EXECUTION COPY
RECEIVABLES TRANSFER AGREEMENT
Dated as of March 28, 2001
Among
IKON FUNDING-3, LLC,
As Transferor,
IOS CAPITAL, INC.,
As Originator and Collection Agent,
TWIN TOWERS INC.
As Conduit Transferee,
THE SEVERAL FINANCIAL INSTITUTIONS
PARTY HERETO
FROM TIME TO TIME,
as Alternate Transferees
DEUTSCHE BANK AG, NEW YORK BRANCH
As Administrative Agent
RECEIVABLES TRANSFER AGREEMENT
Dated as of March 28, 2001
IKON FUNDING-3, LLC, a Delaware limited liability company (together
with its successor and assigns, the "Transferor"), IOS CAPITAL, INC., a Delaware
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corporation (together with its successors and assigns, the "Originator" and in
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its capacity as collection agent, together with its successors and assigns in
such capacity, the "Collection Agent"), TWIN TOWERS INC., a Delaware corporation
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(together with its successors and assigns, "Twin Towers" or the "Conduit
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Transferee"), the APA TRANSFEREES from time to time party hereto (the "Alternate
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Transferees") and DEUTSCHE BANK AG, NEW YORK BRANCH (together with its
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successors and assigns, "Deutsche Bank"), a branch office of a foreign banking
corporation organized under the laws of Germany, as administrative agent for the
benefit of Twin Towers and the Alternate Transferees (in such capacity, together
with its successors and assigns in such capacity, the "Administrative Agent"),
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agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to this Agreement. References
in Exhibits to "the Agreement" refer to this Agreement, as amended, modified or
supplemented from time to time.
The Transferor desires to transfer from time to time, undivided
percentage interests in discrete pools of Receivables and Related Security, and
the Conduit Transferee may desire to, and the APA Transferees (if requested)
shall, accept such transfer of such undivided percentage interests, subject to
the terms and conditions of this Agreement. Accordingly, the parties agree as
follows:
ARTICLE I
AMOUNTS AND TERMS OF TRANSFER
SECTION 1.01 Facility. Upon the terms and subject to the conditions set
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forth herein, prior to the Facility Termination Date, (a) the Transferor may, at
its option from time to time, transfer to the Administrative Agent, on behalf of
the Active Transferees, and (b) the Administrative Agent may, in its sole
discretion, on behalf of Twin Towers, and the Administrative Agent shall on
behalf of the Alternate Transferees (in the event Twin Towers elects not to
accept such transfer) accept such transfer and assignment from the Transferor
of, without recourse except as provided herein, undivided percentage ownership
interests in a pool of Receivables, together with Related Security and
Collections with respect thereto, from time to time (each, a "Transfer"). Under
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no circumstances shall the Administrative Agent accept any Transfer if, after
giving effect to such Transfer, the Aggregate Capital would exceed the Aggregate
Commitment.
(b) The Transferor may, upon at least 30 days' notice to the
Administrative Agent, terminate this facility in whole or, from time to time,
reduce in part the unused portion of the Aggregate Commitment; provided that
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each partial reduction shall be in the amount of at least $10 million or an
integral multiple thereof and that, unless terminated in whole, the Aggregate
Commitment shall in no event be reduced below $100 million. Any such reduction
in the
Aggregate Commitment shall simultaneously reduce the respective Commitments of
the Alternate Transferees Pro Rata.
SECTION 1.02 Consideration and Terms. (a) On any date prior to the
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Facility Termination Date, the Transferor may request a Transfer, which Transfer
shall be in a minimum amount of $10,000,000 and increments of $100,000 in excess
thereof, by delivering to the Administrative Agent not later than 11:00 a.m.
(New York time), three Business Days prior to such requested Transfer (each, a
"Transfer Date"), written notice in the form of Annex C specifying the proposed
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Transfer Date and setting forth detailed information regarding the Receivables
to be included in such Transfer, including an addendum to Schedule II hereto.
The total amount to be paid by the Active Transferees in respect of such
Transfer shall be equal to the Aggregate Adjusted Outstanding Balance of the
Related Contracts for the Receivables included in such Transfer (the
"Consideration" for such Receivables).
(b) Promptly upon receipt of such notice, the Administrative Agent
shall deliver a copy thereof to each of the Transferees. By 3 p.m. (New York
City time) on each Transfer Date, upon satisfaction of the applicable conditions
set forth in Exhibit II hereto, (x) the Active Transferees shall make available
to the Administrative Agent their respective Pro Rata shares of the
Consideration in respect of such Transfer by deposit of such amounts in same day
funds to the Administrative Agent's Account and, after the receipt by the
Administrative Agent of such funds, the Administrative Agent will cause such
Consideration to be paid to the Transferor in immediately available funds prior
to 4:00 p.m. (New York City time) to the Transferor's account no. 5603799977 at
PNC Bank, N.A., Delaware (ABA#031-100-089); provided, however, that in the case
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of each Transfer other than the initial Transfer, the applicable Consideration
may be netted against all amounts on such payments of Capital to be deposited in
the Administrative Agent's Account on such date by the Collection Agent pursuant
to Section 1.03 and (y) the Transferor does hereby (effective on the date of
each Transfer automatically and without any further documentation) transfer to
the Administrative Agent for the benefit of the applicable Transferees all of
the related Receivables, the Related Contracts, the Related Security and the
Collections in respect thereof. The Active Transferees shall on or before the
tenth day of each month (or if such day is not a Business Day, on the preceding
Business Day), notify the Administrative Agent, and the Administrative Agent
shall notify the Transferor, of the Yield accrued with respect to the prior
Settlement Period or portion thereof. Each Transfer to the Administrative Agent
on behalf of the Active Transferees hereunder shall be allocated Pro Rata to
each such Transferee.
(c) Each Alternate Transferee's obligation hereunder shall be several,
such that the failure of any Alternate Transferee to make a payment in
connection with any Transfer hereunder shall not relieve any other Alternate
Transferee of its obligation hereunder to make payment for any Transfer.
Further, in the event any Alternate Transferee fails to satisfy its obligation
to accept a Transfer as required hereunder, upon receipt of notice of such
failure from the Administrative Agent, subject to the limitations set forth
herein, each of the non-defaulting Alternate Transferees shall accept a transfer
of its respective Pro Rata share of such defaulting Alternate Transferee's
applicable share of the related Transfer (determined without regard to the
Commitment of the defaulting Alternate Transferee). Notwithstanding anything in
this paragraph to the contrary, no Alternate Transferee shall be required to
accept a transfer pursuant
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to this paragraph for an amount which would cause the Capital of such Alternate
Transferee (after giving effect to such transfer) to exceed its Commitment.
SECTION 1.03 Settlement Procedures. (a) Collection of the Receivables
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shall be administered by the Collection Agent, in accordance with the terms of
this Agreement. The Transferor shall provide to the Collection Agent on a timely
basis all information needed for such administration.
(b) The Collection Agent shall, on each day on which Collections are
received by it, set aside and hold in trust for the Hedge Counterparties and the
Transferees such Collections and shall distribute such Collections on each
Settlement Date in the following order of priority:
(i) to the Hedge Counterparties in payment of the net amounts
payable to such Hedge Counterparties by the Transferor under the Hedge
Agreements (excluding any Hedge Breakage Costs payable thereunder);
(ii) to the Collection Agent, an amount equal to any Unreimbursed
Servicer Advances;
(iii) to the Collection Agent, if the Collection Agent is not IOS
Capital, Inc., an amount equal to the Collection Agent Fee accrued but
unpaid during the preceding Settlement Period, together with any
amounts in respect of the Collection Agent Fee that were due in respect
of prior Settlement Periods that remain unpaid;
(iv) to the Administrative Agent's Account, an amount equal to
accrued and unpaid Yield and any fees payable pursuant to Section
1.04(a);
(v) to the Administrative Agent's Account,
(a) prior to the occurrence of a Trigger Event, an amount
equal to the due and unpaid Principal Payment Amount,
and
(b) following the occurrence and during the continuation
of a Trigger Event, an amount equal to the
outstanding Aggregate Capital (after giving effect to
any other reduction in Aggregate Capital occurring on
such Settlement Date);
(vi) to the Collection Agent, if the Collection Agent is IOS
Capital, Inc., an amount equal to the Collection Agent Fee accrued but
unpaid during the preceding Settlement Period, together with any
amounts in respect of the Collection Agent Fee that were due in respect
of prior Settlement Periods that remain unpaid;
(vii) to the Hedge Counterparties in payment of any Hedge Breakage
Costs payable to such Counterparties under the Hedge Agreements.
(viii) to the Administrative Agent's Account, in payment of any
amounts then owed to the Transferees, the Administrative Agent or any
Affected Person hereunder (other than in respect of Yield, fees or the
repayment of Capital); and
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(ix) to the Transferor, any remaining amounts.
Unless a Trigger Event or Potential Trigger Event has occurred, for so
long as the Originator is the Collection Agent, the Collection Agent shall not
be required to segregate Collections, but may commingle the Collections with its
own funds and make the deposits and payments required to be made pursuant to
this paragraph (b) on each Settlement Date.
(c) (i) Upon receipt of funds deposited into the Administrative
Agent's Account pursuant to subsection (b)(iv) above, the
Administrative Agent shall distribute such funds, as follows: Pro Rata
to each Transferee in payment of (x) accrued but unpaid Yield on the
Capital of such Transferee and (y) fees payable to the Administrative
Agent (for the benefit of such Transferee) pursuant to Section 1.04(a).
(ii) Upon receipt of funds deposited into the Administrative
Agent's Account pursuant to subsection (b)(v) above, the Administrative
Agent shall distribute such funds Pro Rata to each Transferee in
reduction to zero of all Capital of such Transferee.
(iii) Upon receipt of funds deposited into the Administrative
Agent's Account pursuant to subsection (b)(viii) above, the
Administrative Agent shall distribute such funds to the Transferees,
the Administrative Agent or any Affected Person, as applicable, in
payment of any other amounts owed by the Transferor hereunder, pro rata
based on the respective amounts owed to such parties.
(d) For the purposes of this Section 1.03:
(i) Upon discovery by the Originator or the Transferor or the
Administrative Agent of a breach of any of the representations or
warranties made or deemed made by the Originator in paragraph (h) of
Exhibit III with respect to any Receivable or the Related Security,
such party shall give prompt written notice thereof to the other party,
as soon as practicable and in any event within three Business Days
following such discovery. The Transferor shall be deemed to have
received on such day a Collection in full of such Receivable and all
other Receivables relating to the same Contract, in the amount of the
Outstanding Balance of such Contract plus Yield accrued and to accrue
thereon through the end of the then current Settlement Period, and the
amount of each such Collection shall be applied as provided in this
Section 1.03; and
(ii) if and to the extent the Administrative Agent or any
Transferee shall be required for any reason to pay over to an Obligor
any amount received on its behalf hereunder, such amount shall be
deemed not to have been so received but rather to have been retained by
the Transferor and, accordingly, the Administrative Agent or such
Transferee, as the case may be, shall have a claim against the
Transferor for such amount, payable when and to the extent that any
distribution from or on behalf of such Obligor is made in respect
thereof.
(e) Except as provided in paragraph (i) of Section 1.03(d), or as
otherwise required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivables shall be applied to the Receivables
of such Obligor in the order of the age of the due but unpaid amounts with
respect to such Receivables, starting with the oldest such due but
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unpaid amount, unless such Obligor designates its payment for application to
specific Receivables.
(f) The Transferor shall forthwith deliver to the Collection Agent an
amount equal to all Collections deemed received by the Transferor pursuant to
Section 1.03(d)(i) above and the Collection Agent shall hold or distribute such
Collections in accordance with Section 1.03(b). If Collections are then being
paid to the Administrative Agent, the Collection Agent shall forthwith cause
such deemed Collections to be paid to the Administrative Agent. If a Trigger
Event or Potential Trigger Event has occurred, so long as the Transferor shall
hold any Collections or deemed Collections required to be paid to the Collection
Agent or the Administrative Agent, it shall hold such Collections in trust and
separate and apart from its own funds and shall clearly xxxx its records to
reflect such trust.
(g) The Transferor may reduce the Aggregate Capital upon delivery of a
notice in the form of Annex D at least ten Business Days' (in the case of
reductions in excess of $25,000,000) or at least two Business Days' (in the case
of reduction of $25,000,000 or less), to the Active Transferees and the
Administrative Agent, by remitting to the Administrative Agent's Account (i)
cash and (ii) instructions to apply such cash to the Pro Rata reduction of each
Transferee's Capital and Yield accrued and to accrue thereon (until such cash
can be used to pay the Commercial Paper). The Transferor shall pay all breakage
and other costs related to such Capital reduction, (including any Hedge Breakage
Costs); provided, however, that each of the Transferees and the Administrative
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Agent shall use its reasonable best efforts to minimize any breakage costs.
(h) The Transferor may, upon at least ten Business Days' notice to the
Administrative Agent, repurchase all of the Receivables on any Settlement Date
(the "Repurchase Date") by remitting to the Administrative Agent's Account on or
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prior to such Repurchase Date, for distribution in accordance with subsection
1.03(c) above, cash in an amount equal to the Aggregate Capital, plus all
accrued and unpaid Yield thereon, and all other amounts which are payable under
this Agreement (including any Hedge Breakage Costs). A repurchase of Receivables
made pursuant to this subsection 1.03(h) shall include the Related Security and
Collections with respect thereto.
SECTION 1.04 Payment of Fees and Yield. (a) Fees. The Transferor shall
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pay to the Administrative Agent certain fees (for its benefit and for the
benefit of the Transferees) in the amounts and on the dates set forth in a
separate fee agreement of even date herewith (as amended, supplemented or
otherwise modified, the "Fee Letter") between the Transferor and the
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Administrative Agent.
(b) Yield. On or before the tenth day of each month (or if such day is
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not a Business Day, on the preceding Business Day), the Administrative Agent
shall calculate the Tranche Rate applicable to each Tranche funded or maintained
by a Transferee for each day in the prior Settlement Period and the
Administrative Agent shall notify the Servicer of such rates.
(c) Collection Agent Fee The Collection Agent shall be entitled to
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receive a fee (the "Collection Agent Fee") of one-twelfth of 1.50% per month on
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the average daily Aggregate Capital from the date of the first Transfer of
Receivables until the date on which such Aggregate
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Capital is reduced to zero, payable on each Settlement Date. The Collection
Agent Fee shall be payable solely from Collections pursuant to, and subject to
the priority of payment set forth in, Section 1.03.
SECTION 1.05 Payments and Computations, Etc. (a) Unless otherwise
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specified herein, all amounts to be paid or deposited by the Transferor or the
Collection Agent hereunder to or for the account of the Administrative Agent,
Twin Towers or any other Transferee shall be paid or deposited no later than
11:00 a.m. (New York City time) on the day when due in same day funds to the
Administrative Agent's Account. Upon receipt of funds deposited into the
Administrative Agent's Account, the Administrative Agent shall distribute such
funds to the Persons entitled thereto in accordance with the provisions of this
Agreement or retain such funds for its own account, as appropriate.
(b) The Transferor shall, to the extent permitted by law, pay interest
on any amount not paid or deposited by the Transferor (whether as Collection
Agent or otherwise) when due hereunder, at an interest rate per annum equal to
2% per annum above the Base Rate, payable on demand.
(c) Unless otherwise specified herein, all computations of interest
under subsection (b) above and all computations of Yield, fees, and other
amounts hereunder shall be made on the basis of a year of 360 days for the
actual number of days elapsed. Whenever any payment or deposit to be made
hereunder shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment or deposit.
SECTION 1.06 Increased Costs. (a) If the Administrative Agent, any
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Transferee, any other entity which enters into a commitment to acquire
Receivables or interests therein, or any entity which provides credit
enhancement or any of their respective Affiliates (each an "Affected Person")
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determines that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Affected Person and such Affected Person
determines that the amount of such capital is increased by or based upon the
existence of any commitment to accept transfers of or otherwise to maintain the
investment in Receivables or interests therein hereunder or under any
commitments to a Transferee related to this Agreement or to the funding thereof
or any related liquidity facility or credit enhancement facility (or any
participation therein) and other commitments of the same type, then, upon demand
by such Affected Person (with a copy to the Administrative Agent), the
Transferor shall immediately pay to the Administrative Agent, for the account of
such Affected Person (as a third-party beneficiary), from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person in the light of such circumstances, to the extent that such
Affected Person reasonably determines such increase in capital to be allocable
to the existence of any of such commitments. A certificate as to such amounts
submitted to the Transferor and the Administrative Agent by such Affected Person
shall be conclusive and binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements) in or in
the interpretation of any law or
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regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to a Transferee of agreeing to accept
the Transfer of or accepting such Transfers, or maintaining the ownership of the
Receivables or interests therein in respect of which Yield is computed by
reference to the Eurodollar Rate, then upon demand by such Transferee (with a
copy to the Administrative Agent), the Transferor shall immediately pay to the
Administrative Agent, for the account of such Transferee (as a third-party
beneficiary), from time to time as specified by such Transferee, additional
amounts sufficient to compensate such Transferee for such increased costs. A
certificate as to such amounts submitted to the Transferor and the
Administrative Agent by a Transferee shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 1.07 Requirements of Law. In the event that any requirement of
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law or any change therein or in the interpretation or application thereof by the
relevant governmental authority to a Transferee after the date hereof or
compliance by a Transferee with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority:
(i) does or shall subject such Transferee to any tax of any kind
whatsoever with respect to this Agreement or change the basis of
taxation of payments to such Transferee on account of Collections,
Yield or any other amounts payable hereunder (excluding taxes imposed
on the income of such Transferee, and franchise taxes imposed on such
Transferee, by the jurisdiction under the laws of which such Transferee
is organized or a political subdivision thereof); or
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
purchases, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Transferee which are
not otherwise included in the determination of the Eurodollar Rate or
the Base Rate hereunder;
and the result of any of the foregoing is to increase the cost to such
Transferee of maintaining an interest in Receivables or to reduce any amount
receivable hereunder, then, in any such case, the Transferor shall pay such
Transferee, upon its demand, any additional amounts necessary to compensate such
Transferee for such additional cost or reduced amount receivable with regard to
such Transferee's Receivables. All such amounts shall be payable as incurred. A
certificate from such Transferee or the Administrative Agent, as the case may
be, to the Transferor certifying, in reasonably specific detail, the basis for,
calculation of, and amount of such additional costs shall be conclusive in the
absence of manifest error.
SECTION 1.08 Inability to Determine Eurodollar Rate. In the event that
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the Administrative Agent shall have determined prior to the first day of any
Settlement Period (which determination shall be conclusive and binding upon the
parties hereto) by reason of circumstances affecting the interbank Eurodollar
market, either (a) dollar deposits in the relevant amounts and for the relevant
Settlement Period are not available, (b) adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for such Settlement Period or (c) the
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Eurodollar Rate determined pursuant hereto does not accurately reflect the cost
to the Transferees (as conclusively determined by the Administrative Agent) of
maintaining Receivables during such Settlement Period, the Administrative Agent
shall promptly give telephonic notice of such determination, confirmed in
writing, to the Transferor prior to the first day of such Settlement Period.
Until such notice has been withdrawn by the Administrative Agent, no further
Tranches shall be funded or maintained at the Eurodollar Rate. The
Administrative Agent agrees to withdraw any such notice as soon as reasonably
practicable after the Administrative Agent is notified of a change in
circumstances which makes such notice inapplicable.
SECTION 1.09 Breakage Costs. If (a) any payment of Capital as to which
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Yield is computed by reference to the Eurodollar Rate or the CP Rate is made by
the Transferor to or for the account of any Transferee other than on the last
day of a Settlement Period, as a result of a payment pursuant to Sections 1.03,
1.10 or 3.03 or for any other reason, or (b) the Termination Date shall occur
during any Settlement Period, or (c) any payment of Capital is made by the
Transferor to a Transferee or an Affected Person other than on the last day of a
Settlement Period upon a purchase and assumption of rights and obligations under
this Agreement as a result of a demand by the Transferor, the Transferor shall,
upon demand by such Transferee or Affected Person (with a copy to the
Administrative Agent), immediately pay to the Administrative Agent for the
account of such Transferee or Affected Person (as a third-party beneficiary) any
amounts required to compensate such Transferee or Affected Person for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment, including, without limitation, any loss (including loss of
anticipated profits), costs or expenses incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Transferee or Affected
Person to fund or maintain its interest in the Receivables. A certificate as to
such amounts submitted to the Transferor and the Administrative Agent by such
Transferee or Affected Person shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 1.10 Retransfer of Receivables. At any time after the Aggregate
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Capital is reduced to less than 15% of the highest amount of Aggregate Capital
outstanding on or prior to the Facility Termination Date, the Transferor may, at
its option, upon not less than thirty days notice to the Administrative Agent,
accept the retransfer from the Administrative Agent on the Settlement Date next
succeeding such thirty day period or on such other date as shall be mutually
agreed to by the Administrative Agent and the Transferor (the "Retransfer
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Date"), of all of the Receivables and the Related Security then held by the
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Administrative Agent for an amount equal to the Aggregate Capital outstanding as
at the Retransfer Date (after application of all Collections received on or
prior to such date) plus any accrued and unpaid Yield as at such date plus any
other amounts then owed by the Transferor under this Agreement. The Transferor
shall be entitled to all Collections from the Receivables retransferred to the
Transferor in accordance with this Section 1.10 which are received after the
Retransfer Date and the Collection Agent shall set aside and hold in trust for,
and shall pay forthwith to, the Transferor all such Collections. The terms and
provisions of this Agreement shall continue to be effective or be reinstated, as
the case may be, if any such payment is rescinded or must otherwise be returned
to the Transferor upon the insolvency, bankruptcy or reorganization of the
Transferor or an Obligor or otherwise, all as though such payment had never been
made. On the Retransfer Date:
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(i) all of the Receivables and Related Security shall be
retransferred to the Transferor without any representation or warranty
other than that they are free and clear of any Adverse Claims created
by or through the Transferees or the Administrative Agent, and
(ii) the Administrative Agent shall deliver to the Transferor
executed UCC-3 Termination Statements, terminating the interest of the
Administrative Agent in all such Receivables and Related Security,
thereupon the Transferor shall be vested with all right, title and interest in
such Receivables and Related Security, and the Administrative Agent and the
Transferees shall no longer hold any interest in any of such Receivables or
Related Security.
SECTION 1.11 Security Interest. As collateral security for the
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performance by the Transferor of all the terms, covenants and agreements on the
part of the Transferor (whether as Transferor or otherwise) to be performed
under this Agreement or any document delivered in connection with this Agreement
in accordance with the terms thereof, including the punctual payment when due of
all obligations of the Transferor hereunder or thereunder, whether for the
payment of Capital, Yield, indemnification payments, fees, expenses or
otherwise, the Transferor hereby assigns to the Administrative Agent for its
benefit and the ratable benefit of the Transferees, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the Transferees,
a present and continuing security interest in, all of the Transferor's right,
title and interest in and to:
(a) the Transfer Agreement, including, without limitation, (i) all
rights of the Transferor to receive moneys due or to become due under or
pursuant to the Transfer Agreement, (ii) all security interests and property
subject thereto from time to time purporting to secure payment of monies due or
to become due under or pursuant to the Transfer Agreement, (iii) all rights of
the Transferor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Transfer Agreement (except any rights that might
arise under the Support Agreement), (iv) claims of the Transferor for damages
arising out of or for breach of or default under the Transfer Agreement, and (v)
the right of the Transferor to compel performance and otherwise exercise all
remedies thereunder,
(b) all Receivables and the Related Security and Collections with
respect thereto, and
(c) to the extent not included in the foregoing, all proceeds of any
and all of the foregoing.
SECTION 1.12 Hedging Requirements. (a) The Transferor shall cause to be
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maintained in full force and effect at all times one or more Hedge Transactions
with respect to the Receivables (which, if in the form of one or more Swap
Agreements, shall have an aggregate notional amount in effect for all such Hedge
Transactions of not less than 90% but not greater than 110% of the outstanding
Aggregate Capital). Each Hedge Transaction shall:
(i) be entered into with a Hedge Counterparty and be governed by a
Hedge Agreement;
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(ii) have a tenor and amortization schedule reasonably acceptable
to the Administrative Agent;
(iii) provide for payments on each Settlement Date (x) which, in
the case of a Hedge Transaction in the form of a Cap Agreement, are
made only by the Hedge Counterparty to the Transferor, in an amount
equal to the current notional amount of such Cap Agreement applied to
the excess, if any, of one-month LIBOR over the Hedge Rate with respect
thereto, and (y) in the case of a Hedge Transaction in the form of a
Swap Agreement, are to be made (1) by the Hedge Counterparty to the
Transferor in an amount equal to the current notional amount of the
Swap Agreement applied to one-month LIBOR, and (2) by the Transferor to
the Hedge Counterparty in an amount equal to such notional amount
applied to the Hedge Rate with respect thereto (which amounts may be
netted, with the net amount paid by one party to the other); and
(iv) require the Hedge Counterparty to find a replacement Hedge
Counterparty to execute a new Hedge Agreement reasonably satisfactory
to the Agent within ten Business Days of any downgrade of the ratings
of the Hedge Counterparty below the levels set forth in the definition
of "Hedge Counterparty", which replacement must meet the qualifications
set forth in the definition of "Hedge Counterparty."
(b) In the event that a Hedge Counterparty no longer satisfies the
ratings requirement specified in the definition thereof and does not itself find
a replacement acceptable to the Administrative Agent that has executed a Hedge
Agreement as required under Section 1.12(a)(v), the Transferor shall, within 15
Business Days following the failure of such Hedge Counterparty to satisfy such
ratings requirement, provide a substitute Person satisfying the requirements of
the definition of "Hedge Counterparty" to be substituted as the Hedge
Counterparty under the applicable Hedge Agreement(s) or to enter into a new
Hedge Agreement reasonably satisfactory to the Administrative Agent.
(c) The Transferor hereby agrees that it shall not, without the prior
written consent of the Administrative Agent, exercise any rights (including
termination rights) under any Hedge Agreement or Hedge Transaction that could
reasonably be expected to adversely effect the right of the Transferees to
receive any payment hereunder or under any such Hedge Agreement; provided, that
nothing herein shall have the effect of releasing the Transferor from any of its
obligations under any Hedge Agreement or any Hedge Transaction, nor be construed
as requiring the consent of the Transferees or the Administrative Agent for the
performance by the Transferor of any such obligations.
(d) The Transferor shall not execute any assignment, assumption, credit
support annex, extension, amendment, modification, waiver, confirmation,
designation of "Reference Market Makers," schedule or other agreement in
connection with any Hedge Agreement without first obtaining the prior written
consent of the Administration Agent. A copy of any such item received by the
Transferor, together with a copy of any other notice or communication received
by the Transferor in connection with any Hedge Agreement shall be forwarded to
the Administrative Agent promptly on receipt. Notice of (i) any assignment or
transfer by a Hedge Counterparty of any of its rights or obligations under any
Hedge Agreement (ii) any assumption, amendment, extension, modification, waiver
or event of default under any Hedge Agreement,
10
and (iii) the Hedge Counterparties entering into any new Hedge Agreement
pursuant to this Section 1.12 shall be given by the Administrative Agent to each
Rating Agency.
(e) The Transferor or the Servicer on its behalf shall promptly forward
to the Administrative Agent a copy of any notice received from a Hedge
Counterparty relating to any downgrade, withdrawal or suspension of such Hedge
Counterparty's (or such Hedge Counterparty's guarantors') ratings.
(f) The Collection Agent shall provide the Administrative Agent with
written notice confirming the amounts, if any, to be paid to or by the Hedge
Counterparty on each Settlement Date and any early termination date (which
notice may be contained in the Transferor Report).
ARTICLE II
REPRESENTATIONS AND WARRANTIES;
COVENANTS; TRIGGER EVENTS
SECTION 2.01 Representations and Warranties; Covenants. The Transferor
-----------------------------------------
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, set forth in Exhibits III and IV, respectively,
hereto.
SECTION 2.02 Trigger Events. If any of the Trigger Events set forth in
--------------
Exhibit V hereto shall occur and be continuing, the Administrative Agent may, by
notice to the Transferor, take either or both of the following actions: (x)
declare the Termination Date to have occurred, and (y) designate another Person
to succeed the Originator as the Collection Agent; provided, that, automatically
--------
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in paragraph (h) or (n) of Exhibit V,
the Termination Date shall occur, the Originator (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Administrative
Agent or its designee shall become the Collection Agent. Upon any such
declaration or designation or upon any such automatic termination, the
Transferees and the Administrative Agent shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided after default under the UCC of the appropriate jurisdiction or
jurisdictions and under other applicable law, which rights and remedies shall be
cumulative.
ARTICLE III
INDEMNIFICATION, REPURCHASE, ETC.
SECTION 3.01 Indemnities by the Transferor. Without limiting any other
-----------------------------
rights that the Administrative Agent or any Transferee or any of their
respective Affiliates or its agents (each, an "Indemnified Party") may have
-----------------
hereunder or under applicable law, the Transferor hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
-------------------
from this Agreement or the use of proceeds of any Transfer or the acceptance of
the transfer of the Receivables or in respect of any Receivable, Related
Contract or Related Security, excluding, however, (a) Indemnified
--------- -------
11
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables or (c)
any income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or any
political subdivision thereof, arising out of or as a result of this Agreement
or the acceptance of the transfer of the Receivables or in respect of any
Receivable, Related Contract or Related Security. Without limiting or being
limited by the foregoing, the Transferor shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from any of the
following:
(i) any representation or warranty or statement made by the
Transferor (or any of its officers) under or in connection with this
Agreement and the other Transaction Documents which shall have been
incorrect in any material respect when made;
(ii) the failure by the Transferor to comply with any applicable
law, rule or regulation (including, without limitation, usury or
consumer law) with respect to any Receivable, the related Contract or
the Related Security; or the failure of any Receivable or the related
Contract to conform to any such applicable law, rule or regulation;
(iii) the failure of the Administrative Agent (for the benefit of
the Transferees) to acquire a valid and perfected security interest in
the Receivables and the Related Security and Collections in respect
thereof under Article 9 of the UCC of any applicable jurisdiction, free
and clear of any Adverse Claim;
(iv) the failure to have filed, 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 Receivables or the Related Security and Collections in respect
thereof, whether at the time of the transfer of an interest therein or
at any subsequent time;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (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 lease or sale of the
related Equipment or services related to such Receivable or the
furnishing or failure to furnish such Equipment or other services or
alleging violation by the Transferor of any laws in connection with
such lease or sale activities;
(vi) any failure of the Transferor to perform its duties or
obligations in accordance with the provisions hereof or to perform its
duties or obligations under the Related Contracts;
(vii) any products or personal liability claim arising out of or in
connection with any Equipment or other merchandise, services or
activities which are the subject of any Related Contract;
12
(viii) the commingling by the Transferor or any of its Affiliates
(including without limitation the Originator in its capacity as
Collection Agent) of Collections of Receivables at any time with other
funds;
(ix) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of any Transfer or the acceptance of
the transfer of Receivables or in respect of any Receivable, Related
Security or Related Contract; or
(x) any fine, penalty, tax or other charge asserted against any
Indemnified Party by any governmental authority or agency or any other
Person resulting from any Obligor's use, possession or ownership of any
Equipment.
(xi) any failure of the Transferor or any Hedge Transactions to
comply with the requirements of Section 1.12.
SECTION 3.02 [RESERVED]
SECTION 3.03 Repurchase of Ineligible and Certain Other Receivables.
------------------------------------------------------
(a) The Transferor shall, upon not less than two Business Days' notice from the
Administrative Agent, repurchase (at the repurchase price specified in Section
3.03(b) below) on the next succeeding Settlement Date:
(i) any Receivable that was not an Eligible Receivable at the time
of the related Transfer; or
(ii) any Receivable as to which the Administrative Agent (for the
benefit of the Transferees) does not have a first priority perfected
interest free and clear of any Adverse Claim.
(b) Each repurchase of a Receivable under Section 3.03(a) above shall
include the repurchase of all other Receivables relating to the same Contract.
The repurchase price shall be an amount equal to the Outstanding Balance of the
related Contract plus accrued but unpaid Yield allocable thereto to the date of
repurchase. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Receivables received during the Settlement Period
preceding such Settlement Date and the amount of each such Collection shall be
applied as provided in Section 1.03.
ARTICLE IV
ADMINISTRATION AND COLLECTION
OF RECEIVABLES
SECTION 4.01 Designation of Collection Agent. The servicing,
-------------------------------
administration and collection of the Receivables shall be conducted by the
Collection Agent so designated hereunder from time to time. Until the
Administrative Agent gives notice to the Transferor of the designation of a new
Collection Agent, the Originator is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms hereof. At any time following the occurrence of a Trigger Event, the
Administrative Agent may
13
designate as Collection Agent any Person (including itself) to succeed the
Originator or any successor Collection Agent, if such Person shall consent and
agree to the terms hereof. The Collection Agent may, with the prior consent of
the Administrative Agent, subcontract with any other Person for the servicing,
administration or collection of the Receivables. Any such subcontract shall not
affect the Collection Agent's liability for performance of its duties and
obligations pursuant to the terms hereof.
SECTION 4.02 Duties of Collection Agent. (a) The Collection Agent shall
--------------------------
take or cause to be taken all such actions as may be necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy. The Transferor and the
Administrative Agent hereby appoint the Collection Agent, from time to time
designated pursuant to Section 4.01, as agent for themselves and for the
Transferees to enforce their respective rights and interests in the Receivables,
the Related Security and the related Contracts. In performing its duties as
Collection Agent, the Collection Agent shall exercise the same care and apply
the same policies as it would exercise and apply if it owned such Receivables
and shall act in the best interests of the Transferor and the Transferees.
(b) The Collection Agent shall administer the Collections in accordance
with the procedures described in Section 1.03.
(c) The Collection Agent shall hold in trust for the Transferor and
each Transferee, in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Receivables.
(d) The Collection Agent shall, as soon as practicable following
receipt, turn over to the Transferor any cash collections or other cash proceeds
received with respect to receivables not transferred to the Administrative Agent
and the Transferees pursuant to this Agreement.
(e) The Collection Agent shall, from time to time at the request of the
Administrative Agent, furnish to the Administrative Agent (promptly after any
such request) a calculation of the amounts set aside for the Administrative
Agent and the Transferees pursuant to Section 1.03.
(f) Prior to the 13th calendar day of each month, the Collection Agent
shall prepare and forward to the Administrative Agent a Transferor Report
relating to the Receivables outstanding on the last day of the immediately
preceding month.
(g) For any Settlement Period, if the Collection Agent determines that
any Periodic Payment (or portion thereof) which was due and payable pursuant to
a Related Contract during such Settlement Period was not received prior to the
end of such Settlement Period, the Collection Agent may make an Servicer Advance
in an amount up to the amount of such delinquent Periodic Payment (or portion
thereof), to the extent that in its sole discretion it determines that it can
recover such amount from subsequent Collections under such Related Contract. Any
Servicer Advances shall be treated by the Collection Agent as Collections and
made available for distribution on each Settlement Date in accordance with
Section 1.03(b). If, following the occurrence of a Trigger Event or a Potential
Trigger Event, the Collection Agent shall be required to segregate Collections
from its own funds, it shall deposit any Servicer
14
Advances into a segregated account within two (2) Business Days of the date on
which the related Periodic Payment (or portion thereof) first became delinquent.
The Collection Agent shall be entitled to be reimbursed for Servicer Advances
pursuant to Section 1.03(b), subject to the priority of payments set forth
therein.
SECTION 4.03 Certain Rights of the Administrative Agent.
------------------------------------------
Following the occurrence of a Trigger Event or Potential Trigger Event,
(a) The Administrative Agent may direct the Obligors that all
payments under the Related Contracts be made directly to the
Administrative Agent or its designee.
(b) At the Administrative Agent's request and at the
Transferor's expense, the Transferor shall notify each Obligor of the
interest of the Administrative Agent in the Receivables under this
Agreement and direct that payments be made directly to the
Administrative Agent or its designee.
(c) At the Administrative Agent's request and at the
Transferor's expense, the Transferor and the Collection Agent shall (A)
assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that evidence
or relate to the Receivables and the Related Contracts and Related
Security, or that are otherwise necessary or desirable to collect the
Receivables, and shall make the same available to the Administrative
Agent at a place selected by the Administrative Agent or its designee,
and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections in a manner acceptable to
the Administrative Agent and, promptly upon receipt, remit all such
cash, checks and instruments, duly indorsed or with duly executed
instruments of transfer, to the Administrative Agent or its designee.
(d) The Transferor authorizes the Administrative Agent to take
any and all steps in the Transferor's name and on behalf of the
Transferor that are necessary or desirable, in the determination of the
Administrative Agent, to collect amounts due under the Receivables,
including, without limitation, endorsing the Transferor's name on
checks and other instruments representing Collections and enforcing the
Receivables and the Related Security and related Contracts.
SECTION 4.04 Rights and Remedies. (a) If the Collection Agent fails to
-------------------
perform any of its obligations under this Agreement, the Administrative Agent
may (but shall not be required to) itself perform, or cause performance of, such
obligation; and the Administrative Agent's costs and expenses incurred in
connection therewith shall be payable by the Transferor (if the Collection Agent
that fails to so perform is the Transferor or its designee).
(b) The Transferor and the Originator shall perform their respective
obligations under the Related Contracts to the same extent as if the Receivables
had not been transferred and the exercise by the Administrative Agent on behalf
of the Transferees of their rights under this Agreement shall not release the
Collection Agent or the Transferor from any of their duties or obligations with
respect to any Receivables or Related Contracts. Neither the Administrative
Agent nor the Transferees shall have any obligation or liability with respect to
any Receivables
15
or Related Contracts, nor shall any of them be obligated to perform the
obligations of the Transferor thereunder.
(c) In the event of any conflict between the provisions of Article IV
of this Agreement and Article VI of the Transfer Agreement, the provisions of
this Agreement shall control.
SECTION 4.05 Further Actions Evidencing Transfers. The Originator
------------------------------------
agrees from time to time, at its expense, to promptly execute and deliver all
further instruments and documents, and to take all further actions, that may be
reasonably necessary or desirable, or that the Administrative Agent may
reasonably request, to perfect, protect or more fully evidence the Receivables
transferred hereunder, or to enable the Transferees or the Administrative Agent
to exercise and enforce their respective rights and remedies hereunder. Without
limiting the foregoing, the Originator will upon the request of the
Administrative Agent (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and documents,
that may be reasonably necessary or desirable, or that the Administrative Agent
may reasonably request, to perfect, protect or evidence such interests in
Receivables; (ii) segregate the Related Contracts and other records in its lease
files pertaining to each Receivable; and (iii) xxxx its master data processing
records evidencing such Receivables and the Related Contracts, in each case in a
manner reasonably acceptable to the Administrative Agent, evidencing that such
Receivables have been transferred.
SECTION 4.06 Covenants of the Collection Agent and the Originator. (a)
----------------------------------------------------
Audits. The Collection Agent will, from time to time during regular business
hours as requested by the Administrative Agent, permit the Administrative Agent,
or its agents or representatives (including independent public accountants,
which may be the Collection Agent's independent public accountants), (i) to
conduct periodic audits of the Receivables, the Related Security and the related
books and records and collections systems of the Collection Agent, (ii) 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 the control of the Collection Agent relating to the Receivables and the
Related Security, including, without limitation, the Related Contracts, and
(iii) to visit the offices and properties of the Collection Agent for the
purpose of examining such materials described in clause (ii) above, and to
discuss matters relating to the Receivables and the Related Security or the
Collection Agent's performance hereunder with any of the officers or employees
of the Collection Agent having knowledge of such matters.
(b) Change in Credit and Collection Policy. The Originator will not
--------------------------------------
make any change in the Credit and Collection Policy that would impair the
collectibility of any Receivable or the ability of the Originator (if it is
acting as Collection Agent) to perform its obligations under this Agreement.
SECTION 4.07 Indemnities by the Collection Agent. Without limiting any
-----------------------------------
other rights that the Administrative Agent, any Transferee or any of their
respective Affiliates (each, a "Special Indemnified Party") may have hereunder
-------------------------
or under applicable law, and in consideration of its appointment as Collection
Agent, the Collection Agent hereby agrees to indemnify each Special Indemnified
Party from and against any and all claims, losses and liabilities (including
16
reasonable attorneys' fees) (all of the foregoing being collectively referred to
as "Special Indemnified Amounts") arising out of or resulting from any of the
---------------------------
following (excluding, however, (a) Special Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Special Indemnified Party, (b) recourse for uncollectible Receivables or (c) any
income taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party arising out of or as a result of this Agreement or the
ownership of interests in the Receivables or in respect of any Receivable or any
Contract):
(i) any representation or warranty or statement made or
deemed made by the Collection Agent under or in connection with this
Agreement which shall have been incorrect in any material respect when
made;
(ii) the failure by the Collection Agent to comply with any
applicable law, rule or regulation with respect to any Receivable or
Contract; or the failure of any Receivable or Contract to conform to
any such applicable law, rule or regulation;
(iii) the failure to have filed, 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 Receivables, the Related Contracts and the Related
Security and Collections in respect thereof, whether at the time of any
transfer or reinvestment or at any subsequent time;
(iv) any failure of the Collection Agent to perform its
duties or obligations in accordance with the provisions of this
Agreement;
(v) the commingling of Collections at any time by the
Collection Agent with other funds other than as specifically permitted
herein;
(vi) any action or omission by the Collection Agent reducing
or impairing the rights of the Transferees with respect to any
Receivable or the value of any Receivable;
(vii) any Collection Agent Fees or other costs and expenses
payable to any replacement Collection Agent, to the extent in excess of
the Collection Agent Fees payable to the Collection Agent hereunder; or
(viii) any claim brought by any Person other than a Special
Indemnified Party arising from any activity by the Collection Agent or
its Affiliates in servicing, administering or collecting any
Receivable.
(ix) any failure of the Transferor or any Hedge Transactions
to comply with the requirements of Section 1.12.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Amendments, Etc. No failure or delay on the part of the
----------------
Administrative Agent or any Transferee in exercising any power, right or remedy
under this
17
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any provision of this Agreement may be amended if,
but only if, such amendment is in writing and is signed by the Transferor, the
Collection Agent, the Administrative Agent and the Required Transferees and, if
such amendment is material, the Rating Agencies, to the extent required by the
terms and provisions of the commercial paper program of Twin Towers, have
provided written confirmation that such amendment will not result in a reduction
or withdrawal of the rating of the Commercial Paper; provided that the consent
--------
of all of the Transferees hereto shall be required for any amendment,
modification or supplement relating to (i) the definitions of "Eligible
Receivables," "Facility Termination Date," "Required Transferees," "Required
Balance," "Discount" and "Applicable Percentage" and any defined terms
incorporated therein, (ii) the reduction or postponement of the time for payment
of any fee or other amount payable to or on behalf of such Transferees or (iii)
this Section 5.01.
SECTION 5.02 Notices, Etc. All notices, demands and other
-------------
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (which shall include electronic transmission), shall be personally
delivered, express couriered, electronically transmitted (in which case a hard
copy shall also be sent by regular mail) or mailed by registered or certified
mail and shall, unless otherwise expressly provided herein, be effective when
received at the address specified below for the listed parties or at such other
address as shall be specified in a written notice furnished to the other parties
hereunder.
If to the Transferor:
IKON FUNDING-3, LLC
0000 Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx, President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Originator or Collection Agent:
IOS CAPITAL, INC.
0000 Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
IKON OFFICE SOLUTIONS, INC.
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
18
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Administrative Agent or the Alternate Transferees:
DEUTSCHE BANK AG, NEW YORK BRANCH
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
DEUTSCHE BANK ALEX. XXXXX INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Twin Towers:
TWIN TOWERS INC.
X. X. Management Corporation
c/o Ropes & Xxxx
One International Place, Rm. 615
Xxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to the Administrative Agent
SECTION 5.03 Assignability. (a) This Agreement and each Transferee's
-------------
rights and obligations herein (including rights in the Receivables) shall be
assignable by each Transferee and its successors and assigns if the
Administrative Agent shall have received confirmation from each of the Rating
Agencies that such assignment will not result in the withdrawal or downgrade of
the then-current ratings of Twin Towers's outstanding Commercial Paper;
provided, that no such confirmation shall be required if such assignment is made
--------
by Twin Towers to any other Transferee hereunder or to any Transferee that is a
party to a liquidity facility supporting the Commercial Paper. Each assignor of
Receivables or any interest therein shall notify the Administrative Agent and
the Transferor of any such assignment; provided, that no such notice shall be
--------
required if such assignment is made by Twin Towers to any other Transferee
hereunder or to any Transferee that is a party to a liquidity facility
supporting the commercial paper notes of Twin Towers. Each assignor of
Receivables may, in connection with the assignment or participation, disclose to
the assignee or participant any information, relating to the Transferor or
19
the Receivables, which was furnished to such assignor by or on behalf of the
Transferor or by the Administrative Agent; provided that, prior to any such
--------
disclosure, the assignee or participant agrees to preserve the confidentiality
of any confidential information relating to the Transferor received by it from
any of the foregoing entities.
(b) This Agreement and the rights and obligations of the Administrative
Agent herein shall be assignable by the Administrative Agent and its successors
and assigns; provided that any costs incurred by the Administrative Agent in
--------
connection with such assignment shall be for the account of the Administrative
Agent.
(c) The Transferor may not assign its rights or obligations hereunder
or any interest herein without the prior written consent of the Administrative
Agent, which consent will not be unreasonably withheld.
(d) Without limiting any other rights that may be available under
applicable law, the rights of the Transferees may be enforced through them or by
their agents.
SECTION 5.04 Costs, Expenses and Taxes. (a) In addition to the rights
-------------------------
of indemnification granted under Section 3.01 hereof, the Transferor agrees to
pay on demand all costs and expenses of the Administrative Agent and the
Transferees and their respective Affiliates in connection with the preparation,
execution, delivery, amendment and administration (including periodic auditing
of Receivables) of this Agreement, any transfer agreement or similar agreement
relating to the transfer of interests in Receivables and the other documents and
agreements to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Transferees and their respective Affiliates and agents
with respect thereto and with respect to advising the Administrative Agent, the
Transferees and their respective Affiliates and agents as to their rights and
remedies under this Agreement and all costs and expenses, if any (including
reasonable counsel fees and expenses) of the Administrative Agent, the
Transferees and their respective Affiliates and agents, in connection with the
enforcement of this Agreement, and the other documents and agreements to be
delivered hereunder.
(b) The Transferor shall pay any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other documents or agreements to be delivered hereunder. The
Transferor agrees to save each Indemnified Party harmless from and against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees, any and all stamp and other taxes and fees payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other documents or agreements to be delivered hereunder. The Transferor
agrees to save each Indemnified Party harmless from and against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 5.05 No Proceedings; Limitation on Payments. (a) Each of the
--------------------------------------
Originator, the Transferor, the Administrative Agent, each Transferee, each
assignee of a Receivable or any interest therein and each entity which enters
into a commitment to acquire Receivables or interests therein hereby agrees that
it will not institute against, or join any other person in instituting against,
Twin Towers any proceeding of the type referred to in paragraph (h)
20
of Exhibit V so long as any Commercial Paper issued by Twin Towers shall be
outstanding and there shall not have elapsed one year plus one day since the
last day on which any such Commercial Paper shall have been outstanding. Each of
the Originator, the Administrative Agent, each Transferee, each assignee of a
Receivable or any interest therein and each entity which enters into a
commitment to acquire Receivables or interests therein hereby agrees that it
will not institute against, or join any other person in instituting against, the
Transferor any proceeding of the type referred to in paragraph (h) of Exhibit V
so long as any Commercial Paper issued by Twin Towers to finance the Capital
shall be outstanding and there shall not have elapsed one year plus one day
since the last day on which any such Commercial Paper shall have been
outstanding.
(b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, Twin Towers shall have no obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to Twin Towers after paying or making provision for the payment of its
Commercial Paper. All payment obligations of Twin Towers hereunder are
contingent on the availability of funds in excess of the amounts necessary to
pay its Commercial Paper; and each of the Transferor, the Collection Agent, the
Administrative Agent and the Transferees agree that they shall not have a claim
under Section 101(5) of the Bankruptcy Code if and to the extent that any such
payment obligation exceeds the amount available to Twin Towers to pay such
amount after paying or making provision for the payment of its Commercial Paper.
Notwithstanding anything in this Agreement or any other Transaction Document to
the contrary, the Transferor shall have no obligation to pay any amount required
to be paid by it hereunder or thereunder in excess of any amount available to
the Transferor after paying or making provision for the payment of the items set
forth in Section 1.03(c)(i), (ii) and the first clause of (iii). All payment
------------------ ---- -----
obligations of the Transferor hereunder are contingent on the availability of
funds in excess of the amounts necessary to pay such items; and each of the
Collection Agent, the Administrative Agent, the Transferees and the Affected
Persons agree that they shall not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation exceeds
the amount available to the Transferor to pay such amounts after paying or
making provision for the payment thereof.
(c) The provisions of this Section 5.05 shall survive any termination
------------
of this Agreement.
SECTION 5.06 Confidentiality. Unless otherwise required by applicable
---------------
law, the Transferor agrees to maintain the confidentiality of this Agreement
(and all drafts thereof) in communications with third parties and otherwise;
provided, that this Agreement may be disclosed to (a) third parties to the
--------
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrative Agent, and (b) the Transferor's legal counsel and auditors if
they agree to hold it confidential.
SECTION 5.07 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE INTERESTS OF THE TRANSFEREES IN THE RECEIVABLES OR
REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE
21
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 5.08 Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 5.09 Termination. (a) Except as provided in subsection (b)
-----------
below, this Agreement shall terminate on the Termination Date. Upon the
occurrence of the Termination Date, the Administrative Agent will, at the
Transferor's cost and expense, take such actions as are reasonably requested to
terminate this Agreement and the Transfer contemplated thereby (including,
without limitation, executing UCC termination statements).
(b) The provisions of Sections 1.06, 1.07, 1.08, 1.09, 3.01, 4.07,
5.04, 5.05 and 5.06 shall survive any termination of this Agreement.
SECTION 5.10 Tax Treatment. It is the intention of the Transferor and
-------------
the Administrative Agent that for federal, state and local income and franchise
tax purposes, the Capital will be treated as evidence of indebtedness of the
Transferor secured by the Receivables, the Related Security and Collections and
other proceeds thereof. The Transferor, the Administrative Agent, Twin Towers
and the other Transferees, by entering into this Agreement, intend to treat the
Capital as indebtedness.
SECTION 5.11 Agent Conflict Waiver. The Administrative Agent acts in
---------------------
various capacities with respect to the maintenance and administration of Twin
Towers's commercial paper program (including, as administrative agent for Twin
Towers, as provider of other backup facilities, and as a provider of other
services or facilities from time to time, the "Agent Roles"). Each of the
-----------
parties hereto hereby acknowledges and consents to any and all Agent Roles,
waives any objections it may have to any actual or potential conflict of
interest caused by the Administrative Agent acting as the administrative agent
for Twin Towers or as a related Alternate Transferee or as a liquidity or credit
support provider under Twin Towers's commercial paper program and acting as or
maintaining any of the Agent Roles, and agrees that in connection with any Agent
Role, the Administrative Agent may take, or refrain from taking, any action
which it in its discretion deems appropriate.
The provisions of this Agreement and all related Transaction Documents
shall be construed to further such intentions of the parties hereto.
22
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.
TRANSFEROR: IKON FUNDING-3 LLC
By: IKON FUNDING, INC., its Manager
By:________________________________
Name: X. X. Xxxxx
Title: Treasurer
S-1
ORIGINATOR IOS CAPITAL, INC.
AND
COLLECTION
AGENT: By:______________________________________
Name: Xxxxxxx Xxxxx
Title: President
S-2
CONDUIT TRANSFEREE: TWIN TOWERS INC.
By:____________________________________
Name:
Title:
S-3
ADMINISTRATIVE AGENT: DEUTSCHE BANK AG, NEW YORK BRANCH
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
S-4
ALTERNATE TRANSFEREE: DEUTSCHE BANK AG, NEW YORK BRANCH
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
Commitment: $300,000,000
S-5
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Active Transferee" means Twin Towers, except in the event that Twin
-----------------
Towers elects not to accept a Transfer from the Transferor hereunder, in which
case the Alternate Transferees shall be considered the Active Transferees.
"Administrative Agent" shall have the meaning assigned to such term in
--------------------
the preamble.
"Administrative Agent's Account" means the special account of the
------------------------------
Administrative Agent designated as follows:
Deutsche Bank AG
ABA #000-000-000
Account No. 104636460008
Account Name: TTI
Reference: Xxxxxx
"Adverse Claim" means a lien, security interest or other charge or
-------------
encumbrance, or any other type of preferential arrangement.
"Affected Person" has the meaning set forth in Section 1.06.
---------------
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Aggregate Adjusted Outstanding Balance" means, with respect to any
--------------------------------------
Receivables to be transferred pursuant to Section 1.02, the aggregate
Outstanding Balance of the Contracts related to such Receivables less the
Discount with respect to such Receivables.
"Aggregate Capital" means, at any time, the sum of the outstanding
-----------------
Capital of each Transferee at such time.
"Aggregate Commitment" means, at any time, the sum of the outstanding
--------------------
Commitments of each Transferee at such time.
"Agreement" shall have the meaning assigned to such term in the
---------
preamble.
"Alternate Transferees" shall have the meaning assigned to such term in
---------------------
the preamble.
"Applicable Percentage" means, with respect to the Consideration
---------------------
payable with respect to Receivables, a percentage equal to the greater of (i)
15% or (ii) the product of (a) three, (b) the
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weighted average life of such Receivables expressed in years and fractions
thereof and as reported in the most recent Transferor Report and (c) the average
of the Default Ratios for the twelve months preceding the related Transfer Date;
provided, however, that after the occurrence of a Trigger Event, the Applicable
-------- -------
Percentage for any date of determination shall be the greater of (i) the
percentage calculated above and (ii) a percentage equal to (A) the product of
(x) the aggregate Outstanding Balance of the Receivables on the date of
occurrence of such Trigger Event, (y) the Applicable Percentage on the date of
occurrence of such Trigger Event and (z) 0.25, divided by (B) the aggregate
Outstanding Balance of the Receivables on such date of determination.
"Base Rate" shall mean with respect to Twin Towers, a rate per annum
---------
equal to the sum of (x) the greater of (i) the prime rate of interest announced
by the Administrative Agent from time to time, changing when and as said prime
rate changes (such rate not necessarily being the lowest or best rate charged by
the Administrative Agent) and (ii) the sum of (A) 1.50% and (B) the rate equal
to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it and
(y) the Liquidity Margin.
"Base Rate Tranche" means, with respect to any Transferee, a Tranche
-----------------
funded or maintained by such Transferee as to which Yield is calculated at the
Base Rate.
"Business Day" means any day on which (i) banks are not authorized or
------------
required to close in New York City and (ii) if this definition of "Business Day"
is utilized in connection with the Eurodollar Rate, dealings are carried out on
the London interbank market.
"Cap Agreement" means a Hedge Agreement under which the Hedge
-------------
Counterparty is only required to make payments if and when one-month LIBOR
exceeds a specified level, and which does not require any payment by the
Transferor at any time.
"Capital" means, with respect to any Transferee, the aggregate
-------
Consideration paid by such Transferee for all Transfers that have occurred on or
prior to such date, reduced from time to time by Collections distributed on
account of Receivables and applied to reduce Capital pursuant to Section
1.03(c)(iii) of the Agreement; provided, that if such Capital shall have been
reduced by any distribution and thereafter all or a portion of such distribution
is rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution, as though it
had not been made.
"Closing Date" means March 28, 2001.
------------
"Collection Agent" means at any time the Person then authorized
----------------
pursuant to Section 4.01 of the Agreement to administer and collect Receivables.
"Collection Agent Fee" has the meaning specified in Section 1.04(c) of
--------------------
the Agreement.
I-2
"Collections" means, with respect to any Receivable, (i) all cash
-----------
collections and other cash proceeds of such Receivable, including, without
limitation, any proceeds resulting from the repurchase of such Receivable by
IKON Office Solutions, Inc. and all cash proceeds of Related Security with
respect to such Receivable (including, without limitation, payments under the
related Contract due upon or in connection with (a) Obligor's default under the
Contract, (b) loss, theft or damage to the related Equipment, or (c) renewal of
the Contract), (ii) any Collection of such Receivable deemed to have been
received pursuant to the Agreement and (iii) all amounts received pursuant to
any Hedge Agreement or Hedge Transaction; provided, that Collections shall not
--------
include collections which represent the payment of (x) maintenance charges or
(y) insurance premiums.
"Commercial Paper" means the short-term promissory notes of Twin Towers
----------------
issued by Twin Towers in the United States commercial paper market.
"Commitment" means, respectively, the Commitment of each Alternate
----------
Transferee as set forth below such Alternate Transferee's name on the signature
pages hereof or as set forth in the assignment agreement or the assumption
agreement pursuant to which such Alternate Transferee became a party thereto.
"Conduit Transferee" has the meaning set forth in the preamble.
------------------
"Consideration" has the meaning set forth in Section 1.02(a) of the
-------------
Agreement.
"Contract" means a closed-end lease agreement between the Originator
--------
and an Obligor having an original lease/loan term not exceeding 72 months, in
substantially the form of one of the forms of written contract set forth in
Annex A hereto or otherwise approved by the Administrative Agent, which has been
sold to Transferor pursuant to the Transfer Agreement, pursuant to or under
which such Obligor shall be obligated to pay for the lease of Equipment.
"CP Rate" shall mean, with respect to any CP Tranche funded or
-------
maintained by Twin Towers, the rate equivalent to the weighted average of (i)
the weighted average of the discount rates on all of Twin Towers's Commercial
Paper issued at a discount to fund or maintain such CP Tranche which is
outstanding during the related Settlement Period, converted to an annual
yield-equivalent rate on the basis of a 360-day year, which rates shall include
dealer fees and commissions and (ii) the weighted average of the annual interest
rates payable on all interest-bearing Twin Towers Commercial Paper issued to
fund or maintain such CP Tranche which is outstanding during the related
Settlement Period, on the basis of a 360-day year, which rates shall include
dealer fees and commissions;
"CP Tranche" means a Tranche funded or maintained by Twin Towers as to
----------
which Yield is calculated at the CP Rate.
"Credit and Collection Policy" means those receivables collection
----------------------------
policies and practices of the Originator in effect on the date of the Agreement
and described in Schedule I hereto, as modified in compliance with the
Agreement.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
----
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price
I-3
of property or services, (iv) obligations as Obligor under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, (v) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) above, and (vi) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA.
"Default Ratio" means, as of the last day of each calendar month,
-------------
twelve (12) times the percentage equivalent of a fraction, the numerator of
which is equal to the excess of (x) the aggregate Outstanding Balance of all
Receivables that became Defaulted Receivables during such calendar month over
(y) the sum of all recoveries received during such calendar month with respect
to all Receivables, and the denominator of which is equal to the aggregate
Outstanding Balance of all Receivables which are Eligible Receivables as of (i)
prior to the Facility Termination Date, the last day of the third preceding
calendar month and (ii) on or after the Facility Termination Date, the first day
of such calendar month.
"Defaulted Receivable" means a Receivable:
--------------------
(i) as to which any payment, or part thereof, remains unpaid
for more than 120 days from the original due date for such payment;
(ii) as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in respect thereof has
taken any action, or suffered any event to occur, of the type described
in paragraph (h) of Exhibit V;
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Transferor's books as uncollectible; or
(iv) which is a Delinquent Receivable and with respect to
which no Servicer Advance has been made by the Collection Agent.
"Delinquency Ratio" means, as of the last day of each calendar month,
-----------------
the percentage equivalent of a fraction, the numerator of which is equal to the
aggregate Outstanding Balance of all Related Contracts having one or more
Receivables that were Delinquent Receivables on such day and the denominator of
which is equal to the aggregate Outstanding Balance of all Related Contracts as
of the last day of the third preceding calendar month.
"Delinquent Receivable" means a Receivable (that is not a Defaulted
---------------------
Receivable):
(i) as to which any payment, or part thereof, remains unpaid
for 60 or more days from the original due date for such payment; or
(ii) which, consistent with the Credit and Collection Policy,
would be classified as delinquent by the Originator or the Transferor.
I-4
"Designated Account" means an account in the name of and owned by the
------------------
Administrative Agent, designated by the Administrative Agent in a writing
delivered to the Transferor, for the purpose of receiving Collections of
Receivables.
"Discount" means, with respect to any group of Receivables, the product
--------
of (a) the aggregate Outstanding Balance of the Related Contracts relating to
such Receivables and (b) the Applicable Percentage in respect of such
Receivables.
"Eligible Receivable" means, at any time, a Receivable:
-------------------
(i) the Obligor of which is (a) a United States resident, (b)
is not the Transferor or any Affiliate thereof, and (c) is not a
Governmental Obligor; provided, that Obligors with respect to Contracts
--------
having an aggregate Outstanding Balance of not greater than 3% of the
aggregate Outstanding Balance of all Eligible Receivables may be
Governmental Obligors;
(ii) the Obligor of which has not been disapproved by the
Administrative Agent on or prior to the date of the Transfer and which,
at the time of the Transfer, is not the Obligor of any Defaulted
Receivables;
(iii) which is not a Defaulted Receivable or a Delinquent
Receivable; which arises under a Contract duly authorized by the
parties thereto (which parties had the legal capacity to enter into
such Contract) which is in full force and effect and which is legal
valid and binding obligation of the related Obligor, enforceable
against such Obligor in accordance with its terms;
(iv) (a) which arises under a Contract with a remaining term
of not more than 60 months; provided, that Contracts having an
--------
aggregate Outstanding Balance of not greater than 5% of the aggregate
Outstanding Balance of all Eligible Receivables may have a remaining
term of up to 72 months;
and
(b) which consist of substantially equal monthly payments;
provided, that Receivables having substantially equal quarterly
--------
payments shall in aggregate not be greater than 10% of the aggregate
Outstanding Balance of all Eligible Receivables;
(v) which arose pursuant to a Contract which is "chattel
paper" within the meaning of Section 9-105 of the UCC of the applicable
jurisdictions governing the perfection of the interest created in the
Receivables;
(vi) which is denominated and payable in United States dollars
in the United States;
(vii) which arises under a Contract (a) which has not been
amended, modified, or altered in any material respect (except in
writing and copies of any such writing is attached to the Contract) and
(b) which has been duly authorized and which, together with such
Receivable, is in full force and effect and constitutes the legal,
valid and
I-5
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 (except as
limited by applicable bankruptcy law), (c) in respect of which, prior
to the date it is transferred hereunder, the Equipment has been
delivered and accepted, (d) which pursuant to its terms may not be
canceled, terminated or prepaid by the Obligor before the end of its
stated term (other than Contracts which contain early termination or
prepayment clauses which require the Obligor to pay the remainder of
all scheduled payments under such Contract upon cancellation or
prepayment, and, in the case of Contracts related to Governmental
Obligors, by reason of nonrenewal of appropriations), (e) which, if
related to a Governmental Obligor, has not been canceled before the end
of its stated term by reason of nonrenewal of appropriations, and (f)
which is not a consumer lease;
(viii) 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, consumer protection, truth in lending,
consumer leasing, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and
with respect to which none of the Transferor, the Originator or the
related Obligor is in violation of any such law, rule or regulation in
any material respect;
(ix) with regard to which there exists only one executed
original Contract, which is in the possession of Transferor on the
Transfer Date of such Receivable;
(x) which was selected for transfer by a procedure not
designed to adversely affect the credit quality of the Receivables;
(xi) which represents payments due to the Originator and does
not represent any payments payable for the account of any Person other
than the Originator under the Contract relating to such Receivable or
any sales or use tax payable under such Contract;
(xii) which was originated by the Originator in accordance
with, and otherwise satisfies all applicable requirements of, the
Credit and Collection Policy;
(xiii) which, after giving effect to the acquisition thereof,
would not result in the aggregate Outstanding Balance of Related
Contracts of any single Obligor exceeding 1.5% of the aggregate
Outstanding Balance of all Related Contracts;
(xiv) as to which, at or prior to the time of the Transfer,
the Administrative Agent has not notified the Transferor that such
Receivable (or class of Receivables) is not acceptable for transfer to
Twin Towers hereunder;
(xv) the transfer or assignment of which does not require the
Obligor's consent, and which does not contravene any applicable law,
rule or regulation;
(xvi) with respect to which (a) the related Obligor has not
been released, (b) the Related Contract has not been satisfied,
canceled, subordinated or rescinded, and (c) no Equipment subject to
the Related Contract has been released from the Related Contract;
I-6
(xvii) which Equipment subject to the related Contract has not
been released and such Contract requires the related Obligor to
maintain insurance on such Equipment in an amount sufficient to fully
insure such Equipment;
(xviii) which, after giving effect to the acquisition thereof,
would not result in the aggregate Outstanding Balance of Related
Contracts of Obligors located in any single state exceeding 10% (except
in the case of Texas, which may not exceed 21%, and California, Georgia
and Pennsylvania, which may not individually exceed 15%) of the
aggregate Outstanding Balance of all Related Contracts;
(xix) which has an implied interest rate of at least 7.00% per
annum;
(xx) which, after giving effect to the acquisition thereof,
would not result in (a) the aggregate Outstanding Balance of Related
Contracts secured by analog photocopiers exceeding 35% of the aggregate
Outstanding Balance of all Related Contracts, or (b) the aggregate
Outstanding Balance of Related Contracts secured by Equipment other
than photocopiers or facsimile machines exceeding 10% of the aggregate
Outstanding Balance of all Related Contracts;
(xxi) which has not been previously financed through another
warehouse facility; and
(xxii) which, after giving effect to the acquisition thereof,
would not result in the remaining weighted average life of all Related
Contracts (weighted based on Outstanding Balance) exceeding 2.5 years.
"Equipment" with respect to any Receivable means office, business or
---------
other equipment leased or sold to an Obligor by the Originator pursuant to a
Contract (including any modifications or substitutions of equipment pursuant to
the original Contract giving rise to such Receivable).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Tranche
---------------
funded or maintained by any Transferee (or any liquidity or credit support
provider of Twin Towers), the Liquidity Margin plus a rate per annum equal to
the sum (rounded upwards, if necessary, to the next higher 1/100 of 1%) of (i)
the rate obtained by dividing (A) the applicable LIBOR Rate by (B) a percentage
equal to 100% minus the reserve percentage used for determining the maximum
-----
reserve requirement as specified in Regulation D (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) that is
applicable to the Administrative Agent during the related Settlement Period in
respect of eurocurrency or eurodollar funding, lending or liabilities (or, if
more than one percentage shall be so applicable, the daily average of such
percentage for those days in such Settlement Period during which any such
percentage shall be applicable) plus (ii) the then daily net annual assessment
----
rate (rounded upwards, if necessary,
I-7
to the nearest 1/100 of 1%) as estimated by the Administrative Agent for
determining the current annual assessment payable by the Administrative Agent to
the Federal Deposit Insurance Corporation in respect of eurocurrency or
eurodollar funding, lending or liabilities.
"Facility Termination Date" means the earlier of (a) the Scheduled
-------------------------
Termination Date and (b) the Termination Date.
"Fee Letter" has the meaning set forth in Section 1.04.
----------
"Governmental Obligor" means an Obligor that is the federal government,
--------------------
the government of any state or governmental subdivision or any agency of the
federal government or the government of any state.
"Hedge Agreement" means each agreement between the Transferor and a
---------------
Hedge Counterparty which governs one or more Hedge Transactions entered into
pursuant to Section 1.12, which agreement shall consist of a "Master Agreement"
in a form published by the International Swaps and Derivatives Association,
Inc., together with a "Schedule" thereto substantially in the form of Annex E or
-------
such other form as the Administrative Agent shall approve in writing, and each
"Confirmation" thereunder confirming the specific terms of each such Hedge
Transaction.
"Hedge Breakage Costs" means all amounts payable under a Hedge
--------------------
Agreement as a result of the early termination of a Hedge Transaction or portion
thereof.
"Hedge Collateral" means all right, title and interest of the
----------------
Transferor in each Hedge Agreement, each Hedge Transaction, and all present and
future amounts payable by a Hedge Counterparty to the Transferor under or in
connection with the respective Hedge Agreement and Hedge Transaction(s) with
such Hedge Counterparty.
"Hedge Counterparty" means a Person reasonably acceptable to the
------------------
Administrative Agent and having long term unsecured debt obligations rated at
least AA- by S&P and Aa3 by Moody's.
"Hedge Rate" means, with respect to any Hedge Agreement and the
----------
Receivables assigned thereto (a) if such Hedge Agreement is a Cap Agreement, the
fixed rate per annum which one-month LIBOR must exceed to result in payments
made thereunder by the Hedge Counterparty to the Transferor, and (b) if such
Hedge Agreement is a Swap Agreement, the fixed rate per annum which is applied
to the notional amount of such Hedge Agreement to calculate the payments to be
made by the Transferor thereunder to the Hedge Counterparty. The Hedge Rate
applicable to any particular Receivable shall be (i) if more than one Hedge
Transaction is then in effect, the Hedge Rate for the Hedge Transaction entered
into concurrently with the Transfer of such Receivable and (ii) if only one
Hedge Transaction is then in effect, the Hedge Rate for such Hedge Transaction.
"Hedge Transaction" means each interest rate swap or cap transaction
-----------------
between the Transferor and a Hedge Counterparty which is entered into pursuant
to Section 1.12 and is governed by a Hedge Agreement.
I-8
"IKON Group" means, collectively, the Transferor, the Originator and
----------
the Parent.
"Indemnified Amounts" has the meaning specified in Section 3.01 of the
-------------------
Agreement.
"Indemnified Party" has the meaning specified in Section 3.01 of the
-----------------
Agreement.
"Investment Grade" means, with respect to any entity's long-term public
----------------
senior debt securities, a rating of at least "BBB-" by S& P and of at least
"Baa3" by Moody's.
"LIBOR Rate" shall mean, with respect to any Eurodollar Tranche funded
----------
or maintained by any Transferee (or any liquidity or credit support provider of
Twin Towers), the rate at which deposits in dollars are offered to the
Administrative Agent, in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days before the first day of the related Settlement
Period in an amount approximately equal to the portion of Capital to which the
Eurodollar Rate is to apply and for a period of time approximately equal to the
applicable Settlement Period.
"Liquidity Agreement" shall mean each liquidity agreement, asset
-------------------
purchase agreement, liquidity asset purchase agreement, or other similar
agreement pursuant to which any bank or group of banks or financial institutions
agrees to purchase or make loans secured by (or otherwise advance funds against)
all or any portion of Twin Towers's interest in the Receivables in order to
support Twin Towers's repayment of the Commercial Paper issued to fund or
maintain such interest.
"Liquidity Margin" shall mean 1.50%.
----------------
"Material Adverse Change" means any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of the Agreement or any
other Transaction Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Transferor, the Collection Agent or
the Originator or any of their successors or assigns (the "Transferor Parties"),
------------------
(c) impairs materially or could reasonably be expected to impair materially the
ability of the Transferor Parties to duly and punctually pay or perform their
respective obligations under the Agreement or any other Transaction Document, or
(d) impairs materially or could reasonably be expected to impair materially the
ability of the Administrative Agent or any Transferee, to the extent permitted,
to enforce their legal remedies pursuant to the Agreement or any other
Transaction Document.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor
-------
thereto.
"Obligor" means a Person obligated to make payments pursuant to a
-------
Contract; provided that in the event that any payments in respect of a Contract
--------
are made by any other Person, such other Person shall be deemed to be an
Obligor.
"Other Corporations" means the Parent, the Originator and all of the
------------------
Parent's Subsidiaries except the Transferor.
"Originator" shall have the meaning assigned to such term in the
----------
preamble.
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"Outstanding Balance" of any Contract or Receivables with respect
-------------------
thereto at any date means the net present value of the total Periodic Payments
due to Transferor over the remaining term of the Contract or that have become
due and payable on or prior to such date but remain unpaid on such date (net of
any security deposits or advance rental payments received by Transferor) and not
yet paid by the Collection Agent pursuant to the provisions of Section 1.03(b),
discounted monthly at the Receivables Discount Rate in effect on the Transfer
Date of such Contract or Receivable, as determined by subtracting all amounts
representing unearned interest from the aggregate amount of such Periodic
Payments.
"Parent" means IKON Office Solutions, Inc., an Ohio corporation.
------
"Periodic Payments" means the aggregate base rental amounts coming due
-----------------
on a periodic basis pursuant to the Contracts giving rise to Receivables,
excluding any maintenance charges or, with respect to Contracts covering
photocopiers, any per copy charges.
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.
"Potential Trigger Event" means an event that but for notice or lapse
-----------------------
of time or both would constitute a Trigger Event.
"Principal Payment Amount" means, as of any Settlement Date, (a) the
------------------------
Aggregate Adjusted Outstanding Balance of all Related Contracts as of the end of
the second preceding calendar month, minus (b) the Aggregate Adjusted
-----
Outstanding Balance of all Related Contracts as of the end of the immediately
preceding calendar month; provided, that for purposes of determining all amounts
--------
in clauses (a) and (b) above, the Outstanding Balance of any Receivable that is
a Defaulted Receivable as of the relevant date of determination shall be deemed
to be zero.
"Pro Rata" means, with respect to any Transferee, pro rata based on
--------
such Transferee's outstanding Capital. So long as Twin Towers is the Active
Transferee, its Pro Rata share of any amount shall be equal to 100% of such
amount.
"Program Fee" is defined in the Fee Letter.
-----------
"Receivable" means the obligations of any Obligor under a Related
----------
Contract, and includes monies received subsequent to the related Transfer Date
with respect to (i) all Periodic Payments and (ii) all obligations of such
Obligor to pay interest or finance charges and other obligations of such Obligor
(other than obligations in respect of taxes or insurance or similar escrow
arrangements of any kind) with respect thereto, and all other payments (other
than in respect of taxes or insurance or similar escrow arrangements of any
kind) received by the Transferor pursuant to such Contract, excluding any
maintenance charges or, with respect to Contracts covering photocopiers, any per
copy charges. A Receivable arising under a Related Contract for which the
Outstanding Balance has been collected shall no longer constitute a "Receivable"
outstanding hereunder.
I-10
"Receivables Discount Rate" means, for each Receivable, a rate per
-------------------------
annum equal to the sum of (i) the Hedge Rate applicable to such Receivable, (ii)
the Collection Agent Fee rate (1.50%) and (iii) the "LIBOR Margin" as set forth
in the Fee letter.
"Related Contract" means a Contract included in the List of Contracts
----------------
delivered to the Administrative Agent on or prior to the date of each Transfer;
provided, that after the Outstanding Balance of such Contract has been
--------
collected, it shall no longer constitute a "Related Contract" hereunder.
"Related Security" means with respect to any Receivable:
----------------
(i) all Equipment related to such Receivable;
(ii) all security interests or liens and property (including
without limitation Equipment) securing or purporting to secure payment
of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements signed
by an Obligor describing any collateral securing such Receivable;
(iii) all guaranties (other than the Support Agreement),
insurance and other agreements supporting or securing payment of such
Receivable (or insuring for loss or liability with respect to the
related Equipment), whether pursuant to the Contract related to such
Receivable or otherwise and all of the Originator's and the
Transferor's rights (if any) to recourse, repurchase or indemnity
against any Person with respect to such Receivable;
(iv) the related Contract and all other books, records and
other information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related
property and rights) relating to such Receivable and the related
Obligor; and
(v) all related Hedge Collateral.
"Required Balance" means, with respect to any Settlement Date, an
----------------
amount equal to (a) the Aggregate Capital on such Settlement Date divided by (b)
(i) one minus (ii) the Applicable Percentage.
"Required Transferees" shall mean the Transferees having Commitments
--------------------
which, in the aggregate, equals at least 66 2/3% of the Aggregate Commitment,
or, if the Commitments have been terminated, having Capital which, in the
aggregate, equals at least equal 66 2/3% of the Aggregate Capital; provided that
--------
the Commitment or Capital of any Alternate Transferee that has not paid all
amounts due and owing by it in respect of Transfers (or portions thereof) that
it was obligated to make, shall not be included in any calculations made
pursuant to this definition.
"S&P" means Standard & Poor's Ratings Services, a division of the
---
XxXxxx-Xxxx Companies, Inc. and any successor thereto.
I-11
"Scheduled Termination Date" shall mean two Business Days prior to the
--------------------------
"Final Date" as defined in the Liquidity Agreement.
"Servicer Advance" means, with respect to any Settlement Date, the
----------------
amounts, if any, made available by the Collection Agent for distribution on such
Settlement Date in accordance with Section 1.03 in respect of delinquent
Periodic Payments pursuant to Section 4.02(g).
"Settlement Date" means the fifteenth day of each calendar month, or,
---------------
if such day is not a Business Day, the next succeeding Business Day.
"Settlement Period" means: (i) initially the period commencing on (and
-----------------
including) the date of the initial transfer or funding of such Receivables and
ending on (and including) the last day of the calendar month in which such
Settlement Period began, and (ii) thereafter, each calendar month, provided,
--------
that
(i) in the case of any Settlement Period which commences
before the Facility Termination Date and would otherwise end on a date
occurring after the Facility Termination Date, such Settlement Period
shall end on such Facility Termination Date and the duration of each
Settlement Period which commences on or after the Facility Termination
Date shall be of such duration as shall be selected by the
Administrative Agent; and
(ii) any Settlement Period in respect of which Yield is
computed by reference to the CP Rate may be terminated at the election
of, and upon notice thereof to the Transferee, by the Administrative
Agent at any time, in which case the Receivables allocated to such
terminated Settlement Period shall be allocated to a new Settlement
Period commencing on (and including) the date of such termination and
ending on (but excluding) the next following Settlement Date, and shall
accrue Yield at the Eurodollar Rate or the Base Rate, in the
Administrative Agent's sole discretion.
"Special Indemnified Amounts" has the meaning specified in Section 5.07
---------------------------
of the Agreement.
"Special Indemnified Party" has the meaning specified in Section 5.07
-------------------------
of the Agreement.
"Subsidiary" means any corporation or other entity of which securities
----------
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by the Transferor, the Originator or the Parent, as the case
may be, or one or more Subsidiaries, or by the Transferor, the Originator or the
Parent, as the case may be, and one or more Subsidiaries.
"Support Agreement" means the operating agreement, dated as of October
-----------------
22, 1996, between the Originator and the Parent, as such agreement may be
amended or supplemented or otherwise modified from time to time.
"Swap Agreement" means a Hedge Agreement other than a Cap Agreement.
--------------
I-12
"Take-Out Securitization" means a securitization transaction the
-----------------------
proceeds of which are used to reduce the Aggregate Capital to zero.
"Termination Date" means the earlier of (a) the date specified pursuant
----------------
to Section 2.02 of the Agreement, and (b) the date on which each Transferee
receives an amount equal to its Capital plus accrued Yield thereon plus all
other amounts due to it under the Agreement and each of the Administrative Agent
and the Hedge Counterparties receives all amounts due to it under the Agreement
and the Hedge Agreements.
"Three-Month Rolling Average" means, with respect to any pool
---------------------------
performance ratio, the sum of the applicable ratio for the most recently ended
calendar month and two immediately preceding calendar months (or such fewer
calendar months as have previously occurred since the Closing Date) divided by
three (or such smaller number).
"Tranche" shall mean with respect to any Transferee, each portion of
-------
such Transferee's Capital being funded or maintained by reference to a
particular interest rate basis.
"Tranche Rate" means, with respect to any Tranche, the rate (which
------------
shall be either the CP Rate, Base Rate, or the Eurodollar Rate as selected at
the sole discretion of the Administrative Agent) at which such Tranche is funded
or maintained by the applicable Transferee; it being understood that at all
times on and after the occurrence and continuation of a Trigger Event, the
Tranche Rate with respect to any Tranche, for any Transferee shall be equal to
the Base Rate applicable to such Transferee, plus 2.00% per annum.
"Transaction Document" means any of the Agreement, the Transfer
--------------------
Agreement and all other agreements and documents delivered and/or related hereto
or thereto.
"Transfer" has the meaning specified in Section 1.01 of the Agreement.
--------
"Transfer Agreement" means the Transfer Agreement dated as of the date
------------------
hereof between the Transferor and the Originator, as such agreement may be
amended from time to time.
"Transfer Date" has the meaning specified in Section 1.02(a) of the
-------------
Agreement.
"Transferee" means Twin Towers and each Alternate Transferee, as
----------
applicable.
"Transferor" shall have the meaning assigned to such term in the
----------
preamble.
"Transferor Report" means a report, in substantially the form of Annex
-----------------
B hereto, furnished by the Collection Agent to the Administrative Agent pursuant
to Section 4.02 of the Agreement.
"Trigger Event" has the meaning specified in Exhibit V.
-------------
"Twin Towers" shall have the meaning assigned to such term in the
-----------
preamble.
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the specified jurisdiction.
I-13
"Unreimbursed Servicer Advance" means, at any time, the amount of all
-----------------------------
previous Servicer Advances (or portions thereof) as to which the Collection
Agent has not been reimbursed as of such time pursuant to Section 1.03(b) and
which the Collection Agent has determined in good faith will not be ultimately
recoverable, and with respect to which the Collection Agent has given written
certification to such effect (which certification may take the form of an entry
on a Transferor Report identifying Unreimbursed Servicer Advances).
"Yield" means, with respect to any Transferee:
-----
(a) for any Tranche for any Settlement Period with respect to
any Transferee to the extent such Tranche will be funded by such
Transferee during such Settlement Period through the issuance of
Commercial Paper:
CPR x C x ED/360
(b) for any Tranche for any Settlement Period with respect to
any Transferee to the extent such Tranche will not be funded by such
Transferee during such Settlement Period through the issuance of
Commercial Paper:
TR x C x ED/Year
where:
TR = the Eurodollar Rate or Base Rate, as applicable, for
such Tranche for such Settlement Period with respect
to such Transferee,
C = the portion of the Capital and any capitalized
interest allocated to such Tranche during such
Settlement Period with respect to such Transferee,
CPR = the CP Rate for the Tranche for such Settlement
Period with respect to such Transferee,
ED = the actual number of days during such Settlement
Period, and
Year = if such Tranche is funded based upon: (i) the
Eurodollar Rate, 360 days, and (ii) the Base Rate,
365 or 366 days, as applicable,
provided, that no provision of the Agreement shall require the payment or permit
--------
the collection of Yield in excess of the maximum permitted by applicable law;
and provided further, that Yield for any Tranche shall not be considered paid by
----------------
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
- - - - - -
Other Terms. 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.
I-14
EXHIBIT II
CONDITIONS OF TRANSFERS
1. Conditions Precedent to the Initial Transfer. The initial Transfer
--------------------------------------------
is subject to the conditions precedent that the Administrative Agent shall have
received on or before the date of such Transfer the following, each (unless
otherwise indicated) dated such date, in form and substance satisfactory to the
Administrative Agent:
(a) Certified copies of the resolutions of the Board of Directors of
the Transferor approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary limited liability
company action and governmental approvals, if any, with respect to the
Transaction Documents and such actions.
(b) Certified copies of the resolutions of the Board of Directors of
the Originator approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the Transaction Documents
and such actions.
(c) A certificate of the Secretary or Assistant Secretary of the
Transferor certifying the names and true signatures of the officers of the
Transferor, authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.
(d) A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers of the
Originator authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.
(e) A copy of the organizational documents of the Transferor, and a
certificate as to the good standing of the Transferor from such Secretary of
State or other official, dated as of a recent date.
(f) Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the Initial Transfer (or such
later date as determined by the Administrative Agent) under the UCC of all
jurisdictions that the Administrative Agent may reasonably deem necessary or
desirable in order to perfect the interests contemplated by the Agreement,
including, without limitation, any financing statements filed against the
Originator and the Transferor as the Administrative Agent may reasonably deem
necessary or desirable to perfect the interest of the Transferees in the
Equipment.
(g) Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the (i) Receivables, Related Contracts or Related
Security previously granted by the Transferor and the Originator and (ii) the
collateral security referred to in Section 1.11.
(h) Completed requests for information, listing all effective financing
statements filed in the jurisdictions referred to in subsection (f) above that
name the Transferor as debtor, together with copies of such other financing
statements (none of which shall cover any
II-1
Receivables, Related Contracts, Related Security or the collateral security
referred to in Section 1.11).
(i) An opinion of Xxxxx, Xxxxx and Xxxxx, addressed to the
Administrative Agent and the Transferees, in form and substance reasonably
acceptable to the Administrative Agent, regarding the "true sale" of the
Receivables and certain related assets between the Originator and the Transferor
and the non substantive consolidation of the Originator and the Transferor in
the event of a bankruptcy of the Originator and such other matters as the
Administrative Agent may reasonably request.
(j) An opinion of Xxxxx, Xxxxx and Xxxxx, addressed to the
Administrative Agent and the Transferees, in form and substance reasonably
acceptable to the Administrative Agent, regarding the creation of a valid
security interest by the Originator in favor of the Transferor and by the
Transferor in favor of the Administrative Agent, on behalf of the Transferees,
and such other matters as the Administrative Agent may reasonably request.
(k) An opinion of Xxxxx, Xxxxx & Xxxxx, addressed to the Administrative
Agent and the Transferees, in form and substance reasonably acceptable to the
Administrative Agent, regarding the perfection of the security interests granted
by the Originator to the Transferor, and by the Transferor to the Administrative
Agent, on behalf of the Transferees, in the Equipment.
(l) An opinion of special counsel to the Originator, addressed to the
Administrative Agent and the Transferees, in form and substance reasonably
acceptable to the Administrative Agent, regarding the validity, perfection and
first priority of the security interest granted by the Originator to the
Transferor, the validity, perfection and first priority of the security interest
granted by the Transferor to the Administrative Agent, on behalf of the
Transferees, and such other matters as the Administrative Agent may reasonably
request.
(m) An opinion of the general counsel to the Transferor and the
Originator, addressed to the Administrative Agent and the Transferees, in form
and substance reasonably acceptable to the Administrative Agent, regarding the
enforceability of the Transaction Documents to which each is a party.
(n) An opinion of the general counsel of the Originator and the
Transferor, addressed to the Administrative Agent and the Transferees, in form
and substance reasonably acceptable to the Administrative Agent, regarding
certain corporate matters.
(o) The Fee Letter duly executed by all parties thereto, and payment of
all fees required to be paid on the Closing Date, and reimbursement of the
Administrative Agent and the Transferees for all costs and expenses of the
closing of the transaction (including reasonable legal fees and costs).
(p) The Transfer Agreement, duly executed by all parties thereto.
(q) Satisfactory results of a review and audit by the Administrative
Agent of the Originator's collection, operating and reporting systems, Credit
and Collection Policy, historical receivables data and accounts.
II-2
(r) The following financial information of the Transferor and the
Collection Agent and their respective Subsidiaries: (i) audited financial
statements prepared in accordance with GAAP on a consolidated and consolidating
basis (consolidating statements need not be audited by such accountants) for the
period October 1, 1999 through September 30, 2000 and (ii) consolidated and
consolidating unaudited financial statements for the fiscal quarter ended
December 31, 2000.
(s) A letter from each Rating Agency rating Twin Towers's Commercial
Paper confirming its rating of Twin Towers's Commercial Paper or that such
rating will not be withdrawn or downgraded after giving effect to the Agreement
and the transactions contemplated hereby.
(t) A officer's certificate of each of the Originator and the
Transferor certifying that the representations and warranties of the Originator
set forth in the Transfer Agreement and of the Transferor set forth herein
hereof are true and correct in all material respects as of the Closing Date.
(u) A Pro Forma Transferor Report.
Payment of the Consideration for the initial Transfer hereunder shall
constitute acknowledgment by the Administrative Agent that all of the conditions
set forth have been fulfilled or waived.
2. Additional Conditions Precedent. Each Transfer shall be subject to
-------------------------------
the further conditions precedent that:
(a) on or prior to the date of such Transfer, the Collection Agent
shall have delivered to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, a completed Transferor Report dated
within 30 days prior to the date of such Transfer together with a listing by
Obligor of all Receivables and such additional information as may reasonably be
requested by the Administrative Agent;
(b) on the date of such Transfer the following statements shall be true
(and acceptance of the proceeds of such Transfer shall be deemed a
representation and warranty by the Transferor that such statements are then
true):
(i) The representations and warranties of the Transferor
contained in Exhibit III are correct on and as of the date of such
Transfer as though made on and as of such date;
(ii) The representations and warranties of the Originator
contained in the Transaction Documents are correct on and as of the
date of such Transfer as though made on and as of such date;
(iii) No event has occurred and is continuing, or would result
from such Transfer, that constitutes a Trigger Event or Potential
Trigger Event;
(iv) The Facility Termination Date shall not have occurred;
II-3
(v) The Aggregate Capital does not exceed the Aggregate
Commitment;
(vi) The Outstanding Balance of all Eligible Receivables is
not less than the Required Balance.
(vii) After giving effect to such Transfer, the Transferor
will be in compliance with the hedging requirements set forth in
Section 1.12.
(c) the Administrative Agent shall have received such other approvals,
opinions or documents as it may reasonably request; and
(d) the Administrative Agent shall have received the list of the
Related Contracts to be included in such Transfer that is required to be
delivered pursuant to paragraph (j) of Exhibit IV hereof.
II-4
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Transferor represents and warrants as follows:
(a) The Transferor is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware, and is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Transferor of the
Transaction Documents (i) are within the Transferor's limited liability company
powers, (ii) have been duly authorized by all necessary limited liability
company action, (iii) do not contravene (1) the Transferor's organizational
documents, (2) any law, rule or regulation applicable to the Transferor, (3) any
contractual restriction binding on or affecting the Transferor or its property
or (4) any order, writ, judgment, award, injunction or decree binding on or
affecting the Transferor or its property, and (iv) do not result in or require
the creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties (other than those created pursuant to
the Transaction Documents); and no transaction contemplated by the Agreement
requires compliance with any bulk sales act or similar law. Each of the
Transaction Documents has been duly executed and delivered by the Transferor.
(c) 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 the Transaction
Documents, except for the filing of the UCC financing statements which are
referred to therein.
(d) Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Transferor enforceable against the Transferor in
accordance with its terms.
(e) The balance sheets of the Originator and its Subsidiaries as at
October 1, 1999 and September 30, 2000 and the related statements of income and
retained earnings of the Originator and its Subsidiaries for the fiscal year
then ended, copies of which have been furnished to the Administrative Agent,
fairly present the financial condition of the Originator and its Subsidiaries as
at such date and the results of the operations of Originator and its
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since September 30,
2000 there has been no material adverse change in the business, operations,
property or financial or other condition of the Originator. Since the date of
its formation, there has not been a material adverse change in the business,
operations, property or financial or other condition of the Transferor.
(f) There is no pending or threatened action or proceeding affecting
the Originator or any of its Subsidiaries before any court, governmental agency
or arbitrator which would materially adversely affect the financial condition or
operations of the Originator or any of its Subsidiaries or the ability of the
Transferor or the Originator to perform their respective obligations under the
Transaction Documents, or which purports to affect the legality, validity or
III-1
enforceability of the Transaction Documents; neither the Originator nor any
Subsidiary is in default with respect to any order of any court, arbitration or
governmental body.
(g) No proceeds of any Transfer will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
(h) Each Receivable transferred by the Transferor hereunder is an
Eligible Receivable on the date of the related Transfer, and the Transferor has
the right to transfer such Receivable and all Related Security together with the
Contract related thereto, free and clear of any Adverse Claim, other than the
effect of the Agreement and the transactions contemplated hereby. Upon each
Transfer, the Administrative Agent (for the benefit of the Transferees) will
acquire a valid and perfected first priority interest in each Receivable and in
the Related Security (except to the extent noted above) and Collections with
respect thereto. No effective financing statement or other instrument similar in
effect covering any Related Contract or any Receivable or the Related Security
or Collections with respect thereto is on file in any recording office except
for those filed in favor of the Administrative Agent relating to the Agreement
and those filed by the Transferor pursuant to the Transfer Agreement.
(i) Each Transferor Report (if prepared by the Originator or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Transferor, the Originator or any Affiliate thereof), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of the Transferor or the Originator to the
Administrative Agent or any Transferee in connection with the Agreement is or
will be accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrative Agent or the Transferees, as the case may be, at
such time) as of the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
(j) The principal place of business and chief executive office of the
Transferor and the office where the Transferor keeps its records concerning the
Receivables are located at the respective addresses identified on Exhibit VI.
(k) The Outstanding Balance with respect to each Receivable, as of the
date of Transfer of such Receivable, is correctly set forth on Schedule II (as
supplemented pursuant to Section 1.02(a)).
(l) Schedule II (as supplemented pursuant to Section 1.02(a)) sets
forth accurately and completely in all material respects, as of the date of
Transfer of each Receivable, the information with respect to each such
Receivable transferred on such date.
(m) Each Contract giving rise to a Receivable provides for Periodic
Payments that will fully amortize such Receivable over the term of the Contract
related thereto and the Transferor has not extended the maturity or adjusted the
Outstanding Balance of any Receivable, or amended, modified or waived the terms
of any Receivable or any Contract relating to any Receivable such that the
interests of the Administrative Agent or the Transferees would be materially and
adversely affected thereby.
III-2
(n) The Transferor is not known by and does not use any tradename or
doing-business-as name.
(o) The Transferor was formed on February 16, 2001. The Transferor has
no Subsidiaries.
(p) (i) The fair value of the property of the Transferor is greater
than the total amount of liabilities, including contingent liabilities, of the
Transferor, (ii) the present fair salable value of the assets of the Transferor
is not less than the amount that will be required to pay all probable
liabilities of the Transferor on its debts as they become absolute and matured,
(iii) the Transferor does not intend to, and does not believe that it will,
incur debts or liabilities beyond the Transferor's abilities to pay such debts
and liabilities as they mature and (iv) the Transferor is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which the Transferor's property would constitute unreasonably
small capital.
(q) With respect to each Receivable, the Transferor shall have received
such Receivable from the Originator in exchange for payment (made by the
Transferor to the Originator in accordance with the provisions of the Transfer
Agreement) of cash in an amount which constitutes fair consideration and
reasonably equivalent value. Each such transfer referred to in the preceding
sentence shall not have been made for or on account of an antecedent debt owed
by the Originator to the Transferor and no such transfer is or may be voidable
or subject to avoidance under any section of the Federal Bankruptcy Code.
(r) With respect to each Receivable transferred hereunder, such
Receivable is representative of all of the Receivables owned by the Transferor.
(s) Schedule III sets forth accurately and completely in all material
respects, as of the Closing Date, the identity of all lock-box banks to which
the Obligors have been instructed to make payments in respect of the Receivables
and the account numbers of all accounts into which Collections will be
deposited.
III-3
EXHIBIT IV
COVENANTS
Until the Termination Date, unless the Administrative Agent shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. The Transferor will comply in all
-------------------------
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its limited liability company existence, rights,
franchises, qualifications and privileges except to the extent that the failure
so to comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications and privileges
would not materially adversely affect the collectibility of the Receivables or
the ability of the Transferor to perform its obligations under the Transaction
Documents.
(b) Offices, Records and Books of Account. The Transferor will keep its
-------------------------------------
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables (and all original documents
relating thereto) at the respective addresses set forth on Exhibit VI of the
Agreement or, upon 30 days' prior written notice to the Administrative Agent, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrative Agent to protect and perfect the interest in the Receivables
have been taken and completed. The Transferor also will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables and Related Contracts 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 Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable).
(c) Performance and Compliance with Related Contracts and Credit and
----------------------------------------------------------------
Collection Policy. The Transferor will, at its expense, timely and fully perform
-----------------
and comply with all material provisions, covenants and other promises required
to be observed by it under the Related Contracts, and timely and fully comply in
all material respects with the Credit and Collection Policy in regard to each
Receivable and the Related Contract.
(d) Sales, Liens, Etc. The Transferor will not sell, assign (by
-----------------
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or with respect to, its interest in any Receivable
transferred to the Administrative Agent or the Transferees under the Agreement
or any Related Security, Related Contract or Collections, or assign any right to
receive income in respect thereof.
(e) Extension or Amendment of the Receivables. The Transferor will not,
-----------------------------------------
and will not permit the Collection Agent to, extend the maturity or adjust the
Outstanding Balance of any Receivable or otherwise modify the terms of any
Receivable, or amend, modify or waive any term or condition of any Related
Contract such that the interests of the Administrative Agent or the Transferees
would be materially and adversely affected thereby.
IV-1
(f) Change in Business or Credit and Collection Policy. (i) The
--------------------------------------------------
Transferor will not make any change in the character of its business, and (ii)
the Transferor will not make, and will not permit the Originator to make, any
change in the Credit and Collection Policy that would, in either case,
materially adversely affect the collectibility of the Receivables or the ability
of the Transferor or the Originator to perform their respective obligations
under the Transaction Documents.
(g) Change in Payment Instructions to Obligors; List of Lock-Box Banks
------------------------------------------------------------------
and Related Accounts. The Transferor will not make any change in its
--------------------
instructions to Obligors of Related Contracts regarding payments to be made to
the Transferor unless the Administrative Agent shall have received notice of and
agreed to such addition, termination or change. On or prior to the Closing Date,
the Transferor will provide the Administrative Agent a list of all lock-box
banks to which the Obligors have been instructed to make payments and the
account numbers of all accounts into which Collections are deposited, and will
promptly notify the Administrative Agent of any change in the foregoing.
(h) Further Action Evidencing the Transfer. The Transferor will from
--------------------------------------
time to time, execute and deliver all further instruments and documents and take
all further action that the Administrative Agent may reasonably request in order
to perfect, protect or more fully evidence the interest in the Receivables, the
Related Contracts, and the Related Security and Collections with respect thereto
transferred to the Administrative Agent (for the benefit of the Transferees)
under the Agreement or to enable the Administrative Agent or any Transferee to
exercise or enforce any of its rights under the Transaction Documents. Without
limiting the generality of the foregoing, the Transferor will, or will cause the
Collection Agent to, (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 and (ii) upon the
occurrence of a Trigger Event or Potential Trigger Event, (x) xxxx conspicuously
each Related Contract with a legend, acceptable to the Administrative Agent,
evidencing that an interest in the Receivable has been transferred to the
Administrative Agent (for the benefit of the Transferees) under the Agreement;
and (y) code the Collection Agent's master data processing records evidencing
Receivables and Related Contracts to the foregoing effect. The Transferor hereby
authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Receivables and the Related Security without the
signature of the Transferor where permitted by law. A photocopy or other
reproduction of the Agreement shall be sufficient as a financing statement where
permitted by law. If the Transferor fails after notice to perform any of its
agreements or obligations under the Transaction Documents, the Administrative
Agent may (but shall not be required to) itself perform, or cause performance
of, such agreement or obligation, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable as provided in the Agreement.
(i) Assembly of Documents. The Transferor will, or will cause the
---------------------
Collection Agent to, at the Administrative Agent's request following the
occurrence of a Trigger Event or Potential Trigger Event, (A) assemble all
documents, instruments and other records (including, without limitation,
computer tapes and disks) which evidence or relate to the Receivables, and the
Related Contracts and Related Security, or which are otherwise necessary or
desirable to collect the Receivables, and make the same available to the
Administrative Agent at a place
IV-2
selected by the Administrative Agent or its designee, and (B) segregate all
cash, checks and other instruments received by it or the Collection Agent from
time to time constituting Collections of Receivables in a manner acceptable to
the Administrative Agent and shall, promptly upon receipt, remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrative Agent or its designee.
(j) Delivery of List of Related Contracts. The Transferor will on or
-------------------------------------
prior to the date of each Transfer, deliver to the Administrative Agent a
complete and accurate list of each Related Contract, together with the contract
number, the name of the Obligor and the Outstanding Balance thereof.
(k) Reporting Requirements. The Transferor will provide to the
----------------------
Administrative Agent (in multiple copies, if requested by the Administrative
Agent) the following:
(i) as soon as available and in any event within 60 days
after the end of the first three quarters of each fiscal year of the
Originator, balance sheets of the Originator and its Subsidiaries as of
the end of such quarter and statements of income and retained earnings
of the Originator and its Subsidiaries for the period commencing at the
end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the Originator;
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Originator, a copy of the
annual report for such year for the Parent and the Annual Report on
Form 10-K for the Originator and its Subsidiaries, containing financial
statements for such year audited by Price Waterhousecoopers LLP, or
other independent public accountants acceptable to the Administrative
Agent;
(iii) as soon as possible and in any event within five days
after the occurrence of each Trigger Event or Potential Trigger Event,
a statement of the chief financial officer of the Transferor setting
forth details of such Trigger Event or Potential Trigger Event and the
action that the Transferor has taken and proposes to take with respect
thereto;
(iv) promptly after the sending or filing thereof, copies of
all reports that the Originator sends to any of its securityholders,
and copies of all reports and registration statements that the
Originator or any Subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly after the filing or receiving thereof, copies
of all reports and notices that the Originator or any Affiliate of
either thereof files under ERISA with the Internal Revenue Service or
the Pension Benefit Guaranty Corporation or the U.S. Department of
Labor or that the Originator or any Affiliate of either thereof
receives from any of the foregoing or from any multiemployer plan
(within the meaning of Section 4001(a)(3) of ERISA) to which the
Originator or any Affiliate of either thereof is or was, within the
preceding five years, a contributing employer, in each case in respect
of the assessment of withdrawal liability or an event or condition
which could, in the aggregate, result in the imposition of liability on
the Originator and/or any such Affiliate in excess of $5,000,000;
IV-3
(vi) at least ten Business Days prior to any change in the
Transferor's or Originator's name, a notice setting forth the new name
and the effective date thereof;
(vii) 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, the
Originator or any of its subsidiaries as the Administrative Agent may
from time to time reasonably request;
(viii) promptly after the Transferor obtains knowledge
thereof, notice of any (a) litigation, investigation or proceeding
which may exist at any time between the Transferor or the Originator
and any governmental authority which, in either case, if not cured or
if adversely determined, as the case may be, would have a material
adverse effect on the business, operations, property or financial or
other condition of the Transferor or the Originator; (b) litigation or
proceeding adversely affecting the Transferor's ability to perform its
obligations under the Transaction Documents or the Originator's ability
to perform their obligations under the Transaction Documents or (c)
litigation or proceeding adversely affecting the Transferor or the
Originator in which in the case of the Originator, the amount involved
is $10,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(ix) promptly after the occurrence thereof, notice of a
material adverse change in the business, operations, property or
financial or other condition of the Transferor or the Originator;
(x) promptly after the Transferor obtains knowledge
thereof, notice of any "Event of Termination", "Incipient Event of
Termination" or "Facility Termination Date" under the Transfer
Agreement;
(xi) so long as any Capital shall be outstanding, as soon as
possible and in any event no later than the day of occurrence thereof,
notice that the Originator has stopped selling or contributing to the
Transferor, pursuant to the Transfer Agreement, newly arising
Receivables;
(xii) at the time of the delivery of the financial statements
provided for in clauses (i) and (ii) of this paragraph, a certificate
of the chief financial officer or the treasurer of the Transferor to
the effect that, to the best of such officer's knowledge, no Trigger
Event or Potential Trigger Event has occurred and is continuing or, if
any such Trigger Event or Potential Trigger Event has occurred and is
continuing, specifying the nature and extent thereof; and
(xiii) promptly after receipt thereof, copies of all notices
received by the Transferor from the Originator under the Transfer
Agreement.
(l) Separateness. (i) The Transferor shall at all times be managed by
------------
an entity which has at least one independent director, who (x) is not currently
and has not been during the five years preceding the date of the Agreement an
officer, director or employee of an Affiliate of the Originator or any Other
Corporation, (y) is not a current or former officer or employee of the
IV-4
Originator and (z) is not a stockholder of any Other Corporation or any of their
respective Affiliates.
(ii) The Transferor shall not direct or participate in the
management of any other entity's operations.
(iii) The Transferor shall conduct its business from an
office separate from that of any other entity (but which may be located
in the same facility as one or more of the Other Corporations).
(iv) The Transferor shall at all times be adequately
capitalized in light of its contemplated business.
(v) The Transferor shall at all times provide for its own
operating expenses and liabilities from its own funds.
(vi) The Transferor shall maintain its assets and
transactions separately from those of any other entity and reflect such
assets and transactions in financial statements separate and distinct
from those of any other entity and evidence such assets and
transactions by appropriate entries in books and records separate and
distinct from those of any other entity. The Transferor shall hold
itself out to the public under the Transferor's own name as a legal
entity separate and distinct from all other entities. The Transferor
shall not hold itself out as having agreed to pay, or as being liable,
primarily or secondarily, for, any obligations of any other entity.
(vii) The Transferor shall not become liable as a guarantor
or otherwise with respect to any Debt or contractual obligation of any
other entity.
(viii) The Transferor shall not make any payment or
distribution of assets with respect to any obligation of any other
entity or grant an Adverse Claim on any of its assets to secure any
obligation of any other entity.
(ix) The Transferor shall not make loans, advances or
otherwise extend credit to any other entity.
(x) Each of the Transferor's sole member and manager shall
hold regular duly noticed meetings of its respective Board of Directors
and make and retain minutes of such meetings.
(xi) The Transferor shall have bills of sale (or similar
instruments of assignment) and, if appropriate, UCC-1 financing
statements, with respect to all assets purchased from any other entity.
(xii) The Transferor shall not engage in any transaction with
any of the Other Corporations, except as permitted by its
organizational documents.
(m) Transfer Agreement. The Transferor will not amend, waive or modify
------------------
any provision of the Transfer Agreement or waive the occurrence of any "Event of
Termination"
IV-5
under the Transfer Agreement, without in each case the prior written consent of
the Administrative Agent. The Transferor will perform all of its obligations
under the Transfer Agreement in all material respects and will enforce the
Transfer Agreement in accordance with its terms in all material respects.
(n) Nature of Business. The Transferor will not engage in any business
------------------
other than the purchase of Receivables, Related Security and Collections from
the Originator and the transactions contemplated by the Agreement. The
Transferor will not create or form any Subsidiary.
(o) Mergers, Etc. The Transferor will not merge with or into or
------------
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by the Agreement and the Transfer
Agreement.
(p) Distributions, Etc. The Transferor will not declare or make any
------------------
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interest in the
Transferor, or return any capital to its members as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any payment in respect of
any membership interest in the Transferor or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding; provided, however, that
the Transferor may declare and pay cash distributions on its membership
interests to its members so long as (i) no Trigger Event or Potential Trigger
Event shall then exist or would occur as a result thereof, (ii) such
distributions are in compliance with all applicable law including the law of the
state of Delaware, and (iii) such distribution have been approved by all
necessary and appropriate action of the Transferor.
(q) Debt. The Transferor will not incur any Debt, other than any Debt
----
incurred pursuant to the Agreement and the Transfer Agreement.
(r) Limited Liability Company Agreement. The Transferor will not amend
-----------------------------------
or delete Section 5.1 or 5.5 of its Limited Liability Company Agreement.
(s) Covenant of the Transferor and the Originator. Until the latest of
---------------------------------------------
the Facility Termination Date, the date on which no Capital of or Yield on any
Receivable shall be outstanding or the date all other amounts owed by the
Transferor hereunder to the Transferees or the Administrative Agent are paid in
full, each of the Transferor and the Originator will, at their respective
expense, from time to time during regular business hours as requested by the
Administrative Agent, permit the Administrative Agent or its agents or
representatives (including independent public accountants, which may be the
Transferor's or the Originator's independent public accountants), (i) to conduct
periodic audits of the Receivables, the Related Security and the related books
and records and collections systems of the Transferor or the Originator, as the
case may be, (ii) 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 the control of the Transferor or the Originator, as
the case may be, relating to Receivables and the Related Security, including,
without limitation, the Contracts, and (iii) to visit the offices and
IV-6
properties of the Transferor or the Originator, as the case may be, for the
purpose of examining such materials described in clause (ii) above, and to
discuss matters relating to the Receivables and the Related Security or the
Transferor's or the Originator's performance under the Transaction Documents or
under the Contracts with any of the officers or employees of the Transferor or
the Originator, as the case may be, having knowledge of such matters. In
addition, upon the Administrative Agent's request at least once per year, the
Transferor will, at its expense, appoint independent public accountants (which
may, with the consent of the Administrative Agent, be the Transferor's regular
independent public accountants), or utilize the Administrative Agent's
representatives or auditors, to prepare and deliver to the Administrative Agent
a written report with respect to the Receivables and the Credit and Collection
Policy (including, in each case, the systems, procedures and records relating
thereto) on a scope and in a form reasonably requested by the Administrative
Agent.
(t) Collections. At all times following the occurrence of a Trigger
-----------
Event or a Potential Trigger Event and the designation by the Administrative
Agent of any Designated Account, the Transferor will deposit, or cause to be
deposited, all Collections to such Designated Account.
(u) Deposits to Designated Accounts. The Transferor and the Collection
-------------------------------
Agent will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Designated Account cash or cash proceeds other
than Collections of Receivables.
IV-7
EXHIBIT V
TRIGGER EVENTS
Each of the following, unless waived in writing by the Administrative
Agent (other than as set forth in clauses (h) or (n), neither of which can be
waived), shall be a "Trigger Event":
-------------
(a) The Collection Agent (if the Originator or any of its Affiliates)
(i) shall fail to perform or observe any term, covenant or agreement under the
Agreement (other than as referred to in clause (ii) of this paragraph (a)) and
such failure shall remain unremedied for three Business Days after receipt of
notice or actual knowledge thereof or (ii) shall fail to make when due any
payment or deposit to be made by it under the Agreement; or
(b) The Transferor or the Originator shall fail (i) to transfer to the
Administrative Agent when requested any rights pursuant to the Agreement which
the Transferor or the Originator then has as Collection Agent or otherwise or
(ii) to make any payment required under Section 1.03 or 3.03 of the Agreement;
or
(c) Any representation or warranty made by the Transferor or the
Originator (or any of their respective officers) under the Transaction
Documents, or any information or report delivered by the Transferor or the
Originator pursuant to the Transaction Documents shall prove to have been
incorrect or untrue in any material respect when made or delivered; or
(d) The Transferor shall fail to perform or observe any other term,
covenant or agreement contained in the Transaction Documents on its part to be
performed or observed and any such failure shall remain unremedied for ten days
after written notice thereof shall have been given to the Transferor by the
Administrative Agent; or
(e) The Originator shall fail to perform or observe any term, covenant
or agreement contained in the Transaction Documents on its part to be performed
or observed and any such failure shall remain unremedied for ten days after
written notice thereof shall have been given to the Originator by the
Administrative Agent (or, with respect to a failure to deliver the Transferor
Report pursuant to Section 4.02 of the Agreement such failure shall remain
unremedied for three days, without a requirement for notice); or
(f) Any member of the IKON Group or any Subsidiary thereof shall fail
to pay any principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least $10,000,000 in the aggregate when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to repay, redeem, purchase
V-1
or defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or
(g) Any Transfer shall for any reason cease to create, or the interest
of the Administrative Agent (for the benefit of the Transferees) in any
Receivable shall for any reason cease to be, a valid and perfected first
priority interest in each Receivable and the Related Security and Collections
with respect thereto; or the security interest created pursuant to Section 1.11
shall for any reason cease to be a valid first priority security interest in the
collateral security referred to in such Section; or
(h) Any member of the IKON Group or any Subsidiary thereof shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
any such member or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
any member of the IKON Group or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this paragraph (h); or
(i) As of the last day of any calendar month: (i) the Three-Month
Rolling Average Delinquency Ratio exceeds 10.00% or (ii) the Three-Month Rolling
Average Default Ratio exceeds 12.00%; or
(j) There shall have occurred any material adverse change in the
business, operations, property or financial or other condition of the Originator
since September 30, 2000, or the Transferor since the date of its formation; or
there shall have occurred any event which may materially adversely affect the
collectibility of the Receivables, the ability of the Collection Agent or the
Transferor to collect the Receivables or the ability of the Originator or the
Transferor to perform its respective obligations under the Transaction
Documents; or
(k) Any rating of the long-term debt obligations of the Originator are
withdrawn or reduced below Investment Grade; or
(l) An "Event of Termination" or "Facility Termination Date" shall
occur under the Transfer Agreement, or the Transfer Agreement shall cease to be
in full force and effect; or
(m) All of the members' interests of the Transferor shall cease to be
owned, directly or indirectly, by the Originator; or
(m) On any Settlement Date, (a) the aggregate Outstanding Balance of
all Eligible Receivables is less than (b) the Required Balance.
V-2
(n) The Transferor shall fail to comply with the covenant contained in
clause (k)(x) of Exhibit IV.
----------
(o) The Transferor shall have failed to effect a Take-Out
Securitization at least once in each consecutive 18-month period following the
initial Transfer.
V-3
EXHIBIT VI
The principal place of business and chief executive offices of the
Transferor are located at:
IKON FUNDING-3, LLC
0000 Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
The original records concerning the Receivables (and all original
documents related thereto) are located at the offices of the Collection Agent
at:
IOS CAPITAL, INC.
0000 Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
VI-1
ANNEX A
Form of Contract
ANNEX B
Form of Transferor Report
ANNEX C
FORM TRANSFER NOTICE
--------------, -----
DEUTSCHE BANK AG, NEW YORK BRANCH
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxx
Ladies and Gentlemen:
Reference is hereby made to the Receivables Transfer Agreement, dated
as of March 28, 2001 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-3, LLC, as Transferor, IOS
------------------------------
Capital, Inc., as Originator and Collection Agent, Twin Towers Inc., as Conduit
Transferee, the Alternate Transferees from time to time party thereto and
Deutsche Bank AG, New York Branch, as Administrative Agent. Capitalized terms
used in this Transfer Notice and not otherwise defined herein shall have the
meanings assigned thereto in the Receivables Transfer Agreement.
This letter constitutes a Transfer Notice pursuant to Section 1.02(a)
---------------
of the Receivables Transfer Agreement. The Transferor desires to effect a
Transfer on ____________, _____ for Consideration of $___________./1/ The
aggregate Outstanding Balance of the Receivables to be transferred in connection
herewith is $____________, as shown on the attached addendum to Schedule II to
the Receivables Transfer Agreement.
The Transferor hereby represents and warrants as of the date hereof,
and as of the date of Transfer, as follows:
(i) The representations and warranties of the Transferor
contained in Exhibit III are correct on and as of the date of the
Transfer as though made on and as of such date;
(ii) The representations and warranties of the Originator
contained in the Transaction Documents are correct on and as of the
date of the Transfer as though made on and as of such date;
(iii) No event has occurred and is continuing, or would result
from the Transfer, that constitutes a Trigger Event or Potential
Trigger Event;
(iv) The Facility Termination Date shall not have occurred;
--------------------------
/1/ Minimum amount of $10,000,000 and increments of $100,000 in excess thereof.
(v) The Aggregate Capital does not exceed the Aggregate
Commitment;
(vi) The outstanding Outstanding Balance of all Eligible
Receivables is not less than the Required Balance; and
(vii) After giving effect to such Transfer, it will be in
compliance with the hedging requirements set forth in Section 1.12.
Attached hereto is a true and correct schedule setting forth detailed
information regarding the Receivables to be included in the proposed Transfer,
including an addendum to Schedule II to the Receivables Transfer Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to
be executed by its duly authorized officer as of the date first above written.
IKON FUNDING-3, LLC
By:____________________________________
Name:
Title:
ANNEX D
FORM OF PAYDOWN NOTICE
--------------, -----
DEUTSCHE BANK, AG, NEW YORK BRANCH
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxx
Ladies and Gentlemen:
Reference is hereby made to the Receivables Transfer Agreement, dated
as of March 28, 2001 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-2, LLC, as Transferor, IOS
------------------------------
Capital, Inc., as Originator and Collection Agent, Twin Towers Inc., as Conduit
Transferee, the Alternate Transferees from time to time party thereto and
Deutsche Bank AG, New York Branch, as Administrative Agent. Capitalized terms
used in this Transfer Notice and not otherwise defined herein shall have the
meanings assigned thereto in the Receivables Transfer Agreement.
This letter constitutes a Paydown Notice pursuant to Section 1.03(g) of
---------------
the Receivables Transfer Agreement. The Transferor desires to reduce the
Aggregate Capital on ____________, _____/2/ by the application of $___________
in cash to pay the Aggregate Capital and Yield accrued and to accrue (until such
cash can be used to pay Commercial Paper notes) with respect to such Aggregate
Capital, together with all costs related to such reduction of Capital.
IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to
be executed by its duly authorized officer as of the date first above written.
IKON FUNDING-3, LLC
By:____________________________________
Name:
Title:
--------------------------
2 Notice must be given at least ten Business Days' prior to the requested
paydown date, in the case of reductions in excess of $25,000,000, or at least
two Business Days' prior to the requested paydown date, in the case of
reductions of $25,000,000 or less.
ANNEX E
FORM OF HEDGE AGREEMENT
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LIST OF RECEIVABLES
SCHEDULE III
LIST OF LOCK-BOX BANKS
AND COLLECTION ACCOUNTS
Lock-box bank: First Union National Bank, Philadelphia
Lock-boxes: Atlanta #931742
Atlanta #931750
Atlanta #740540
Atlanta #740541
Dallas #650016
Dallas #650073
Dallas #850074
Dallas #850014
Langhorne #41564
Collection account: Account number 2000002649085 of IOS Capital, Inc. at First
Union National Bank, Philadelphia
