AMENDED AND RESTATED RECEIVABLES TRANSFER AGREEMENT
Dated as of March 31, 1997
Among
IKON FUNDING, INC.
as Transferor
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and
IKON CAPITAL, INC.
as initial Servicer
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and
TWIN TOWERS INC.
as Transferee
-------------
and
DEUTSCHE BANK AG, NEW YORK BRANCH
as Agent
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TABLE OF CONTENTS
Section Page
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ARTICLE I
THE COMMITMENT............................. 2
1.01. Commitment........................................................ 2
1.02. Limits on Commitment.............................................. 3
1.03. Transfer Procedure................................................ 3
1.04. Commitment Termination Date....................................... 3
1.05. Voluntary Termination of Commitment or Reduction of Maximum
Investment........................................................ 4
ARTICLE II
TRANSFEREE'S INTEREST.......................... 4
2.01. Assignment of Transferee's Interest............................... 4
2.02. Transferee's Percentage........................................... 4
2.03. Rate Tranches; Selection of Yield Periods......................... 5
ARTICLE III
SETTLEMENT................................ 6
3.01. Non-Pay Out Settlement Procedures for Collections................. 6
3.02. Pay Out Settlement Procedures for Collections..................... 9
3.03. Dilutions......................................................... 11
3.04. Optional Reduction of Transferee's Investment..................... 12
3.05. Reporting by Servicer............................................. 13
3.06. Delivery of Deemed Collections; Collections Held in Trust......... 13
ARTICLE IV
PAYMENT PROCEDURES; FEES AND YIELD PROTECTION.............. 14
4.01. Payments and Computations......................................... 14
4.02. Interest on Overdue Amounts....................................... 14
4.03. Fees.............................................................. 14
4.04. Yield Protection.................................................. 15
4.05. Interest Rate Hedging Agreements.................................. 17
ARTICLE V
CONDITIONS PRECEDENT.......................... 18
5.01. Conditions Precedent to Amendment and Restatement................. 18
5.02. Conditions Precedent to All Transfers and Reinvestments........... 20
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES...................... 21
6.01. Representations and Warranties of the Transferor.................. 21
6.02. Representations and Warranties of IKON Capital.................... 25
ARTICLE VII
GENERAL COVENANTS............................ 28
7.01. Affirmative Covenants............................................. 28
7.02. Reporting Requirements............................................ 30
7.03. Negative Covenants................................................ 31
7.04. Separate Corporate Existence...................................... 33
ARTICLE VIII
ADMINISTRATION AND COLLECTION....................... 35
8.01. Designation of Servicer........................................... 35
8.02. Duties of Servicer................................................ 36
8.03. Rights of the Agent............................................... 38
8.04. Responsibilities of Transferor.................................... 39
8.05. Further Action Evidencing Transfers............................... 39
8.06. Application of Obligors' Payments................................. 41
ARTICLE IX
SECURITY INTEREST............................. 41
9.01. Grant of Security Interest........................................ 41
9.02. Further Assurances................................................ 41
9.03. Remedies.......................................................... 41
ARTICLE X
TERMINATION EVENTS............................ 42
10.01. Termination Events................................................ 42
10.02. Remedies.......................................................... 44
ARTICLE XI
THE AGENT................................. 45
11.01. Authorization and Action.......................................... 45
11.02. Agent's Reliance, Etc............................................. 45
11.03. Agent and Affiliates.............................................. 46
ARTICLE XII
ASSIGNMENTS............................... 46
12.01. Restrictions on Assignments....................................... 46
12.02. Documentation; Notice of Assignment............................... 47
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12.03. Rights of Assignee................................................ 47
12.04. Allocation of Payments............................................ 48
12.05. Calculation of Earned Discount After Assignment................... 48
12.06. Rights of Collateral Agent........................................ 48
ARTICLE XIII
INDEMNIFICATION.............................. 49
13.01. Indemnities by the Transferor..................................... 49
ARTICLE XIV
MISCELLANEOUS............................. 52
14.01. Amendments, Etc................................................... 52
14.02. Notices, Etc...................................................... 52
14.03. No Waiver; Remedies............................................... 52
14.04. Binding Effect; Survival.......................................... 53
14.05. Costs, Expenses and Taxes......................................... 53
14.06. No Proceedings.................................................... 54
14.07. Confidentiality of Transferor Information......................... 54
14.08. Confidentiality of Program Information............................ 56
14.09. No Recourse Against Other Parties................................. 59
14.10. Definitions; Other Terms.......................................... 59
14.11. Captions and Cross References..................................... 59
14.12. Integration....................................................... 59
14.13. Governing Law..................................................... 59
14.14. Waiver Of Jury Trial.............................................. 60
14.15. Consent To Jurisdiction; Waiver Of Immunities..................... 60
14.16. Execution in Counterparts......................................... 60
14.17. Syndication of Liquidity.......................................... 60
14.18. Tax Treatment..................................................... 60
APPENDIX A DEFINITIONS.................................................. A-1
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APPENDIX
APPENDIX A Definitions
SCHEDULES
SCHEDULE 5.01(f) Filing Jurisdictions
SCHEDULE 6.01(m) List of Offices of Transferor where Records Are Kept
SCHEDULE 6.01(n) List of Designated Account Banks and Post Office Boxes
SCHEDULE 6.01(o)-1 Forms of Contracts
SCHEDULE 6.01(o)-2 Description of Credit and Collection Policy
SCHEDULE 6.02(i) Description of Material Adverse Changes
SCHEDULE 14.02 Addresses for Notice
SCHEDULE A-1 Marketplaces
EXHIBITS
EXHIBIT 1.03 Form of Transfer Request
EXHIBIT 3.05(a) Form of Periodic Report
EXHIBIT 5.01(f) Form of UCC Financing Statement
EXHIBIT 5.01(h) Form of Designated Account Agreement
EXHIBIT 5.01(i) Form of Opinion of Counsel for Transferor
EXHIBIT 5.01(j) Form of Opinion of Counsel for Agent
EXHIBIT 5.01(k) Form of UCC Financing Statement - Dealer
EXHIBIT 5.01(l) Form of Power of Attorney
EXHIBIT 5.01(o) Form of IKON Office Letter
EXHIBIT A Form of Post Office Box Agreement
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AMENDED AND RESTATED RECEIVABLES TRANSFER AGREEMENT
AMENDED AND RESTATED RECEIVABLES TRANSFER AGREEMENT, dated as of March 31,
1997, among IKON FUNDING, INC., a Delaware corporation (the "Transferor"), as
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transferor, IKON CAPITAL, INC. (formerly Alco Capital Resource, Inc.), a
Delaware corporation ("IKON Capital"), as initial Servicer (as defined herein),
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TWIN TOWERS INC., a Delaware corporation (the "Transferee"), as transferee, and
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DEUTSCHE BANK AG, a banking corporation organized under the laws of the Federal
Republic of Germany ("Deutsche Bank"), acting through its NEW YORK BRANCH
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("DBNY"), as agent for the Transferee (in such capacity, the "Agent"). Unless
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otherwise indicated, capitalized terms used in this Agreement are defined in
Appendix A.
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Background
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1. IKON Capital, Transferee and the Agent entered into a Receivables
Transfer Agreement, dated as of September 23, 1994 (as heretofore amended, the
"Original Receivables Agreement").
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2. Transferor, IKON Capital, Transferee and the Agent desire to amend and
restate the Original Receivables Agreement in its entirety as set forth herein
in order to, among other things, provide for the substitution of IKON Funding,
Inc., as Transferor.
3. The Transferor has, and expects to have, Pool Receivables in which the
Transferor intends to transfer an undivided interest. The Transferor has
requested the Transferee, and the Transferee has agreed, subject to the terms
and conditions contained in this Agreement, to acquire from the Transferor such
undivided interest, herein referred to as the Transferee's Interest, in one or
more Transfers from time to time during the Reinvestment Period.
4. The Transferor and the Transferee also desire that, subject to the
terms and conditions of this Agreement, certain of the daily Collections in
respect of the Transferee's Interest be reinvested in Pool Receivables so that
the Transferee may maintain its Transferee's Investment fully invested in
uncollected Pool Receivables.
5. The Transferee expects generally to fund its Transfers and
Reinvestments through the issuance of Commercial Paper Notes. The Transferee has
entered into a Liquidity Agreement providing for the making by the Liquidity
Banks of loans secured by the Transferee's Interest in the event the Transferee
is unable to fund its Transfers or Reinvestments pursuant to this Agreement by
the issuance of Commercial Paper Notes or otherwise prefers to fund such
Transfers or Reinvestments under the Liquidity Agreement rather than by the
issuance of Commercial Paper Notes, or is unable to pay such Commercial Paper
Notes at maturity from its share of collections on Pool Receivables. The
Transferee has also entered into an Enhancement Agreement with the Enhancement
Bank providing for the issuance of a letter of credit to a trustee for the
holders of Commercial Paper Notes, and for the making of loans to the
Transferee, to provide funds for the payment of Commercial Paper Notes in the
circumstances described above when funding is not available under the Liquidity
Agreement.
6. The Transferee has appointed DBNY as its agent to perform certain
administrative duties for the Transferee, including, among other things, the
arrangement of the transactions provided for hereunder, the administration of
the funding of such transactions and the making of certain determinations
hereunder and in connection herewith.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto hereby amend and restate the Original
Receivables Agreement in its entirety and hereby agree as follows:
ARTICLE I
THE COMMITMENT
SECTION 1.01. Commitment. On the terms and subject to the conditions set
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forth in this Agreement (including Article V):
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(a) Transfers. Pursuant to Section 1.03, from time to time during
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the Reinvestment Period, upon request by the Transferor, the Transferee
shall acquire from the Transferor, in one or more transactions, an
undivided interest in the Pool Receivables and Related Property. Each of
the initial acquisitions of the Transferee's Interest hereunder and each
subsequent acquisition increasing the Transferee's Interest is herein
called a "Transfer".
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(b) Reinvestments. Pursuant to Section 3.01, during the Reinvestment
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Period, the Transferee shall permit the Servicer to cause certain of the
Collections in respect of the Transferee's Interest to be paid to
Transferor for reinvestment in the Pool Receivables and Related Property.
Each such payment is herein called a "Reinvestment".
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The Transferee's obligation to make such Transfers and
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Reinvestments is herein called the "Commitment".
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SECTION 1.02. Limits on Commitment. Under no circumstances shall the
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Transferee accept any Transfer to the extent that, after giving effect to such
Transfer:
(a) the Transferee's Investment would exceed the Maximum Investment;
or
(b) the Unadjusted Transferee's Percentage would exceed the Maximum
Percentage.
SECTION 1.03. Transfer Procedure. (a) Transfer Request. Each Transfer from
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the Transferor by the Transferee shall be made on written request by the
Transferor to the Transferee and the Agent, substantially in the form of
Exhibit 1.03 (a "Transfer Request"), received by the Agent not later than 11:00
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a.m. (New York City time) on the second Business Day preceding the date of such
proposed Transfer. Each such request shall specify the desired amount and date
of such Transfer.
(b) Amount of Transfer Price. The amount of the transfer price paid by the
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Transferee for each Transfer shall be equal to the lesser of (x) the amount
proposed by the Transferor pursuant to Section 1.03(a) and (y) the maximum
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amount permitted under Section 1.02.
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(c) Funding of Transfer. On the date of each Transfer, the Transferee
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shall, upon satisfaction of the applicable conditions set forth in Article V,
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make available to the Agent in immediately available funds, at its office at
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, the amount of the transfer price
to be paid for such Transfer (determined pursuant to Section 1.03(b)) and after
---------------
receipt by the Agent of such funds, the Agent will make such funds immediately
available to the Transferor at such office.
SECTION 1.04. Commitment Termination Date. (a) The "Commitment Termination
--------------------------- ----------------------
Date" shall be the earlier to occur of (i) March 30, 1998 (herein, as the same
----
may be extended, called the "Scheduled Commitment Termination Date"), and
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(ii) the date of termination of the Commitment pursuant to Section 1.04(c), 1.05
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or 10.02.
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(b) The Scheduled Commitment Termination Date may be extended from time to
time by delivery of a written request for such extension to the Transferee and
the Agent not less than 60 days prior to the then Scheduled Commitment
Termination Date. Within 30 days prior to the then Scheduled Commitment
Termination Date, the Transferee and the Agent shall notify the
3
Transferor as to whether they have given their consent to such extension (which
consent may be given or withheld by either such party in its sole discretion).
As a condition to any such extension, the Transferor and the Servicer shall
deliver such certificates, opinions of counsel or other documents as the
Transferee or the Agent may require. If such extension is approved, the
Scheduled Commitment Termination Date shall be extended for 364 days from the
effective date of such consent.
(c) The Commitment shall terminate, and the Transferee shall have no
obligation to accept any further Transfers or make any further Reinvestments
hereunder, on the scheduled date of termination of either (A) the Liquidity
Banks' commitments under the Liquidity Agreement or (B) the Enhancement Bank's
commitment under the Enhancement Agreement. The Transferee agrees to give the
Transferor at least 30 days' prior written notice of the termination of the
Commitment pursuant to the foregoing sentence, but no failure to give or delay
in giving such notice shall prevent or delay such termination.
SECTION 1.05. Voluntary Termination of Commitment or Reduction of Maximum
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Investment. The Transferor may, upon at least ten Business Days' notice to the
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Agent, terminate the Commitment in whole or reduce in part the unused portion of
the Maximum Investment; provided, however, that (a) each partial reduction shall
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be in an amount equal to $5,000,000 or an integral multiple thereof and (b)
after giving effect to such reduction, the remaining Maximum Investment will not
be less than $25,000,000.
ARTICLE II
TRANSFEREE'S INTEREST
SECTION 2.01. Assignment of Transferee's Interest. The Transferor hereby
-----------------------------------
assigns and transfers to the Transferee, effective on and as of the date of the
initial Transfer hereunder and, with respect to any increase in the Transferee's
Interest effected by an additional Transfer hereunder, on the date of such
additional Transfer, an undivided ownership interest, in a percentage equal to
the Transferee's Percentage as determined from time to time in accordance with
Section 2.02, in all Pool Receivables and Related Property, whether now existing
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or hereafter arising or acquired by the Transferor from time to time. Such
undivided ownership interest as in effect from time to time is herein called the
"Transferee's Interest".
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SECTION 2.02. Transferee's Percentage. The Transferee's Interest shall be
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in a percentage (the "Transferee's Percentage")
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4
equal at any time to the quotient obtained by dividing
(a) the sum of (i) the Transferee's Investment, (ii) the Discount
Factor, (iii) the Default and Dilution Reserve and (iv) the Servicer's Fee
Reserve (such sum being herein sometimes called the "Transferee's
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Allocation"), by
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(b) the Net Pool Balance,
as most recently computed in accordance with this Section 2.02 (such quotient,
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expressed as a percentage, before giving effect to the following provison, being
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the "Unadjusted Transferee's Percentage"); provided, however,
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(1) the Transferee's Percentage shall not be greater than 100%;
(2) during the Pay Out Period, the Transferee's Percentage shall
be the greater of (x) the Transferee's Percentage in effect
immediately before the commencement of the Pay Out Period and (y) the
Transferee's Percentage as otherwise determined in accordance with
this Section 2.02; and
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(3) the Transferee's Percentage shall become zero at such time
as (A) the Transferee shall have received the accrued Earned Discount,
shall have recovered the Transferee's Investment and shall have
received all other amounts payable to the Transferee pursuant to this
Agreement and (B) the Servicer shall have received the accrued
Servicer's Fee.
The Transferee's Percentage shall initially be computed by the Servicer as of
the opening of business of the Servicer on the date of each Transfer, as of the
most recent Month End Date, and shall be recomputed in each Periodic Report and
each Pay Out Statement; provided, however, the Agent may from time to time
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request the Servicer to deliver a Periodic Report for the purpose of
recalculating the Transferee's Percentage, and the Servicer shall deliver such
Periodic Report within 10 Business Days after its receipt of such request. The
Transferee's 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, if any, shall be made.
SECTION 2.03. Rate Tranches; Selection of Yield Periods. (a) From time to
-----------------------------------------
time, for purposes of determining the Yield Periods applicable to different
portions of the Transferee's Interest, and of calculating the Earned Discount
and Servicer's Fee with respect thereto, the Agent shall allocate the
5
Transferee's Interest to one or more tranches (each a "Rate Tranche"), each
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representing a portion of the Transferee's Investment (with respect to each Rate
Tranche, the "Transferee's Tranche Investment"). At any time, each Rate Tranche
-------------------------------
shall have only one Yield Period and one Transferee Rate applicable for purposes
of calculating Earned Discount, and shall be funded by (i) an issue of
Commercial Paper Notes, (ii) a Funding Advance, (iii) a borrowing of Liquidity
Loans funded by the Liquidity Banks ratably and having the same Yield Period, or
(iv) an Enhancement Draw, but not by more than one of the foregoing at the same
time.
(b) The Agent shall select the duration of the initial, and each
subsequent, Yield Period for each Rate Tranche in its discretion; provided that,
--------
so long as no Termination Event shall have occurred and be continuing, the Agent
shall use reasonable efforts, taking into account market conditions, to
accommodate the Transferor's preferences.
(c) From time to time the Agent shall notify the Servicer of the number of
Rate Tranches, the Transferee's Tranche Investment of each Rate Tranche, the
Transferee Rate for such Rate Tranche and the duration of the current Yield
Period selected by it for each Rate Tranche.
ARTICLE III
SETTLEMENT
SECTION 3.01. Non-Pay Out Settlement Procedures for Collections. (a) Daily
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Procedure. On each day during the Reinvestment Period, the Servicer shall deem
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an amount equal to the Transferee's Share of Collections of Pool Receivables
received or deemed received on such day to be received in respect of the
Transferee's Interest, and, out of the Transferee's Share of such Collections,
shall:
(i) hold in trust for the benefit of the Transferee an amount equal
to (A) the aggregate of the aggregate Earned Discount and Servicer's Fee
accrued through such day, less (B) the amount, if any, theretofore set
----
aside and then so held for the benefit of the Transferee in respect of such
Earned Discount and Servicer's Fee;
(ii) set aside and hold in trust for the Transferee an amount equal
to the excess, if any, of
(A) the greatest of
6
(I) if the Transferor shall have elected to reduce the
Transferee's Investment under Section 3.04, the amount of the
------------
proposed reduction,
(II) if the Transferee's Investment shall exceed the
Maximum Investment, the amount of such excess,
(III) if the Unadjusted Transferee's Percentage shall
exceed the Maximum Percentage, an amount equal to the minimum
reduction of the Transferee's Investment which (based on the
Transferee Rates currently in effect, and assuming that such
reduction will be applied to reduce the Transferee's Tranche
Investments of the Rate Tranches having the shortest remaining
Yield Periods first) would result in the Transferee's Percentage
being no greater than the Maximum Percentage, and
(IV) if any of the conditions precedent to Reinvestment
set forth in Section 5.02 shall not be met, the Transferee's
------------
Investment, over
----
(B) the aggregate of the amounts theretofore set aside and
then so held for the benefit of the Transferee pursuant to this
clause (ii); and
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(iii) subject to Section 5.02, pay the remainder, if any, of such
------------
Collections to the Transferor for application to Reinvestment, for the
benefit of the Transferee, in the Transferee's Interest in accordance with
Section 1.01(b).
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The Servicer shall first, apply the Transferor's Share of such Collections to
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any other amounts (other than Earned Discount and Transferee's Investment) then
due to Transferee or the Agent and second, pay any remaining portion of the
------
Transferor's Share of such Collections to the Transferor.
(b) Settlement Date Procedure. Prior to the Pay Out Period, on each
-------------------------
Settlement Date, the Servicer shall deposit to the Agent's Account:
(i) out of the amounts set aside pursuant to clause (i) of
----------
Section 3.01(a), an amount equal to the Earned Discount and Servicer's Fee
---------------
accrued during the related Yield Period with respect to the related Rate
Tranche; and
(ii) out of the amount, if any, set aside pursuant to clause (ii) of
-----------
Section 3.01(a) and not theretofore
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7
reinvested in accordance with Section 3.01(d) or deposited to the Agent's
---------------
Account pursuant to this Section 3.01(b), an amount equal to the lesser of
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such amount and the Transferee's Tranche Investment of the related Rate
Tranche;
provided, however, that if the Agent gives its consent (which consent may be
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revoked at any time), the Servicer may retain amounts which would otherwise be
deposited in respect of Servicer's Fee, in which case no distribution shall be
made in respect of Servicer's Fee under clause (c) below.
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In addition, if, on such Settlement Date, after reducing the Transferee's
Tranche Investment of the related Rate Tranche by the amount deposited pursuant
to clause (ii) above, the Transferee's Investment would be greater than the
-----------
Maximum Investment or the Unadjusted Transferee's Percentage would be greater
than the Maximum Percentage, then the Transferor shall pay to the Servicer, and
the Servicer shall deposit to the Agent's Account, an amount equal to the least
of (x) the minimum reduction of the Transferee's Investment which would result
in the Unadjusted Transferee's Investment not exceeding the Maximum Investment
and the Unadjusted Transferee's Percentage not exceeding the Maximum Percentage,
(y) the Transferee's Tranche Investment of the related Rate Tranche and (z) the
Transferor's Collection Amount.
(c) Order of Application. Upon receipt by the Agent of funds deposited
--------------------
pursuant to subsection (b) on a Settlement Date for any Rate Tranche, the Agent
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shall distribute them to the Persons, for the purposes and in the order of
priority set forth below:
(i) to the Transferee in payment of the accrued and unpaid Earned
Discount for such Rate Tranche;
(ii) to the Servicer in payment of the accrued and unpaid Servicer's
Fee payable with respect to such Rate Tranche; and
(iii) to the Transferee in reduction of the Transferee's Tranche
Investment of such Rate Tranche.
(d) Unreinvested Collections. During the Reinvestment Period, if on any
------------------------
date the amount of Collections theretofore set aside and then held by the
Servicer for the benefit of the Transferee pursuant to clause (ii) of
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Section 3.01(a) shall exceed the maximum amount then required to be set aside
---------------
and so held pursuant to such clause (ii), then, subject to the applicable
-----------
conditions precedent set forth in Section 5.02, the Servicer shall pay to the
------------
Transferor the amount of such excess
8
Collections, for application to Reinvestment in accordance with Section 1.01(b).
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To the extent and for so long as such Collections may not be so reinvested, the
Servicer shall hold such Collections in trust for the benefit of the Transferee
in a separate deposit account containing only such Collections and no other
funds. On each Settlement Date with respect to any Rate Tranche, the Servicer
shall pay to the Agent for the account of the Transferee, in reduction of the
Transferee's Investment, the amount of Collections then held in trust pursuant
to the next preceding sentence or, if less, the Transferee's Tranche Investment
of such Rate Tranche; any such amounts remaining after such application shall
continue to be held in trust pursuant to this paragraph (d) and shall be applied
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on the next successive Settlement Dates until such amount has been reduced to
zero. The Transferee's Investment shall not be deemed reduced by any amount held
in trust pursuant to this subsection (d) unless and until, and then only to the
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extent that, such amount is finally paid to the Agent in accordance with the
next preceding sentence.
SECTION 3.02. Pay Out Settlement Procedures for Collections. (a) Daily
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Procedure. During the Pay Out Period, on each day, the Servicer shall (i) set
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aside and hold in trust for the Transferee the Transferee's Share of the
Collections of Pool Receivables received by the Servicer, and (ii) first, apply
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the Transferor's Share of such Collections to any other amounts (other than
Earned Discount and Transferee's Investment) then due to Transferee or the Agent
and second, pay any remaining portion of the Transferor's Share of such
------
Collections to the Transferor.
(b) Settlement Date Procedure. During the Pay Out Period, on each
-------------------------
Settlement Date for any Rate Tranche, subject to Section 3.02(d), the Servicer
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shall deposit to the Agent's Account the amounts set aside pursuant to
Section 3.02(a), but not to exceed the sum of (i) the accrued and unpaid Earned
---------------
Discount with respect to such Rate Tranche, (ii) the Transferee's Tranche
Investment of such Rate Tranche, (iii) the aggregate of other amounts (other
than the Transferee's Investment, Earned Discount and Servicer's Fee) owed
hereunder by the Transferor to the Transferee or the Agent, and (iv) the accrued
Servicer's Fee payable with respect to such Rate Tranche. Any amounts in excess
of the amount required to be deposited in the Agent's Account pursuant to the
previous sentence shall continue to be set aside and held in trust by the
Servicer for application on the next succeeding Settlement Date(s).
(c) Order of Application. Upon receipt of funds deposited to the Agent's
--------------------
account pursuant to Section 3.02(b), subject to Section 3.02(d), the Agent shall
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distribute them to the Persons, for the purposes and in the order of priority
set forth below:
9
(i) to the Transferee in payment of the accrued and unpaid
Earned Discount for such Rate Tranche;
(ii) if the Servicer is a Person other than IKON Capital or an
Affiliate of IKON Capital, to the Servicer in payment of the accrued
and unpaid Servicer's Fee with respect to such Rate Tranche;
(iii) to the Transferee in reduction of the Transferee's Tranche
Investment with respect to such Rate Tranche;
(iv) to the Transferee or the Agent (as the case may be) in
payment of any other amounts owed by the Transferor hereunder to the
Transferee or the Agent (other than the Transferee's Investment,
Earned Discount and Servicer's Fee); and
(v) to the Servicer in payment of the accrued Servicer's Fee
payable with respect to such Rate Tranche, to the extent not paid
pursuant to clause (ii) above.
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(d) Priorities in Event of Funding Advances, Liquidity Loans or
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Enhancement Draw. If on any day during the Pay Out Period any Rate Tranche is
----------------
funded by a Funding Advance, a borrowing of Liquidity Loans or an Enhancement
Draw, then:
(i) if the aggregate amount of Collections set aside and held in
trust pursuant to Section 3.02(a) is less than the aggregate accrued and
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unpaid Earned Discount with respect to all Rate Tranches, then such
Collections shall be allocated first to accrued and unpaid Earned Discount
-----
on Rate Tranches funded by Funding Advances, second to accrued and unpaid
------
Earned Discount on Rate Tranches funded by Liquidity Loans, third to
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accrued and unpaid Earned Discount on Rate Tranches funded by Commercial
Paper Notes, and fourth to accrued and unpaid Earned Discount on Rate
------
Tranches funded by Enhancement Draws, and, in the case of each of clauses
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first, second, third and fourth above, first to the Rate Tranches having
----- ------ ----- ------
the shortest remaining Yield Periods, to the extent that funds have not
been set aside or deposited with the Agent in respect thereof; and
(ii) no Collections shall be deposited in the Agent's Account (unless
requested by the Agent for later distribution in accordance with this
Section 3.02(d)) or distributed by the Agent to the Transferee (A) in
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respect of the Transferee's Tranche Investment of any Rate Tranche funded
by Liquidity Loans unless the Transferee's Tranche
10
Investments of all Rate Tranches funded by Funding Advances shall have
been reduced to zero, or Collections equal to such Transferee's Tranche
Investments shall have been deposited in the Agent's Account for
distribution to the Transferee in reduction of such Transferee's
Tranche Investments, (B) in respect of the Transferee's Tranche
Investment of any Rate Tranche funded by Commercial Paper Notes unless
the Transferee's Tranche Investments of all Rate Tranches funded by
Funding Advances or Liquidity Loans shall have been reduced to zero, or
Collections equal to such Transferee's Tranche Investments shall have
been deposited in the Agent's Account for distribution to the
Transferee in reduction of such Transferee's Tranche Investments, or
(C) in respect of the Transferee's Tranche Investment of any Rate
Tranche funded by any Enhancement Draw unless the Transferee's Tranche
Investments of all Rate Tranches funded by Funding Advances, Liquidity
Loans or Commercial Paper Notes shall have been reduced to zero, or
Collections equal to such Transferee's Tranche Investments shall have
been deposited in the Agent's Account for distribution to the
Transferee in reduction of such Transferee's Tranche Investments.
SECTION 3.03. Dilutions. (a) If on any day the Unpaid Balance of any
---------
Pool Receivable is
(i) reduced as a result of any defective, rejected or
returned merchandise or services, any cash discount, any allowances or
billing errors, any trade-in or trade-up, or any adjustment by the
Transferor, any Affiliate of the Transferor or by the Servicer or any
early termination, refinancing, prepayment, consolidation or
replacement of the Contract related to such Pool Receivable,
(ii) reduced or cancelled as a result of a setoff in respect
of any claim or dispute by the Obligor thereof against the Transferor
or any Affiliate of the Transferor (individually or as Servicer) or any
other Person (whether such claim arises out of the same or a related or
an unrelated transaction),
(iii) reduced on account of the obligation of the Transferor
or an Affiliate of the Transferor (individually or as Servicer) to pay
to the related Obligor any rebate or refund, or
(iv) determined by the Agent, the Servicer or the Transferor
to have been less than the Unpaid Balance of such Receivable used in
calculating the Net Pool Balance for purposes of the most recent
Periodic Report or Settlement
11
Statement,
then, on such day, the Transferor shall be deemed to have received a Collection
of such Pool Receivable in the amount of such reduction or cancellation or, in
the case of clause (iv) above, by the amount of the difference between the
-----------
actual Unpaid Balance and the Unpaid Balance as so reported.
(b) If on any day (i) any of the representations or warranties of the
Transferor set forth in Section 6.01(k) or (o) shall not be true with respect to
--------------- ---
a Pool Receivable (other than solely by reason of such Pool Receivable's being a
Defaulted Receivable), or (ii) when the Servicer or the Transferor delivers any
Periodic Report or Settlement Statement, any Pool Receivable the Unpaid Balance
of which is included in the computation of the Net Pool Balance therein shall
not be an Eligible Receivable, then, on such day, the Transferor shall be deemed
to have received a Collection of such Pool Receivable in the amount of the
Unpaid Balance of such Pool Receivable.
SECTION 3.04. Optional Reduction of Transferee's Investment. The
---------------------------------------------
Transferor may at any time elect to cause the reduction of the Transferee's
Investment as follows:
(a) the Transferor shall give the Agent at least 10 Business
Days' prior written notice of such reduction (including the amount of
such proposed reduction and the proposed date on which such reduction
will commence);
(b) on the proposed date of commencement of such reduction and
on each day thereafter, the Servicer shall set aside Collections and
hold them in trust for the Transferee under clause (ii) of Section
----------- -------
3.01(a) until the amount so set aside shall equal the desired amount of
-------
reduction; and
(c) the Servicer shall set aside and hold such Collections for
the benefit of the Transferee and, on each Settlement Date with respect
to any Rate Tranche, shall pay to the Agent for the benefit of the
Transferee, in reduction of the Transferee's Investment, the amount of
such Collections so held or, if less, the Transferee's Tranche
Investment of such Rate Tranche (it being understood that the
Transferee's Investment shall not be deemed reduced by any amount set
aside or held pursuant to this Section 3.04 unless and until, and then
------------
only to the extent that, such amount is finally paid to the Agent as
aforesaid);
provided that,
--------
(i) the amount of any such reduction shall be not less
12
than $5,000,000 and shall be an integral multiple of $1,000,000, and
the Transferee's Investment after giving effect to such reduction shall
be not less than $10,000,000 (unless the Transferee's Investment shall
thereby be reduced to zero),
(ii) the Transferor shall use reasonable efforts to attempt
to choose a reduction amount, and the date of commencement thereof, so
that such reduction shall commence and conclude in a single Yield
Period with respect to a Rate Tranche, and
(iii) such proposed reduction shall be applied, unless the
Agent shall consent otherwise, to the Rate Tranche with the shortest
remaining Yield Period.
SECTION 3.05. Reporting by Servicer. (a) On or prior to the 15th day
---------------------
(or if such day is not a Business Day, on the next Business Day) of each month,
the Servicer shall prepare and forward to the Agent a Periodic Report, executed
by an Authorized Servicing Officer, relating to the Transferee's Interest as of
the close of business of the Servicer on the next preceding Month End Date. In
addition, if at any time the Agent shall so request, then, within 10 Business
Days after the later of (i) the date of such request and (ii) such other date as
the Agent may designate in such request as the effective date of the requested
report, the Servicer shall prepare and deliver to the Agent a Periodic Report,
executed by an Authorized Servicing Officer, relating to the Transferee's
Interest as of the close of business on the date of such request or such other
effective date, as applicable.
(b) During the Pay Out Period, on the Settlement Date of each
Settlement Period for each Rate Tranche, the Servicer shall prepare and forward
to the Agent a Pay Out Statement as of the close of business of the Servicer on
such Settlement Date.
SECTION 3.06. Delivery of Deemed Collections; Collections Held in
---------------------------------------------------
Trust. (a) Whenever the Transferor is deemed to receive Collections pursuant to
-----
Section 3.03, the Transferor shall forthwith deliver to the Servicer the amount
------------
of such deemed Collections, and the Servicer shall set aside and hold or
distribute such Collections as and to the same extent as if such Collections had
actually been received on the date of such delivery to Servicer. If Collections
are then being paid to the Agent, or lock boxes or accounts directly or
indirectly owned or controlled by the Agent, the Servicer shall forthwith cause
such deemed Collections to be paid to the Agent or to such lock boxes or
accounts, as applicable.
13
(b) So long as the Transferor shall hold any Collections or deemed
Collections required to be paid to the Servicer or the Agent, it shall hold such
Collections in trust and separate and apart from its own funds and shall clearly
▇▇▇▇ its records to reflect such trust.
ARTICLE IV
PAYMENT PROCEDURES; FEES AND YIELD PROTECTION
SECTION 4.01. Payments and Computations. (a) All amounts to be paid or
-------------------------
deposited by the Transferor or the Servicer to or for the account of the
Transferee or the 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 lawful money of the United States of America in immediately available
funds to account #104636460008 or such other account as the Agent may designate
(the "Agent's Account") at DBNY's office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, New
---------------
York 10019 or at such other place in New York City as the Agent may designate.
(b) All computations of interest, Earned Discount, Negative Spread Fee
and any other fees hereunder shall be made on the basis of a year of 360 days
for the actual number of days (including the first day but excluding the last
day) elapsed.
SECTION 4.02. Interest on Overdue Amounts. The Transferor or Servicer,
---------------------------
as applicable, shall, to the extent permitted by law, pay to the Agent interest
on all amounts not paid or deposited when due hereunder at 1% per annum above
--- -----
the Alternate Base Rate, payable on demand, provided, however, that such
-------- -------
interest rate shall not at any time exceed the maximum rate permitted by
applicable law.
SECTION 4.03. Fees. (a) Certain Fees. The Transferor shall pay to the
---- ------------
Agent and the Transferee the fees in the amounts and at the times set forth in
the letter from the Agent to the Transferor, dated as of the date hereof (as
amended from time to time, the "Fee Letter").
----------
(b) Note Fee. From the date hereof until the Final Pay Out Date, the
--------
Transferor shall pay to the Agent for the account of the Transferee a commercial
paper transaction fee ("Note Fee") in an amount equal to the product of (x) the
--------
amount of the per-trade fee paid or payable by the Transferee to the Depository
Trust Company (or any other or successor clearing corporation through which the
Commercial Paper Notes may be issued) in connection with the issuance, payment
or redemption of Commercial Paper Notes, as notified by the Agent to the
Transferor and the
14
Servicer from time to time, times (y) the number of transactions in Commercial
-----
Paper Notes issued by the Transferee to fund the Transferee's Interest hereunder
during the period for which such Note Fee is payable and to which such per-trade
fee applies, as notified by the Agent to the Transferor and the Servicer. Such
Note Fee shall be paid in arrears on the last Business Day of each February of
each calendar year and on the Final Pay Out Date for the number of Commercial
Paper Note trades that were consummated, to fund the Transferee's Interest
hereunder during the twelve month period ending on the last day of the
immediately preceding December, or in the case of the Final Pay Out Date, other
period then ending and for which no Note Fee shall have theretofore been paid.
The Agent shall notify the Transferor and the Servicer on or prior to the last
day of each January of the Note Fee due on the last Business Day of the
following February.
SECTION 4.04. Yield Protection. (a) If (i) Regulation D or (ii) any
----------------
Regulatory Change occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to the Transferee's Interest or any portion
thereof, or any obligations or right to accept or make Transfers or
Reinvestments or to provide funding therefor, or shall change the basis
of taxation of payments to the Affected Party of any of the
Transferee's Investment or Earned Discount owned by, owed to or funded
by it or any other amounts due under this Agreement in respect of the
Transferee's Interest or any portion thereof or its obligations or
rights, if any, to accept or make Transfers or Reinvestments or to
provide funding therefor (except for changes in the rate of tax on the
overall net income of such Affected Party imposed by the United States
of America, by the jurisdiction in which such Affected Party's
principal executive office is located and, if such Affected Party's
principal executive office is not in the United States of America, by
the jurisdiction where such Affected Party's principal office in the
United States is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but excluding any reserve included in the determination
of Earned Discount), special deposit or similar requirement against
assets of any Affected Party, deposits or obligations with or for the
account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected
Party; or
(C) shall change the amount of capital maintained or
15
required or requested or directed to be maintained by any Affected
Party; or
(D) shall impose any other condition affecting the
Transferee's Interest or any portion thereof owned or funded by any
Affected Party, or its obligations or rights, if any, to accept or make
Transfers or Reinvestments or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or any successor thereto)
assesses, deposit insurance premiums or similar charges, or shall
impose on any Affected Party a requirement to maintain deposit
insurance;
and the result of any of the foregoing is or would be
(x) to increase the cost or to impose a cost on (I) an
Affected Party accepting or funding or making or maintaining any
Transfers or Reinvestments, any loans or other extensions of credit
under the Liquidity Agreement, or any Enhancement Draw, or any
commitment of such Affected Party with respect to any of the foregoing,
or (II) the Agent for continuing its or the Transferor's relationship
with the Transferee,
(y) to reduce the amount of any sum received or receivable by
an Affected Party under this Agreement or any other Transaction
Document, or under the Liquidity Agreement or the Enhancement Agreement
with respect thereto, or
(z) in the sole determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved (taking into consideration the policies of such
Affected Party with respect to capital adequacy) by an amount deemed by
such Affected Party to be material,
then, within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis of such demand), the
Transferor shall pay directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost or such reduction.
(b) Each Affected Party will promptly notify the Transferor and the
Agent of any event of which it has knowledge which occurs after the date hereof
and will entitle such Affected Party to
16
compensation pursuant to this Section 4.04; provided, however, no failure to
------------ -------- -------
give or delay in giving such notification shall adversely affect the rights of
any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 4.04, an Affected Party may use any reasonable averaging and attribution
------------
methods that it (in its sole discretion) shall deem applicable. Any Affected
Party when making a claim under this Section 4.04 shall submit to the Transferor
------------
a statement as to such increased cost or reduced return (including calculation
thereof in reasonable detail), which statement shall, in the absence of manifest
error, be conclusive and binding upon the Transferor.
SECTION 4.05. Interest Rate Hedging Agreements. Promptly after the
--------------------------------
Commitment Termination Date, the Transferee will enter into, and will maintain
throughout the Pay Out Period, one or more interest rate swap agreements,
interest rate collars, interest rate caps or other interest rate hedging
arrangements, with one or more financial institutions, including the Agent,
whose long-term unsecured debt obligations are rated at least Aaa by Moody's or
AAA by S&P, with an amortizing notional amount equal to Transferee's good faith
determination of its outstanding Transferee's Investment from time to time
during the Pay Out Period (the "Hedging Arrangements"). Such Hedging
--------------------
Arrangements shall protect Transferee from differences between a fixed interest
rate equal to the interpolated yield to maturity of the Treasury security with a
maturity equal to the then Average Maturity and a floating interest rate equal
to the Commercial Paper Rate or Eurodollar Rate (Reserve Adjusted). The Agent
and the Transferee agree to use their reasonable efforts to obtain such Hedging
Arrangements at a commercially reasonable cost, in light of the circumstances of
such transaction. The Agent will consult in good faith with the Servicer, and
the Servicer agrees to cooperate with the Agent (including providing information
on the historical amortization of the portfolio) in order for the Agent to
promptly determine an amortization schedule for the Hedging Arrangements.
Transferor and IKON Capital, jointly and severally, hereby agree to pay, or to
reimburse Transferee for, on demand, any and all costs, expenses and liabilities
of Transferee incurred in connection with such Hedging Arrangements (other than
periodic net payments of fixed rate interest due to the counterparty thereof),
including any arrangement fees, legal costs and early termination payments with
respect thereto; provided, that, to the extent that the notional amount of such
--------
Hedging Arrangements exceeds the then Transferee's Investment, Transferee shall
assign to IKON Capital, and IKON Capital shall accept, the portion of such
Hedging Arrangement related to such excess, in which event, IKON Capital shall
be responsible for all
17
obligations, and be entitled to all benefits, associated with such portion of
the Hedging Arrangements. Notwithstanding the foregoing, if (i) the unsecured
short term obligations of IKON Capital are rated at least A-1+ by S&P and P-1 by
Moody's, (ii) Transferor has requested that the Transferee accept Transferor's
recourse obligation for Earned Discount and IKON Capital's guaranty of such
recourse obligation and (iii) Transferor has executed and delivered to the
Transferee and the Agent an agreement pursuant to which Transferor agrees to
pay, on a recourse basis, Earned Discount as and when due, and IKON Capital has
executed and delivered to the Transferee and the Agent a guaranty, reasonably
satisfactory to the Agent, of such obligation, then, for so long as IKON Capital
maintains the ratings described in the foregoing clause (i), the Transferee
----------
shall accept such agreement in place of maintaining Hedging Arrangements.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to Amendment and Restatement. The
-------------------------------------------------
amendment and restatement of the Original Receivables Agreement hereby is
subject to the condition precedent that the Agent shall have received the
following, each (unless otherwise indicated) dated (or dated as of) the date
this amendment and restatement shall become effective and in form and substance
satisfactory to the Agent:
(a) This Agreement, duly executed by the Transferor and the
initial Servicer;
(b) A copy of the resolutions of the Board of Directors of
the Transferor approving this Agreement, and the other Transaction
Documents to be delivered by it and the transactions contemplated
hereby and thereby, certified by its Secretary or Assistant Secretary;
a copy of the resolutions of the Board of Directors of IKON Capital
approving this Agreement, and the other Transaction Documents to be
delivered by it and the transactions contemplated hereby and thereby,
certified by its Secretary or Assistant Secretary; a copy of the
resolutions of the Board of Directors of IKON Office approving the
Support Agreement, certified by its Secretary or Assistant Secretary;
(c) Good standing certificates for IKON Office issued by the
Secretaries of State of Pennsylvania and Ohio; good standing
certificates for the Transferor issued by the
18
Secretary of State of Delaware; good standing certificates for IKON
Capital issued by the Secretaries of State of Delaware, Georgia,
Washington, Minnesota, Michigan, Texas and Colorado, in each case dated
as of a recent date acceptable to the Agent;
(d) A certificate of the Secretary or an Assistant Secretary
of each of the Transferor and IKON Capital certifying the names and
true signatures of the officers authorized on its behalf to sign this
Agreement and the other Transaction Documents to be delivered by it (on
which certificate the Agent and the Transferee may conclusively rely
until such time as the Agent shall receive from the Transferor a
revised certificate meeting the requirements of this subsection (d));
--------------
(e) The Articles of Incorporation of the Transferor, IKON
Capital and IKON Office, duly certified by the Secretary of State of
Delaware and the Secretary of State of Ohio, as applicable, as of a
recent date acceptable to Agent, together with a copy of the By-laws of
the Transferor, IKON Capital and IKON Office, duly certified by the
Secretary or an Assistant Secretary of the Transferor, IKON Capital or
IKON Office, as the case may be;
(f) Acknowledgment copies of proper Financing Statements
(Form UCC-1), substantially in the forms attached hereto as Exhibit
-------
5.01(f) (with such modifications, if any, as may be necessary or
-------
appropriate to conform to the law, customary practice or standard forms
of a particular jurisdiction), filed on or prior to the date of this
amendment and restatement, naming (i) the Transferor as the debtor and
transferor of Pool Receivables or an undivided interest therein and the
Transferee as the secured party and transferee and (ii) IKON Capital as
debtor and transferor of Pool Receivables, Transferor as the secured
party and transferee and Transferee as assignee, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Agent, desirable under the UCC or any comparable law of all appropriate
jurisdictions (including those jurisdictions listed on Schedule 5.01(f)
----------------
hereto) to perfect the Transferee's Interest and the security interest
granted to the Transferee under Article IX hereof;
----------
(g) A search report or reports provided in writing to the
Agent by LEXIS Document Services, Inc. as of a recent date (or dates)
acceptable to the Agent, listing all effective financing statements
that name the Transferor or IKON Capital (including any prior names of
such Persons) as debtor and that are filed in the jurisdictions in
which
19
filings were made pursuant to subsection (f) above and in such other
--------------
jurisdictions that the Agent shall reasonably request, together with
copies of such financing statements (none of which shall cover any Pool
Receivables or Contracts related thereto or interests therein or
Collections or proceeds of any thereof);
(h) Duly executed copies of Designated Account Agreements
with each of the Designated Account Banks; duly executed copies of Post
Office Box Agreements with respect to each Post Office Box;
(i) A favorable opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel to the
Transferor, IKON Capital and IKON Office, in substantially the form of
Exhibit 5.01(i);
---------------
(j) A favorable opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for
the Agent, substantially in the form of Exhibit 5.01(j);
---------------
(k) Acknowledgment copies of proper Financing Statements
(Form UCC-1), substantially in the form attached hereto as Exhibit
-------
5.01(k) (with such modifications, if any, as may be necessary or
-------
appropriate to conform to the law, customary practice or standard forms
of a particular jurisdiction), filed on or prior to the date of the
amendment and restatement in the jurisdictions of the principal places
of business of the dealers listed on Schedule A-1, naming such dealers,
------------
respectively, as debtors and transferors of Receivables, IKON Capital
as the secured party and transferee and Transferee as the assignee, or
other, similar instruments or documents, as may be necessary or, in the
opinion of the Agent, desirable under the UCC or any comparable law of
all appropriate jurisdictions to perfect IKON Capital's interest in the
Receivables;
(l) Such powers of attorney as the Agent shall reasonably
request to enable the Agent to collect all amounts due under any and
all Pool Receivables, which powers of attorney shall be substantially
in the form of Exhibit 5.01(l) or in such other form as the Agent may
---------------
reasonably request;
(m) A Periodic Report as of the most recent Month End Date
(in which the Transferee's Interest and the components thereof shall be
calculated after giving effect to the amendment and restatement);
(n) A copy of the Support Agreement, certified as true,
correct and complete by an officer of IKON Office;
20
(o) A letter executed by IKON Office substantially in the
form of Exhibit 5.01(o);
----------------
(p) An amendment to the interest rate protection agreement
between Transferor and DBNY, and an assignment agreement related
thereto; and
(q) The Transfer Agreement duly executed by IKON Capital and
the Transferor.
SECTION 5.02. Conditions Precedent to All Transfers and Reinvestments.
-------------------------------------------------------
Each Transfer (including the initial Transfer) and each Reinvestment hereunder
shall be subject to the further conditions precedent that on the date of such
Transfer or Reinvestment the following statements shall be true (and the
Transferor by accepting the amount of such Transfer or by receiving the proceeds
of such Reinvestment shall be deemed to have certified that):
(a) The representations and warranties contained in Article
-------
VI are correct on and as of such day as though made on and as of such
--
day and shall be deemed to have been made on such day,
(b) No event has occurred and is continuing, or would result
from such Transfer or Reinvestment, that constitutes a Termination
Event or Unmatured Termination Event,
(c) In the case of a Reinvestment, the amount of the
Reinvestment will not exceed the amount available therefor under
Section 3.01, and in the case of a Transfer, after giving effect
------------
thereto, the Transferee's Investment will not exceed the Maximum
Investment and the Unadjusted Transferee's Percentage will not exceed
the Maximum Percentage, and
(d) The Commitment Termination Date shall not have occurred;
provided, however, the absence of the occurrence and continuance of an Unmatured
-----------------
Termination Event shall not be a condition precedent to any Reinvestment or to
any Transfer on any day which does not cause the Transferee's Investment, after
giving effect to such Transfer, to exceed the Transferee's Investment as of the
opening of business on such day.
21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of the Transferor. The
------------------------------------------------
Transferor represents and warrants as follows:
(a) Organization and Good Standing. The Transferor has been
------------------------------
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted, and had at all relevant times, and now has, all necessary
power, authority, and legal right to acquire and own the Pool
Receivables.
(b) Due Qualification. The Transferor is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualification, licenses or approvals.
(c) Power and Authority; Due Authorization. The Transferor (i)
--------------------------------------
has all necessary power, authority and legal right to execute and
deliver this Agreement and the other Transaction Documents, to carry
out the terms of the Transaction Documents and to transfer and assign
the Transferee's Interest on the terms and conditions herein provided,
and (ii) has duly authorized by all necessary corporate action the
execution, delivery and performance of this Agreement and the other
Transaction Documents and the transfer and assignment of the
Transferee's Interest on the terms and conditions herein provided.
(d) Valid Transfer; Binding Obligations. This Agreement
-----------------------------------
constitutes a valid transfer and assignment of the Transferee's
Interest to the Transferee, enforceable against creditors of, and
purchasers from, the Transferor and IKON Capital; and this Agreement
constitutes, and each other Transaction Document to be signed by the
Transferor when duly executed and delivered will constitute, a legal,
valid and binding obligation of the Transferor enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
22
(e) No Violation. The execution, delivery and performance by
------------
the Transferor of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby and
thereby will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, the articles of incorporation or
by-laws of the Transferor, or any indenture, loan agreement,
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument to which the Transferor is a party or by which
it or any of its properties is bound, (ii) result in the creation or
imposition of any Lien upon any of the Transferor's properties pursuant
to the terms of any such indenture, loan agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or
instrument, other than this Agreement, or (iii) violate any law or any
order, rule, or regulation applicable to the Transferor of any court or
of any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the
Transferor or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending, or threatened, before, and there has been no injunction,
decree or other decision issued or made by, any court, regulatory body,
administrative agency, or other tribunal or governmental agency or
instrumentality (i) asserting the invalidity of this Agreement or any
other Transaction Document, (ii) seeking to prevent the transfer and
assignment of the Transferee's Interest or any portion thereof or the
consummation of any of the other transactions contemplated by this
Agreement or any other Transaction Document, (iii) seeking any
determination or ruling that might have a Material Adverse Effect or
(iv) seeking to adversely affect the federal income tax attributes of
the Transfers hereunder.
(g) Bulk Sales Act. No transaction contemplated hereby
--------------
requires compliance with any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or
--------------------
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by the Transferor of this Agreement or any
other Transaction Document, except for the filing of the UCC Financing
------
Statements referred to in Article V, all of which, at the time required
---------
in Article V, shall have been duly made and
---------
23
shall be in full force and effect.
(i) Financial Condition. (x) The balance sheets of the
-------------------
Transferor as at December 31, 1996, and the related statements of
income, cash flows and shareholders' equity of the Transferor for the
fiscal year then ended, certified by the Transferor's chief financial
officer, copies of which have been furnished to the Agent, fairly
present the financial condition, business, business prospects and
operations of the Transferor as at such dates and the results of the
operations of the Transferor for the period ended on such dates, all in
accordance with generally accepted accounting principles consistently
applied, and (y) since December 31, 1996 there has been no material
adverse change in any such condition, business, business prospects or
operations.
(j) Margin Regulations. The use of all funds obtained by the
------------------
Transferor under this Agreement will not conflict with or contravene
any of Regulations G, T, U and X promulgated by the Board of Governors
of the Federal Reserve System from time to time.
(k) Quality of Title. (i) Each Pool Receivable, together with
----------------
the Related Property, is owned by the Transferor free and clear of any
Lien (other than any Lien arising solely as the result of any action
taken by the Transferee (or any assignee thereof) or by the Agent)
except as created hereby; (ii) each Pool Receivable, together with the
Related Property, was transferred by Transferor from IKON Capital
pursuant to the Transfer Agreement, which transfer is enforceable
against all creditors of, and purchasers from, IKON Capital, and,
Transferor took all steps necessary to perfect its interest in such
Pool Receivable, together with the Related Property, against IKON
Capital; (iii) when the Transferee accepts a Transfer, it shall have
acquired and shall at all times thereafter continuously maintain a
valid and perfected first priority undivided percentage ownership
interest, in a percentage equal to the Transferee's Percentage in
effect from time to time, in each Pool Receivable and in the Related
Property, free and clear of any Lien (other than any Lien arising
solely as the result of any action taken by the Transferee (or any
assignee thereof) or by the Agent); and (iv) no effective financing
statement or other instrument similar in effect covering any Pool
Receivable, any interest therein or any of the Related Property is on
file in any recording office except such as may be filed (A) in favor
of IKON Capital in accordance with the Contracts or against the
dealers, (B) in favor of Transferor in accordance with the
24
terms of the Transfer Agreement, (C) in favor of the Transferee or the
Agent in accordance with this Agreement or in connection with any Lien
arising solely as the result of any action taken by the Transferee (or
any assignee thereof) or by the Agent, or (D) in favor of DBNY, as
Collateral Agent, or any successor in such capacity, as described in
Section 12.01.
-------------
(l) Accurate Reports. No Periodic Report or Pay Out Statement
----------------
(if prepared by the Transferor, or to the extent that information
contained therein was supplied by the Transferor) or other information,
exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Transferor to the Agent or the
Transferee in connection with this Agreement was or will be inaccurate
in any material respect as of the date it was or will be dated or
(except as otherwise disclosed to the Agent or the Transferee, as the
case may be, at such time) as of the date so furnished, or contained or
will contain any material misstatement of fact or omitted or will omit
to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(m) Offices. The chief place of business and chief executive
-------
office of the Transferor are located at the address of the Transferor
referred to in Section 14.02, and the offices where the Transferor
-------------
keeps all its books, records and documents evidencing or included in
the Pool Receivables and Related Property are located at the addresses
specified in Schedule 6.01(m) (or at such other locations, notified to
----------------
the Agent in accordance with Section 7.01(f), in jurisdictions where
---------------
all action required by Section 8.05 has been taken and completed).
------------
(n) Designated Accounts; Post Office Boxes. The names and
--------------------------------------
addresses of all the Designated Accounts Banks, together with the
account numbers of the Designated Accounts of the Transferor at such
Designated Account Banks, are specified in Schedule 6.01(n) (or have
----------------
been notified to the Agent in accordance with Section 7.03(d)). The
---------------
addresses and numbers of all Post Office Boxes are specified in
Schedule 6.01(n) (as have been notified to the Agent in accordance with
----------------
Section 7.03(d)).
---------------
(o) Eligible Receivables. Each Receivable included in the Net
--------------------
Pool Balance as an Eligible Receivable on any date shall be an Eligible
Receivable on such date.
SECTION 6.02. Representations and Warranties of IKON Capital. IKON
----------------------------------------------
Capital represents and warrants as follows:
25
(a) Organization and Good Standing. IKON Capital has been duly
------------------------------
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) Due Qualification. IKON Capital is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualification, licenses or approvals.
(c) Power and Authority; Due Authorization. IKON Capital (i)
--------------------------------------
has all necessary power, authority and legal right to execute and
deliver this Agreement and the other Transaction Documents, to carry
out the terms of the Transaction Documents and (ii) has duly authorized
by all necessary corporate action the execution, delivery and
performance of this Agreement and the other Transaction Documents.
(d) Valid and Binding Obligations. This Agreement constitutes,
-----------------------------
and each other Transaction Document to be signed by IKON Capital when
duly executed and delivered will constitute, a legal, valid and binding
obligation of IKON Capital enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(e) No Violation. The execution, delivery and performance by
------------
IKON Capital of this Agreement and the other Transaction Documents and
the consummation of the transactions contemplated hereby and thereby
will not (i) conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, the articles of incorporation or by-laws
of IKON Capital, or any indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument to
which IKON Capital is a party or by which it or any of its properties
is bound, (ii) result in the creation or imposition of any Lien upon
any of IKON Capital's properties pursuant to the terms of any such
indenture, loan agreement,
26
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument, other than the Transfer Agreement, or (iii)
violate any law or any order, rule, or regulation applicable to IKON
Capital of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over IKON Capital or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending, or threatened, before, and there has been no injunction,
decree or other decision issued or made by, any court, regulatory body,
administrative agency, or other tribunal or governmental agency or
instrumentality (i) asserting the invalidity of this Agreement or any
other Transaction Document and (ii) seeking any determination or ruling
that might have a Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby
--------------
requires compliance with any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or
--------------------
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by IKON Capital of this Agreement or any other
Transaction Document, except for the filing of the UCC Financing
------
Statements referred to in Article V, all of which, at the time required
---------
in Article V, shall have been duly made and shall be in full force and
---------
effect.
(i) Financial Condition. (x) The consolidated balance sheets
-------------------
of IKON Capital and its consolidated subsidiaries as at September 30,
1996, and the related statements of income, cash flows and
shareholders' equity of IKON Capital and its consolidated subsidiaries
for the fiscal year then ended, certified by Ernst & Young, independent
certified public accountants, and the consolidated balance sheets of
IKON Capital and its consolidated subsidiaries as at December 31, 1996,
and the related statements of income, cash flows and shareholders'
equity of IKON Capital and its consolidated subsidiaries for the
periods then ended, in each case, copies of which have been furnished
to the Agent, fairly present the consolidated financial condition,
business, business prospects and operations of IKON Capital and its
consolidated subsidiaries as at such dates and the consolidated results
of the operations of IKON Capital and its consolidated subsidiaries for
the period ended on such dates, all in accordance with generally
accepted accounting principles consistently applied, and (y) since
September 30,
27
1996 there has been no material adverse change in any such condition,
business, business prospects or operations except as described in
Schedule 6.02(i).
----------------
(j) Accurate Reports. No Periodic Report or Pay Out Statement
----------------
(if prepared by IKON Capital, or to the extent that information
contained therein was supplied by IKON Capital) or other information,
exhibit, financial statement, document, book, record or report
furnished or to be furnished by IKON Capital to the Agent or the
Transferee in connection with this Agreement was or will be inaccurate
in any material respect as of the date it was or will be dated or
(except as otherwise disclosed to the Agent or the Transferee, as the
case may be, at such time) as of the date so furnished, or contained or
will contain any material misstatement of fact or omitted or will omit
to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(k) Offices. The chief place of business and chief executive
-------
office of IKON Capital are located at the address of IKON Capital
referred to in Section 14.02, and the offices where IKON Capital keeps
-------------
all its books, records and documents evidencing or included in the Pool
Receivables and Related Property are located at the addresses specified
in Schedule 6.01(m) (or at such other locations, notified to the Agent
----------------
in accordance with Section 7.01(f), in jurisdictions where all action
---------------
required by Section 8.05 has been taken and completed).
------------
(l) Servicing Programs. Any and all programs used by IKON
------------------
Capital in the servicing of the Receivables Pool are owned by it and
not leased or licensed, except for all licensed IBM operating system
software. No license or approval is required for the Agent's use of any
program used by the Servicer in the administration of the Receivables,
other than those which have been obtained and are in full force and
effect.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants. From the date hereof until the
---------------------
Final Pay Out Date, each of IKON Capital and the Transferor will, unless the
Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material
-------------------------
28
respects with all applicable laws, rules, regulations and orders
applicable to it, including those with respect to the Pool Receivables
and related Contracts.
(b) Preservation of Corporate Existence. Subject to Section
----------------------------------- -------
7.03(e), preserve and maintain its corporate existence, rights,
-------
franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would have
a Material Adverse Effect.
(c) Audits. (i) At any time and from time to time during
------
regular business hours, upon reasonable notice, permit the Agent, or
its agents or representatives, (A) to examine and make copies of and
abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under its
control relating to Pool Receivables, including, without limitation,
the related Contracts and purchase orders and other agreements, and (B)
to visit its offices and properties for the purpose of examining such
materials described in clause (i)(A) next above, and to discuss matters
-------------
relating to Pool Receivables or its performance hereunder or under any
other Transaction Document with any of its officers or employees having
knowledge of such matters; and (ii) without limiting the provisions of
clause (i) next above, from time to time on request of the Agent given
----------
not more than once in each calendar year so long as no Termination
Event or Unmatured Termination Event shall have occurred and be
continuing, permit certified public accountants or other auditors,
selected by it and reasonably acceptable to the Agent, to conduct, at
its expense, a review of its books and records with respect to the Pool
Receivables.
(d) Keeping of Records and Books of Account. Maintain and
---------------------------------------
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables
in the event of the destruction of the originals thereof), and keep and
maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Pool
Receivables (including, without limitation, records adequate to permit
the daily identification of each new Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable).
29
(e) Performance and Compliance with Receivables and Contracts.
---------------------------------------------------------
At IKON Capital's expense timely and fully perform and comply with all
material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Pool Receivables and
all purchase orders and other agreements related to such Pool
Receivables.
(f) Location of Records. Keep its chief place of business and
-------------------
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all purchase
orders and other agreements related to such Pool Receivables (and all
original documents relating thereto), at its address(es) referred to in
Section 6.01(m) or, upon 30 days' prior written notice to the Agent, at
---------------
such other locations in jurisdictions where all action required by
Section 8.05 shall have been taken and completed.
------------
(g) Credit and Collection Policies. Comply in all material
------------------------------
respects with its Credit and Collection Policy in regard to each Pool
Receivable and the related Contract.
(h) Collections. Instruct all Obligors to cause all
-----------
Collections of Pool Receivables to be sent directly to a Post Office
Box, and deposit all Collections received into a Designated Account.
SECTION 7.02. Reporting Requirements. From the date hereof until the
----------------------
Final Pay Out Date, IKON Capital and the Transferor will, unless the Agent shall
otherwise consent in writing, furnish to the Agent:
(a) Quarterly Financial Statements. As soon as available and
------------------------------
in any event within 60 days after the end of each of the first three
quarters of each fiscal year of each of IKON Office, IKON Capital and
the Transferor, copies of the financial statements of the Transferor,
IKON Capital and its Subsidiaries and IKON Office and its Subsidiaries,
in each case, prepared on a consolidated basis, in conformity with
generally accepted accounting principles, duly certified by the chief
financial officer, any vice-president, the treasurer or the controller
of IKON Capital, the Transferor or IKON Office, as the case may be;
(b) Annual Financial Statements. As soon as available and in
---------------------------
any event within 90 days after the end of each fiscal year of the
Transferor, IKON Capital and IKON Office copies of the financial
statements of the Transferor, IKON Capital and its Subsidiaries and
IKON Office and its Subsidiaries,
30
in each case prepared on a consolidated basis, in conformity with
generally accepted accounting principles, duly certified by independent
certified public accountants of recognized standing selected by the
Transferor, IKON Capital or IKON Office, as the case may be;
(c) Reports to Holders and Exchanges. Copies of any reports or
--------------------------------
registration statements that the Transferor, IKON Capital or IKON
Office files with the Securities and Exchange Commission or any
national securities exchange other than registration statements
relating to employee benefit plans and registrations of securities for
selling security holders and statements filed on Form S-1 or S-4;
(d) ERISA. Promptly after the filing or receiving thereof,
-----
copies of all reports and notices with respect to any Reportable Event
defined in Article IV of ERISA as to which the Pension Benefit Guaranty
Corporation has not waived the 30-day notice requirement which the
Transferor, IKON Capital or IKON Office files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or which the Transferor, IKON Capital or
IKON Office receives from the Pension Benefit Guaranty Corporation;
(e) Termination Events. As soon as possible and in any event
------------------
within five days after the occurrence of each Termination Event and
each Unmatured Termination Event, a written statement of the chief
financial officer or chief accounting officer of the IKON Capital and
Transferor setting forth details of such event and the action that IKON
Capital and the Transferor propose to take with respect thereto;
(f) Litigation. As soon as possible and in any event within
----------
three Business Days of its knowledge thereof, notice of (i) any
litigation, investigation or proceeding which may exist at any time
which could have a Material Adverse Effect and (ii) any material
adverse development in previously disclosed litigation; and
(g) Other. Promptly, from time to time, such other
-----
information, documents, records or reports respecting the Receivables
or the condition or operations, financial or otherwise, of the
Transferor, IKON Office or IKON Capital as the Agent may from time to
time reasonably request in order to protect the interests of the Agent
or the Transferee under or as contemplated by this Agreement.
SECTION 7.03. Negative Covenants. From the date hereof
------------------
31
until the Final Pay Out Date, each of IKON Capital and the Transferor will not,
without the prior written consent of the Agent (provided that it is agreed
clauses (h), (i) and (j) of this Section 7.03 shall only apply to the
----------- --- --- ------------
Transferor):
(a) Sales, Liens, Etc. Except as otherwise provided herein,
-----------------
sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Lien upon or with respect to, any
Pool Receivable or Related Property, or any interest therein, or any
post office box or account to which any Collections of any Pool
Receivable are sent, or any right to receive income from or in respect
of any of the foregoing.
(b) Extension or Amendment of Receivables. Except as otherwise
-------------------------------------
permitted in Section 8.02, extend, amend, terminate or otherwise modify
the terms of any Pool Receivable, or amend, modify, terminate or waive
any term or condition of any Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make
--------------------------------------------------
any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, impair the
collectibility of the Pool Receivables (other than an immaterial
portion thereof) or otherwise adversely affect the interests, rights or
remedies of the Transferee under this Agreement or any other
Transaction Document.
(d) Change in Payment Instructions to Obligors. Add or
------------------------------------------
terminate any Post Office Box from those listed in Schedule 6.01(o) or
----------------
make any change in its instructions to Obligors regarding payments to
be made to the Transferor or the Servicer or payments to be made to any
Post Office Box unless the Agent shall have received (i) notice of such
addition, termination or change and (ii) duly executed copies of Post
Office Box Agreements with respect to each new Post Office Box. Deposit
or transfer any Collections received in any Post Office Box or
otherwise to any account other than a Designated Account.
(e) Mergers, Acquisitions, Sales, etc. Be a party to any
---------------------------------
merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except
in the ordinary course of its business, sell, transfer, convey or lease
all or any substantial part of its assets, or permit any Subsidiary to
do any of the foregoing, except for any such merger or consolidation,
sale, transfer, conveyance, lease
32
or assignment with respect to IKON Capital (i) of or by any wholly-
owned Subsidiary (other than Transferor) into IKON Capital or into,
with or to any other wholly-owned Subsidiary, (ii) any such purchase or
other acquisition by IKON Capital or any wholly-owned Subsidiary (other
than the Transferor) of the assets or stock of any wholly-owned
Subsidiary and (iii) pursuant to which IKON Capital is the survivor,
provided that no Termination Event or Unmatured Termination Event has
occurred and is continuing or would result therefrom.
(f) Support Agreement. Amend, modify or terminate the Support
-----------------
Agreement.
(g) Transfer Agreement. Amend, waive, terminate or modify the
------------------
Transfer Agreement or the Company Note or amend the Transferor's
articles of incorporation.
(h) Incurrence of Indebtedness. Incur or suffer to exist any
--------------------------
Indebtedness other than its obligations to Servicer, the Transferee and
the Agent hereunder, its obligations under the Old Line Agreement and
its obligations to IKON Capital under the Transfer Agreement.
(i) Restricted Payments. (i) Declare or pay any dividends,
-------------------
(ii) lend or advance any funds or (iii) repay any loans or advances to,
for or from IKON Capital or any other Affiliated Party (including
making any payment pursuant to the Transfer Agreement) (all of the
foregoing, "Restricted Payments"), provided that Transferor may make
------------------- --------
payments under the Transfer Agreement in accordance with its terms and
pay dividends, in each case, from Collections paid or released to
Transferor pursuant to Section 3.01 or 3.02, so long as no Termination
------------ ----
Event or Unmatured Termination Event has occurred and is continuing or
would result therefrom, and after giving effect thereto, the
Transferor's Tangible Net Worth is not less than $10,000,000.
(j) Change of Name. Change its corporate name or the name
--------------
under or by which it does business unless Transferor shall have given
the Agent at least 30 days' prior written notice thereof and unless,
prior to any such change, Transferor shall have filed, or caused to be
filed, such financing statements or amendments as the Agent determines
may be necessary to continue the perfection of Transferee's interest in
the Pool Receivables and Related Property.
Section 7.04. Separate Corporate Existence. Transferor and IKON
----------------------------
Capital hereby acknowledge that the Transferee and the Agent are entering into
the transactions contemplated by this Agreement
33
in reliance upon the Transferor's identity as a legal entity separate from the
other Affiliated Parties. Therefore, Transferor and IKON Capital shall take the
steps described in this Section 7.04 and any other steps that the Agent
------------
reasonably requests to continue the Transferor's identity as such a separate
legal entity and to make it apparent to third Persons that the Transferor is an
entity with assets and liabilities distinct from those of the other Affiliated
Parties and those of any other Person, and not a division of the other
Affiliated Parties or any other Person:
(a) The Transferor will be a limited purpose corporation whose
primary activities are restricted in its articles of incorporation to
accepting transferred Receivables from IKON Capital, entering into
agreements for the servicing of such Receivables, transferring
undivided interests in the Receivables, and conducting such other
activities as it reasonably deems necessary or appropriate to carry out
its primary activities and entering into similar arrangements with
other Persons;
(b) No director or officer of the Transferor shall at any time
serve as a trustee in bankruptcy for any other Affiliated Party;
(c) Any employee, consultant or agent of the Transferor will
be paid by the Manager for services provided to the Transferor, which
payment shall be charged to Transferor's account, except as provided in
this Agreement in respect of the Servicing Fee and in the Old Line
Agreement for the servicing fee paid thereunder. The Transferor will
engage no agents other than a Servicer for the Receivables, which
Servicer (if an Affiliated Party) will be fully compensated for its
services to the Transferor by payment of the Servicing Fee and the
servicing fee paid under the Old Line Agreement, and the Manager
pursuant to the Management Agreement, which Manager's fees shall not
exceed $10,000 in any calendar year;
(d) The Transferor's operating expenses will not be paid by
any other Affiliated Party;
(e) The Transferor will have its own separate mailing address,
stationery and, if used, bank checks and, if it uses premises leased,
owned or occupied by any other Affiliated Party, its portion of such
premises will be defined and separately identified;
(f) The Transferor's books and records will be maintained
separately from those of every other Affiliated
34
Party;
(g) Any financial statements of any other Affiliated Party
which are consolidated to include the Transferor will contain detailed
notes clearly stating that (A) all of the Transferor's assets are owned
by the Transferor, and (B) the Transferor is a separate corporate
entity with its own separate creditors which will be entitled to be
satisfied out of the Transferor's assets prior to any value in the
Transferor becoming available to the Transferor's equity holders;
(h) The assets of the Transferor will be maintained in a
manner that facilitates their identification and segregation from those
of any other Affiliated Party;
(i) The Transferor will strictly observe corporate formalities
in its dealings with each other Affiliated Party, and funds or other
assets of the Transferor will not be commingled or pooled with those of
any other Affiliated Party;
(j) The Transferor shall not maintain joint bank accounts with
any other Affiliated Party or other depository accounts to which any
other Affiliated Party (other than IKON Capital in its capacity as
Servicer) has independent access;
(k) The Transferor shall not, directly or indirectly, be named
and shall not enter into any agreement to be named as a direct or
contingent beneficiary or loss payee on any insurance policy covering
the property of any other Affiliated Party;
(l) The Transferor will maintain arm's length relationships
with each other Affiliated Party. Any other Affiliated Party which
renders or otherwise furnishes services or merchandise to the
Transferor will be compensated by the Transferor at market rates for
such services or merchandise; and
(m) Neither the Transferor, on the one hand, nor any other
Affiliated Party, on the other hand, will be or will hold itself out to
be responsible for the debts of the other or the decisions or actions
respecting the daily business and affairs of the other.
35
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer. (a) IKON Capital as Initial
----------------------- -----------------------
Servicer. The servicing, administering and collection of the Pool Receivables
--------
shall be conducted by the Person designated as the servicer hereunder (the
"Servicer") from time to time in accordance with this Section 8.01. Until the
-------- ------------
Agent gives to IKON Capital a notice designating a new Servicer (as provided in
Section 8.01(b)), IKON Capital is hereby designated as, and hereby agrees to
---------------
perform the duties and obligations of, the Servicer pursuant to the terms
hereof.
(b) Designation of New Servicer. Upon IKON Capital's receipt of a
---------------------------
notice from the Agent of the Agent's designation of a new Servicer, IKON Capital
agrees that it will terminate its activities as the Servicer hereunder in a
manner that the Agent believes will facilitate the transition of the performance
of such activities to the new Servicer, and the Agent (or, its designee) shall
assume each and all of IKON Capital's said obligations to service and administer
the Pool Receivables, on the terms and subject to the conditions herein set
forth, and IKON Capital shall use its best efforts to assist the Agent (or its
designee) in assuming such obligations. The Agent agrees not to give such notice
until after the occurrence of (i) any Termination Event, (ii) any default by the
Servicer of the type described in Section 10.01(a) (whether or not IKON Capital
----------------
or an Affiliate of IKON Capital is the Servicer), or (iii) any event which, in
the reasonable opinion of the Agent, could have a material adverse effect on
IKON Capital's ability to perform its obligations as the Servicer hereunder, in
which case such notice may be given at any time in the Agent's discretion. If
IKON Capital disputes the occurrence of a Termination Event or other event
described above, IKON Capital may take appropriate action to resolve such
dispute; provided that IKON Capital must terminate its activities hereunder as
--------
the Servicer and allow the newly designated Servicer to perform such activities
on the date provided by the Agent as described above, notwithstanding the
commencement or continuation of any proceeding to resolve the aforementioned
dispute.
(c) Subcontracts. The Servicer may, with the prior written consent of
------------
the Agent, subcontract with any other person for servicing, administering or
collecting the Pool Receivables; provided that the Servicer shall remain liable
for the performance of the duties and obligations of the Servicer pursuant to
the terms hereof; and provided, further, that any funds received by any
subcontractor pursuant to the subcontract shall be deemed to have been received
by the Servicer.
36
SECTION 8.02. Duties of Servicer. (a) Appointment; Duties in General.
------------------ ------------------------------
Each of the Transferor, the Transferee and the Agent hereby appoints as its
agent the Servicer, as from time to time designated pursuant to Section 8.01,
------------
(i) to enforce its rights and interests in and under the Pool Receivables, the
Contracts and other Related Property, (ii) to take or cause to be taken all such
actions as may be necessary or advisable to collect each Pool 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, and (iii) to take such other actions and exercise such other
powers on behalf of the Transferee and the Agent under this Agreement as are
delegated to the Servicer by the terms hereof.
(b) Allocation of Collections; Segregation. The Servicer shall set
--------------------------------------
aside and hold in trust for the account of the Transferor and the Transferee
their respective allocable shares of the Collections of Pool Receivables in
accordance with Sections 3.01 and 3.02, but shall not be required (unless
------------- ----
otherwise requested by the Agent) to segregate the funds constituting such
portions of such Collections prior to the remittance thereof in accordance with
said Sections. If instructed by the Agent, the Servicer shall segregate and
deposit with a bank designated by the Agent such allocable shares of Collections
of Pool Receivables, set aside for the Transferee and any assignee from the
Transferee of the Transferee's Interest (or any portion thereof), on the first
Business Day following receipt by the Servicer of such Collections in
immediately available funds.
(c) Modification of Receivables. So long as no Termination Event or
---------------------------
Unmatured Termination Event shall have occurred and be continuing, IKON Capital,
while it is Servicer, may, in accordance with the Credit and Collection Policy,
(i) extend the maturity or adjust the Unpaid Balance of any Defaulted Receivable
as IKON Capital may determine to be appropriate to maximize Collections thereof;
provided that, no such extension shall be for more than 30 days and, after
-------- ----
giving effect to such extension of maturity or such adjustment, the Unadjusted
Transferee's Percentage will not exceed the Maximum Percentage, and (ii) adjust
the Unpaid Balance of any Receivable to reflect the reductions or cancellations
described in Section 3.03(a). IKON Capital will not terminate, nor allow the
---------------
prepayment of, any Contract related to a Pool Receivable unless, after giving
effect to such termination or prepayment, any payment of a deemed Collection as
a result of such termination or prepayment pursuant to Section 3.03 and the
------------
inclusion of any new Eligible Receivables in the Receivables Pool, the
Unadjusted Transferee's Percentage, as of such date, does not exceed the Maximum
Percentage.
37
(d) Documents and Records. IKON Capital shall deliver to the Servicer,
---------------------
and the Servicer shall hold in trust for the Transferor and the Transferee in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) that evidence
or relate to Pool Receivables.
(e) Power of Attorney. The Transferor hereby grants to the Servicer an
-----------------
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Transferor all steps which are necessary or
advisable to endorse, negotiate or otherwise realize on any writing or other
right of any kind held or transmitted by the Transferor or transmitted or
received by the Transferee (whether or not from the Transferor) in connection
with any Receivable.
(f) Certain Duties to the Transferor. The Servicer shall, as soon as
--------------------------------
practicable following receipt, turn over to the Transferor (i) that portion of
Collections of Pool Receivables representing its undivided interest therein,
less, the sum of (a) in the event IKON Capital is no longer the Servicer, all
reasonable and appropriate out-of-pocket costs and expenses of the Servicer of
servicing, collecting and administering the Pool Receivables to the extent not
covered by the Servicer's Fee received by it and (b) any amounts, other than
Transferee's Investment and Earned Discount, then due to the Transferee or the
Agent, and (ii) the Collections of any Receivable that is not a Pool Receivable.
The Servicer, if other than IKON Capital, shall, at the Transferor's expense, as
soon as practicable upon demand, deliver to the Transferor all documents,
instruments and records in its possession that evidence or relate to Receivables
of the Transferor other than Pool Receivables, and copies of documents,
instruments and records in its possession that evidence or relate to Pool
Receivables.
(g) Termination. The Servicer's authorization under this Agreement
-----------
shall terminate on the Final Pay Out Date.
SECTION 8.03. Rights of the Agent. (a) Notice to Obligors;
------------------- -------------------
Segregation. At any time when a Termination Event or an Unmatured Termination
-----------
Event shall have occurred, the Agent may notify the Obligors of Pool
Receivables, or any of them, of the ownership of the Transferee's Interest by
the Transferee. At any time the Agent may require the Transferor to establish a
new Designated Account into which no funds are deposited other than Collections,
and to deposit, or cause to be deposited, all Collections into such new
Designated Account.
(b) Notice to Post Office Boxes and Designated Banks. At
------------------------------------------------
38
any time when a Termination Event or an Unmatured Termination Event shall have
occurred, (i) the Agent is hereby authorized to give notice, as provided in the
Post Office Box Agreements, of the transfer to the Agent of dominion and control
over the Post Office Boxes to which the Obligors of Pool Receivables make
payments, (ii) the Agent is hereby authorized to give notice to the Designated
Account Banks, as provided in the Designated Account Agreements, of the transfer
to the Agent of dominion and control over the Designated Accounts and (iii) the
Agent may notify, or may require the Servicer to notify, the Obligors to send
their payments to a lock-box located at DBNY or other bank approved by the
Agent, under the dominion and control of the Agent.
(c) Rights on Designation of New Servicer. At any time following the
-------------------------------------
designation of a Servicer other than IKON Capital pursuant to Section 8.01:
------------
(i) The Agent may direct the Obligors of Pool Receivables, or
any of them, to pay all amounts payable under any Pool Receivable
directly to the Agent or its designee.
(ii) IKON Capital shall, at the Agent's request and at IKON
Capital's expense, give notice of such ownership to each said Obligor
and direct that payments be made directly to the Agent or its designee.
(iii) Each of the Transferor and IKON Capital shall, at the
Agent's request, (A) assemble all of the documents, instruments and
other records (including, without limitation, computer programs, tapes
and disks) which evidence the Pool Receivables and Related Property, or
which are otherwise necessary or desirable to collect such Pool
Receivables, and make the same available to the Agent 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 Pool 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.
(d) Authorization and Power of Attorney. Each of the Transferor and
-----------------------------------
the Transferee hereby authorizes the Agent and hereby appoints the Agent as its
attorney-in-fact (which appointment is coupled with an interest and is
irrevocable), from time to time upon and after the designation of a successor
Servicer in accordance with Section 8.01, to take any and all steps in the
------------
Transferor's name and on behalf of the Transferor
39
and the Transferee which are necessary or desirable, in the determination of the
Agent, to collect all amounts due under any and all Pool Receivables and Related
Property, including, without limitation, endorsing the Transferor's name on
checks and other instruments representing Collections and enforcing such Pool
Receivables and the related Contracts.
SECTION 8.04. Responsibilities of Transferor. Anything herein to the
------------------------------
contrary notwithstanding:
(a) The Transferor shall perform (or cause IKON Capital to
perform under the Transfer Agreement) all of its obligations under the
Contracts related to the Pool Receivables and under the related
purchase orders and other agreements to the same extent as if the
Transferee's Interest had not been transferred hereunder and the
exercise by the Agent of its rights hereunder shall not relieve the
Transferor from such obligations.
(b) Neither the Agent nor the Transferee shall have any
obligation or liability with respect to any Pool Receivables, Contracts
related thereto or any other related purchase orders or other
agreements, nor shall any of them be obligated to perform any of the
obligations of the Transferor thereunder.
SECTION 8.05. Further Action Evidencing Transfers. (a) The Transferor
-----------------------------------
agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action that
the Agent may reasonably request in order to perfect, protect or more fully
evidence the Transfers hereunder and the resulting Transferee's Interest, or to
enable the Transferee or the Agent to exercise or enforce any of their
respective rights hereunder or under the other Transaction Documents. Without
limiting the generality of the foregoing, the Transferor will upon the request
of the Agent:
(i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate;
(ii) ▇▇▇▇ conspicuously each Contract evidencing each Pool
Receivable with a legend, acceptable to the Agent, evidencing the
transfer of the Transferee's Interest; and
(iii) ▇▇▇▇ its master data processing records evidencing such
Pool Receivables and related Contracts with such legend.
40
(b) The Transferor hereby authorizes the Agent to file in the name of
the Transferor, to the extent permitted by applicable law, one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Pool Receivables and Related Property now existing
or hereafter arising. If the Transferor fails to perform any of its agreements
or obligations under this Agreement, the Agent may (but shall not be required
to) itself perform, or cause performance of, such agreement or obligation, and
the expenses of the Agent incurred in connection therewith shall be payable by
the Transferor as provided in Section 13.01.
-------------
(c) Without limiting the generality of subsection (a), the Transferor
--------------
will, not earlier than six (6) months and not later than three (3) months from
the fifth anniversary of the date of filing of the financing statements referred
to in Sections 5.01(f) and 5.01(k) or any other financing statement filed
---------------- -------
pursuant to this Agreement or in connection with any Transfer hereunder, unless
the Final Pay Out Date shall have occurred:
(i) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to each such financing
statement; and
(ii) deliver or cause to be delivered to the Agent an opinion
of the counsel for the Transferor referred to in Section 5.01(i) (or
---------------
other counsel for the Transferor reasonably satisfactory to the Agent),
in form and substance reasonably satisfactory to the Agent, confirming
and updating the opinion delivered pursuant to Section 5.01(i) with
---------------
respect to perfection issues and otherwise to the effect that the
Transferee's Interest hereunder continues to be a valid and perfected
interest subject to no Liens of record except as provided herein or
otherwise permitted hereunder.
SECTION 8.06. Application of Obligors' Payments. (a) Any payment by an
---------------------------------
Obligor in respect of any indebtedness owed by it to the Transferor or IKON
Capital shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless the Agent instructs otherwise, be applied
as a Collection of any Pool Receivable or Receivables of such Obligor to the
extent of any amounts then due and payable thereunder before such payment is
applied to any other indebtedness of such Obligor.
(b) Except or as otherwise required by law or the underlying Contract,
all Collections received from an Obligor of
41
any Receivable shall be applied to Pool Receivables then outstanding of such
Obligor in the order of the age of such Pool Receivables, starting with the
oldest such Pool Receivable; provided, however, that, if payment is designated
-------- -------
by such Obligor for application to specific Receivables, it shall be applied to
such specified Receivables.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all obligations of
--------------------------
the Transferor arising in connection with this Agreement and each other
Transaction Document, whether now or hereafter existing, due or to become due,
direct or indirect, or absolute or contingent, including, without limitation,
Indemnified Amounts, payments on account of Collections received or deemed to be
received, fees and Earned Discount, in each case pro rata according to the
--- ----
respective amounts thereof, the Transferor hereby assigns and grants to the
Transferee, for its benefit and the benefit of the Agent, the Affected Parties
and the Indemnified Parties, a security interest in all of the Transferor's
right, title and interest (including specifically any undivided interest
retained by the Transferor hereunder) now or hereafter existing in, to and under
all the Pool Receivables and Related Property.
SECTION 9.02. Further Assurances. The provisions of Section 8.05 shall
------------------ ------------
apply to the security interest granted under Section 9.01 as well as to the
------------
Transfers and the Transferee's Interest hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Termination Event, the
--------
Transferee, for its own benefit and for the benefit of the Agent, the Affected
Parties and the Indemnified Parties, shall have, with respect to the collateral
granted pursuant to Section 9.01, and in addition to all other rights and
------------
remedies available to the Transferee, the Agent, the Affected Parties or the
Indemnified Parties under this Agreement or other applicable law, all the rights
and remedies of a secured party upon default under the UCC.
42
ARTICLE X
TERMINATION EVENTS
SECTION 10.01. Termination Events. Each of the following events shall
------------------
be a "Termination Event":
-----------------
(a) (i) The Servicer (if IKON Capital or an Affiliate of
IKON Capital is the Servicer) shall fail to perform or observe any
term, covenant or agreement hereunder (other than as referred to in
clause (ii) next following) and such failure shall remain unremedied
-----------
for three Business Days or (ii) the Servicer (if IKON Capital or an
Affiliate of IKON Capital is the Servicer) or the Transferor shall fail
to make any payment or deposit to be made by it hereunder when due; or
(b) Any representation or warranty made or deemed to be made
by the Transferor or IKON Capital (or any of its officers) under or in
connection with this Agreement, any other Transaction Document or any
Periodic Report or Pay Out Statement or other information or report
delivered pursuant hereto shall prove to have been false or incorrect
in any material respect when made; or
(c) The Transferor or IKON Capital shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement or any other Transaction Document on its part to be performed
or observed and any such failure shall remain unremedied for ten
Business Days after written notice thereof shall have been given by the
Agent to the Transferor or IKON Capital, as the case may be; or
(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the
issuance of indebtedness for borrowed money of, or guaranteed by, IKON
Capital, the Transferor or any Affiliate thereof (provided, that in the
case of IKON Office, such indebtedness is in excess of $5,000,000),
which default is a payment default or if unremedied, uncured, or
unwaived (with or without the passage of time or the giving of notice
or both) would permit acceleration of the maturity of such indebtedness
and such default shall have continued unremedied, uncured or unwaived
for a period long enough to permit such acceleration and any notice of
default required to permit acceleration shall have been given; or any
default under any agreement or instrument relating to the purchase or
transfer of receivables of IKON Capital or the Transferor, or any other
event, shall occur and shall
43
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default is to terminate,
or permit the termination of, the commitment of any party to such
agreement or instrument to purchase or acquire receivables or the right
of the IKON Capital or Transferor to reinvest in receivables the
principal amount paid by any party to such agreement or instrument for
an interest in receivables; or
(e) An Event of Bankruptcy shall have occurred and remained
continuing with respect to IKON Capital, the Transferor or any
Affiliate thereof; or
(f) (i) Any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by IKON Capital or the Transferor
to the Agent and the Transferee prior to the date of execution and
delivery of this Agreement is pending against IKON Capital, the
Transferor or any Affiliate thereof, or (ii) any material development
not so disclosed has occurred in any litigation (including, without
limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, which, in the case of
clause (i) or (ii), in the opinion of the Agent, is likely to have a
---------- ----
Material Adverse Effect; or
(g) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to
any of the assets of IKON Capital or the Transferor and such lien shall
not have been released within 5 days, or the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention to, file notice of a
lien pursuant to Section 4068 of the Employee Retirement Income
Security Act of 1974 with regard to any of the assets of IKON Capital,
the Transferor or IKON Office; or
(h) There shall have occurred or shall exist any event or
condition which has, or would have a material possibility of causing,
a Material Adverse Effect; or the warranty in Section 6.01(i)(y) or
------------------
6.02(i)(y) shall not be true at any time; or
----------
(i) the Unadjusted Transferee's Percentage shall exceed the
Maximum Percentage, and such event shall continue for more than 5
Business Days; or
(j) The Losses to Liquidations Ratio (1) for any one month
period exceeds 9% or (2) for any six consecutive month period exceeds
7.5%; or
44
(k) The average of the Delinquency Ratios for any three
consecutive calendar months exceeds 5% or the average of the Default
Ratios for any three consecutive calendar months exceeds 4%; or
(l) a default shall occur under the Support Agreement, or the
Support Agreement shall terminate or cease to be in effect for any
reason; or
(m) There shall have been entered against IKON Capital or the
Transferor one or more judgments, awards or decrees which, in the case
of IKON Capital, exceed $2,500,000 at any one time outstanding,
excluding judgments, awards or decrees for which there is full
insurance and with respect to which the insurer has assumed a
responsibility in writing; or
(n) IKON Capital ceases to have a long term unsecured debt
rating of at least BBB- from S&P and Baa3 from ▇▇▇▇▇'▇; or
(o) Transferee shall cease to have a valid, perfected first
priority ownership interest in the Receivables and the Related Property
for any reason; or
(p) Transfer Termination Event shall occur under the Transfer
Agreement.
SECTION 10.02. Remedies. (a) Optional Termination. Upon the occurrence
-------- --------------------
of a Termination Event (other than a Termination Event described in
subsection (e) or (i) of Section 10.01), the Agent shall, at the request, or may
-------------- --- -------------
with the consent, of the Transferee, by notice to the Transferor declare the
Commitment Termination Date to have occurred.
(b) Automatic Termination. Upon the occurrence of a Termination Event
---------------------
described in subsection (e) or (i) of Section 10.01, the Commitment Termination
-------------- --- -------------
Date shall be deemed to have occurred automatically upon the occurrence of such
event; provided that, if the Commitment Termination Date shall have occurred by
--------
reason of a Termination Event described in subsection (i) and subsequent to such
--------------
date the Unadjusted Transferee's Percentage shall not exceed the Maximum
Percentage, upon written notice by the Agent to the Transferor, the Commitment
shall be reinstated.
(c) Additional Remedies. Upon any termination of the Commitment
-------------------
pursuant to this Section 10.02, the Agent and the Transferee 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 each applicable jurisdiction
45
and other applicable laws, which rights shall be cumulative. Without limiting
the foregoing or the general applicability of Article XIII hereof, (i) the
------------
occurrence of a Termination Event shall not deny to the Transferee any remedy in
addition to termination of the Commitment to which the Transferee may be
otherwise appropriately entitled, whether at law or in equity, and (ii)
following the occurrence of any Termination Event the Transferee may elect to
assign to any Person the Transferee's Interest, or any portion thereof.
ARTICLE XI
THE AGENT
SECTION 11.01. Authorization and Action. The Transferee has appointed
------------------------
the Agent as its agent pursuant to a Servicing Agreement between the Transferee
and DBNY, and hereby authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof and of said Servicing Agreement, together with such
powers as are reasonably incidental thereto.
SECTION 11.02. 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 the Agent under or in connection with this
Agreement (including, without limitation, the servicing, administering or
collecting Pool Receivables as the Servicer pursuant to Section 8.01), except
------------
for its or their own gross negligence or willful misconduct, and except for any
breach by the Servicing Agent of its obligations to the Transferee expressly set
forth in the Servicing Agreement referred to in Section 11.01. Without limiting
-------------
the generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for the Transferor or IKON Capital), independent certified
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; (b) makes no warranty or
representation to the Transferee or any other holder of any interest in Pool
Receivables and shall not be responsible to the Transferee or any such other
holder for any statements, warranties or representations made by any Person
(other than the Servicing Agent) in or in connection with this Agreement; (c)
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 on the
part of the Transferor or IKON Capital or to inspect the property (including the
books and records) of the Transferor or IKON Capital, except for its duties to
the
46
Transferee as set forth in the Servicing Agreement referred to above; (d)
shall not be responsible to the Transferee (except for any breach by the
Servicing Agent of its duties set forth in the Servicing Agreement referred to
above) or to any other holder of any interest in Pool Receivables for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Transaction Document; and (e) shall incur no
liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 11.03. Agent and Affiliates. Deutsche Bank and its Affiliates
--------------------
may generally engage in any kind of business with IKON Capital, the Transferor
or any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of IKON Capital, the Transferor or any Obligor
or any of their respective Affiliates, all as if Deutsche Bank were not the
Agent and without any duty to account therefor to the Transferee or any other
holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENTS
SECTION 12.01. Restrictions on Assignments. (a) None of IKON Capital,
---------------------------
the Transferor or the Transferee may assign its rights hereunder or any interest
herein without the prior written consent of the Agent, and the Transferee may
not assign the Transferee's Interest (or any portion thereof) to any Person
without the prior written consent of the Transferor, which consent shall not be
unreasonably withheld; provided, however, that
-------- -------
(i) the Transferee may assign, or grant a security interest
in, the Transferee's Interest (or any portion thereof) to Deutsche
Bank, the Liquidity Banks (or any successor of any thereof by merger,
consolidation or otherwise), or any Affiliate of Deutsche Bank or any
of the Liquidity Banks (which may then assign the Transferee's Interest
(or any portion thereof so assigned) or any interest therein to such
party or parties as it may choose); and
(ii) the Transferee may assign and grant a security interest
in the Transferee's Interest and the Transferee's rights and interests
in, to and under this Agreement and the
47
other Transaction Documents to DBNY, as Collateral Agent, and any
successor in such capacity, to secure the Transferee's obligations
under or in connection with the Commercial Paper Notes, the Liquidity
Agreement, the Enhancement Agreement and any letter of credit issued
thereunder, and certain other obligations of the Transferee incurred in
connection with the funding of the Transfers and Reinvestments
hereunder, which assignment and grant of a security interest shall not
be considered an "assignment" for purposes of Section 12.01(b),
----------------
Section 12.03 or 12.04 or, prior to the enforcement of such security
------------- -----
interest, for purposes of any other provision of this Agreement.
(b) The Transferor agrees to advise the Agent within five Business Days
after notice to the Transferor of any proposed assignment by the Transferee of
the Transferee's Interest (or any portion thereof), not otherwise permitted
under subsection (a), of the Transferor's consent or non-consent to such
--------------
assignment. If the Transferor does not consent to such assignment, the
Transferee may immediately assign the Transferee's Interest (or such portion) to
Deutsche Bank, any of the Liquidity Banks or any Affiliate of Deutsche Bank or
any of the Liquidity Banks. All of the aforementioned assignments shall be upon
such terms and conditions as the Transferee and the assignee may mutually agree.
SECTION 12.02. Documentation; Notice of Assignment. (a) Any assignment
-----------------------------------
of the Transferee's Interest (or any portion thereof) to any Person may be
evidenced by such instruments or documents as may be satisfactory to the
Transferee, the Agent and the assignee.
(b) The Transferee shall provide notice to the Transferor of any
assignment of the Transferee's Interest (or any portion thereof) by the
Transferee to any assignee (other than the assignment and grant of a security
interest referred to in Section 12.01(a)(ii)).
--------------------
SECTION 12.03. Rights of Assignee. Upon the assignment by the
------------------
Transferee of the Transferee's Interest (or any portion thereof) in accordance
with this Article XII, the assignee receiving such assignment shall have all
-----------
of the rights of the Transferee hereunder with respect to the Transferee's
Interest (or the portion thereof so assigned); subject, however, to
------- -------
Sections 12.04 and 12.05.
-------------- -----
SECTION 12.04. Allocation of Payments. If on any date there are
----------------------
sufficient funds in the Agent's Account to distribute a portion, but not all,
of the amounts payable pursuant to subsection (c)(i) of either Section 3.01
----------------- ------------
or Section 3.02 and, due to any assignment of the Transferee's Interest (or
------------
any portion
48
thereof), such amounts are payable to more than one Person, then, unless
otherwise agreed between such Persons, and subject to Section 3.02(d), the Agent
---------------
shall distribute funds to such Persons pro rata based upon the amounts so
--- ----
payable to such Persons.
SECTION 12.05. Calculation of Earned Discount After Assignment. Upon
-----------------------------------------------
and after the assignment of the Transferee's Interest (or any portion thereof)
pursuant to this Article XII, the Transferee Rate used to calculate Earned
-----------
Discount from time to time with respect to the Transferee's Interest (or the
portion thereof so assigned) for each applicable Yield Period beginning after
the effective date of such assignment shall be the Bank Rate, unless the
Transferee, the Transferor and the assignee may agree in writing upon to use a
different Transferee Rate for calculating such Earned Discount. If (i) the
Transferor fails to consent to any assignment of the Transferee's Interest (or
any portion thereof) proposed by the Transferee, (ii) the Transferee makes an
assignment of the Transferee's Interest (or such portion) to Deutsche Bank or
any Affiliate of Deutsche Bank as permitted under Section 12.01(b), and (iii) in
----------------
the opinion of the Agent, the Transferee was required by applicable law,
regulation or directive from any governmental authority to make such assignment,
then the Earned Discount with respect to the Transferee's Interest (or the
portion thereof so assigned) shall immediately begin to accrue at the Bank Rate
for the remainder of any then applicable Yield Period.
SECTION 12.06. Rights of Collateral Agent. Each of IKON Capital and the
--------------------------
Transferor hereby agrees that, upon notice to the Transferor, the Collateral
Agent referred to in Section 12.01 may exercise all the rights of the Agent
-------------
hereunder with respect to the Transferee's Interest (or all portions thereof,
and Collections with respect thereto, which are owned by the Transferee), and
all other rights and interests of the Transferee in, to or under this Agreement
or any other Transaction Document. Without limiting the foregoing, upon such
notice such Collateral Agent may request the Servicer to segregate the
Transferee's allocable share of Collections from the Transferor's allocable
share in accordance with Section 8.02(a), may give a notice designating a new
---------------
Servicer pursuant to Section 8.01(a), may give or require the Agent to give
---------------
notice to the Post Office Boxes and Designated Account Banks as referred to in
Section 8.03(a), and may direct the Obligors of Pool Receivables to make
---------------
payments in respect thereof directly to an account or lockbox designated by it,
in each case, to the same extent as the Transferee or the Agent might have done.
49
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by the Transferor. (a) General Indemnity.
----------------------------- -----------------
Without limiting any other rights which any such Person may have hereunder or
under applicable law, the Transferor hereby agrees to indemnify each of the
Agent, the Transferee, the Liquidity Banks, the Enhancement Bank, Deutsche Bank,
each of their respective Affiliates, successors, transferees, participants and
assigns and all officers, directors, shareholders, controlling persons,
employees and agents of any of the foregoing (each an "Indemnified Party"),
-----------------
forthwith on demand, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
-------------------
or relating to this Agreement or the ownership or funding of the Transferee's
Interest (or any portion thereof) or in respect of any Receivable or any
Contract, excluding, however, (a) Indemnified Amounts to the extent resulting
--------- -------
from gross negligence or willful misconduct on the part of the Agent, the
Transferee or such Indemnified Party or (b) recourse (except as otherwise
specifically provided in this Agreement) for Defaulted Receivables. Without
limiting the foregoing, and subject to the foregoing exclusions, the Transferor
shall indemnify each Indemnified Party for Indemnified Amounts arising out of or
relating to:
(i) the transfer by the Transferor of any interest in any
Receivable other than the transfer of the Transferee's Interest to the
Transferee pursuant to this Agreement and the grant of a security
interest to the Transferee pursuant to Section 9.01;
------------
(ii) the breach of any representation or warranty made by the
Transferor (or any of its officers) under or in connection with this
Agreement, any Periodic Report or Pay Out Statement or any other
information or report delivered by the Transferor or the Servicer
pursuant hereto, which shall have been false or incorrect in any
material respect when made or deemed made;
(iii) the failure by the Transferor to comply with any
applicable law, rule or regulation with respect to any Pool Receivable
or the related Contract, or the nonconformity of any Pool Receivable or
the related Contract with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the
50
Transferee an undivided percentage ownership interest, to the extent of
the Transferee's Interest, in the Receivables in, or purporting to be
in, the Receivables Pool, together with all Related Property, free and
clear of any Lien, other than an Lien arising solely as a result of an
act of the Transferee or the Agent, whether existing at the time of any
Transfer or Reinvestment or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Pool Receivables or Related Property, whether at the time of any
Transfer or Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool (including,
without limitation, a defense based on such Receivable or the related
Contract not being a 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 the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any failure of the Transferor to perform its duties or
obligations in accordance with the provisions of this Agreement;
(viii) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any
Pool Receivable; or
(ix) any tax or governmental fee or charge (but not
including taxes upon or measured by net income), all interest and
penalties thereon or with respect thereto, and all out-of-pocket costs
and expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the transfer
or ownership of the Transferee's Interest, any portion thereof or any
other interest in the Pool Receivables or Related Property or in any
goods which secure any such Pool Receivables.
(b) Indemnities by Servicer. Without limiting any other rights which
-----------------------
any such Person may have hereunder or under applicable law, Servicer hereby
agrees to indemnify each of the Indemnified Parties, forthwith on demand, from
and against any and all Indemnified Amounts awarded against or incurred by any
of
51
them arising out or related to:
(i) the fact that any representation or warranty made by
the Servicer (or any of its officers) under or in connection with this
Agreement, any Periodic Report or any other information or report
delivered by the Servicer pursuant hereto shall have been false or
incorrect in any material respect when made or deemed made;
(ii) the failure by the Servicer to comply with any
applicable law, rule or regulation with respect to the servicing or
collection of any Pool Receivable or the related Contract;
(iii) the failure of the Servicer or any subservicer to
perform its duties or obligations in accordance with the provisions of
this Agreement; and
(iv) any dispute, claim, offset or defense of the Obligor to
the payment of any Pool Receivable by reason of the action or inaction
of the Servicer or any subservicer of the Servicer.
(c) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party
-------------------------------------
shall have notice of any attempt to impose or collect any tax or governmental
fee or charge for which indemnification will be sought from the Transferor under
Section 13.01(a)(ix), such Indemnified Party shall give prompt and timely notice
--------------------
of such attempt to the Transferor and the Transferor shall have the right, at
its expense, to participate in any proceedings resisting or objecting to the
imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the payment of any of the aforesaid taxes and the receipt
of the indemnity provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax or refund on the amount
of tax measured by net income or profits which is or was payable by the
Indemnified Party.
(d) Contribution. If for any reason the indemnification provided above
------------
in this Section 13.01 is unavailable to an Indemnified Party or is insufficient
-------------
to hold an Indemnified Party harmless, then the Transferor or IKON Capital, as
the case may be, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by such Indemnified Party on the one hand and the Transferor or IKON Capital, as
the case may
52
be, on the other hand but also the relative fault of such Indemnified Party as
well as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement nor consent to any departure by the Transferor or IKON Capital
therefrom shall in any event be effective unless the same shall be in writing
and signed by (a) the Transferor, IKON Capital, the Agent and the Transferee
(with respect to an amendment) or (b) the Agent and the Transferee (with respect
to a waiver or consent by them) or the Transferor or IKON Capital (with respect
to a waiver or consent by the Transferor or IKON Capital), as the case may be,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 14.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier, or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
in Schedule 14.02 hereto or at such other address or facsimile number as shall
--------------
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, (a) if personally delivered
or sent by express mail or courier, when received, (b) if sent by certified
mail, three Business Days after having been deposited in the mail, postage
prepaid, and (c) if transmitted by facsimile, when sent, receipt confirmed by
telephone or electronic means, except that notices and communications pursuant
to Article I shall not be effective until received.
---------
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
-------------------
Agent, any Affected Party, any Indemnified Party, the Transferee or any assignee
of the Transferee's Interest or any portion thereof to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, Deutsche Bank is hereby authorized by the
Transferor at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits
53
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Deutsche Bank to or for the credit or
the account of the Transferor, now or hereafter existing under this Agreement,
to the Agent, any Affected Party, any Indemnified Party or the Transferee, or
their respective successors and assigns.
SECTION 14.04. Binding Effect; Survival. This Agreement shall be
------------------------
binding upon and inure to the benefit of the Transferor, IKON Capital, the
Agent, the Transferee and their respective successors and assigns, and the
provisions of Section 4.04 and Article XIII shall inure to the benefit of the
------------ ------------
Affected Parties and the Indemnified Parties, respectively, and their respective
successors and assigns; provided, however, nothing in the foregoing shall be
-------- -------
deemed to authorize any assignment not permitted by Section 12.01. This
-------------
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until such time as the Final Pay Out Date shall have occurred. The rights and
remedies with respect to any breach of any representation and warranty made by
the Transferor or IKON Capital pursuant to Article VI and the provisions of
----------
Article XIII, Section 4.04 and Sections 14.05 through 14.09 shall be continuing
------------ ------------ -------------- -----
and shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its
-------------------------
obligations under Article XIII, the Transferor and IKON Capital jointly and
------------
severally agree to pay on demand:
(a) all costs and expenses incurred by the Agent, the
Transferee, Deutsche Bank and their respective Affiliates in connection
with the negotiation, preparation, execution and delivery, the
administration (including periodic auditing) or the enforcement of, or
any actual or claimed breach of, this Agreement and the other
Transaction Documents, including, without limitation (i) the reasonable
fees and expenses of counsel to any of such Persons incurred in
connection with any of the foregoing or in advising such Persons as to
their respective rights and remedies under any of the Transaction
Documents, and (ii) all reasonable out-of-pocket expenses (including
reasonable fees and expenses of independent accountants) incurred in
connection with any review of the Transferor's or IKON Capital's books
and records either prior to the execution and delivery hereof or
pursuant to Section 7.01(c); and
---------------
(b) all stamp and other taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and
recording of this Agreement or any or
54
the other Transaction Documents (and the Transferor agrees to indemnify
each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees).
Transferor also agrees to pay a pro rata share of Transferee's general operating
costs and expenses, including, but not limited to, rating agency fees,
management fees and the fees and expenses of counsel, which pro rata share shall
be determined by dividing the daily average annual Transferee's Investment by
the daily average Commercial Paper Notes issued by Transferee, provided,
--------
however, that in no event shall such pro rata share exceed .01% per annum of the
-------
average annual Transferee's Investment. Such fee shall be payable on the last
day of each February for the calendar year ending on the immediately preceding
December 31.
SECTION 14.06. No Proceedings. The Transferor, IKON Capital and
--------------
Deutsche Bank, individually and as Agent, each hereby agrees that it will not
institute against or join any other Person in instituting against, the
Transferee, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any Federal or state
bankruptcy or similar law, for one year and a day after the latest maturing
Commercial Paper Note is paid. The foregoing shall not limit the Transferor's or
IKON Capital's right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any Person other
than the Transferor or IKON Capital.
SECTION 14.07. Confidentiality of Transferor Information. (a)
-----------------------------------------
Confidential Information. Each of the Transferee and the Agent acknowledges that
------------------------
certain of the information provided to such party by or on behalf of the
Transferor or IKON Capital in connection with this Agreement and the
transactions contemplated hereby is or may be confidential, and each such party
severally agrees that, unless the Transferor or IKON Capital shall otherwise
agree in writing, and except as provided in subsection (b), such party will not
--------------
disclose to any other person or entity:
(i) any information regarding, or copies of, any Periodic
Reports, Pay Out Statements, and any non-public financial statements,
reports and other information, furnished by the Transferor or IKON
Capital to the Transferee or the Agent pursuant to this Agreement, or
(ii) any other information regarding the Transferor or IKON
Capital which is designated by the Transferor or IKON Capital to such
party in writing or otherwise as confidential;
55
the information referred to in clauses (i) and (ii) above, is collectively
--------------------
referred to as the "Transferor Information"; provided, however, "Transferor
---------------------- -------- ------- ----------
Information" shall not include
-----------
(A) any information which is or becomes generally
available to the general public or to such party on a
nonconfidential basis from a source other than the Transferor
or IKON Capital or which was known to such party on a
nonconfidential basis prior to its disclosure by the
Transferor or IKON Capital, or
(B) general information regarding the nature of this
Agreement, the basic terms hereof (including without
limitation the amount and nature of the Commitment and the
Transferee's Investments hereunder and of the recourse or
other credit enhancement provided by hereunder), the nature,
amount and status of the Pool Receivables, and the current
and/or historical ratios of losses to liquidations and/or
outstandings with respect to the Receivables Pool, and the
identity of the Transferor and IKON Capital.
(b) Disclosure. Notwithstanding subsection (a), each party may
---------- --------------
disclose any Transferor Information:
(i) to any of such party's attorneys, consultants and
auditors, and to such of the Liquidity Banks, the Enhancement Bank, any
dealer or placement agent for the Transferee's commercial paper, and
any actual or potential assignees of, or participants in, any of the
rights or obligations of the Transferee, the Liquidity Banks, the
Enhancement Bank or Deutsche Bank under or in connection with this
Agreement, who (A) are informed by such party of the confidential
nature of the Transferor Information and the terms of this Section
-------
14.07, and (B) are subject to confidentiality restrictions generally
-----
consistent with this Section 14.07,
-------------
(ii) to any rating agency that maintains a rating for the
Transferee's commercial paper or is considering the issuance of such a
rating, for the purposes of reviewing the credit of the Transferee in
connection with such rating,
(iii) to any other party to this Agreement, for the purposes
contemplated hereby,
(iv) to any Person whom any dealer or placement agent for the
Transferee shall have identified as an actual or potential investor in
Commercial Paper Notes, and who shall have agreed with Deutsche Bank in
writing to keep such
56
information confidential and use it only in connection with considering
or monitoring such investments, subject to applicable legal
requirements (it being understood that such Person may also receive the
information excluded from the definition of "Transferor Information"
pursuant to clause (B) of subsection (a)),
---------- --------------
(v) as may be required by any municipal, state, federal or
other regulatory body having or claiming to have jurisdiction over such
party, in order to comply with any law, order, regulation, regulatory
request or ruling applicable to such party, or
(vi) subject to subsection (c), in the event such party is
--------------
legally compelled (by interrogatories, requests for information or
copies, subpoena, civil investigative demand or similar process) to
disclose such Transferor Information.
(c) Legal Compulsion. In the event that any party hereto (other than
----------------
the Transferor or IKON Capital) or any of its representatives is requested or
becomes legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any of the Transferor Information, such party will (or will cause its
representatives to)
(i) provide the Transferor or IKON Capital with prompt
written notice of such request or legal compulsion; and
(ii) at IKON Capital's expense, use its reasonable efforts to
cooperate with the Transferor and IKON Capital in making an appropriate
objection to disclosure, seeking a protective order or taking such
other actions as may be lawful and appropriate in order to maintain the
confidentiality of such Transferor Information.
(d) Survival. This Section 14.07 shall survive termination of this
-------- -------------
Agreement.
SECTION 14.08. Confidentiality of Program Information. (a) Program
-------------------------------------- -------
Information. Each party hereto (other than DBNY) acknowledges that DBNY regards
-----------
the structure of the transactions contemplated by this Agreement, and by the
Liquidity Agreement, the Enhancement Agreement and the other Program Documents
referred to therein, to be proprietary, and each such party severally agrees
that:
(i) unless DBNY shall otherwise agree in writing, and except
as provided in subsection (b), such party will not disclose to any
--------------
other person or entity:
57
(A) any information regarding, or copies of, this Agreement
or any transaction contemplated hereby,
(B) any information regarding, or copies of, the Liquidity
Agreement, the Enhancement Agreement, any of the other Program
Documents referred to therein, or any transaction contemplated
thereby,
(C) any information regarding the organization or business
of the Transferee generally, or
(D) any information regarding Deutsche Bank which is
designated by DBNY to such party in writing or otherwise as
confidential or not otherwise available to the general public
(the information referred to in clauses (A), (B), (C) and (D) above, whether
----------- --- --- ---
furnished by the Transferee, DBNY, any Liquidity Bank, the Enhancement Bank, any
assignee of or participant in any rights or obligations of the Transferee, any
Liquidity Bank or the Enhancement Bank, or any attorney for or other
representative of any of the foregoing (each a "Program Information Provider"),
----------------------------
is collectively referred to as the "Program Information"; provided, however,
------------------- -------- -------
"Program Information" shall not include any information which is or becomes
-------------------
generally available to the general public or to such party on a nonconfidential
basis from a source other than DBNY or any other Program Information Provider,
or which was known to such party on a nonconfidential basis prior to its
disclosure by DBNY or any other Program Information Provider);
(ii) such party will make the Program Information available to
only such of its officers, directors, employees and agents who (A) in
the good faith belief of such party, have a need to know such Program
Information, (B) are informed by such party of the confidential nature
of the Program Information and the terms of this Section 14.08, and (C)
-------------
are subject to confidentiality restrictions consistent with this
Section 14.08;
-------------
(iii) such party will use the Program Information solely for the
purposes of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto; and
(iv) such party will, upon demand, return (and cause each of
its officers, directors, employees, agents, attorneys, consultants or
auditors (collectively,
58
"representatives") to return) to DBNY, or to such other Program
---------------
Information Provider as shall have furnished it with any Program
Information, all documents or other written material received from DBNY
or such other Program Information Provider which constitute or contain
any Information described in subclause (B), (C), or (D) of clause (i)
------------- --- --- ----------
above and all copies of such documents or other material in its
possession or in the possession of any of its representatives, and will
not retain any copy, summary or extract thereof on any storage medium
whatsoever.
(b) Disclosure. Notwithstanding clause (i) of subsection (a), each
---------- ---------- --------------
party may disclose any Program Information:
(i) to its attorneys, consultants and auditors who (A) in the
good faith belief of such party, have a need to know such Program
Information, (B) are informed by such party of the confidential nature
of the Program Information and the terms of this Section 14.08, and (C)
-------------
are subject to confidentiality restrictions consistent with this
Section 14.08,
-------------
(ii) to any other party to this Agreement, for the purposes
contemplated hereby,
(iii) as may be required by any municipal, state, federal or
other regulatory body having or claiming to have jurisdiction over such
party, in order to comply with any law, order, regulation, regulatory
request or ruling applicable to such party (provided that prior to
--------
making any required filing of this agreement with the Securities and
Exchange Commission, Transferor and IKON Capital shall apply for
confidential treatment and shall expurgate those provisions requested
by the Agent), or
(iv) subject to subsection (c), in the event such party is
--------------
legally compelled (by interrogatories, requests for information or
copies, subpoena, civil investigative demand or similar process) to
disclose such Program Information.
(c) Legal Compulsion. In the event that any party hereto (other than
----------------
DBNY) or any one to whom such party or its representatives transmits the Program
Information is requested or becomes legally compelled (by interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Program Information, such party will (or
will cause its representatives to)
(i) provide DBNY with prompt written notice of such request or
legal compulsion;
59
(ii) unless DBNY agrees that such Program Information may be
disclosed, make a timely objection to the request or compulsion to
provide such Program Information on the basis that such Program
Information is confidential and subject to the agreements contained in
this Section 14.08; and
-------------
(iii) at the expense of DBNY or any other Program Information
Provider, take any action as DBNY or such other Program Information
Provider may reasonably request to seek a protective order or other
appropriate remedy and otherwise to maintain the confidentiality of
such Program Information.
(d) Survival. This Section 14.08 shall survive termination of this
-------- -------------
Agreement.
SECTION 14.09. No Recourse Against Other Parties. No recourse under any
---------------------------------
obligation, covenant or agreement of the Transferee contained in this Agreement
shall be had against any stockholder, employee, officer, director, or
incorporator of the Transferee, provided, however, that nothing in this Section
-------- ------- -------
14.09 shall relieve any of the foregoing Persons from any liability which such
-----
Person may otherwise have for such Person's gross intentional misrepresentation
or willful misconduct.
SECTION 14.10. Definitions; Other Terms. Unless otherwise defined
------------------------
herein, all capitalized terms used in this Agreement shall have the meanings set
forth in Appendix A attached to this Agreement and by this reference made a part
----------
hereof. All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles. 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.
SECTION 14.11. Captions and Cross References. The various captions
-----------------------------
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 14.12. Integration. This Agreement and the other Transaction
-----------
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the
60
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 14.13. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION (AND THE EFFECT OF PERFECTION OR NONPERFECTION) OF THE INTERESTS OF
THE TRANSFEREE IN THE RECEIVABLES OR THE RELATED PROPERTY IS GOVERNED BY THE
LAWS OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.14. Waiver Of Jury Trial. EACH OF THE TRANSFEROR AND IKON
CAPITAL HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH
MAY BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT A JURY.
SECTION 14.15. Consent To Jurisdiction; Waiver Of Immunities. EACH OF
---------------------------------------------
THE TRANSFEROR, IKON CAPITAL AND TRANSFEREE HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF
ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS
NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN
NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW
YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF
AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
SECTION 14.16. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when
61
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same Agreement.
SECTION 14.17. Syndication of Liquidity. Each of IKON Capital and the
------------------------
Transferor agrees to cooperate with DBNY in connection with the syndication of
the Liquidity Agreement.
SECTION 14.18. Tax Treatment. It is the intent of Transferor and
-------------
Transferee that, for federal, state and local income and franchise tax purposes,
the Transferee's Interest will be treated as evidence of indebtedness secured by
the Receivables, Related Security and Collections and other proceeds thereof.
Transferor, by entering into this Agreement, and Transferee agree to treat the
Transferee's Interest for federal, state and local income and franchise tax
purposes as indebtedness. The provisions of this Agreement and all related
Transaction Documents shall be construed to further such intentions of the
parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
62
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
TWIN TOWERS INC.,
as Transferee
By
--------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Agent
By
--------------------------------------
Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-Fact
IKON FUNDING, INC.,
as Transferor
By
--------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
IKON CAPITAL, INC.,
as Servicer
By
--------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
S-1
APPENDIX A
DEFINITIONS
This is Appendix A to the Amended and Restated Receivables Transfer
----------
Agreement, dated as of March 31, 1997, among IKON Funding, Inc., IKON Capital,
Inc., as initial Servicer, Twin Towers Inc. and Deutsche Bank AG, New York
Branch, as Agent (as amended, supplemented or otherwise modified from time to
time, this "Agreement"). Each reference in this Appendix A to any Section,
--------- ----------
Appendix or Exhibit refers to such Section of or Appendix or Exhibit to this
Agreement.
As used in this Agreement, unless the context requires a different
meaning, the following terms have the meanings indicated hereinbelow:
"Adjusted Average Maturity" means, on any day, the sum of (a) 45 days
------------------------- ---
plus (b) the Average Maturity for such day.
----
"Affected Party" means each of the Transferee, the Liquidity Banks, the
--------------
Enhancement Bank, any permitted assignee of the Transferee, any assignee of or
participant in any of the Transferee's obligations to the Liquidity Banks or the
Enhancement Bank, Deutsche Bank (including any branch or agency thereof) and any
successor to Deutsche Bank or DBNY as the Agent.
"Affiliate" when used with respect to a Person means any other Person
---------
controlling, controlled by, or under common control with, such Person.
"Affiliated Party" means each of IKON Capital and each of its
----------------
Affiliates.
"Agent" has the meaning set forth in the preamble.
----- --------
"Agent's Account" has the meaning set forth in Section 4.01(a).
--------------- ---------------
"Alternate Base Rate" means, on any date, a fluctuating rate of
-------------------
interest per annum equal to the higher of
--- -----
(a) 1.00% above the rate of interest most recently announced
by Deutsche Bank as its prime lending rate for unsecured commercial
loans within the United States; and
(b) 1.00% above the rate per annum at which DBNY, as a branch
--- -----
of a foreign bank, in its sole discretion, can
A-1
acquire federal funds in the interbank overnight federal funds market,
including through brokers of recognized standing.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by Deutsche Bank or DBNY in connection with extensions of
credit.
"Authorized Servicing Officer" means (i) chief financial officer, chief
----------------------------
accounting officer, controller or president, if IKON Capital is the Servicer and
(ii) such other officer as the Agent may agree to, if IKON Capital is not the
Servicer.
"Average Maturity" means, on any day, that time period (expressed in
----------------
days) equal to the weighted average maturity of the Pool Receivables as shall be
calculated by the Servicer, as set forth in the most recent Periodic Report in
accordance with the provisions thereof. If the Agent shall disagree with any
such calculation, the Agent may recalculate the Average Maturity for such day,
which calculation shall, absent manifest error, be binding upon the Servicer,
the Transferor and the Transferee.
"Bank Rate" for any Yield Period for any Rate Tranche means a rate per
--------- ---
annum equal to the sum of (a) .30% per annum, plus (b) the Eurodollar Rate
----- --------- ----
(Reserve Adjusted) for such Yield Period; provided, however, that if (i) it
-------- -------
shall become unlawful for the Agent, any Liquidity Bank or the Enhancement Bank
to obtain funds in the London interbank market in order to fund any Transfer or
to maintain any Rate Tranche, or if such funds shall not be reasonably available
to the Agent, any Liquidity Bank or the Enhancement Bank, or (ii) there shall
not be time prior to the commencement of an applicable Yield Period to determine
a Eurodollar Rate in accordance with its terms, then the "Bank Rate" for any
---------
Yield Period for such Rate Tranche shall be equal to a rate of (x) .425% per
---
annum, plus (y) the Domestic CD Rate (Adjusted) for such Yield Period.
----- ----
"Business Day" means a day on which both (a) the Agent at its principal
------------
office in New York City, New York is open for business and (b) commercial banks
in New York City are not authorized or required to be closed for business.
"Collections" means, with respect to any Receivable, all funds which
-----------
either (a) are received by IKON Capital, the Transferor or the Servicer from or
on behalf of the related Obligors in payment of any amounts owed (including,
without limitation, purchase prices, finance charges, interest and all other
charges) in respect of such Receivable, or applied to such amounts owed by such
Obligors (including, without limitation, insurance payments that IKON Capital,
the Transferor or Servicer
A-2
applies in the ordinary course of its business to amounts owed in respect of
such Receivable and net proceeds of sale or other disposition of repossessed or
returned Equipment or other collateral or property of the Obligor or any other
party directly or indirectly liable for payment of such Receivable and available
to be applied thereon), (b) are received by IKON Capital, the Transferor or the
Servicer in payment of the purchase price of such Receivable or recourse
obligations of any Person related to such Receivable, whether pursuant to
arrangements with the dealers or otherwise, or (c) are deemed to have been
received by IKON Capital, the Transferor or any other Person as a Collection
pursuant to Section 3.03; provided that, so long as IKON Capital or an Affiliate
------------ -------- ----
of IKON Capital is the Servicer, late payment charges, collection fees and
extension fees shall not be deemed to be Collections.
"Commercial Paper Notes" means short-term promissory notes issued or to
----------------------
be issued by the Transferee to fund its investments in accounts receivable or
other financial assets.
"Commercial Paper Rate" for any Yield Period for any Rate Tranche means
---------------------
a rate per annum equal to the sum of (i) the rate or, if more than one rate, the
--- -----
weighted average of the rates, determined by converting to an interest-bearing
equivalent rate per annum the discount rate (or rates) at which Commercial Paper
--- -----
Notes having a term equal to such Yield Period and to be issued to fund the
Transfer of or to maintain such Rate Tranche by the Transferee (including,
without limitation, the Transferee's Tranche Investment and accrued and unpaid
Earned Discount) may be sold by any placement agent or commercial paper dealer
selected by the Agent, as agreed between each such agent or dealer and the
Agent, plus (ii) the commissions and charges charged by such placement agent or
----
commercial paper dealer with respect to such Commercial Paper Notes, expressed
as a percentage of the face amount of such Commercial Paper Notes and converted
to an interest-bearing equivalent rate per annum.
--- -----
"Commitment" has the meaning set forth in Section 1.01.
---------- ------------
"Commitment Termination Date" has the meaning set forth in
---------------------------
Section 1.04.
------------
"Company Note" has the meaning set forth in the Transfer Agreement.
------------
"Concentration Limit" for any Obligor at any time means the greater of
-------------------
(a) the Special Concentration Limit, if any, for such Obligor and (b) 2.0% of
the Transferee's Investment at such time.
"Contingent Obligation" as to any Person means any
---------------------
A-3
obligation of such Person guaranteeing or in effect guaranteeing any
indebtedness, leases, dividends or other contractual obligations ("primary
-------
obligations") of any other Person (the "primary obligor") in any manner, whether
----------- ---------------
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of such primary obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation shall
-------- -------
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
"Contract" means a lease, conditional sale agreement or other contract
--------
between IKON Capital and any Person pursuant to or under which such Person shall
be obligated to make payments to IKON Capital from time to time.
"Credit and Collection Policy" means those credit and collection
----------------------------
policies and practices relating to Contracts and Receivables described in
Schedule 6.01(o)-2, as modified without violating Section 7.03(c).
------------------ ---------------
"DBNY" has the meaning set forth in the preamble.
---- --------
"Dealer Terminations" means Pool Receivables that have been terminated
-------------------
or prepaid in connection with a trade in or trade up or any other reason (other
than a default under such Pool Receivable) in a circumstance where the Obligor
did not make a cash payment to the Transferor in an amount at least equal to the
Unpaid Balance of such Pool Receivable.
"Dealer Termination Ratio" means the ratio (expressed as a percentage)
------------------------
computed as of the last day of each month by dividing (x) the aggregate amount
of the Unpaid Balance of all Dealer Terminations that were terminated or prepaid
during such month by (y) the Collections of Pool Receivables during such month.
A-4
"Default Ratio" means the ratio (expressed as a percentage) computed as
-------------
of the last day of each month by dividing (x) the aggregate Unpaid Balance of
all Pool Receivables that are Defaulted Receivables as of such date by (y) the
aggregate Unpaid Balance of all Pool Receivables on such date.
"Default and Dilution Reserve" on any day means an amount equal to the
----------------------------
product of (a) the Reserve Percentage at the close of business of the Transferee
on such day, times (b) the sum of (i) the Transferee's Investment at the opening
-----
of business of the Transferee on such day plus (ii) the Discount Factor on such
----
day; provided that from and after the Commitment Termination Date, the Default
--------
and Dilution Reserve shall be the greater of (1) the foregoing amount and (2)
6.5% of the sum described in the foregoing clause (b), calculated as of the
----------
Month End Date immediately preceding such Commitment Termination Date.
"Default Reserve Percentage" means, on any day, the greater of (a) 2.75
--------------------------
times the highest average of the sum of the Delinquency Ratio plus the Default
Ratio for three consecutive months during the 12 calendar months preceding or
ending on such day, and (b) four times the highest Losses-to-Liquidations Ratio
on the last day of any of the 12 calendar months preceding or ending on such
day.
"Defaulted Receivable" means a Receivable: (a) as to which any payment,
--------------------
or part thereof, remains unpaid for 90 or more days from the original due date
for such payment, (b) as to which the Obligor thereof is the Obligor on any
other Defaulted Receivable, (c) as to which an Event of Bankruptcy has occurred
and remains continuing with respect to the Obligor thereunder, (d) as to which
payments have been extended, or the terms of payment thereof rewritten, without
the Agent's consent, except as set forth herein or (e) which, consistent with
the Credit and Collection Policy, would be written off the Transferor's or IKON
Capital's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
-----------------
computed as of the last day of each month by dividing (x) the aggregate Unpaid
Balance of all Pool Receivables that were Delinquent Receivables at the end of
such month by (y) the aggregate Unpaid Balance of all Pool Receivables on such
date.
"Delinquent Receivable" means a Receivable that is not a Defaulted
---------------------
Receivable and: (a) as to which any payment, or part thereof, remains unpaid for
60 days or more from the original due date for such payment; or (b) which,
consistent with the Credit and Collection Policy, would be classified as
delinquent by IKON Capital.
A-5
"Designated Account" means any bank account into which collections from
------------------
Pool Receivables are deposited.
"Designated Account Agreement" means a letter agreement, in
----------------------------
substantially the form of Exhibit 5.01(h), among the Transferor, IKON Capital
---------------
and any Designated Account Bank.
"Designated Account Bank" means any of the banks holding one or more
-----------------------
Designated Accounts.
"Designated Obligor" means, at any time, all Obligors except any
------------------
Obligor as to which the Agent has, at least three Business Days prior to the
date of determination, given notice to the Transferor that such Obligor shall
not be considered a Designated Obligor.
"Deutsche Bank" has the meaning set forth in the preamble.
------------- --------
"Dilution Percentage" means, for any day, 15% times the highest Dealer
-------------------
Termination Ratio occurring for the immediately preceding three months.
"Dilution Reserve Percentage" means, for any day, the sum of the
---------------------------
Dilution Percentages for each of the 12 months ending on or preceding such day
divided by 12.
"Discount Amount" at any time means an amount equal to (i) the
---------------
aggregate Unpaid Balance of all Eligible Receivables at such time minus (ii) the
-----
aggregate Present Value of all Eligible Receivables at such time.
"Discount Factor" at any time means an amount equal to the sum of the
---------------
aggregate accrued and unpaid Earned Discount with respect to all Rate Tranches
at such time.
"Dollars" means dollars in lawful money of the United States of
-------
America.
"Domestic CD Rate (Adjusted)" for any Yield Period for any Rate Tranche
---------------------------
means a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
---------
1%) determined pursuant to the following formula:
Domestic CD Rate = Domestic CD Rate + Assessment
----------------
(Adjusted) 1-Reserve Rate
Requirement
where:
-----
A-6
"Domestic CD Rate" means, with respect to any Yield Period for any Rate
----------------
Tranche, a rate of interest equal to the average of the secondary
market morning offering rates in the United States for time
certificates of deposit of major United States money market banks for a
period approximately equal to such Yield Period in an amount
substantially equal to the Transferee's Tranche Investment of such Rate
Tranche, as such offering rate is quoted to the Agent by the Federal
Reserve Bank of New York during the morning of the first day of such
Yield Period; provided, however, that if the Agent shall not receive
-------- -------
any such quote by the Federal Reserve Bank of New York by 11:00 a.m.,
New York City time, on the morning of the first day of any Yield
Period, then "Domestic CD Rate" shall mean, with respect to such Yield
----------------
Period, the rate of interest determined by the Agent to be the average
(rounded upwards, if necessary, to the nearest 1/100 of 1%) of the bid
rates quoted to the Agent in the secondary market at approximately
11:00 a.m., New York City time (or as soon thereafter as practicable),
on the first day of such Yield Period by two certificate of deposit
dealers in New York or New York City of recognized standing selected by
the Agent in its sole discretion for the purchase from the Agent at
face value of certificates of deposit issued by the Agent in an amount
approximately equal or comparable to such Transferee's Tranche
Investment and having a maturity equal to such Yield Period.
"Assessment Rate" for any Yield Period means the annual assessment rate
---------------
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
applicable to the Agent on its insured deposits, on the Business Day
immediately preceding the first day of such Yield Period, under the
Federal Deposit Insurance Act, determined by annualizing the most
recent assessment levied on the Agent by the Federal Deposit Insurance
Corporation (together with any successor, the "FDIC") with respect to
----
such deposits after giving effect to the most recent rebate granted to
the Agent by the FDIC with respect to deposit insurance as well as the
loss to the Agent (determined in the good faith judgment of the Agent)
of the use of such rebate prior to the date a credit is taken by the
Agent with respect to such rebate.
"Reserve Requirement" means, with respect to any Yield Period, a
-------------------
percentage (expressed as a decimal) equal to the daily average during
such Yield Period of the aggregate reserve requirement (including all
basic,
A-7
supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled
changes in reserve requirements during such period) specified
under Regulation D, as applicable to the class of banks of
which the Agent is a member, on deposits of the types used as
a reference in determining the Domestic CD Rate and having a
maturity approximately equal to such Yield Period.
"Earned Discount" for any Rate Tranche for each day in a Yield Period
---------------
applicable to such Rate Tranche means an amount equal to the sum of (a) the
product of (i) the Transferee's Tranche Investment of such Rate Tranche on such
day, times (ii) the Transferee Rate for such Rate Tranche on such day, times
----- -----
(iii) 1/360, plus (b) the Negative Spread Fee, if any, for such Rate Tranche on
----
such day. No provision of the Agreement shall require the payment or permit the
collection of Earned Discount in excess of the maximum permitted by applicable
law. Earned Discount for any Rate Tranche shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
"Eligible Contract" means a Contract in one of the forms set forth in
-----------------
Schedule 6.01(o)-1, with such variations as IKON Capital shall approve in its
------------------
reasonable business judgment and as shall not result in materially lesser rights
for IKON Capital as such forms, or otherwise approved by the Agent.
"Eligible Receivable" means, at any time, a Receivable:
-------------------
(a) generated by IKON Capital in the ordinary course of its business
that was transferred to the Transferor pursuant to the Transfer Agreement;
(b) which constitutes an account, chattel paper or general
intangible as defined in the Uniform Commercial Code as in effect in the
jurisdiction that governs the perfection of the Transferee's undivided ownership
interest in such Receivable;
(c) the Obligor of which is a United States resident, is not an
Affiliate of IKON Capital, and is not a government or a governmental subdivision
or agency;
(d) which is denominated and payable only in Dollars in the United
States;
(e) the Obligor of which is a Designated Obligor;
(f) which arises under a Contract (i) in respect of which the
related Equipment has been delivered and unconditionally
A-8
accepted by the Obligor, (ii) under which the Obligor has made at least one
regularly scheduled payment and (iii) which is not cancelable by the Obligor
before the end of its scheduled termination date;
(g) which is not a Defaulted Receivable;
(h) with regard to which the warranty of the Transferor in Section
-------
6.01(l) is true and correct;
-------
(i) the transfer of an undivided interest in which does not
contravene or conflict with any law or require the consent or approval of, or
notice to, any Person, including the Obligor;
(j) which arises under an Eligible Contract that has been duly
authorized and that, together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms and is
not subject to any dispute, offset, counterclaim or defense whatsoever;
(k) 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
usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and with respect
to which no party to the Contract related thereto is in violation of any such
law, rule or regulation in any material respect if such violation would impair
the collectibility of such Receivable;
(l) which (i) satisfies all applicable requirements of the Credit
and Collection Policy and (ii) complies with such other criteria and
requirements (other than those relating to the collectibility of such
Receivable) as the Agent may from time to time specify to the Transferor
following thirty days' notice;
(m) which is an account receivable, chattel paper or general
intangible representing all or part of the sales price of merchandise, insurance
and services within the meaning of section 3(c)(5) of the Investment Company Act
of 1940, as amended;
(n) which arises out of a current transaction, or the proceeds of
which have been or are to be used for current transactions, within the meaning
of section 3(a)(3) of the Securities Act of 1933, as amended;
A-9
(o) which arises under a Contract (i) requiring payment within 30
days of billing therefor, and (ii) providing for periodic payments in
substantially equal amounts over the scheduled term of the Contract that fully
amortize the initial lease or principal balance;
(p) which is evidenced by a Contract that constitutes either (i) a
true lease pursuant to which the Transferor owns the Equipment free of any Liens
other than such Contract and the Transferee's Interest or (ii) a conditional
sale contract pursuant to which the Transferor has a first priority, perfected
security interest in the related Equipment; and
(q) as to which the Agent has not notified the Transferor that the
Agent has determined, in its sole discretion, that such Receivable (or class of
Receivables) is not acceptable for purchase hereunder.
"Enhancement Agreement" means and includes (a) the Enhancement
---------------------
Agreement dated as of September 14, 1993 among the Transferee, the Agent and
DBNY and (b) any other agreement (other than the Liquidity Agreement or another
agreement of the type described in clause (b) of the definition thereof)
----------
hereafter entered into by the Transferee providing for the issuance of one or
more letters of credit for the account of the Transferee, the making of loans to
the Transferee or any other extensions of credit to or for the account of the
Transferee to support all or any part of the Transferee's payment obligations
under its Commercial Paper Notes or to provide an alternate means of funding the
Transferee's investments in accounts receivable or other financial assets, in
each case, as amended, supplemented or otherwise modified from time to time.
"Enhancement Bank" means and includes DBNY as lender to the Transferee
----------------
and issuer of a letter of credit for the Transferee's account under the
Enhancement Agreement, and any other or additional bank or other financial
institution now or hereafter extending credit or having a commitment to extend
credit to or for the account of the Transferee under the Enhancement Agreement.
"Enhancement Draw" means a drawing under a letter of credit issued
----------------
pursuant to the Enhancement Agreement for the account of the Transferee, a loan
to the Transferee under the Enhancement Agreement or any other advance or
disbursement of funds to the Transferee or for the Transferee's account pursuant
to the Enhancement Agreement or any such letter of credit, in each case to the
extent such drawing, loan, advance or disbursement has not been repaid or
reimbursed to the Enhancement Bank in accordance with the Enhancement Agreement.
A-10
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
-----
as amended from time to time.
"Equipment" means office equipment.
---------
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any Yield
----------------------------------
Period for any Rate Tranche, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) -----------------
1-Eurodollar
Reserve Percentage
where:
-----
"Eurodollar Rate" means, with respect to any Yield Period for
---------------
any Rate Tranche, the rate per annum at which Dollar deposits
in immediately available funds are offered to the Eurodollar
Office of the Agent two Eurodollar Business Days prior to the
beginning of such period by prime banks in the interbank
eurodollar market at or about 11:00 a.m., New York City time
for delivery on the first day of such Yield Period, for the
number of days comprised therein and in an amount equal or
comparable to the amount of the Transferee's Tranche
Investment of such Rate Tranche.
"Eurodollar Business Day" means a day of the year on which
-----------------------
dealings are carried on in the eurodollar interbank market of
the Agent's Eurodollar Office and banks are open for business
in London and are not required or authorized to close in New
York City.
"Eurodollar Office" shall mean the Cayman Islands office of
-----------------
the Agent or such other office or offices of the Agent (as
designated from time to time by notice from the Agent to the
Transferor) or such other office or offices through which the
Agent determines the Eurodollar Rate. A Eurodollar Office of
the Agent may be, at the option of the Agent, either a
domestic or foreign office.
"Eurodollar Reserve Percentage" means, with respect to any
-----------------------------
Yield Period, the then applicable percentage (expressed as a
decimal) prescribed by the Federal Reserve Board for
determining reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D.
A-11
"Event of Bankruptcy" shall be deemed to have occurred with respect to
-------------------
a Person if either:
(a) a case or other proceeding shall be commenced, without
the application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator
or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 30
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System, or any successor thereto or to the functions thereof.
"Fee Letter" has the meaning set forth in Schedule 4.03(a).
---------- ----------------
"Final Pay Out Date" means the date, after the Commitment Termination
------------------
Date, when the Transferee's Percentage has been reduced to zero in accordance
with clause (3) of Section 2.02.
---------- ------------
"Financing Lease(s)" shall mean (a) any lease of property, real or
------------------
personal, the then present value of the minimum rental commitment of which
should, in accordance with general accepted accounting principles, be
capitalized on a balance sheet of the lessee, and (b) any other such lease the
obligations under which
A-12
are capitalized on a consolidated balance sheet of IKON Capital and its
Subsidiaries.
"Funding Advance" means an advance (other than a daylight overdraft
---------------
advance) made by the Agent, in its sole discretion, to the Transferee for the
purpose of funding the Transferee's acquisition or maintenance of the
Transferee's Interest or a portion thereof.
"Funding Advance Rate" on any day means a rate per annum equal to the
-------------------- ---------
Alternate Base Rate in effect on such day, provided that, with respect to any
--------
Funding Advance made in an amount less than $5,000 to fund the "tag end" of any
Rate Tranche funded by the issuance of Commercial Paper Notes, the Funding
Advance Rate shall mean the Commercial Paper Rate for such Rate Tranche.
"IKON Capital" has the meaning set forth in the preamble.
------------
"IKON Office" means IKON Office Solutions, Inc., an Ohio corporation
-----------
(formerly Alco Standard Corporation).
"Indemnified Amounts" has the meaning set forth in Section 13.01.
------------------- -------------
"Indebtedness" of a Person, at a particular date, means any of the
------------
following at such date, without duplication, (a) indebtedness of such Person for
borrowed money or evidenced by notes, bonds, debentures or like instruments, (b)
indebtedness of such Person for the deferred purchase price of property or
services, except current accounts payable and accrued expenses arising in the
ordinary course of business, (c) obligations of such Person under any Financing
Lease, (d) indebtedness of such Person arising under acceptance facilities, (e)
unreimbursed draws on letters of credit and (f) Contingent Obligations.
"Indemnified Party" has the meaning set forth in Section 13.01.
----------------- -------------
"Lien" means a lien, security interest, charge, or encumbrance, or
----
other right or claim of any Person other than (a) a potential claim or right
(that has not yet been asserted) of a trustee appointed for an Obligor in
connection with any Event of Bankruptcy or (b) an unfiled lien for taxes accrued
but not yet payable.
"Liquidity Agreement" means and includes (a) the Amended and Restated
-------------------
Liquidity Loan Agreement dated as of March 31, 1997 among the Transferee, as
borrower, the Agent, DBNY, as lender, and DBNY, as agent for such lender, and
(b) any other agreement hereafter entered into by the Transferee providing for
the making
A-13
of loans or other extensions of credit to the Transferee secured by a security
interest in the Transferee's Interest (or any portion thereof), to support all
or part of the Transferee's payment obligations under the Commercial Paper Notes
or to provide an alternate means of funding the Transferee's Interest, and under
which the amount available from such loans or other extensions of credit is
limited to an amount calculated by reference to the value or unpaid balance of
the Pool Receivables or any portion or category thereof or the level of credit
enhancement available with respect thereto, in each case as amended,
supplemented or otherwise modified from time to time.
"Liquidity Bank" means and includes DBNY as lender under the Liquidity
--------------
Agreement, and any other or additional bank or other financial institution
hereafter extending credit to or for the account of the Transferee under the
Liquidity Agreement.
"Liquidity Loan" means a loan made by a Liquidity Bank to the
--------------
Transferee pursuant to the Liquidity Agreement.
"Losses" means the aggregate Unpaid Balance of Pool Receivables (a) as
------
to which any payment, or part thereof, remains unpaid for 120 or more days from
the original due date for such payment or (b) as to which the Obligor thereof is
subject to a proceeding under Chapter 7 of the Bankruptcy Reform Act of 1978, 11
U.S.C. 101 et seq., as amended.
-- ---
"Losses to Liquidations Ratio" means the percentage that (x) the
----------------------------
aggregate Losses recognized during the one or six, as applicable, month period
ending on the most recent Month End Date was of (y) Collections of Pool
Receivables during such period.
"Management Agreement" means the Management Agreement, dated as of
--------------------
March 31, 1997, between IKON Capital and the Transferor, as it may be amended,
supplemented or otherwise modified from time to time.
"Manager" means IKON Capital, in its capacity as manager pursuant to
-------
the Management Agreement.
"Material Adverse Effect" means, with respect to any event, condition
-----------------------
or circumstance, a material adverse effect on:
(i) the business, assets, financial condition, operations
or prospects of the Transferor, IKON Capital or the Servicer;
(ii) the ability of the Servicer, IKON Capital or the
Transferor to perform its obligations under this Agreement or any other
Transaction Document;
A-14
(iii) the validity, enforceability or collectibility of this
Agreement, any other Transaction Document, the Receivables or the
related Contracts;
(iv) the status, existence, perfection, priority or
enforceability of the Transferee's Interest; or
(v) the collectibility of the Pool Receivables.
"Maximum Investment" means $125,000,000, as such amount may be reduced
------------------
at the option of the Transferor pursuant to Section 1.05.
------------
"Maximum Percentage" means 100%.
------------------
"Month End Date" means the last day of each calendar month.
--------------
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Negative Spread Fee" means, for any Rate Tranche on any day in a Yield
-------------------
Period applicable to such Rate Tranche (computed without regard to clause (C) of
----------
the proviso to the definition of "Yield Period"), the sum of:
-------
(a) if such day occurs during a period in which a downgraded
Liquidity Bank shall have placed funds in escrow pursuant to the
Liquidity Agreement, an amount designated by the Agent to enable, when
taken together with other amounts similarly designated with respect to
other Rate Tranches, the Transferee to compensate such Liquidity Bank
for the excess, if any, of (x) the Earned Discount which would have
accrued on funds in such escrow account at the Bank Rate if such funds
had been designated as a Liquidity Loan over (y) the income actually
earned by investing such funds, plus
----
(b) if all or any part of such Yield Period falls in the Pay
Out Period, the amount, if any, by which:
(i) the additional Earned Discount (calculated
without taking into account any Negative Spread Fee) which
would have accrued on the reductions of the Transferee's
Tranche Investment of such Rate Tranche during such Yield
Period if such reductions had remained as the Transferee's
Investment, exceeds
-------
(ii) the income, if any, received by the Transferee
from investing the proceeds of such reductions of the
Transferee's Investment.
A-15
"Net Pool Balance" at any time means an amount equal to
----------------
(a) the aggregate Present Value of the Eligible Receivables
in the Receivables Pool at such time, minus
-----
(b) the aggregate (for all Obligors) of the amounts by
which (i) the Unpaid Balance of all Pool Receivables of each Obligor
exceeds (ii) the Concentration Limit for such Obligor at such time,
minus
-----
(c) the aggregate amount of security deposits and prepaid
rents related to the Pool Receivables.
"Obligor" means a Person obligated to make payments with respect to a
-------
Receivable. In the case of an Obligor which is an Affiliate of any other
Obligor, the Concentration Limit, the Special Concentration Limit, if any, and
the aggregate Unpaid Balance of Pool Receivables of such Obligors shall be
calculated as if such Obligors were one Obligor.
"Old Line Agreement" means the Receivables Transfer Agreement, dated as
------------------
of September 30, 1996, among the Transferor, IKON Capital, Old Line Funding
Corp. and Royal Bank of Canada, as it may be amended, supplemented or otherwise
modified from time to time.
"Original Receivable Agreement" has the meaning set forth in the
-----------------------------
Background.
"Pay Out Period" means the period from and including the Commitment
--------------
Termination Date and to and including the Final Pay Out Date.
"Pay Out Servicer's Fee" at any time means an amount equal to the
----------------------
product of
(a) the Transferee's Investment at such time, times
-----
(b) (i) the percentage per annum set forth in clause (a) (x)
--- ----- --------------
of the definition of the "Servicer's Fee", or (ii) if the Servicer's
Fee is calculated pursuant to clause (b) of such definition, the
----------
percentage per annum determined for each day by dividing the amount of
--- -----
the Servicer's Fee accrued for such day by the Transferee's Investment
at the close of business on such day, multiplying the quotient by 360
and expressing the product as a percentage, times
-----
(c) a fraction, the numerator of which is the then Adjusted
Average Maturity of the Receivables Pool and the
A-16
denominator of which is 360.
"Pay Out Statement" means a statement substantially in such form as
-----------------
shall be proposed by the Agent and agreed to by the Transferor, such agreement
not to be unreasonably withheld.
"Periodic Report" means a report in substantially the form of Exhibit
--------------- -------
3.05(a).
-------
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture, government or any agency or political subdivision thereof or any other
entity.
"Pool Receivable" means a Receivable in the Receivables Pool.
---------------
"Post Office Box" means any U.S. post office box to which the Obligors
---------------
are directed to, or do, send payments under the Pool Receivables.
"Post Office Box Agreement" means an executed and undated notice, in
-------------------------
substantially the form of Exhibit A from the Transferor and IKON Capital to the
---------
applicable U.S. postal office.
"Present Value" of any Receivable means, at any time, the present value
-------------
of the Unpaid Balance thereof, discounted to the date of determination, at a
rate equal to (i) 2.50% plus (ii) the greater of (a) the one month Eurodollar
----
Rate (Reserve Adjusted) and (b) the interpolated yield to maturity of the
Treasury security with a maturity equal to the then Average Maturity; provided
--------
that if the Transferee has entered into (1) an interest rate swap agreement, the
rate for purposes of this clause (ii) will be the fixed interest rate that the
-----------
Transferee is obligated to pay pursuant to such agreement or (2) an interest
rate cap, the rate for purposes of this clause (ii) will be the strike price of
-----------
such cap.
"Program Fee" has the meaning set forth in Fee Letter.
-----------
"Program Fee Rate" has the meaning set forth in the Fee Letter.
----------------
"Program Information" has the meaning set forth in Section 14.08.
------------------- -------------
"Program Information Provider" has the meaning set forth in Section
---------------------------- -------
14.08.
-----
"Rate Tranche" has the meaning set forth in Section 2.03.
------------ ------------
A-17
"Receivable" means any right to payment from a Person, whether
----------
constituting an account, chattel paper, instrument or general intangible,
arising from the sale or lease by IKON Capital (or by a dealer on behalf of IKON
Capital) of Equipment, and includes the right to payment of any interest or
finance charges and other obligations of such Person with respect thereto.
"Receivables Pool" means at any time all then outstanding Receivables
----------------
which (a) were or are generated at any time in any of the marketplaces listed on
Schedule A-1, (as such list may be amended from time to time with the written
------------
consent of IKON Capital, the Transferor and the Agent) and such other
marketplaces as designated from time to time by IKON Capital and Transferor and
approved in writing by the Agent, and (b) as to which the Obligors thereunder
are Designated Obligors.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
------------
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party
-----------------
(a) any change in (or the adoption, implementation, phase-in
or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to
such Affected Party of (A) any court, government authority
charged with the interpretation or administration of any law
referred to in clause (a)(i) or of (B) any fiscal, monetary or
-------------
other authority having jurisdiction over such Affected Party;
or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Affected
Party and affecting the application to such Affected Party of
any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or
------------- -------
(b) any change in the application to such Affected Party of
any existing law, regulation, interpretation,
A-18
directive, requirement, request or accounting principles referred to in
clause (a)(i), (a)(ii) or (a)(iii) above; or
------ ------- --------
(c) the issuance, publication or release of any regulation,
interpretation, directive, requirement or request of a type described
in clause (a)(ii) above to the effect that the obligations of a
--------------
Liquidity Bank under the Liquidity Agreement are not entitled to be
included in the zero percent category of off-balance sheet assets for
purposes of any risk-weighted capital guidelines applicable to such
Liquidity Bank or any related Affected Party.
"Reinvestment" has the meaning set forth in Section 1.01.
------------ ------------
"Reinvestment Period" means the period from and including the date
-------------------
hereof to but excluding the Commitment Termination Date.
"Related Property" means, with respect to any Pool Receivable: (a) all
----------------
of the Transferor's and IKON Capital's right, title and interest in and to all
Contracts, purchase orders or other agreements or documents that evidence,
secure or otherwise relate to such Pool Receivable; (b) all of the Transferor's
and IKON Capital's interest in the Equipment (including returned Equipment), the
sale or lease of which gave rise to such Pool Receivable; (c) all Liens from
time to time purporting to secure payment of such Pool Receivable, whether
pursuant to the Contract related to such Pool Receivable or otherwise, and all
property subject to such Liens; (d) all UCC financing statements covering any
collateral securing payment of such Pool Receivable (to the extent of the
interest of the Transferee in the related Pool Receivable); (e) all guarantees
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Pool Receivable whether pursuant to the
Contract related to such Pool Receivable or otherwise; (f) all of Transferor's
rights and claims under the Transfer Agreement; (g) all books and records
evidencing or otherwise relating to any Pool Receivables or any of the
foregoing; (h) all lock-boxes, post office boxes and accounts to which
Collections are sent or deposited, to the extent of such Collections and (i) all
Collections with respect to, and other proceeds of, such Pool Receivables and
any of the property described above.
"Reserve Percentage" means, on any day the greater of (a) the sum of
------------------
the Default Reserve Percentage plus the Dilution Reserve Percentage and (b) 15%.
"Scheduled Commitment Termination Date" has the meaning set forth in
-------------------------------------
Section 1.04.
------------
A-19
"Servicer" has the meaning set forth in Section 8.01.
-------- ------------
"Servicer's Fee" accrued for any day means
--------------
(a) an amount equal to (x) .75% per annum, times (y) the
--- ----- -----
amount of the Transferee's Investment at the close of business on such
day, times (z) 1/360; or
-----
(b) on and after the Servicer's reasonable request made at any
time when IKON Capital shall no longer be the Servicer, an alternative
amount specified by Servicer not exceeding (x) 115% of the Servicer's
cost and expenses of performing its obligations under the Agreement
during the Yield Period when such day occurs, divided by (y) the number
of days in such Yield Period.
With respect to any Rate Tranche, the Servicer's Fee allocable thereto shall be
equal to the Servicer's Fee determined as set forth above times a fraction, the
-----
numerator of which is the Transferee's Tranche Investment of such Rate Tranche
and the denominator of which is the Transferee's Investment.
"Servicer's Fee Reserve" at any time means an amount equal to the sum
----------------------
of (a) the aggregate accrued and unpaid Servicer's Fee (with respect to all Rate
Tranches), plus (b) the Pay Out Servicer's Fee at such time.
----
"Settlement Date" means the last day of each Settlement Period.
---------------
"Settlement Period" for any Rate Tranche means
-----------------
(a) each period commencing on the first day of each Yield
Period for such Rate Tranche and ending on the last day of such Yield
Period; and
(b) on and after the Commitment Termination Date, such period
(including, without limitation, a period of one day) as shall be
selected from time to time by the Agent or, in absence of any such
selection, each period of thirty days from the next preceding
Settlement Date;
provided, however, that
-------- -------
(i) with respect to any Yield Period of one day, the related
Settlement Period shall be the first day following such Yield Period;
(ii) any Settlement Period which would otherwise end on a day
which is not a Business Day shall be extended to
A-20
the next succeeding Business Day; and
(iii) the last Settlement Period shall end on the Final Pay
Out Date.
"S&P" means Standard & Poor's Ratings Group.
---
"Special Concentration Limit" for any Obligor at any time means the
---------------------------
amount, if any, most recently designated by the Agent in a writing delivered to
the Transferor as the Special Concentration Limit for such Obligor.
"Subsidiary" means a corporation of which IKON Capital and/or its other
----------
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"Support Agreement" means the Amended and Restated 1996 Support
-----------------
Agreement, dated as of October 22, 1996, between IKON Capital and IKON Office,
as it may be amended, supplemented or otherwise modified from time to time.
"Tangible Net Worth" means tangible net worth as determined in
------------------
accordance with generally accepted accounting principles.
"Termination Event" has the meaning set forth in Section 10.01.
----------------- -------------
"Transaction Documents" means this Agreement, the Transfer Agreement,
---------------------
the Company Note and the other documents to be executed and delivered in
connection herewith or therewith.
"Transfer" has the meaning set forth in Section 1.01(a).
-------- ---------------
"Transfer Agreement" means the First Tier Transfer Agreement, dated as
------------------
of March 31, 1997, between IKON Capital and Transferor, as the same may be
amended, supplemented or otherwise modified from time to time.
"Transfer Request" has the meaning set forth in Section 1.03.
---------------- ------------
"Transferee" has the meaning set forth in the preamble.
---------- --------
"Transferee Rate" for any Yield Period for any Rate Tranche means:
---------------
(a) in the case of a Rate Tranche other than one referred to
in clause (b) or (c) of this definition, the Commercial Paper Rate for
------ --- ---
such Rate Tranche for such Yield
A-21
Period;
(b) in the case of a Rate Tranche funded by a Funding Advance,
a rate per annum equal for each day in such Yield Period to the Funding
--- -----
Advance Rate in effect on such day; and
(c) in the case of a Rate Tranche funded pursuant to the
Liquidity Agreement or by an Enhancement Draw, the Bank Rate for such
Rate Tranche for such Yield Period;
provided, however, that on any day when any Termination Event shall have
-------- -------
occurred and be continuing, the Transferee Rate shall mean a rate per annum
--- -----
equal to the sum of the applicable rate pursuant to clause (a), (b) or (c) above
---------- --- ---
on such day plus .70% per annum.
--- -----
"Transferee's Allocation" has the meaning set forth in Section 2.02.
----------------------- ------------
"Transferee's Interest" has the meaning set forth in Section 2.01.
--------------------- ------------
"Transferee's Investment" at any time means an amount equal to
-----------------------
(a) the aggregate of the amounts theretofore paid to the
Transferor for the acquisition of the Transferee's Interest by Transfer
pursuant to Sections 1.01(a) and 1.03, less
---------------- ---- ----
(b) the aggregate amount of Collections theretofore received
by the Servicer and actually distributed to the Agent for the account
of the Transferee on account of such Transferee's Investment pursuant
to Sections 3.01 and 3.02;
------------- ----
provided, however, the Transferee's Investment shall not be considered reduced
-------- -------
by any distribution of any portion of Collections if at any time such
distribution is rescinded or must otherwise be returned for any reason.
"Transferee's Percentage" has the meaning set forth in Section 2.02.
----------------------- ------------
"Transferee's Share" of any Collections means a portion of such
------------------
Collections in an amount equal to the product of (a) the amount of such
Collections, times (b) the Transferee's Percentage as in effect on the date of
-----
determination.
"Transferee's Tranche Investment" has the meaning set forth
-------------------------------
A-22
in Section 2.03.
------------
"Transferor" has the meaning set forth in the preamble.
---------- --------
"Transferor Information" has the meaning set forth in Section 14.07.
---------------------- -------------
"Transferor's Collection Amount" at any time means an amount equal to
------------------------------
the excess, if any, if (a) the aggregate of the amounts theretofore paid by the
Servicer to the Transferor for Reinvestment pursuant to Section 3.01(a)(iii),
--------------------
over (b) the aggregate of the amounts, if any, theretofore paid by the
----
Transferor to the Servicer pursuant to the last sentence of Section 3.01(b).
---------------
"Transferor's Share" of any Collections means a portion of such
------------------
Collections equal to the amount of such Collections less the Transferee's Share
----
thereof.
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the applicable jurisdiction or jurisdictions.
"Unadjusted Transferee's Percentage" has the meaning set forth in
----------------------------------
Section 2.02.
------------
"Unmatured Termination Event" means any event which, with the giving of
---------------------------
notice or lapse of time or both, would, unless cured or waived, become a
Termination Event.
"Unpaid Balance" of any Receivable means at any time the aggregate
--------------
scheduled lease or debt service payments that the Obligor is obligated to make
thereunder during the period from the date such Receivable is included in the
Receivables Pool to the date that is 60 months thereafter, but excluding all
---------
late payment charges, delinquency charges, extension or collection fees and
sales tax payments.
"Yield Period" means with respect to any Rate Tranche, each period
------------
(a) commencing on, and including, the date of creation of such
Rate Tranche pursuant to Section 2.03, or the last day of the
------------
immediately preceding Yield Period for such Rate Tranche (whichever is
later); and
(b) ending on, and excluding, the date that falls
(i) in the case of a Rate Tranche funded by the
issuance of Commercial Paper Notes, except as provided in
clause (iii) below, such number of days (not to
------------
A-23
exceed 180 days or, after the occurrence and during the
continuance of any Termination Event, 60 days) thereafter as
the Agent shall select, after consultation with the
Transferor;
(ii) in the case of a Rate Tranche funded by
Liquidity Loans or by an Enhancement Draw, (A) if the
Transferee Rate for such Yield Period is based on the Domestic
CD Rate (Adjusted), 1, 7, 14, 30, 60 or 90 days thereafter,
and (B) if the Transferee Rate for such Yield Period is based
on the Eurodollar Rate (Reserve Adjusted), one day, one week,
one month, two months or three months thereafter (or, if such
month has no numerically corresponding day, on the last
Business Day of such month), in either case as the Agent may
select; and
(iii) in the case of (A) any Rate Tranche funded by a
Funding Advance, and (B) any other Rate Tranche, if the
Transferee Rate for such Yield Period is based on the
Alternate Base Rate, such number of days thereafter as the
Agent may select in its sole discretion;
provided, however, that
-------- -------
(A) any Yield Period (other than a Yield Period consisting of
one day) which would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day (unless the
Transferee Rate for the related Rate Tranche for such Yield Period
shall be based on the Eurodollar Rate (Reserve Adjusted), in which case
if such succeeding Business Day is in a different calendar month, such
Yield Period shall instead be shortened to the next preceding Business
Day);
(B) any Yield Period of one day for any Rate Tranche, (I) if
such Yield Period is the initial Yield Period for a new Rate Tranche
created in connection with a Transfer, shall be the day of the Transfer
of such Rate Tranche, and (II) if such Yield Period is not the initial
Yield Period for such Rate Tranche (or, in the case of a Rate Tranche
created by division or combination pursuant to Section 2.03, any
------------
predecessor Rate Tranche), (x) if the immediately preceding Yield
Period is more than one day, shall be the last day of such immediately
preceding Yield Period, and (y) if the immediately preceding Yield
Period is one day, shall be the next day following such immediately
preceding Yield Period;
A-24
(C) any Yield Period which commences before the Commitment
Termination Date and would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date; and
(D) subject to clause (ii) above, each Yield Period which
-----------
commences on or after the Commitment Termination Date shall be of such
duration as the Agent may select in its sole discretion.
The "related" Yield Period for any Rate Tranche at any time means the Yield
-------
Period pursuant to which Earned Discount is then accruing for such Rate Tranche.
A-25