser has established and shall maintain the "Collection
Account" (the "Collection Account"), the "Purchase Account" (the "Purchase
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, 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 24% 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 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 payment of consideration for a purchase 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 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 as of each Purchase Date:
(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) The Termination Date shall not have occurred;
(e) The Seller shall have taken such other action, including but not
limited to any necessary audit or audit update of the Seller and the
delivery of (i) an opinion of counsel prior to the initial Purchase Date
in the form of Exhibit D hereto, (ii) an Individual Guaranty in the form
attached hereto as Exhibit E executed by Xxxx Xxxxxx, (iii) evidence,
satisfactory to Purchaser, that Seller has received a new cash equity
investment prior to the initial Purchase of at least $1,100,000, (iv)
prior to the initial Purchase, satisfactory review by Purchaser of
Seller's audited financial statements for the year ending December 31,
2000, and (v) such other approvals, opinions or documents to the
Purchaser, as the Purchaser may reasonably request;
(f) The Seller shall (i) timely file all tax returns which Seller is
required by law to file or has obtained valid extensions therefor and all
taxes and other sums owing by Seller to any governmental authority have
been fully paid, (ii) maintain adequate reserves to pay such tax
liabilities as they accrue, (iii) except as set forth on Schedule
3.1(f)(iii), delivered to Purchaser satisfactory evidence that Seller is
in good standing and material compliance with any and all relevant taxing,
administrative, regulatory and/or Governmental Authorities; and
(g) As of the initial Purchase Date, the Purchaser shall have
received background checks on certain of Seller's shareholders, directors,
officers or managers, the results of which shall be satisfactory to the
Purchaser in its sole discretion.
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, as of the
date of this Agreement and as of 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 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 $25,000;
(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 through December 31, 2000, 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 December 31, 2000, there has been no
material adverse change in any such condition, business or operations; and
(iv) the Seller has delivered 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 45
days after the end of each fiscal quarter of Seller 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 and accompanied by a management narrative summarizing circumstances
and issues underlying such financial statements and facing the Seller
going forward and (c) within 90 days after the end of the fiscal year of
the Seller the financial statements, including balance sheet and income
statement prepared by an accounting firm acceptable to Purchaser;
(f) 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;
(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 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;
(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) Except as set forth on Schedule 4.1(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 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 (i) create an Adverse Claim with respect to any
Receivable or (ii) 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; 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 as of each subsequent Purchase Date, as follows:
(a) Such Purchased Receivable (i) includes all the Required
Information; (ii) is the legal, valid and binding obligation 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; (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; (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;
(viii) is able to be legally and validly sold by the Seller as the Seller
has the right to sell, assign and transfer the same and interests therein
as contemplated under this Agreement and (ix) is not subject to any
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 such Purchased Receivable is payable in
United States Dollars and the Eligible Receivable Amount with respect
thereto, unless the Purchaser and Seller agree otherwise in writing, is
not in excess of $15,000 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
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 such
Receivable, 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
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
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, 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
telecommunications services or equipment rendered by or on behalf of
Seller which contains a "pay to" address other than the Lockbox Account;
(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 4.4. Repurchase Obligations. Upon discovery by any party
to this Agreement of a breach of any representation or warranty in
Sections 4.1 or 4.2 of 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 satisfaction of the Rejected Receivable Amount and, provided
the full Net Value of such Rejected Receivables is deposited in the
Collection Account, such Rejected Receivables shall then be considered to
have been repurchased by the Seller. 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 or make demand upon the
Seller to pay any such deficiency to the Purchaser for deposit to the
Collection Account. Upon full payment of the amounts set forth above to
the Collection Account, the Seller will be deemed to have repurchased such
Rejected Receivable.
ARTICLE V - ACCOUNTS ADMINISTRATION
Section 5.1. 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. All such amounts shall be
administered in accordance with Section 5.3.
Section 5.2. Determinations of the Purchaser. On each
Determination Date, the Purchaser will determine, in good faith, the
following:
(a) the Net Value of all Purchased Receivables which have become
Rejected Receivables since the prior Purchase Date and which have not been
repurchased or offset in the manner set forth in Section 4.4 (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" or "Credit Deficiency");
(d) 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 (the "Excess Collection Amount");
(e) the Net Value of all Purchased Receivables less the Rejected
Receivable Amount and the Defaulted Receivable Amount as of the current
Determination Date; and
(f) the amount of any accrued and unpaid Program Fee.
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 5.3. Distributions from Accounts. (a) On each
Determination Date, following the determinations set forth in Section 5.2,
the Purchaser will make the following withdrawals and deposits:
(i) withdraw 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;
(ii) withdraw the Defaulted Receivable Amount from the Seller
Credit Reserve Account and deposit such amount in the Purchase Account;
(iii) withdraw the Excess Collection Amount from the
Collection Account 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; and
(iv) withdraw the balance of the Excess Collection Amount from
the Collection Account and, subject to any offset required under Section
5.3(b) 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 Excess
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 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.
(b) The full amount of the Purchase Price before any offsets, or in
the case where there is no Purchase Price paid in a given week, such
amounts as set forth at (i) through (iv) of this Section, shall be
withdrawn from the Purchase Account and paid and administered as follows:
(i) the Program Fee due and owing as of each respective Purchase Date
shall be paid to the Purchaser, (ii) the amount, if any, by which the
Seller Credit Reserve Account is less than the Specified Credit Reserve
Balance as of such respective Purchase Date shall be deposited in the
Seller Credit Reserve Account, (iii) the amount, if any, due and owing the
Purchaser pursuant to Section 9.4 of this Agreement shall be paid to the
Purchaser, and (iv) any remaining amount shall be paid to the Seller in
accordance with Section 2.3 of this Agreement.
(c) Until the Termination Date, with commercially reasonable best
efforts on each Purchase Date or in any event within two Business Days of
each Purchase Date, the Purchaser shall withdraw all amounts deposited
hereunder (net of withdrawals required hereunder) from the Seller Credit
Reserve Account which are 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, 5.3, 8.1, 9.4 and any
applicable Termination Fee, and pay the balance, if any, by wire transfer
to an account designated by the Seller.
Section 5.4. Allocation of Moneys following Termination Date. (a)
Upon the occurrence of a Termination Date hereunder, the Purchaser shall
administer and monitor the Lockbox Account and any and all Collections
and apply the amount of such Collections to the outstanding Net Value of
Purchased Receivables. Following the Termination Date and the Purchaser's
receipt of the Termination Fee, if applicable, from the Seller, the
Purchaser 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. To the extent any Purchased Receivable becomes
a Defaulted Receivable, the Purchaser may withdraw an amount equal to such
Defaulted Receivable Amount from the Seller Credit Reserve Account and
deposit such amount in the Collection Account, provided, however, that
such recourse is expressly limited to the monies which comprise the Seller
Credit Reserve Account at the time of the Termination Date which shall not
at any time exceed the Specified Credit Reserve Balance. Thereafter, any
Excess Collection Amount may not be used for deposit to the Seller Credit
Reserve Account and shall be otherwise administered in accordance with
this Agreement.
(b) In any event, following the Termination Date and the
Purchaser's receipt of the Termination Fee, if any, the Seller may, at its
option, repurchase all previously Purchased Receivables which have not
been fully paid by the respective Payors thereof by depositing with the
Purchaser the then aggregate Net Value of such Purchased Receivables.
Following such payment and any other amount due and owing the Purchaser
under this Agreement, this Agreement shall be deemed terminated.
(c) On the first date on which the aggregate Net Value of all
Purchased Receivables (other than Defaulted Receivables) is less than the
aggregate amount remaining in the Seller Credit Reserve Account, the
Purchaser shall withdraw an amount equal to such aggregate Net Value from
such accounts and deposit it in the Purchase Account. Thereupon the
Purchaser 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. Subject to Section
6.5, as consideration for the Seller's receipt of that portion of the
Excess 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.
Section 6.2. 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 6.4 or 7. 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 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.
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 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 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) The Seller or any Affiliate 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 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) An 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 thirty (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 4.1 or 4.2 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 4.4;
(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 or
Rejected 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 VIII - INDEMNIFICATION AND SECURITY INTEREST
Section 8.1. 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 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 2.3, 4.4, 5.3, 8.1, 9.4 and any applicable
Purchase Commitment Fees and/or Termination Fee, 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-1 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.
ARTICLE IX - MISCELLANEOUS
Section 9.1. Notices, Etc. All written notices required hereunder
shall be 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 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 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 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 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 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.
(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 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 and the Purchaser, 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
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.
Section 9.8. 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.
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.
XXXXXXXXXXXX.XXX, INC., as Seller and Subservicer
By:
Name:
Title:
Address at which the chief executive office is
located:
Address:
Attention:
Phone number:
Telecopier number:
Additional locations at which the Seller does
business and maintains Records:
Additional names under which Seller does
business:
RFC CAPITAL CORPORATION
By:
Name: Xxxxxxx X. Xxxxxx
Title:
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Phone number: (000) 000-0000
Telecopier number: (000) 000-0000
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 variable rate equal to
the prime lending rate as listed in The Wall Street Journal, Midwest
Edition, plus six percent (6%) 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 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.
"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 April __, 2001.
"Collection Account" means the account titled "Collection 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.
"Contract" means an agreement (or agreements) pursuant to, or under
which a Payor shall be obligated to pay for services rendered by the
Seller from time to time.
"Credit Deficiency" has the meaning specified in Section 5.2(c).
"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) any part of the Net Value thereof remains
unpaid for more than 90 days from the Billing Date for such Receivable; or
(b) the Seller or Payor thereof has taken any action, or suffered any
event to occur, of the type described in Section 7.1 of this Agreement; or
(c) the Purchaser otherwise reasonably 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 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 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 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, 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.
"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.
"LOA" means a letter of agency, or other authorization, obtained by
the Seller from each Payor designating the Seller as its service 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).
"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 Purchaser 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 the
greater of (a) $5,000 per month or (b) (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; 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 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 titled "Purchase Account"
established pursuant to Section 2.4(b).
"Purchase Commitment" means an amount not to exceed $2,500,000;
provided, however, that with respect to the initial Purchase Date, such
amount shall not exceed $1,500,000 and other than with respect to the
initial Purchase Date, the aggregate Net Value of Purchased Receivables of
any calendar month may not be greater than $500,000 more than the
immediately preceding month's highest aggregate Net Value of Purchased
Receivables, 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
calendar 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 $10,000,000 provided, however, that no
single incremental increase in such Purchase Commitment may be for an
amount less than $2,500,000.
"Purchase Commitment Fee" means, a fee due and owing by the Seller to
the Purchaser equal to (i) two percent (2.0%) of the Purchase Commitment
payable on the Closing. Any increases in the Purchase Commitment amount
will be subject to the payment by Seller to Purchaser of an additional fee
of two percent 2.0%) of the amount of any such respective increase.
"Purchase Date" means the date on which the Purchaser initially
purchases Receivables from the Seller and thereafter, such other day of
each week, as the case may be, 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 2.3.
"Purchased Receivable" means any Receivable which has been purchased
by the Purchaser hereunder including a Rejected Receivable to the extent
such Rejected Receivable has not been repurchased by Seller.
"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 services (and any telecommunication 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 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.
"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
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 Xxxxxxxxxxxx.xxx, Inc., a Delaware corporation,
together with its successors and assigns.
"Seller Credit Reserve Account" means the account titled "Seller
Credit Reserve 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 or the Purchaser 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 to the extent not repurchased and (b) those
Receivables to be purchased on such Purchase Date.
"Subservicer" means the Seller, or any Person designated as
Subservicer hereunder.
"Termination Date" means the earlier of (a) April __, 2002; (b) the
occurrence of an Event of Seller Default as set forth in Section 7.1 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 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 4.0% of the Purchase Commitment.
"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.
