INSURANCE AND INDEMNITY AGREEMENT
AMBAC ASSURANCE CORPORATION,
as Insurer,
IKON RECEIVABLES, LLC,
as Issuer,
IKON RECEIVABLES-I, LLC,
as Seller,
IOS CAPITAL, INC.,
as Originator and as Servicer,
and
XXXXXX TRUST AND SAVINGS BANK,
as Indenture Trustee
IKON RECEIVABLES, LLC LEASE-BACKED NOTES
Dated as of May 25, 1999
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in Article
I of this Agreement.)
Page
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ARTICLE I 1
DEFINITIONS 1
Section 1.01. Defined Terms 1
Section 1.02. Other Definitional Provisions. 4
ARTICLE II 4
REPRESENTATIONS, WARRANTIES AND COVENANTS 4
Section 2.01. Representations and Warranties of IOS Capital 4
Section 2.02. Affirmative Covenants of IOS Capital 6
Section 2.03. Negative Covenants of IOS Capital 7
Section 2.04. Representations and Warranties of the Insurer 7
Section 2.05. Representations and Warranties and Covenants of the Seller 10
Section 2.06. Representations and Warranties of the Issuer 10
Section 2.07. Affirmative Covenants of the Issuer 12
Section 2.08. Negative Covenants of the Issuer 14
ARTICLE III 15
THE POLICY; REIMBURSEMENT 15
Section 3.01. Issuance of the Policy 15
Section 3.02. Payment of Fees and Premium 17
Section 3.03. Reimbursement Obligation 18
Section 3.04. Indemnification 18
Section 3.05. Payment Procedure 21
ARTICLE IV 22
FURTHER AGREEMENTS 22
Section 4.01. Effective Date; Term of the Insurance Agreement 22
Section 4.02. Further Assurances and Corrective Instruments 22
Section 4.03. Obligations Absolute 22
Section 4.04. Assignments; Reinsurance; Third-Party Rights 24
Section 4.05. Liability of the Insurer 25
Section 4.06. Annual Servicing Audit and Certification 25
ARTICLE V 25
DEFAULTS AND REMEDIES 25
Section 5.01. Defaults 25
Section 5.02. Remedies; No Remedy Exclusive 26
Section 5.03. Waivers 27
ARTICLE VI 27
MISCELLANEOUS 27
Section 6.01. Amendments, Etc 27
Section 6.02. Notices 28
Section 6.03. Severability 29
Section 6.04. Governing Law 29
Section 6.05. Consent to Jurisdiction 29
Section 6.06. Consent of the Insurer 30
Section 6.07. Counterparts 30
Section 6.08. Headings 30
Section 6.09. Trial by Jury Waived 31
Section 6.10. Limited Liability 31
Section 6.11. Entire Agreement 31
Section 6.12. Indenture Trustee 31
INSURANCE AND INDEMNITY AGREEMENT (as it may be amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated as of May 25,
1999, by and among IOS Capital, Inc., as Originator and as Servicer, Ambac
Assurance Corporation, as Insurer, IKON Receivables, LLC, as Issuer, IKON
Receivables-I, LLC, as Seller, and Xxxxxx Trust and Savings Bank, as Indenture
Trustee.
PRELIMINARY STATEMENTS
A. The Indenture, dated as of April 1, 1999, relating to the IKON
Receivables, LLC Lease-Backed Notes, Series 1999-1, by and among the Issuer, the
Servicer and the Indenture Trustee (as it may be amended, modified or
supplemented from time to time as set forth therein) provides for, among other
things, the issuance of the Notes.
B. The Insurer has issued the Policy, pursuant to which it has agreed to
pay to the Indenture Trustee for the benefit of the Holders certain payments in
respect of the Notes.
C. The Insurer shall be paid a Premium as set forth herein.
D. IOS Capital, Inc., the Issuer, the Seller and the Indenture Trustee
have undertaken certain obligations in consideration for the Insurer's issuance
of its Policy.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Indenture or, if not defined
therein, in the Policy described below. For purposes of this Insurance
Agreement, the following terms shall have the following meanings:
"Closing Date" means May 25, 1999.
"Commission" means the Securities and Exchange Commission.
"Company Documents" means the Indenture, this Insurance Agreement, the
Notes, and the Assignment and Servicing Agreement.
"Default" means any event which results, or which with the giving of notice
or the lapse of time or both would result, in an Event of Servicing Termination.
"Documents" means the Company Documents and any other information relating
to the Asset Pool, IOS Capital, the Seller or the Issuer furnished to the
Insurer by IOS Capital, the Seller or the Issuer.
"Event of Servicing Termination" means any Event of Servicing Termination
specified in Section 5.01 of this Insurance Agreement.
"Financial Statements" means, with respect to IOS Capital, the consolidated
statements of financial condition as of September 30, 1998 and the statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended September 30, 1998 and the notes thereto.
"Holder" has the meaning given such term in the Policy.
"Indemnification Agreement" means the Indemnification Agreement dated as of
April 1, 1999 between the Insurer and the Underwriters.
"Indenture Trustee" means Xxxxxx Trust and Savings Bank, as indenture
trustee under the Indenture, and any successor thereto under the Indenture.
"Insurance Agreement" has the meaning given such term in the initial
paragraph hereof.
"Insurer" means Ambac Assurance Corporation, a Wisconsin domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Information" has the meaning given such term in Section
3.04(a)(v).
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IOS Capital" means IOS Capital, Inc., and any successors thereto, as the
Originator and the Servicer.
"Issuer" means IKON Receivables, LLC, a Delaware limited liability company,
or any successor thereto as provided for in the Indenture.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest publicly announced from time to time by Citibank, N.A. as
its prime or base lending rate (any change in such rate of interest to be
effective on the date such change is announced by Citibank, N.A.), plus 2% per
annum and (ii) the then applicable highest rate of interest on the Notes and (b)
the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person on a consolidated basis with its subsidiaries or
(ii) the ability of such Person to perform its obligations under any of the
Company Documents.
"Moody's" means Xxxxx'x Investors Service, Inc., and any successor thereto.
"Notes" has the meaning given such term in the Indenture.
"Offering Document" means the Prospectus dated May 7, 1999, the Preliminary
Prospectus Supplement dated May 11, 1999, and the Prospectus Supplement dated
May 19, 1999, each in respect of the Notes, and any amendment or supplement
thereto, and any other offering document in respect of the Notes prepared by IOS
Capital that makes reference to the Policy.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
"Policy" means the certificate guaranty insurance policy, #AB0254BE,
together with all endorsements thereto, issued by the Insurer to the Indenture
Trustee, for the benefit of the Holders of the Notes.
"Premium" means the premium payable in accordance with the Policy, with
respect to any Payment Date, the amount calculated by multiplying the Premium
Percentage by the Outstanding Principal Amount of the Notes on such Payment Date
prior to the distribution of any principal with respect to the Notes on such
Payment Date. All calculations of the Premium shall be based upon twelve 30-day
months and a 360-day year.
"Premium Percentage" shall mean 0.20% per annum.
"Registration Statement" means the registration statement on Form S-3 (No.
333-71073), including the prospectus, relating to the Notes, at the time it
became effective.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The XxXxxx-
Xxxx Companies, Inc., and any successor thereto.
"Transaction" means the transactions contemplated by the Company Documents,
including the transactions described in the Offering Document.
"Trust Indenture Act" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Underwriters" means, collectively, Xxxxxx Brothers Inc., PNC Capital
Markets, Inc., Chase Securities Inc. and Deutsche Bank Securities Inc.
"Underwriting Agreement" means the Underwriting Agreement dated May 19,
1999 between Xxxxxx Brothers Inc., as representative of the several Underwriters
named in Schedule 1 to the Underwriting Agreement, and IOS Capital with respect
to the offer and sale of the Notes, as amended, modified or supplemented from
time to time.
"Underwriters' Information" has the meaning given such term in the
Indemnification Agreement.
Section 1.02. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Insurance
Agreement shall refer to this Insurance Agreement as a whole and not to any
particular provision of this Insurance Agreement, and Section, subsection,
Schedule and Exhibit references are to this Insurance Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation."
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of IOS Capital. IOS Capital
hereby makes to and for the benefit of the Insurer each of the representations
and warranties made by IOS Capital in the Indenture and the Assignment and
Servicing Agreement, including, but not limited to, Section 2 of the Assignment
and Servicing Agreement. Such representations and warranties are incorporated
herein by this reference as if fully set forth herein, and may not be amended
except by an amendment complying with the terms of Section 6.01. In addition,
IOS Capital represents and warrants as of the Closing Date as follows:
(a) Due Authorization. The execution, delivery and performance by IOS
Capital of the Company Documents to which it is a party, have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to or
filing with any Person, including any governmental entity or any of the
stockholders of IOS Capital, which have not previously been obtained or
given.
(b) Noncontravention. The execution and delivery by IOS Capital of
the Company Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the Company
Documents do not and will not:
(i) conflict with or result in any breach or violation of
any provision of the charter or bylaws of IOS Capital or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to IOS
Capital or any of its respective material properties, including
regulations issued by any administrative agency or other governmental
authority having supervisory powers over IOS Capital;
(ii) constitute a default by IOS Capital under, result in
the acceleration of any obligation under, or breach any provision of
any loan agreement, mortgage, indenture or other agreement or
instrument to which IOS Capital is a party or by which any of its
properties are or may be bound or affected; or
(iii) result in or require the creation of any lien upon or
in respect of any assets of IOS Capital, except as expressly
contemplated by the Company Documents.
(c) Valid and Binding Obligations. When executed and delivered by IOS
Capital, the Company Documents to which IOS Capital is a party will
constitute the legal, valid and binding obligations of IOS Capital
enforceable in accordance with their respective terms, except as such
enforceability may be limited by insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. The Notes, when
executed, authenticated and delivered in accordance with the Indenture,
will be validly issued and outstanding and entitled to the benefits of the
Indenture. IOS Capital will not at any time in the future deny that the
Company Documents constitute the legal, valid and binding obligations of
IOS Capital.
(d) Compliance With Securities Laws. The offer and sale of the Notes
comply in all material respects with all requirements of law, including all
registration requirements of applicable securities laws. The Indenture is
required to be qualified and has been qualified under the Trust Indenture
Act and the Issuer
is not required to be registered as an "investment company" under the
Investment Company Act. IOS Capital will satisfy any of the information
reporting requirements of the Securities Exchange Act arising out of the
Transaction to which it, the Issuer or the Seller are subject.
Section 2.02. Affirmative Covenants of IOS Capital. IOS Capital hereby
makes, to and for the benefit of the Insurer, all of the covenants made by IOS
Capital as Originator and Servicer in the Indenture and the Assignment and
Servicing Agreement, including, but not limited to, Sections 4, 5, 6, 7 and 8 of
the Assignment and Servicing Agreement (but with respect to such covenants made
by IOS Capital as Servicer, only for so long as IOS Capital is the Servicer).
Such covenants are hereby incorporated herein by this reference as if fully set
forth herein, and may not be amended except by an amendment complying with the
terms of Section 6.01. In addition, IOS Capital hereby agrees that during the
term of this Insurance Agreement, unless the Insurer shall otherwise expressly
consent in writing:
(a) Compliance With Agreements and Applicable Laws. IOS Capital shall
comply with the terms and conditions of and perform its obligations under
the Company Documents to which it is a party in all cases in which failure
to so comply or perform would result in a default thereunder and shall
comply with all material requirements of any law, rule or regulation
applicable to it.
(b) Access to Records; Discussions with Officers and Accountants. On
an annual basis, or upon the occurrence of a Material Adverse Change, IOS
Capital shall, upon the reasonable request of the Insurer, permit the
Insurer or its authorized agents:
(i) to inspect the books and records of IOS Capital as
they may relate to the Notes, the obligations of IOS Capital under the
Company Documents and the Transaction;
(ii) to discuss the affairs, finances and accounts of IOS
Capital with the Chief Operating Officer and the Chief Financial
Officer of IOS Capital; and
(iii) with IOS Capital's consent, which consent shall not
be unreasonably withheld or delayed, to discuss the affairs, finances
and accounts of IOS Capital with IOS Capital's independent
accountants, provided that an officer of IOS Capital shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours at the Insurer's expense and shall not unreasonably disrupt
the business of IOS Capital.
(c) Retirement of Notes. IOS Capital shall instruct the Indenture
Trustee in writing, upon a retirement or other payment of all of the Notes,
to surrender the Policy to the Insurer for cancellation.
(d) Disclosure Document. Each Offering Document delivered with
respect to the Notes shall clearly disclose that the Policy is not covered
by the property/casualty insurance security fund specified in Article 76 of
the New York Insurance Law.
(e) Third-Party Beneficiary. IOS Capital agrees that the Insurer
shall have all rights of a third-party beneficiary in respect of the
Indenture, and the Assignment and Servicing Agreement.
(f) Closing Documents. IOS Capital shall provide or cause to be
provided to the Insurer an executed original copy of each document executed
in connection with the Transaction within 30 Business Days after the date
of closing.
Section 2.03. Negative Covenants of IOS Capital. IOS Capital hereby
agrees that during the term of this Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. IOS Capital shall not take any action, or
fail to take any action, if such action or failure to take action may
result in a Material Adverse Change specified in clause (ii) of the
definition of Material Adverse Change with respect to IOS Capital, or may
not interfere with the enforcement of any rights of the Insurer under or
with respect to any of the Company Documents. IOS Capital shall give the
Insurer written notice of any such action or failure to act on the earlier
of: (i) the date upon which any publicly available filing or release is
made with respect to such action or failure to act or (ii) promptly prior
to the date of consummation of such action or failure to act. IOS Capital
shall furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this paragraph.
(b) Amendments, Etc. IOS Capital shall not modify or amend, or
consent to any modification or amendment of, any of the terms, provisions
or conditions of the Company Documents to which it is a party without the
prior written consent of the Insurer thereto, but excluding any amendment
to the Offering Document required by law and excluding any modifications or
amendments to which, pursuant to the terms of the Company Documents,
Insurer's consent is not required.
(c) Successors. Except as provided in Section 10.02 of the Assignment
and Servicing Agreement or Section 8.08 of the Indenture, as applicable,
neither the Indenture Trustee nor IOS Capital shall terminate or
designate, or consent to the termination or designation of, any successor
Servicer or Indenture Trustee without the prior written approval of the
Insurer, which approval shall not be unreasonably withheld, conditioned or
delayed.
Section 2.04. Representations and Warranties of the Insurer. The
Insurer represents and warrants to the Indenture Trustee (on behalf of the
Noteholders), the Issuer and IOS Capital as follows:
(a) Organization and Licensing. The Insurer is a duly organized
and validly existing Wisconsin stock insurance company duly qualified to
conduct an insurance business in the State of Illinois.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Insurance
Agreement and to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. All proceedings legally required
for the issuance of the Policy and the execution, delivery and performance
of this Insurance Agreement have been taken and all licenses, orders,
consents or other authorizations or approvals of the Insurer's Board of
Directors or stockholders or any governmental boards or bodies legally
required for the enforceability of the Policy have been obtained; any
proceeding not taken and any license, authorization or approvals not
obtained are not material to the enforceability of the Policy.
(d) Enforceability. The Policy, when issued, and this Insurance
Agreement will each constitute a legal, valid and binding obligation of the
Insurer, enforceable in accordance with its terms, subject to insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity and subject
to principles of public policy limiting the right to enforce the
indemnification provisions contained therein and herein, insofar as such
provisions relate to indemnification for liabilities arising under federal
securities laws.
(e) Financial Information. The consolidated financial statements
of the Insurer and its subsidiaries as of December 31, 1998 and 1997, and
for the three years ended December 31, 1998, included in the Annual Report
on Form 10-K of Ambac Financial Group, Inc. (which was filed with the
Commission on March 30, 1999, Commission File Number 1-10777), and the
unaudited consolidated financial statements of the Insurer and its
subsidiaries as of March 31, 1999 and for the periods ending March 31, 1999
and March 31, 1998, included in the Quarterly Report on Form 10-Q of Ambac
Financial Group, Inc. (which was filed with the Commission on May 12,
1999), are hereby incorporated by reference into the Prospectus Supplement
dated May 19, 1999 relating to the Notes and shall be deemed to be a part
hereof. Since March 31, 1999, there has
been no Material Adverse Change with respect to the financial condition of
the Insurer that would affect its ability to perform its obligations under
the Policy.
(f) Insurer Information. The Insurer Information is true and
correct in all material respects and does not contain any untrue statement
of a material fact.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policy or this Insurance Agreement.
(h) No Conflict. The execution by the Insurer of this Insurance
Agreement will not, and the satisfaction of the terms hereof will not,
conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-Laws of the Insurer,
or any restriction contained in any contract, agreement or instrument to
which the Insurer is a party or by which it is bound or constitute a
default under any of the foregoing.
(i) Confidential Information. The Insurer agrees that it and its
shareholders, directors, agents, accountants and attorneys shall not use or
disclose any information provided to the Insurer pursuant to or in
connection with this Insurance Agreement or the issuance of the Policy or
otherwise related to the Transactions, including any matter of which it
becomes aware during the inspections conducted or discussions had pursuant
to Section 2.02(b), unless such information is readily available from
public sources or except as may be otherwise required by regulation, law or
court order or requested by appropriate governmental authorities or as
necessary to preserve its rights or security under or to enforce the
Company Documents; provided, however, that the foregoing shall not limit
the right of the Insurer to make such information available to its
regulators, securities rating agencies, reinsurers, credit and liquidity
providers, counsel and accountants. If the Insurer is requested or required
(by oral questions, interrogatories, requests for information or documents
subpoena, civil investigative demand or similar process) to disclose any
information provided to the Insurer pursuant to or in connection with this
Insurance Agreement or the issuance of the Policy or otherwise related to
the Transactions, including any information of which it becomes aware
through such inspections or discussions, the Insurer will promptly notify
IOS Capital of such request(s) so that IOS Capital may seek an appropriate
protective order and/or waive the Insurer's compliance with the provisions
of this Insurance Agreement. If, in the absence of a protective order or
the receipt of a waiver hereunder, the Insurer is, nonetheless, in the
opinion of its counsel (which shall be delivered to IOS Capital), compelled
to disclose such information to any tribunal or else stand liable for
contempt or suffer other censure of significant penalty, the Insurer may
disclose such
information to such tribunal that the Insurer is compelled to disclose,
provided that the Insurer shall promptly notify IOS Capital that the
Insurer has been compelled to so disclose and that the Insurer shall
use best efforts to provide to IOS Capital prior to disclosure a copy
of all information to be so disclosed.
(j) Rating. The Insurer is not aware of any facts that if
disclosed to Moody's or S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Insurer by
either of such Rating Agencies.
(k) 1933 Act Registration. The Policy is exempt from
registration under the Act.
Section 2.05. Representations and Warranties and Covenants of the
Seller. The Seller hereby makes to and for the benefit of the Insurer each of
the representations and warranties and covenants made by the Seller in the
Assignment and Servicing Agreement, including, but not limited to, Section 3 and
Section 9 of the Assignment and Servicing Agreement. Such representations,
warranties and covenants are incorporated herein by this reference as if fully
set forth herein, and may not be amended except by an amendment complying with
the terms of Section 6.01.
Section 2.06. Representations and Warranties of the Issuer. The Issuer
hereby makes, to and for the benefit of the Insurer, each of the representations
and warranties made by the Issuer in the Indenture. Such representations and
warranties are incorporated herein by this reference as if fully set forth
herein, and may not be amended except by an amendment complying with the terms
of Section 6.01. In addition, the Issuer represents and warrants as of the
Closing Date as follows:
(a) Due Organization and Qualification. The Issuer is a limited
liability company, duly organized, validly existing and in good
standing under the laws of Delaware and the United States of America.
The Issuer is duly qualified to do business, is in good standing and
has obtained all necessary licenses, permits, charters, registrations
and approvals (together, "approvals") necessary for the conduct of its
business as currently conducted and as described in the Offering
Document and the performance of its obligations under the Company
Documents in each jurisdiction in which the failure to be so qualified
or to obtain such approvals would render any Company Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction.
(b) Power and Authority. The Issuer has all necessary limited
liability company power and authority to conduct its business as
currently conducted and as described in the Offering Document, to
execute, deliver and perform its obligations under the Company
Documents and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and performance
of the Company Documents by the Issuer has been duly authorized by all
necessary limited liability company action and does not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including any governmental entity or any
beneficial owner of the Trust, which have not previously been obtained
or given by the Trust.
(d) Noncontravention. The execution and delivery by the Issuer
of the Company Documents to which it is a party, the consummation of
the Transaction and the satisfaction of the terms and conditions of the
Company Documents do not and will not:
(i) conflict with or result in any breach or
violation of any provision of the Amended and Restated Limited
Liability Company Agreement of the Issuer or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability
to the Issuer or any of its respective material properties,
including regulations issued by any administrative agency or
other governmental authority having supervisory powers over the
Issuer;
(ii) constitute a default by the Issuer under, result
in the acceleration of any obligation under, or breach any
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Issuer either is a party or
by which any of their properties are or may be bound or affected;
or
(iii) result in or require the creation of any lien
upon or in respect of any assets of the Issuer, except as
otherwise expressly contemplated by the Company Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer, any properties or
rights of the Issuer or any of the Asset Pool pending or threatened,
which, in any case, if decided adversely to the Issuer could result in
a Material Adverse Change with respect to the Issuer.
(f) Valid and Binding Obligations. The Company Documents, when
executed and delivered by the Issuer, will constitute the legal, valid
and binding obligations of the Issuer, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and public
policy considerations as to rights of indemnification for violations of
federal securities laws. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be validly issued and
outstanding and entitled to the benefits of the Indenture.
(g) Compliance with Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer in the conduct of
its business violates any law, regulation, judgment, agreement, order
or decree applicable to the Issuer that, if enforced, could result in a
Material Adverse Change with respect to the Issuer.
(h) Accuracy of Information. None of the Documents, as amended,
supplemented or superseded, furnished to the Insurer by the Issuer
contains any statement of a material fact which was untrue or
misleading in any material respect when made. Since the furnishing of
the Documents, there has been no change nor any development or event
involving a prospective change known to the Issuer that would render
any of the Documents untrue or misleading in any material respect.
(i) Compliance With Securities Laws. The offer and sale of the
Notes comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limiting the foregoing, the Offering Document does not contain
any untrue statement of a material fact and does not omit to state a
material fact necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading;
provided, however, that no representation is made with respect to the
Insurer Information or with respect to the Underwriters' Information.
Neither the offer nor sale of the Notes by the Issuer has been or will
be in violation of the Securities Act or any other federal or state
securities laws. The Indenture is required to be qualified under the
Trust Indenture Act. The Issuer is not required to be registered as an
"investment company" under the Investment Company Act. The Issuer will
satisfy any of the information reporting requirements of the Securities
Exchange Act arising out of the Transaction to which it or the Trust
are subject.
(j) Solvency; Fraudulent Conveyance. The Issuer is solvent and
will not be rendered insolvent by the Transaction and, after giving
effect to the Transaction, the Issuer will not be left with an
unreasonably small amount of capital with which to engage in its
business, and the Issuer does not intend to incur, or believe that it
has incurred, debts beyond its ability to pay as they mature. The
Issuer does not contemplate the commencement of insolvency, liquidation
or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of the
Issuer or any of their assets. The Issuer is not pledging the Asset
Pool under the Indenture with any intent to hinder, delay or defraud
any of the Issuer's creditors.
(k) Principal Place of Business. The principal place of business
of the Issuer is 0000 Xxxx Xxxx, Xxxxx, Xxxxxxx 00000.
Section 2.07. Affirmative Covenants of the Issuer. The Issuer hereby
makes, to and for the benefit of the Insurer, all of the covenants of the Issuer
set forth in the Indenture, including, but not limited to, Section 9 of the
Indenture. Such covenants are incorporated herein by this reference, and may not
be amended except by an amendment complying with the terms of Section 6.01. In
addition, the Issuer hereby agrees that during the term of this Insurance
Agreement, unless the Insurer shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The Issuer
shall comply with the terms and conditions of and perform its
respective obligations under the Company Documents to which it is a
party in all cases in which failure to so comply or perform would
result in a default thereunder and shall comply with all material
requirements of any law, rule or regulation applicable to it.
(b) Existence. The Issuer and its successors and permitted
assigns shall maintain its existence as a limited liability company and
shall at all times continue to be duly organized under the laws of the
State of Delaware and duly qualified and duly authorized (as described
in subsections 2.06(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its Amended and Restated
Limited Liability Company Agreement.
(c) Access to Records; Discussions with Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Issuer shall, upon the reasonable request of the
Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the Issuer as
they may relate to the Notes, the obligations of the Issuer under
the Company Documents and the Transaction;
(ii) to discuss the affairs, finances and accounts of
the Issuer with IOS Capital on behalf of the Issuer; and
(iii) with the Issuer's consent, which consent shall
not be unreasonably withheld or delayed, to discuss the affairs,
finances and accounts of the Issuer with the Issuer's independent
accountants, provided that an officer of the Issuer and IOS
Capital shall have the right to be present during such
discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Issuer.
(d) Notice of Material Events. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of
the following:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary proceeding
by or against the Issuer that (A) could reasonably be required to
be disclosed to the Commission or (B) would likely result in a
Material Adverse Change with respect to the Issuer, or the
promulgation of any proceeding or any proposed or final ruling in
connection with any such litigation, investigation or proceeding
which would likely result in a Material Adverse Change with
respect to the Issuer;
(ii) any change in the location of the principal
office of the Issuer;
(iii) the occurrence of any Default or Event of
Servicing Termination, or any Material Adverse Change in respect
of the Issuer;
(iv) the commencement of any proceedings by or against
the Issuer under any applicable reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter
in effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may
be, appointed or requested for the Issuer or any of their assets;
or
(v) the receipt of notice that (A) any license,
permit, charter, registration or approval necessary for the
conduct of the Issuer's business are to be, or may be suspended
or revoked or (B) the Issuer is to cease and desist any practice,
procedure or policy employed by the Issuer in the conduct of its
business, and such cessation may result in a Material Adverse
Change with respect to the Issuer.
(e) Financing Statements and Further Assurances. The Issuer
shall, upon the request of the Insurer, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, within ten days of such request, such amendments hereto and
such further instruments and take such further action as may be
reasonably necessary to effectuate the intention, performance and
provisions of the Company Documents. In addition, the Issuer agrees to
cooperate with S&P and Xxxxx'x in connection with any review of the
Transaction, conducted during normal business hours and in a manner
that does not unreasonably disrupt the business of IOS Capital, that
may be undertaken by S&P and Xxxxx'x after the date hereof upon
reasonable notice.
(f) Maintenance of Licenses. The Issuer shall maintain all
licenses, permits, charters and registrations which are material to the
conduct of their business.
(g) Third-Party Beneficiary. The Issuer agrees that the Insurer
shall have all rights of a third-party beneficiary in respect of the
Indenture.
Section 2.08. Negative Covenants of the Issuer. The Issuer hereby
agrees that during the term of this Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Issuer shall not take any action,
or fail to take any action, if such action or failure to take action
may result in a Material Adverse Change specified in clause (ii) of the
definition of Material Adverse Change with respect to the Issuer or may
not interfere with the enforcement of any rights of the Insurer under
or with respect to any of the Company Documents. The Issuer shall give
the Insurer written notice of any such action or failure to act on the
earlier of: (i) the date upon which any publicly available filing or
release is made with respect to such action or failure to act or (ii)
promptly prior to the date of consummation of such action or failure to
act. The Issuer shall furnish to the Insurer all information requested
by it that is reasonably necessary to determine compliance with this
paragraph.
(b) Amendments, Etc. The Issuer shall not modify or amend, or
consent to any modification or amendment of, any of the terms,
provisions or conditions of the Company Documents to which it is a
party without the prior written consent of the Insurer thereto, but
excluding any amendment to the Offering Document required by law and
excluding any modifications or amendments to which, pursuant to the
terms of the Company Documents, Insurer's consent is not required.
(c) Limitation on Mergers, Etc. The Issuer shall not consolidate
with or merge with or into any Person or transfer all or substantially
all of its assets to any Person or liquidate or dissolve except as
provided in the Indenture or as permitted hereby. The Issuer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this paragraph.
(d) Successors. Except as provided in Section 10.02 of the
Assignment and Servicing Agreement or Section 8.08 of the Indenture, as
applicable, neither the Trustee nor IOS Capital shall terminate or
designate, or consent to the termination or designation of, any
successor Servicer or Trustee without the prior written approval of the
Insurer, which approval shall not be unreasonably withheld, conditioned
or delayed.
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) Payment of Initial Premium and Expenses. The applicable
parties shall have been paid by IOS Capital their related fees and
expenses payable in accordance with Section 3.02 within 5 Business Days
of receipt of the related invoice;
(b) Company Documents. The Insurer shall have received a copy of
each of the Company Documents, in form and substance reasonably
satisfactory to the Insurer, duly authorized, executed and delivered by
each party thereto;
(c) Certified Documents and Resolutions. The Insurer shall have
received a copy of the charter and bylaws of IOS Capital and the
limited liability company agreement and certificate of each of Seller
and Issuer, and (ii) a certificate of the Secretary or Assistant
Secretary of IOS Capital stating that attached thereto is a true,
complete and correct copy of resolutions duly adopted by the Board of
Directors or a duly authorized committee of IOS Capital, or the
Managing Member of the Seller and the Issuer, as the case may be,
authorizing the execution, delivery and performance by IOS Capital, the
Seller or the Issuer, as the case may be, of the Company Documents to
which it is a party and the consummation of the Transaction and that
such charter, bylaws, limited liability company agreements,
certificates of formation and resolutions are in full force and effect
without amendment or modification on the Closing Date;
(d) Incumbency Certificate. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of each of IOS
Capital, the Seller and the Issuer certifying the names and signatures
of the officers of such entity authorized to execute and deliver the
Company Documents to which it is a party;
(e) Representations and Warranties; Certificate. The
representations and warranties of IOS Capital, the Seller and the
Issuer set forth or incorporated by reference in this Insurance
Agreement shall be true and correct on and as of the Closing Date as if
made on the Closing Date, and the Insurer shall have received a
certificate of appropriate officers of IOS Capital, the Seller and the
Issuer to that effect;
(f) Opinions of Counsel. The Insurer shall have received all
opinions of counsel addressed to any of Xxxxx'x, S&P, the Indenture
Trustee, IOS Capital, the Issuer, the Seller, or the Underwriters in
respect of the Transaction, in form and substance reasonably
satisfactory to the Insurer, addressed to the Insurer and addressing
such matters as the Insurer may reasonably request, and the counsel
providing each such opinion shall have been instructed by its client to
deliver such opinion to the addressees thereof;
(g) Approvals, Etc. The Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any,
including any required approval of the shareholders of IOS Capital,
required in connection with the Transaction;
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall
be pending or threatened before any court, governmental or
administrative agency or arbitrator in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with any
of the Company Documents or the consummation of the Transaction;
(i) Legality. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
Transaction illegal or otherwise prevent the consummation thereof;
(j) Satisfaction of Conditions of the Underwriting Agreement.
All conditions in the Underwriting Agreement relating to the
Underwriters' obligation to purchase the Notes shall have been
satisfied, without taking into account any waiver by any Underwriter of
any condition unless such waiver has been approved by the Insurer. The
Insurer shall have received copies of each of the documents, and shall
be entitled to rely on each of the documents, required to be delivered
to any Underwriter pursuant to the Underwriting Agreement;
(k) Issuance of Ratings. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes a "BBB"
risk by S&P and a "Baa2" risk by Xxxxx'x and that the Notes, when
issued, will be rated "AAA" by S&P and "Aaa" by Xxxxx'x (or A-1+ by S&P
and P-1 by Xxxxx'x in the case of the Class A-1 Notes);
(1) No Default. No Default or Event of Servicing Termination
shall have occurred;
(m) Additional Items. The Insurer shall have received such other
documents, instruments, approvals or opinions reasonably requested by
the Insurer as may be reasonably necessary to effect the Transaction,
including evidence reasonably satisfactory to the Insurer that the
conditions precedent, if any, in the Company Documents have been
satisfied; and
(n) Satisfactory Documentation. The Insurer and its counsel
shall have determined that all documents, Notes and opinions to be
delivered in connection with the Notes conform to the terms of the
Indenture, the Registration Statement, the Offering Document and this
Insurance Agreement.
Section 3.02. Payment of Fees and Premium.
(a) Legal and Accounting Fees. IOS Capital shall pay or cause to
be paid, within 5 Business Days of receipt of the related invoice,
reasonable legal fees, auditors' fees in connection with the provision
of information or any consent in connection with the Offering Document
and disbursements incurred by the Insurer in connection with the
issuance of the Policy. Any reasonable additional fees of the Insurer's
counsel or auditors payable in respect of any amendment or supplement
to the Offering Document incurred after the Closing Date shall be paid
by IOS Capital on demand.
(b) Rating Agency Fees. IOS Capital shall promptly pay the
initial fees of S&P and Xxxxx'x with respect to the Notes and the
transactions contemplated hereby following receipt of a statement with
respect thereto. IOS Capital shall pay any subsequent fees of S&P or
Xxxxx'x with respect to, and directly allocable to, the Notes to the
extent that such fees and expenses result from actions of S&P or
Xxxxx'x that are requested by IOS Capital. The Insurer shall not be
responsible for any fees or expenses of S&P or Xxxxx'x. The fees for
any other rating agency shall be paid by the party requesting such
other agency's rating.
(c) Premium.
(i) In consideration of the issuance by the Insurer of the
Policy, the Insurer shall be entitled to receive the Premium as
and when due in accordance with and from the funds specified by
Section 3.03 of the Indenture.
(ii) The Premium paid under the Indenture shall be
nonrefundable without regard to whether any Notice for Payment is
delivered to the Insurer requiring the Insurer to make any
payment under the Policy or any
other circumstances relating to the Notes or provision being made
for payment of the Notes prior to maturity.
Section 3.03. Reimbursement Obligation.
(a) As and when due, from, and only from, the funds specified in
Section 3.03 of the Indenture, the Insurer shall be entitled to
reimbursement for any payment made by the Insurer under the Policy,
which reimbursement shall be due and payable on the date that any
amount is paid thereunder, in an amount equal to the amount so paid and
all amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts
representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal
to the Late Payment Rate.
(b) IOS Capital agrees to pay to the Insurer, within 5 Business
Days of receipt of an invoice, as follows: any and all charges, fees,
costs and expenses that the Insurer may reasonably pay or incur,
including reasonable attorneys' and accountants' fees and expenses, in
connection with (i) the enforcement, defense or preservation of any
rights in respect of any of the Company Documents, including defending,
monitoring or participating in any litigation or proceeding (including
any insolvency proceeding in respect of any Transaction participant or
any affiliate thereof) relating to any of the Company Documents, any
party to any of the Company Documents (in its capacity as such a party)
or the Transaction, or (ii) any amendment, waiver or other action with
respect to, or related to, any Company Document, whether or not
executed or completed.
(c) IOS Capital agrees to pay to the Insurer, within 5 Business
Days of receipt of an invoice, as follows: interest on any and all
amounts described in subclause (b) of this Section 3.03 from the date
payable or paid by such party until payment thereof in full, and
interest on any and all amounts described in Section 3.02 (a) from the
date due until payment thereof in full and interest on any and all
amounts described in Section 3.04 from the date due until payment
thereof in full, in each case, payable to the Insurer at the Late
Payment Rate.
Section 3.04. Indemnification.
(a) In addition to any and all of the Insurer's rights of
reimbursement, indemnification, subrogation and to any other rights of
the Insurer pursuant hereto or under law or in equity, IOS Capital
agrees to pay, and to protect, indemnify and save harmless, the Insurer
and its officers, directors, shareholders, employees, agents and each
Person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act from and against, any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any
nature arising out of or relating to the transactions contemplated by
the Company Documents by reason of:
(i) any omission or action (other than of or by the
Insurer (including any Insurer Information, as defined below) or
the Underwriters) by IOS Capital in connection with the offering,
issuance, sale or delivery of any of the Notes prior to the
completion of the initial offering and distribution of the Notes;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of IOS Capital in connection with any
Transaction arising from or relating to the Company Documents;
(iii) the violation by IOS Capital of any domestic or
foreign law, rule or regulation, or any judgment, order or decree
applicable to it;
(iv) the breach by IOS Capital of any representation,
warranty or covenant under any of the Company Documents or the
occurrence, in respect of IOS Capital, under any of the Company
Documents of any Event of Servicing Termination or any event
which, with the giving of notice or the lapse of time or both,
would constitute any Event of Servicing Termination (exclusive of
clause (c) of Section 5.01 hereof); or
(v) any untrue statement or alleged untrue statement of a
material fact contained in any Offering Document or the
Registration Statement or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
insofar as such claims, losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or
expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations)
arise out of or are based upon any untrue statement or omission
in the an Offering Document other than the Underwriters'
Information and information furnished by the Insurer in writing
expressly for use therein (all such information so furnished
being referred to herein as "Insurer Information"), it being
understood that, in respect of the initial Offering Document, the
Insurer Information is limited to the information with
respect to the Insurer included under the caption "THE INSURER
AND THE POLICY."
(b) The Insurer agrees to pay, and to protect, indemnify and
save harmless, IOS Capital and its respective officers, directors,
shareholders, employees, agents and each Person, if any, who controls
IOS Capital within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act from and against, any
and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or by
reason of any untrue statement or alleged untrue statement of a
material fact contained in the Insurer Information in any Offering
Document or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading or a breach of any of the representations and
warranties of the Insurer contained in Section 2.04.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which the indemnity provided in
Section 3.04(a) or (b) may be sought from IOS Capital, on the one hand,
or the Insurer, on the other (each, an "Indemnifying Party") hereunder,
each such Indemnified Party shall promptly notify the Indemnifying
Party in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel satisfactory to the
Indemnified Party and the payment of all expenses. The Indemnified
Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of
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such separate counsel shall be at the expense of the Indemnifying Party
if (i) the Indemnifying Party has agreed to pay such fees and expenses,
(ii) the Indemnifying Party shall have failed to assume the defense of
such action or proceeding and employ counsel reasonably satisfactory to
the Indemnified Party in any such action or proceeding or (iii) the
named parties to any such action or proceeding (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party,
and the Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party (in
which case, if the Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings
in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Parties, which firm shall be designated in
writing by the Indemnified Party). The Indemnifying Party shall not be
liable for any settlement of any such action or proceeding effected
without its written consent to the extent that any such settlement
shall be prejudicial to the Indemnifying Party, but, if settled with
its written consent, or if there is a final judgment for the plaintiff
in any such action or proceeding with respect to which the Indemnifying
Party shall have received notice in accordance with this subsection
(c), the Indemnifying Party agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by
reason of such settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party
(other than due to application of this Section), each Indemnifying
Party shall contribute to the losses incurred by the Indemnified Party
on the basis of the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand. The relative
fault of each Indemnifying Party, on the one hand, and each Indemnified
Party, on the other, shall be determined by reference to, among other
things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth are within the control of, the
Indemnifying Party or the Indemnified Party, and the parties relative
intent, knowledge, access to information and opportunity to correct or
prevent such breach.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section (11)f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
Section 3.05. Payment Procedure. In the event of any payment to
the Insurer, the Indenture Trustee and IOS Capital agree to accept the voucher
or other evidence of payment as prima facie evidence of the propriety thereof
and the liability, if any, described in Section 3.03 therefor to the Insurer.
All payments to be made to the Insurer under this Insurance Agreement shall be
made to the Insurer in lawful currency of the United States of America in
immediately available funds at the notice address for the Insurer as specified
in the Indenture on the date when due or as the Insurer shall otherwise direct
by written notice to the other parties hereto. In the event that the date of any
payment to the Insurer or the expiration of any time period hereunder occurs on
a day that is not a Business Day, then such payment or expiration of time period
shall be made or occur on the next succeeding Business Day with the same force
and effect as if such payment was made or time period expired on the scheduled
date of payment or expiration date.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement. This
Insurance Agreement shall take effect on the Closing Date and shall remain in
effect until the later of (a) such time as the Insurer is no longer subject to a
claim under the Policy and the Policy shall have been surrendered to the Insurer
for cancellation and (b) all amounts payable to the Insurer by IOS Capital and
the Issuer hereunder or from any other source hereunder or under the Company
Documents and all amounts payable under the Notes have been paid in full;
provided, however, that the provisions of Sections 3.02, 3.03 and 3.04 hereof
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shall survive any termination of this Insurance Agreement.
Section 4.02. Further Assurances and Corrective Instruments.
(a) Except at such times as an Insurer Default (as defined in
the Indenture) shall exist or shall have occurred, neither IOS Capital
nor the Indenture Trustee shall grant any waiver of rights under any of
the Company Documents to which any of them is a party without the prior
written consent of the Insurer, which shall not be unreasonably
withheld, conditioned or delayed and any such waiver without prior
written consent of the Insurer shall be null and void and of no force
or effect.
(b) To the extent permitted by law, IOS Capital agrees that
it will, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as the Insurer may reasonably request and as
may be required in the Insurer's reasonable judgment to effectuate the
intention of or facilitate the performance of this Insurance Agreement.
(c) IOS Capital will not cause or permit (i) the Seller to
assign or transfer any of its assets to any party, other than the
transfers to the Issuer in connection with the Transaction, or to issue
any notes or other evidences of indebtedness, or to otherwise incur
any indebtedness, or (ii) the Issuer to issue any notes or other
evidences of indebtedness, or to otherwise incur any indebtedness,
other than the indebtedness represented by the Notes, and the Issuer
agrees that it will not issue any notes or other evidences of
indebtedness, or otherwise incur any indebtedness, other than the
indebtedness represented by the
Notes, in any such case, without the prior written consent of the
Insurer, such consent not to be unreasonably withheld.
Section 4.03. Obligations Absolute.
(a) The obligations of IOS Capital, the Seller and the
Issuer hereunder shall be absolute and unconditional and shall be paid
or performed strictly in accordance with this Insurance Agreement under
all circumstances irrespective of:
(i) any lack of validity or enforceability of,
or any amendment or other modifications of, or waiver, with
respect to any of the Company Documents or the Notes;
(ii) any exchange or release of any other
obligations hereunder;
(iii) the existence of any claim, setoff,
defense, reduction, abatement or other right that IOS Capital
may have at any time against the Insurer or any other Person;
(iv) any document presented in connection with
the Policy proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) any payment by the Insurer under the
Policy against presentation of a certificate or other document
that does not strictly comply with the terms of the Policy;
(vi) any failure of IOS Capital to receive the
proceeds from the sale of the Notes; and
(vii) any other circumstances, other than
payment in full, that might otherwise constitute a defense
available to, or discharge of, IOS Capital in respect of any
Company Document.
(b) IOS Capital, the Seller and the Issuer and any and all
others who are now or may become liable for all or any part of the
obligations of IOS Capital, the Seller and the Issuer under this
Insurance Agreement (including any successor to IOS Capital as
Servicer) agree to be bound by this Insurance Agreement and (i) to the
extent permitted by law, waive and renounce any and all redemption and
exemption rights and the benefit of all valuation and appraisement
privileges against the indebtedness and obligations evidenced by any
Company Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of
dishonor, protest of dishonor and notice of protest; (iii) waive all
notices in connection with the delivery and acceptance hereof and all
other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the
Company Documents; (iv) waive all rights of abatement, diminution,
postponement or deduction, or to any defense other than payment, or to
any right of setoff or recoupment arising out of any breach under any
of the Company Documents, by any party thereto or any beneficiary
thereof, or out of any obligation at any time owing to IOS Capital;
(v) agree that its liabilities hereunder shall, except as otherwise
expressly provided in this Section 4.03, be unconditional and without
regard to any setoff, counterclaim or the liability of any other
Persons for the payment hereof, (vi) agree that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for
such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by the Insurer with respect
to any payment hereunder or other provisions hereof and to the release
of any security at any time given for any payment hereunder, or any
part thereof, with or without substitution, and to the release of any
Person or entity liable for any such payment; and (viii) consent to
the addition of any and all other makers, endorsers, guarantors and
other obligors for any payment hereunder, and to the acceptance of any
and all other security for any payment hereunder, and agree that the
addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting IOS
Capital or the Indenture Trustee from pursuing any rights or remedies
it may have against any Person in a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
(a) This Insurance Agreement shall be a continuing
obligation of the parties hereto and shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and permitted assigns. None of IOS Capital, the Seller or the Issuer
may assign its rights under this Insurance Agreement, or delegate any
of its duties hereunder, without the prior written consent of the
Insurer. Any assignments made in violation of this Insurance Agreement
shall be null and void.
(b) The Insurer shall have the right to give participations
in its rights under this Insurance Agreement and to enter into
contracts of reinsurance with respect to the Policy upon such terms and
conditions as the Insurer may in its discretion determine; provided,
--------
however, that no such participation or reinsurance agreement or
-------
arrangement shall relieve the Insurer of any of its obligations
hereunder or under the Policy and provided further that any reinsurer
or participant will not have any rights against IOS Capital, the
Noteholders or the Indenture Trustee and that IOS Capital, the
Noteholders and the Indenture Trustee shall have no obligation to have
any communication or relationship with any reinsurer or participant in
order to enforce the obligations of the Insurer hereunder and under the
Policy.
(c) Except as provided herein with respect to participants
and reinsurers, nothing in this Insurance Agreement shall confer any
right, remedy or claim, express or implied, upon any Person, including,
particularly, any Holder, other than the Insurer against IOS Capital or
IOS Capital against the Insurer and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the
sole and exclusive benefit of the parties hereto and their successors
and permitted assigns. Neither the Indenture Trustee nor any Holder
shall have any right to payment from any Premiums paid or payable
hereunder or under the Indenture or from any amounts paid by IOS
Capital pursuant to Sections 3.02 or 3.03 hereof.
Section 4.05. Liability of the Insurer. Unless the Insurer shall have
been grossly negligent or guilty of wrongful misconduct, neither the Insurer nor
any of its officers, directors or employees shall be liable or responsible for:
(a) the use that may be made of the Policy by the Trust or for any acts or
omissions of the Trust in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer in
connection with any claim under the Policy, or of any signatures thereon, even
if such documents or signatures should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged (unless the Insurer shall
have actual knowledge thereof). In furtherance and not in limitation of the
foregoing, the Insurer may accept documents that appear on their face to be in
order, without responsibility for further investigation.
Section 4.06. Annual Servicing Audit and Certification. The annual
servicing audit required pursuant to Section 6.02 of the Servicing Agreement
shall be performed by an independent third party acceptable to the Insurer. Any
one of the five major nationally recognized firms of independent public
accountants is deemed to be acceptable.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Defaults. The occurrence of any of the following events
shall constitute an Event of Servicing Termination hereunder:
(a) Any representation or warranty made by IOS Capital, the
Seller or the Issuer hereunder or under the Company Documents, or in any
certificate furnished hereunder or under the Company Documents, shall prove
to be untrue or incomplete in any material respect; provided, however, that
-------- -------
if IOS Capital, the Seller or the Issuer effectively cures any such defects
in any representation or warranty under any Transaction Document or
certificate or report furnished under any Company Document, within the time
period specified in the related document as the cure period therefor, such
defect shall not in and of itself constitute an Event of Servicing
Termination;
(b) (i) IOS Capital shall fail to pay when due any amount
payable by IOS Capital unless such amounts are paid in full within the cure
period therefor, respectively, hereunder or (ii) a legislative body has
enacted any law that declares or a court of competent jurisdiction shall
find or rule that this Insurance Agreement or the Indenture is not valid
and binding on IOS Capital or the Issuer;
(c) The occurrence and continuance of a Servicer Event of
Default under the Assignment and Servicing Agreement;
(d) Any failure on the part of IOS Capital, the Seller or the
Issuer duly to observe or perform in any material respect any other of the
covenants or agreements on the part of IOS Capital, the Seller or the
Issuer contained in this Insurance Agreement or in any other Company
Document which continues unremedied beyond any cure period provided
therein, or, in the case of this Insurance Agreement, for a period of 30
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to IOS Capital by the Insurer
(with a copy to the Indenture Trustee) or by the Indenture Trustee (with a
copy to the Insurer); provided, further, that if such failure shall be of a
nature that it cannot be cured within 30 days, such failure shall not
constitute an Event of Servicing Termination hereunder, if within such 30-
day period IOS Capital, the Seller or the Issuer, as the case may be, shall
have given written notice to the Insurer and the Indenture Trustee of
corrective action it proposes to take, which corrective action is agreed in
writing by the Insurer to be satisfactory and IOS Capital, the Seller or
the Issuer shall thereafter pursue such corrective action diligently until
such default is cured;
(e) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under
any present or future federal or state insolvency or similar law or the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against
IOS Capital, the Seller or the Issuer and such decree or order shall
have remained in force undischarged or unstayed for a period of 90
consecutive days;
(f) IOS Capital, the Seller or the Issuer shall consent to the
appointment of a conservator or receiver or liquidator or other
similar official in any involuntary insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to IOS Capital, the Seller or the Issuer or of or relating to
all or substantially all of their respective property and if IOS
Capital, the Seller or the Issuer shall fail to take appropriate
action resulting in the withdrawal or dismissal of such proceeding
within 30 Business Days; or
(g) IOS Capital, the Seller or the Issuer shall admit in writing
its inability to pay their debts generally as they become due, file a
petition to take advantage of or otherwise voluntarily commence a case
or proceeding under any applicable insolvency, reorganization or other
similar statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations.
Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Servicing Termination,
the Insurer may take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts, if any,
then due under this Insurance Agreement, the Assignment and Servicing
Agreement or the Indenture or to enforce performance and observance of
any obligation, agreement or covenant of IOS Capital, the Seller or
the Issuer under this Insurance Agreement, the Assignment and
Servicing Agreement or the Indenture.
(b) Unless otherwise expressly provided, no remedy herein
conferred or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under this Insurance Agreement, the
Assignment and Servicing Agreement the Indenture or existing at law or
in equity. No delay or omission to exercise any right or power
accruing under this Insurance Agreement, the Assignment and Servicing
Agreement or the Indenture upon the happening of any event set forth
in Section 5.01 shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
In order to entitle the Insurer to exercise any remedy reserved to the
Insurer in this Article, it shall not be necessary to give any notice,
other than such notice as may be required by this Article.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by the
Insurer in exercising, any right hereunder shall operate as a waiver
thereof. The
exercise by the Insurer of any right hereunder shall not preclude the
exercise of any other right, and the remedies provided herein to the
Insurer are declared in every case to be cumulative and not exclusive
of any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Servicing Termination
hereunder, by a writing setting forth the terms, conditions and extent
of such waiver signed by the Insurer and delivered to IOS Capital and
the Indenture Trustee. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific
event or occurrence which gave rise to the Event of Servicing
Termination so waived and not to any other similar event or occurrence
which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Insurance Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto. No consent of any re-insurer
or participant contracted with by the Insurer pursuant to Section 4.04(b) hereof
shall be required for any amendment, modification, supplement or termination
hereof. IOS Capital agrees to provide a copy of any amendment to this Insurance
Agreement promptly to the Indenture Trustee and the rating agencies maintaining
a rating on any of the Notes at the request of IOS Capital. The Insurer agrees
to provide reasonable notice to the rating agencies maintaining a rating on any
of the Notes with respect to any proposed amendment. No act or course of dealing
shall be deemed to constitute an amendment, modification, supplement or
termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
and telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department - ABS
Telecopy No.: 000-000-0000
Confirmation: 212-668-0340
(in each case in which notice or other communication to the
Insurer refers to an Event of Servicing Termination, a claim
on the Policy
or with respect to which failure on the part of the Insurer
to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
communication should also be sent to the attention of the
general counsel of each of the Insurer and the Trustee and
shall be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To IOS Capital:
IOS Capital, Inc.
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Vice President - Finance,
with a copy to the General Counsel
Facsimile: (000) 000-0000
(c) To the Issuer:
IKON Receivables, LLC
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx XxXxxx
Facsimile: (000) 000-0000
(d) To the Seller:
IKON Receivables-I, LLC
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx XxXxxx
Facsimile: (000) 000-0000
(e) To the Indenture Trustee:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
Facsimile: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Severability. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 6.04. Governing Law. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
Section 6.05. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District
of New York and any court in the State of New York located in the City and
County of New York, and any appellate court from any thereof, in any
action, suit or proceeding brought against it and to or in connection with
any of the Company Documents or the Transaction or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York state court or, to
the extent permitted by law, in such federal court. The parties hereto
agree that a final unappealable judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. To the
extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that the related documents or the subject matter
thereof may not be litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Service on IOS Capital may be made by mailing or delivering
copies of the summons and complaint and other process which may be served
in any suit, action or proceeding to the Servicer at the related addresses
listed in Section 6.02(b) and (c) herein. Such address may be changed by
the applicable party or parties, with the prior written consent of the
Insurer, by written notice to the other parties hereto.
(d) Nothing contained in this Insurance Agreement shall limit or
affect any party's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Company Documents
against any other party or its properties in the courts of any
jurisdiction.
Section 6.06. Consent of the Insurer. In the event that the consent of
the Insurer is required under any of the Company Documents, the determination
whether to grant or withhold such consent shall be made by the Insurer in its
sole discretion without any implied duty towards any other Person, except as
otherwise expressly provided therein.
Section 6.07. Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. Headings. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They
form no part of this Insurance Agreement and shall not affect its construction
or interpretation.
Section 6.09. Trial by Jury Waived. Each party hereby waives, to the
fullest extent permitted by law, any right to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
any of the Company Documents or any of the transactions contemplated thereunder.
Each party hereto (A) certifies that no representative, agent or attorney of any
party hereto has represented, expressly or otherwise, that it would not, in the
event of litigation, seek to enforce the foregoing waiver and (B) acknowledges
that it has been induced to enter into the Company Documents to which it is a
party by, among other things, this waiver.
Section 6.10. Limited Liability. No recourse under any Company Document
or the Underwriting Agreement shall be had against, and no personal liability
shall attach to, any officer, employee, director, affiliate or shareholder of
any party hereto, as such, by the enforcement of any assessment or by any legal
or equitable proceeding, by virtue of any statute or otherwise in respect of any
of the Company Documents or the Underwriting Agreement, the Notes or the Policy,
it being expressly agreed and understood that each Company Document or the
Underwriting Agreement is solely a corporate obligation of each party hereto,
and that any and all personal liability, either at common law or in equity, or
by statute or constitution, of every such officer, employee, director, affiliate
or shareholder for breaches of any party hereto of any obligations under any
Company Document or the Underwriting Agreement is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.
Section 6.11. Entire Agreement. This Insurance Agreement and the Policy
set forth the entire agreement between the parties with respect to the subject
matter hereof and thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
Section 6.12. Indenture Trustee. The Indenture Trustee hereby acknowledges
and agrees to perform all its obligations and duties pursuant to the Company
Documents to which it is a party thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
all as of the day and year first above mentioned.
Ambac Assurance Corporation,
as Insurer
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxx
-------------------------------
Title: First Vice President
------------------------------
IOS Capital, Inc.,
as Originator and as Servicer
By:/s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
-------------------------------
Title: VP - Finance
------------------------------
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IKON Receivables, LLC,
as Issuer
By: IKON Receivables Funding, Inc.
By: /s/Xxxxxx X. XxXxxx
---------------------------
Name: Xxxxxx X. XxXxxx
-------------------------
Title: President
------------------------
IKON Receivables-I, LLC,
By: IKON Receivables Funding, Inc.
By: /s/Xxxxxx X. XxXxxx
---------------------------
Name: Xxxxxx X. XxXxxx
-------------------------
Title: President
------------------------
S-3
Xxxxxx Trust and Savings Bank, not in
its individual capacity, but solely
as Indenture Trustee
By: /s/Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------
Title: Vice President
-----------------------------
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