AMBAC ASSURANCE CORPORATION,
and
XXXXXX BROTHERS INC.,
CHASE SECURITIES INC.,
DEUTSCHE BANK SECURITIES INC.
AND
PNC CAPITAL MARKETS, INC.
INDEMNIFICATION AGREEMENT
$751,642,000 in aggregate principal amount of
IKON RECEIVABLES, LLC LEASE-BACKED NOTES
Dated as of May 25, 1999
TABLE OF CONTENTS
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(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in Article
I of this Agreement.)
Page
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Section 1. Defined Terms........................................ 1
Section 2. Other Definitional Provisions........................ 1
Section 3. Representations and Warranties of the Underwriters... 1
Section 4. Representations and Warranties of the Insurer........ 2
Section 5. Indemnification...................................... 3
Section 6. Amendments, Etc...................................... 4
Section 7. Notices.............................................. 4
Section 8. Severability......................................... 5
Section 9. Governing Law........................................ 5
Section 10. Counterparts......................................... 5
Section 11. Headings............................................. 5
INDEMNIFICATION AGREEMENT, dated as of May 25, 1999, by and among Ambac
Assurance Corporation, as Insurer, and Xxxxxx Brothers Inc., Chase Securities
Inc., Deutsche Bank Securities Inc. and PNC Capital Markets, Inc., as the
Underwriters.
Section 1. Defined Terms. Unless the context clearly requires otherwise,
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all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Insurance and Indemnity Agreement or the
Certificate Guaranty Insurance Policy No. AB0254BE issued by the Insurer in
favor of the Trustee (the "Policy"). For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Indenture" means the Indenture dated as of April 1, 1999 among the Issuer,
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the Indenture Trustee and the Servicer.
"Insurance and Indemnity Agreement" means the Insurance and Indemnity
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Agreement (as may be amended, modified or supplemented from time to time), dated
as of May 25, 1999, by and among the Insurer, the Seller, the Issuer, IOS
Capital, and the Indenture Trustee.
"Insurer" means Ambac Assurance Corporation, a Wisconsin domiciled stock
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insurance company, or any successor thereto, as issuer of the Policy.
"Insurer Information" has the meaning given such term in Section 4.
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"Notes" means any notes authorized by, and authenticated and delivered
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under the Indenture.
"Underwriter Information" has the meaning given such term in Section 3.
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"Underwriters" means Xxxxxx Brothers Inc., Chase Securities Inc., Deutsche
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Bank Securities Inc., and PNC Capital Markets, Inc.
Section 2. Other Definitional Provisions. The words "hereof," "herein" and
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"hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations and Warranties of the Underwriters. Each of the
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Underwriters, severally and not jointly, represents and warrants as of the
Closing Date as follows:
(a) Offering Document. The Underwriters will not use, or
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distribute to other broker-dealers for use, any Offering Document in
connection with the
offer and sale of the Notes unless such Offering Document includes such
information relating to the Insurer as has been furnished by the Insurer
for inclusion therein and has been approved by the Insurer.
(b) Underwriter Information. As to each Underwriter, all
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material provided in writing to the Company for inclusion in the Offering
Document (as revised from time to time,
and as included in such Offering Document or any other Offering Document),
such information being the second, third, fifth and sixth paragraphs of the
section headed "Underwriting" in the Prospectus Supplement dated May 19,
1999 with respect to the Notes (the "Underwriter Information"), insofar as
such information relates to such Underwriter, shall be true and correct in
all material respects.
(c) Compliance with Laws. Each Underwriter will comply in all
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material respects with all legal requirements in connection with its offers
and sales of the Securities and will make such offers and sales in the
manner provided in the Offering Document.
Section 4. Representations and Warranties of the Insurer. The Insurer
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represents and warrants to the Underwriters as follows:
(a) Organization and Licensing. The Insurer is a duly organized
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and validly existing Wisconsin stock insurance corporation.
(b) Corporate Power. The Insurer has the corporate power and
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authority to issue the Policy and execute and deliver this Indemnification
Agreement and the Insurance Agreement and to perform all of its obligations
hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for
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the issuance of the Policy and the execution, delivery and performance of
this Indemnification Agreement and the Insurance and Indemnity Agreement
have been taken and licenses, orders, consents or other authorizations or
approvals of any governmental boards or bodies legally required for the
enforceability of the Policy have been obtained or are not material to the
enforceability of the Policy.
(d) Enforceability. The Policy, when issued, and this
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Indemnification Agreement and the Insurance and Indemnity Agreement will
each constitute a legal, valid and binding obligation of the Insurer,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and by general principles of equity
and subject to principles of public policy limiting the right to enforce
the indemnification provisions contained therein and herein, insofar as
such provisions relate to indemnification for liabilities arising under
federal securities laws.
(e) Financial Information. The balance sheet of the Insurer as
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of December 31, 1998 and the related statements of income, stockholder's
equity and cash flows for the three fiscal years ended December 31, 1998,
and the accompanying footnotes, and the unaudited balance sheet of the
Insurer as of March 31, 1999, and the unaudited related statements of
income, stockholder's equity and cash flows for the three month period
ending March 31, 1999, fairly present in all material respects the
financial condition of the Insurer as of such dates and for the periods
covered by such statements in accordance with generally accepted accounting
principles consistently applied. Any future financial
statements of the Insurer incorporated by reference into the Offering
Document relating to the Notes will fairly present in all material respects
the financial condition of the Insurer as of their dated dates in
accordance with generally accepted accounting principles consistently
applied. Since March 31, 1999, there has been no change in such financial
condition of the Insurer that would materially and adversely affect its
ability to perform its obligations under the Policy.
(f) Insurer Information. The information relating to the Insurer
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in the Prospectus Supplement dated May 19, 1999 as of the date hereof under
the caption "The Insurer and the Policy" and the financial statements of
the Insurer incorporated by reference into the Offering Document (together
the "Insurer Information") are true and correct in all material respects
and do not contain any untrue statement of a material fact.
Section 5. Indemnification.
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(a) Each of the Underwriters agrees, severally and not jointly,
to pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents and each Person, if
any, who controls the Insurer within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act, from and
against, any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or by
reason of any untrue statement of a material fact contained in the
Underwriter Information with respect to such Underwriter or a breach of any
of the representations and warranties of such Underwriter contained in
Section 3.
(b) The Insurer agrees to pay, and to protect, indemnify and
save harmless, each of the Underwriters and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls the
Underwriters within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act from and against, any and all
claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or expenses (including reasonable fees
and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) of any nature arising out of or by reason of any untrue
statement of a material fact contained in the Insurer Information or a
breach of any of the representations and warranties of the Insurer
contained in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of which the indemnity provided in this Section 5(a)
or (b) may be sought from the Underwriters, on the one hand, or the
Insurer, on the other (each, an "Indemnifying Party") hereunder, each such
Indemnified Party shall promptly
notify the Indemnifying Party in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
satisfactory to the Indemnified Party and the payment of all expenses. The
Indemnified Party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i)
the Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action
or proceeding and employ counsel reasonably satisfactory to the Indemnified
Party in any such action or proceeding or (iii) the named parties to any
such action or proceeding (including any impleaded parties) include both
the Indemnified Party and the Indemnifying Party, and the Indemnified Party
shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case, if the Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnified Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, it being understood,
however, that the Indemnifying Party shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Indemnified Parties, which firm shall be designated in writing by the
Indemnified Party). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its written
consent to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if there
is a final judgment for the plaintiff in any such action or proceeding with
respect to which the Indemnifying Party shall have received notice in
accordance with this subsection (c), the Indemnifying Party agrees to
indemnify and hold the Indemnified Parties harmless from and against any
loss or liability by reason of such settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party (other
than due to application of this Section), each Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the basis of
the relative fault of the Indemnifying Party, on the one hand, and the
Indemnified Party, on the other hand. The relative fault of each
Indemnifying Party, on the one hand, and each Indemnified Party, on the
other, shall be determined by reference to, among other things, whether the
breach of, or alleged breach of, any of its representations and warranties
set forth within the control of, the Indemnifying Party or the Indemnified
Party, and the parties relative intent, knowledge, access to information
and opportunity to correct or prevent such breach. No person guilty of
fraudulent misrepresentation (within the meaning Section (11)(f) of the
Securities Act) shall be entitled to contribution from any person who was
not
guilty of such fraudulent misrepresentation. No Underwriter shall be
responsible for any amount in excess of an amount equal to the excess of
the sales price to the public of the Notes purchased by such Underwriter
over the price paid therefor by such Underwriter.
Section 6. Amendments, Etc. This Indemnification Agreement may be
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amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
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given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department
Facsimile: (000) 000-0000
(b) To the Underwriters:
c/x Xxxxxx Brothers Inc.
3 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:_______________
Facsimile:_______________
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
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Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be governed
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by and construed in accordance with the laws of the State of New York (without
giving effect to the conflict of laws provisions thereof).
Section 10. Counterparts. This Indemnification Agreement may be executed
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in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
Section 11. Headings. The headings of Sections and the Table of Contents
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contained in this Indemnification Agreement are provided for convenience only.
They form no part of this Indemnification Agreement and shall not affect its
construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as
of the day and year first above mentioned.
Ambac Assurance Corporation,
as Insurer
By: /s/ Xxxxxxxx X. Xxxxxx
______________________________
Name: Xxxxxxxx X. Xxxxxx
____________________________
Title: First Vice President
___________________________
Xxxxxx Brothers Inc.
as an Underwriter
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
Title: Managing Director
Chase Securities Inc.,
as an Underwriter
By: /s/ Xxxx Xxxxxxx
_________________________________
Name: Xxxx Xxxxxxx
Title: Vice President
Deutsche Bank Securities Inc.,
as an Underwriter
By: /s/ Xxxxx Xxxxxxx
_________________________________
Name: Xxxxx Xxxxxxx
Title: Vice President
By: /s/ Xxxxx Xxxx
_________________________________
Name: Xxxxx Xxxx
Title: Vice President
PNC Capital Markets, Inc.,
as an Underwriter
By: /s/Xxxxx Xxxxxx
_________________________________
Name: Xxxxx Xxxxxx
Title: Managing Director
