RECEIVABLES SALE AGREEMENT
Dated as of
December 19, 2001
among
HBS BILLING SERVICES COMPANY
AND
ACI BILLING SERVICES, INC.
individually and collectively, as Seller and Subservicer, and
RFC CAPITAL CORPORATION,
as Purchaser
RECEIVABLES SALE AGREEMENT (the "Agreement"), dated as of
December 19, 2001, among HBS BILLING SERVICES COMPANY, a Texas
corporation and ACI BILLING SERVICES, INC., a Delaware corporation,
individually and collectively, as Seller and Subservicer, and RFC
CAPITAL CORPORATION, a Delaware corporation, as Purchaser.
RECITALS
A. The Seller desires to sell certain of its receivables and the
Purchaser is a corporation formed for the purpose of purchasing certain
receivables from time to time.
B. The Purchaser shall retain the complete right and ultimate authority
to perform certain servicing, administrative and collection functions in respect
of the receivables purchased by the Purchaser under this Agreement.
C. The Purchaser desires that the Subservicer be appointed to perform
certain servicing, administrative and collection functions in respect of the
Purchased Receivables.
D. The Seller has been requested and is willing to act as the
Subservicer.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I - DEFINITIONS
Section 1.1. Certain Defined Terms. The capitalized terms used in this
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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
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in this Agreement shall be construed in accordance with generally accepted
accounting principles. 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,
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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
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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.
Section 2.3. Purchase Price and Payment. The Purchase Price for
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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
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Therein; Investments. (a) A Lockbox Account will be established or assigned, as
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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 18% 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
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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
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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 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 the Seller with respect to any
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) the guaranties of Xxxxxxxx Group, Xxxxx Communications,
Inc., and Xxxxxxx Xxxxxx in the form attached hereto as Exhibit E and (iii) 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) delivered to Purchaser satisfactory evidence that Seller is in
good standing and material compliance with any and all relevant taxing,
administrative, local exchange carrier billing and collection agreements,
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
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Seller. The Seller represents and warrants to the Purchaser, as of the date of
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this Agreement and will represent and warrant as of each subsequent Purchase
Date, except as such representations and warranties may be affected by Seller's
existing and future relationship with PT-1 as described on Schedule 4 hereto, as
follows:
(a) The Seller is a corporation duly incorporated, 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 where the failure to do so would have a material adverse
effect 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, subject as to enforcement of remedies, to the
following qualifications: (i) equitable principles generally, and (ii)
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally;
(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, to Seller's
knowledge, 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 $100,000, which is not being contested in good faith and for
which an appropriate reserve has been established in accordance with generally
accepted accounting principles;
(d) The primary business of the Seller is the provision of billing
services and/or equipment. 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
September 30, 2001, 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 September 30,
2001, 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 45
days after the end of march, June and September and within 30 days after the end
of each other calendar month (other than December) the financial statements,
including balance sheet and income statement prepared in accordance with
generally accepted accounting principles, exclusive of footnotes, of the Seller
And Xxxxx Communications, Inc. as of the end of such month as kept by Seller and
Xxxxx Communications, Inc. in the ordinary course of their respective
businesses, certified by an officer of the Seller and Xxxxx Communications, Inc.
and accompanied by a management narrative summarizing circumstances and issues
underlying such financial statements and facing the Seller and Xxxxx
Communications, Inc. going forward and (b) within 90 days after the end of the
fiscal year of the Seller and Xxxxx Communications, Inc., the financial
statements, including balance sheet and income statement accompanied by the
report of the independent public accounting firm approved by the Board of
Directors of Xxxxx Communications, Inc.;
(f) All information furnished by or on behalf of the Seller and Xxxxx
Communications, Inc. 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 and Xxxxx Communications, Inc. in good faith and without intent to
hinder, delay or defraud present or future creditors of the Seller or Xxxxx
Communications, Inc.;
(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 addresses 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, except for changing its name from "HOLD Billing Services,
Ltd." to "HBS Billing Services Company" on February 15, 2000, and except for
changing its name from "ACI Communications, Inc." to ACI Billing Services, Inc."
on December 11, 2001, 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 "HBS Billing Services" and those appearing on the signature page of
this Agreement; and
(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 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 Billing and Collection Agreement to
become any more than thirty days past due.
Section 4.2. Representations and Warranties of the Seller as to
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Purchased Receivables. With respect to each Purchased Receivable sold pursuant
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to this Agreement the Seller represents and warrants as of the date hereof and
will represent and warrant 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 either created by the provision or sale of telecommunication
services or equipment by an Eligible Payor or by the provision of billing
services 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, the Billing and
Collection 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, the
Billing and Collection Agent, or any other Person shall be required to effect
the sale of any such Purchased Receivable.
(b) The Purchased Receivable is a Class 1 Purchased Receivable or, if a
Class 2 Purchased Receivable, 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 the lesser of 5% of the
aggregate outstanding Net Value Class 2 Purchased Receivables or $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 Billing and Collection Agreement or otherwise and neither
the Receivable nor the related Billing and Collection Agreement or Contract has
been compromised, adjusted, extended, satisfied, subordinated, rescinded,
set-off or modified by the Seller, the Payor or the Billing and Collection
Agent, and is not, to Seller's knowledge, subject to compromise, adjustment,
termination or modification, whether arising out of transactions concerning the
Contract, any Billing and Collection Agreement or otherwise; and
(c) Except as set forth on Schedule 4.2(c), there are no proceedings or
investigations pending or, to Seller's knowledge, 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,
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without the prior 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, other than Permitted Liens;
(b) Submit or permit to be submitted to Payors any invoice for billing
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;
(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 to the extent that Seller has Net Value
related to an end user under the advance funding program contemplated by this
Agreement;
(e) Make any payments, transfers or remittances of cash or other assets
to any Affiliate other than management fees paid in the normal course of
business up to $4,500,000 per annum, but in any event only to the extent that
the payment of any such management fees does not otherwise cause a default under
this Agreement;
(f) Other than in the normal course of business as approved in advance
by Purchaser and pursuant to written agreements, assume any liability, expense,
encumbrance or other obligation of an Affiliate;
(g) Pledge or otherwise encumber any of its assets or guarantee,
co-sign or endorse any obligation or cause any Affiliate to do any of the
foregoing, other than (i) Permitted Liens, or (ii) any of the foregoing done in
the ordinary course of Seller's business, where the dollar amount of all such
actions do not, in the aggregate, exceed $100,000 during any 12 calendar month
period;
(h) For any calendar month, permit the ratio of outstanding Net Value
to Collections received in the Lockbox Account to exceed .25 to 1.0;
(i) Permit the sum of its cash and accounts receivable (other than
accounts receivable from Affiliates) to be less than the sum of its payables and
current liabilities;
(j) Fail to pay billing customers of HBS Billing Services, Inc. within
5 Business Days of receipt of payment from any local exchange carrier; or fail
to pay customers of ACI Billing Services, Inc. in accordance with the terms of
their respective Billing and Collection Agreements, or, with respect to payments
received by Seller during the last full business week of each calendar month,
fail to pay customers of Seller within 10 Business Days of receipt of payment.
(k) Permit receivables purchased from any Participating Client to
exceed amounts approved by Purchaser.
Section 4.4. Repurchase Obligations. Upon discovery by any party to
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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
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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
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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
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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 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
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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) Following the Termination Date, 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 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, Xxxxx Communications, Inc. or Xxxxxxxx Group, Inc.
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 (60) 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 that remains
undischarged for a period of 45 days;
(f) As of the first day of any respective month, the average Net Value
of Purchased Receivables that became Defaulted Receivables or Rejected
Receivables during the prior three month period shall exceed 10.0% 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 for any reason whatsoever of any Billing and
Collection Agreement between Seller and any Payor that is obligated to make
payments in respect of Purchased Receivables then owned or held by Purchaser
absent (i) the consummation of a substitute Billing and Collections Agreement
with such Payor within ten Business Days of the termination thereof, or (ii) the
repurchase by Seller from Purchaser of all of such Payor's Purchased Receivables
within ten Business Days of the termination thereof, and/or, any invoice due and
owing by the Seller relating to any Billing and Collection Agreement has become
more than thirty days' past due; provided, however, no Event of Seller Default
shall be deemed to have occurred hereunder if a local exchange carrier
unilaterally terminates a Billing and Collection Agreement and there is no
material adverse effect resulting therefrom; 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 written 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) four
periodic audits of the Seller per year 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.
HBS BILLING SERVICES COMPANY, as Seller and Subservicer
By: s / Xxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address at which the chief executive office is located:
Address: 0000 Xxxxxxx Xxxxx, #0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Phone number: 000-000-0000
Telecopier number: 000-000-0000
ACI BILLING SERVICES, INC.
By: s / Xxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address at which the chief executive office is located:
Address: Xxxxxxx X. Xxxxxx
000 xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Phone number: 312-419-0077
Telecopier number: 000-000-0000
RFC CAPITAL CORPORATION
By: s / Xxxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Phone number: (000) 000-0000
Telecopier number: (000) 000-0000
