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EXHIBIT 10(r)(i)
EXECUTION COPY
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TRANSFER AND ADMINISTRATION AGREEMENT
among
ENTERPRISE FUNDING CORPORATION,
as Company
and
LCI SPC I, INC.
as Transferor
and
LCI INTERNATIONAL TELECOM CORP.
as the initial Collection Agent
and
NATIONSBANK, N.A.
as Agent and as a Bank Investor
and
CERTAIN OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO
as Bank Investors
Dated as of August 29, 1996
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 1.3. Computation of Time Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.2. Transfers; Eligible Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.3. Selection of Tranche Periods and Tranche Rates . . . . . . . . . . . . . . . . . . . . 48
SECTION 2.4. Discount, Fees and Other Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 2.5. Non-Liquidation Settlement and Reinvestment Procedures; Equalization
Account and LEC True-Up Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 2.6. Liquidation Settlement Procedures; Escrow Account . . . . . . . . . . . . . . . . . . . 54
SECTION 2.7. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 2.8. Protection of Ownership Interest of the Company and the Bank Investors . . . . . . . . 57
SECTION 2.9. Deemed Collections; Application of Payments . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 2.10. Payments and Computations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 2.11. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 2.12. Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 2.13. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 2.14. Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Transferor. . . . . . . . . . . . . . . . . . . . 62
SECTION 3.2. Reaffirmation of Representations and Warranties by the Transferor . . . . . . . . . . . 70
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 5.2. Negative Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 6.2. Duties of Collection Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 6.3. Rights After Designation of New Collection Agent . . . . . . . . . . . . . . . . . . . 92
SECTION 6.4. Collection Agent Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 6.5. Responsibilities of the Transferor and the Sellers . . . . . . . . . . . . . . . . . . 95
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 7.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 8.2. Indemnity for Taxes, Reserves and
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 8.3. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
SECTION 8.4. Other Costs, Expenses and Related
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 8.5. Reconveyance Under Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
ARTICLE IX
THE AGENT; BANK COMMITMENT
SECTION 9.1. Authorization and Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 9.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 9.3. Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 9.4. Indemnification of the Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 9.5. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
SECTION 9.6. Payments by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
SECTION 9.7. Bank Commitment; Assignment to
Bank Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
SECTION 10.2. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
SECTION 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
SECTION 10.4. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL; INTEGRATION . . . . . . . . . . . . . . . . . . . . 123
SECTION 10.5. Counterparts; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
SECTION 10.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
SECTION 10.7. Waiver of Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
SECTION 10.8. Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
SECTION 10.9. No Bankruptcy Petition Against the Company . . . . . . . . . . . . . . . . . . . . . . 126
SECTION 10.10. No Recourse Against Stockholders, Officers or Directors . . . . . . . . . . . . . . . . 126
SECTION 10.11. Characterization of the Transactions Contemplated by the Agreement . . . . . . . . . . 126
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ANNEX I DESCRIPTION
Annex I -- Financial Covenant Termination Events and Definitions
EXHIBITS DESCRIPTION
Exhibit A -- Contract and Tariff Term Restrictions
Exhibit B -- Credit and Collection Policies
Exhibit C -- Lock-Box Banks; Lock-Box Accounts; Lock-Box Numbers
Exhibit D -- Form of Lock-Box Agreement
Exhibit E-1 -- Form of Investor Report
Exhibit E-2 -- Form of Interim Report
Exhibit F -- Form of Assignment and Assumption Agreement
Exhibit G -- Litigation Matters
Exhibit H -- Addresses and Locations of Books and Records of the Transferor and Sellers;
Taxpayer Identification Numbers
Exhibit I -- Tradenames of Transferor and Sellers
Exhibit J-1 -- Matters for inclusion in opinion of counsel to Parent, Transferor and the Sellers (general corporate
and UCC matters)
Exhibit J-2 -- Matters for inclusion in opinion of counsel to Transferor and Sellers (true sale and
non-consolidation)
Exhibit K-1 -- Form of Secretary's Certificate (Transferor)
Exhibit K-2 -- Form of Secretary's Certificate (Sellers)
Exhibit K-3 -- Form of Secretary's Certificate (Parent)
Exhibit L -- ERISA Matters
Exhibit M-1 -- Form of Officer's Certificate (pro-forma balance sheet)
Exhibit M-2 -- Form of Officer's Certificate (representations and warranties - Seller)
Exhibit M-3 -- Form of Officer's Certificate (representations and warranties - Parent)
Exhibit N -- [Reserved]
Exhibit O-1 -- Form of Billing Agent Attornment Agreement
Exhibit O-2 -- Billing Agent Agreements
Exhibit P-1 -- Form of Computer Software or Equipment License Attornment Agreement
Exhibit P-2 -- Computer Software or Equipment License Agreements
Exhibit Q -- Qualified LEC Agreements
Exhibit R -- Form of PAR Statements
Exhibit S -- Form of UCC 9-318 Notice
Exhibit T -- Permitted Unblocked Accounts; Maximum Transmission Times for Funds on Deposit in Permitted Unblocked
Accounts
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TRANSFER AND ADMINISTRATION AGREEMENT
TRANSFER AND ADMINISTRATION AGREEMENT (this "Agreement"), dated as of
August 29, 1996, by and among LCI SPC I, INC., a Delaware corporation, as
transferor (in such capacity, the "Transferor"), LCI INTERNATIONAL TELECOM
CORP., a Delaware corporation, as the initial collection agent (in such
capacity, the "Collection Agent"), ENTERPRISE FUNDING CORPORATION, a Delaware
corporation (the "Company"), NATIONSBANK, N.A., a national banking association
("NationsBank"), as agent for the Company and the Bank Investors (in such
capacity, the "Agent") and as a Bank Investor, and those other financial
institutions from time to time parties hereto as Bank Investors.
PRELIMINARY STATEMENTS
WHEREAS, the Transferor may desire to convey, transfer and assign,
from time to time, undivided percentage interests in certain accounts
receivable, and the Company may desire to, and the Bank Investors, if
requested, shall, accept such conveyance, transfer and assignment of such
undivided percentage interests, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Activation Date" means the date upon which the Transferor elects to
utilize the Inactive Commitment to increase the Maximum Net Investment in
accordance with Section 2.2(d).
"Activation Termination Date" means the earlier to occur of the
Termination Date and the date occurring on the one year anniversary of the date
of this Agreement.
"Active Commitment" means, at any time with respect to any Bank
Investor, such Bank Investor's Pro Rata Share of the Maximum Net Investment at
such time.
"Administration Fee" means the fee payable by the Transferor to the
Agent, solely for the benefit of the Company, pursuant to Section 2.7, which
fee shall be equal to the product of (a) the per annum rate set forth in the
Fee Letter and (b) the
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average daily Maximum Net Investment during the period for which such fee is
owing.
"Administrative Agent" means NationsBank, N.A., as administrative
agent.
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person (including any UCC financing statement
or any similar instrument filed against such Person's assets or properties),
except that with respect to any Qualified LEC Receivables, any rights of any
LEC therein pursuant to the applicable LEC Agreement and/or any applicable
Tariffs relating thereto shall not constitute an Adverse Claim.
"Affected Assets" means, collectively, the Receivables and the Related
Security, Collections and Proceeds relating thereto.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of voting stock, by contract or
otherwise.
"Affiliated Entity" means the Parent, the Transferor, any of the
Sellers, any of the foregoing's Subsidiaries or any Affiliate of any of the
foregoing or, in each case, any designee or agent of any of the foregoing.
"Agent" means NationsBank, N.A., in its capacity as agent for the
Company and the Bank Investors, and any successor thereto appointed pursuant to
Article IX.
"Aggregate LEC Reduction Amount" means, at any time, the sum of the
LEC Reduction Amounts for all of the LECs at such time.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of
(i) the aggregate accrued and unpaid Discount with respect to all Tranche
Periods at such time, (ii) the Net Investment at such time, and (iii) all other
amounts owed (whether due or accrued) hereunder by the Transferor to the
Company, the Bank Investors, the Agent or the Collection Agent (if other than
an Affiliated Entity) at such time.
"Applicable Initial LEC Receivable Cut-Off Date" means, with respect
to each Qualified LEC Agreement, the last day of the most recent period covered
by a PAR Statement in respect of which
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any Associated LEC Payments under such PAR Statement have been made by the
applicable LEC to the applicable Seller parties to such LEC Agreement.
"Arrangement Fee" means the fee payable by the Transferor to the
Administrative Agent pursuant to Section 2.7 hereof, the terms of which are set
forth in the Fee Letter.
"Assignment Amount" with respect to a Bank Investor shall mean at any
time an amount equal to the lesser of (i) such Bank Investor's Pro Rata Share
of the Net Investment at such time and (ii) such Bank Investor's unused
Commitment.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit F attached hereto.
"Associated LEC Payments" means, with respect to any Qualified LEC
Receivable transmitted, transferred or otherwise remitted to a LEC for billing
and collection, all payments required to be made by the LEC to the applicable
Seller for such LEC Receivable pursuant to the applicable LEC Agreement.
"Average Collection Period" means, at any time, the weighted average
of the LEC Average Collection Period and the Direct Billed Average Collection
Period (as determined by reference to the respective Outstanding Balances of
the Direct Billed Receivables and the Qualified LEC Receivables).
"Bank Investors" means NationsBank, N.A., any other financial
institution that becomes a Bank Investor pursuant to an Assignment and
Assumption Agreement, and any of the foregoing's respective successors and
assigns.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101 et seq.), as amended.
"Base Rate" or "BR" means, a rate per annum equal to the greater of
(i) the prime rate of interest announced by the Liquidity Provider (or, if more
than one Liquidity Provider, then by NationsBank) from time to time, changing
when and as said prime rate changes (such rate not necessarily being the lowest
or best rate charged by the Liquidity Provider (or NationsBank, as applicable))
and (ii) the sum of (a) 1.50% and (b) the rate equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Liquidity Provider (or, if more than one
Liquidity Provider, then
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by NationsBank) from three Federal funds brokers of recognized standing
selected by it.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Transferor, any of the Sellers, the
Parent or any ERISA Affiliate of the Transferor, any of the Sellers or the
Parent is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"Billing Agent" means any Person performing billing services with
respect to the Receivables for any of the Sellers or the Transferor, pursuant
to which arrangement the Collections of such Receivables continue to be
remitted to the applicable Seller or the Transferor, as applicable, and not to
the Billing Agent.
"Business Day" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York or Charlotte, North Carolina are authorized
or required by law to close, and, when used with respect to the determination
of any Eurodollar Rate or any notice with respect thereto, any such day which
is also a day for trading by and between banks in United States dollar deposits
in the London interbank market.
"BR Tranche" means a Tranche as to which Discount is calculated at the
Base Rate.
"BR Tranche Period" means, with respect to a BR Tranche, either (i)
prior to the Termination Date, a period of up to 30 days requested by the
Transferor and agreed to by the Company, NationsBank on behalf of the Liquidity
Provider, or the Agent, as the case may be, commencing on a Business Day
requested by the Transferor and agreed to by the Company, NationsBank or the
Agent, as the case may be, or (ii) after the Termination Date, a period of one
day. If such BR Tranche Period would end on a day which is not a Business Day,
such BR Tranche Period shall end on the next succeeding Business Day.
"Capitalized Lease" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Certificate of Designation" means the Certificate of Designation for
the Existing Preferred Stock, as in effect on June 6, 1995.
"Change of Control" means, with respect to the Parent, (i) any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of the
Securities and Exchange Act of 1934 (as amended, the "Exchange Act")), other
than Warburg, Pincus Capital Company, L.P. or its Affiliates, shall obtain
ownership or
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control in one or more series of transactions of more than fifty percent (50%)
of the common stock or fifty percent (50%) of the voting power of the Parent
entitled to vote in the election of members of the board of directors of the
Parent or (ii) there shall have occurred under any indenture or other
instrument evidencing Indebtedness of the Parent in excess of $5,000,000 or
under the Certificate of Designation any "change of control" (as defined in
such indenture or other evidence of such Indebtedness or such certificate)
obligating the Parent to repurchase, redeem or repay all or any part of such
Indebtedness or capital stock provided for therein.
"Closing Date" means August 29, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means NationsBank, N.A., as collateral agent for
any Liquidity Provider, any Credit Support Provider, the holders of Commercial
Paper and certain other parties.
"Collection Account" means the account established by the Agent, for
the benefit of the Company and the Bank Investors, pursuant to Section 2.12.
"Collection Agent" means at any time the Person then authorized
pursuant to Section 6.1 to service, administer and collect the Receivables.
"Collection Agent Default" has the meaning specified in Section 6.4
hereof.
"Collections" means (a) with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable and the Related Security
with respect thereto, including, without limitation, all Associated LEC
Payments and all Finance Charges, if any and (b) all interest and other
investment proceeds (net of losses and investment expenses) on funds on deposit
in the Escrow Account as a result of the investment thereof pursuant to Section
2.6(b).
"Commercial Contract" means an agreement or invoice pursuant to or
under which an Obligor shall be obligated to pay for merchandise purchased or
leased or services rendered.
"Commercial Paper" means the promissory notes of the Company issued by
the Company in the commercial paper market.
"Commitment" means for each Bank Investor, the commitment of such Bank
Investor to make or participate in acquisitions from the Transferor, the
Company and/or the
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Liquidity Provider in accordance herewith and/or the Liquidity Provider
Agreement in an aggregate amount not to exceed the dollar amount set forth
either (i) opposite such Bank Investor's signature on the signature page hereto
under the heading "Commitment" or (ii) in the most recent Assignment and
Assumption Agreement to which such Bank Investor is a party, in either case, as
the same may be reduced from time to time pursuant to Section 2.2(d)(ii);
provided; however, that from and after the Termination Date, such Bank
Investor's Commitment shall be equal to the aggregate outstanding principal
balance of its interest in the Net Investment hereunder and its participation
interest in the "Bank's Related Aggregate Investment" under (and as such term
is defined in) the Liquidity Provider Agreement with respect to this Agreement.
"Company" means Enterprise Funding Corporation, and its successors and
assigns.
"Concentration Factor" means, on any date of determination, two
percent (2%) of the Net Investment on such date; provided, however, that (i)
with respect to any Designated Obligor and its affiliates whose long term
unsecured debt obligations are rated at least "A1" by Moody's and at least "A+"
by Standard & Poor's and with respect to which rating neither Moody's nor
Standard & Poor's shall have made a public announcement anticipating a
downgrading of such Designated Obligor's long term unsecured debt obligations
to a rating less than the aforementioned ratings ("A1/A+ Rated Obligors"), such
amount shall be equal to five percent (5%) of the Net Investment on such date;
(ii) with respect to any Special Obligors, such amount shall be equal to such
other amounts or percentages of the Net Investment as shall be determined by
the Agent in the reasonable exercise of its good faith judgment and disclosed
in a written notice delivered to the Transferor.
"Contract" means either a Commercial Contract or a Tariff; for
purposes of this Agreement the term "Contract" shall not include any LEC
Agreements.
"Coverage Percentage" means the fraction (expressed as a percentage)
computed at any time of determination as follows:
NI + DBLR + DBDLR + DR + SFR + LTR + LDR + LWR
----------------------------------------------
NRB + EAB
where:
NI = the Net Investment at the time of such computation;
DBLR = the Direct Billed Loss Reserve at the time of such computation;
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DBDLR= the Direct Billed Dilution Reserve at the time of such computation;
DR = the Discount Reserve at the time of such computation;
SFR = the Servicing Fee Reserve at the time of such computation;
LTR = the LEC True-Up Reserve at the time of such computation;
LDR = the LEC Dilution Reserve at the time of such computation;
LWR = the LEC Withholding Reserve at the time of such computation;
NRB = the Net Receivables Balance at the time of such computation; and
EAB = the balance of the Equalization Account at the time of such
computation.
The Coverage Percentage shall be calculated by the Collection Agent
on the day of the initial Incremental Transfer hereunder. Thereafter, until
the Termination Date, the Collection Agent shall recompute the Coverage
Percentage at the time of each Incremental Transfer pursuant to Section 2.2(a)
and as of the close of business on each Business Day and report such
recomputations for the last day of each month (or such other date as shall be
directed by the Agent pursuant to the following proviso) to the Agent in the
Investor Report and as otherwise requested by the Agent; provided, that the
Agent shall not request any such additional recomputations other than after the
occurrence and during the continuance of a Termination Event. The Coverage
Percentage shall remain constant from the time as of which any such computation
or recomputation is made until the time as of which the next such recomputation
shall be made, notwithstanding any additional Receivables arising or any
reinvestment Transfer made pursuant to Section 2.2(b) and 2.5(a) during any
period between computations of the Coverage Percentage.
"CP Rate" means, with respect to any CP Tranche Period, the rate
equivalent to the rate (or if more than one rate, the weighted average of the
rates) at which Commercial Paper having a term equal to such CP Tranche Period
may be sold by any placement agent or commercial paper dealer selected by the
Company, provided, however, that if the rate (or rates) as agreed between any
such agent or dealer and the Company is a discount rate, then the rate (or if
more than one rate, the weighted average of the
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rates) resulting from the Company's converting such discount rate (or rates) to
an interest-bearing equivalent rate per annum.
"CP Tranche" means a Tranche as to which Discount is calculated at
a CP Rate.
"CP Tranche Period" means, with respect to a CP Tranche, a period
of days not to exceed ninety (90) days commencing on a Business Day requested
by the Transferor and agreed to by the Company pursuant to Section 2.3. If a
CP Tranche Period would end on a day which is not a Business Day, such CP
Tranche Period shall end on the next succeeding Business Day.
"Credit and Collection Policy" shall mean with respect to any of
the Sellers, the credit and collection policies and practices of such Seller
attached hereto as Exhibit B relating to Contracts and Receivables originated
by such Seller, as the same may be modified from time to time in compliance
with Section 5.2(c), and "Credit and Collection Policies" means, collectively,
the Credit and Collection Policies of each of the Sellers.
"Credit Support Agreement" means the agreement between the Company
and the Credit Support Provider evidencing the obligation of the Credit Support
Provider to provide credit support to the Company in connection with the
issuance by the Company of Commercial Paper.
"Credit Support Provider" means the Person or Persons who provides
credit support to the Company in connection with the issuance by the Company of
Commercial Paper.
"Customer Statement" means, for any Direct Billed Receivable, the
invoice, monthly statement or other document or notice stating that the amount
described therein is due upon the Obligor's receipt thereof or at such time as
is otherwise set forth therein.
"Dealer Fee" means the fee payable by the Transferor to the
Collateral Agent, pursuant to Section 2.4 hereof, the terms of which are set
forth in the Fee Letter.
"Deemed Collections" means any Collections on any Receivable deemed
to have been received pursuant to Section 2.9(a) or (b) hereof.
"Defaulted Receivable" means a Receivable: (i) as to which, if it
is a Direct Billed Receivable, any payment, or any part thereof, remains unpaid
for more than 120 days from the original invoice date for such Receivable;
provided, however, that for any period prior to the time that the Sellers
commenced tracking defaults on such basis, a "Defaulted Receivable" shall mean
a Receivable as to which any payment, or any part thereof,
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remains unpaid for more than 90 days from the original invoice date for such
Receivable; (ii) as to which, if it is a Qualified LEC Receivable, any
Associated LEC Payment owing with respect thereto (as determined by reference
to the applicable PAR Statement covering such LEC Receivable), or any part
thereof, remains unpaid for more than 90 days from the Transmission Date of
such Receivable; (iii) as to which an Event of Bankruptcy has occurred and is
continuing with respect to the Obligor thereof; (iv) which has been identified
by the Transferor, the Seller originating such Receivable, the Collection Agent
or any applicable LEC responsible for the billing and collection thereof as
uncollectible or with respect to which the telephone service to the Obligor of
such Receivable has been terminated or suspended for non-payment by such Seller
or such LEC; or (v) which, consistent with the Credit and Collection Policy of
the applicable Seller and/or the applicable LEC Agreement (and the Tariffs
relating thereto) between the applicable Seller and the LEC responsible for the
billing and collection thereof, has been or should have been written off as
uncollectible.
"Delinquent Receivable" means a Receivable: (i) as to which, if it
is a Direct Billed Receivable, any payment, or any part thereof, remains unpaid
for more than sixty (60) days from the original invoice date for such
Receivable or (ii) as to which, if it is a Qualified LEC Receivable, any
Associated LEC Payment owing with respect thereto (as determined by reference
to the applicable PAR Statement covering such LEC Receivable), or any part
thereof, remains unpaid for more than 60 days from the Transmission Date of
such Receivable and (iii) in either case, which is not a Defaulted Receivable.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon notice to
the Transferor from the Agent delivered at any time.
"Diluted Receivable" means that portion of any Receivable that has
been reduced as a result of any Dilution Factor.
"Dilution" means the reduction or cancellation of all or any
portion of a Receivable as a result of any Dilution Factor.
"Dilution Factor" has the meaning assigned to such term in the
definition of "Direct Billed Dilution Ratio" and "LEC Dilution Ratio".
"Direct Billed Allocation Percentage" means a fraction (expressed
as a percentage as calculated on the Investor Report most recently delivered)
the numerator of which shall be the aggregate Outstanding Balance of all Direct
Billed Receivables as
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of the last Business Day of the month covered by such Investor Report (or, in
the case of the initial period after the Closing Date until delivery of the
First Investor Report, as of the Closing Date) and the denominator of which is
the aggregate Outstanding Balance of all Receivables on such date.
"Direct Billed Average Collection Period" means, at any time, a
period of days equal to the product of (i) a fraction the numerator of which
shall be the amount set forth in the most recent Investor Report as the
"Beginning Balance" of the Direct Billed Receivables and the denominator of
which shall be the Collections of Direct Billed Receivables as set forth in the
most recent Investor Report and (ii) thirty (30).
"Direct Billed Delinquency Ratio" means, the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
the aggregate Outstanding Balance as of such date of all Direct Billed
Receivables in respect of which any payment (or part thereof) shall be
outstanding more than sixty (60) days but less than ninety-one (91) days after
the original billing date therefor by (ii) the aggregate Outstanding Balance of
all Direct Billed Receivables (other than those in respect of which any payment
(or any part thereof) shall be outstanding ninety-one days or more after the
original billing date therefor) as of such date.
"Direct Billed Dilution Ratio" means, the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
the sum of the aggregate amounts, if any, by which all Direct Billed
Receivables are reduced or cancelled during such month as a result of any
defective, rejected or returned merchandise or services and all credits,
rebates, discounts, disputes, warranty claims, repossessed or returned goods,
chargebacks, allowances, other dilutive factors, and any other billing or other
adjustment provided to any Obligors in respect of their Direct Billed
Receivables, including, without limitation, (x) any reductions for improper
billing and (y) any reductions to, re-ratings of, or other adjustments to, any
previously reported Unbilled Toll for any reason whatsoever (in each case,
whether effected through the granting of credits against the applicable
Receivables or by the issuance of a check or other payment in respect of (and
as payment for) such reduction) by the applicable Seller, the Transferor or the
Collection Agent (the foregoing, together with the "Dilution Factors" defined
in the definition of LEC Dilution Ratio, being referred to collectively as
"Dilution Factors" and each individually as a "Dilution Factor") by (ii) the
aggregate Outstanding Balance of all Direct Billed Receivables which were
billed, and all Unbilled Toll which arose but which was not billed, in each
case, during the month occurring two months prior to the month for which such
ratio is being calculated (i.e., for the calculation of the July Direct Billed
Dilution Ratio, the
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relevant Direct Billed Receivables and Unbilled Toll would be those billed or
arising, respectively, during the month of May); provided, however, that the
Direct Billed Dilution Ratio shall in no event ever be less than seven percent
(7%).
"Direct Billed Dilution Reserve" means, at any time, an amount
equal to the sum of (a) product of (i) 1.5, (ii) the highest Direct Billed
Dilution Ratio as of the last day of any of the preceding 12 calendar months
and (iii) the product of (x) the Direct Billed Allocation Percentage at such
time and (y) the sum of the Net Investment, the Discount Reserve and the
Servicing Fee Reserve, plus (b) the product of (i) 1.5, (ii) the highest Direct
Billed Dilution Ratio as of the last day of any of the preceding 12 calendar
months and (iii) the Direct Billed Loss Reserve, in each case at such time.
"Direct Billed Loss Percentage" means on any day, as calculated in
the most recent Investor Report, the greatest of (i) three and one-half (3.5)
times the average of the two highest Direct Billed Loss-to-Liquidation Ratios
for any two consecutive months during the twelve (12) calendar months ending
prior to the date of such Investor Report, (ii) four (4) times the highest
percentage used to determine the Concentration Factor of all Designated
Obligors (other than A1/A+ Rated Obligors (as such term is defined in, and as
such percentage is set forth in clause (i) of, the definition of "Concentration
Factor") or Special Obligors) and (iii) fifteen percent (15%).
"Direct Billed Loss Reserve" means, on any day, an amount equal to:
[DBLP x DBAP x (NI + DR + SFR)] + [DBLP x DBDLR]
where:
DBLP = the Direct Billed Loss Percentage at the close of business of the
Collection Agent on such day;
DBAP = the Direct Billed Allocation Percentage as of such date;
NI = the Net Investment at the close of business of the Collection Agent
on such day;
DBDLR= the Direct Billed Dilution Reserve at the close of business of the
Collection Agent on such day;
DR = the Discount Reserve at the close of business of the Collection
Agent on such day; and
SFR = the Servicing Fee Reserve at the close of business of the Collection
Agent on such day.
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Notwithstanding the foregoing, the Direct Billed Loss Reserve shall at all
times be at least equal to $15,000,000.
"Direct Billed Loss-to-Liquidation Ratio" means the ratio (expressed
as a percentage) computed as of the last day of each calendar month by dividing
(i) the aggregate Outstanding Balance of all Direct Billed Receivables which
became Defaulted Receivables during such calendar month, by (ii) the aggregate
amount of Collections of the Direct Billed Receivables received by the
Collection Agent during such calendar month.
"Direct Billed Receivable" means, either a Private Line Receivable
or a Switched Services Receivable, which in either case, is not covered by or
subject to a LEC Agreement, and "Direct Billed Receivables" means all such
Private Line Receivables and Switched Services Receivables, collectively.
"Discount" means, with respect to any Tranche Period:
TR x TNI x AD
-------------
360
where:
TR = the Tranche Rate applicable to such Tranche Period;
TNI = the portion of the Net Investment allocated to such Tranche Period;
and
AD = the actual number of days during such Tranche Period;
provided, however, that no provision of this Agreement shall require the
payment or permit the collection of Discount in excess of the maximum amount
permitted by applicable law; and provided, further, that Discount shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must be returned for any reason.
"Discount Reserve" means, at any time, an amount equal to:
TD + LY
where:
TD = the sum of the accrued and unpaid Discount for all Tranche Periods;
and
LY = the Liquidation Yield
"Early Collection Fee" means, for any Tranche Period (such Tranche
Period to be determined without regard to the last
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sentence in Section 2.3(a) hereof) during which the portion of the Net
Investment that was allocated to such Tranche Period is reduced for any reason
whatsoever (other than as the result of the occurrence of a Non-Fee Termination
Event pursuant to Section 7.2(a)), the excess, if any, of (i) the additional
Discount that would have accrued during such Tranche Period if such reductions
had not occurred, minus (ii) the income, if any, received by the recipient of
such reductions from investing the proceeds of such reductions.
"Eligible Investments" means any of the following (a) negotiable
instruments or securities represented by instruments in bearer or registered or
in book-entry form which evidence (i) obligations fully guaranteed by the
United States of America; (ii) time deposits in, or bankers acceptances issued
by, any depositary institution or trust company incorporated under the laws of
the United States of America or any state thereof and subject to supervision
and examination by Federal or state banking or depositary institution
authorities; provided, however, that at the time of investment or contractual
commitment to invest therein, the certificates of deposit or short-term
deposits, if any, or long-term unsecured debt obligations (other than such
obligation whose rating is based on collateral or on the credit of a Person
other than such institution or trust company) of such depositary institution or
trust company shall have a credit rating from Moody's and S&P of at least "P-1"
and "A-1", respectively, in the case of the certificates of deposit or
short-term deposits, or a rating not lower than one of the two highest
investment categories granted by Moody's and by S&P; (iii) certificates of
deposit having, at the time of investment or contractual commitment to invest
therein, a rating from Moody's and S&P of at least "P-1" and "A-1",
respectively; or (iv) investments in money market funds rated in the highest
investment category or otherwise approved in writing by the applicable rating
agencies; (b) demand deposits in any depositary institution or trust company
referred to in (a)(ii) above; (c) commercial paper (having original or
remaining maturities of no more than 30 days) having, at the time of investment
or contractual commitment to invest therein, a credit rating from Moody's and
S&P of at least "P-1" and "A-1", respectively; (d) Eurodollar time deposits
having a credit rating from Moody's and S&P of at least "P-1" and "A-1",
respectively; and (e) repurchase agreements involving any of the Eligible
Investments described in clauses (a)(i), (a)(iii) and (d) hereof so long as the
other party to the repurchase agreement has at the time of investment therein,
a rating from Moody's and S&P of at least "P-1" and "A-1", respectively.
"Eligible Qualified LEC Receivable" means, at any time, a Qualified
LEC Receivable (i) that is subject to a Qualified LEC Agreement which has not
been terminated by any party thereto and is otherwise in full force and effect,
except that if such
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Qualified LEC Agreement is terminated by the applicable Seller party thereto
but such termination does not, in the commercially reasonable determination of
the Agent, adversely affect any Qualified LEC Receivable that was outstanding
on the date of such termination, then any such outstanding Qualified LEC
Receivable would continue to satisfy this clause (i), (ii) that is subject to a
LEC Agreement which has not been amended, supplemented or otherwise modified,
without the prior consent of the Majority Investors, in any manner which
adversely affects the collectibility of the Receivables covered thereby, and
(iii) that is subject to a Qualified LEC Agreement with respect to which the
LEC party thereto (a) has received (and has not rejected or repudiated) a
notice in the form of Exhibit S hereto (or otherwise acceptable to the Agent)
given pursuant to Section 9-318 of the UCC, (b) has a long-term unsecured debt
rating of at least "BBB" by S&P and "Baa2" by Moody's, (c) is not subject to
any Event of Bankruptcy and (d) has not breached or otherwise failed to perform
(or has remedied any such prior breach or failure of) any of the material terms
and provisions of such agreement which it is required to perform thereunder or
filed any Tariff (or any amendment to any Tariff) with any Official Body, which
such breach or Tariff (or any such amendment) could reasonably be expected to
adversely affect (x) the ability of the Transferor or any of the Sellers to
perform its obligations hereunder, (y) the collectibility of the LEC
Receivables covered thereunder (or the Associated LEC Payments in respect
thereof) or (z) affect the interest of the Agent, the Company and/or the Bank
Investors in the Receivables and/or the Related Security.
"Eligible Receivable" means, at any time, any Receivable:
(i) which has been originated by a Seller, sold to the
Transferor pursuant to (and in accordance with) the Receivables Purchase
Agreement and to which the Transferor has good title thereto, free and
clear of all Adverse Claims;
(ii) which (together with the Collections and Related
Security related thereto) has been the subject of either a valid transfer
and assignment from the Transferor to the Agent, on behalf of the Company
and the Bank Investors, of all of the Transferor's right, title and
interest therein or the grant to the Agent, on behalf of the Company and
the Bank Investors, of a first priority perfected security interest in all
of the Transferor's right, title and interest therein (and, in either case,
in the Collections and Related Security related thereto), effective until
the termination of this Agreement;
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(iii) the Obligor of which is not an Affiliate of any of
the parties hereto;
(iv) which is not a Defaulted Receivable at the time of
the initial creation hereunder of an interest therein;
(v) which is not a Delinquent Receivable at the time of
the initial creation hereunder of an interest therein;
(vi) which, (A) arises pursuant to a Contract or Tariff
which does not violate any of the restrictions set forth on Exhibit A
hereto, and, in either case, with respect to which the applicable Seller
and the Transferor have each performed all obligations required to be
performed by it thereunder, including without limitation shipment of the
merchandise and/or the performance of the services purchased thereunder;
(B) which, if such Receivable is a Direct Billed Receivable, has either (x)
been billed by the applicable Seller's or its Billing Agent's mailing of a
Customer Statement to the Obligor thereof or (y) constitutes Eligible
Unbilled Toll; and (C) according to the Contract or the Customer Statement
related thereto, is required to be paid in full within no more than 30 days
after the original billing date therefor; provided, that any Receivable
arising under a Contract or Customer Statement which does not require
payment thereof for any number of days in excess of thirty (30) but not
greater than sixty (60), in each case, after the original billing date
therefor shall not be deemed to be ineligible pursuant to this clause (vi)
to the extent that the Outstanding Balance thereof, when aggregated with
the Outstanding Balance of all such other Eligible Receivables of the type
described in this proviso, would not exceed $2,000,000;
(vii) which is an "eligible asset" as defined in Rule 3a-7
under the Investment Company Act of 1940, as amended;
(viii) a purchase of which with the proceeds of Commercial
Paper would constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
(ix) which is an "account" within the meaning of Article
9 of the UCC of all applicable jurisdictions;
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(x) which is denominated and payable only in United
States dollars in the United States;
(xi) which, arises under a Contract that, together with the
Receivable related thereto, is in full force and effect and constitutes the
legal, valid and binding obligation of the related Obligor enforceable
against such Obligor in accordance with its terms and is not subject to any
litigation, dispute, offset, counterclaim or other defense; provided,
however, that only such portion of such Receivable which is the subject of
such litigation, dispute, offset, counterclaim or other defense shall be
deemed ineligible pursuant to this clause (xi);
(xii) which, together with the Contract related thereto,
does not contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy) and with respect to which no part of the Contract related thereto
is in violation of any such law, rule or regulation in any material
respect;
(xiii) which (A) satisfies all applicable requirements of
the Credit and Collection Policy of the applicable Seller, (B) is
assignable without the consent of, or notice to, the Obligor thereunder,
and (C) complies with such other criteria and requirements as the Agent may
from time to time specify to the Transferor following five days' notice;
(xiv) which was generated from the sale or lease of goods,
merchandise or inventory of, or the provision of services by, the
applicable Seller in the ordinary course of such Seller's business;
(xv) the Obligor of which has been directed to remit
payments thereon directly to either (a) a Lock-Box or Lock-Box Account in
respect of which there shall be a Lock-Box Agreement in effect or (b) to
the extent permitted pursuant to Section 2.8(b) and 5.1(h), to a Permitted
Unblocked Account or a Lock-Box Relating to any such account;
(xvi) as to which the Agent has not notified the
Transferor that such Receivable or class of Receivables is not acceptable
for purchase hereunder;
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(xvii) the assignment of which under the Receivables
Purchase Agreement by the applicable Seller and hereunder by the Transferor
does not violate, conflict or contravene any applicable laws, rules,
regulations, orders or writs or any contractual or other restriction,
limitation or encumbrance;
(xviii) which has not been compromised, adjusted or modified
(including by the extension of time for payment or the granting of any
discounts, allowances or credits); provided, however, that only such
portion of such Receivable that is the subject of such compromise,
adjustment or modification shall be deemed to be ineligible pursuant to the
terms of this clause (xviii);
(xix) which, if such Receivable is a Qualified LEC
Receivable, is an Eligible Qualified LEC Receivable; and
(xx) which, if subject to a Billing Agent Agreement, a
Billing Agent attornment agreement substantially in the form of Exhibit O-1
executed by the applicable Billing Agent shall have been delivered to the
Agent with respect thereto.
"Eligible Unbilled Toll" means Unbilled Toll in respect of
which no more than 10 calendar days has elapsed since the cut-off date of the
billing cycle for the Obligor thereon.
"Equalization Account" means the account established by the
Agent, for the benefit of the Company and the Bank Investors, pursuant to
Section 2.5(b).
"Environmental Laws" means any and all federal, state and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or other Official Bodies,
relating to the protection of human health or the environmental, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Materials. Environmental Laws include, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601
et. seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 331 et.
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et.
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et.
seq.), the Clean Air Act (42 U.S. Section 7401 et. seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et. seq.), the Safe Drinking Water Act (42
U.S.C. Section 300, et. seq.), the Environmental Protection Agency's
regulations relating to underground storage
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tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 et. seq.) and the rules and regulations promulgated
under each of these statutes, each as amended or modified from time to time.
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code (as in effect from time to
time, the "Code")) as such Person; (ii) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with such Person; or (iii) a member of the same affiliated service group
(within the meaning of Section 414(n) of the Code) as such Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above.
"Escrow Account" shall have the meaning specified in Section
2.6(b).
"Escrow Amount" shall mean, on any day during the Escrow
Period, the amount equal to the excess, if any, of (a) the product of (i) the
Percentage Factor (as calculated on the Termination Date) times (ii)
Collections received on such day, over (b) the product of (i) the Fixed
Allocation Percentage times (ii) Collections received on such day.
"Escrow Payment" shall mean (1) as of the last day of any
Tranche Period occurring during the Escrow Period, to the extent funds are then
available therefor in the Escrow Account, an amount equal to the sum of (i) the
aggregate Outstanding Balance of all Receivables that became Delinquent
Receivables, Defaulted Receivables or Diluted Receivables during the period (so
long as such period ended after the Termination Date) covered by the most
recent Investor Report (as such amount is set forth in such Investor Report)
and (ii) with respect to any earlier periods covered by earlier Investor
Reports (but only to the extent such months ended on or after the Termination
Date), the aggregate Outstanding Balance of all Receivables that became
Delinquent Receivables, Defaulted Receivables or Diluted Receivables during
such earlier periods but for which funds from the Escrow Account have not yet
been applied in accordance with Section 2.6(a), and (2) as of the last day of
any Tranche Period occurring after the Escrow Period Termination Date, the
lesser of (i) the unpaid portion of the Net Investment allocated to any such
Tranche (after taking account of any other Collections to be allocated to the
payment thereof on such date) and (ii) the balance of the Escrow Account on
such date.
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"Escrow Period" means the period commencing on the
Termination Date and ending on Escrow Period Termination Date.
"Escrow Period Termination Date" means March 31, 1997.
"Estimated Maturity Period" shall mean, at any time, the
period, rounded upward to the nearest whole number of days, equal to the
weighted average number of days until due of the Receivables as calculated by
the Collection Agent in good faith and set forth in the most recent Investor
Report, such calculation to be based on the assumptions that (a) each
Receivable within a particular aging category, (as set forth in the Investor
Report) will be paid on the last day of such aging category and (b) the last
day of the last such aging category coincides with the last date on which any
Outstanding Balance of any Receivables would be written off as uncollectible or
charged against any applicable reserve or similar account in accordance with
the objective requirements of the applicable Seller's Credit and Collection
Policy and normal accounting practices applied on a basis consistent with those
reflected in such Seller's financial statements, provided, however, that if the
Agent, the Company or any of the Bank Investors shall reasonably disagree with
any such calculation, the Agent may recalculate the Estimated Maturity Period,
and such recalculation, in the absence of manifest error, shall be conclusive.
"Eurodollar Rate" means, with respect to any Eurodollar
Tranche Period, a per annum rate which is equal to the sum of (A) .65%, (B) the
rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) obtained
by dividing (i) the applicable LIBOR Rate by (ii) a percentage equal to 100%
minus the reserve percentage used for determining the maximum reserve
requirement as specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is
applicable to NationsBank during such Eurodollar Tranche Period in respect of
eurocurrency or eurodollar funding, lending or liabilities (or, if more than
one percentage shall be so applicable, the daily average of such percentage for
those days in such Eurodollar Tranche Period during which any such percentage
shall be applicable) and (C) the net annual assessment rate (calculated as a
daily rate and rounded upwards, if necessary, to the nearest 1/100 of 1%) as
estimated by NationsBank for determining the current annual assessment payable
by NationsBank to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.
"Eurodollar Tranche" means a Tranche as to which Discount is
calculated at the Eurodollar Rate.
"Eurodollar Tranche Period" means, with respect to a
Eurodollar Tranche, prior to the Termination Date, a period of one, two or
three months commencing on a Business Day requested
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by the Transferor and agreed to by the Company, NationsBank or the Agent, as
applicable; provided, however, that if such Eurodollar Tranche Period would
expire on a day which is not a Business Day, such Eurodollar Tranche Period
shall expire on the next succeeding Business Day; provided, further, that if
such Eurodollar Tranche Period would expire on (a) a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Eurodollar Tranche Period shall expire on the next
preceding Business Day or (b) if any Eurodollar Tranche commences on the last
Business Day of any month or on a Business Day for which there is no
numerically corresponding day in the subsequent month in which such Eurodollar
Tranche Period is to end, such Eurodollar Tranche Period shall expire on the
last Business Day of such subsequent month.
"Event of Bankruptcy" means, with respect to any Person, (i)
such Person (a) shall generally not pay its debts as such debts become due or
(b) shall admit in writing its inability to pay its debts generally or (c)
shall make a general assignment for the benefit of creditors; (ii) any
proceeding shall be instituted by or against such Person seeking to adjudicate
it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
it or 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, trustee or other similar official for
it or any substantial part of its property, and, with respect to any such
proceeding instituted against such Person, such proceeding shall remain
unvacated or unstayed for sixty (60) days after being so instituted or any of
the relief sought in any such proceeding shall be granted, or (iii) if such
Person is a corporation, such Person or any Subsidiary shall take any corporate
action to authorize any of the actions set forth in the preceding clauses (i)
or (ii).
"Excluded Taxes" shall have the meaning specified in Section
8.3 hereof.
"Existing Preferred Stock" means the 5% Cumulative
Convertible Exchangeable Preferred Stock of the Parent as described in the
Certificate of Designation.
"External Credit" means any reduction of the Outstanding
Balance of any Qualified LEC Receivable granted by a LEC in connection with a
customer dispute or billing error or discrepancy relating to such Qualified LEC
Receivable, whether such reduction shall be effected by the granting of credit
against such Receivable or by the issuance of a check or other payment in
respect of (and as payment for) such reduction.
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"Facility Fee" means the fee payable by the Transferor to the
Agent pursuant to Section 2.7(b) hereof, which fee shall be equal to:
(a) with respect to any period (or portion thereof) prior
to the occurrence of either the Activation Date or the Activation
Termination Date, the sum of (1) the product of (x) the per annum rate set
forth in the Fee Letter and (y) the average daily amount by which (i) the
aggregate Active Commitments of all of the Bank Investors exceeds (ii) the
aggregate outstanding principal balance of all fundings made by the Bank
Investors in respect of their respective Commitments hereunder and/or under
the Liquidity Provider Agreement with respect to the TAA, in each case,
during such period (or portion thereof) for which such fee is owing, plus
(2) the product of (x) the per annum rate set forth in the Fee Letter and
(y) the average daily Inactive Commitment during such period (or portion
thereof); and
(b) with respect to any period (or portion thereof) after
the occurrence of either the Activation Date or the Activation Termination
Date, the product of (x) per annum rate set forth in the Fee Letter and (y)
the average daily amount by which (i) the aggregate Commitments of all of
the Bank Investors exceeds (ii) the aggregate outstanding principal balance
of all fundings made by the Bank Investors in respect of their respective
Commitments hereunder and/or under the Liquidity Provider Agreement with
respect to the TAA, in each case, during such period (or portion thereof)
for which such fee is owing.
"FCC" means the Federal Communications Commission or any
successor Official Body performing the duties thereof.
"FCC License" means any long distance telecommunications or
other license, permit, consent, certificate of compliance, franchise, approval,
waiver or authorization granted or issued by the FCC, including, without
limitation, any of the foregoing authorizing or permitting the acquisition,
construction or operation of Network Facilities or any other long distance
telecommunications system.
"Fee Letter" means the letter agreement dated the date hereof
between the Transferor and the Company with respect to the fees to be paid by
the Transferor hereunder, as amended, modified or supplemented from time to
time.
"Finance Charges" means, with respect to a Contract, any
finance, interest, late or similar charges owing by an Obligor pursuant to such
Contract.
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"Financial Covenant Termination Event" has the meaning
specified in Annex I hereto.
"Fiscal Year" means the fiscal year of the Transferor and the
Sellers, which fiscal year shall end on December 31st of each calendar year.
"Fixed Allocation Percentage" means the fraction (expressed
as a percentage) computed as of the Termination Date as follows:
NI + DBLR + DBDLR + DR + SFR + LTR + LDR + LWR
----------------------------------------------
TR
where:
NI = the Net Investment on such date;
DBLR = the Direct Billed Loss Reserve on such date;
DBDLR= the Direct Billed Dilution Reserve on such date;
DR = the Discount Reserve on such date;
SFR = the Servicing Fee Reserve on such date;
LTR = the LEC True-Up Reserve on such date;
LDR = the LEC Dilution Reserve on such date;
LWR = the LEC Withholding Reserve on such date; and
TR = the aggregate Outstanding Balance of all Receivables on such
date.
"Foreign Receivable" means any Receivable the Obligor of
which has a billing address which is not located within the United States of
America.
"Foreign Receivables Reduction Amount" means at any time,
the excess, if any, of (i) the aggregate Outstanding Balance of all Eligible
Receivables which are Foreign Receivables at such time over (ii) an amount
equal to one percent (1%) of the Net Investment outstanding hereunder at such
time.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such accounting profession, which are in effect as of the date of
this Agreement.
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"Government Receivable" means any Receivable the Obligor of
which is a government or an agency, department or instrumentality of a
government.
"Government Receivables Reduction Amount" means at any time,
the excess, if any, of (i) the aggregate Outstanding Balance of all Eligible
Receivables which are Government Receivables at such time over (ii) an amount
equal to three percent (3%) of the Net Investment outstanding hereunder at such
time.
"Guaranty" means, with respect to any Person any agreement
by which such Person assumes, guarantees, endorses, contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes liable upon,
the obligation of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person or otherwise
assures any other creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement or take-or-pay
contract and shall include, without limitation, the contingent liability of
such Person in connection with any application for a letter of credit.
"Hazardous Materials" means any substances or materials (a)
which are or become defined as hazardous wastes, hazardous substances,
pollutants, contaminants or toxic substances under any Environmental Law, (b)
which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise harmful to human health or the environment
and are or become regulated by any Official Body, (c) the presence of which
require investigation or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a permit, license or
similar instrument or approval under any Environmental Law, (e) which are
deemed to constitute a nuisance, a trespass or pose a health or safety hazard
to persons or neighboring properties, (f) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"Inactive Commitment" means $25,000,000, as such amount may
be reduced from time to time in accordance with Section 2.2(d); provided,
however, that upon the earlier to occur of the Activation Date or the
Activation Termination Date, there shall cease to be any Inactive Commitment.
"Incremental Transfer" means a Transfer which is made
pursuant to Section 2.2(a) hereof.
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"Indebtedness" means, with respect to any Person such
Person's (i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of property other than accounts payable arising in the
ordinary course of such Person's business on terms customary in the trade,
(iii) obligations, whether or not assumed, secured by liens or payable out of
the proceeds or production from property now or hereafter owned or acquired by
such Person, (iv) obligations which are evidenced by notes, acceptances, or
other instruments, (v) Capitalized Lease obligations and (vi) obligations for
which such Person is obligated pursuant to a Guaranty.
"Indemnified Amounts" has the meaning specified in Section
8.1 hereof.
"Indemnified Parties" has the meaning specified in Section
8.1 hereof.
"Interest Component" shall mean, (i) with respect to any
Commercial Paper issued on an interest-bearing basis, the interest payable on
such Commercial Paper at its maturity (including any dealer commissions) and
(ii) with respect to any Commercial Paper issued on a discount basis, the
portion of the face amount of such Commercial Paper representing the discount
incurred in respect thereof (including any dealer commissions).
"Interim Report" means a report, in substantially the form
attached hereto as Exhibit E-2 or in such other form as is mutually agreed to
by the Transferor and the Agent to be furnished by the Collection Agent
pursuant to Section 2.11 hereof.
"Intermediate Biller Agreement" means an agreement between a
Seller and an unaffiliated entity providing for the transfer of receivables to
one or more LECs and the collection by such entity of payments made in respect
of such receivables by such LEC or LECs.
"Intermediate Biller Receivables" means any receivables
covered by or subject to an Intermediate Biller Agreement.
"Internal Credit" means any reduction of the Outstanding
Balance of any Qualified LEC Receivable granted by a Seller for any reason
whatsoever, including, without limitation, a customer dispute or billing error
or discrepancy relating to such Qualified LEC Receivable, whether such
reduction shall be effected by the granting of credit against such Receivable
or by the issuance of a check or other payment in respect of (and as payment
for) such reduction.
"Investor Allocable Post-Termination Date LEC True-Up
Reimbursement Obligations" means, with respect to any Post-
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Termination Date LEC True-Up Reimbursement Obligation, the product of the
Percentage Factor and such Post-Termination Date LEC True-Up Reimbursement
Obligation.
"Investor Report" means a report, in substantially the form
attached hereto as Exhibit E-1 or in such other form as is mutually agreed to
by the Transferor and the Agent to be furnished by the Collection Agent
pursuant to Section 2.11 hereof.
"Law" means any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Official Body.
"LCI Telecom" means LCI International Telecom Corp., a
Delaware corporation.
"LEC" means any Person that is engaged in the provision of
telephone exchange service or exchange access. Such term does not include a
Person engaged in the provision of a commercial mobile service under Section
332(c) of Communications Act of 1934, as amended, and the rules, regulations
and published policies of the FCC promulgated thereunder, except to the extent
that the FCC finds that such service should be included in the definition of
such term.
"LEC Agreement" means a written agreement between a Seller
and a LEC whereby the LEC has agreed to perform billing and collection services
with respect to the receivables identified therein.
"LEC Allocation Percentage" means, at any time, the
difference (expressed as a percentage) of (x) 1.0 minus (y) the Direct Billed
Allocation Percentage.
"LEC Average Collection Period" means, at any time, a period
of days equal to the product of (i) a fraction the numerator of which shall be
the amount set forth in the most recent Investor Report as the "Beginning
Balance" of the Qualified LEC Receivables and the denominator of which shall be
the Collections of LEC Receivables (including, the Associated LEC Payments) as
set forth in the most recent Investor Report and (ii) thirty (30).
"LEC Concentration Factor" means, with respect to any LEC
that has a long-term unsecured debt rating of at least "A+" by Standard &
Poor's and "A1" by Moody's, 15%, and with respect to all other LECs, 10%.
"LEC Delinquency Ratio" means, the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
the aggregate Outstanding Balance of all
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Qualified LEC Receivables that are Delinquent Receivables as of such date by
(ii) the aggregate Outstanding Balance of all Qualified LEC Receivables (other
than Defaulted Receivables) as of such date.
"LEC Dilution Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month to equal the
sum of (x) a fraction (expressed as a percentage), the numerator of which
equals the sum (without duplication of any other Dilution Factor referred to in
this definition) of the aggregate amount of all Net Rejects, the Net
Unbillables and Internal Credits realized during such month, and the
denominator of which equals the aggregate Outstanding Balance of all Qualified
LEC Receivables transmitted, transferred or otherwise remitted to the
applicable LECs during the month immediately preceding the month for which such
determination is being made, plus (y) a fraction (expressed as a percentage),
the numerator of which equals the aggregate amount of all External Credits (the
Net Rejects, the Net Unbillables, the Internal Credits, the External Credits,
together with the "Dilution Factors" listed in the definition of Direct Billed
Dilution Ratio, being, collectively, the "Dilution Factors") realized during
such month, and the denominator of which equals the aggregate Outstanding
Balance of all Qualified LEC Receivables transmitted, transferred or otherwise
remitted to the applicable LECs during the second month immediately preceding
the month for which such determination is being made.
"LEC Dilution Reserve" means, at any time, an amount equal
to the sum of (x) the product of (i) two (2), (ii) the highest LEC Dilution
Ratio as of the last day of any of the preceding twelve (12) calendar months
ending prior to such date and (iii) the product of (a) the LEC Allocation
Percentage at such time and (b) the sum of the Net Investment, the Discount
Reserve and the Servicing Fee Reserve, in each case, at such time, plus (y) the
product of (a) two (2), (ii) the highest LEC Dilution Ratio as of the last day
of any of the preceding twelve (12) calendar months ending prior to such date,
and (iii) the sum of the LEC True-Up Reserve and the LEC Withholding Reserve,
in each case, at such time.
"LEC Receivable" means any receivable that is covered by or
subject to a LEC Agreement, and "LEC Receivables" means all such receivables.
"LEC Reduction Amount" means, at any time with respect to
any LEC that is a party to a Qualified LEC Agreement, the positive amount, if
any, by which the aggregate Outstanding Balance of Eligible Qualified LEC
Receivables (whether arising under one or more Qualified LEC Agreements to
which such LEC is a party), if any, under such agreement exceeds an amount
equal to
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the product of the LEC Concentration Factor for such LEC and the Net Investment
at such time.
"LEC True-Up" means, with respect to any period covered by a
PAR Statement, any set-off or other reduction applied by a LEC against, or any
addition applied by a LEC to, amounts shown on such PAR Statement as otherwise
owing by such LEC for the LEC Receivables transmitted, transferred or otherwise
remitted to such LEC during such period, which set-offs, other reductions or
additions relate to either (x) credit losses (in the case of reductions) or
collections (in the case of additions) of LEC Receivables in excess of the
estimated levels thereof withheld in connection with the transfer, transmission
or other conveyance of such LEC Receivable to such LEC under the applicable LEC
Agreement in any prior period or (y) other amounts owed by such Seller to such
LEC under the applicable LEC Agreement or any applicable Tariff which amounts
became due and payable, but which were not paid, in a prior period.
"LEC True-Up Ratio" means a fraction (expressed as a
percentage) to be computed as of the last day of each month, the numerator of
which is the aggregate dollar amount of all LEC True-Ups under all Qualified
LEC Agreements effected during such month, as such amounts shall be set forth
on the PAR Statements delivered to the Sellers by the LECs during such month,
and the denominator of which shall be the aggregate Outstanding Balance of all
LEC Receivables transmitted, transferred or otherwise remitted by the Sellers
to the LECs parties to such Qualified LEC Agreements during the month six
months prior to the month for which such determination is being made (i.e., for
the calculation of the July LEC True-Up Ratio, the relevant LEC Receivables to
be used in the denominator of such calculation would be the LEC Receivables
transmitted, transferred or otherwise remitted to the LECs during January).
"LEC True-Up Reserve" means, at any time, an amount equal to
the difference of (x) the sum of (a) the product of (i) eight (8), (ii) the
highest LEC True-Up Ratio as of the last day of any of the preceding twelve
(12) calendar months ending immediately prior to such date and (iii) the
product of (A) the LEC Allocation Percentage at such time, and (B) the sum of
the Net Investment, the Discount Reserve and the Servicing Fee Reserve, in each
case, at such time, plus (b) the product of (i) eight (8), (ii) the highest LEC
True-Up Ratio as of the last day of any of the preceding twelve (12) calendar
months ending immediately prior to such date and (iii) the sum of the LEC
Dilution Reserve and the LEC Withholding Reserve, in each case, at such time;
minus (y) the balance at such time of the LEC True-Up Reserve Account;
provided, however, that the LEC True-Up Reserve shall never be less than
$5,000,000.
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"LEC True-Up Reserve Account" means the account established
by the Agent pursuant to Section 2.5(b), for the benefit of the applicable
Sellers originating Qualified LEC Receivables, the Company and the Bank
Investors.
"LEC True-Up Reserve Termination Date Amount" means the
amount of the LEC True-Up Reserve as calculated upon the occurrence of the
Termination Date.
"LEC Withholding Ratio" means, for any month, a fraction
(expressed as a percentage) to be computed as of the last day of each month,
the numerator of which is the aggregate dollar amount of the portion of all of
Qualified LEC Receivables stated to be withheld by all of the applicable LECs
during such month in respect of anticipated credit losses on such Receivables
transmitted to such LECs (excluding any true-up for actual credit losses), as
such amounts shall be set forth on the PAR Statements delivered to the Sellers
by such LECs during such month, and the denominator of which shall be the
aggregate Outstanding Balance of all LEC Receivables transmitted, transferred
or otherwise remitted by the Sellers to the LECs parties to such Qualified LEC
Agreements during the periods covered by such PAR Statement.
"LEC Withholding Reserve" means, at any time, the sum of (x)
the product of (i) two and one-half (2.5), (ii) the highest LEC Withholding
Ratio for the twelve months most recently ended and covered in the most recent
Investor Report, and (iii) the product of (a) the LEC Allocation Percentage at
such time and (b) the sum of the Net Investment, the Discount Reserve and the
Servicing Fee Reserve, plus (y) the product of (i) two and one-half (2.5), (ii)
the highest LEC Withholding Ratio for the twelve months most recently ended and
covered in the most recent Investor Report, and (iii) the sum of the LEC
Dilution Reserve and the LEC True-Up Reserve, in each case, at such time;
provided, however, that the LEC Withholding Reserve shall never be less than
$5,000,000.
"LIBOR Rate" means, with respect to any Eurodollar Tranche
Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days before the first day of such Eurodollar Tranche
Period for a term approximately equal to the applicable Eurodollar Tranche
Period. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, with respect to any Eurodollar Tranche Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days before the
first day of such Eurodollar Tranche Period for a term approximately equal to
the applicable
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Eurodollar Tranche Period; provided, however, if more than one rate is
specified on the Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Liquidation Yield" means, at any time, an amount equal to:
(RVF x LBR x NI) x (EMP x 1.5)
-----------
360
where:
RVF = the Rate Variance Factor at such time;
LBR = the Base Rate at such time which is applicable to the
liquidation period after a Termination Event;
NI = the Net Investment at such time; and
EMP = the Estimated Maturity Period of the Receivables.
"Liquidity Provider" means the Person or Persons who will
provide liquidity support to the Company in connection with the issuance by the
Company of Commercial Paper.
"Liquidity Provider Agreement" means the agreement between
the Company and the Liquidity Provider evidencing the obligation of the
Liquidity Provider to provide liquidity support to the Company in connection
with the issuance by the Company of Commercial Paper.
"Lock-Box" means a lock-box associated with a Lock-Box
Account or a Permitted Unblocked Account which is maintained by the Transferor
or any of the Sellers for the purpose of receiving Collections from Obligors by
mail.
"Lock-Box Account" means an account maintained by the
Transferor or any of the Sellers at a Lock-Box Bank for the purpose of
receiving Collections from Receivables and which is the subject of a Lock-Box
Agreement.
"Lock-Box Agreement" means an agreement among the applicable
Seller, the Transferor, the Agent and the applicable Lock-Box Bank in
substantially the form of Exhibit D hereto.
"Lock-Box Bank" means each of the banks set forth in Exhibit
C hereto and such banks as may be added thereto or deleted therefrom pursuant
to Section 2.8 hereof.
"Majority Investors" shall have the meaning specified in
Section 9.1(a) hereof.
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"Material Adverse Effect" means any event or condition which
would have a material adverse effect on (i) the collectibility of the
Receivables, (ii) the condition (financial or otherwise), operations,
businesses or properties of the Transferor or of any of the Sellers and their
respective Subsidiaries, (iii) the ability of the Transferor or any of the
Sellers to perform its respective obligations under the Transaction Documents
to which it is a party or (iv) the interests of the Agent, the Company or the
Bank Investors under the Transaction Documents.
"Maximum Coverage Percentage" means 98%.
"Maximum Net Investment" means One Hundred and Twenty-Five
Million Dollars ($125,000,000), as the same may be increased or reduced from
time to time pursuant to Section 2.2(d) or otherwise pursuant to Section
9.7(g); provided that such amount may not at any time exceed the aggregate
Commitments at any time in effect; provided, further, that from and after the
Termination Date, the Maximum Net Investment shall at all times equal the Net
Investment.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Transferor,
any of the Sellers or any ERISA Affiliate of the Transferor or any or the
Sellers on behalf of its employees.
"Net Asset Test" shall mean, in connection with any
assignment by the Company to the Bank Investors of an interest in the Net
Investment pursuant to Section 9.7 hereof, that on the day immediately prior to
the day on which such assignment is to take effect, the Net Receivables Balance
shall be greater than the Net Investment.
"Net Investment" means the sum of the cash amounts paid to
the Transferor for each Incremental Transfer less the aggregate amount of
Collections or other amounts received and applied by the Agent to reduce such
Net Investment pursuant to Section 2.5(g), 2.6 or 2.9 hereof; provided that the
Net Investment shall be restored and reinstated in the amount of any
Collections so received and applied if at any time the distribution of such
Collections is rescinded or must otherwise be returned for any reason; and
provided, further that the Net Investment may be increased by the amount
described in Sections 9.7(d) and (g) as described therein.
"Net Receivables Balance" means at any time the aggregate
Outstanding Balance of all Eligible Receivables at such
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time reduced by the sum, without duplication, of (i) the aggregate amount by
which the Outstanding Balance of all Receivables that are Eligible Receivables
of each Designated Obligor exceeds the Concentration Factor for such Designated
Obligor, plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted Receivables, plus (iii) the aggregate
Outstanding Balance of all Eligible Receivables of each Obligor with respect to
which 25% or more of such Obligor's Receivables are Defaulted Receivables, plus
(iv) the Foreign Receivables Reduction Balance, plus (v) the Government
Receivables Reduction Amount, plus (vi) the sum of the LEC Reduction Amounts
for all LECs, plus (vii) the Sales Tax Reduction Amount, plus (viii) the
Unbilled Toll Reduction Amount, plus (ix) the aggregate amount of any unapplied
cash security deposits received by, and held on the books of, any of the
Sellers.
"Net Reject" means the Outstanding Balance of any Qualified
LEC Receivable transmitted, transferred or otherwise remitted to a LEC for
billing and collection which is subsequently rejected by such LEC for any
reason whatsoever, including, without limitation, for improper formatting.
"Network Agreement" means any document or agreement entered
into by the Parent or any of its Subsidiaries regarding the use, operation,
maintenance or otherwise concerning any of the Network Facilities.
"Network Facilities" means the network of digital facilities
and capacity owned or leased by the Parent or any of its Subsidiaries.
"Net Unbillables" means the Outstanding Balance of any
Qualified LEC Receivable transmitted, transferred or otherwise remitted to a
LEC for billing and collection which is determined by such LEC to be unbillable
to an identifiable Obligor for any reason whatsoever.
"Non-Fee Termination Event" means any Termination Event of
the type described in Section 7.1(k), 7.1(l) or, to the extent caused by the
occurrence of a Termination Event of the type described in either Section
7.1(k) or 7.1(l), a Termination Event of the type described in Section 7.1(h).
"Non-Qualified LEC Agreement" means any LEC Agreement other
than a Qualified LEC Agreement.
"Non-Qualified LEC Receivable" means any LEC Receivable
other than a Qualified LEC Receivable.
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"Obligor" means a Person obligated to make payments for the
provision or lease of goods and services pursuant to a Contract.
"Official Body" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of any such government or political subdivision,
or any court, tribunal, grand jury or arbitrator, in each case whether foreign
or domestic.
"Operator Services" means telephone operator assistance
services provided by any of the Sellers to its customers.
"Operator Services Receivable" a receivable arising out of
the sale or rendering of Operator Services by a Seller to an Obligor.
"Other Transferor" means any Person other than the
Transferor that has entered into a receivables purchase agreement or transfer
and administration agreement with the Company.
"Outstanding Balance" means, with respect to any Receivable
at any time, the then outstanding principal amount thereof, less any accrued
and outstanding Finance Charges related thereto.
"PACE" means Pennsylvania Alternative Communications, Inc.,
a Pennsylvania corporation.
"PAR Statement" means, with respect to a LEC Agreement, the
periodic statement of account issued by the applicable LEC which is party to
such LEC Agreement in accordance with the terms of such LEC Agreement, which
PAR Statement shall be substantially in the form of that attached hereto as
Exhibit R.
"Parent" means LCI International, Inc., a Delaware
corporation.
"Parent Support Agreement" means that certain Support
Agreement dated as of the Closing Date executed by the Parent in favor of the
Transferor, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Percentage Factor" means the fraction (expressed as a
percentage) computed at any time of determination as follows:
NI + DBLR + DBDLR + DR + SFR + LTR + LDR + LWR
----------------------------------------------
NRB
where:
NI = the Net Investment at the time of such computation;
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DBLR = the Direct Billed Loss Reserve at the time of such
computation;
DBDLR= the Direct Billed Dilution Reserve at the time of such
computation;
DR = the Discount Reserve at the time of such computation;
SFR = the Servicing Fee Reserve at the time of such computation;
LTR = the LEC True-Up Reserve at the time of such computation;
LDR = the LEC Dilution Reserve at the time of such computation;
LWR = the LEC Withholding Reserve at the time of such computation;
and
NRB = the Net Receivables Balance at the time of such computation;
provided, however, that the Percentage Factor shall at no time exceed 100%.
The Percentage Factor shall be calculated by the Collection Agent on the day of
the initial Incremental Transfer hereunder. Thereafter, until the Termination
Date, the Collection Agent shall recompute the Percentage Factor at the time of
each Incremental Transfer pursuant to Section 2.2(a) and as of the close of
business on each Business Day and report such recomputations to the Agent in
the Investor Report and as otherwise requested by the Agent. The Percentage
Factor shall remain constant from the time as of which any such computation or
recomputation is made until the time as of which the next such recomputation
shall be made, notwithstanding any additional Receivables arising or any
reinvestment Transfer made pursuant to Section 2.2(b) and 2.5(a) during any
period between computations of the Percentage Factor. The Percentage Factor,
as calculated at the close of business on the Business Day immediately
preceding the Termination Date, shall remain constant at all times thereafter
until such time as the Agent, on behalf of the Company and the Bank Investors,
shall have received all of the Aggregate Unpaids, in cash, at which time the
Percentage Factor shall be reduced to zero.
"Permitted Unblocked Account" has the meaning specified in
Section 5.1(h).
"Person" means any corporation, limited liability company,
natural person, firm, joint venture, partnership, trust, unincorporated
organization, enterprise, government or any department or agency of any
government.
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"Post-Termination Date LEC True-Up Reimbursement Obligations"
shall have the meaning ascribed to such term in the Receivables Purchase
Agreement.
"Potential Termination Event" means an event which but for
the lapse of time or the giving of notice, or both, would constitute a
Termination Event.
"Private Line Receivable" means any receivable arising from
or out of the sale or provision of Private Line Services by a Seller to any of
its customers.
"Private Line Services" means dedicated telecommuni-cations
services provided by a Seller to its customers between designated customer
premises.
"Pro Rata Share" means, for a Bank Investor, a percentage
equal to the quotient of (a) the Commitment of such Bank Investor divided by
(b) the sum of the Commitments of all Bank Investors.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of
the UCC.
"Program Fee" means the fee payable by the Transferor to the
Company, solely for its own account, pursuant to Section 2.7 hereof, which fee
shall be equal to the product of (a) the daily average Net Investment
outstanding during the period for which such fee is owing and (b) the per annum
rate set forth in the Fee Letter.
"PUC" means any state regulatory agency or body that
exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Network facility or long distance
telecommunications systems or over Persons who own, construct or operate a
Network Facility or long distance telecommunications systems, in each case by
reason of the nature or type of the business subject to regulation and not
pursuant to laws and regulations of general applicability to Person conducting
business in said state.
"PUC Authorizations" means all applications, filings,
reports, documents, recordings and registrations with, and all validations,
exemptions, franchises, waivers, approvals, orders or authorizations, consents,
licenses, certificates and permits from any PUC.
"Purchased Interest" means the interest in the Receivables
acquired by the Liquidity Provider through purchase pursuant to the terms of
the Liquidity Provider Agreement.
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"Purchase Termination Date" means the date upon which the
Transferor shall cease, be required to cease or be unable, for any reason
whatsoever, to make purchases of Receivables from any of the Sellers under the
Receivables Purchase Agreement, including, without limitation, as a result of
the prohibition on any further borrowings under any Subordinated Note, (ii) any
of the Sellers shall cease, be required to cease, or be unable on any day, for
any reason whatsoever, to make sales of Receivables to the Transferor under the
Receivables Purchase Agreement, or (iii) the Receivables Purchase Agreement
shall terminate for any reason whatsoever.
"Qualified LEC Agreement" means (i) for purposes of
calculating the various ratios hereunder relating to periods prior to the date
of this Agreement, each LEC Agreement existing on the date any such calculation
is made, and (ii) for all other purposes hereunder, any LEC Agreement in
respect of which (x) the Agent has received fully-executed copies of all
consents, waivers, approvals and/or any other agreements or documents, if any,
required to be delivered or granted by the LEC that is party thereto, any
applicable PUC and any other Official Body or other Person, in each case, to
authorize and permit the applicable Seller's and the Transferor's entering into
and performing the transactions contemplated under the Receivables Purchase
Agreement, this Agreement and the other Transaction Documents with respect to
the LEC Receivables subject to such LEC Agreement, in each case, to the extent
that such consents, waivers, approvals and/or other agreements or documents
continue to be in full force and effect and have not been rescinded or revoked,
(y) the Agent shall have received an opinion of counsel (to be in form and
substance and from such counsel as are, in each case, reasonably satisfactory
to the Agent (it being agreed that in-house counsel for LCI Telecom is
satisfactory to the Agent)), opining that the applicable Seller's and the
Transferor's entering into and performing the transactions contemplated by the
Receivables Purchase Agreement, this Agreement and the other Transaction
Documents with respect to the LEC Receivables subject to such LEC Agreement
would not violate the terms of such LEC Agreement (after giving effect to any
such waivers, consents, approvals or other documentation delivered by such LEC
with respect thereto, if any), any applicable Tariffs, the Communications Act
of 1934, as amended (together with the rules, regulations, and published
policies of the Federal Communications Commission thereunder) or any rules,
regulations or published policies of any applicable PUC (which opinion, if in
substantially the form of the corresponding opinions delivered on the Closing
Date covering such matters with respect to the Qualified LEC Agreements set
forth on Exhibit Q hereto, shall be deemed to be acceptable for purposes of
this provision) and (z) the Agent shall have approved such LEC Agreement as a
Qualified LEC Agreement (which approval shall not be unreasonably withheld or
delayed after satisfaction of the conditions set forth in the
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immediately preceding clauses (x) and (y)). The Agent hereby acknowledges
that, except with respect to those specific LEC Receivables described in the
first proviso in the definition of "Qualified LEC Receivable", all of the
conditions set forth in this definition shall have been satisfied with respect
to those LEC Agreements described on Exhibit Q hereto.
"Qualified LEC Receivable" means any LEC Receivable which is
or is purported by the Transferor and/or the applicable Seller to be covered by
or subject to a Qualified LEC Agreement and to have been transmitted,
transferred or otherwise remitted to and accepted by the applicable LEC (such
acceptance to be evidenced by a confirmation statement executed by such LEC)
for billing and collection on or after the Applicable Initial LEC Receivable
Cut-Off Date but prior to the Termination Date; provided, however, that the LEC
Receivables arising under the LEC Agreement between LCI Telecom and Bell
Atlantic that are owing by Obligors having billing addresses in Maryland shall
be deemed to be Qualified LEC Receivables hereunder until such time as the
conditions described in the definition of Qualified LEC Agreement (including
the opinion of counsel described therein) shall have been satisfied with
respect to such receivables; and provided, further, however, that the Qualified
LEC Receivables (and any rights therein received by the Transferor and conveyed
hereunder) shall be subject to the rights of the applicable LECs therein, if
any, pursuant to the applicable LEC Agreement and/or any applicable Tariffs
relating thereto. Notwithstanding anything contained herein to the contrary,
if any previously Qualified LEC Agreement shall cease to be Qualified LEC
Agreement hereunder, the interests of the Agent, the Company, the Bank
Investors and the Transferor acquired during the time that such LEC Agreement
was a Qualified LEC Agreement shall be unaffected by the subsequent
recharacterization of the LEC Agreement as being a Non-Qualified LEC Agreement.
"Rate Variance Factor" means the number, computed from time
to time in good faith by the Agent, that reflects the largest potential
variance (from minimum to maximum) in selected interest rates over a period of
time selected by the Agent from time to time, set forth in a written notice by
the Agent to the Transferor and the Collection Agent.
"receivable" means the indebtedness owed to any of the
Sellers (including, in the case of a LEC Receivable, any such indebtedness
payable to a LEC on behalf of a Seller) by any Obligor or by any credit card
company on behalf of such Obligor (if such indebtedness was charged by such
Obligor on its credit card) (in each case, without giving effect to any
purchase under the Receivables Purchase Agreement by the Transferor at any
time), whether constituting an account, chattel paper, instrument, investment
property or general intangible, arising in connection with the sale or lease of
goods, merchandise or
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inventory or the rendering of services by such Seller and includes the right to
payment of any Finance Charges and other obligations of such Obligor with
respect thereto.
"Receivable" means any Private Line Receivable, Switched
Services Receivable or Qualified LEC Receivable of any of the Sellers sold or
otherwise conveyed by such Seller to the Transferor pursuant to the Receivables
Purchase Agreement, and "Receivables" means all such Private Line Receivables,
Switched Services Receivables and Qualified LEC Receivables of the Sellers; it
being understood and agreed, that the terms "Receivable" or "Receivables" (x)
shall not include any Non-Qualified LEC Receivables, Operator Services
Receivables or Intermediate Biller Receivables and (y) shall include Unbilled
Toll. In addition, once a Receivable has been deemed collected pursuant to
Section 2.9 hereof and the Transferor shall have satisfied its payment
obligations with respect thereto, as set forth in such Section, such receivable
shall no longer constitute a Receivable hereunder.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement dated as of August 29, 1996 by and between each of the
Sellers, as sellers, and the Transferor, as purchaser, as such agreement may be
amended, restated, supplemented or otherwise modified and in effect from time
to time in accordance with the terms hereof.
"Records" means all Contracts and other documents, books,
records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) maintained with respect to the Receivables and the related
Obligors.
"Reinvestment Termination Date" means the second Business Day
after the delivery by the Company to the Transferor of written notice that the
Company elects to commence the amortization of its interest in the Net
Investment.
"Related Commercial Paper" shall mean Commercial Paper issued
by the Company the proceeds of which were used to acquire, or refinance the
acquisition of, an interest in Receivables with respect to the Transferor.
"Related Security" means, with respect to any Receivable, all
of the Transferor's rights, title and interest in, to and under:
(i) all rights and claims of the Transferor
under the applicable Qualified LEC Agreements to and for the
Associated LEC Payments owed by the applicable LEC party thereto and
all such payments so made, in each case, whether such rights, claims
or payments constitute accounts, chattel
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paper, general intangibles, instruments, cash, investment property,
securities or otherwise;
(ii) all rights and claims of the Transferor
to or for payments from any credit card companies for any Receivables,
and all such payments so made, in each case, whether such rights,
claims or payments constitute accounts, chattel paper, general
intangibles, instruments, cash, investment property, securities or
otherwise;
(iii) the Equalization Account, the LEC
True-Up Reserve Account, and each of the Permitted Unblocked Accounts,
Lock-Boxes and Lock-Box Accounts, and all items of payment, monies and
other property from time to time on deposit therein;
(iv) the goods, merchandise or inventory
(including returned or repossessed goods, merchandise or inventory),
if any, the sale or lease of which by the applicable originating
Seller gave rise to such Receivable;
(v) all other security interests or
liens and property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether pursuant to
the Contract related to such Receivable or otherwise, together with
all financing statements signed by an Obligor describing any
collateral securing such Receivable;
(vi) all guarantees, letters of
credit, indemnities, warranties, insurance policies (and proceeds and
premium refunds thereof) or other agreements or arrangements of any
kind from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable
or otherwise;
(vii) all Records related to such Receivable;
(viii) all rights and remedies of the
Transferor under the Parent Support Agreement and the Receivables
Purchase Agreement, together with all financing statements filed by
the Transferor against each of the Sellers in connection with the
Receivables Purchase Agreement; and
(ix) all Proceeds of any of the foregoing.
"Required LEC True-Up Reserve Account Funded Amount" means, at
any time prior to the Termination Date, the sum of (x) the product of (i) the
highest LEC True-Up Ratio as of the last day of any of the preceding twelve
(12) calendar months ending immediately prior to such date and (ii) the product
of (a) the
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LEC Allocation Percentage at such time, and (b) the sum of the Net Investment,
the Discount Reserve and the Servicing Fee Reserve, in each case, at such time,
plus (y) the product of (i) the highest LEC True-Up Ratio as of the last day of
any of the preceding twelve (12) calendar months ending immediately prior to
such date and (ii) the sum of the LEC Dilution Reserve and the LEC Withholding
Reserve, in each case, at such time; provided, however, that the Required LEC
True-Up Reserve Account Funded Amount shall never be less than $1,000,000.
"Revolving Credit Agreement" means that certain Second Amended
and Restated Credit Agreement dated as of February 14, 1996 by and among the
Parent, the lenders from time to time parties thereto, First Union National
Bank of North Carolina, as Managing Agent and Credit Agent, and NationsBank of
Texas, N.A., as Managing Agent and Administrative Agent, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Sales Tax Allocation Percentage" means a percentage to be
determined by the Collection Agent and set forth on each Investor Report to be
equal to the estimated weighted average of the sales taxes, excise taxes,
surcharges and other similar government taxes and/or charges allocable to the
Receivables of each of the Sellers. The initial percentages hereunder shall
equal (i) for each of LCI Telecom's CTD and U.S. Signal/ATS divisions, 4% and
(ii) otherwise for LCI Telecom, 3.5%.
"Sales Tax Reduction Amount" means, at any time, the aggregate
sum for all of the Sellers of the product for each such Seller of the
Outstanding Balance of such Seller's (and its division's) Receivables and the
applicable Sales Tax Allocation Percentage relating to such Seller (or its
division, as applicable).
"Section 8.2 Costs" has the meaning specified in Section
8.2(d) hereof.
"Seller" means any of LCI Telecom and, to the extent the Agent
and the Majority Investors shall have previously consented thereto, any other
Person that becomes a party to the Receivables Purchase Agreement as a seller
of Receivables thereunder, together in each case with such Person's respective
permitted successors and assigns, and "Sellers" means all of the foregoing,
collectively. To the extent applicable, the terms "Seller" and "Sellers" shall
be deemed to include and be a reference to any Seller or the Sellers, in its or
their capacity as a Sub-Collection Agent.
"Servicing Fee" means the fee payable by the Company or the
Bank Investors to the Collection Agent, with respect to a Tranche, in an amount
equal to either (x) one percent (1%) per
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annum on the amount of the Net Investment allocated to such Tranche pursuant to
Section 2.3 hereof or (y) such other amount as shall be determined pursuant to
Section 6.2(b). Such fee shall accrue from the date of the initial purchase of
an interest in the Receivables hereunder to the later of the Termination Date
or the date occurring thereafter on which the Percentage Factor is reduced to
zero. On or prior to the Termination Date, such fee shall be payable only from
Collections pursuant to, and subject to the priority of payments set forth in,
Section 2.5(a) hereof. After the Termination Date, such fee shall be payable
only from Collections pursuant to, and subject to the priority of payments set
forth in, Section 2.6 hereof.
"Servicing Fee Reserve" means at any time an amount equal to
the product of (i) the aggregate Outstanding Balance of all Receivables at such
time, (ii) the Servicing Fee percentage and (iii) a fraction having as the
numerator, the sum of (a) 1.5 times the Estimated Maturity Period plus (b) 30,
and as the denominator, 360.
"Special Obligor" means any Designated Obligor designated by
the Agent, in writing, as a Special Obligor, which designation has not been
revoked by the Agent.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings
Service, a division of McGraw-Hill Companies, Inc.
"Sub-Collection Agent" means any Person appointed as such by
the Collection Agent (and which appointment has not been revoked) pursuant to
Section 6.1(b) hereof and Section 6.02(a) of the Receivables Purchase
Agreement.
"Subordinated Note" and "Subordinated Notes" shall have the
meanings specified in the Receivables Purchase Agreement.
"Subsidiary" of a Person means any Person more than 50% of the
outstanding voting interests of which shall at any time be owned or controlled,
directly or indirectly, by such Person or by one or more Subsidiaries of such
Person or any similar business organization which is so owned or controlled.
"Switched Service Receivables" means any receivable arising
from or out of the sale or provision of Switched Services by a Seller to any of
its customers.
"Switched Services" means the metered services provided by a
Seller to its customers for originating and/or terminating telecommunications
transmissions.
"Tariff" means, with respect to any Seller, (i) any document,
instrument or other agreement submitted by such Seller to any government or
governmental regulatory agency setting forth
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the terms and conditions of sales by such Seller of telecommunication services,
including, without limitation, the terms and conditions affecting the creation,
billing, payment and collection of Receivables, within the jurisdiction of any
such government or governmental agency and (ii) with respect to any LEC
Receivables, any similar document, instrument or other agreement submitted by
the applicable LECs to any government or governmental regulatory agency and
covering or governing the terms of such LEC Receivables.
"Taxes" shall have the meaning specified in Section 8.3
hereof.
"Termination Date" means the earliest of (i) the Business Day
designated by the Transferor to the Agent as the Termination Date at any time
following 60 days' written notice to the Agent, (ii) the date of termination of
the commitment of the Liquidity Provider under the Liquidity Provider
Agreement, (iii) the date of termination of the commitment of the Credit
Support Provider under the Credit Support Agreement, (iv) the date upon which
the Termination Date is declared or automatically occurs pursuant to Section
7.2(a) hereof, (v) the day on which the Reinvestment Termination Date shall
occur, unless on or prior to such date the Company shall have assigned one
hundred percent of its interest in the Net Investment to the Bank Investors in
accordance with Section 9.7, (vi) the Purchase Termination Date, or (vii)
August 26, 1997.
"Termination Event" means an event described in Section 7.1
hereof.
"Tranche" means a portion of the Net Investment allocated to a
Tranche Period pursuant to Section 2.3 hereof.
"Tranche Period" means a CP Tranche Period, a BR Tranche
Period or a Eurodollar Tranche Period.
"Tranche Rate" means the CP Rate, the Base Rate or the
Eurodollar Rate.
"Transaction Costs" has the meaning specified in Section
8.4(a) hereof.
"Transaction Documents" means, collectively, this Agreement,
the Receivables Purchase Agreement, the Fee Letter, the Parent Support
Agreement, the Lock-Box Agreements, the Subordinated Notes and all of the other
instruments, documents and other agreements executed and delivered by the
Parent, the Transferor and/or any of the Sellers in connection with any of the
foregoing, in each case, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
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"Transfer" means a conveyance, transfer and assignment by the
Transferor to the Company or the Bank Investors of an undivided percentage
ownership interest in Receivables hereunder (including, without limitation, as
a result of any reinvestment of Collections in Transferred Interests pursuant
to Section 2.2(b) and 2.5(a)).
"Transfer Date" means, with respect to each Transfer, the
Business Day on which such Transfer is made.
"Transfer Price" means with respect to any Incremental
Transfer, the amount paid in respect thereof to the Transferor by the Company
or the Bank Investors, as applicable, in accordance with Section 2.2(a). The
Transfer Price for any Incremental Transfer shall be comprised of (a) a cash
component equal to the corresponding increase in the Net Investment and (b) a
deferred payment component equal to the corresponding increase in the reserves
included in the numerator of the Percentage Factor, which amount shall be
payable by the holders of the Net Investment in accordance with Section 2.6
hereof.
"Transferor" means LCI SPC I, Inc., a Delaware corporation,
and its successors and permitted assigns.
"Transferred Interest" means, at any time of determination, an
undivided percentage ownership interest in (i) each and every then outstanding
Receivable, (ii) all Related Security with respect to each such Receivable,
(iii) all Collections with respect thereto, and (iv) other Proceeds of the
foregoing, which undivided ownership interest shall be equal to the Percentage
Factor at such time, and only at such time (without regard to prior
calculations). The Transferred Interest in each Receivable, together with the
Related Security, Collections and Proceeds with respect thereto, shall at all
times be equal to the Transferred Interest in each other Receivable, together
with Related Security, Collections and Proceeds with respect thereto. To the
extent that the Transferred Interest shall decrease as a result of a
recalculation of the Percentage Factor, the Company or the Bank Investors, as
applicable, shall be considered to have reconveyed to the Transferor an
undivided percentage ownership interest in each Receivable, together with
Related Security, Collections and Proceeds with respect thereto, in an amount
equal to such decrease such that in each case the Transferred Interest in each
Receivable shall be equal to the Transferred Interest in each other Receivable.
"Transmission Date" means, with respect to any LEC Receivable,
the date upon which such Receivable is transmitted, transferred or otherwise
remitted to the LEC by the applicable Seller for billing and collection.
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"UCC" means, with respect to any state, the Uniform Commercial
Code as from time to time in effect in such state.
"Unbilled Toll" means, with respect to any Obligor, the Direct
Billed Receivables of such Obligor arising during a billing cycle but in
respect of which a Customer Statement has not yet been remitted to such
Obligor.
"Unbilled Toll Reduction Amount" means, at any time, the
product of ten percent (10%) and the aggregate Outstanding Balance of all
Receivables constituting Unbilled Toll at such time.
"U.S." or "United States" means the United States of America.
SECTION 1.2. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
The words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits, Schedules
and Annexes hereto, as the same may from time to time be amended or
supplemented, and not to any particular Section, subsection or clause
contained in this Agreement, and all references herein to Sections, Exhibits,
Schedules and Annexes shall mean, unless the context clearly indicates
otherwise, the Sections hereof and the Exhibits, Schedules and Annexes
attached hereto, the terms of which are hereby incorporated into this
Agreement. Whenever appropriate, in the context, terms used herein in the
singular also include the plural, and vice versa.
SECTION 1.3. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including", the words "to" and "until" each means "to but excluding", and the
word "within" means "from and excluding a specified date and to and including
a later specified date".
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility. Upon the terms and subject to the
conditions herein set forth, at any time prior to the Termination Date (x) the
Transferor may, at its option, convey, transfer and assign to the Company or
the Bank Investors, as applicable, and (y) the Company may, at its option, or
the Bank Investors shall, if so requested, accept such conveyance, trans-
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fer and assignment from the Transferor of, without recourse except as provided
herein, undivided percentage ownership interests in the Receivables, together
with Related Security, Collections and Proceeds with respect thereto, from time
to time. By accepting any conveyance, transfer and assignment hereunder,
neither the Company, any Bank Investor nor the Agent assumes or shall have any
obligations or liability under any of the Contracts, all of which shall remain
the obligations and liabilities of the Transferor and the applicable Seller.
SECTION 2.2. Transfers; Eligible Receivables (a) Incremental
Transfers. Upon the terms and subject to the conditions herein set forth (x)
the Transferor may, at its option, convey, transfer and assign to the Company
or the Bank Investors, as applicable, and (y) the Company may, at its option,
or the Bank Investors shall, if so requested by the Transferor, accept such
conveyance, transfer and assignment from the Transferor of, without recourse
except as provided herein, undivided percentage ownership interests in the
Receivables, together with Related Security, Collections and Proceeds with
respect thereto (each, an "Incremental Transfer") from time to time prior to
the occurrence of the Termination Date; provided that after giving effect to
the issuance of Related Commercial Paper to fund the Transfer Price of any
Incremental Transfer and the payment to the Transferor of such Transfer Price,
the sum of the Net Investment plus the Interest Component of all outstanding
Related Commercial Paper would not exceed the Maximum Net Investment (as
reduced by any requested reduction thereof pursuant to Section 2.2(d) which
shall not yet have become effective); and, provided further, that (i) the
representations and warranties set forth in Section 3.1 shall be true and
correct both immediately before and immediately after giving effect to any such
Incremental Transfer and the payment to the Transferor of the Transfer Price
related thereto and (ii) an Investor Report shall have been delivered with
respect to such Incremental Transfer as required by Section 3.2 hereof.
The Transferor shall, by notice to the Agent given by telecopy, offer
to convey, transfer and assign to the Company or the Bank Investors, as
applicable, undivided percentage ownership interests in the Receivables and the
other Affected Assets relating thereto at least three (3) Business Days prior
to the proposed date of any Incremental Transfer. Each such notice shall
specify (w) whether such request is made to the Company or the Bank Investors
(it being understood and agreed that once the Bank Investors acquire any
Transferred Interest hereunder, the Bank Investors shall be required to
purchase all Transferred Interests held by the Company in accordance with
Section 9.7 and thereafter the Company shall no longer accept any additional
Incremental Transfers hereunder), (x) the desired Transfer Price (which shall
be at least $5,000,000 or integral multiples of $1,000,000 in excess thereof
or, to the extent that the then
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available unused portion of the Maximum Net Investment (after taking account of
any reduction thereof requested pursuant to Section 2.2(d) which has not yet
then become effective) is less than such amount, such lesser amount equal to
such available portion of the Maximum Net Investment), (y) the desired date of
such Incremental Transfer and (z) the desired Tranche Period(s) and allocations
of the Net Investment of such Incremental Transfer thereto as required by
Section 2.3. The Agent will promptly notify the Company or each of the Bank
Investors, as the case may be, of the Agent's receipt of any request for an
Incremental Transfer to be made to such Person. To the extent that any such
Incremental Transfer is requested of the Company, the Company shall accept or
reject such offer by notice given to the Transferor and the Agent by telephone
or telecopy by no later than the close of its business on the Business Day
following its receipt of any such request. Each notice of proposed Transfer
shall be irrevocable and binding on the Transferor and the Transferor shall
indemnify the Company and each Bank Investor against any loss or expense
incurred by the Company or any Bank Investor, either directly or indirectly
(including, in the case of the Company, through the Liquidity Provider
Agreement) as a result of any failure by the Transferor to complete such
Incremental Transfer, including, without limitation, any loss or expense
incurred by the Company or any Bank Investor, either directly or indirectly
(including, in the case of the Company, pursuant to the Liquidity Provider
Agreement) by reason of the liquidation or reemployment of funds acquired by
the Company (or the Liquidity Provider) or any Bank Investor (including,
without limitation, funds obtained by issuing commercial paper or promissory
notes or obtaining deposits as loans from third parties) for the Company or any
Bank Investor to fund such Incremental Transfer.
On the date of the initial Incremental Transfer, the Agent, on behalf
of the Company or the Bank Investors, as applicable, shall deliver written
confirmation to the Transferor of the Transfer Price, the Tranche Period(s) and
the Tranche Rate(s) relating to such Transfer. On the date of each subsequent
Incremental Transfer, the Agent shall send written confirmation to the
Transferor of the Transfer Price, the Tranche Period(s), the Transfer Date and
the Tranche Rate(s) applicable to such Incremental Transfer.
By no later than 11:00 a.m. (New York time) on any Transfer Date, the
Company or each Bank Investor, as the case may be, shall remit its share
(which, in the case of an Incremental Transfer to the Bank Investors, shall be
equal to such Bank Investor's Pro Rata Share) of the aggregate Transfer Price
for such Transfer to the account of the Agent specified therefor from time to
time by the Agent by notice to such Persons. The obligation of each Bank
Investor to remit its Pro Rata Share of any such Transfer Price shall be
several from that of each other
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Bank Investor, and the failure of any Bank Investor to so make such amount
available to the Agent shall not relieve any other Bank Investor of its
obligation hereunder. Following each Incremental Transfer and the Agent's
receipt of funds from the Company or the Bank Investors as aforesaid, the Agent
shall remit to the Transferor's account at the location indicated in Section
10.3 hereof, in immediately available funds, an amount equal to the Transfer
Price for such Incremental Transfer. Unless the Agent shall have received
notice from the Company or any Bank Investor, as applicable, that such Person
will not make its share of any Transfer Price relating to any Incremental
Transfer available on the applicable Transfer Date therefor, the Agent may (but
shall have no obligation to) make the Company's or any such Bank Investor's
share of any such Transfer Price available to the Transferor in anticipation of
the receipt by the Agent of such amount from the Company or such Bank Investor.
To the extent the Company or any such Bank Investor fails to remit any such
amount to the Agent after any such advance by the Agent on such Transfer Date,
the Company or such Bank Investor, on the one hand, and the Transferor, on the
other hand, shall be required to pay such amount, together with interest
thereon at a per annum rate equal to the Federal funds rate (as determined in
accordance with clause (ii) of the definition of "Base Rate"), in the case of
the Company or any such Bank Investor, or the Base Rate, in the case of the
Transferor, to the Agent upon its demand therefor. Until such amount shall be
repaid, such amount shall be deemed to be Net Investment paid by the Agent and
the Agent shall be deemed to be the owner of a Transferred Interest hereunder.
Upon the payment of such amount to the Agent (x) by the Transferor, the amount
of the aggregate Net Investment shall be reduced by such amount or (y) by the
Company or such Bank Investor, such payment shall constitute such Person's
payment of its share of the applicable Transfer Price for such Transfer.
(b) Reinvestment Transfers. On each Business Day occurring after
the initial Incremental Transfer hereunder and prior to the Termination Date,
the Transferor hereby agrees to convey, transfer and assign to the Company or
the Bank Investors then owning any Transferred Interests, and in consideration
of the Transferor's agreement to maintain at all times prior to the Termination
Date a Net Receivables Balance in an amount at least sufficient to maintain the
Coverage Percentage at an amount not greater than the Maximum Coverage
Percentage, the Company may, and the Bank Investors shall (in either case, to
the extent such Persons then own any Transferred Interest), agree to purchase
from the Transferor, undivided percentage ownership interests in each and every
Receivable, together with the Related Security, Collections and Proceeds with
respect thereto, to the extent that Collections are available for such Transfer
in accordance with Section 2.5(a) hereof, such that after giving effect to such
Transfer, (i) the amount of the Net Investment at the close of business on such
Business Day shall be equal to the amount of the
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Net Investment at the close of the business on the Business Day immediately
preceding such Business Day plus the Transfer Price of any Incremental Transfer
made on such day, if any, and (ii) the Transferred Interest in each Receivable,
together with the Related Security, Collections and Proceeds with respect
thereto, shall be equal to the Transferred Interest in each other Receivable,
together with the Related Security, Collections and Proceeds with respect
thereto.
(c) All Transfers. Each Transfer shall constitute a
purchase of undivided percentage ownership interests in each and every
Receivable, together with the Related Security, Collections and Proceeds with
respect thereto, then existing, as well as in each and every Receivable,
together with the Related Security, Collections and Proceeds with respect
thereto, which arises at any time after the date of such Transfer. The
Company's and/or the Bank Investors', as applicable, aggregate undivided
percentage ownership interest in the Receivables, together with the Related
Security, Collections and Proceeds with respect thereto, shall equal the
Percentage Factor in effect from time to time. Each of the Company's and each
Bank Investor's undivided percentage ownership interest in the Affected Assets
shall equal such Person's ratable share (determined on the basis of the
relationship that such Person's Net Investment bears to the aggregate Net
Investment of the Company and all of the Bank Investors at such time) of the
Percentage Factor at such time.
(d) Inactive Commitment; Voluntary Reductions of
the Maximum Net Investment and the Commitments. (i) At all times prior to the
occurrence of the Activation Termination Date, the Transferor shall have the
right to elect to increase the Maximum Net Investment by the full amount (but
not any partial amount) of the Inactive Commitment as then in effect. The
Transferor may exercise such option by giving at least three (3) Business Days'
irrevocable prior written notice thereof to the Agent (who shall thereafter
notify each of the Bank Investors thereof) specifying the requested date of
such increase (which date must be a Business Day occurring prior to the
Activation Termination Date). Upon the effectiveness of any such increase, the
Active Commitments of each of the Bank Investors shall be increased by its Pro
Rata Share of the Inactive Commitment whereupon the Inactive Commitment shall
cease to exist.
(ii) The Transferor shall have the right at any time to
reduce (x) the Inactive Commitment or (y) to the extent that the Inactive
Commitment shall have previously been reduced to zero or shall otherwise have
ceased to exist, the Maximum Net Investment by any unused portion thereof, in
either case, in a minimum amount of $5,000,000 and in integral multiples of
$1,000,000 in excess thereof. Any such reduction shall be requested in a
writing to the Agent at least three (3) Business Days prior to the requested
effective date of such reduction
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(which date must be a Business Day). Each such notice shall specify the date
and the amount of the proposed reduction and shall be irrevocable when given.
Concurrently with the effectiveness of any reduction of the Inactive Commitment
or the Maximum Net Investment, each Bank Investor's Commitment shall be reduced
by its Pro Rata Share (as calculated prior to such reduction) of any such
reduction.
(e) Agent's Books and Records. The Agent shall
maintain books and records in which shall be recorded (i) the date and amount
of each Incremental Transfer hereunder and the purchaser(s) thereof, (ii) the
date and amount of and parties to any assignment of rights and obligations
hereunder pursuant to Section 9.7, (iii) the amount of any Discount, fees or
other amount due and payable or to become due from the Transferor to the Agent,
the Company, each of the Bank Investors and/or the Collection Agent hereunder
and (iv) the amount and date of any reduction in the Net Investment. The
entries made in the Agent's books and records as described in this Section
2.2(e) shall be conclusive and binding on the Transferor for all purposes
absent manifest error.
SECTION 2.3. Selection of Tranche Periods and Tranche
Rates.
(a) Prior to the Termination Date; Transferred
Interest held by Company. At all times hereafter, but prior to the Termination
Date and not with respect to any portion of the Transferred Interest held by
the Bank Investors (or any of them), the Transferor may, subject to the
Company's approval and the limitations described below, request Tranche Periods
and allocate a portion of the Net Investment to each selected Tranche Period,
so that the aggregate amounts allocated to outstanding Tranche Periods shall at
all times equal the Net Investment held by the Company. The Transferor shall
give the Company irrevocable notice by telephone of the new requested Tranche
Period(s) and the aggregate amount of Net Investment to be allocated thereto,
in each case, at least three (3) Business Days prior to the expiration of any
then existing Tranche Period; provided, however, that the Company may select,
in its sole discretion, any such new Tranche Period if (i) the Transferor fails
to provide such notice on a timely basis or (ii) the Company determines, in its
sole discretion, that the Tranche Period requested by the Transferor is
unavailable or for any reason commercially undesirable. The Company confirms
that it is its intention to allocate all or substantially all of the Net
Investment held by it to one or more CP Tranche Periods; provided that the
Company may determine, from time to time, in its sole discretion, that funding
such Net Investment by means of one or more CP Tranche Periods is not possible
or is not desirable for any reason. If the Liquidity Provider acquires a
Purchased Interest from the Company pursuant to the terms of the Liquidity
Provider Agreement, NationsBank, on
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behalf of the Liquidity Provider, may exercise the right of selection granted
to the Company hereby. The initial Tranche Period applicable to any such
Purchased Interest acquired by the Liquidity Provider shall be a period of not
greater than 14 days and such Tranche shall be a BR Tranche. Thereafter,
provided that the Termination Date shall not have occurred, the Tranche Rate
applicable thereto shall be the Eurodollar Rate, to the extent then available
and determinable in accordance with the terms hereof, or in all other cases,
the Base Rate, in each case, as determined by NationsBank. Upon the occurrence
of the Termination Date, the Agent may, in its sole discretion, declare any
Tranche Periods then outstanding to be terminated on such date.
(b) After the Termination Date; Transferred
Interest Held by Company. At all times on and after the Termination Date, with
respect to any portion of the Transferred Interest which shall not have been
transferred to the Bank Investors (or any of them), the Company or NationsBank,
as applicable, shall select all Tranche Periods and Tranche Rates applicable
thereto.
(c) Prior to the Termination Date; Transferred
Interest Held by Bank Investor. At all times with respect to any portion of
the Transferred Interest transferred to the Bank Investors (or any of them)
pursuant to Section 9.7, but prior to the Termination Date, the initial Tranche
Period applicable to such portion of the Net Investment allocable thereto shall
be a period of not greater than 14 days and such Tranche shall be a BR Tranche.
Thereafter, with respect to such portion, and with respect to any other portion
of the Transferred Interest held by the Bank Investors (or any of them),
provided that the Termination Date shall not have occurred, such Net Investment
shall be allocated, at the Transferor's option (subject to the limitations set
forth herein), to either BR Tranches or Eurodollar Tranches. The Transferor
shall give the Agent irrevocable notice by telephone of the new requested
Tranche Period at least three (3) Business Days prior to the expiration of any
then existing Tranche Period; provided, that if the Transferor shall fail to
give any such notice with respect to any expiring Tranche Period held by any
Bank Investor, the Transferor shall be deemed to have selected a BR Tranche
having a Tranche Period of three (3) Business Days. Upon the occurrence of the
Termination Date, the Agent may, in its sole discretion, declare any Tranche
Periods then outstanding to be terminated on such date.
(d) After the Termination Date; Transferred
Interest Held by Bank Investor. At all times on and after the Termination
Date, with respect to any portion of the Transferred Interest owned or
transferred to the Bank Investors (or any of them), the Agent shall select all
Tranche Periods and Tranche Rates applicable thereto.
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(e) Eurodollar Rate Protection; Illegality. (i)
If the Agent is unable to obtain on a timely basis the information necessary to
determine the LIBOR Rate for any proposed Eurodollar Tranche, then:
(A) the Agent shall forthwith notify the Company or the
Bank Investors, as applicable, and the Transferor that the Eurodollar
Rate cannot be determined for such Eurodollar Tranche; and
(B) while such circumstances exist, neither the Company,
any of the Bank Investors nor the Agent shall allocate the Net
Investment of any additional Transferred Interests purchased during
such period or reallocate the Net Investment allocated to any then
existing Tranche Period ending during such period, to a Eurodollar
Tranche.
(ii) If, with respect to any outstanding Eurodollar Tranche,
the Company or any of the Bank Investors owning any Transferred Interest
therein notifies the Agent that it is unable to obtain matching deposits in the
London interbank market to fund its purchase or maintenance of such Transferred
Interest or that the Eurodollar Rate applicable to such Transferred Interest
will not adequately reflect the cost to the Person of funding or maintaining
its respective Transferred Interest for such Tranche Period, then the Agent
shall forthwith so notify the Transferor, whereupon neither the Agent, the
Company nor the Bank Investors, as applicable, shall, while such circumstances
exist, allocate any Net Investment of any additional Transferred Interest
purchased during such period or reallocate the Net Interest allocated to any
Tranche Period ending during such period, to a Eurodollar Tranche.
(iii) Notwithstanding any other provision of this Agreement,
if the Company or any of the Bank Investors, as applicable, shall notify the
Agent that such Person has determined (or has been notified by any Liquidity
Provider) that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful (either for the Company, such Bank
Investor, or such Liquidity Provider, as applicable), or any central bank or
other governmental authority asserts that it is unlawful, for the Company, such
Bank Investor or such Liquidity Provider, as applicable, to fund the purchases
or maintenance of Transferred Interests at the Eurodollar Rate, then (x) as of
the effective date of such notice from such Person to the Agent, the obligation
or ability of the Company or such Bank Investors, as applicable, to fund its
purchase or maintenance of Transferred Interests at the Eurodollar Rate shall
be suspended until such Person notifies the Agent that the circumstances
causing such suspension no longer exist and (y) the Net Investment of each
Eurodollar Tranche in which such Person owns an interest shall either (1) if
such Person may lawfully continue
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to maintain such Transferred Interest at the Eurodollar Rate until the last day
of the applicable Tranche Period, be reallocated on the last day of such
Tranche Period to another Tranche Period in respect of which the Net Investment
allocated thereto accrues Discount at a Tranche Rate other than the Eurodollar
Rate or (2) if such Person shall determine that it may not lawfully continue to
maintain such Transferred Interest at the Eurodollar Rate until the end of the
applicable Tranche Period, such Person's share of the Net Investment allocated
to such Eurodollar Tranche shall be deemed to accrue Discount at the Base Rate
from the effective date of such notice until the end of such Tranche Period.
SECTION 2.4. Discount, Fees and Other Costs and Expenses.
Notwithstanding the limitation on recourse under Section 2.1 hereof, the
Transferor shall pay, as and when due in accordance with this Agreement, all
fees hereunder, Discount (including Discount due to the Company or any Bank
Investor), all amounts payable pursuant to Article VIII hereof, if any, and the
Servicing Fees. On the last day of each Tranche Period, the Transferor shall
pay to the Agent, on behalf of the Company or the Bank Investors, as
applicable, an amount equal to the accrued and unpaid Discount for such Tranche
Period together with, in the event the Transferred Interest is held by the
Company, an amount equal to the discount accrued on the Company's Commercial
Paper to the extent such Commercial Paper was issued in order to fund the
Transferred Interest in an amount in excess of the Transfer Price of an
Incremental Transfer; it being understood and agreed, that the Company shall
use its best efforts to not overfund the requested Transfer Price of any
Incremental Transfer by an amount in excess of $100,000. The Transferor shall
pay the Dealer Fee to the Agent, on behalf of the Company, on each day on which
any Related Commercial Paper is issued by the Company. Discount shall accrue
with respect to each Tranche on each day occurring during the Tranche Period
related thereto. Nothing in this Agreement shall limit in any way the
obligations of the Transferor to pay the amounts set forth in this Section 2.4.
SECTION 2.5. Non-Liquidation Settlement and Reinvestment
Procedures; Equalization Account and LEC True-Up Reserve Account. (a) On each
day after the date of any Incremental Transfer but prior to the Termination
Date and provided that no Potential Termination Event shall have occurred and
be continuing, the Collection Agent shall out of (x) the Percentage Factor of
Collections received on or prior to such day and not previously applied or
accounted for and (y) withdrawals from the Equalization Account requested by
the Transferor and available for distribution as described in Section 2.5(c)
below, in the following order of priority: (i) set aside and hold in trust for
the Company or the Bank Investors, as applicable (or deposit into the
Collection Account if so required pursuant to Section 2.12 hereof) an amount
equal to all Discount and the Servicing Fee ac-
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crued through such day and not so previously set aside or paid, (ii) to the
extent the balance of the LEC True-Up Reserve Account is less than the Required
LEC True-Up Reserve Account Funded Amount, deposit into the LEC True-up Reserve
Account the amount of such deficiency, (iii) to the extent that the Coverage
Percentage then exceeds the Maximum Coverage Percentage, deposit to the
Equalization Account an amount sufficient to cause such excess to be
eliminated, and (iv) apply the balance of such Percentage Factor of Collections
remaining after application of Collections as provided in the preceding clauses
(i), (ii) and (iii) of this Section 2.5(a) hereof to the Transferor, for the
benefit of the Company or the Bank Investors, as applicable, to the purchase of
additional undivided percentage interests in each Receivable pursuant to
Section 2.2(b) hereof. On the last day of each Tranche Period, from the
amounts set aside as described in clause (i) of the first sentence of this
Section 2.5(a) hereof, the Collection Agent shall deposit to the Agent's
account (to the extent not previously so deposited), for the benefit of the
Company or the Bank Investors, as applicable, an amount equal to the accrued
and unpaid Discount for such Tranche Period and shall deposit to its own
account, to the extent of funds still available after payment of Discount as
aforesaid, an amount equal to the accrued and unpaid Servicing Fee for such
Tranche Period. The Agent, upon its receipt of such amounts in the Agent's
account, shall distribute such amounts to the Company and/or the Bank Investors
entitled thereto as set forth above; provided that if the Agent shall have
insufficient funds to pay all of the above amounts in full on any such date,
the Agent shall pay such amounts ratably (based on the amounts owing to each
such Person) to all such Persons entitled to payment thereof as set forth
above.
(b) The Agent, for the benefit of the Company and the Bank
Investors, shall establish and maintain (i) an interest bearing account (the
"Equalization Account") into which such amounts allocated from the Collections
pursuant to clause (iii) of Section 2.5(a) or required to be paid by the Seller
to the Agent pursuant to the first sentence of Section 2.6 are to be deposited
and (ii) an interest bearing account with the Agent (the "LEC True-Up Reserve
Account") into which amounts allocated from Collections pursuant to clause (ii)
of Section 2.5(a) are to be deposited.
(c) On the last day of each Tranche Period occurring at any
time that any amounts are on deposit in the Equalization Account, the amounts
required pursuant to the second sentence of Section 2.6 shall be withdrawn from
the Equalization Account and applied as set forth in such sentence. In
addition, amounts on deposit in the Equalization Account may also be withdrawn
by the Transferor, upon not less than one (1) Business Days' prior notice to
the Agent, to the extent that after giving effect thereto, the Coverage
Percentage would not exceed the Maximum
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Coverage Percentage. The amount of any such optional withdrawal shall be
treated as Collections received by the Transferor and shall be remitted to, and
applied by, the Collection Agent in accordance with Section 2.5(a) on the date
such optional withdrawal is permitted. Any such request for, and the
acceptance of, any such optional withdrawal from the Equalization Account shall
be deemed a representation and warranty by the Transferor that the Coverage
Percentage is less than or equal to the Maximum Coverage Percentage. Upon the
occurrence of the Termination Date for any reason, the Equalization Account
shall be automatically closed and all amounts on deposit therein shall be
applied in accordance with Section 2.6 (other than the second sentence thereof)
on such date (or such later date as the Agent may direct if such amounts were
invested in Eligible Investments that have not yet matured).
(d) Amounts on deposit in the LEC True-Up Reserve Account
shall only be withdrawable after the Termination Date, upon no less than one
Business Days' prior written notice to the Agent, (i) by the Transferor, to pay
any Investor Allocable Post-Termination Date LEC True-Up Reimbursement
Obligations then due and owing by the Transferor to any of the Sellers under
the Receivables Purchase Agreement and (ii) by the Collection Agent, to the
extent of the positive excess of the balance of such account over the remaining
aggregate contingent Investor Allocable Post-Termination Date LEC True-Up
Reimbursement Obligations at such time, to be remitted and applied as
Collections in accordance with Section 2.6.
(e) The Agent, at the direction of the Collection Agent (or,
if the Collection Agent is not an Affiliated Entity, such other Person as the
Transferor may designate from time to time for such purpose), shall invest the
amounts from time to time on deposit in the Equalization Account and the LEC
True-Up Reserve Account in any Eligible Investments having maturities of no
longer than last the day of the next maturing Tranche Period; provided, that no
such Eligible Investment shall be sold before its maturity, unless the Agent
shall otherwise direct (such direction shall only be given in the case of the
Equalization Account upon the occurrence of the Termination Date or would not
otherwise cause a loss of any principal of the amounts so invested). The
Transferor shall be entitled to all investment proceeds with respect to any
such investments and all interest earned on amounts from time to time on
deposit (and not otherwise invested) in such accounts. Neither the Agent, the
Company, nor any of the Bank Investors shall have any liability for any losses
incurred in connection with any such investments, including, as a result of the
early termination thereof as aforesaid.
(f) The Transferor hereby grants to the Agent, and the Agent
shall hereafter have and possess (for its benefit and for the benefit of the
Company and the Bank Investors), exclusive
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ownership, dominion and control of the Equalization Account and the LEC True-Up
Reserve Account, and all funds on deposit from time to time therein, except as
otherwise provided herein with respect to the investment of the amounts set
forth therein. The Transferor hereby acknowledges and agrees that it shall
have no right of setoff or deduction against any such amounts from time to time
on deposit in such accounts for any amounts owing by it to the Agent, the
Company, the Bank Investors, any other Indemnified Party hereunder or any
Seller.
(g) The Transferor shall be entitled at any time during the
term of this Agreement to request a partial liquidation of the Company's
and/or the Bank Investor's respective Transferred Interests such that the
aggregate outstanding Net Investment of all such Persons' respective
Transferred Interests shall be reduced to an amount designated by the
Transferor in any such request. Any such partial liquidation must be done pro
rata as among all Persons then holding any Transferred Interests and shall be
conducted on terms to be mutually acceptable (on a commercially reasonable
basis) to the Transferor, the Agent and the holders of at least fifty-one
percent of the Net Investment at such time.
SECTION 2.6. Liquidation Settlement Procedures; Escrow
Account. (a) If at any time on or prior to the Termination Date, the Coverage
Percentage is greater than the Maximum Coverage Percentage, then the Transferor
shall immediately pay to the Agent, for deposit into the Equalization Account,
an amount such that, if applied in reduction of the Net Investment, would cause
the Coverage Percentage to be less than or equal to the Maximum Coverage
Percentage. Such amount shall be withdrawn from the Equalization Account by
the Collection Agent and be applied to the reduction of the Net Investment of
next maturing Tranche Period (or, if more than one such Tranche Period is so
maturing, to one or more such Tranche Period, as selected by the Agent). On the
Termination Date and on each day thereafter, and on each day on which a
Termination Event or a Potential Termination Event has occurred and is
continuing, the Collection Agent shall (x) out of the Percentage Factor of all
Collections received on such day, (i) if during the Escrow Period, deposit to
the Escrow Account an amount equal to the Escrow Amount, and (ii) with respect
to the remainder thereof, set such amounts aside and hold them in trust for the
Company or the Bank Investors, as applicable (or deposit them into the
Collection Account if so required pursuant to Section 2.12 hereof) and (y) set
aside and hold in trust for the Transferor such portion of Collections not
allocated to the Escrow Account, the Company or the Bank Investors, as
applicable, as aforesaid. On the Termination Date or the day on which a
Termination Event or a Potential Termination Event occurs, the Collection Agent
shall deposit to the Agent's account, for the benefit of the Company or the
Bank Investors, as applicable, any amounts set aside pursuant to Sec-
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tion 2.5(a) above and, in the case of the Termination Date, the balance of the
Equalization Account.
On the last day of each Tranche Period to occur on or after
the Termination Date or during the continuance of a Termination Event or a
Potential Termination Event, there shall be deposited to the Agent's account
(x) by the Escrow Agent from the Escrow Account, the amount of any Escrow
Payment in respect of such day and (y) by the Collection Agent out of the
amounts so set aside for the Company or the Bank Investors pursuant to the
immediately preceding two sentences, in an aggregate amount not to exceed the
sum of the following, and the Agent shall remit from the Agent's account such
amounts as follows: (i) to the Collection Agent, if other than an Affiliated
Entity, amount of the accrued and unpaid Servicing Fee, (ii) to the Company
and/or the Bank Investors, the accrued Discount for such Tranche Period, (iii)
to the Transferor, to the extent that the balance of the LEC True-Up Reserve
Account has been reduced to zero, the amount of any Investor Allocable
Post-Termination Date LEC True-Up Reimbursement Obligations then due and owing
by the Transferor to any of the Sellers under the Receivables Purchase
Agreement; provided, that such amount shall be payable out of the amounts
described herein only to the extent that the amount of such obligations to be
paid at such time, when aggregated with all other prior obligations paid
pursuant to this clause, would not exceed the LEC True-Up Reserve Termination
Date Amount, (iv) to the Company and/or the Bank Investors, the portion of the
Net Investment allocated to such Tranche Period, (v) to any applicable Person,
all other Aggregate Unpaids (other than the Servicing Fee), and (vi) to the
Collection Agent (if an Affiliated Entity), the amount of the accrued and
unpaid Servicing Fee. If there shall be insufficient funds for the Agent to
distribute funds in payment in full of all of the aforementioned amounts, the
Agent shall distribute funds, first, in payment of accrued Servicing Fee owing
to any Collection Agent other than an Affiliated Entity, second, to the Company
and the Bank Investors in payment of accrued and unpaid Discount, third,
subject to the limitations set forth in the immediately preceding clause (iii),
to the Transferor for payment of any Investor Allocable Post-Termination Date
LEC True-Up Reimbursement Obligations then owing, fourth, in reduction of the
Net Investment allocated to any Tranche Period ending on such date, fifth, in
payment of all fees payable by the Transferor hereunder, fifth, in payment of
all other Aggregate Unpaids (other than the Servicing Fee), and sixth, if an
Affiliated Entity is then the Collection Agent, to its account as Collection
Agent, in payment of the Servicing Fee payable to such Person; provided that if
the Agent shall have insufficient funds to pay all of the above amounts in full
on any such date, the Agent shall pay such amounts in the order of priority set
forth above and, with respect to any such category above for which the Agent
shall have insufficient funds to pay all such amounts owing on such date,
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ratably (based on the amounts in such categories owing to such Persons) among
all such Persons entitled to payment thereof. Following the date on which the
Net Investment has been reduced to zero, all accrued Discount and Servicing
Fees have been paid in full, in cash and all other Aggregate Unpaids have been
paid in full, in cash, (i) the Percentage Factor shall be reduced to zero, (ii)
the Agent, on behalf of the Company and the Bank Investors, shall be considered
to have reconveyed to the Transferor all of the Agent's, the Company's and the
Bank Investors' right, title and interest in and to the Affected Assets
(including the Transferred Interest), (iii) the Collection Agent, the Escrow
Agent and/or the Agent shall pay to the Transferor any remaining Collections or
other amounts set aside and held by the Collection Agent, the Escrow Agent
and/or the Agent (including in the LEC True-Up Reserve Account and the Escrow
Account) and (iv) the Agent, on behalf of the Company and the Bank Investors,
shall execute and deliver to the Transferor, at the Transferor's expense, such
documents or instruments as are necessary to terminate the Agent's, the
Company's and the Bank Investors' respective interests in the Affected Assets.
Any such documents and instruments shall be prepared by or on behalf of the
Transferor. On the last day of each Tranche Period, the Collection Agent shall
remit to the Transferor such portion of Collections set aside for the
Transferor pursuant to this Section 2.6.
The reconveyance of the Transferred Interest to the Transferor
pursuant to the immediately preceding clause (ii) shall constitute payment in
full of the deferred portion of the Transfer Price owing by the Bank Investors
and/or the Company in connection with its acquisitions of Transferred Interests
hereunder.
(b) The Collection Agent, for the benefit of the Company, the
Bank Investors and the Transferor, shall establish with NationsBank, N.A. and
maintain in the name of the Escrow Agent, a segregated interest bearing account
accessible only by the Escrow Agent (the "Escrow Account"), which shall be
identified as the "Escrow Account for the LCI SPC I, Inc. Securitization
Facility." The Escrow Agent, at the direction of the Collection Agent (or, if
the Collection Agent is not an Affiliated Entity, such other Person as the
Transferor may designate from time to time for such purpose), shall invest the
amounts from time to time on deposit in the Escrow Account in any Eligible
Investments having maturities of no longer than the last day of the next
maturing Tranche Period; provided, that no such Eligible Investment shall be
sold before its maturity, unless the Agent shall otherwise direct. All such
Eligible Investments shall be held by the Escrow Agent for the benefit of the
Company, the Bank Investors and the Transferor. All interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
in the Escrow Account shall be deposited into
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the Escrow Account to be applied as set forth in Section 2.6(a). On the
Business Day immediately prior to each date upon which any Escrow Payment is to
be made in accordance with Section 2.6(a), the Collection Agent shall direct
the Escrow Agent to withdraw such amount from the Escrow Account and remit it
to the Agent's account as set forth in Section 2.6(a).
(c) Each of the Company, the Bank Investors and the
Purchaser hereby appoints NationsBank, N.A. as the Escrow Agent (in such
capacity, the "Escrow Agent") with the authority to take such action on its
behalf and to exercise such powers under this Agreement as are delegated to the
Escrow Agent by the terms hereof, together with such powers as are reasonably
incidental thereto, including, without limitation, the power and authority to
hold, allocate and distribute funds deposited into the Escrow Account on behalf
of the Company, the Bank Investors, and the Transferor. In acting in such
capacity, the Escrow Agent shall be entitled to the rights, benefits,
protections and indemnities set forth in Article IX of this Agreement to the
same extent as the Agent, as if any reference therein to "the Agent" were
instead a reference to "each of the Agent and the Escrow Agent."
SECTION 2.7. Fees. Notwithstanding any limitation on
recourse contained in this Agreement, the Transferor shall pay the following
non-refundable fees:
(a) On the last day of each month and on the date
occurring after the Termination Date upon which the Percentage Factor is
reduced to zero, to the Company solely for its own account, the Administration
Fee and the Program Fee.
(b) On the last day of each month and on the
Termination Date, to the Agent for distribution to the Bank Investors in such
manner as shall be agreed upon by the Agent and each such Bank Investor in a
separate agreement between such parties, the Facility Fee.
(c) On the date of execution hereof, to the
Administrative Agent solely for its own account, the Arrangement Feep.
SECTION 2.8. Protection of Ownership Interest of the Company
and the Bank Investors. (a) The Transferor agrees that it will, and will cause
each of the Sellers to, from time to time, at its or their expense, promptly
execute and deliver all instruments and documents and take all actions as may
be necessary or as the Agent may reasonably request in order to perfect or
protect the Transferred Interest or to enable the Agent, the Company or the
Bank Investors to exercise or enforce any of their respective rights hereunder.
Without limiting the foregoing, the Transferor will, and will cause each of the
Sellers to, in order to accurately reflect this purchase and sale trans-
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action, (x) execute and file such financing or continuation statements or
amendments thereto or assignments thereof (as permitted pursuant to Section 9.7
hereof) as may reasonably be requested by the Agent, the Company or any of the
Bank Investors in order to perfect or protect the Transferred Interest and (y)
mark its respective master data processing records and, upon the request of the
Agent, the Company or any of the Bank Investors, its other documents with a
legend describing the conveyance to the Transferor (in the case of the Sellers)
and the Agent, for the benefit of the Company and the Bank Investors, of the
Transferred Interest. The Transferor shall, and will cause each of the Sellers
to, upon request of the Agent, the Company or any of the Bank Investors, obtain
such additional search reports as the Agent, the Company or any of the Bank
Investors shall reasonably request. To the fullest extent permitted by
applicable law, the Agent shall be permitted to sign and file continuation
statements and amendments thereto and assignments thereof without the
Transferor's or any of the Sellers' signatures. Carbon, photographic or other
reproduction of this Agreement or any financing statement shall be sufficient
as a financing statement. The Transferor shall not, and shall not permit any of
the Sellers to, change its respective name, identity or corporate structure
(within the meaning of Section 9-402(7) of the UCC as in effect in the States
of New York, Ohio, Virginia and South Carolina) nor relocate its respective
chief executive office or any office where Records are kept unless it shall
have: (i) given the Agent at least thirty (30) days prior notice thereof and
(ii) prepare, at the Transferor's expense, and delivered to the Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Transferred Interest or reasonably requested by the Agent in
connection with such change or relocation. Any filings under the UCC or
otherwise that are occasioned by such change in name or location shall be made
at the expense of Transferor.
(b) Except as expressly otherwise permitted
pursuant to Section 5.1(h), the Collection Agent shall instruct all Obligors to
remit all Collections directly to a Lock-Box or a Lock-Box Account in respect
of which a Lock-Box Agreement shall be in effect. Each Lock-Box or Lock-Box
Account maintained by a Lock-Box Bank shall, pursuant hereto and the applicable
Lock-Box Agreement, be under the exclusive ownership and control of the Agent,
which exclusive ownership and control is hereby and thereby granted to the
Agent by the applicable Seller and the Transferor. The Collection Agent shall
be permitted to give instructions to the Lock-Box Banks until such time after
the occurrence of any Collection Agent Default, Termination Event or Potential
Termination Event as the Agent shall, by notice to the Collection Agent or any
of the Lock-Box Banks, terminate such authority. The Collection Agent shall
not add any bank as a Lock-Box Bank or any lock-box or lock-box account as a
Lock-Box or Lock-Box Account to those listed on Exhibit C attached hereto
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unless the applicable bank has entered into a Lock-Box Agreement covering such
new Lock-Box or Lock-Box Account at such Lock-Box Bank. The Collection Agent
shall not terminate any bank as a Lock-Box Bank, any lock-box as a Lock-Box or
any account as a Lock-Box Account unless the Agent shall have received at least
thirty (30) days' prior written notice of such termination. If the Transferor,
any of the Sellers or the Collection Agent receives any Collections, the
Transferor, such Seller or the Collection Agent, as applicable, shall
immediately, but in any event within two Business Days after its receipt
thereof, remit (and shall cause such Seller to remit) such Collections to a
Lock-Box Account.
SECTION 2.9. Deemed Collections; Application of Payments.
(a) If (i) on any day the Outstanding Balance of a Receivable (other than
Unbilled Toll) is either reduced or cancelled (x) as a result of any Dilution
Factor or (y) as a result of a setoff or offset in respect of any claim by any
Person (whether such claim arises out of the same or a related transaction or
an unrelated transaction), or (ii) during any month the Outstanding Balance of
any Unbilled Toll has been either reduced or cancelled (x) as a result of any
Dilution Factor or (y) as a result of a setoff or offset in respect of any
claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), then, in either case, the Transferor
shall be deemed to have received on such day (in the case of clause (i) above)
or on the last day of such month (in the case of clause (ii) above) a
Collection of such Receivable or Receivables, as applicable, in the aggregate
amount of such reduction or cancellation and the Transferor shall pay to the
Collection Agent an amount equal to such reduction or cancellation and such
amount shall be applied by the Collection Agent as a Collection in accordance
with Section 2.5(a) or 2.6 hereof, as applicable. The Net Investment shall be
reduced by the amount of such payment actually received by the Agent.
(b) If on any day any of the representations or
warranties in Article III was or becomes untrue with respect to a Receivable
(whether on or after the date of any transfer of an interest therein to the
Agent, the Company or the Bank Investors as contemplated hereunder), the
Transferor shall be deemed to have received on such day a Collection of such
Receivable in full and the Transferor shall on such day pay to the Collection
Agent an amount equal to the Outstanding Balance of such Receivable and such
amount shall be allocated and applied by the Collection Agent as a Collection
allocable to the Transferred Interest in accordance with Section 2.5(a) or 2.6
hereof, as applicable. The Net Investment shall be reduced by the amount of
such payment actually received by the Agent.
(c) Any payment by an Obligor in respect of any
indebtedness owed by it to the Transferor or any of the Sellers
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shall, except as otherwise specified by such Obligor or otherwise required by
contract or law and unless otherwise instructed by the Company, be applied as a
Collection of any Receivable of such Obligor included in the Transferred
Interest (starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other indebtedness of such Obligor.
SECTION 2.10. Payments and Computations, Etc. All amounts
to be paid or deposited by the Transferor or the Collection Agent hereunder
shall be paid or deposited in accordance with the terms hereof no later than
11:00 a.m. (New York City time) on the day when due in immediately available
funds; if such amounts are payable to the Company or any Bank Investor they
shall be paid or deposited in the account indicated in Section 10.3 hereof
until otherwise notified by the Agent. The Transferor shall, to the extent
permitted by law, pay to the Agent, for the benefit of the Company and the Bank
Investors upon demand, interest on all amounts not paid or deposited when due
hereunder at a rate equal to 2% per annum plus the Base Rate. All computations
of Discount, interest and all per annum fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed. Any computations by the Agent of amounts
payable by the Transferor hereunder shall be binding upon the Transferor absent
manifest error.
In the event that any payment hereunder is stated to be due on
a day which is not a Business Day, then such payment shall be deemed to be due
on the immediately succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of Discount, interest or
any fee payable hereunder, as the case may be; provided, however, that if such
extension would cause payment of Discount on any Eurodollar Tranche to be made
in the next calendar month, such payment shall be made on the next preceding
Business Day.
SECTION 2.11. Reports. (a) Prior to the twentieth day
of each month, the Collection Agent shall prepare and forward to the Agent and
the Administrative Agent (i) an Investor Report as of the end of the last day
of the immediately preceding calendar month, (ii) if requested by the Agent or
the Administrative Agent, a listing by Obligor of all Receivables together with
an aging of such Receivables and (iii) such other information as the Agent or
the Administrative Agent may reasonably request.
(b) By no later than the close of business on Thursday of each
week, the Collection Agent shall prepare and forward to the Administrative
Agent and the Agent an Interim Report based on the Daily Reports provided to
the Collection Agent by the Sellers on each day during the preceding week
pursuant to (and as such term is defined in) the Receivables Purchase
Agreement.
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SECTION 2.12. Collection Account. There shall be
established with the Agent on the day of the initial Incremental Transfer
hereunder and thereafter maintained, for the benefit of the Company and the
Bank Investors, a segregated account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Company and the Bank Investors. On and after the occurrence
of a Collection Agent Default, a Termination Event or a Potential Termination
Event, the Collection Agent shall remit daily (within two Business Days after
its receipt thereof) all Collections which it receives with respect to any
Receivables to the Collection Account. Funds on deposit in the Collection
Account (other than investment earnings) shall be invested by the Agent in
Eligible Investments that will mature so that such funds will be available
prior to the last day of each successive Tranche Period following such
investment. On the last day of each Tranche Period, all interest and earnings
(net of losses and investment expenses) on funds on deposit in the Collection
Account shall be retained in the Collection Account and be available to make
any payments required to be made hereunder (including Discount) by the
Transferor. On the date occurring after the Termination Date upon which the
Percentage Factor shall have been reduced to zero, any funds remaining on
deposit in the Collection Account shall be paid to the Transferor.
SECTION 2.13. Sharing of Payments, Etc. If the Company or
any Bank Investor (for purposes of this Section only, being a "Recipient")
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise) on account of any Transferred Interest
owned by it (other than pursuant to Section 2.7 or 9.7, or Article VIII and
other than as a result of the differences in the timing of the applications of
Collections pursuant to Section 2.5(a) or 2.6) in excess of its ratable share
of payments on account of the Transferred Interest that are made to the Company
and/or the Bank Investors (other than the Recipient) entitled thereto, such
Recipient shall forthwith purchase from the Company and/or the Bank Investors
entitled to a share of such amount participations in the Percentage Interests
owned by such other Persons as shall be necessary to cause such Recipient to
share the excess payment ratably with each such other Person entitled thereto;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such Recipient, such purchase from each such other
Person shall be rescinded and each such other Person shall repay to the
Recipient the purchase price paid by such Recipient for such participation to
the extent of such recovery, together with an amount equal to such other
Person's ratable share (according to the proportion of (a) the amount of such
other Person's required payment to (b) the total amount so recovered from the
Recipient) of any interest or other amount paid or payable by the Recipient in
respect of the total amount so recovered.
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SECTION 2.14. Right of Setoff. Without in any way limiting
the provisions of Section 2.13, each of the Company and the Bank Investors is
hereby authorized (in addition to any other rights it may have) at any time
after the occurrence of the Termination Date to setoff, appropriate and apply
(without presentment, demand, protest or other notice which are hereby
expressly waived) any deposits and any other indebtedness held or owing by the
Company or such Bank Investor to, or for the account of, the Transferor against
the amount of the Aggregate Unpaids owing by the Transferor to such Person
(even if contingent or unmatured).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the
Transferor. The Transferor represents and warrants to the Agent, the Company
and the Bank Investors that:
(a) Corporate Existence and Power. The Transferor
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all corporate power and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
now conducted, except where the failure to have obtained or received any such
government licenses, authorizations, consents and approvals could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. The Transferor is duly qualified to do business in, and is in
good standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so qualified or
in good standing could not reasonably be expected to have a Material Adverse
Effect.
(b) Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the Transferor of
this Agreement, the Receivables Purchase Agreement, the Fee Letter, the
Subordinated Notes and the other Transaction Documents to which the Transferor
is a party (including, without limitation for purposes of the immediately
succeeding clause (iii), the delivery of PAR Statements by such Person as and
to the extent required pursuant to Section 5.1(a)(xi)) are within the
Transferor's corporate powers, have been duly authorized by all necessary
corporate and shareholder action, (ii) require no action by or in respect of,
or filing with, any Official Body or official thereof (except as contemplated
by Section 2.8 hereof), (iii) do not contravene, or constitute a default under,
any provision of applicable law, rule or regulation or any agreement,
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judgment, injunction, order, writ, decree or other instrument binding upon the
Transferor (after, in the case of any such agreement or any applicable Tariff
to which the Transferor or any applicable Seller is a party or to which it or
its Receivables are subject, giving effect to any necessary consents, waivers,
approvals or other agreements obtained or delivered thereunder and except to
the extent that the provisions of Section 9-318 of the UCC as in effect in all
applicable jurisdictions would render any such violated or contravened
provision ineffective) except any such contravention or default which could
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect, (iv) do not contravene the Certificate of
Incorporation or Bylaws of the Transferor, or (v) result in the creation or
imposition of any Adverse Claim on the assets of the Transferor (except as
contemplated by Section 2.8 hereof).
(c) Binding Effect. Each of this Agreement, the
Receivables Purchase Agreement, the Fee Letter, the Subordinated Notes, and the
other Transaction Documents to which the Transferor is a party constitutes the
legal, valid and binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally.
(d) Perfection. Immediately preceding the purchase
thereof by the Transferor from each of the Sellers under the Receivables
Purchase Agreement, each Seller was the owner of the Receivables sold by it to
the Transferor thereunder free and clear of any Adverse Claim. Immediately
preceding each Transfer hereunder, the Transferor shall be the owner of all of
the Receivables, free and clear of all Adverse Claims. On or prior to each
Transfer and each recomputation of the Transferred Interest, all financing
statements and other documents required to be recorded or filed in order to
perfect and protect the Transferred Interest (to the extent the Transferred
Interest may be perfected or protected by the recordation or filing of
financing statements or any such other documents) against all creditors of and
purchasers from the Transferor and each of the Sellers will have been duly
filed in each filing office necessary for such purpose and all filing fees and
taxes, if any, payable in connection with such filings shall have been paid in
full.
(e) Accuracy of Information. All information
heretofore furnished by the Transferor (including without limitation, any
Investor Reports, any other reports delivered pursuant to Section 2.11 hereof
and the Transferor's financial statements) to the Company, any Bank Investor,
the Agent or the Administrative Agent for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Transferor to the Company, any Bank
Investor, the Agent or the Administrative Agent will be,
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true and accurate in every material respect, on the date such information is
stated or certified.
(f) Tax Status. The Transferor has filed all tax
returns (federal, state and local) required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges, except any such taxes, assessments and/or other
governmental charges which the Transferor is contesting in good faith and by
appropriate proceedings and in respect of which (x) the Transferor has
established and maintains adequate reserves on its books and records for the
payment of such amounts and (y) no Adverse Claim on any of the Affected Assets
has resulted from the non-payment thereof.
(g) Action, Suits. Except as set forth in Exhibit G
hereof, there are no actions, suits or proceedings pending, or to the knowledge
of the Transferor threatened, against or affecting the Transferor or any
Affiliate of the Transferor or their respective properties, in or before any
court, arbitrator or other body, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(h) Use of Proceeds. No proceeds of any Transfer
will be used by the Transferor to acquire any security in any transaction which
is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(i) Place of Business. The principal place of
business and chief executive office of the Transferor are located at the
address of the Transferor indicated in Section 10.3 hereof and the offices
where the Transferor keeps all its Records, are located at the address(es)
described on Exhibit H or such other locations notified to the Company in
accordance with Section 2.8 hereof in jurisdictions where all action required
by Section 2.8 hereof has been taken and completed. The principal place of
business and chief executive office of each of the Sellers and the offices
where each such Seller keeps all its Records, are located at the address(es)
described on Exhibit H or such other locations notified to the Agent in
accordance with Section 2.8 hereof in jurisdictions where all action required
by Section 2.8 hereof has been taken and completed. The Federal taxpayer
identification numbers of each of the Transferor and the Sellers are set forth
on Exhibit H hereto or, with respect to any Person that becomes a Seller after
the date hereof, has otherwise been notified to the Agent in writing.
(j) Good Title. Upon each Transfer and each
recomputation of the Transferred Interest, the Agent, for the benefit of the
Company and/or the Bank Investors, as applicable, shall acquire a valid and
perfected first priority undivided
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percentage ownership interest to the extent of the Transferred Interest or a
first priority perfected security interest in each Receivable that exists on
the date of such Transfer and recomputation and in the Related Security and
Collections with respect thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof: (i)
the Transferor has no Subsidiaries and (ii) the Transferor and each of the
Sellers has, within the last one (1) year, operated only under the tradenames
identified in Exhibit I hereto, and, within the last year has not changed its
name, merged with or into or consolidated with any other corporation or been
the subject of any proceeding under the Bankruptcy Code, except, in each case,
as disclosed in Exhibit I hereto. None of the Transferor or the Sellers have
incurred any indebtedness or granted any Adverse Claims under any names other
than its respective proper corporate name as set forth on its corporate
charter.
(l) Nature of Receivables. Each Receivable (x)
represented by the Transferor or the Collection Agent to be an Eligible
Receivable (including in any Investor Report or other report delivered pursuant
to Section 2.11 hereof) or (y) included in the calculation of the Net
Receivables Balance in fact satisfies at such time the definition of "Eligible
Receivable" set forth herein, is an "eligible asset" as defined in Rule 3a-7
under the Investment Company Act, of 1940, as amended and, in the case of
clause (y) above, is properly includable in the calculation of the Net
Receivables Balance in accordance with the definition thereof.
(m) Coverage Requirement; Amount of Receivables. On
the Closing Date and at all times thereafter on or prior to the Termination
Date, the Coverage Percentage shall be less than the Maximum Coverage
Percentage.
(n) Credit and Collection Policy. Since the Closing
Date, there have been no material changes in the Credit and Collection Policies
of any Sellers other than as permitted hereunder.
(o) Collections and Servicing. Since December 31,
1995, there has been no material adverse change in the financial condition of
the Parent and its consolidated Subsidiaries taken as a whole. Since May 15,
1996, there has been no material adverse change in the ability of the
Collection Agent or any of the Sub-Collection Agents (to the extent that such
Persons are Affiliated Entities) to service and collect the Receivables.
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(p) No Termination Event. No event has occurred and
is continuing and no condition exists which constitutes a Termination Event or
a Potential Termination Event.
(q) Not an Investment Company or a Public Utilities
Holding Company. Neither the Transferor nor any of the Sellers is, or is
controlled by, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither the Transferor nor any of the Sellers
is a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company", within the meanings of such terms set forth
in the Public Utility Holding Company Act of 1935, as amended.
(r) ERISA. Except as set forth on Exhibit L, none
of the Parent, the Transferor, any of the Sellers or any ERISA Affiliate of any
of the foregoing maintains any Benefit Plans. Each of the Parent, the
Transferor, the Sellers and the ERISA Affiliates of each of the foregoing is in
compliance in all material respects with ERISA and no Adverse Claims exists in
favor of the Pension Benefit Guaranty Corporation or the U.S. Department of
Labor on any of the Receivables or on the assets or properties of any such
Person.
(s) Lock-Box Accounts; Permitted Unblocked Accounts.
The names and addresses of all of the Lock-Box Banks, together with the account
numbers of the Lock-Box Accounts and the numbers of the related Lock-Boxes at
such Lock-Box Banks are specified in Exhibit C hereto (or at such other
Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified
to the Agent and for which Lock-Box Agreements have been executed in accordance
with Section 2.8(b) hereof and delivered to the Agent). The names and
addresses of all of the banks at which any Permitted Unblocked Accounts are
maintained, together with the account numbers of any such Permitted Unblocked
Accounts and the numbers of the Lock-Boxes relating thereto, are specified in
Exhibit T hereto. Except as otherwise permitted pursuant to Section 2.8,
Section 5.1(h) and Section 5.2(f), (i) all of the Obligors have been instructed
to make payments directly to a Lock-Box Account or a Lock-Box associated
therewith and (ii) only Collections are deposited into the Lock-Boxes, the
Lock-Box Accounts and the Permitted Unblocked Accounts.
(t) Bulk Sales. No transaction contemplated hereby
or by the Receivables Purchase Agreement requires compliance with any bulk
sales act or similar law.
(u) Financial Statements; Material Adverse Change.
The audited consolidated and the unaudited consolidating balance sheets of the
Parent and its Subsidiaries, in each case, dated as of December 31, 1995, and
the consolidated and unconsolidated statements of income, cash flows and
changes in
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financial position relating thereto for the Fiscal Year then ended, copies of
which have been furnished to the Agent, fairly present the financial condition
of each such Persons as at such date and the results of the operations and cash
flows of each such Person for the period ended on such date, all in accordance
with generally accepted accounting principles consistently applied. Since
December 31, 1995, there has been no material adverse change in the business,
properties or condition (financial or otherwise) of the Parent, any of the
Sellers or any of the foregoing's respective Subsidiaries.
(v) Transfers Under Receivables Purchase Agreement.
Each Receivable which has been transferred to the Transferor by the applicable
Seller has been purchased by the Transferor from such Seller pursuant to, and
in accordance with, the terms of the Receivables Purchase Agreement.
(w) Preference; Voidability. The Transferor shall
have given reasonably equivalent value to the applicable Seller in
consideration for the transfer to the Transferor of the Receivables and Related
Security from such Seller, and no such transfer shall have been made for or on
account of an antecedent debt owed by the Seller to the Transferor or is
voidable under any Section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101 et seq.), as amended. At the time of each such purchase by the
Transferor from a Seller under the Receivables Purchase Agreement, such Seller
has assets having a value in excess of the amount of its liabilities, is
generally able to pay its debts as they become due and is adequately
capitalized in light of the businesses in which it engages.
(x) Regulatory Matters. The FCC Licenses and PUC
Authorizations of each of the Sellers and its Affiliates under which such
Sellers operate are valid and in full force and effect without conditions
except (A) for such conditions as are generally applicable to holders of such
FCC Licenses and PUC Authorizations and (B) where the failure of any such FCC
License or PUC Authorization to be in full force and effect could not
reasonably be expected to have a Material Adverse Effect. The Transferor has
no knowledge of the occurrence and continuance of any event which could
reasonable be expected to (A) result in the imposition of a material forfeiture
or the revocation, termination or adverse modification of any such FCC License
or PUC Authorization or (B) materially and adversely affect any rights of the
Sellers, the Transferor, the Parent or any of the foregoing's respective
Affiliates thereunder. The Borrower has no reason to believe and has no
knowledge that any such FCC Licenses and/or PUC Authorizations will not be
renewed in the ordinary course.
(y) Environmental Matters. (i) None of the
properties of the Transferor or, to the best of the Transferor's
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knowledge, its Affiliates contain, or to the best of the Transferor's
knowledge, have previously contained, any Hazardous Materials in amounts or
concentrations which (A) constitute or constituted a violation of, or (B) could
give rise to liability under, applicable Environmental Laws, except for any
violation or liability that could not reasonably be expected to have a Material
Adverse Effect;
(ii) Such properties and all operations conducted in
connection therewith are in material compliance, and have in the last five
years been in material compliance, with all applicable Environmental Laws, and
there is no contamination at, under or about such properties or such operations
which could materially interfere with the continued operation of such
properties or materially impair the fair saleable value thereof;
(iii) Neither the Transferor nor any Affiliate thereof has
received any notice of material violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of their properties or the
operations conducted in connection therewith, nor does the Transferor have
knowledge or reason to believe that any such notice will be received or is
being threatened;
(iv) Hazardous Material have not been transported or disposed
of from the properties of the Transferor or any of its Affiliates in violation
of, or in a manner or to a location which could give rise to material liability
under, Environmental Laws, nor have any Hazardous Materials been generated,
treated, stored or disposed of at, on or under any of such properties in
material violation of, or in a manner that could give rise to material
liability under, any applicable Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Transferor, threatened, under
any Environmental Law to which the Transferor or any Affiliate thereof is or
will be named as a party with respect to such properties or operations
conducted in connection therewith, nor are there any consent decrees or other
decree, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to such properties or such operations; and
(vi) There has been no release, or to the best of the
Transferor's knowledge, the threat of release, of Hazardous Materials at or
from such properties, in violation of or in amounts or in a manner that could
give rise to material liability under Environmental Laws.
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(z) Billing Terms. None of the Seller's Contracts
relating to the Receivables contain billing terms pursuant to which the
Obligor thereunder is billed less frequently than once a month.
(aa) Computer Software and Equipment Licenses and
Billing Agent Agreements. All of the computer equipment and software license
agreements pursuant to which the Transferor or any of the Sellers license the
use of any computer software or equipment used in the billing, monitoring
and/or collection of the Receivables are either (i) specified on Exhibit P-2 or
(ii) have otherwise been notified to the Agent and in respect of which computer
software or equipment license attornment agreements substantially in the form
of Exhibit P-1 relating thereto have been executed by the applicable licensor
thereunder have been delivered to the Agent prior to or concurrently with the
effectiveness of any such computer software or equipment license agreement not
so specified on such Exhibit. All of the agreements between the Transferor
and/or any of the Sellers and any Billing Agent relating to the billing and
collection of the Receivables are either (i) specified on Exhibit O-2 or (ii)
have otherwise been notified to the Agent.
(bb) LEC Agreements. Exhibit Q sets forth the
complete list of those LEC Agreements constituting Qualified LEC Agreements
as of the Closing Date. With respect to each such Qualified LEC Agreement
(other than with respect to the Maryland Obligors under the LEC Agreement with
Bell Atlantic as described in first proviso in the definition of "Qualified LEC
Receivable"), as well as each other additional LEC Agreement hereafter approved
by the Agent as being a Qualified LEC Agreement, (i) the applicable Seller and
the Transferor have obtained or received all necessary consents, waivers,
approvals and other agreements, if any, from the applicable LEC under such LEC
Agreement and any applicable PUCs or other Official Bodies for the execution
and delivery by such Seller and the Transferor of the Receivables Purchase
Agreement, this Agreement, the other Transaction Documents and each such
Person's performance of the transactions contemplated thereby and (ii) the
execution, and delivery by the applicable Seller and the Transferor of the
Receivables Purchase Agreement, this Agreement and the other Transaction
Documents and each such Person's performance of the transactions contemplated
thereby do not, in any case, violate or contravene any of the terms of such
Qualified LEC Agreements or any applicable Tariffs (after giving effect to any
such consents, waivers, approvals or other agreements delivered by the
respective LEC thereunder and except to the extent that the provisions of
Section 9-318 of the UCC as in effect in all applicable jurisdictions would
render any such violated or contravened provision ineffective) or the
Communications Act of 1934, as amended (together with the rules, regulations,
and published policies of the Federal Communications Commission
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thereunder) or any rules, regulations or published policies of any applicable
PUCs.
Any document, instrument, certificate or notice delivered to
the Company hereunder shall be deemed a representation and warranty by the
Transferor.
SECTION 3.2. Reaffirmation of Representations and
Warranties by the Transferor. On each day that a Transfer is made hereunder,
the Transferor, by accepting the proceeds of such Transfer, whether delivered
to the Transferor pursuant to Section 2.2(a) or Section 2.5(a) hereof, shall be
deemed to have certified that all representations and warranties described in
Section 3.1 hereof are correct on and as of such day as though made on and as
of such day (except to the extent they expressly speak only as to an earlier
date). Each Incremental Transfer shall be subject to the further condition
precedent that prior to the date of such Incremental Transfer, the Collection
Agent shall have delivered to the Agent and the Administrative Agent, in form
and substance satisfactory to the Agent and the Administrative Agent, a
completed Investor Report dated within ten (10) days prior to the date of such
Incremental Transfer and, if and to the extent requested by the Agent, (i) a
listing of all Receivables by Obligor (ii) a listing of Qualified LEC
Receivables by LEC, and (iii) and such other additional information as may be
reasonably requested by the Administrative Agent or the Agent; and by its
receipt and acceptance of such Transfer, the Transferor shall be deemed to have
represented and warranted that such conditions precedent have been satisfied.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. On or prior to the
date of execution hereof, the Transferor shall deliver to the Agent the
following documents, instruments and fees all of which shall be in a form and
substance (and in such quantities as are) acceptable to the Agent:
(a) A copy of the resolutions of the Board of
Directors of the Transferor certified by its Secretary or Assistant Secretary
approving the execution, delivery and performance by the Transferor of this
Agreement, the Receivables Purchase Agreement, the Fee Letter, the Subordinated
Notes and the other Transaction Documents to be delivered by the Transferor
hereunder or thereunder.
(b) Copies of the resolutions of the Board of
Directors of each of the Sellers certified by its Secretary or Assistant
Secretary approving the execution, delivery and
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performance by such Seller of this Agreement (to the extent relevant), the
Receivables Purchase Agreement and the other Transaction Documents to be
delivered by such Seller hereunder or thereunder.
(c) A copy of the resolutions of the Board of
Directors of the Parent certified by its Secretary or Assistant Secretary
approving the execution, delivery and performance by the Parent of the Parent
Support Agreement and the other Transaction Documents to be delivered by the
Parent hereunder.
(d) The Certificates of Incorporation of each of the
Transferor and the Parent certified by the Secretary of State of Delaware, in
each case, dated a date reasonably prior to the Closing Date.
(e) The Articles/Certificates of Incorporation of
each of the Sellers certified by the Secretary of State or other similar
official of such Seller's jurisdiction of incorporation, in each case, dated a
date reasonably prior to the Closing Date.
(f) A Good Standing Certificate for the Transferor
issued by the Secretary of State or a similar official of the Transferor's
jurisdiction of incorporation and certificates of qualification as a foreign
corporation issued by the Secretaries of State or other similar officials of
each jurisdiction where such qualification is material to the transactions
contemplated by this Agreement and the other Transaction Documents, in each
case, dated a date reasonably prior to the Closing Date.
(g) Good Standing Certificates for each of the
Sellers and the Parent issued by the Secretary of State or a similar official
of such Seller's or the Parent's, as applicable, jurisdiction of incorporation
and certificates of qualification as a foreign corporation issued by the
Secretaries of State or other similar officials of each jurisdiction where such
qualification of such Seller or the Parent, as applicable, is material to the
transactions contemplated by this Agreement and the other Transaction
Documents, in each case, dated a date reasonably prior to the Closing Date.
(h) A Certificate of the Secretary or Assistant
Secretary of the Transferor substantially in the form of Exhibit K-1 attached
hereto.
(i) A Certificate of the Secretary or Assistant
Secretary of each of the Sellers and the Parent substantially in the form of
Exhibit K-2 and K-3, respectively, attached hereto.
(j) Copies of proper financing statements (Form
UCC-1) naming the Transferor as the debtor and the Agent, for the
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benefit of the Company and the Bank Investors, as secured party, or other
similar instruments or documents as may be necessary or, in the reasonable
opinion of the Agent, desirable under the UCC of all appropriate jurisdictions
or any comparable law to perfect the Agent's undivided percentage interest in
all Receivables and the Related Security and Collections relating thereto.
(k) Copies of proper financing statements (Form
UCC-1) to be filed in respect of each of the Sellers, separately, naming such
Seller as the debtor, the Transferor as secured party and the Agent, for the
benefit of the Company and the Bank Investors, as assignee of the secured
party, or other similar instruments or documents as may be necessary or, in the
reasonable opinion of the Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Transferor's ownership
interest in all Receivables.
(l) Copies of proper financing statements (Form
UCC-3), if any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by Transferor.
(m) Copies of proper financing statements (Form
UCC-3), if any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by any of the Sellers.
(n) Certified copies of request for information or
copies (Form UCC-11) (or a similar search report certified by parties
acceptable to the Agent) dated a date reasonably prior to the date of the
initial Incremental Transfer listing all effective financing statements which
name the Transferor or any of the Sellers (under their respective present names
and any previous names) as debtor and which are filed in jurisdictions in which
the filings were made pursuant to items (j) or (k) above, together with copies
of such financing statements (none of which shall cover any Receivables or
Contracts).
(o) Fully-executed copies of the each of the
Lock-Box Agreements relating to each of the Lock-Boxes and the Lock-Box
Accounts.
(p) Opinions of counsel to the Transferor, the
Sellers and the Parent, covering the matters set forth in the forms thereof
attached as Exhibit J-1 hereto for the States of New York, Virginia and Ohio,
in form and substance satisfactory to the Agent and the Agent's counsel.
(q) An opinion of Willkie, Farr & Gallagher, counsel
to the Transferor and each of the Sellers, covering the matters relating to
certain bankruptcy and insolvency matters (i.e., "true sale" and
nonconsolidation) set forth in the form
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thereof attached as Exhibit J-2, in form and substance satisfactory to the
Agent and Agent's counsel.
(r) Executed counterparts of this Agreement, the
Receivables Purchase Agreement, the Parent Support Agreement, the Fee Letter,
the Subordinated Notes and each of the other Transaction Documents to be
executed by any of the Sellers, the Parent and/or the Transferor, executed by
such Persons.
(s) The Arrangement Fee in accordance with Section
2.7(c).
(t) An Investor Report for the calendar month ended
July 31, 1996 and an Interim Report covering the week ending August 23, 1996,
in each case, signed by the Collection Agent.
(u) A fully-executed copy of an amendment to the
Revolving Credit Agreement permitting the execution, delivery and performance
of the Transaction Documents by the Sellers, the Parent and the Transferor of
this Agreement, the Receivables Purchase Agreement, the Parent Support
Agreement and the other Transaction Documents.
(v) Fully-executed copies of attornment agreements
relating to the computer software and equipment license agreements and the
Billing Agent agreements described on Exhibits P-2 and O-2, respectively.
(w) A fully-executed copy of each of the consents,
waivers and/or approvals relating to the Qualified LEC Agreements set forth on
Exhibit Q hereto (together with opinions of counsel of the type referred to in
the definition of "Qualified LEC Agreement" to the extent that such matters are
not otherwise addressed in any of the other opinions of counsel referred to in
this Section 4.1).
(x) A certificate of the Chief Financial Officer of
the Parent and the Transferor, certifying that the pro-forma balance sheet of
the Transferor dated as of the Closing Date attached thereto has been prepared
in accordance with GAAP and accurately reflects the financial condition of the
Transferor immediately after giving effect to the initial capitalization
thereof and the initial Incremental Transfer hereunder, which certificate shall
be in the form of that attached hereto as Exhibit M-1 and dated as of the
Closing Date.
(y) A certificate of the Chief Financial Officer,
the President or a Vice President of each of the Transferor, the Parent and
each Seller, certifying the accuracy of its representation and warranties
hereunder and under the other Transaction Documents to which it is a party,
that no Termination
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Event or Potential Termination Event has occurred and is continuing and that
all conditions precedent and covenants required to be complied with or
performed on or prior to the Closing Date by such Person, if any, have been so
complied with or performed, which certificate shall be in the form of Exhibit
M-2 (Seller) or Exhibit M-3 (Parent), respectively, attached hereto and dated
as of the Closing Date.
(z) copies of notices under UCC Section 9-318 sent
to each LEC that is party to any LEC Agreement covering any LEC Receivables
that are identified as being Eligible Qualified LEC Receivables, together with
evidence of the mailing of such notices to each such LEC.
(aa) Such other documents, instruments, certificates
and opinions as the Agent or the Administrative Agent, shall reasonably
request.
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of Transferor. At all
times from the date hereof to the date occurring after the Termination Date
upon which the Percentage Factor shall have been reduced to zero, unless the
Agent and the Majority Investors shall otherwise consent in writing:
(a) Financial Reporting. The Transferor will, and
will cause the Parent and each of the Sellers to, maintain, for itself and each
of its respective Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to the Agent:
(i) Annual Reporting. Within ninety (90)
days after the close of each Fiscal Year, audited financial
statements, prepared in accordance with GAAP on a consolidated and
consolidating basis (consolidating statements need not be audited by
such accountants) for (x) the Transferor and (y) for the Parent and
its consolidated Subsidiaries, in each case, including balance sheets
as of the end of such period, related statements of operations,
shareholder's equity and cash flows, accompanied by an unqualified
audit report certified by independent certified public accountants,
acceptable to the Agent, prepared in accordance with generally
accepted auditing principles and any management letter prepared by
said accountants and by a certificate of said accountants that, in the
course of the foregoing, they have obtained no knowledge of any
Termination Event or Potential Termination Event, or
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if, in the opinion of such accountants, any Termination Event or
Potential Termination Event shall exist, stating the nature and status
thereof.
(ii) Quarterly Reporting. Within
forty-five (45) days after the close of the first three quarterly
periods of each of Fiscal Year, for (x) the Transferor and (y) for the
Parent and its consolidated Subsidiaries, in each case, consolidated
and consolidating unaudited balance sheets as at the close of each
such period and consolidated and consolidating related statements of
operations, shareholder's equity and cash flows for the period from
the beginning of such Fiscal Year to the end of such quarter, all
certified by such Person's chief financial officer.
(iii) Compliance Certificate. Together
with the financial statements required hereunder, a compliance
certificate signed by the Transferor's or the Parent's, as applicable,
chief financial officer stating that (x) the attached financial
statements have been prepared in accordance with GAAP and accurately
reflect the financial condition of the Transferor or of the Parent and
its Subsidiaries, respectively and (y) to the best of such Person's
knowledge, no Termination Event or Potential Termination Event exists,
or if any Termination Event or Potential Termination Event exists,
stating the nature and status thereof and showing the computation of,
and showing compliance with, each of the financial ratios and
restrictions set forth in Annex I hereto applicable to such Person.
(iv) Shareholders Statements and Reports.
Promptly upon the furnishing thereof to the shareholders of the
Parent, the Transferor or any of the Sellers, copies of all financial
statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the
filing thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which the Parent, the
Transferor or any of the Sellers or any of the foregoing's respective
Subsidiaries files with the Securities and Exchange Commission.
(vi) Notice of Termination Events,
Potential Termination Events or Collection Agent Defaults. As soon as
possible, and in any event within two (2) Business Days after becoming
aware of the occurrence of any Termination Event, Potential
Termination Event or Collection Agent Default, a statement of the
chief financial officer or chief accounting officer
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of the Transferor setting forth details of such Termination Event,
Potential Termination Event or Collection Agent Default and, in the
case of any such Termination Event, such Potential Termination Event
or, to the extent the Collection Agent is an Affiliated Entity, such
Collection Agent Default, the action which the Transferor proposes to
take or cause to be taken with respect thereto.
(vii) Change in Credit and Collection
Policies and Debt Ratings. Within ten (10) days after the date any
material change in or amendment to the Credit and Collection Policy of
any of the Sellers is made, a copy of such Credit and Collection
Policy then in effect indicating such change or amendment. Within
five (5) days after the date of any change in the Transferor's, the
Parent's or any of the Sellers' public or private debt ratings, if
any, written notice of such change and such Person's credit rating
after giving effect to such change.
(viii) Credit and Collection Policy.
Within ninety (90) days after the close of each Fiscal Year, a
complete copy of the Credit and Collection Policies of each of the
Sellers as then in effect.
(ix) Revolving Credit Agreement. As soon
as practicable (and in any case within three (3) Business Days) after
its receipt thereof, copies of any notices of default, any amendments,
consents or modifications to, or the termination of, the Revolving
Credit Agreement.
(x) ERISA. Promptly after the filing or
receiving thereof, copies of all reports and notices with respect to
any Reportable Event (as defined in Title IV of ERISA) which the
Parent, the Transferor, any of the Sellers or any ERISA Affiliate of
any of the foregoing files under ERISA with the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Parent, the Transferor, any of the
Sellers or any ERISA Affiliates of any of the foregoing receives from
the Internal Revenue Service, the Pension Benefit Guaranty Corporation
or the U.S. Department of Labor.
(xi) LEC Agreements. As soon as
practicable (and in any event within three (3) Business Days) after
its receipt thereof or its acquiring knowledge thereof, as applicable,
(x) copies of any notices of any default or breach by any Seller
under, or the termination of, any LEC Agreement, (y) any default or
breach by a LEC under any
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Qualified LEC Agreement, or (z) any repudiation or rejection of any
notice delivered to any such LEC pursuant to Section 9-318 of the UCC.
Upon the request of the Agent, the Transferor shall, and shall cause
each of the Sellers to, provide the Agent (or any designee of the
Agent) with copies of any or all of the PAR Statements and
confirmations of acceptance by any LEC, in each case, relating to any
Qualified LEC Agreements and Qualified LEC Receivables.
(xii) Other Information. Within a reasonable
time after the request therefor by the Agent (such time to be
determined and specified by the Agent after consultation with the
Transferor), such other information (including non-financial
information) as the Agent or the Administrative Agent may from time to
time reasonably request with respect to the Parent, any of the
Sellers, the Transferor or any Subsidiary of any of the foregoing and,
with respect to the LEC Receivables, the disclosure of which
information would not violate the confidentiality terms of any
applicable LEC Agreement; it being understood and agreed that the
Transferor shall, and shall cause each of the Sellers to, use
commercially reasonable efforts to provide the Agent and/or the
Administrative Agent, with any such restricted information through any
reasonable alternative methods which would not violate the
confidentiality terms of any such LEC Agreement.
(b) Conduct of Business. The Transferor will (a)
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted, (b)
do all things necessary to remain duly incorporated, validly existing and in
good standing as a domestic corporation in such Person's respective
jurisdiction of incorporation and (c) maintain all requisite authority to
conduct such Person's respective business in each jurisdiction in which its
business is conducted, except, in the case of this clause (c), where the
failure to do so could not reasonably be expected to cause a Material Adverse
Effect. The Transferor will cause each of the Sellers to (a) carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as conducted on the Closing Date or in fields of
enterprise involving the resale of local exchange, cellular, and paging
communications services and, in each of the foregoing cases, other fields of
enterprise reasonably related thereto, (b) do all things necessary to remain
duly incorporated, validly existing and in good standing as a domestic
corporation in such Person's respective jurisdiction of incorporation and (c)
maintain all requisite authority to conduct such Person's respective business
in each jurisdiction in which its business is conducted, except, in the case of
this clause (c), where the failure to do so could not reasonably be expected to
cause a Material Adverse Effect.
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(c) Compliance with Laws. The Transferor will, and
will cause each of the Sellers, the Parent and each of the Sellers' and the
Parent's respective Subsidiaries to, comply with all material laws, rules,
regulations, orders, writs, judgments, injunctions, decrees, awards, licenses
and authorizations (including without limitation, FCC Licenses and PUC
Authorizations) to which it or its respective properties may be subject.
(d) Furnishing of Information and Inspection of
Records. The Transferor will, and will cause each of the Sellers to, furnish
to the Agent from time to time such information with respect to the Receivables
as the Agent may reasonably request, including, without limitation, listings
identifying the Obligor and the Outstanding Balance for each Receivable and PAR
Statements relating to any Qualified LEC Receivables; it being understood and
agreed that, with respect to the LEC Receivables, the Transferor and the
applicable Sellers may be unable to provide certain information relating to
those LEC Receivables in respect of which the Transmission Date shall have
previously occurred, but the Transferor will, and will cause each such Seller
to, use commercially reasonable efforts to provide the Agent with such
information regarding such matters as is reasonably available to or
ascertainable by the Transferor or such applicable Seller. The Transferor
will, and will cause each of the Sellers to, at any time and from time to time
during regular business hours permit the Agent, or its agents or
representatives, (i) to examine and make copies of, or make abstracts from, all
Records and any PAR Statements and (ii) to visit the offices and properties of
the Transferor or any of the Sellers, as applicable, for the purpose of
examining such Records and PAR Statements, and to discuss matters relating to
Receivables or the Transferor's or any such Seller's performance hereunder and
under the other Transaction Documents to which such Person is a party with any
of the officers, directors, employees or independent public accountants of the
Transferor or any of the Sellers, as applicable, having knowledge of such
matters; provided, that with respect to any of the foregoing information
relating to the LEC Agreements and/or the LEC Receivables (but subject to
Section 5.1(a)(xi)), the Transferor and the Sellers, shall not be required to
furnish or make available any such confidential information the disclosure of
which would violate the terms of the LEC Agreements.
(e) Keeping of Records and Books of Account. The
Transferor will, and will cause each of the Sellers to, maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and, other than with respect to the
Qualified LEC Receivables, keep and maintain, all documents, books, records and
other information reasonably necessary or advisable for the
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collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each new Receivable and all Collections
of and adjustments to each existing Receivable). With respect to the Qualified
LEC Receivables, the Transferor hereby represents and warrants that, to the
best of its knowledge, the applicable LECs keep and maintain books, records and
other information referred to in the immediately preceding sentence with
respect to such LEC Receivables, and that upon the termination of any LEC
Agreement covering any Qualified LEC Receivables, the Transferor shall, and
shall cause the applicable Seller to, use its best efforts to deliver or cause
to be delivered to the Collection Agent copies of those records reasonably
necessary for the proper servicing and monitoring of such LEC Receivables
previously transmitted, transferred or otherwise conveyed to such LEC by such
Seller. The Transferor will, and will cause each of the Sellers to, give the
Agent notice of any material change in the administrative and operating
procedures of the Transferor or any such Seller, as applicable, referred to in
the previous sentence.
(f) Performance and Compliance with Receivables and
Contracts. The Transferor, at its expense, will, and will cause each of the
Sellers to, timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by the Transferor or any
such Seller under the Contracts related to the Receivables.
(g) Credit and Collection Policies. The Transferor
will, and will cause each of the Sellers to, comply in all material respects
with the Credit and Collection Policy of the applicable Seller in regard to
each Receivable and the related Contract.
(h) Collections; Permitted Unblocked Accounts. The
Transferor shall, and shall cause each of the Sellers to, instruct all Obligors
(other than the Obligors of any Qualified LEC Receivables) and all LECs to
remit all Collections and Associated LEC Payments, as applicable, directly to a
Lock-Box or Lock-Box Account; provided, however, that, subject to the
limitations set forth in this proviso, the Transferor and/or the Sellers shall
be permitted to direct the Obligors to remit Collections of Direct Billed
Receivables to one of the bank accounts described on Exhibit T hereto (or a
Lock-Box relating thereto) in respect of which no Lock-Box Agreement has been
executed (each such bank account being a "Permitted Unblocked Account"),
provided that (A) the Obligors being so directed to remit such Collections to
any such Permitted Unblocked Account are either (x) existing Obligors that were
remitting such Collections to such accounts prior to the Closing Date or (y)
new Obligors that in accordance with the applicable Seller's past business
practices would have been directed to remit such Collections to such an
account, (B) the aggregate balances of all
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Permitted Unblocked Accounts shall not exceed $600,000 at any time, (C) all
such Collections deposited into any such Permitted Unblocked Account shall be
transferred to a Lock-Box Account within the time specified therefor in Exhibit
T hereto, and (D) by no later than March 31, 1997, (w) all such Permitted
Unblocked Accounts and the Lock-Boxes associated therewith, together with LCI
Telecom's bank account and Lock-Boxes maintained at Comerica Bank and described
on Exhibit C hereto, shall be closed, (x) all Collections on deposit therein
shall have been transferred to other Lock-Box Accounts, (y) all Obligors shall
have been directed to remit Collections to other Lock-Box Accounts or the
Lock-Boxes relating thereto, and (z) effective as of such date (or, if earlier,
the date the last Permitted Unblocked Account is closed), there shall cease to
be any Permitted Unblocked Accounts; and provided, further, however, that in
accordance with the past business practices of the Seller and subject to the
requirements of Section 5.1(i), each of the Sellers, so long as it is then
acting as Collection Agent or a Sub-Collection Agent, shall be permitted to
direct certain Obligors of Direct Billed Receivables that are Delinquent
Receivables or Defaulted Receivables to remit Collections of such Delinquent or
Defaulted Receivables directly to such Seller.
(i) Collections Received. The Transferor shall, and
shall cause each of the Sellers to hold in trust and immediately, but in any
event not later than two (2) Business Days after such Person's receipt thereof,
deposit all Collections received from time to time by the Transferor or any
such Seller, as the case may be, to a Lock-Box Account.
(j) Preservation of Corporate Existence; Separate
Business. (i) The Transferor shall, and shall cause each of the Sellers to,
preserve and maintain its respective corporate existence, rights, franchises
and privileges in the respective jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
respective jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could reasonably be
expected to have a Material Adverse Effect.
(ii) The Transferor shall take all reasonable steps to
continue its identity as a separate legal entity and to make it apparent to
third Persons that it is an entity with assets and liabilities distinct from
those of the Parent, any of the Sellers, any Subsidiaries or other Affiliates
of the Parent or any of the Sellers (collectively, the "Related Parties" and
individually, a "Related Party") or any other Person, and that it is not a
division of any of the Related Parties or any other Person. In that regard,
and without limiting the foregoing in any manner, the Transferor shall:
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(1) maintain its own board of directors and make independent
decisions with respect to its daily operations and business affairs
and not be controlled in making such decisions by any other Related
Party or any other Person;
(2) maintain at least one director who is not a direct,
indirect or beneficial officer, director, employee, affiliate,
associate, customer or supplier of any of the Related Parties, nor a
direct, indirect or beneficial owner of more than 10% of the
outstanding capital stock of any of the Related Parties (any such
Person also being a "Related Party"), nor a relative of any of the
foregoing, nor a trustee in bankruptcy for any of the foregoing;
(3) maintain separate and clearly delineated office space
owned by it or evidenced by a written lease or sublease (even if
located in an office owned or leased by, or shared with, a Related
Party);
(4) maintain its assets in a manner which facilitates their
identification and segregation from those of any of the Related
Parties;
(5) maintain a separate telephone number which will be
answered only in its own name and separate stationery and other
business forms;
(6) conduct all intercompany transactions with the Related
Parties on terms which the Transferor reasonably believes to be on an
arm's-length basis;
(7) not guarantee any obligation of any of the Related
Parties, nor have any of its obligations guaranteed by any Related
Party or hold itself out as responsible for the debts of any Related
Party or for the decisions or actions with respect to the business and
affairs of any Related Party, nor seek or obtain credit or incur any
obligation to any third-party based upon the creditworthiness or
assets of any Related Party or any other Person; it being acknowledged
and agreed, that the continuing liability of the applicable Sellers to
the LECs for LEC True-Ups under the LEC Agreements and the
reimbursement and indemnification obligations of the Transferor and
such Sellers in respect thereof shall not violate the provisions of
this clause (7) or any other provision of this Agreement or any other
Transaction Document;
(8) except as expressly otherwise permitted hereunder or under
any of the other Transaction Documents, not permit the commingling or
pooling of its funds or other assets with the assets of any Related
Party;
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(9) maintain separate deposit and other bank accounts to which
no Related Party (other than as Collection Agent or as a
Sub-Collection Agent) has any access;
(10) maintain financial records which are separate from those
of the Related Parties;
(11) compensate all employees, consultants and agents, and
Related Parties, to the extent applicable, for services provided to
the Transferor by such employees, consultants and agents or Related
Parties, in each case, from the Transferor's own funds;
(12) have agreed with each of the Sellers and the other
relevant Related Parties to allocate among themselves shared overhead
and corporate operating services and expenses which are not reflected
in the Servicing Fee (including without limitation the services of
shared employees, consultants and agents and reasonable legal and
auditing expenses) on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to actual use or
the value of services rendered;
(13) pay for its own account for accounting and payroll
services, rent, lease and other expenses (or its allocable share of
any such amounts provided by one or more other Related Party) and not
have such operating expenses (or the Transferor's allocable share
thereof) paid by any of the Related Parties, provided, that the Parent
shall be permitted to pay the initial organizational expenses of the
Transferor;
(14) maintain adequate capitalization in light of its business
and purpose;
(15) conduct all of its business (whether in writing or
orally) solely in its own name through its duly authorized officers,
employees and agents;
(16) not make or declare any dividends or other distributions
of cash or property to the holders of its equity securities or make
redemptions or repurchases of its equity securities, in either case,
any more frequently than monthly, and all such distributions,
redemptions or repurchases shall only be permitted hereunder to the
extent that it is not violative of any applicable law and that no
Termination Event or Potential Termination Event then exists or would
result therefrom;
(17) maintain at least one employee (which employee may be
shared with an Affiliate pursuant to a written agreement allocating
the compensation and other renumeration and
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benefits for such employee as among such parties) in charge of
day-to-day operations of the Transferor; and
(18) otherwise practice and adhere to corporate formalities
such as complying with its Certificate of Incorporation, By-laws and
corporate resolutions, the holding of regularly scheduled board of
directors meetings, and maintaining complete and correct books and
records and minutes of meetings and other proceedings of its
stockholders and board of directors.
(k) Performance of Receivables Purchase Agreement
and LEC Agreements. The Transferor shall, and shall cause each of the Sellers
to, timely and fully perform such Person's respective obligations required to
be performed by each such Person under the Receivables Purchase Agreement. The
Transferor shall cause each of the Sellers to timely and fully perform all
obligations required to be performed by such Seller under any LEC Agreement to
which it is a party.
(l) Unbilled Toll. With respect to any Direct
Billed Receivables, the Transferor shall cause each of the Sellers and each of
the Seller's Billing Agents to distribute Customer Statements to each of such
Seller's Obligors within ten (10) calendar days after the applicable cut-off
date of the billing cycle for such Obligor.
(m) Accounting and Tax Treatment of the LEC
Receivables. Without taking into the account the effect of this Agreement and
the Receivables Purchase Agreement, the Transferor shall, and shall cause each
of the Sellers to, (x) treat the LEC Receivables as being owned by the
applicable Seller for all tax and accounting purposes and (y) maintain its
records and books of account in a manner which clearly indicates and reflects
such ownership.
SECTION 5.2. Negative Covenants of the Transferor. During
the term of this Agreement, unless the Agent and the Majority Investors shall
otherwise consent in writing:
(a) No Sales, Liens, Etc. Except as otherwise
provided herein and in the Receivables Purchase Agreement, the Transferor will
not, and will not permit any of the Sellers to, sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to (x) any of the Affected Assets, (y) any
inventory or goods, the sale or lease of which may give rise to a Receivable,
except (i) in the case of any such Seller, where such Person in whose favor
such Adverse Claim exists has acknowledged in writing in form and substance
satisfactory to the Agent that it does not claim, and thereby releases, any
Adverse Claim in the Affected Assets, whether arising as Proceeds of such
Person's
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collateral or otherwise and (ii) that the Sellers shall be permitted to sell
and/or lease their inventory in the ordinary course of their respective
businesses, or (z) upon or with respect to any Lock-Box Account or Permitted
Unblocked Account, or assign any right to receive income in respect thereof.
(b) No Extension or Amendment of Receivables. Except
as otherwise permitted in Section 6.2 hereof, the Transferor will not, and will
not permit any of the Sellers to, extend, amend or otherwise modify the terms
of any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) No Change in Business or Credit and Collection
Policy. The Transferor will not, and will not permit any of the Sellers to,
make any change in the character of its business or in any such Seller's Credit
and Collection Policy, which change would, in either case, impair the
collectibility of any Receivable or otherwise could reasonably be expected to
have a Material Adverse Effect.
(d) No Mergers, Etc. The Transferor will not, and
will not, except as otherwise permitted pursuant to the Receivables Purchase
Agreement or the Parent Support Agreement, permit any of the Sellers or the
Parent to, (i) consolidate, merge with or into any other Person, or (ii) sell,
lease or transfer all or substantially all of its assets to any other Person;
it being understood and agreed, that no receivables of any such entity with
which any such Seller has so merged or consolidated nor any receivables
acquired by any Seller from any entity shall, upon the purchase thereof by the
Transferor, be deemed to be Receivables hereunder unless and until (x) the
Agent has approved such receivables; provided, however, that the Agent shall
have no right of approval with respect to the inclusion of any such receivables
as Receivables hereunder in connection with any such merger, consolidation or
acquisition if the Outstanding Balance of such Receivable to be so added, when
aggregated with the Outstanding Balances of any other Receivables previously or
concurrently added hereunder pursuant to this proviso (without the approval of
the Agent) in connection with all other mergers, consolidations and/or
acquisitions within the same twelve month period as the subject merger,
consolidation or acquisition, would exceed an amount equal to two percent (2%)
of the aggregate Outstanding Balance of all Receivables as determined on the
date of (and without giving effect to) (x) the date of the first addition of
any such Receivables pursuant to this proviso, and (y) thereafter on the one
year anniversary of the most recent such Determination Date (as hereinafter
defined) or, if later, the date of (but without giving effect to) the next
addition hereto of any such Receivables subject to the terms of this proviso
(any such date of determination being the "Determination Date"); it being
understood and agreed, that the initial addition
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of Receivables subject to this proviso shall have occurred on the Closing Date
(and such date shall be the initial Determination Date for determination of the
Outstanding Balance of Receivables hereunder for the succeeding twelve month
(or such longer) period for purposes of this provision) by virtue of the
inclusion of the receivables of PACE as Receivables hereunder, (y) the
Transferor and the Collection Agent shall have submitted a revised Investor
Report recalculating all amounts set forth therein taking into account such
receivables (and their past performance), including, without limitation (to the
extent effected), the Direct Billed Loss-to-Liquidation Ratio, the Direct
Billed Loss Percentage, the Direct Billed Loss Reserve, the Direct Billed
Dilution Ratio, the Direct Billed Dilution Reserve, the Direct Billed
Delinquency Ratio, the LEC Delinquency Ratio, the LEC Dilution Ratio, the LEC
Dilution Reserve, the LEC True-Up Ratio, the LEC True-Up Reserve, the LEC
Withholding Ratio, the LEC Withholding Reserve, the Required LEC True-Up
Reserve Account Funded Amount and the Estimated Maturity Period, and (z) no
Termination Event or Potential Termination Event would then exist or result
from the inclusion thereof as Receivables.
(e) Change in Payment Instructions to Obligors. The
Transferor will not, and will not permit any of the Sellers to, add or
terminate any bank as a Lock-Box Bank, any account as a Lock-Box Account or any
lock-box as Lock-Box to or from those listed in Exhibit C hereto or, except as
permitted pursuant to Section 5.1(h), make any change in its instructions to
Obligors regarding payments to be made to any Lock-Box, Lock-Box Account, or
Permitted Unblocked Account, unless (i) such instructions are to deposit such
payments to another existing Lock-Box or Lock-Box Account or (ii) the Agent
shall have received written notice of such addition, termination or change at
least 30 days prior thereto and the Agent shall have received a Lock-Box
Agreement executed by each new Lock-Box Bank or an existing Lock-Box Bank with
respect to each new Lock-Box Account or Lock-Box, as applicable.
(f) Deposits to Lock-Box Accounts. The Transferor
will not, and will not permit any of the Sellers to, deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account or Permitted Unblocked Account any cash or cash proceeds other than
Collections of Receivables; provided, however, that Collections of
Non-Qualified LEC Receivables and/or the Related Security associated therewith
may be deposited into the Lock-Box Accounts from time to time hereafter until
such time (but not later than December 31, 1996) as the Transferor and the
Sellers can make arrangements with the applicable LECs and/or the applicable
Lock-Box Banks to divert such payments to other accounts or sub-accounts, and,
until such time, any such amounts shall be removed from such Lock-Box Account
by the Collection Agent within two (2) Business Days after the Transferor's,
any Seller's or the Collection Agent's
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acquiring knowledge of the deposit thereof to any such Lock-Box Account; and
provided, further, however, that if any such other amounts (other than
Receivables or the above described Non-Qualified LEC Receivables) shall
inadvertently be deposited into any such Lock-Box Account or Permitted
Unblocked Account, the Collection Agent shall cause such amounts to be removed
within two (2) Business Days after the Transferor's, any Seller's or the
Collection Agent's acquiring knowledge of the deposit thereof to any such
Lock-Box Account or Permitted Unblocked Account, as applicable. The Transferor
hereby represents and warrants that the Associated LEC Payments relating to
Qualified LEC Receivables are readily identifiable and distinguishable from
those payments relating to the Non-Qualified LEC Receivables.
(g) Change of Name, Etc. The Transferor will not,
and will not permit any of the Sellers to, change its name, identity or
structure or the location of its chief executive office or where it keeps its
books and records relating to the Receivables, unless at least 30 days prior to
the effective date of any such change the Transferor or any such Seller, as
applicable, delivers to the Agent and the Collateral Agent (i) such documents,
instruments or agreements, executed by the Transferor or such Seller, as
applicable, as are necessary to reflect such change and to continue the
perfection of the Agent's and the Collateral Agent's ownership interests or
security interests in the Affected Assets and (ii) new or revised Lock-Box
Agreements executed by the Lock-Box Banks, the Transferor and any applicable
Seller which reflect such change and enable the Agent to continue to exercise
its rights contained in Section 2.8 hereof.
(h) Amendment to Receivables Purchase Agreement and
Parent Support Agreement. The Transferor will not, and will not permit any of
the Sellers (in the case of the Receivables Purchase Agreement) or the Parent
(in the case of the Parent Support Agreement) to, amend, modify, or supplement
the Receivables Purchase Agreement or the Parent Support Agreement, as
applicable, except with the prior written consent of the Agent, the Majority
Investors and the Administrative Agent; nor shall the Transferor take, or
permit any of the Sellers (in the case of the Receivables Purchase Agreement)
or the Parent (in the case of the Parent Support Agreement) to take, any other
action under the Receivables Purchase Agreement or the Parent Support
Agreement, as applicable, that could reasonably be expected to have a material
adverse effect on the Agent, the Company, any Bank Investor or the Transferor
or which is inconsistent with the terms of this Agreement.
(i) Amendments to Qualified LEC Agreements or
Tariffs. The Transferor will not, and will not permit any of the Sellers to (i)
agree to make or make any material amendment, modification or change to any of
the Qualified LEC Agreements or
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agree to any material amendment, modification or change to any Tariff relating
any Receivables which, in either case, would be inconsistent with the terms
hereof and of the other Transaction Documents or adversely affect the
collectibility of the Receivables covered thereby or the Related Security
relating thereto or the interest of the Agent, the Company or the Bank
Investors therein; or terminate any Qualified LEC Agreement, except for any
such termination that does not affect or relate to any Qualified LEC Receivable
that was outstanding on the date of such termination.
(j) Other Debt. Except as provided for herein, the
Transferor will not create, incur, assume or suffer to exist any indebtedness
whether current or funded, or any other liability other than (i) indebtedness
of the Transferor representing fees, expenses and indemnities (including for
LEC True-Ups) arising hereunder or under the Receivables Purchase Agreement or
for the purchase price of the Receivables under the Receivables Purchase
Agreement, and (ii) other indebtedness incurred in the ordinary course of its
business in an amount not to exceed $50,000 in any Fiscal Year.
(k) Corporate Documents. The Transferor shall not
amend, alter, change or repeal any provision of any of the "Restricted
Articles" of (and as such term is defined in) its Certificate of Incorporation
without the prior written consent of the Agent, the Majority Investors and the
Administrative Agent.
(l) ERISA Matters. The Transferor will not, and
will not permit the Parent, any of the Sellers or any ERISA Affiliate of any of
the foregoing to, (i) engage in any prohibited transaction (as defined in
Section 4975 of the Code and Section 406 of ERISA) for which an exemption is
not available or has not previously been obtained from the U.S. Department of
Labor; (ii) permit to exist any accumulated funding deficiency (as defined in
Section 302(a) of ERISA and Section 412(a) of the Code) or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan; (iii) fail to
make any payments to any Multiemployer Plan that the Transferor, the Parent,
any of the Sellers or any such ERISA Affiliate is required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; or (v) permit
to exist any occurrence of any reportable event described in Title IV of ERISA
which represents a material risk of a liability to the Transferor, the Parent,
any of the Sellers, or any ERISA Affiliate of any of the foregoing under ERISA
or the Code, if such prohibited transactions, accumulated funding deficiencies,
payments, terminations and reportable events involve a payment of money or an
incurrence of liability by the Transferor, Parent, any of the Sellers or any
ERISA Affiliate of any of the foregoing, in an aggregate amount in excess of
$5,000,000 in any twelve month
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period. Without limiting the foregoing in any manner whatsoever, the
Transferor shall, or shall cause any such Seller or ERISA Affiliate, as
applicable, to (i) satisfy any such liability or obligation in excess of
$100,000, in the aggregate, and to remedy the circumstances giving rise
thereto, in each case, within 10 days after any such Person acquires or should
have acquired knowledge thereof and (ii) satisfy any such other liability or
obligation and remedy the circumstances giving rise thereto, in each case, as
soon as practicable (exercising commercially reasonable efforts) after such
Person acquires actual knowledge thereof.
(m) Payment to the Sellers. With respect to any
Receivable sold or contributed by any of the Sellers to the Transferor pursuant
to the Receivables Purchase Agreement, the Transferor shall, and shall cause
each applicable Seller to, effect such sale under, and pursuant to the terms
of, the Receivables Purchase Agreement, including, without limitation, by the
Transferor's making payment (either in cash or by increase in the amount of the
Subordinated Note) to such Seller of an aggregate amount equal to the purchase
price for each such Receivable so sold as determined in accordance with the
terms of the Receivables Purchase Agreement.
(n) Subsidiaries; Joint Ventures. The Transferor
shall not establish, organize or acquire any Subsidiaries or enter into any
partnership or any joint ventures with any Person.
(o) Sale Treatment. The Transferor will not (i) and
will not permit any of the Sellers to, account for (including for accounting
and tax purposes), or otherwise treat, the transactions contemplated by the
Receivables Purchase Agreement in any manner other than as a sale of
Receivables by such Seller to the Transferor, or (ii) account for (other than
for tax purposes) or otherwise treat the transactions contemplated hereby in
any manner other than a sale of Receivables by the Transferor to the Company or
the Bank Investors, as applicable. In addition, the Transferor shall, and
shall cause each of the Sellers and the Parent to, disclose (in a footnote or
otherwise) in all of its respective financial statements (including any such
financial statements consolidated with any other Persons' financial statements)
the existence and nature of the transaction contemplated hereby and by the
Receivables Purchase Agreement and the interest of the Transferor (in the case
of the Sellers' financial statements), the Agent, the Company and the Bank
Investors in the Affected Assets.
(p) Tariffs. The Transferor shall not, and shall
not permit the Parent or any of the Sellers to, file or consent to the filing
of any Tariff relating to any Receivable or any amendment to any such Tariff
with any Official Body which would cause such Tariff to conflict with the terms
relating to Tariffs
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set forth in Exhibit A hereto or otherwise be inconsistent with the terms of,
or adversely affect the interests of the Agent, the Company, the Bank Investors
or the Transferor under, this Agreement, the Receivables Purchase Agreement or
any of the other Transaction Documents.
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent. (a) The
servicing, administering and collection of the Receivables shall be conducted
by such Person (the "Collection Agent") so designated from time to time in
accordance with this Section 6.1. Until the Company, in accordance with this
Section 6.1, gives notice to LCI Telecom of the designation of a new Collection
Agent (which notice may only be given after the occurrence of a Collection
Agent Default), LCI Telecom is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms hereof. The Agent may, and upon the direction of the Majority Investors
the Agent shall, after the occurrence of a Collection Agent Default designate
as Collection Agent any Person (including itself) to succeed LCI Telecom or any
successor Collection Agent, on the condition in each case that any such Person
so designated shall agree to perform the duties and obligations of the
Collection Agent pursuant to the terms hereof. The Agent may notify any
Obligor of the Transferred Interest; provided, however, that no such notice may
be given by the Agent prior to the occurrence of a Termination Event.
(b) The Collection Agent may, with the prior written consent
of the Agent, subcontract with any other Person for the servicing,
administering or collecting of the Receivables (any such Person with which the
Collection Agent may so sub-contract (including, without limitation, the LECs)
being a "Sub-Collection Agent" and collectively, the "Sub-Collection Agents");
provided, however, that the Collection Agent shall remain liable for the
performance of the duties and obligations of the Collection Agent and the
Sub-Collection Agents pursuant to the terms hereof; it being understood and
agreed, that (i) the Agent may, at any time after the occurrence of any event
of the type described in the definition of "Collection Agent Default" with
respect to any such Sub-Collection Agent, terminate or cause the Collection
Agent to replace any Sub-Collection Agent and (ii) unless otherwise specified
by the Agent, each Sub-Collection Agent's appointment hereunder shall
automatically terminate upon the resignation or removal of the Collection Agent
that appointed such Sub-Collection Agent; and it being further understood and
agreed that the appointments of each of the Collection Agent and the
Sub-Collection Agents shall terminate on the date occurring
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on or after Termination Date upon which all of the Aggregate Unpaids shall have
been paid in full, in cash. In connection therewith, the Agent hereby consents
to the appointment of each of the Sellers and the LECs as Sub-Collection Agents
on the terms and subject to the conditions set forth in the Receivables
Purchase Agreement.
SECTION 6.2. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be
taken all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Each of the Transferor, the Company, the Agent
and the Bank Investors hereby appoints as its agent the Collection Agent from
time to time designated pursuant to Section 6.1 hereof to enforce each of the
foregoing's respective rights and interests in and under the Affected Assets.
To the extent permitted by applicable law, each of the Transferor and the
Sellers (to the extent any such Person is not then acting as Collection Agent
hereunder) hereby grants to any Collection Agent appointed hereunder an
irrevocable power of attorney to take any and all steps in the Transferor's
and/or such Seller's name and on behalf of the Transferor or such Seller
necessary or desirable, in the reasonable determination of the Collection
Agent, to collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Transferor's and/or such Seller's name on
checks and other instruments representing Collections and enforcing such
Receivables and the related Contracts. The Collection Agent shall set aside
for the account of the Transferor and the Company their respective allocable
shares of the Collections of Receivables in accordance with Sections 2.5(a) and
2.6 hereof. The Collection Agent shall segregate and deposit to the Agent's
account the Company's and/or the Bank Investors' allocable share of Collections
of Receivables when required pursuant to Article II hereof. The Collection
Agent may (x) so long as no Termination Event shall have occurred and be
continuing, extend the maturity of Receivables, but not beyond thirty (30)
days, or adjust the Outstanding Balance of any Receivables as the Collection
Agent may determine to be appropriate in accordance with the applicable Credit
and Collection Policies in order to maximize Collections thereof and (y) with
respect to any LEC Receivable, the applicable LEC may adjust or extend the
maturities and/or the Outstanding Balances of such Receivables in accordance
with, and as permitted pursuant to, the applicable LEC Agreement; provided,
however, that, in either case, such extension or adjustment shall not alter the
status of such Receivable as a Delinquent Receivable or a Defaulted Receivable.
The Transferor shall deliver to the Collection Agent and the Collection Agent
shall hold in trust for the Transferor, the Company, the Agent and the Bank
Investors, in accordance with
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their respective interests, all Records which evidence or relate to Receivables
or Related Security. Notwithstanding anything to the contrary contained
herein, the Agent shall have the absolute and unlimited right to direct the
Collection Agent (whether the Collection Agent is an Affiliated Entity or any
other Person) to commence or settle any legal action to enforce collection of
any Receivable or to foreclose upon or repossess any Related Security.
Notwithstanding the foregoing, the Collection Agent shall not make the Agent,
the Company or any of the Bank Investors a party to any litigation without the
prior written consent of such Person.
(b) The Collection Agent shall, as soon as
practicable following receipt thereof, turn over to the Transferor any
collections of any indebtedness of any Person which is not on account of a
Receivable. If the Collection Agent is not an Affiliated Entity, then the
Collection Agent, by giving three Business Days' prior written notice to the
Agent, may revise the percentage used to calculate the Servicing Fee so long as
the revised percentage will not result in a Servicing Fee that exceeds 110% of
the reasonable and appropriate out-of-pocket costs and expenses of such
Collection Agent incurred in connection with the performance of its obligations
hereunder as documented to the reasonable satisfaction of the Agent; provided,
however, that at any time after the Coverage Percentage equals or exceeds 100%,
any compensation to the Collection Agent in excess of the Servicing Fee
initially provided for herein shall be an obligation of the Transferor and
shall not be payable, in whole or in part, from Collections allocated to the
Company or the Bank Investors, as applicable. The Collection Agent, if other
than an Affiliated Entity, shall as soon as practicable upon demand, deliver to
the applicable Seller all Records in its possession which evidence or relate to
indebtedness of an Obligor which is not a Receivable.
(c) On or before 90 days after the end of each
Fiscal Year, beginning with the fiscal year ending December 31, 1996, the
Collection Agent shall cause Arthur Andersen LLP or any other nationally
recognized firm of independent public accountants selected by the Transferor
and reasonably acceptable to the Agent, to furnish an "Agreed Upon Procedures
Report" to the Agent, for the benefit of the Company and the Bank Investors,
with such accountant's findings relating to the following procedures: (i) a
test of the clerical accuracy of the each of the Investor Reports; (ii) an
agreement of the information contained in the Investor Reports delivered during
such fiscal year with the supporting detail records, Interim Reports and the
related reconciliations; (iii) agree the Net Receivables Balances reported by
the Transferor and the Collection Agent in each of the Investor Reports
delivered during such fiscal year with the books and records of the Transferor
and agree the balances of the applicable account receivables agings categories
with the
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information contained in such Investor Reports, (iv) verify that the
Receivables treated by the Collection Agent as being Eligible Receivables on
any of the Investor Reports delivered during such fiscal year in fact satisfied
the requirements of such definition thereof contained herein, with appropriate
consideration given to the balance forward account receivables system used by
the Transferor and the Sellers, (v) make a selection of customer account
receivables balances from the Collection Agent account receivables agings
utilized above and send "negative confirmations" to the applicable customers,
which confirmations shall include the Collection Agent's build up of the
balance by aging category, and (vi) in each of the cases of clauses (i)-(v)
above, report the results of such testing, verifications or confirmations,
except in each case (a) for such exceptions or discrepancies as such firm shall
believe to be immaterial (which exceptions or discrepancies need not be
enumerated) and (b) such other exceptions as shall be set forth in any such
reports.
(d) Notwithstanding anything to the contrary
contained in this Article VI, the Collection Agent, if other than an Affiliated
Entity, shall have no obligation to collect, enforce or take any other action
described in this Article VI with respect to any receivables or other
indebtedness that are not Receivables other than to deliver to the Transferor
the collections and documents with respect to any such receivables and other
indebtedness as described in Section 6.2(b) hereof.
SECTION 6.3. Rights After Designation of New Collection
Agent. At any time following the designation of a Collection Agent (other than
an Affiliated Entity) pursuant to Section 6.1 hereof:
(i) The Agent may direct that payment of all
amounts payable under any Receivable be made directly to the Agent or
its designee.
(ii) The Transferor shall, and shall cause each of
the Seller's to, at the Agent's request and at the Transferor's
expense, give notice of the Agent's, the Transferor's and/or the Bank
Investors' ownership of Receivables to each Obligor and each LEC and
direct that payments with respect to the Receivables be made directly
to the Agent or its designee.
(iii) The Transferor shall, and shall cause each of
the Sellers to, at the Agent's request, (A) assemble all of the
Records, and shall make the same available to the Agent or its
designee at a place selected by the Agent or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of
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Receivables in a manner acceptable to the Agent and shall, promptly
upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent
or its designee.
(iv) The Transferor hereby authorizes the Agent to
take any and all steps in the Transferor's and/or any of the Sellers'
name and on behalf of the Transferor and/or any such Seller necessary
or desirable, in the determination of the Agent, to collect all
amounts due under any and all Receivables, including, without
limitation, endorsing the Transferor's and/or, to the extent permitted
pursuant to the Receivables Purchase Agreement, any such Seller's name
on checks and other instruments representing Collections and enforcing
such Receivables and the related Contracts.
SECTION 6.4. Collection Agent Default. The occurrence of
any one or more of the following events shall constitute a Collection Agent
Default:
(a) (i) the Collection Agent or, to the extent that
the Transferor, any of the Sellers or any other Affiliated Entity is then
acting as Collection Agent, the Transferor, such Seller or the Parent, as
applicable, shall fail to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (ii) of this Section 6.4(a)) or
under any of the other Transaction Documents to which such Person is a party or
by which such Person is bound, and such failure shall remain unremedied for ten
(10) days after notice of such failure is given to such Person, or (ii) the
Collection Agent or, to the extent that the Transferor, any of the Sellers or
any other Affiliated Entity is then acting as Collection Agent, the Transferor,
any Seller or the Parent, as applicable, shall fail to make any payment or
deposit required to be made by it hereunder or under any of the other
Transaction Documents to which such Person is a party, in each case, when such
payment is due, or the Collection Agent shall fail to observe or perform any
term, covenant or agreement on the Collection Agent's part to be performed
under Section 2.8(b) hereof; or
(b) any representation, warranty, certification or
statement made by the Collection Agent or, to the extent that the Transferor,
any of the Sellers or any other Affiliated Entity is then acting as Collection
Agent, the Transferor, such Seller or the Parent, as applicable, in this
Agreement, the Receivables Purchase Agreement, the Parent Support Agreement, or
in any of the other Transaction Documents or in any certificate or report
delivered by such Person pursuant to any of the foregoing shall
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prove to have been incorrect in any material respect when made or deemed made;
or
(c) (i) failure of the Collection Agent or any of
its Subsidiaries to pay any Indebtedness when due under any agreement (other
than hereunder or under any of the other Transaction Documents) the aggregate
outstanding balance of which is in excess of $5,000,000, which failure
continues beyond the applicable period of grace if any, provided under the
applicable instrument or document under which any such Indebtedness was created
or is governed; or (ii) the Collection Agent or any of its Subsidiaries shall
fail to observe or perform any other agreement or condition relating to any
Indebtedness (other than hereunder or under any of the other Transaction
Documents) the aggregate outstanding amount of which is greater than $5,000,000
or contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holders of
such Indebtedness (or a trustee or agent on behalf of such holders) to cause,
with the giving of notice if required, any such Indebtedness to become due
prior to its stated maturity (any applicable grace period having expired); or
(d) any Event of Bankruptcy shall occur with respect
to the Collection Agent, any Sub-Collection Agent or any Subsidiary of any of
the foregoing; or
(e) there shall have occurred any material adverse
change in the operations of the Collection Agent since the end of the last
fiscal year of the Collection Agent ending prior to the date of its appointment
as Collection Agent hereunder or any other event shall have occurred which, in
the commercially reasonably judgment of the Agent, materially and adversely
affects the Collection Agent's ability to either collect the Receivables or to
perform its obligations under this Agreement; or
(f) to the extent the Collection Agent is the
Transferor, any of the Sellers or any other Affiliated Entity, such Collection
Agent shall cease to be a wholly-owned direct or indirect Subsidiary of the
Parent, or a Change of Control shall occur; or
(g) any judgment (or any related series of
judgments) shall be rendered against the Collection Agent or, to the extent the
Collection Agent is the Transferor, any of the Sellers or any other Affiliated
Entity, against any Sub-Collection Agent (other than a LEC) that (i) exceeds
the insurance coverage therefor by an amount in excess of $5,000,000 or in
respect of which such Person's insurance carrier has not acknowledged coverage
for such loss (or any portion thereof) in
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excess of $5,000,000, (ii) is in an amount in excess of $20,000,000 whether or
not covered by insurance, or (iii) otherwise materially and adversely affects
the Collection Agent's or the Sub-Collection Agent's (as applicable) ability to
service the Receivables or otherwise perform its duties hereunder, and in each
case, such judgment has not been fully discharged or stayed for a period of
thirty (30) days.
SECTION 6.5. Responsibilities of the Transferor and the
Sellers. Anything herein to the contrary notwithstanding, the Transferor
shall, and/or shall cause each of the Sellers to, (i) perform all of the
applicable Seller's obligations under the Contracts related to the Receivables
originated by it to the same extent as if interests in such Receivables had not
been sold hereunder and under the Receivables Purchase Agreement, and the
exercise by the Agent, the Company and the Bank Investors of their rights
hereunder and under the Receivables Purchase Agreement shall not relieve the
Transferor or the Sellers from such obligations and (ii) pay when due any
taxes, including without limitation, any sales taxes payable in connection with
the Receivables and their creation and satisfaction, except any such taxes
which the Transferor or any such Seller is contesting in good faith and by
appropriate proceedings and in respect of which (x) the Transferor or such
Seller, as applicable has established and maintains adequate reserves on its
books and records for the payment of such taxes and (y) no Adverse Claim on the
Affected Assets has resulted from the non-payment thereof. Neither the Agent,
the Company nor any of the Bank Investors shall have any obligation or
liability with respect to any Receivable or related Contracts, nor shall it be
obligated to perform any of the obligations of the Sellers or the Transferor
thereunder.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events. The occurrence of any one
or more of the following events shall constitute a Termination Event:
(a) the Transferor, any of the Sellers or the Parent
shall fail to make any payment or deposit to be made by it hereunder, under the
Receivables Purchase Agreement or under the Parent Support Agreement, as
applicable, when due hereunder or thereunder; or
(b) any representation, warranty, certification or
statement made by the Transferor, any of the Sellers (including, in each case,
in its capacity as Collection Agent or as a Sub-Collection Agent, to the extent
applicable) or the Parent in this Agreement, any other Transaction Document to
which
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such Person is a party or in any other document delivered pursuant hereto or
thereto shall prove to have been incorrect in any material respect when made or
deemed made; provided, that to the extent such untrue or incorrect
representation, warranty, certification or statement relates specifically to a
particular Receivable and the Transferor shall have satisfied its obligation
with respect thereto under and in accordance with Section 2.9(b) within one
Business Day after the Transferor acquired actual knowledge of the
incorrectness thereof, then no Termination Event shall be deemed to exist with
respect thereto pursuant to this Section 7.1(b); or
(c) the Transferor or any of the Sellers shall
default in the performance of any payment or undertaking (other than those
covered by clause (a) above) (i) to be performed or observed under Sections
5.1(a)(vi), 5.1(a)(vii), 5.1(b), 5.1(h), 5.1(i), or 5.2 or (ii) to be performed
or observed under any other provision hereof or of the other Transaction
Documents to which such Person is a party and such default in the case of this
clause (ii) shall continue for five (5) days; or
(d) failure of the Parent, the Transferor, any of
the Sellers or any Subsidiary of any of the foregoing to pay any Indebtedness
when due under any agreement (other than hereunder or under any of the other
Transaction Documents) the aggregate outstanding balance of which is in excess
of $5,000,000, which failure continues beyond the applicable period of grace if
any, provided under the applicable instrument or document under which any such
Indebtedness was created or is governed; or (ii) failure of the Parent, the
Transferor, any of the Sellers or any of Subsidiary of any of the foregoing to
observe or perform any other agreement or condition relating to any
Indebtedness (other than hereunder or under any of the other Transaction
Documents) the aggregate outstanding amount of which is greater than $5,000,000
or contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holders of
such Indebtedness (or a trustee or agent on behalf of such holders) to cause,
with the giving of notice if required, any such Indebtedness to become due
prior to its stated maturity (any applicable grace period having expired); or
(e) any Event of Bankruptcy shall occur with respect
to the Parent, the Transferor, any of the Sellers or any Subsidiary of any of
the foregoing; or
(f) (i) the Transferor shall for any reason fail or
cease to have a valid and perfected ownership interest in the Receivables free
and clear of any Adverse Claim except as contemplated hereby; or (ii) the
Agent, on behalf of the Company and/or the Bank Investors, shall, for any
reason, fail or cease
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to have a valid and perfected first priority ownership or security interest in
the Affected Assets free and clear of any Adverse Claims; provided, that if the
Transferor satisfies its obligations under Section 2.9(b) with respect to any
and all Receivables in respect of which any such failure exists within one (1)
Business Day after acquiring knowledge thereof, then no Termination Event shall
be deemed to have occurred pursuant to this clause (f); or
(g) a Collection Agent Default shall have occurred;
or
(h) the Receivables Purchase Agreement shall have
terminated for any reason whatsoever; or
(i) (x) the Transferor or any of the Sellers shall
cease to be a direct or indirect wholly-owned Subsidiary of the Parent or (y)
any Change of Control shall have occurred; or
(j) there shall have occurred any material adverse
change in the condition (financial or otherwise) or operations of the Parent,
the Transferor or any of the Sellers since December 31, 1995 or any other
Material Adverse Effect shall have occurred; or
(k) the Liquidity Provider or the Credit Support
Provider shall have given notice that an event of default has occurred and is
continuing under any of its respective agreements with the Company; or
(l) the Commercial Paper issued by the Company shall
cease to be rated at least "A-2" by Standard & Poor's and at least "P-2" by
Moody's; or
(m) (i) the Coverage Percentage exceeds the Maximum
Percentage Factor on any day, unless such excess is eliminated by no later than
the close of business on the next Business Day thereafter; (ii) the Coverage
Percentage equals or exceeds 100% at any time; or (iii) the Net Investment plus
the Interest Component of all outstanding Related Commercial Paper shall exceed
the Maximum Net Investment; or
(n) the average (as reported on the Investor Report
for any month) of the Direct Billed Dilution Ratios for the preceding three
months ending prior to the date of such Investor Report exceeds 6%; or
(o) the average (as reported on the Investor Report
for any month) of the Direct Billed Loss-to-Liquidation Ratios for the
preceding three months ending prior to the date of such Investor Report exceeds
8%; or
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(p) the average (as reported on the Investor Report
for any month) of the Direct Billed Delinquency Ratios for the preceding three
months ending prior to the date of such Investor Report exceeds 15%; or
(q) the Parent Support Agreement is terminated or
held to be unenforceable; or any Affiliated Entity or any trustee, receiver,
conservator or liquidator of or for such Affiliated Entity shall assert the
unenforceability of the Parent Support Agreement or contest the liability of
the Parent thereunder; or
(r) any Financial Covenant Termination Event shall
have occurred; or
(s) any judgment (or any related series of
judgments) shall be rendered against the Parent, the Transferor or any of the
Sellers that (i) exceeds the insurance coverage therefor by an amount in excess
of $5,000,000 or in respect of which such Person's insurance carrier has not
acknowledged coverage for such loss (or any portion thereof) in excess of
$5,000,000, (ii) is in an amount in excess of $20,000,000 whether or not
covered by insurance, or (iii) otherwise materially and adversely affects such
Person's ability to perform its obligations hereunder or under the other
Transaction Documents to which it is a party, and in each case, such judgment
has not been fully discharged or stayed within thirty (30) days; or
(t) the average (as reported on the Investor Report
for any month) of the LEC True-Up Ratios for the preceding three months ending
prior to the date of such Investor Report exceeds 2%; or
(u) the average (as reported on the Investor Report
for any month) of the LEC Withholding Ratios for the preceding three months
ending prior to the date of such Investor Report exceeds 5%; or
(v) the average (as reported on the Investor Report
for any month) of the LEC Dilution Ratios for the preceding three months ending
prior to the date of such Investor Report exceeds 7%; or
(w) the average (as reported on the Investor Report
for any month) of the LEC Delinquency Ratios for the preceding three months
ending prior to the date of such Investor Report exceeds 20%; or
(x) any LEC which is a party to any Qualified LEC
Agreement (x) fails to make any Associated LEC Payment as and when required
pursuant to the terms of such agreement and such failure continues unremedied
for three (3) days, (y) becomes the
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subject of an Event of Bankruptcy, or (z) ceases to be a Qualified LEC for any
reason whatsoever, which cessation is asserted by any Person as having a
retroactive effect which the Agent reasonably determines may adversely effect
the interest of the Agent, the Company, the Bank Investors or the Purchaser in
the effected LEC Receivables previously included in the Transferred Interest,
unless, in each of the cases of clauses (x) and (z) above, the Transferor
repurchases the Agent's, the Company's and the Bank Investors' Transferred
Interest in such Receivables and Related Security (at a price equal to product
of the Percentage Factor at such time and the Outstanding Balance of such
Receivables at such time, plus all accrued but unpaid Discount and Servicing
Fees on such amount) within four (4) Business Days after the occurrence of any
such event.
SECTION 7.2. Termination. (a) Upon the
occurrence of any Termination Event (other than a Non-Fee Termination Event),
the Agent may, or at the direction of the Majority Investors shall, by notice
to the Transferor declare the Termination Date to have occurred; provided,
that, in the case of any event described in Section 7.1(e), 7.1(f), 7.1(m)(ii),
7.1(m)(iii) or 7.1(q), above, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Agent shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
(b) Upon the occurrence and during the continuance
of a Termination Event (whether before or after the occurrence of the
Termination Date), and at any time after the automatic occurrence or
declaration of the Termination Date pursuant to Section 7.2(a) (other than as a
result of a Non-Fee Termination Event), the Agent may declare that the Base
Rate plus 2% shall thereafter be the Tranche Rate applicable to the Net
Investment of all Tranches. In addition, upon the automatic occurrence or
declaration of the Termination Date pursuant to Section 7.2(a), the Agent may,
by notice to the Transferor, declare that all outstanding Tranche Periods shall
be terminated.
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferor. Without limiting
any other rights which the Agent, the Company or the Bank Investors may have
hereunder or under applicable law, the Transferor hereby agrees to indemnify
the Company, the Bank Investors, the Agent, the Administrative Agent, the
Collateral Agent, the Liquidity Provider and the Credit Support Provider and
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any successors and permitted assigns of each of the foregoing and the
respective officers, directors, employees and agents of each of the foregoing
(collectively, the "Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, costs and expenses, including, without limitation,
reasonable attorneys' fees (which such attorneys may be employees of the
Liquidity Provider, the Credit Support Provider, the Agent, the Administrative
Agent or the Collateral Agent, as applicable) and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them in any action or proceeding between the
Transferor, the Parent or any of the Sellers (including, in any case, in such
Person's capacity as the Collection Agent or Sub-Collection Agent), on the one
hand, and any of the Indemnified Parties, on the other hand, or between any of
the Indemnified Parties and any third party or otherwise arising out of or as a
result of this Agreement, the other Transaction Documents, the ownership or
maintenance, either directly or indirectly, by the Agent, the Company or any
Bank Investor of the Transferred Interest or any of the other transactions
contemplated hereby or thereby, excluding, however, (i) Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct on the part of
an Indemnified Party, (ii) recourse (except as otherwise specifically provided
in this Agreement) for Receivables which are uncollectible for credit reasons,
(iii) any breach by the Transferor or any Collection Agent or Sub-Collection
Agent (in either case, if other than an Affiliated Entity) of any of such
Person's representations, warranties, covenants or undertakings hereunder or
under any of the other Transaction Documents. Without limiting the generality
of the foregoing, the Transferor shall indemnify each Indemnified Party for
Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made
by the Transferor or by the Collection Agent or any Sub-Collection
Agent (in each case, if an Affiliated Entity) or any officers of the
Transferor or of the Collection Agent or any Sub-Collection Agent (in
each case, if an Affiliated Entity) under or in connection with this
Agreement, the Receivable Purchase Agreement, the Parent Support
Agreement, any of the other Transaction Documents, any Investor Report
or any other information or report delivered by the Transferor, the
Collection Agent or any Sub-Collection Agent (in each case, if an
Affiliated Entity) pursuant hereto, which shall have been false or
incorrect in any material respect when made or deemed made;
(ii) the failure by the Transferor, any
of the Sellers (including, in any case, in such Person's capacity as
the Collection Agent or a Sub-Collection Agent) or any LEC to comply
with any appli-
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cable law, rule or regulation with respect to any Receivable or the
related Contract, or the nonconformity of any Receivable or the
related Contract with any such applicable law, rule or regulation;
(iii) the failure to vest and maintain
vested (x) in the Company and/or the Bank Investors, an undivided
first priority, perfected percentage ownership interest, to the extent
of the Transferred Interest, in the Affected Assets free and clear of
any Adverse Claim or (y) to create or maintain a valid and perfected
first priority security interest in favor of the Agent, for the
benefit of the Company and/or the Bank Investors, in the Transferor's
interest in the Affected Assets as contemplated pursuant to Section
10.11, free and clear of any Adverse Claim;
(iv) the failure to file, or any delay in
filing, financing statements, continuation statements, or other
similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any of the
Affected Assets;
(v) any dispute, claim, offset or
defense (other than discharge in bankruptcy) of the Obligor to the
payment of any Receivable (including, without limitation, a defense
based on such Receivable or the related Contract not being the legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of merchandise or services related to such Receivable or the furnishing
or failure to furnish such merchandise or services;
(vi) any failure of the Collection Agent
(if an Affiliated Entity) to perform its duties or obligations in
accordance with the provisions hereof or of any LEC to perform its
obligations under any LEC Agreement;
(vii) any products liability claim; tort
claim, or personal injury or property damage suit or other similar or
related claim or action of whatever sort arising out of or in
connection with goods, merchandise, inventory or services which are
the subject of any Receivable or Contract;
(viii) the transfer of an ownership
interest hereunder to the Agent in any Receivable other than an
Eligible Receivable;
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(ix) the failure by the Transferor or the
Collection Agent or any Sub-Collection Agent (in each case, to the
extent an Affiliated Entity) to comply with any term, provision or
covenant contained in this Agreement, the Receivables Purchase
Agreement, the Parent Support Agreement or any of the other
Transaction Documents to which it is a party or to perform any of its
respective duties under the Contracts; it being understood and agreed
that for purposes of this clause (ix) and the existence of an
indemnifiable claim hereunder, any limitation contained in any
covenant or undertaking relating to the occurrence or reasonable
expectation of the occurrence of a Material Adverse Effect shall be
disregarded;
(x) the Coverage Percentage exceeding
the Maximum Coverage Percentage at any time on or prior to the
Termination Date;
(xi) the failure of the Transferor or any
of the Sellers to pay when due any taxes, including without
limitation, sales, excise or personal property taxes or surcharges
payable in connection with any of the Receivables;
(xii) any repayment by any Indemnified
Party of any amount previously distributed in reduction of Net
Investment which such Indemnified Party believes in good faith is
required to be made (other than in connection with the discharge in
bankruptcy of an Obligor);
(xiii) the commingling by the Transferor,
any of the Sellers or the Collection Agent (if an Affiliated Entity)
of Collections of Receivables at any time (whether or not permitted
hereunder or under any of the other Transaction Documents) with other
funds;
(xiv) any investigation, litigation or
proceeding related to this Agreement, any of the other Transaction
Documents, the use of proceeds of Transfers by the Transferor or any
of the Sellers, the ownership or maintenance of Transferred Interests,
or any Receivable, Related Security or Contract, other than any of the
foregoing relating to (x) any such Indemnified Party's authority,
ability, capacity or qualification to enter into the transactions
contemplated hereunder and under the other Transaction Documents or
(y) any costs, fees and expenses incurred in connection with any
proceeding for the collection of any Receivable from the Obligor
thereof);
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(xv) the failure of any Lock-Box Bank or
any bank at which any Permitted Unblocked Accounts are maintained to
remit any amounts held in the Lock-Boxes, the Lock-Box Accounts or the
Permitted Unblocked Accounts, as applicable, pursuant to the
instructions of the Collection Agent, the Transferor, any applicable
Seller or the Agent (to the extent such Person is entitled to give
such instructions in accordance with the terms hereof and of any
applicable Lock-Box Agreement) whether by reason of the exercise of
set-off rights or otherwise;
(xvi) any failure of the Transferor to
give reasonably equivalent value to the applicable Seller in
consideration of the purchase by the Transferor from such Seller of
any Receivable, or any attempt by any Person to void, rescind or
set-aside any such transfer under statutory provisions or common law
or equitable action, including, without limitation, any provision of
the Bankruptcy Code;
(xvii) any action taken by the Transferor,
any of the Sellers, the Collection Agent (if an Affiliated Entity) or
any LEC in the enforcement or collection of any Receivable;
(xix) the amendment, modification or
termination of any LEC Agreement or any Tariff relating to or
affecting any Receivable in existence prior to the effective date of
any such amendment, modification or termination, unless previously
consented to by the Agent;
(xx) any failure by any Seller to perform
its obligations under any LEC Agreement to which it is a party;
(xxi) any set-off against any of the
Affected Assets by any LEC other than in respect of the non-collection
of any delinquent or uncollectible LEC Receivables;
(xxii) any reductions in the amount of a
Government Receivable, or the Related Security with respect thereto,
as a result of the non-appropriation therefor by the Obligor thereon
or the termination thereof for convenience, or the inability to
collect any Government Receivable or Related Security from any such
Obligor, whether as a result of the non-compliance by the applicable
Seller and/or the Transferor with the Assignment of Claims Act, 31
U.S.C. Sections 3727 et seq. (1982) and 41 U.S.C. Sections 15 et
seq.(1982) (in each case, as amended), whether or not such compliance
is required hereunder or under the Receivables Purchase Agreement, or
otherwise; or
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(xxiii) the inability to obtain jurisdiction
over or enforce any Foreign Receivable against the Obligor thereon, or
the assertion by any Person of an Adverse Claim in any Foreign
Receivable equal or superior in priority to the interests of the
Agent, the Company and the Bank Investors therein;
provided, however, that if the Company enters into agreements for the purchase
of interests in receivables from one or more Other Transferor, the Company
shall allocate such Indemnified Amounts which are in connection with the
Liquidity Provider Agreement, the Credit Support Agreement or the credit
support furnished by the Credit Support Provider to the Transferor and each
Other Transferor; and provided, further, that if such Indemnified Amounts are
attributable to the Transferor, any of the Sellers or the Collection Agent and
not attributable to any Other Transferor, the Transferor shall be solely liable
for such Indemnified Amounts or if such Indemnified Amounts are attributable to
Other Transferor and not attributable to the Transferor, any of the Sellers or
the Collection Agent, such Other Transferor shall be solely liable for such
Indemnified Amounts. Any demand for indemnification by any Indemnified Party
pursuant to this Section 8.1 shall be made by delivery of a certificate from
the Indemnified Party to the Transferor and the Agent setting forth the amount
and the calculation (in reasonable detail, which calculation shall be
conclusive and binding absent manifest error) of the Indemnified Amount and the
nature of such claim. Any such amounts shall be payable within ten (10) days
after such Indemnified Party's demand therefor.
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses.
(a) If after the date hereof, the adoption of any Law or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future Law or bank regulatory guideline by any Official Body charged with the
administration, interpretation or application thereof, or the compliance with
any directive of any Official Body (in the case of any bank regulatory
guideline, whether or not having the force of Law):
(i) shall subject any Indemnified Party to
any tax, duty or other charge (other than Excluded Taxes) with
respect to this Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Transferred Interest, the
Receivables or payments of amounts due hereunder, or shall change the
basis of taxation of payments to any Indemnified Party of amounts
payable in respect of this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred
Interest, the Receivables or payments of amounts due hereunder or its
obligation to advance funds hereunder, under the Liquidity Provider
Agreement or the credit support fur-
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nished by the Credit Support Provider or otherwise in respect of
this Agreement, the other Transaction Documents, the ownership,
maintenance or financing of the Transferred Interest or the Receivables
(except for changes in the rate of general corporate, franchise, net
income or other income tax imposed on such Indemnified Party by the
jurisdiction in which such Indemnified Party's principal executive
office is located);
(ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement (including,
without limitation, any such re quirement imposed by the Board of
Governors of the Federal Reserve System) against assets of, deposits
with or for the account of, or credit extended by, any Indemnified
Party or shall impose on any Indemnified Party or on the United States
market for certificates of deposit or the London interbank market any
other condition affecting this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred
Interest, the Receivables or payments of amounts due hereunder or its
obligation to advance funds hereunder, under the Liquidity Provider
Agreement or the credit support provided by the Credit Support Provider
or otherwise in respect of this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred
Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any
other expense (including, without limitation, reasonable
attorneys' fees and expenses, and expenses of litigation or preparation
therefor in contesting any of the foregoing) with respect to this
Agreement, the other Transaction Documents, the ownership, maintenance
or financing of the Transferred Interest, the Receivables or payments
of amounts due hereunder or its obligation to advance funds hereunder,
under the Liquidity Provider Agreement or the credit support furnished
by the Credit Support Provider or otherwise in respect of this
Agreement, the other Transaction Documents, the ownership, maintenance
or financing of the Transferred Interests or the Receivables,
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred Interest,
the Receivables, the obligations hereunder, the funding of any purchases
hereunder, the Liquidity Provider Agreement or the Credit Support Agreement,
then, within ten (10) days after demand by such Indemnified Party through the
Agent, the Transferor shall pay to the Agent, for the benefit of
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such Indemnified Party, such additional amount or amounts as will compensate
such Indemnified Party for such increased cost or reduction.
(b) If any Indemnified Party shall have determined
that after the date hereof, the adoption of any applicable Law or bank
regulatory guideline regarding capital adequacy, or any change therein, or any
change in the interpretation thereof by any Official Body, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of law) of any such Official Body, has or would
have the effect of reducing the rate of return on capital of such Indemnified
Party (or its parent) as a consequence of such Indemnified Party's obligations
hereunder or with respect hereto to a level below that which such Indemnified
Party (or its parent) could have achieved but for such adoption, change, re
quest or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Indemnified Party to be material,
then from time to time, within ten (10) days after demand by such Indemnified
Party through the Agent, the Transferor shall pay to the Agent, for the benefit
of such Indemnified Party, such additional amount or amounts as will compensate
such Indemnified Party (or its parent) for such reduction.
(c) The Agent will promptly notify the Transferor of
any event of which it has knowledge, occurring after the date hereof, which
will entitle an Indemnified Party to compensation pursuant to this Section 8.2.
A notice by the Agent or the applicable Indemnified Party claiming compensation
under this Section and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Agent or any applicable Indemnified Party may use
any reasonable averaging and attributing methods.
(d) Anything in this Section 8.2 to the contrary
notwithstanding, if the Company enters into agreements for the acquisition of
interests in receivables from one or more Other Transferor, the Company shall
allocate the liability for any amounts under this Section 8.2 which are in
connection with the Liquidity Provider Agreement, the Credit Support Agreement
or the credit support provided by the Credit Support Provider ("Section 8.2
Costs") to the Transferor and each Other Transferor; provided, however, that if
such Section 8.2 Costs are attributable to the Transferor, any of the Sellers
or the Collection Agent and not attributable to any Other Transferor, the
Transferor shall be solely liable for such Section 8.2 Costs or if such Section
8.2 Costs are attributable to Other Transferor and not attributable to the
Transferor, any of the Sellers or the Collection Agent, such Other Transferor
shall be solely liable for such Section 8.2 Costs.
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(e) Notwithstanding anything contained in this
Section 8.2 to the contrary, no Indemnified Party shall have any right to
indemnification for any Section 8.2 Cost in respect of which no demand shall
have been made to the Transferor for indemnification therefor within 180 days
after such Indemnified Party shall have acquired actual knowledge of its
incurrence thereof. In addition, the Transferor shall have the right to cause
any Bank Investor that makes any demand for indemnification of any Section 8.2
Cost to assign all of its rights, title, interests and Commitment hereunder and
under the Liquidity Provider Agreement to a commercial bank designated by the
Transferor and (x) having a short-term debt rating of at least "A-2" and "P-2"
by S&P and Moody's, respectively, and (y) that is reasonably acceptable to the
Agent, the Administrative Agent and the Company. Any such assignment shall be
effected in accordance with Section 9.7.
SECTION 8.3. Taxes. All payments made hereunder by the
Transferor or the Collection Agent (each, a "payor") to the Company, any Bank
Investor, or the Agent (each, a "recipient") shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and any other taxes, fees, duties, withholdings or other
charges of any nature whatsoever imposed by any taxing authority on any
recipient (or any assignee of such parties) (such non-excluded items being
called "Taxes"), but excluding franchise taxes and taxes imposed on or measured
by the recipient's net or gross income or net or gross receipts and taxes in
the nature of branch profits taxes (collectively, the "Excluded Taxes"). In
the event that any withholding or deduction from any payment made by the payor
hereunder is required in respect of any Taxes, then such payor shall:
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Agent an official
receipt or other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the recipient such additional amount or
amounts as is necessary to ensure that the net amount actually received by the
recipient will equal the full amount such recipient would have received had no
such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against
any Indemnified Party with respect to any payment received by such Indemnified
Party hereunder or under any of the other Transaction Documents, the Liquidity
Provider Agreement or any Credit Support Document, such Indemnified Party may
pay such Taxes and the payor will promptly pay such additional amounts
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(including any penalties, interest or expenses) as shall be necessary in order
that the net amount received by such Indemnified Party after the payment of
such Taxes (including any Taxes on such additional amount) shall equal the
amount such Indemnified Party would have received had such Taxes not been
asserted.
If the payor fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Indemnified Party the
required receipts or other required documentary evidence, the payor shall
indemnify the Indemnified Party for any incremental Taxes, interest, or
penalties that may become payable by any Indemnified party as a result of any
such failure.
Any of the Agent or the Bank Investors that is not
created or organized under the laws of the United States or a political
subdivision thereof shall, to the extent that it may then do so under
applicable laws and regulations, deliver to the Transferor (with, in the case
of each Bank Investor, a copy to the Agent) (i) upon becoming a party hereto
pursuant to Section 9.7 or otherwise, two (or such other number as may from
time to time be prescribed by applicable laws or regulations) duly completed
copies of IRS Form 4224, Form 1001 or W-8 (or any successor forms or other
certificates or statements which may be required from time to time by the
relevant United States taxing authorities or applicable laws or regulations),
as appropriate, to permit the Transferor or the Collection Agent to make
payments hereunder for the account of the Agent or such Bank Investor, as the
case may be, without deduction or withholding of United States Federal income
or similar taxes and (ii) upon the obsolescence of or after the occurrence of
any event requiring a change in, any form or certificate previously delivered
pursuant to this Section 8.3, copies (in such numbers as may from time to time
be prescribed by applicable laws or regulations) of such additional, amended or
successor forms, certificates or statements as may be required under applicable
laws or regulations to permit the Transferor or the Collection Agent to make
payments hereunder for the account of the Agent or such Bank Investor, as the
case may be, without deduction or withholding of United States Federal income
or similar taxes. No Indemnified Party shall be entitled to assert any of
rights or benefits of this Section 8.3 at any time that it is not in compliance
with the terms of this paragraph.
Anything in this Section 8.3 to the contrary
notwithstanding, if the Company enters into agreements for the acquisition of
interests in receivables from one or more Other Transferor, the Company shall
allocate the liability for any Taxes or other amounts due under this Section
8.3, if any, which are in connection with the Liquidity Provider Agreement, the
Credit Support Agreement or the credit support provided by the Credit Support
Provider among the Transferor and each Other
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Transferor; provided, however, that if such Taxes are attributable to the
Transferor, any of the Sellers or the Collection Agent and not attributable to
any Other Transferor, the Transferor shall be solely liable for such Taxes or
if such Taxes are attributable to any Other Transferor and not attributable to
the Transferor, any of the Sellers or the Collection Agent, such Other
Transferor shall be solely liable therefor.
Any demand for indemnification for any Taxes or other
amounts by any Indemnified Party pursuant to this Section 8.3 shall be made by
delivery of a certificate from the Indemnified Party to the Transferor and the
Agent setting forth the amount and the calculation (in reasonable detail, which
calculation shall be conclusive and binding absent manifest error) of the
Indemnified Amount and the nature of such claim. Any such amounts shall be
payable within ten (10) days after such Indemnified Party's demand therefor.
Notwithstanding anything contained in this Section 8.3 to the
contrary, no Indemnified Party shall have any right to indemnification for any
of the amounts described herein in respect of which no demand shall have been
made to the Transferor for indemnification therefor within 180 days after any
such amount for which such Indemnified Party shall be entitled to
indemnification hereunder shall have been assessed against (and the Indemnified
Party shall have received notice of such assessment) or was actually incurred
by the Indemnified Party.
SECTION 8.4. Other Costs, Expenses and Related Matters.
(a) The Transferor agrees, upon receipt of a written invoice, to pay or cause
to be paid, and to save the Indemnified Parties harmless against liability for
the payment of, all reasonable out-of-pocket expenses (including, without
limitation, attorneys', accountants' and other third parties' fees and
expenses, any filing fees and expenses incurred by officers or employees of any
of the Indemnified Parties) or intangible, documentary or recording taxes
incurred by or on behalf of any of the Indemnified Parties (i) in connection
with the negotiation, execution, delivery and preparation of this Agreement,
the other Transaction Documents and any documents or instruments delivered
pursuant hereto or thereto and the transactions contemplated hereby or thereby
(including, without limitation, the perfection or protection of the Transferred
Interest) and (ii) from time to time (a) relating to any amendments, waivers or
consents under this Agreement and the other Transaction Documents, (b) arising
in connection with any of the Indemnified Parties' enforcement or preservation
of rights under the Transaction Documents (including, without limitation, the
perfection and protection of the Transferred Interest under this Agreement), or
(c) arising in connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving this Agreement or any of the other
Transaction Documents (all of such amounts, collectively,
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"Transaction Costs"). Any demand for indemnification for any Taxes or other
amounts by any Indemnified Party pursuant to this Section 8.4 shall be made by
delivery of a certificate from the Indemnified Party to the Transferor and the
Agent setting forth the amount and the calculation of the Indemnified Amount
(in reasonable detail, which calculation shall be conclusive and binding absent
manifest error) and the nature of such claim. Any such amounts shall be
payable within ten (10) days after such Indemnified Party's demand therefor.
Notwithstanding anything contained in this Section 8.4(a) to the contrary, no
Indemnified Party shall have any right to indemnification for any of the
amounts described herein in respect of which no demand shall have been made to
the Transferor for indemnification therefor within 180 days after such
Indemnified Party shall have acquired actual knowledge of its incurrence
thereof.
(b) The Transferor shall pay the Agent, for the
account of the Company and the Bank Investors, as applicable, on demand any
Early Collection Fee due on account of the reduction for any reason whatsoever
of a Tranche on a day prior to the last day of its Tranche Period, other than
any such reduction occurring as a result of a Non-Fee Termination Event.
SECTION 8.5. Reconveyance Under Certain Circumstances.
(a) The Transferor agrees to accept the reconveyance from the Agent, on behalf
of the Company and/or the Bank Investors, of the Transferred Interest if the
Agent notifies the Transferor of a material breach of any representation or
warranty made or deemed made pursuant to Section 3.1(a), 3.1(b) or 3.1(c) of
this Agreement and the Transferor shall fail to cure such breach within 15 days
of such notice. The reconveyance price shall be paid by the Transferor to the
Agent, for the account of the Company and the Bank Investors, as applicable, in
immediately available funds on such 15th day, in an amount equal to the
Aggregate Unpaids.
(b) The Transferor agrees to accept the reconveyance from the
Agent, on behalf of the Company and/or the Bank Investors, of the Transferred
Interest in those Receivables as to which the Agent notifies the Transferor
that any of the representations and warranties made or deemed made pursuant to
Section 3.1(d), 3.1(j) or 3.1(l) of this Agreement are not true with respect
thereto and the Transferor shall fail to cure such breach within 3 days of such
notice. The reconveyance price for such Receivables shall be equal to the
product of the Percentage Factor at such time and aggregate Outstanding Balance
of all such affected Receivables, plus all accrued but unpaid Discount and
Servicing Fees with respect thereto.
ARTICLE IX
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THE AGENT; BANK COMMITMENT
SECTION 9.1. Authorization and Action.
(a) The Company and each Bank Investor hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Transaction Documents as are delegated to
the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. In furtherance, and without limiting the
generality, of the foregoing, the Company and each Bank Investor hereby
appoints the Agent as its agent to execute and deliver all further instruments
and documents, and take all further action that the Agent may deem necessary or
appropriate or that the Company or a Bank Investor may reasonably request in
order to perfect, protect or more fully evidence the interests transferred or
to be transferred from time to time by the Transferor hereunder, or to enable
any of them to exercise or enforce any of their respective rights hereunder,
including, without limitation, the execution by the Agent as secured party or
assignee of such financing or continuation statements, or amendments thereto or
assignments thereof, relative to all or any of the Receivables now existing or
hereafter arising, and such other instruments or notices, as may be necessary
or appropriate for the purposes stated hereinabove. The Company and the
Majority Investors may direct the Agent to take any such incidental action
hereunder. With respect to other actions which are incidental to the actions
specifically delegated to the Agent hereunder, the Agent shall not be required
to take any such incidental action hereunder, but shall be required to act or
to refrain from acting (and shall be fully protected in acting or refraining
from acting) upon the direction of the Majority Investors; provided, however,
that Agent shall not be required to take any action hereunder if the taking of
such action, in the reasonable determination of the Agent, shall be in
violation of any applicable law, rule or regulation or contrary to any
provision of this Agreement or shall expose the Agent to liability hereunder or
otherwise. Upon the occurrence and during the continuance of any Termination
Event or Potential Termination Event, the Agent shall take no action hereunder
(other than ministerial actions or such actions as are specifically provided
for herein) without the prior consent of the Majority Investors. The Agent
shall not, without the prior written consent of all Bank Investors, agree to
(i) amend, modify or waive any provision of this Agreement in any way which
would (A) reduce or impair Collections or the payment of Discount or fees
payable hereunder to the Bank Investors or delay the scheduled dates for
payment of such amounts, (B) increase the Servicing Fee (other than as
permitted pursuant to Section 6.2(b)), (C) modify any provisions of this
Agreement, the Receivables Purchase Agreement or the Parent Support Agreement
relating to the timing of payments required to be made by the Transferor, the
Sellers or the Parent hereunder or thereunder or the application of the
proceeds of such payments, (D) the appointment of any Person (other
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than the Agent) as successor Collection Agent, (E) release any property from
the lien provided by this Agreement (other than as expressly contemplated
herein), or (F) modifying any of the obligations of the Parent under the Parent
Support Agreement. The Agent shall not agree to any amendment of this Agreement
which increases the dollar amount of a Bank Investor's Commitment without the
prior consent of such Bank Investor. In addition, the Agent shall not agree to
any amendment of this Agreement not specifically described in the two preceding
sentences without the consent of the Majority Investors. "Majority Investors"
shall mean, at any time, (i) those Bank Investors which hold Commitments
aggregating in excess of 51% of the Maximum Net Investment as of such date and
(ii) the Company, to the extent that either (x) the Company has any Net
Investment at such time or (y) the Company has no Net Investment at such time
but the Reinvestment Termination Date has not yet occurred. In the event the
Agent requests the Company's or a Bank Investor's consent pursuant to the
foregoing provisions and the Agent does not receive a consent (either positive
or negative) from the Company or such Bank Investor within 10 Business Days of
the Company's or Bank Investor's receipt of such request, then the Company or
such Bank Investor (and its percentage interest hereunder) shall be disregarded
in determining whether the Agent shall have obtained sufficient consent
hereunder.
(b) The Agent shall exercise such rights and powers
vested in it by this Agreement and the other Transaction Documents, and use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
SECTION 9.2. Agent's Reliance, Etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement or any of the other Transaction Documents,
except for its or their own gross negligence or willful misconduct. Without
limiting the foregoing, the Agent: (i) may consult with legal counsel
(including counsel for the Transferor or any of the Sellers), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to the Company or any Bank Investor and shall not be responsible
to the Company or any Bank Investor for any statements, warranties or
representations made in or in connection with this Agreement; (iii) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or any of the other
Transaction Documents on the part of the Transferor, the
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Collection Agent, the Sellers or the Parent or to inspect the property
(including the books and records) of the Transferor, the Collection Agent, the
Sellers or the Parent; (iv) shall not be responsible to the Company or any Bank
Investor for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any of the other
Transaction Documents or any other instrument or document furnished pursuant
hereto or thereto; (v) shall not be responsible to the Company or to any of the
Bank Investors for the existence, value or sufficiency of any of the Affected
Assets or to ascertain the Transferor's or any of the Sellers' compliance with
any of the Contracts or any LEC Agreement, and (vi) shall incur no liability
under or in respect of this Agreement or any of the other Transaction Documents
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 9.3. Credit Decision. The Company and each Bank
Investor acknowledges that it has, independently and without reliance upon the
Agent, any of the Agent's Affiliates, any other Bank Investor or the Company
(in the case of any Bank Investor) and based upon such documents and
information as it has deemed appropriate, made its own evaluation and decision
to enter into this Agreement and the other Transaction Documents to which it is
a party and, if it so determines, to accept the transfer of any undivided
ownership interest in the Affected Assets hereunder. The Company and each Bank
Investor also acknowledges that it will, independently and without reliance
upon the Agent, any of the Agent's Affiliates, any other Bank Investor or the
Company (in the case of any Bank Investor) and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement and the other
Transaction Documents to which it is a party.
SECTION 9.4. Indemnification of the Agent. The Bank
Investors agree to indemnify the Agent (to the extent not reimbursed by the
Transferor), ratably in accordance with their Pro Rata Shares, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
in any way relating to or arising out of this Agreement, any of the other
Transaction Documents or any action taken or omitted by the Agent hereunder or
thereunder, provided that the Bank Investors shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
the Bank Investors agree to reimburse the Agent, ratably in accordance with
their Pro Rata Shares, promptly upon demand for any out-of-pocket expenses
(including counsel fees and expenses) incurred by the Agent in
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connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
other Transaction Documents, to the extent that such expenses are incurred in
the interests of or otherwise in respect of the Bank Investors hereunder and/or
thereunder and to the extent that the Agent is not reimbursed for such expenses
by the Transferor.
SECTION 9.5. Successor Agent. The Agent may resign at any
time by giving written notice thereof to each Bank Investor, the Company and
the Transferor and may be removed at any time for cause by the Majority
Investors. Upon any such resignation or removal, the Company and the Majority
Investors shall appoint a successor Agent. The Company and the Bank Investors
each agrees that it shall not unreasonably withhold or delay its approval of
the appointment of a successor Agent. If no such successor Agent shall have
been so appointed, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Majority
Investors' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Company and the Bank Investors, appoint a successor Agent which
successor Agent shall be either (i) a commercial bank organized under the laws
of the United States or of any state thereof and have a combined capital and
surplus of at least $50,000,000 or (ii) an Affiliate of such a bank. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article IX shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent under this
Agreement.
SECTION 9.6. Payments by the Agent. All amounts received
by the Agent on behalf of the Bank Investors or any of them shall be paid by
the Agent to the Bank Investors (at their respective accounts specified to the
Agent from time to time) in accordance with their respective related pro rata
interests in the Net Investment (unless specifically allocated to the Bank
Investors or any of them differently pursuant to the terms hereof, in which
case, such amounts shall be paid in accordance with such different allocation
to the applicable Bank Investors entitled thereto) on the Business Day received
by the Agent, unless such amounts are received after 12:00 noon on such
Business Day, in which case the Agent shall use its reasonable efforts to pay
such amounts to the applicable Bank Investors entitled thereto on such Business
Day, but, in any event, shall pay such amounts to the Bank Investors not later
than the following Business Day.
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SECTION 9.7. Bank Commitment; Assignment to Bank
Investors.
(a) Bank Commitment. At any time on or prior to the
Termination Date, in the event that the Company does not effect an Incremental
Transfer as requested under Section 2.2(a), then the Transferor shall have the
right to require the Company to assign its interest in the Net Investment in
whole to the Bank Investors pursuant to this Section 9.7. In addition, at any
time on or prior to the Termination Date (i) upon the occurrence of a
Termination Event or (ii) upon the Company's giving of a notice of the
Reinvestment Termination Date, the Transferor hereby requests and directs that
the Company assign its interest in the Net Investment in whole to the Bank
Investors pursuant to this Section 9.7 and, in each case, the Transferor hereby
agrees to pay the amounts described in Section 9.7(d) above. Provided that (i)
the Net Asset Test is satisfied and (ii) the Transferor shall have paid to the
Company all amounts due as described in Section 9.7(d) hereof, upon any such
election by the Company or any such request by the Transferor, the Company
shall make such assignment and the Bank Investors shall accept such assignment
and shall assume all of the Company's obligations hereunder. In connection
with any assignment from the Company to the Bank Investors pursuant to this
Section 9.7, each Bank Investor shall, on the date of such assignment, pay to
the Company an amount equal to its Assignment Amount. In addition, at any time
on or prior to the Termination Date, the Transferor shall have the right to
request funding under this Agreement directly from the Bank Investors; provided
that at such time all conditions precedent set forth herein for an Incremental
Transfer shall be satisfied; and provided; further that in connection with such
funding by the Bank Investors, the Bank Investors shall have theretofore or
concurrently therewith accepted the assignment of all of the Company's interest
in the Net Investment and assumed all of the Company's obligations hereunder.
Upon any assignment by the Company to the Bank Investors contemplated
hereunder, the Company shall cease to make any additional Incremental Transfers
hereunder.
(b) Assignment. No Bank Investor may assign all or
any portion of its interests in the Net Investment, the Receivables, or the
Collections, Related Security and Proceeds with respect thereto or its rights
and obligations hereunder to any Person unless approved in writing by the Agent
and the Transferor, which consent, in the case of the Transferor, shall not be
unreasonably withheld. In the case of an assignment by the Company to the Bank
Investors or by a Bank Investor to another Person, the assignor shall deliver
to the assignee(s) an Assignment and Assumption Agreement in substantially the
form of Exhibit F attached hereto, duly executed, assigning to the assignee a
pro rata interest in the Net Investment, the Receivables, and Collections,
Related Security and Proceeds with
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respect thereto and the assignor's rights and obligations hereunder and the
assignor shall promptly execute and deliver all further instruments and
documents, and take all further action, that the assignee may reasonably
request in order to protect, or more fully evidence the assignee's right, title
and interest in and to such interest and to enable the Agent, on behalf of such
assignee, to exercise or enforce any rights hereunder and under the other
Transaction Documents to which such assignor is or, immediately prior to such
assignment, was a party. Upon any such assignment, (i) the assignee shall have
all of the rights and obligations of the assignor hereunder and under the other
Transaction Documents to which such assignor is or, immediately prior to such
assignment, was a party with respect to such interest for all purposes of this
Agreement and under the other Transaction Documents to which such assignor is
or, immediately prior to such assignment, was a party (it being understood that
the Bank Investors, as assignees, shall (x) be obligated to effect Incremental
Transfers under Section 2.2(a) in accordance with the terms thereof,
notwithstanding that the Company was not so obligated and (y) not have the
right to elect the commencement of the amortization of the Net Investment
pursuant to the definition of "Reinvestment Termination Date", notwithstanding
that the Company had such right) and (ii) the assignor shall relinquish its
rights with respect to such interest for all purposes of this Agreement and the
other Transaction Documents to which such assignor is or, immediately prior to
such assignment, was a party. No such assignment shall be effective unless a
fully executed copy of the related Assignment and Assumption Agreement shall be
delivered to the Agent and the Transferor and shall have been accepted by the
Agent. All costs and expenses of the Agent, the Liquidity Provider,
NationsBank (including, in all cases, in its capacity as an assignor or
assignee) and, to the extent such assignment was requested by or caused by the
Transferor, the assignor and assignee, in each case, incurred in connection
with any assignment hereunder shall be borne by the Transferor. In all other
cases, the Transferor shall not be liable for any such costs or expenses of the
assignor or assignee, other than NationsBank in its capacity as such. No Bank
Investor shall assign any portion of its Commitment hereunder without also
simultaneously assigning an equal portion of its interest in the Liquidity
Provider Agreement.
(c) Effects of Assignment. By executing and
delivering an Assignment and Assumption Agreement, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Assumption
Agreement, the assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, the other Transaction Documents
or any other instrument or document furnished pursuant hereto or thereto or the
execution, legality, validity,
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enforceability, genuineness, sufficiency or value or this Agreement, the other
Transaction Documents or any such other instrument or document; (ii) the
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Transferor, the Sellers or the
Collection Agent or the performance or observance by the Transferor, the
Sellers, the Parent or the Collection Agent of any of their respective
obligations under this Agreement, the Receivables Purchase Agreement, the
Parent Support Agreement, the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) the assignor
makes no representations and assumes no liability for the existence, value or
sufficiency of any of the Affected Assets or the performance or observance by
any of the Sellers or the Transferor of any of their respective obligations, if
any, under any Contract or any LEC Agreement, (iv) such assignee confirms that
it has received a copy of this Agreement, the Receivables Purchase Agreement,
the Parent Support Agreement and such other instruments, documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement and to purchase
such interest; (v) such assignee will, independently and without reliance upon
the Agent, or any of its Affiliates, or the assignor and based on such
agreements, documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Transaction Documents; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement, the other Transaction Documents and
any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto and to enforce its respective
rights and interests in and under this Agreement, the other Transaction
Documents, the Receivables, the Contracts and the Related Security; (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Transaction
Documents are required to be performed by it as the assignee of the assignor;
and (vii) such assignee agrees that it will not institute against the Company
any proceeding of the type referred to in Section 10.9 prior to the date which
is one year and one day after the payment in full of all Commercial Paper
issued by the Company.
(d) Transferor's Obligation to Pay Certain Amounts;
Additional Assignment Amount. The Transferor shall pay to the Agent, for the
account of the Company, in connection with any assignment by the Company to the
Bank Investors pursuant to this Section 9.7, an aggregate amount equal to all
accrued but unpaid Discount through the effective date of assignment, plus the
Early Collection Fee, plus all other Aggregate Unpaids (other than the Net
Investment). To the extent that such Discount (or
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the Early Collection Fee, if applicable) relates to interest or discount on
Commercial Paper issued to fund the Net Investment, if the Transferor fails to
make payment of such amounts at or prior to the time of assignment by the
Company to the Bank Investors, such amount shall be paid by the Bank Investors
(in accordance with their respective Pro Rata Shares) to the Company as
additional consideration for the interests assigned to the Bank Investors and
the amount of the "Net Investment" hereunder held by the Bank Investors shall
be increased by an amount equal to the additional amount so paid by the Bank
Investors.
(e) Administration of Agreement After Assignment.
After any assignment by the Company to the Bank Investors pursuant to this
Section 9.7 (and the payment of all amounts owing to the Company in connection
therewith), all rights of the Administrative Agent and the Collateral Agent set
forth herein shall be deemed to be afforded to the Agent on behalf of the Bank
Investors instead of either such party.
(f) Payments. After any assignment by the Company
to the Bank Investors pursuant to this Section 9.7, all payments to be made
hereunder by the Transferor or the Collection Agent to the Bank Investors shall
be made to the Agent's account as such account shall have been notified to the
Transferor and the Collection Agent.
(g) Downgrade of Bank Investor. (i) If, at any time
prior to any assignment by the Company to the Bank Investors as contemplated
pursuant to this Section 9.7, the short term debt rating of any Bank Investor
shall be "A-2" or "P-2" from Standard & Poor's or Moody's, respectively, with
negative credit implications, and the Agent shall so request, then such Bank
Investor shall, within 30 days of such request, assign its rights and
obligations hereunder to another financial institution acceptable to the Agent
and the Company (which institution's short term debt shall be rated at least
"A-2" and "P-2" from Standard & Poor's and Moody's, respectively, and which
shall not be so rated with negative credit implications). If the short term
debt rating of a Bank Investor shall be "A-3" or "P-3", or lower, from Standard
& Poor's or Moody's, respectively (or such rating shall have been withdrawn by
Standard & Poor's or Moody's), such Bank Investor, upon the request of the
Agent shall, within five (5) Business Days of such request, assign its rights
and obligations hereunder to another financial institution acceptable to the
Agent and the Company (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's and Moody's, respectively, and
which shall not be so rated with negative credit implications). In either such
case, if any such Bank Investor shall not have assigned its rights and
obligations under this Agreement within the applicable time period described
above, the Company shall have the right to require such Bank Investor to accept
the assignment of such Bank
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Investor's Pro Rata Share of the Net Investment; such assignment shall occur in
accordance with the applicable provisions of this Section 9.7. Such Bank
Investor shall be obligated to pay to the Company, in connection with such
assignment, in addition to the Pro Rata Share of the Net Investment, an amount
equal to the interest component of the Commercial Paper issued to fund the
portion of the Net Investment being assigned to such Bank Investor, as
reasonably determined by the Agent. Notwithstanding anything contained herein
to the contrary, upon any such assignment to a downgraded Bank Investor as
contemplated pursuant to the immediately preceding sentence, (x) the aggregate
available amount of the Maximum Net Investment, solely as it relates to new
Incremental Transfers by the Company, shall be reduced by the amount of unused
Commitment of such downgraded Bank Investor and (y) the Inactive Commitment
shall be reduced by such downgraded Bank Investor's Pro Rate Share thereof (as
determined prior to any such default by such Bank Investor); it being
understood and agreed, that nothing in this sentence or the preceding two
sentences shall effect or diminish in any way any such downgraded Bank
Investor's Commitment to the Transferor or such downgraded Bank Investor's
other obligations and liabilities hereunder and under the other Transaction
Documents.
(ii) If, at any time after any assignment by
the Company to the Bank Investors as contemplated pursuant to this Section 9.7,
the short term debt rating of any Bank Investor shall be "A-3" or "P-3" from
Standard & Poor's or Moody's, respectively, with negative credit implications,
and the Transferor shall so request, then such Bank Investor shall, within 30
days of such request, assign its rights and obligations hereunder to another
financial institution acceptable to the Agent (which institution's short term
debt shall be rated at least "A-2" and "P-2" from Standard & Poor's and
Moody's, respectively, and which shall not be so rated with negative credit
implications).
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Term of Agreement. This Agreement shall
terminate on the date following the Termination Date upon which the Net
Investment has been reduced to zero, all accrued Discount and Servicing Fees
have been indefeasibly paid in full and all other Aggregate Unpaids have been
paid in full, in each case, in cash; provided, however, that (i) the rights and
remedies of the Agent, the Company, the Bank Investors and the Administrative
Agent with respect to any representation and warranty made or deemed to be made
by the Transferor pursuant to this Agreement, (ii) the indemnification and
payment provisions of Article VIII, and (iii) the agreement set forth in
Section 10.8 and 10.9
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hereof, shall be continuing and shall survive any termination of this
Agreement.
SECTION 10.2. Waivers; Amendments. No failure or delay on
the part of the Agent, the Company, the Administrative Agent or any Bank
Investor in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies
provided by law. Any provision of this Agreement may be amended if, but only
if, such amendment is in writing and is signed by the Transferor, the Agent
and, except as expressly otherwise provided herein, the Majority Investors; it
being expressly agreed that, to the extent the Agent determines that there has
been no other material revision to the other provisions of the Revolving Credit
Agreement since the date upon which the financial covenants set forth on Annex
I hereto had last been amended, supplemented or otherwise modified hereunder,
the Agent and the Transferor may, without the consent of the Majority
Investors, amend, supplement or otherwise modify the provision of Annex I
hereto in any manner (including, without limitation, adding financial covenants
thereto or deleting or modifying any of the financial covenants thereunder) to
make the Financial Covenant Termination Events hereunder substantively
identical to the financial covenants set forth in the Revolving Credit
Agreement.
SECTION 10.3. Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing
(including telecopy or electronic facsimile transmission or similar writing)
and shall be given to the other party at its address or telecopy number set
forth below or at such other address or telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 10.3
and confirmation is received, (ii) if given by mail, three (3) Business Days
following such posting, postage prepaid, U.S. certified or registered, (iii) if
given by overnight courier, one (1) Business Day after deposit thereof with a
national overnight courier service, or (iv) if given by any other means, when
received at the address specified in this Section 10.3. However, anything in
this Section to the contrary notwithstanding, the Transferor hereby authorizes
the Agent, the Company and/or the Bank Investors to effect Transfers, Tranche
Period and Tranche Rate selections based on telephonic notices made by any
Person which the Agent, the Company and/or the Bank Investors, as applicable,
in good faith believes to be acting on behalf of the Transferor. The
Transferor agrees to deliver promptly to the Agent a written confirmation of
each telephonic
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notice signed by an authorized officer of Transferor. However, the absence of
such confirmation shall not affect the validity of such notice. If the written
confirmation differs in any material respect from the action taken by the
Agent, the Company and/or the Bank Investors, the records of the Agent, the
Company and/or the Bank Investors, as applicable, shall govern absent manifest
error.
If to the Company:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center--South Tower
225 Liberty Street
New York, New York 10080
Telephone: (212) 236-7200
Telecopy: (212) 236-7584
(with a copy to the Administrative Agent)
If to the Transferor:
LCI SPC I, Inc.
8180 Greensboro Drive, Suite 900
McLean, Virginia 22102
Attn: Karen Perry
Telephone: (703) 610-4840
Telecopy: (703) 714-1733
Payment Information:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
ABA No.: 071-000-013
Account No.: 5563925
Reference: LCI SPC I, Inc.
With a copy to:
Willkie, Farr & Gallagher
One CitiCorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Richard Sammis, Esq.
Telephone: (212) 821-8263
Telecopy: (212) 821-8111
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If to the Collection Agent:
LCI International Telecom Corp.
8180 Greensboro Drive, Suite 800
McLean, Virginia 22102
Attn: John J. Dillon
Telephone: (703) 848-4490
Telecopy: (703) 918-4660
With a copy to:
Willkie, Farr & Gallagher
One CitiCorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Richard Sammis, Esq.
Telephone: (212) 821-8263
Telecopy: (212) 821-8111
If to the Collateral Agent:
NationsBank, N.A.
NationsBank Corporate Center--10th Floor
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
If to the Agent:
NationsBank, N.A.
NationsBank Corporate Center--10th Floor
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
If to the Administrative Agent:
NationsBank, N.A.
NationsBank Corporate Center--10th Floor
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
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If to the Bank Investors, at their respective addresses set
forth on the signature pages hereto or of the Assignment and Assumption
Agreement pursuant to which any such Person became a party hereto.
SECTION 10.4. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; INTEGRATION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS DISTINGUISHED FROM THE
CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW YORK. THE TRANSFEROR HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING
IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
TRANSFEROR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING IN THIS SECTION 10.4 SHALL AFFECT THE RIGHT OF THE COMPANY, ANY
BANK INVESTOR, THE AGENT OR THE ADMINISTRATIVE AGENT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE TRANSFEROR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH,
RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
(c) This Agreement and the other Transaction
Documents contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and thereof and
shall constitute the entire agreement among the parties hereto and thereto with
respect to the subject matter hereof and thereof superseding all prior oral or
written understandings.
(d) The Transferor and LCI Telecom, in its capacity
as the Collection Agent hereunder, each hereby appoint CT Corporation System
located at 1633 Broadway, New York, New York, 10019 as the authorized agent
upon whom process may be served in any action arising out of or based upon this
Agreement, the other Transaction Documents to which such Person is a party or
the transactions contemplated hereby or thereby that may be instituted in the
United States District Court for the Southern District of New York and of any
New York State court sitting in The City
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of New York by the Company, the Agent, any Bank Investor, the Collateral Agent
or any assignee of any of them.
SECTION 10.5. Counterparts; Severability. This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.6. Successors and Assigns. (a) This Agreement
shall be binding on the parties hereto and their respective successors and
assigns; provided, however, that neither the Transferor, any of the Sellers,
nor the Parent may assign any of its respective rights or delegate any of its
duties hereunder, under the Receivables Purchase Agreement, under the Parent
Support Agreement or under any of the other Transaction Documents to which any
such Person is a party without the prior written consent of the Agent. No
provision of this Agreement shall in any manner restrict the ability of the
Company or any Bank Investor to assign, participate, grant security interests
in, or otherwise transfer any portion of the Transferred Interest.
(b) The Transferor hereby agrees and consents to the
assignment by the Company from time to time of all or any part of its rights
under, interest in and title to this Agreement and the Transferred Interest to
any Liquidity Provider. In addition, the Transferor hereby consents to and
acknowledges the assignment by the Company of all of its rights under, interest
in and title to this Agreement and the Transferred Interest to the Collateral
Agent.
SECTION 10.7. Waiver of Confidentiality. The Transferor
and the Collection Agent each hereby consents to the disclosure of any
non-public information with respect to it received by the Company, the Agent,
any Bank Investor, the Liquidity Provider or the Administrative Agent to (i)
any of the Company, the Agent, any nationally recognized rating agency rating
the Company's Commercial Paper, the Administrative Agent, the Collateral Agent,
any Bank Investor or potential Bank Investor, the Liquidity Provider or the
Credit Support Provider in relation to this Agreement, (ii) any of the
foregoing's auditors, attorneys, employees, financial advisors; provided such
Persons are made aware of the confidential nature thereof, (iii) any Official
Body having authority over any of the foregoing to
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the extent required to do so under law or subpoena; (iv) any such other Person
as is otherwise required by law or a court of competent jurisdiction, and (v)
any assignee or participant or any potential assignee or participant; and
provided such Persons are made aware of the confidential nature thereof. None
of the Company, the Agent, any Bank Investor, the Liquidity Provider or the
Administrative Agent shall use any such confidential information other than in
connection with administration of this Agreement and the other Transaction
Documents, the transactions contemplated hereunder or thereunder, and any other
transactions, proceedings of circumstances relating hereto or thereto, unless
otherwise consented to by the Transferor.
SECTION 10.8. Confidentiality Agreement. (a) Each of the
Transferor and the Collection Agent hereby agrees that it will not disclose the
contents of this Agreement or any of the other Transaction Documents or any
other proprietary or confidential information of the Company, the Agent, the
Administrative Agent, the Collateral Agent, any Liquidity Provider or any Bank
Investor to any other Person except (i) its auditors and attorneys, employees
or financial advisors and any nationally recognized rating agency rating its
debt, provided such auditors, attorneys, employees, financial advisors or
rating agencies are informed of the highly confidential nature of such
information, (ii) as otherwise required by applicable law (including, the
filing thereof with the Securities Exchange Commission to the extent reasonably
deemed to be required in accordance with the Securities Exchange Act of 1934,
as amended) or order of a court of competent jurisdiction, or (iii) which is
already in the public domain other than as a result of the breach by the
Transferor and/or the Collection Agent of the provisions of this Section 10.8.
(b) Each of the Company, the Agent and the Bank Investors
hereby agrees that it will not disclose any information provided to it by any
of the Affiliated Entities which is clearly marked as being confidential to any
other Person except (i) to the Company, the Agent, any Bank Investor or any
Liquidity Provider or, in each case, any assignee, potential assignee,
participant or potential participant thereof or therewith, provided, that any
such recipient is made aware of the highly confidentiality nature of such
information, (ii) its auditors and attorneys, employees or financial advisors
and any nationally recognized rating agency rating its debt, provided such
auditors, attorneys, employees, financial advisors or rating agencies are
informed of the highly confidential nature of such information, (iii) any
regulatory agency, body or other Official Body regulating or having
jurisdiction over any such Person, provided, such agency, body or other
Official Body is informed of the highly confidential nature of such
information, (iii) as otherwise required by applicable law or order of a court
of competent jurisdiction, (iv) in connection with any legal proceeding or
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threatened legal proceeding to which such Person is a party; or (v) which is
already in the public domain other than as a result of the breach by any such
Person bound by the terms of this Section 10.8(b) of the provisions of this
Section 10.8(b).
SECTION 10.9. No Bankruptcy Petition Against the Company.
Each of the Transferor and the Collection Agent hereby covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of all outstanding Commercial Paper or other indebtedness of the Company, it
will not institute against, or join any other Person in instituting against,
the Company any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.
SECTION 10.10. No Recourse Against Stockholders, Officers or
Directors. No recourse under any obligation, covenant or agreement of the
Company contained in this Agreement or the other Transaction Documents shall be
had against Merrill Lynch Money Markets Inc. (or any affiliate thereof), or any
stockholder, officer or director of the Company, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that this
Agreement and the other Transaction Documents are solely the corporate
obligations of the Company, and that no personal liability whatsoever shall
attach to or be incurred by Merrill Lynch Money Markets Inc. (or any affiliate
thereof), or the stockholders, officers or directors of the Company, as such,
or any of them, under or by reason of any of the obligations, covenants or
agreements of the Company contained herein or therein, or implied therefrom,
and that any and all personal liability for breaches by the Company of any of
such obligations, covenants or agreements, either at common law or at equity,
or by statute or constitution, of Merrill Lynch Money Markets Inc. (or any
affiliate thereof) and every such stockholder, officer or director of the
Company is hereby expressly waived as a condition of and consideration for the
execution of this Agreement.
SECTION 10.11. Characterization of the Transactions
Contemplated by the Agreement. It is the intention of the parties that the
transactions contemplated hereby constitute the sale of the Transferred
Interest, conveying good title thereto free and clear of any Adverse Claims to
the Agent, on behalf of the Company and the Bank Investors, and that the
Transferred Interest not be part of the Transferor's estate in the event of an
insolvency. If, notwithstanding the foregoing, the transactions contemplated
hereby should be deemed a financing, the parties intend that the Transferor
shall be deemed to have granted to the Agent, on behalf of the Company and the
Bank Investors, and the Transferor hereby grants to the Agent, on behalf of the
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Company and the Bank Investors, a first priority perfected and continuing
security interest in all of the Transferor's right, title and interest in, to
and under the Receivables, together with the Related Security, Collections and
Proceeds with respect thereto, and together with all of the Transferor's rights
under the Receivables Purchase Agreement with respect to the Receivables and
with respect to any obligations thereunder of the Sellers with respect to the
Receivables, and that this Agreement shall constitute a security agreement
under applicable law. The Transferor hereby assigns to the Agent, on behalf of
the Company and the Bank Investors, all of its rights and remedies under the
Receivables Purchase Agreement with respect to the Receivables and with respect
to any obligations thereunder of the Sellers with respect to the Receivables.
The Transferor agrees that it shall not give any consent or waiver required or
permitted to be given under the Receivables Purchase Agreement without the
prior consent of the Agent.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Transfer and Administration Agreement as of the date first
written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ STEWART CUTTER
---------------------------------------------
Name: Stewart Cutter
Title: Vice President
LCI SPC I, INC., as Transferor
By: /s/ JOHN J. DILLON
----------------------------------------------
Name: John J. Dillon
Title: Vice President
LCI INTERNATIONAL TELECOM CORP.,
as Collection Agent
By: /s/ JOHN J. DILLON
----------------------------------------------
Name: John J. Dillon
Title: Vice President - Finance
and Treasurer
Commitment NATIONSBANK, N.A., as Agent and
---------- as the sole initial Bank Investor
$150,000,000
By: /s/ MICHELLE M. HEATH
----------------------------------------------
Name: Michelle M. Heath
Title: Vice President
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