EXHIBIT 10.1
EXECUTION COPY
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PROGRAM AGREEMENT
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BY AND AMONG
GENERAL ELECTRIC CAPITAL CORPORATION,
A DELAWARE CORPORATION,
GE CAPITAL INFORMATION TECHNOLOGY SOLUTIONS, INC.,
A CALIFORNIA CORPORATION,
AND
IKON OFFICE SOLUTIONS, INC.,
AN OHIO CORPORATION
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DATED MARCH 31, 2004
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TABLE OF CONTENTS
PAGE
Article 1. PROGRAM FINANCING STRUCTURE...................................1
1.1. Financing Structure...........................................1
Article 2. MANAGEMENT OF THE PROGRAM.....................................2
2.1. Executive Committee...........................................2
2.2. Program Relationship Managers.................................4
Article 3. THE PROGRAM...................................................4
3.1. Private Label Administration..................................4
3.2. GE as Preferred Provider......................................6
3.3. GE Right of First Opportunity.................................8
3.4. Sale of Equipment by IKON Companies Other Than IKON...........8
3.5. Federal Program...............................................9
3.6. Product Reviews...............................................9
3.7. Training......................................................9
Article 4. GE RATE SHEETS; CREDIT APPROVAL POLICY; RESIDUAL POLICY.......9
4.1. GE Rate Sheets; Changes.......................................9
4.2. Credit Approval Policy; Changes..............................11
4.3. Residual Policy; Changes.....................................12
Article 5. LEASE ORIGINATIONS...........................................12
5.1. Calculation and Allocations of Minimum Periodic Payment......12
5.2. Application of Payments......................................15
5.3. Remittance of Payments.......................................15
5.4. Financing Documentation; Exceptions..........................17
5.5. Credit Approval; Preparation of Document Package.............19
5.6. Authorization................................................21
5.7. Purchase and Sale of Equipment...............................24
5.8. Rights Under Leases; Security Interest.......................27
5.9. Syndication..................................................29
5.10. Financings with Recourse or Other Support....................30
5.11. Transferred Servicing Agreements.............................30
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TABLE OF CONTENTS
(continued)
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5.12. Execution and Assignment of Certain Program Financing
Contracts....................................................30
5.13. Non-Standard Financing Contracts.............................31
5.14. Program Reliance and Recourse................................32
Article 6. ADMINISTRATION...............................................32
6.1. Administration of GE Portfolio...............................32
6.2. De-Installation, Repossession and Remarketing Support........37
6.3. Cancel/Upgrades; Mid-Term Buy Outs...........................38
6.4. Administrative Support from IKON.............................41
6.5. Evergreen Rentals............................................42
6.6. Performance of Services; Force Majeure.......................43
Article 7. AUDIT RIGHTS.................................................43
7.1. Audit Rights.................................................43
Article 8. REPRESENTATIONS, WARRANTIES AND COVENANTS....................46
8.1. General Representations and Warranties of IKON...............46
8.2. Transactional Representations and Warranties of IKON.........47
8.3. Covenants of IKON............................................49
8.4. Representations and Warranties of GE and GECITS..............51
8.5. Covenants of GE and GECITS...................................52
Article 9. REMEDIES.....................................................53
9.1. IKON Indemnities.............................................53
9.2. GE Indemnities...............................................53
9.3. Indemnification Procedure for Third Party Actions............53
9.4. Purchase of Program Financing Contracts, Program Stream
Financings and Equipment.....................................55
9.5. Personal Property Tax Reimbursement..........................56
9.6. Right of Offset..............................................56
9.7. Limitation on Damages........................................56
Article 10. FEES; OTHER AGREEMENTS; LOSS POOL............................56
10.1. Origination Fees.............................................56
10.2. Other Agreements.............................................57
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TABLE OF CONTENTS
(continued)
PAGE
10.3. Rejected Application Fee.....................................57
10.4. Year One Expense Reimbursement...............................57
10.5. [INTENTIONALLY OMITTED]......................................58
10.6. Loss Pool....................................................58
Article 11. TERM AND TERMINATION.........................................59
11.1. Term of Agreement............................................59
11.2. Termination Rights...........................................59
11.3. Consequences of Termination..................................60
Article 12. MISCELLANEOUS................................................63
12.1. Confidentiality..............................................63
12.2. Amendments...................................................64
12.3. Integrated Contract..........................................64
12.4. Governing Law................................................64
12.5. Notices......................................................65
12.6. No Assignment................................................66
12.7. Headings.....................................................66
12.8. Counterparts.................................................66
12.9. Announcements................................................66
12.10. Severability.................................................66
12.11. Binding Effect...............................................66
12.12. Waiver of Jury Trial.........................................66
12.13. Exclusive Jurisdiction.......................................67
12.14. No Third Party Beneficiary...................................67
12.15. Expenses.....................................................67
12.16. Misdirected Payments or Communications.......................67
12.17. Representation by Counsel; Interpretation....................68
12.18. No Partnership...............................................68
12.19. Further Assurances...........................................68
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TABLE OF CONTENTS
Table of Exhibits
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Exhibit A Residual Policy
Exhibit B Credit Approval Policy
Exhibit C [Intentionally Omitted]
Exhibit D Minimum Periodic Payment Worksheet
Exhibit E Application Methodology
Exhibit F Allocation Policy
Exhibit G Write-Off Policy
Exhibit H-1 Form of SLG Notification Letter
Exhibit H-2 Form of SLG Consent Letter
Exhibit I-1 Form of Program Financing Contract
Exhibit I-2 Exceptions Manual
Exhibit J GE Rate Sheets and Related Assumptions
Exhibit K Representative Contracts
Exhibit L Federal Assignment Agreement
Exhibit M Non-Standard Representations, Warranties,
Covenants and Indemnities
Table of Annexes
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Annex A Definitions
Annex B Designee Notices
Annex C IKON Syndication Partners
Annex D ABS Agreed Warranties
Annex E Prohibited Transferees Syndication Partners
Annex F Responsible Officers
Table of Schedules
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Schedule 1 Other Agreements
Schedule 2 Existing Facilities Management Agreements
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EXECUTION COPY
PROGRAM AGREEMENT
THIS PROGRAM AGREEMENT, dated as of March 31, 2004, is by and among
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation with a business
address at 00 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 ("GE"), GE CAPITAL INFORMATION
TECHNOLOGY SOLUTIONS, INC., a California corporation with a business address at
00 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 ("GECITS"), and IKON OFFICE SOLUTIONS,
INC., an Ohio corporation with its principal place of business at 00 Xxxxxx
Xxxxxx Xxxxxxx, Xxxxxxx, XX 00000 ("IKON"). Unless otherwise defined herein,
all capitalized terms are defined in Annex A.
RECITALS
WHEREAS, GE and IKON have entered into the Asset Purchase Agreement
pursuant to which, among other things, GE has agreed to purchase (or to cause
one or more of its Affiliates to purchase) from IKON the Purchased Assets (as
defined in the Asset Purchase Agreement) and to enter into this Agreement to
provide for a Customer financing program with respect to IKON's and its
Affiliates' sales and financing of Equipment for Customers of the IKON
Companies at locations in the United States; and
WHEREAS, GE, GECITS and IKON desire to enter into this Agreement to
set forth their respective rights and duties with respect to and under the
Program;
NOW THEREFORE, in consideration of the above premises and of the
representations, warranties, covenants and indemnities contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1.
PROGRAM FINANCING STRUCTURE
1.1. Financing Structure.
(a) During the Term and subject to the conditions set forth
herein, GECITS shall (i) originate, in the manner set forth below, contracts in
the form of lease or rental agreements relating to the lease or rental of
Equipment to Customers (other than State and Local Government Entities or the
United States Government) of IKON and its Subsidiaries (collectively, the "IKON
Companies") at locations in the United States (each, an "Originated Financing
Contract"), (ii) purchase, in the manner set forth below, SLG Financing
Contracts relating to the lease or rental of Equipment to State and Local
Government Entities at locations in the United States, (iii) purchase, in the
manner set forth below, IKON Originated Financing Contracts relating to the
lease or rental of Equipment to Customers of the IKON Companies at locations in
the United States and (iv) purchase, in the manner set forth below, Program FM
Stream Financings and Program EM Stream Financings relating to the lease or
rental of Equipment to Customers of the IKON Companies at locations in the
United States.
(b) The payments that may from time to time become due under a
Program Financing Contract or Program Stream Financing Agreement consist of (i)
the periodic minimum payment thereunder (the "Minimum Periodic Payment") which
shall be allocated between the parties as specified in Section 5.1 and (ii) one
or more of the following (if applicable): (A) the excess "cost per copy" meter
charge thereunder (i.e., the per copy charge for copies in excess of a stated
base volume of copies) (the "CPC Payment"), (B) Sales Tax Payments, (C) late
charges thereunder ("Late Charges"), (D) Uplift Payments, (E) collateral
protection insurance charges under Purchased Financing Contracts (the "CPI
Charges"), (F) payments by the Obligor thereunder in connection with the
exercise of any option to purchase the Equipment subject to such Program
Financing Contract or Program Stream Financing Agreement, (G) property tax
administration fees thereunder ("Administration Fees") and/or (H) payments in
respect of other sundry charges thereunder.
ARTICLE 2.
MANAGEMENT OF THE PROGRAM
2.1. Executive Committee.
(a) Generally; Size. In connection with the Program, GE, GECITS
and IKON shall establish and shall maintain an executive committee (the
"Executive Committee") to monitor and review the operation and administration
of the Program and oversee the relationship of the parties. The Executive
Committee shall consist of three (3) designees of IKON (collectively, the "IKON
Designees"), and three (3) designees of GE (collectively, the "GE Designees"),
all of whom shall be voting members of the Executive Committee. The initial
Designees are listed on Annex B. From and after the date hereof, any
appointment or removal by GE of any GE Designee and any appointment or removal
by IKON of any IKON Designee shall be evidenced in writing signed by a duly
authorized representative of the appointing or removing party and shall be
delivered to each other party hereto.
(b) Composition; Term of Office. The IKON Designees shall be
employees of an IKON Company familiar with the Program and generally familiar
with the Equipment and products offered by the IKON Companies. The GE
Designees shall be employees of GE familiar with the Program and generally
familiar with the credit markets, equipment leasing and financial services.
Each Designee shall hold such position until his or her successor is appointed
in accordance with Section 2.1(h) or until his or her earlier resignation,
death or removal.
(c) Meetings. Meetings of the Executive Committee shall be held
at such times as the Executive Committee may determine. One GE Designee shall
be designated by GE as the chairperson of the first meeting of the Executive
Committee, and thereafter, on an alternating basis, one IKON Designee or one GE
Designee shall be designated by IKON or GE (as applicable) as the chairperson
of each subsequent meeting of the Executive Committee. At or before the
conclusion of each meeting of the Executive Committee, GE or IKON (as
applicable)
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shall designate the chairperson of the next meeting of the Executive Committee
(it being agreed that each of IKON and GE shall be entitled, at or prior to
each meeting of the Executive Committee, to modify its appointment of the
chairperson for such meeting (to the extent such chairperson has been so
designated by it)). The Executive Committee shall meet at least once each
calendar quarter or as otherwise agreed by GE and IKON.
(d) Notice. Notice of all meetings of the Executive Committee
shall be sent to each Designee by the chairperson of such meeting and shall be
addressed to such Designees at the addresses set forth on Annex B (or, with
respect to any Designee appointed after the date hereof, as specified in
writing to each other party hereto by the party making such appointment) by
express mail or overnight courier service, or be delivered personally or by
telephone, not later than the tenth (10th) Business Day before the day on which
such meeting is to be held. Such notice shall state the place, date, and time
of the meeting and the purpose or purposes for which it is called. Any
requirements of furnishing a notice may be waived by any Designee who signs a
waiver of notice before or after the meeting. The presence of a Designee at a
meeting (whether in person or telephonically) shall constitute a waiver by such
Person of notice of such meeting, except if such Designee attends such meeting
for the express purpose of objecting at the beginning of the meeting to the
transaction of any business thereat as a consequence of the meeting not
properly being called or convened.
(e) Quorum; Vote. A quorum for the transaction of business at
any Executive Committee meeting shall consist of at least two (2) IKON
Designees and two (2) GE Designees. The affirmative vote of a majority of each
of the GE Designees and the IKON Designees who, in each case, are present at
any meeting at which a quorum is present shall constitute an act of the
Executive Committee. The Executive Committee shall have the ability to act
without a meeting if the action to be taken is approved in writing by at least
two (2) GE Designees and at least two (2) IKON Designees.
(f) Resignation. Any Designee may resign from the Executive
Committee at any time by giving written notice to the party that appointed such
Designee and to the other party hereto. The resignation of any Designee shall
take effect upon receipt of notice thereof by each of the parties hereto or at
such later time as shall be specified in such notice.
(g) Removal. Any Designee may be removed, with or without cause,
at any time upon the written direction of the party that appointed such
Designee, effective upon the delivery of such written direction by the removing
party to the non-removing party.
(h) Vacancies. Unless otherwise provided in this Agreement, any
vacancies resulting from the death, resignation or removal of any Designee
shall be filled, in a manner consistent with this Agreement, by the party that
appointed such Designee.
(i) Authority. The authority, functions and duties of the
Executive Committee shall consist solely of the following:
(i) the review from time to time of the reports prepared by
GE or IKON in connection with the Program,
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(ii) subject to Section 4.1 (if applicable), the review and
approval of increases or decreases to the rates set forth in the GE Rate
Sheets,
(iii) without limiting GE's rights under Section 4.2, the
review of any changes to the Credit Approval Policy effected from time to time
by GE,
(iv) without limiting IKON's or GE's rights under Section
4.3, the review of any changes to the Residual Policy,
(v) the mediation and resolution of disputes that may arise
between GE, GECITS and IKON relating to the Program, and
(vi) the recommendation of new types of financing products
and modifications of existing financing products to be offered from time to
time by GE in connection with the Program.
In addition to the foregoing, the Executive Committee shall review the
operations of the Program on an overall basis and make recommendations to GE,
GECITS and IKON with respect to the improvement of such operations or other
matters relating to the Program.
2.2. Program Relationship Managers. GE shall from time to time
appoint a relationship manager who shall function as GE's and GECITS' primary
management contact with IKON (the "GE Relationship Manager"), who shall be an
employee of GE and who shall be responsible for the maintenance of the regular
and ongoing relationship between the parties. IKON shall from time to time
appoint a relationship manager who shall function as IKON's primary management
contact with GE and GECITS (the "IKON Relationship Manager"), who shall be an
employee of IKON and who shall be responsible for the maintenance of the
regular and ongoing relationship between the parties. The initial GE
Relationship Manager shall be Xxxxxxx Xxxxx and the initial IKON Relationship
Manager shall be Xxxxx Xxxxxxx.
ARTICLE 3.
THE PROGRAM
3.1. Private Label Administration. Unless otherwise agreed by
GE, GECITS and IKON, and to the extent permitted by the Trademark License
Agreement and applicable Law, (A) GECITS shall enter into each Originated
Financing Contract as the lessor using the name "IKON Financial Services" and
(B) GE shall xxxx, collect and administer each Program Financing Contract,
Program FM Stream Financing and Program EM Stream Financing using an Assumed
Name; provided, however, that notwithstanding anything to the contrary herein,
if (1) (I) an Obligor under a Program Financing Contract or in respect of a
Program FM Stream Financing or a Program EM Stream Financing notifies GE or
GECITS of its inability or unwillingness to make payments in respect of such
Program Financing Contract or Program Stream Financing (for reasons other than
actual or asserted billing inaccuracies) and, to the extent that such Obligor
has asserted to GE or GECITS that any such unwillingness is the result of an
Asserted Service Failure, IKON has had the opportunity to respond to GE or
GECITS, as
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contemplated by Section 6.1(b)(iii), with respect thereto, (II) any payment
under any such Program Financing Contract or in respect of any such Program FM
Stream Financing or Program EM Stream Financing becomes 120 days or more past
due, provided that to the extent that such Obligor has asserted to GE or
GECITS that any such delinquency is the result of an Asserted Service Failure,
IKON has had the opportunity to respond to GE or GECITS, as contemplated by
Section 6.1(b)(iii), with respect thereto, (III) a Bankruptcy Event (or event
which, with the lapse of time would constitute a Bankruptcy Event) occurs with
respect to an Obligor under such Program Financing Contract or in respect of
such Program FM Stream Financing or Program EM Stream Financing, or (IV) GE or
GECITS commences litigation with respect to such Program Financing Contract,
Program FM Stream Financing or Program EM Stream Financing, (2) there shall
have occurred a GE Termination Event of the type described in Section
11.2(a)(i)(B), Section 11.2(a)(ii) or Section 11.2(a)(iii), (3) the Program is
terminated and IKON has not elected to exercise its option to repurchase all
Program Financing Contracts and Program Stream Financings in accordance with
Section 11.3, (4) GE or GECITS at any time ceases to be entitled, pursuant to
the Trademark License Agreement or applicable Law, to utilize each of the
Assumed Names, (5) GE or GECITS determines that use of each of the Assumed
Names poses a material risk of liability to GE or any of its Affiliates for
trademark infringement or dilution, or (6) GE or GECITS determines that the
use of the name "IKON Financial Services" in connection with the origination
of Originated Financing Contracts poses a material risk of liability to GE or
any of its Affiliates for trademark infringement or dilution, then GE and
GECITS (as applicable) shall, to the extent otherwise permitted by this
Agreement, have the right (at their option after, in the case of clauses
(1)(I), (1)(II) and (6) above, not less than ten (10) Business Days' prior
written notice to IKON, which notice, in the case of clause (1)(II), may be in
the form of a 120-day delinquency report or on-line queue) to enter into,
xxxx, collect and administer Program Financing Contracts, Program FM Stream
Financings and Program EM Stream Financings and pursue litigation or
collection proceedings against, and give notices to or otherwise communicate
with, Obligors, in each case, in their own names, with respect to the (x)
applicable Program Financing Contract, Program FM Stream Financing or Program
EM Stream Financing (in the case of the occurrence of any event described in
clause (1)), (y) all Program Financing Contracts, Program FM Stream Financings
and Program EM Stream Financings (in the case of the occurrence of any event
described in clause (2), (3), (4) or (5)), or (z) unless IKON shall have
granted to GE and GECITS, during the ten (10) Business Day period referred to
above, a license pursuant to the Trademark License Agreement to utilize a name
(other than any Assumed Name) incorporating the "IKON" trademark (or such
other name upon which GE, GECITS and IKON shall agree) which GE and GECITS do
not believe poses a material risk of liability to GE or any of its Affiliates
for trademark infringement or dilution, all Originated Financing Contracts (in
the case of the occurrence of any event described in clause (6)).
(i) Unless otherwise agreed by GE, GECITS and IKON, and to
the extent permitted by the Trademark License Agreement and applicable Law,
GECITS shall xxxx, collect and administer each Federal Financing Contract under
the name "IKON Office Solutions".
(b) Notwithstanding the provisions of Section 3.1(a) to the
contrary, all Tax-Exempt Public Sector Financings shall be billed, collected
and administered in the name of
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GECITS; provided that invoices sent in respect of such Tax-Exempt Public
Sector Financings may also reflect an Assumed Name. In respect of any SLG
Financing Contract, Program EM Stream Financing or Program FM Stream Financing
in respect of which the Obligor thereunder is a State and Local Government
Entity pursuant to which notice to the applicable State and Local Government
Entity is required in connection with any assignment thereof, IKON
acknowledges and agrees that GECITS may send a notification letter
(substantially in the form of Exhibit H-1) to such State and Local Government
Entity at any time after the Transfer Date with respect to the Equipment
subject or related thereto.
(c) Simultaneously with the execution and delivery hereof, GE,
GECITS and IKON shall enter into the Trademark License Agreement.
3.2. GE as Preferred Provider. (a) IKON shall and shall cause its
Subsidiaries, during the Term, to promote and introduce the Program as its and
their preferred source of Customer financing for Equipment in the United States
(other than with respect to Excluded Transactions) by (i) adopting,
implementing, maintaining and enforcing the policies referred to in Sections
3.2(b) and 3.2(e) in the manner described in Sections 3.2(b), 3.2(c) and
3.2(e), (ii) making the announcements regarding the Program referred to in
Section 3.2(d) and (iii) providing GECITS with financing opportunities as
provided in Section 3.3.
(b) IKON shall and shall cause its Subsidiaries to adopt (within
ninety (90) days after the date hereof), implement and maintain company-wide,
written policies and procedures that require their respective sales
representatives and similar personnel (i) to actively introduce and promote as
part of the sales and marketing process for Equipment, the use of Financing
Contracts available pursuant to the Program, (ii) to refer Customers that
express an interest in leasing, or financing the acquisition of, Equipment to
be located in the United States (other than Excluded Transactions) to the
Program, (iii) other than in connection with Excluded Transactions and proposed
Program Financing Contracts or Program Stream Financings offered to GECITS for
funding under the Program in accordance with this Agreement and rejected by GE
and GECITS hereunder, not to arrange, promote, or encourage financing of
Equipment from any source other than through GECITS under the Program, (iv)
other than in connection with Excluded Transactions, not to furnish rate cards,
promotional materials or other documentation of or information related to any
other source of Equipment financing and (v) to permit GE and VFS Macon
personnel to attend sales functions and sales and marketing meetings of the
IKON Companies as representatives of the IKON Companies' preferred source for
the leasing and financing of Equipment. IKON shall provide GE (with respect to
the policies to be implemented within 90 days after the date hereof) and the
Executive Committee (with respect to all policies to be implemented thereafter)
with an opportunity to review and discuss the specific form and content of the
policies proposed to be adopted by the IKON Companies in accordance with this
Section 3.2(b) within a reasonable period of time prior to adoption thereof.
(c) IKON shall and shall cause its Subsidiaries to use reasonable
efforts to monitor compliance by their sales representatives and similar
personnel with the policies referred to in Section 3.2(b). If GE or GECITS
notifies IKON, or any Responsible Officer of any IKON Company otherwise becomes
aware, that any such personnel has materially or persistently violated any such
policies, IKON shall take or cause to be taken such action as IKON reasonably
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determines to be appropriate in order to emphasize the importance to IKON of
compliance with such policies and to discourage further violations of such
policies by such individual. To the extent not inconsistent with applicable
Law, IKON shall, upon request by GE, notify GE and GECITS as to the actions
taken by IKON in compliance herewith.
(d) IKON shall, and shall cause its Subsidiaries to, announce
both publicly and separately to the sales representatives and similar personnel
of the IKON Companies, the commencement of the Program with GE and GECITS, such
announcements to be made promptly following the date hereof and (in the case of
announcements to sales representatives and similar personnel) from time to time
hereafter as GE and GECITS may reasonably request. The form of such
announcements shall be as mutually agreed by IKON, GECITS and GE.
(e) IKON shall provide to the IKON Companies' sales
representatives and similar personnel, fees and other incentive payments
intended to induce such personnel to promote the use by Customers of Financing
Contracts offered from time to time by GE and GECITS pursuant to the Program,
all in accordance with the sales commission policies previously delivered by
IKON to GE (collectively, the "Program Commission Policy"). IKON shall not
modify the Program Commission Policy in a manner that is designed to incent its
sales representatives and similar personnel to pursue cancel/upgrade
opportunities as described in Section 6.3(a) prior to the expiration of one-
half of the original stated term of a Program Financing Contract or, with
respect to any Program Stream Financing, one-half of the original stated lease
or rental term for the Equipment related thereto under the applicable Program
Stream Financing Agreement; it being agreed that in the event that any such
modification to the Program Commission Policy has the effect of incenting IKON
or IKON Company sales representatives or similar personnel to pursue
cancel/upgrade opportunities as described in Section 6.3(a) prior to the
expiration of one-half of the original stated term of a Program Financing
Contract or, with respect to any Program Stream Financing, one-half of the
original stated lease or rental term for the Equipment related thereto under
the applicable Program Stream Financing Agreement, then promptly upon written
notice from GE (or promptly upon IKON's discovery of such effect), IKON shall
reinstate the Program Commission Policy as in effect immediately prior to such
modification. IKON shall, and shall cause its Subsidiaries to, (i) prohibit
the payment to, or receipt by, any of their sales representatives or similar
personnel of fees or other compensation from (or directly or indirectly funded
by) any Person other than the IKON Companies that are intended to induce, or
have the effect of inducing, such personnel to promote the financing by such
Person or any of such Person's Affiliates of the sale, lease or rental of
Equipment to Customers at locations in the United States, and (ii) in the event
of the receipt by any such IKON Company personnel of fees or compensation
prohibited by clause (i) above, promptly take corrective action (subject to
applicable Law) up to and including termination of such personnel's employment
with the applicable IKON Company. Any disciplinary measure to be taken in
connection with any such violation shall be in IKON's sole discretion.
(f) IKON shall not permit any Person, other than an IKON Company,
GE, GECITS or one of the existing syndication partners of the IKON Companies
set forth on Annex C, to use the name "IKON", "IOS Capital" or "IKON Financial
Services" (or any derivation thereof) in connection with the provision of
leasing, rental or financing (or solicitation of leasing or financing) of
Equipment to Customers of any of the IKON Companies at locations in the
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United States; provided, however, that (x) the existing syndication partners
of the IKON Companies listed in Annex C may continue to use the IOS Capital
name in connection with the servicing of lease or rental contracts owned by
such Persons on the date hereof and (y) IKON may, from time to time, permit
its then-existing syndication partners to utilize the name "IKON" in
connection with the billing and collecting of (and initiating collection
proceedings relating to) payments due to IKON (it being agreed that in no
event shall IKON authorize any Person, other than GE and GECITS, to utilize
the name "IKON Financial Services").
3.3. GE Right of First Opportunity. Other than with respect to
Excluded Transactions, IKON shall cause to be offered to GECITS the first right
to finance through the Program each proposed sale, lease or rental of Equipment
to Customers of any IKON Company at locations in the United States (whether
directly or, (a) with respect to any proposed IKON Originated Financing
Contract or SLG Financing Contract, by offering to sell and assign such
proposed Financing Contract, the Equipment subject thereto and the Purchased
Assets in respect thereof to GECITS or (b) with respect to any existing or
proposed Program Facilities Management Agreement or Program Equipment
Management Agreement, by offering to sell and assign the related proposed
Program Stream Financing, the Equipment related thereto and the Purchased
Assets in respect thereof to GECITS), and IKON shall not (and shall cause its
Subsidiaries not to) approach any other Person as to the possibility of such
Person's financing or arranging for the financing (whether on an individual or
programmatic basis) of any proposed sale, lease or rental of Equipment, to
Customers of any IKON Company, at locations in the United States (collectively,
the "Right of First Opportunity"); provided, however, that (x) the Right of
First Opportunity shall not restrict the independent right of a Customer to
utilize, directly or indirectly, any third party financing source independently
identified by such Customer to finance its acquisition of Equipment and (y)
notwithstanding the IKON Companies' obligations to offer to GECITS the first
right to finance each sale, lease or rental of Equipment by the IKON Companies
under the Program, with respect to any proposed sale, lease or rental of
Equipment under a proposed Program Financing Contract, Program FM Stream
Financing or Program EM Stream Financing rejected by GE on behalf of GECITS,
IKON may itself, or may arrange for a third party financing source to, provide
financing for such Customer with respect to such proposed sale, lease or
rental; provided that if GE, on behalf of GECITS, shall have approved a
proposed Program Financing Contract, Program FM Stream Financing or Program EM
Stream Financing contingent upon the receipt of a specified level of recourse
or other financial accommodation from an IKON Company, no IKON Company shall
offer or provide to such third party financing source recourse or other
financial accommodation (including acceptance by IKON of an origination fee
less than the Base Origination Fee) that is as much or more than such specified
recourse or financial accommodation.
3.4. Sale of Equipment by IKON Companies Other Than IKON. Other
than in connection with Excluded Transactions, if any IKON Company other than
IKON arranges or enters into any agreement to lease Equipment to, or to provide
financing for the acquisition of Equipment by, Customers at locations in the
United States, then prior to arranging or entering into such agreement or
providing such financing, IKON, GE and GECITS shall negotiate and enter into
such amendments to this Agreement and to the GE Operative Agreements and the
IKON Operative Agreements as are necessary to cause such other IKON Company to
become a
8
party to this Agreement in order to provide for the transfer, sale and
conveyance of Equipment (together with any related Financing Contract and
other assets of the type described in the definition "Purchased Assets") to
GECITS on substantially the same terms (including representations, warranties,
covenants and indemnities) and subject to substantially the same conditions as
provided hereunder in connection with Program Financing Contracts and/or
Program Stream Financings (and the Equipment subject thereto and Purchased
Assets in respect thereof). In connection with any such amendments to this
Agreement, IKON shall unconditionally guarantee the full and prompt
performance and satisfaction of such other IKON Company's obligations to GE
and GECITS hereunder and under each of the other applicable IKON Operative
Agreements.
3.5. Federal Program. From and after the date hereof, IKON and GE
will negotiate in good faith the terms, conditions, provisions and processes
pursuant to which GE (or one or more of its Affiliates) would, during the Term,
purchase from IKON (pursuant to one or more agreements between GE (or an
Affiliate of GE) and IKON), receivables relating to the lease or rental
payments in respect of Equipment subject to Federal Financing Contracts
originated by IKON during the Term (the date on which agreements with respect
to the terms, conditions, provisions and processes for the purchase from IKON
by GE (or one or more of its Affiliates) of such receivables become effective
being the "Federal Program Integration Date"). During the period commencing on
the date hereof and ending on the Federal Program Integration Date, IKON may
offer to GE, and GE may purchase from IKON, Program Federal Stream Financings
pursuant to an executed Federal Assignment Agreement.
3.6. Product Reviews. From time to time during the Term, IKON
shall seek to permit GE and VFS Macon personnel to attend product reviews of
IKON's Equipment suppliers, including new product introductions, schedules for
anticipated product introductions and updates thereof, anticipated pricing
changes, projected monthly unit sales by model grouping and new marketing
programs.
3.7. Training. GE shall sponsor training programs for Equipment
sales personnel of the IKON Companies in the United States and certain key
operations personnel of the IKON Companies in the United States involved in the
administration of the Program, at which such individuals shall receive training
in the techniques of using leases and other financial products as sales tools
and such other matters as the parties may mutually agree. Such training
programs shall be held with such frequency and at such locations as IKON and GE
may mutually agree. IKON shall encourage, and shall use commercially
reasonable efforts to cause, its Equipment sales personnel and such key
operations personnel to attend such training programs. Each party shall bear
its own expenses in connection with such training programs.
ARTICLE 4.
GE RATE SHEETS; CREDIT APPROVAL POLICY; RESIDUAL POLICY
4.1. GE Rate Sheets; Changes. The GE Rate Sheets in effect on
the date hereof, and the steps and assumptions utilized in connection with the
preparation thereof (the "Base Assumptions"), are attached hereto as Exhibit J.
The rates set forth on the GE Rate Sheets
9
may be modified by GE to reflect changes in the underlying swap rates and/or
deviations in respect of actual Program portfolio composition from the Base
Assumptions (provided that GE shall not be entitled to modify the Base
Assumptions) on not less than 60 days' prior written notice to IKON, and any
such modification shall be accompanied by a notice from GE setting forth each
of the underlying swap rates utilized in the preparation of such modifications
(it being agreed that nothing contained in this Section 4.1 shall prohibit GE,
on behalf of GECITS, from granting (and GE, on behalf of GECITS, shall be
entitled to grant) a conditional approval of a proposed Program Financing
Contract or Program Stream Financing that includes as a condition, a change to
the rate otherwise applicable to the related Customer and/or the proposed
Program Financing Contract or Program Stream Financing pursuant to the GE Rate
Sheet then in effect). The GE Rate Sheets, as in effect from time to time,
shall incorporate residual values set forth in the then-current Residual
Policy by Equipment type.
(b) (i) GE shall present to the Executive Committee (together
with supporting materials) any proposed increases in the rates set forth on the
GE Rate Sheets that it desires to effect as a consequence of the impact, on the
average Program portfolio spread to GECITS under proposed Program Financing
Contracts and Program Stream Financings, of actual or anticipated accounting
or tax changes or other events or circumstances; provided, however, that, in
each case, such change, event or circumstance is reasonably expected to impact
similarly situated U.S.-based equipment lessors generally. After such
presentation to the Executive Committee, GE shall be free to implement the
proposed increases to the GE Rate Sheets upon at least 60 days' prior written
notice to IKON.
(ii) Following any increase contemplated by clause (b)(i)
and implemented without Executive Committee approval, the parties hereto shall
use their respective good faith efforts to resolve any such disagreement in
respect of such increases. In the event that the parties hereto are unable to
resolve any such disagreement within twenty (20) Business Days (a "Dispute"),
then upon the request of either IKON or GE, each of IKON and GE shall refer
the Dispute to the CEO or CFO of IKON (determined at the election of IKON) and
the CEO of the GE Vendor Financial Services business unit who shall attempt in
good faith to resolve such disagreement.
(iii) If the CEO or CFO of IKON and the CEO of GE Vendor
Financial Services fail to resolve any Dispute within twenty (20) Business
Days after such referral, then the parties shall submit such Dispute to
non-binding mediation in accordance with such rules upon which the parties
shall agree.
(c) If during the Term there shall occur any changes in tax Law
which (i) impact both the GE Vendor Financial Services business unit and
U.S.-based equipment lessors that are similarly situated to GE Vendor
Financial Services, (ii) provide favorable overall tax benefits to such
U.S.-based equipment lessors and (iii) result in such similarly situated
U.S.-based equipment lessors decreasing financing rates to such lessors'
end-user customers, then IKON may present to GE one or more proposals that
would similarly reduce the average Program portfolio margin to GECITS
reflected in the rates set forth on the GE Rate Sheets. Unless GE shall
deliver to IKON a written certification certifying that GE Vendor Financial
Services has not received (or shall not receive), through internal allocations
from GE, the benefit of such tax changes, GE shall, within 90 days of IKON's
request, effect such
10
modifications to the GE Rate Sheets as GE shall reasonably determine are
appropriate to pass on to Customers the benefit to GE Vendor Financial
Services of such tax benefits (to the extent such tax benefits are passed on
by similarly situated U.S.-based equipment lessors to their customers).
(d) In addition to the modifications to the GE Rate Sheets
contemplated by Sections 4.1(a), 4.1(b) and 4.1(c), either GE or IKON may,
based on changes in the market perceived by GE or IKON, present to the other
increases in the rates set forth on the GE Rate Sheets that it desires to
effect; provided, however, that any such rate increases shall require the
approval of the Executive Committee and shall be shared equally by GECITS and
IKON. For the avoidance of doubt, each of GE, GECITS and IKON acknowledges and
agrees that IKON shall be entitled to retain, for its own account, all amounts
received in respect of the Purchase Price of Equipment resulting from
Commissioned Rates.
(e) During the Term, the GE Rate Sheets shall not be amended,
modified or supplemented other than as contemplated by Sections 2.1(i)(ii),
4.1(a), 4.1(b), 4.1(c) or 4.1(d).
(f) GE shall, during the Term, deliver to the IKON Relationship
Manager the IKON National Rate Chart, in electronic format, which shall
incorporate the rates contained in the GE Rate Sheets and the Commissioned
Rates, in each case, as of the time of such delivery by GE. IKON shall be
entitled, from time to time, to require GE to revise the IKON National Rate
Chart by delivering to GE the Commissioned Rates to be incorporated therein
not less than two (2) Business Days prior to the date such IKON National Rate
Chart is to become effective. GE shall deliver to the IKON Relationship
Manager any such revised IKON National Rate Chart so requested, in electronic
format, in accordance with the immediately preceding sentence on or prior to
the date such revised rates are to become effective. During the Term, the IKON
National Rate Chart shall not be amended, modified or supplemented other than
as contemplated by this Section 4.1(f).
(g) Notwithstanding the foregoing, GE may, solely for its internal
purposes (and without affecting the then current lease rate factors),
effectively reduce the average Program spread to accommodate a corresponding
decrease in residual values during the period following notice to IKON of a
proposed change in the Residual Policy but prior to the effectiveness thereof
pursuant to Section 4.3(b).
4.2. Credit Approval Policy; Changes. The initial Credit Approval
Policy in effect on the date hereof is attached as Exhibit B. GE shall provide
IKON with not less than 30 days' prior written notice of any changes to the
Credit Approval Policy, together with GE's rationale for such changes and such
supporting information as IKON reasonably requests. GE, GECITS and IKON
acknowledge and agree that GE shall maintain final authority on changes to the
Credit Approval Policy and associated credit decisions (including credit
decisions based upon Obligor credit rating and credit decisions based upon
actual or anticipated levels of recourse to or reliance upon IKON).
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4.3. Residual Policy; Changes.
(a) The initial Residual Policy in effect on the date hereof is
attached hereto as Exhibit A. Subject to the limitations set forth in Section
4.3(b), from time to time after the date hereof, GE may make such changes to
the Residual Policy as GE determines to be appropriate; provided that such
changes are consistent with GE's treatment of residual positions with respect
to equivalent equipment under substantially similar GE Vendor Financial
Services programs with independent equipment dealers or manufacturers.
Notwithstanding the foregoing, in no event shall GE or GECITS have any
obligation to disclose residual or any other information to any IKON Company in
respect of GE Vendor Financial Services' other dealer or manufacturer programs,
and IKON (on behalf of itself and each other IKON Company) hereby irrevocably
waives all rights to require GE or GECITS to do so.
(b) GE shall provide IKON with not less than 60 days' prior
written notice of any proposed changes to the Residual Policy and shall,
together with such notice, provide supporting materials in respect of such
proposed changes as GE shall determine to be appropriate. Within such 60-day
period, IKON shall be entitled to accept or reject any increase to the residual
values so proposed by GE by delivering written notice thereof to GE. GE shall
be entitled to effect any such proposed changes, other than any proposed
increase in the residual values rejected by IKON in writing during the 60-day
period referred to above. IKON shall have the right to offer additional
residual pricing support in the amount of any decrease implemented by GE
(whether on an individual transaction basis or with respect to classes or
categories of Equipment subject to any Program Financing Contracts or related
to any Program Stream Financings), including residual pricing support of the
type contemplated by Section 5.10.
(c) Notwithstanding anything to the contrary contained herein, GE
shall be entitled to supplement the Residual Policy from time to time to add
residual information with respect to new items or models of Equipment not
previously included in the Residual Policy. In addition, GE shall be entitled
to amend, modify or supplement the Residual Policy, in its sole discretion, in
order to add or change the residual values in respect of any Non-Core Equipment
included or to be included therein (whether in connection with an individual
Program Financing Contract or Program Stream Financing or with respect to
classes or categories of Non-Core Equipment or otherwise); provided, however,
that nothing contained herein shall create or be deemed to create any
obligation of GE to supplement or amend the Residual Policy to include Non-Core
Equipment.
ARTICLE 5.
LEASE ORIGINATIONS
5.1. Calculation and Allocations of Minimum Periodic Payment.
The Minimum Periodic Payment in respect of each Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract or Program Stream
Financing Agreement that, in each case, constitutes a Bundled Financing
Contract shall, for the purposes of the Program, be allocated as among the
Lease Payment (with respect to any such Originated Financing Contract, IKON
Originated Financing Contract or SLG Financing Contract) or the Program Stream
12
Financing Payment (with respect to any Program Stream Financing Agreement), the
Base Equipment Service Payment, (unless such Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract or Program Stream
Financing Agreement provides for such reimbursement to be separately billed to
the Obligor) the Uplift Payment (which Uplift Payment (calculated on a monthly
basis) shall be deemed to be an amount equal to the product of (x) the Uplift
Allocation Percentage multiplied by (y) a fraction, the numerator of which is
the Original Equipment Cost of the Equipment subject or related to such Program
Financing Contract or Program Stream Financing and the denominator of which is
12), and (unless such Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Program Stream Financing Agreement provides
for such reimbursement to be separately billed to the Obligor) the Sales Tax
Payment (which Sales Tax Payment shall be deemed to be an amount equal to the
result of (x) the sum of (i) the product of (A) the Original Equipment Cost of
the Equipment subject or related to such Program Financing Contract or Program
Stream Financing (as applicable) multiplied by (B) the sales tax rate
applicable to the Lease Payment or Program Stream Financing Payment (at the
inception date of such Program Financing Contract or Program Financing Stream)
plus (ii) the product of (A) the Original Equipment Cost of the Equipment
subject or related to such Program Financing Contract or Program Stream
Financing (as applicable) multiplied by (B) the sales tax rate applicable to
the Base Equipment Service Payment (at the inception date of such Program
Financing Contract or Program Financing Stream) divided by (y) the number of
months of the original term of such Program Financing Contract or Program
Stream Financing), each in the manner set forth in Exhibit F (the "Allocation
Policy").
For each proposed Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Program Stream Financing Agreement that
has been submitted to GE for approval for funding under the Program (whether
or not a Bundled Financing Contract), IKON shall deliver to GE a completed
worksheet, in the form attached as Exhibit D, via the CLAS system or as
otherwise agreed, setting forth each of the applicable components of the
Minimum Periodic Payment thereunder as contemplated by Section 5.5(b)(i).
(i) If during the Term there shall occur any changes in
personal property tax Law or applicable rates which GE reasonably believes will
have the effect of rendering the Uplift Payments in respect of Property Tax
Inclusive Financing Contracts (A) insufficient to satisfy all of GECITS'
personal property tax obligations with respect to future Property Tax Inclusive
Financing Contracts, then GE shall be entitled, upon not less than 90 days
prior written notice to IKON, to increase the Uplift Allocation Percentage with
respect to all future Property Tax Inclusive Financing Contracts to such
percentage as GE shall reasonably determine is appropriate to price into new
Property Tax Inclusive Financing Contracts the full anticipated amount of the
personal property tax required to be paid by GECITS to the appropriate
Governmental Entities in respect thereof or (B) more than sufficient to satisfy
all of GECITS' personal property tax obligations with respect to future
Property Tax Inclusive Financing Contracts, then GE shall, within 90 days after
such determination, decrease the Uplift Allocation Percentage with respect to
all future Property Tax Inclusive Financing Contracts to such percentage as GE
shall reasonably determine is appropriate to price into new Property Tax
13
Inclusive Financing Contracts an amount sufficient to satisfy the personal
property tax required to be paid by GECITS to the appropriate Governmental
Entities in respect thereof.
(ii) The IKON National Service Price List, the IKON National
FM Price List and the IKON National Equipment Price List, each as in effect on
the date hereof, have previously been delivered to GE. From and after the date
hereof, IKON shall provide GE with copies of any and all amendments,
modifications or supplements to the IKON National Equipment Price List, the
IKON National Service Price List and the IKON National FM Price List (whether
in hard copy, via electronic transmission (in an agreed format) or by posting
such information on the website "xxx.XXXX.xxx" in a subfolder both identified,
in writing, to GE and in respect of which GE shall have been given (and shall
maintain) full access) by no later than the earlier to occur of (x) the date
that IKON distributes any such amendments, modifications or supplements to its
sales force and (y) the effective date of any such amendments, modifications or
supplements.
(b) For purposes of the services required to be performed by GE
and GECITS pursuant to this Agreement, the Servicing Agreement, the
Subservicing Agreements and the Services Agreement (including determining the
amounts, if any, required to be remitted to IKON under any Purchased Financing
Contract or Program Facilities Management Agreement the Program FM Stream
Financing in respect of which was purchased by GECITS pursuant to the Asset
Purchase Agreement), GE and GECITS shall be entitled to rely on (x) the
allocation of the Minimum Periodic Payment under each Purchased Financing
Contract and Program Facilities Management Agreement (as among the Lease
Payment or Program FM Stream Financing Payment (as applicable), Base Equipment
Service Payment, any applicable Uplift Payment and any applicable Sales Tax
Payment) reflected on the Purchased Assets (as defined in the Asset Purchase
Agreement) comprised of the books and records of IOS Capital (immediately prior
to the consummation of the Pre-Closing Merger) and IKON (as successor by merger
to IOS Capital).
(c) The allocation of the Minimum Periodic Payment under a
Program Financing Contract at the inception of an Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract or Program
Stream Financing Agreement the Program Stream Financing in respect of which is
purchased by GE from IKON pursuant to this Agreement (or, in the case of a
Purchased Financing Contract or Program Facilities Management Agreement the
Program FM Stream Financing in respect of which was purchased by GECITS under
the Asset Purchase Agreement, as set forth in Section 5.1(b)) shall, subject to
any amendments thereto effected in accordance with Section 5.8(c), govern the
allocation thereof through the end of the term of such Program Financing
Contract or Program Stream Financing Agreement (as applicable); provided,
however, that notwithstanding the foregoing, (x) any periodic increases to the
Minimum Periodic Payment that are expressly provided for in a Program Financing
Contract or Program Stream Financing Agreement shall be allocable solely to the
Base Equipment Service Payment under such Program Financing Contract or Program
Stream Financing Agreement (as applicable) and (y) GE, GECITS and IKON may
agree to reallocate the components of the Minimum Periodic Payment in respect
of any Program Financing Contract or Program Stream Financing Agreement during
any extension or renewal period thereof (in recognition of the reduced value of
the Equipment subject or related thereto
14
and the increased cost of performance of the Equipment Service Obligations in
respect thereof) to increase the Base Equipment Service Payment thereunder (by
up to 15% of the amount thereof) and to make a corresponding decrease in the
amount of the Lease Payment or Program Stream Financing Payment (as
applicable) thereunder. Except as otherwise specified in any Program Financing
Contract or Program Stream Financing Agreement, the CPC Payment, (except for
Property Tax Inclusive Financing Contracts) the Uplift Payment, (except for
Sales Tax Inclusive Financing Contracts) the Sales Tax Payment, and the CPI
Charges (if any) shall be in addition to (and itemized separately from) the
Minimum Periodic Payment and, therefore, shall not be subject to "allocation"
as provided above.
5.2. Application of Payments. Except to the extent the terms of
any Securitization Documents otherwise require (in which case the terms of such
Securitization Documents shall govern), all payments made by an Obligor under
each Program Financing Contract and Program Stream Financing Agreement and
received by or on behalf of GE or GECITS shall be applied in the manner set
forth in the Application Methodology attached as Exhibit E hereto (the
"Application Methodology"). Notwithstanding the foregoing, if an Obligor under
a Program Financing Contract or Program Stream Financing Agreement has made a
partial payment in respect of such Program Financing Contract or Program Stream
Financing Agreement and has specified how it wants such payment applied, then
such payment shall be applied in accordance with such Obligor's specifications.
Except as otherwise permitted to do so by IKON, neither GE nor GECITS shall
instruct any Obligor under any Program Financing Contract or Program Stream
Financing Agreement to direct the application of any payments made or to be
made by such Obligor thereunder that would cause amounts due and owing to
GECITS (which GECITS is entitled to retain for its own account) to be paid in
lieu of payments that would, under the Application Methodology, otherwise be
required to be remitted by GE to IKON. Except as otherwise permitted to do so
by GE or GECITS, IKON shall not instruct any Obligor under any Program
Financing Contract or Program Stream Financing Agreement to direct the
application of any payments made or to be made by such Obligor thereunder that
would cause amounts due and owing to IKON to be paid in lieu of payments that
would, under the Application Methodology, otherwise be required to be remitted
to or retained by GECITS.
5.3. Remittance of Payments. (a) Except to the extent the terms of
any Securitization Documents otherwise require (in which case the terms of such
Securitization Documents shall govern), all amounts received by or on behalf of
GE or GECITS pursuant to any Program Financing Contract (other than a Written-
Off Financing Contract) shall be remitted or retained as follows (subject, in
each case, to the application priorities set forth in the Application
Methodology):
(i) (A) The Base Equipment Service Payments, the CPI
Charges billed and uncollected as of the date hereof (if any), the Service
Sales Tax Payments and CPC Payments received by or on behalf of GE or GECITS
pursuant to any Program Financing Contract, (B) those Late Charges and recovery
settlement receivables not reflected as assets on the Final Adjusted Closing
Date Schedule (if any) that, in the case of this clause (B), are billed and
uncollected as of the date hereof and are hereafter received by GE or GECITS
under any Purchased Financing Contract and (C) Uplift Payments the property tax
obligations relating to which are borne by IKON pursuant to Section 8.3(e)
shall, in the case of (A), (B) and (C) above,
15
be remitted by GE to IKON within one (1) Business Day after such amounts are
received and identified by GE and the proper application thereof has been
determined by GE, and
(ii) The Lease Payments, Equipment Sales Tax Payments,
(except to the extent otherwise provided in Section 5.03(b) of the Asset
Purchase Agreement (solely in respect of Purchased Financing Contracts)) Uplift
Payments (if any) (other than any Uplift Payments of the type described in
Section 5.3(a)(i)(C) above), CPI Charges (other than CPI Charges billed and
uncollected as of the date hereof (if any)), Administration Fees thereunder,
payments made in connection with the exercise by an Obligor of any right to
purchase Equipment subject to such Program Financing Contract, Late Charges,
Insurance Proceeds, Equipment casualty payments by the related Obligor, Obligor
indemnity payments in respect of any of the foregoing or in respect of the
Equipment subject to such Program Financing Contract and all other amounts
(other than unidentified proceeds (so long as such proceeds remain
unidentified) and except as expressly provided in clause (i) above) received by
or on behalf of GE or GECITS pursuant to any Program Financing Contract shall
be retained by GECITS for its own account.
(iii) GE shall make the payments described in Section
5.3(a)(i) above because IKON has agreed to perform the obligations described in
Section 8.3(a). The payment by GE of such amounts shall not be conditioned
upon the performance by IKON of such obligations.
(b) All amounts received by or on behalf of GE or GECITS pursuant
to any Program Stream Financing Agreement shall be remitted or retained as
follows (subject, in each case, to the application priorities set forth in the
Application Methodology referred to in Section 5.2 above):
(i) The Program Stream Financing Payments, and (except to
the extent otherwise provided in Section 5.03(b) of the Asset Purchase
Agreement (solely in respect of Program FM Stream Financings purchased
pursuant thereto)) any Uplift Payments (other than Uplift Payments the
property tax obligations relating to which are borne by IKON pursuant to
Section 8.3(e)), Equipment Sales Tax Payments, CPI Charges (other than
CPI Charges billed and uncollected as of date hereof (if any)),
Administration Fees, any Late Charges in respect thereof (except as
expressly provided in clause (b)(ii) immediately below), payments made in
connection with the exercise by an Obligor of any right to purchase
Equipment related to any Program Stream Financing, Insurance Proceeds,
Equipment casualty payments by the related Obligor, Obligor indemnity
payments in respect of any of the foregoing or in respect of the
Equipment related to any Program Stream Financing, in each case, received
by or on behalf of GECITS shall be retained by GECITS for its own
account, and
(ii) All other amounts, including any Service Sales Tax
Payments, Late Charges and recovery settlement receivables not reflected
as assets on the Final Adjusted Closing Date Schedule (if any) that are
billed and uncollected as of the date hereof and are hereafter received
by or on behalf of GE or GECITS under any Program Stream Financing
Agreement (other than unidentified proceeds (so long as such proceeds
remain
16
unidentified) and except as expressly provided in clause (i) above)
received by or on behalf of GE or GECITS pursuant to any Program Stream
Financing Agreement shall be remitted by GE to IKON in accordance with
Section 2(d) of the Servicing Agreement within one (1) Business Day after
such amounts are received and identified by GE and the proper application
thereof has been determined by GE.
(iii) GE's obligations under Section 5.3(b)(ii) are not
conditioned upon IKON's performance of its Equipment Service Obligations
with respect to any Program Stream Financing Agreement.
GE shall use commercially reasonable efforts, consistent with Business as
Usual, to identify, and determine the proper application of, all amounts
received by it in respect of Program Financing Contracts (in accordance with
Section 5.3(a)) and Program Stream Financing Agreements (in accordance with
Section 5.3(b)) as promptly as practicable following its receipt thereof. If
GE is unable, within 20 Business Days following its receipt of any payment by
or on behalf of an Obligor under a Program Financing Contract or Program Stream
Financing Agreement, to identify and apply such cash pursuant to the provisions
of Section 5.3(a) or 5.3(b), then GE shall (x) promptly contact such Obligor
(whether telephonically or in writing) for purposes of determining the proper
application of such payment and (y) concurrently with such Customer contact,
notify the IKON Director of Macon Shared Services Center (or other Person
identified by IKON to GE in writing) of the amount of such unidentified
payments and the Customer from whom such payments were received. Unless
otherwise instructed by the Obligor on or prior to the day that is five (5)
Business Days after GE first contacts such Obligor and IKON of the unidentified
payments, GE shall (x) remit to IKON such amount as IKON notifies GE are due
and owing by such Obligor to IKON at such time and (y) return such payments (or
any portion thereof not remitted to IKON) to such Obligor.
5.4. Financing Documentation; Exceptions. (a) GE shall provide
IKON with the Standard Form Documentation (including the Exceptions Manual)
and form of Application. GE shall be permitted to modify or change any
Standard Form Documentation and develop new or additional Standard Form
Documentation; provided, that except to the extent that GE determines that a
modification or other change thereto is necessary or prudent to comply with
applicable Law or provide appropriate legal disclosures, prior to GE
implementing any material modifications or changes to, or any material new or
additional, Standard Form Documentation, IKON shall have the right to review
and approve any such modifications or changes or new or additional
documentation.
(b) (i) IKON shall cause its sales, legal and similar personnel
to use reasonable commercial efforts to utilize the Standard Form Documentation
in connection with each proposed Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract and Federal Financing
Contract (whether or not any related Equipment Service Obligations of IKON are
contemplated to include obligations to provide facilities management
services); it being agreed that the foregoing shall not apply to any Program
Facilities Management Agreement listed on Schedule 2 hereto prior to the
earlier of (1) the expiration date thereof set forth opposite such agreement
on Schedule 2 and (2) the date such Program Facilities Management Agreement is
amended or otherwise modified to conform to the
17
Standard Form Documentation. IKON shall promptly coordinate with designated GE
representatives with respect to any changes proposed by the Customer in
respect of any proposed Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract or Federal Financing Contract which
are not otherwise permitted by the Exceptions Manual, including by (A)
delivering to GE all such changes promptly following the delivery thereof to
IKON's legal department (except to the extent that IKON's legal department, in
the exercise of its reasonable judgment, deems the Customer's proposed changes
to be unacceptable and would not recommend to GE and GECITS the financing
thereof, in which case the IKON legal department may, prior to or in lieu of
presentation of such Customer proposed changes to GE, attempt to negotiate
terms more favorable to the lessor, in which case any such negotiated changes
which are not otherwise permitted by the Exceptions Manual shall be delivered
to GE), (B) promptly reviewing and responding to Customer comments or proposed
changes to any proposed Program Financing Contract or Program Stream Financing
Agreement, (C) promptly presenting to the applicable Customer any changes to
such proposed Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Federal Financing Contract (as applicable)
proposed by GE or GECITS, and (D) using commercially reasonable efforts to
negotiate with such Customer all such proposed changes communicated by GE or
GECITS.
(ii) Upon GE's receipt from IKON of a draft proposed
Originated Financing Contract, IKON Originated Financing Contract or SLG
Financing Contract containing proposed changes to the Standard Form
Documentation requested by the Customer (which shall have been delivered to
IKON's legal department pursuant to Section 5.4(b)(i)), GE shall (and shall
cause GECITS to) respond to IKON in respect of such proposed changes (which may
be by approving, rejecting and/or modifying such changes), on average, for any
month during the Term, within three (3) Business Days of its receipt thereof.
(c) Nothing contained in this Agreement shall limit in any manner
GE's or GECITS' right to negotiate with Customers and otherwise change, from
the Standard Form Documentation, the documentation with respect to any actual
or proposed Originated Financing Contract, IKON Originated Financing Contract
or SLG Financing Contract with a Customer, except (i) to the extent such change
shall (A) increase any obligation of IKON (including any warranty obligation to
be retained by IKON) to the Obligor thereunder or (B) reduce, from the amount
determined pursuant to Section 5.1, the amount of any CPC Payment or Base
Equipment Service Payment due or to become due thereunder, and (ii) that IKON
may require GE to agree (A) not to charge, with respect to any Originated
Financing Contract, or (B) to accept proposed changes to any proposed IKON
Originated Financing Contract, SLG Financing Contract, Program Equipment
Management Agreement or Program Facilities Management Agreement, in each case,
which have the sole effect of omitting to charge, late fees or delinquency
charges thereunder; provided that, in determining the Purchase Price for the
Equipment subject or related thereto, the Discount Rate that would otherwise be
applicable to such Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or to the related Program Stream Financing (as
applicable) in accordance with the GE Rate Sheets shall be increased by 1%. GE
acknowledges and agrees that unless otherwise requested by IKON, GE shall not
directly negotiate with Customers with respect to the documentation in respect
of any
18
proposed Program Facilities Management Agreement or Program Equipment
Management Agreement.
5.5. Credit Approval; Preparation of Document Package.
(a) Credit Approval. Upon its receipt from IKON of (i) a complete
Application for approval of a credit line in respect of a proposed Customer
(which Application shall be executed by the applicable Customer if a personal
guaranty is required to be given or if GE determines that a bank reference is
required to be obtained, in each case, in connection with such Application
pursuant to the Credit Approval Policy) and (ii) all other information required
pursuant to the Credit Approval Policy with respect to such Application, GE
shall (A) promptly (1) notify IKON that such Application is complete and (2)
conduct such credit investigation and analysis of such Customer as it deems
necessary, and (B) approve, conditionally approve or reject each such
Application, on average, for each month during the Term, within the applicable
Credit Approval Period. The parties hereto acknowledge and agree that any
approval or conditional approval of any Application shall not constitute an
approval or conditional approval of any proposed Program Financing Contract or
Program Stream Financing.
(b) Preparation of Document Package. In connection with each
proposal for a Customer to enter into an Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract or Federal Financing
Contract, or to rent or lease Equipment pursuant to a Program Facilities
Management Agreement or Program EM Stream Financing (which proposal may be
delivered to GE concurrently with an Application for such Customer or at any
time during the period for which an approval or conditional approval in respect
of an Application for such Customer is in effect) IKON shall transmit to GE
(whether in hard copy or in an agreed electronic format) all credit and other
information required pursuant to the Credit Approval Policy with respect to
such proposed Originated Financing Contract, IKON Originated Financing Contract
or SLG Financing Contract, or with respect to the Program Stream Financing
related to such Federal Financing Contract, Program Facilities Management
Agreement or Program Equipment Management Agreement (as applicable)
(collectively, with the complete Application, the "Document Package" for such
proposed Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing (as applicable)), which
information shall include:
(i) in respect of each such Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing or Program EM Stream Financing, (A) a detailed description and
listing of the Equipment to be covered thereby, together with the related
pricing worksheets setting forth (if applicable) the allocation of each
component of the Minimum Periodic Payment as provided in Section 5.1 above and
the manner of the computation thereof, together with the amounts of all other
payments (if any) required to be made by the Obligor thereunder, and (B) such
other credit and financial documentation and information as may be reasonably
requested by GE from IKON or the applicable Customer as contemplated by the
Credit Approval Policy, and
(ii) solely with respect to each proposed SLG Financing
Contract, Program FM Stream Financing or Program EM Stream Financing in respect
of which the
19
Obligor thereunder is a State and Local Government Entity, (A) the name and
telephone number of the Customer's designated contact, (B) a copy of any RFP
response or comparable proposal that IKON presented to the Customer under such
proposed SLG Financing Contract or the Program Facilities Management Agreement
or Program Equipment Management Agreement relating to such proposed Program FM
Stream Financing or Program EM Stream Financing (as applicable), (C) a copy of
each RFP, bid award, contract and purchase order, if applicable, related to
such proposed SLG Financing Contract or the Program Facilities Management
Agreement or Program Equipment Management Agreement relating to such proposed
Program FM Stream Financing or Program EM Stream Financing, (D) an essential
use audit/information statement completed by the Customer under such proposed
SLG Financing Contract or the Program Facilities Management Agreement or
Program Equipment Management Agreement relating to such proposed Program FM
Stream Financing or Program EM Stream Financing, in each case, to the extent
the Original Equipment Cost of all Equipment proposed to be subject thereto is
in excess of $100,000, (E) to the extent that the consent or approval of the
applicable State and Local Government Entity is required prior to any
assignment thereof (or the Program Stream Financings thereunder or RFPs with
respect thereto), a consent letter (in the form of Exhibit H-2) duly executed
by such State and Local Government Entity, and (F) if such SLG Financing
Contract, Program FM Stream Financing or Program EM Stream Financing is
submitted as a Tax-Exempt Public Sector Financing, an Internal Revenue Service
Form 8038-G or 8038-GC, as the case may be, duly executed by the Customer
under such SLG Financing Contract, Program Facilities Management Agreement or
Program Equipment Management Agreement relating to such proposed Program FM
Stream Financing or Program EM Stream Financing (as applicable). After GE's
approval of an SLG Financing Contract, Program FM Stream Financing or Program
EM Stream Financing (but before GECITS' purchase thereof), IKON shall deliver
to GE a copy of such Customer's board minutes or other documents evidencing
approval and such other document(s) as may be required pursuant to the Credit
Approval Policy.
(c) GE and IKON shall establish mutually acceptable procedures
pursuant to which IKON shall timely transmit to GE (via the CLAS system or as
otherwise agreed) all of the information required to be delivered by it to GE
pursuant to Sections 5.5(a) and 5.5(b) above.
(d) Upon the request of IKON, and to the extent GE and GECITS are
legally permitted to do so (pursuant to applicable Law, contracts to which
either of them is a party or by which either of them are bound, or otherwise),
GE shall deliver to IKON copies of any credit, financial or other information
obtained or prepared by GE in connection with the credit review of any
Applications or proposed Originated Financing Contracts, IKON Originated
Financing Contracts, SLG Financing Contracts or Program Stream Financings
rejected by GE. IKON acknowledges and agrees that (i) any such information or
documentation delivered by GE or GECITS to IKON pursuant to this Section 5.5(d)
(and not pursuant to any other provision of this Agreement, any IKON Operative
Agreement or GE Operative Agreement) shall be delivered without representation
or warranty of any kind, and neither GE nor GECITS shall have any liability or
obligation to IKON under this Agreement in connection with the delivery to, or
use by IKON, of such documentation and information and (ii) IKON shall not,
except as otherwise expressly consented to by GE (which consent may be withheld
by GE in its sole discretion) or
20
required pursuant to the terms of a valid and effective subpoena or Order of a
court of competent jurisdiction, distribute, publish or make available to any
other Person any information or documentation provided to IKON by GE pursuant
to this Section 5.5(d). In the event that IKON receives a request to disclose
all or any part of the information or documentation provided to it pursuant to
this Section 5.5(d) (and not pursuant to any other provision of this Agreement
or any IKON Operative Agreement or GE Operative Agreement) under the terms of
a valid and effective subpoena or Order issued by a court of competent
jurisdiction, IKON agrees that it shall (i) immediately notify GE, in writing,
of such request and the terms thereof, (ii) consult with GE on the
advisability of taking available steps to resist or narrow such request and
(iii) assist GE or GECITS (at GE's and GECITS' expense) in seeking a
protective order or other appropriate remedy. In the event such protective
order or other remedy is not obtained, IKON shall be entitled to disclose only
that portion of such information and/or documentation which, in the opinion of
its counsel, is legally required by Law to be disclosed, and shall use
commercially reasonable efforts to obtain assurance that confidential
treatment will be accorded such information and/or documentation.
5.6. Authorization. (a) Upon confirmation by GE that it has
received (i) a complete Document Package with respect to a proposed Originated
Financing Contract, IKON Originated Financing Contract, SLG Financing Contract
or Program Stream Financing (as applicable), and provided that (A) the sum of
(x) the Purchase Price with respect to the Equipment (other than Non-Core
Equipment) to be subject or related to such proposed Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract or
Program Stream Financing plus (y) the purchase price payable to any third
party supplier with respect to any Non-Core Equipment to be subject or related
to such proposed Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Program Stream Financing, does not exceed
the then- remaining undrawn credit line approved by GE for the related
Customer thereunder and (B) any approval or conditional approval of any
applicable Application shall not have terminated, expired or been revoked, in
each case, pursuant to Section 5.6(c) or (d)) and (ii) evidence as to the
satisfaction of all conditions to any conditional approval prior to the date
that such conditional approval shall expire or be revoked pursuant to Section
5.6(c) or (d), then GE shall notify IKON, in writing, as to whether it has
approved, or conditionally approved or rejected the purchase by GECITS of the
Equipment subject or related to such proposed Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract or Program Stream
Financing (as applicable) in the manner set forth below. Unless otherwise
agreed to in a writing delivered to IKON by GE, any such approval or
conditional approval shall be subject to (and any obligation of GECITS to
remit to IKON the Purchase Price in respect thereof shall be conditioned upon)
GE's receipt of a Confirmation of Acceptance and an original Program Financing
Contract or Program Stream Financing Agreement (which conforms to the Standard
Form Documentation unless otherwise agreed by GE), duly executed by the
applicable Obligor, in each case, with respect to the Equipment subject
thereto.
(b) Except with respect to Equipment placed with the Customer
pursuant to a trial or demonstration arrangement, IKON shall implement policies
designed to prevent the shipment of any Equipment subject or related to a
proposed Originated Financing Contract,
21
IKON Originated Financing Contract, SLG Financing Contract or Program Stream
Financing prior to (i) the execution and delivery by the applicable Customer
of an Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing Agreement (or lease addendum or
amendment with respect to such Equipment) (as applicable) relating to the
rental or lease of such Equipment to such Customer and (ii) the delivery of
faxed copies or originals of such documentation to IKON. In the event that any
Responsible Officer of any IKON Company learns of any such shipment prior to
such time, IKON shall immediately notify GE. Such notice shall not relieve
IKON of its obligation to deliver to GECITS good title to the Equipment that
is the subject thereof.
(c) Notwithstanding anything to the contrary contained herein,
unless otherwise agreed to by GE in any particular instance in writing, (i)
GE's credit approval of a Application for a Customer credit line shall expire
six (6) months after such approval, (ii) if amendments to the GE Rate Sheet
made pursuant to Section 4.1 shall become effective during the period between
the date a pricing quote in respect of a proposed Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract or Program
Stream Financing is communicated to IKON and the Transfer Date in respect of
the Equipment subject to such pricing quote, then such pricing quote shall be
deemed automatically to be amended, as of the Transfer Date, to reflect the
rates set forth in the GE Rate Sheets in effect on such Transfer Date and (iii)
GE's approval of a proposed purchase of Equipment under a proposed Originated
Financing Contract or of a proposed purchase of any IKON Originated Financing
Contract, SLG Financing Contract or Program Stream Financing (and the Purchased
Assets and Equipment related thereto) shall automatically be revoked if IKON
shall, in accordance with its past practices, effect a "sale reversal" with
respect to the related Equipment.
(d) (i) GE, on behalf of GECITS, may at any time prior to the
Transfer Date relating to the Equipment subject or related to a proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing, upon notice to IKON, revoke its
approval or conditional approval, of (i) an Application for a credit line
delivered pursuant to Section 5.5, or (ii) the purchase of any Equipment (and
any related IKON Originated Financing Contract, SLG Financing Contract, Program
Stream Financing and Purchased Assets) subject or related to such proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing (as applicable) given pursuant
to Section 5.6(a) if:
(A) at any time after such approval or conditional
approval was granted there shall occur and be continuing any GE Termination
Event; provided that GE shall not be entitled to revoke, under this clause (A),
its approval or conditional approval for the purchase of any Equipment (and any
related IKON Originated Financing Contract, SLG Financing Contract, Program
Federal Stream Financing and Purchased Assets) if (x) the related proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Federal Financing Contract (I) is written on the Standard
Form Documentation and (II) has been approved without recourse to, or reliance
upon, any IKON Company or (y) a Credit Revocation Cutoff Date with respect to
such GE Termination Event shall have occurred at or prior to such time (it
being agreed that nothing contained in this Section 5.6(d)(i)(A) shall, in any
22
event, be deemed to limit, modify or otherwise restrict any of GE's remedies
under any of the other provisions of this Agreement in respect of such GE
Termination Event), or
(B) GE (1) determines that any of the information on
which any such approval was based is inaccurate or false in any material
respect, or (2) becomes aware of additional information (including that there
has been a significant change in the Customer's business or properties or in
the ownership or control of such Customer) which would (in GE's view), if such
information had been provided to GE prior to GE approving such Application or
such purchase of any Equipment subject or related to such proposed Originated
Financing Contract, IKON Originated Financing Contract, SLG Financing Contract
or Program Stream Financing, have resulted in GE's rejecting (or, in the case
of a conditional approval, further conditioning the approval of) such
Application or such Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Program Stream Financing, or (3) determines
that there has been a material decline in the Customer's business, properties
or financial condition or change in control of such Customer.
(ii) In addition to the foregoing, GE may, at any time prior
to the Transfer Date relating to the Equipment subject or related to a proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing (as applicable), upon notice to
IKON, revoke its approval or conditional approval of such proposed Originated
Financing Contract, IKON Originated Financing Contract, SLG Financing Contract
or Program Stream Financing given pursuant to Section 5.6(a) if:
(A) the related Customer shall notify any IKON
Company or GE of such Customer's intent to cancel all or any part of such
proposed Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing Agreement (or such Program
Stream Financing thereunder), or to refuse to accept any Equipment to be
subject or related to such proposed Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract or Program Stream
Financing Agreement (or such Program Stream Financing thereunder) (as
applicable), or
(B) GE reasonably determines, at any time, that (1)
any of the representations and warranties of IKON contained in Section 8.2 will
not, with respect to such proposed Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing or Program EM Stream Financing (or the Equipment subject thereto or
Purchased Assets in respect thereof), be true and correct on the proposed
Transfer Date of the Equipment subject or related thereto, or (2) any of the
representations and warranties of IKON contained in the Federal Assignment
Agreement will not, with respect to such proposed Program Federal Stream
Financing (or the Equipment subject thereto or Purchased Assets in respect
thereof), be true and correct on the proposed Transfer Date of the Equipment
related to such proposed Program Federal Stream Financing.
5.7. Purchase and Sale of Equipment.
(a) (i) (A) On the Transfer Date with respect to Equipment (and
any related IKON Originated Financing Contract, SLG Financing Contract, Program
FM Stream
23
Financing, Program EM Stream Financing and Purchased Assets), other
than any Equipment related to a Program Federal Stream Financing, IKON shall
automatically be deemed to have sold, transferred, conveyed and assigned to
GECITS, and GECITS shall automatically be deemed to have purchased, all of such
Equipment (and any related IKON Originated Financing Contract, SLG Financing
Contract, Program FM Stream Financing, Program EM Stream Financing and
Purchased Assets with respect thereto), and with no further action,
documentation or agreement required by any party to give effect thereto, in
each case free and clear of all Liens (including Liens arising under the
federal, state or local tax laws or the Employee Retirement Security Act of
1974, as amended), except for Liens for property taxes that are not yet due and
payable. Such assignment shall include all of IKON's rights to such Equipment
(and IKON Originated Financing Contract, SLG Financing Contract, Program FM
Stream Financing, Program EM Stream Financing and Purchased Assets with respect
thereto, but shall not include any Equipment Service Obligations and any
obligation under any warranties (whether or not set forth in the applicable
Program Financing Contract or related Program Stream Financing Agreement).
Notwithstanding anything to the contrary in this Section 5.7(a)(i)(A), GECITS
acknowledges and agrees that with respect to any IKON Originated Financing
Contract or SLG Financing Contract that is sold, transferred, conveyed and
assigned to GECITS hereunder, GECITS shall assume each obligation of IKON, as
lessor, under such IKON Originated Financing Contract or SLG Financing Contract
(as applicable) other than any Equipment Service Obligations.
(1) Each such assignment by IKON shall be
deemed to be an absolute and present sale and assignment, not an assignment for
the purposes of collateral security and shall in no way be construed as an
extension of credit by GE or GECITS to IKON. IKON shall not and shall cause
its Affiliates not to, take any action or do or cause anything to be done, that
shall limit, restrict or impair the passage of any manufacturer's or other
warranties in respect of the Equipment subject to Originated Financing
Contracts, IKON Originated Financing Contracts, SLG Financing Contracts,
Program EM Stream Financings or Program FM Stream Financings to GECITS and the
applicable Customer. Each IKON Company shall (to the extent it is entitled to
do so) assign to GECITS and the Customer all such warranties without recourse
to IKON.
(2) If IKON or another IKON Company desires to
arrange for or source any proposed Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract, Program EM Stream
Financing or Program FM Stream Financing in respect of which part of the
Equipment to be subject thereto consists of Non-Core Equipment, then prior to
the proposed Transfer Date with respect to such Equipment (and any related
proposed IKON Originated Financing Contract, SLG Financing Contract, Program FM
Stream Financing, Program EM Stream Financing and Purchased Assets (as
applicable)), IKON shall deliver to GE an invoice with respect to the purchase
of such Non-Core Equipment together with a third party payee letter in respect
thereof pursuant to which (I) IKON shall assign to GE all of its rights to
purchase such Non-Core Equipment and (II) GECITS shall be directed to remit the
purchase price with respect to such Non-Core Equipment directly to the third
party supplier identified in such letter and invoice. IKON shall and shall
cause each other applicable IKON Company to use commercially reasonable efforts
24
to assist GE in obtaining from any such third party supplier, in connection
with any proposed Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract, Program EM Stream Financing or Program FM
Stream Financing, any required consent to an assignment by the Customer to GE
of such Customer's purchase order for such Non-Core Equipment.
(B) On the Transfer Date with respect to Equipment
related to a Program Federal Stream Financing, IKON shall sell, transfer,
convey and assign to GECITS, and GECITS shall purchase from IKON, such
Equipment, the Program Federal Stream Financing with respect thereto and the
Purchased Assets in respect thereof, pursuant to the Federal Assignment
Agreement, if prior to the Federal Program Integration Date.
(ii) Notwithstanding anything to the contrary in Section
5.7(a)(i), (A) GECITS acknowledges and agrees that with respect to any
Equipment subject or related to a Program Stream Financing Agreement that is
sold, transferred, conveyed and assigned to GECITS, such Equipment is
encumbered by and subject to the rights and interests of the Obligor under the
applicable Program Stream Financing Agreement and (B) GECITS agrees that with
respect to any Equipment subject or related to a Program Stream Financing
Agreement that is sold, transferred, conveyed and assigned to GECITS, GECITS
shall not, nor shall it permit any Person acting on behalf of or through GECITS
to, take any action which, at the time and under the circumstances so taken, is
inconsistent with the rights of, or any actions that may be taken by, the
lessor under the related Program Stream Financing Agreement.
(iii) In addition, on the Transfer Date with respect to any
Equipment (and any related IKON Originated Financing Contract, SLG Financing
Contract, Program Stream Financing and Purchased Assets (as applicable)),
GECITS shall (except as otherwise provided above or in the Federal Assignment
Agreement) become obligated to, and within one (1) Business Day after the
delivery of the Dealer Compensation Report in respect of the transfer of such
Equipment shall, pay the Purchase Price of all such Equipment (and any related
IKON Originated Financing Contract, SLG Financing Contract, Program Stream
Financing and Purchased Assets); provided that, GE shall have received, (A) not
later than one (1) Business Day prior to the Transfer Date applicable to such
Equipment, (1) the complete Document Package with respect to such Originated
Financing Contract, IKON Originated Financing Contract, SLG Financing Contract
or Program Stream Financing, (2) an original Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract or Federal Financing
Contract (or faxed copy which shall be followed by delivery to GE of an
original thereof prior to the applicable Fax Funding Delivery Date), duly
executed by the applicable Obligor or a faxed copy of the applicable Program
Facilities Management Agreement or Program Equipment Management Agreement
(together with any lease addendum or amendment relating to the Equipment
transferred to GECITS on such Transfer Date), duly executed by the applicable
Obligor and (B) a Confirmation of Acceptance with respect to such Equipment.
(iv) During the 90-day period commencing on the date hereof,
IKON shall implement (and shall thereafter maintain at all times during the
Term) company-wide policies and procedures that require the IKON Companies'
sales, legal and similar personnel to (x) obtain from the applicable Customers,
as promptly as practicable, original execution copies of each Originated
Financing Contract, IKON Originated Financing Contract, SLG Financing
25
Contract and Federal Financing Contract, to the extent the Equipment subject
thereto was shipped by IKON upon IKON's receipt of a facsimile copy (and not
an original execution copy) thereof and (y) deliver to GE original execution
copies of each Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract and Federal Financing Contract (duly executed
by the applicable Obligor) which GECITS has funded upon its receipt of a
facsimile copy thereof pursuant to Section 5.7(a)(iii), by the date that is
ten (10) days after the Transfer Date with respect to the Equipment subject or
related thereto. If an IKON Company fails to provide to GE an original
executed copy of an Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Federal Financing Contract by the Fax
Funding Delivery Date with respect thereto, then IKON shall be required to
purchase from GECITS, within one (1) Business Day after such Fax Funding
Delivery Date, such Originated Financing Contract, IKON Originated Financing
Contract, SLG Financing Contract or Federal Financing Contract (as applicable)
and Purchased Assets and Equipment related thereto, on an "AS-IS, WHERE-IS"
basis, without representation, warranty or recourse of any kind, other than
Agreed Warranties for a purchase price equal to the Net Book Value thereof on
the date of such purchase.
(b) IKON agrees to promptly provide GECITS with written evidence
of IKON's sale and assignment of any Equipment and/or any related IKON
Originated Financing Contract, SLG Financing Contract, Program Stream Financing
and Purchased Assets (as applicable) to GECITS together with such additional
documentation as GECITS may reasonably request from time to time in connection
therewith to evidence IKON's compliance with its obligations under this
Agreement or any other IKON Operative Agreement.
(c) As designated by GE from time to time in writing, IKON shall
sell, assign, and otherwise transfer and convey (i) any SLG Financing Contract
and related Equipment and Purchased Assets directly to GECITS, any Affiliate of
GE or any direct or indirect wholly-owned Subsidiary of GE, which Person shall
be the lessor in respect of such SLG Financing Contract (as assignee of IKON)
and (ii) any Program Stream Financing (and related Equipment and Purchased
Assets) in respect of which the Obligor thereunder is a State and Local
Government Entity directly to GECITS, any Affiliate of GE or any direct or
indirect wholly-owned Subsidiary of GE; provided, however, that GE shall
guarantee the full performance and satisfaction of the obligations of such GE
designee in the event of any such sale, assignment, transfer or conveyance
pursuant to a guaranty in substantially the form of the GE Guaranty. All of
the representations, warranties, covenants and other obligations set forth in
this Agreement shall inure to the benefit of such designee(s).
(d) Unless otherwise required by United States generally accepted
accounting principles, IKON shall treat the conveyance of the Equipment subject
or related to any proposed Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract or Program Stream Financing, and the
conveyance of any IKON Originated Financing Contract, SLG Financing Contract,
Program Stream Financing and related Purchased Assets, as a sale thereof on all
relevant books, records, financial statements and other applicable documents.
(e) Each of IKON, GECITS and GE acknowledge and agree that GECITS
is a buyer in the ordinary course of IKON's business of all Equipment (and (i)
in the case of any
26
IKON Originated Financing Contract or SLG Financing Contract in respect
thereof, such Financing Contract and related Purchased Assets or (ii) in the
case of any Program Stream Financing related thereto, such Program Stream
Financing and related Purchased Assets) sold, assigned, transferred or
otherwise conveyed by IKON pursuant to this Agreement.
(f) Each of GE, GECITS and IKON acknowledge and agree that (i)
each IKON Originated Financing Contract, SLG Financing Contract and Program
Stream Financing Agreement is an obligation for the lease or rental of
Equipment and (ii) each IKON Originated Financing Contract, SLG Financing
Contract and Program Stream Financing Agreement constitutes "chattel paper" (as
defined in the New York Uniform Commercial Code). The rights to receive
payments under each IKON Originated Financing Contract, SLG Financing Contract
and in respect of each Program Stream Financing constitute "proceeds" of
"chattel paper" (each as defined in the New York Uniform Commercial Code). All
Credit Enhancements in respect of the IKON Originated Financing Contracts, SLG
Financing Contracts and Program Stream Financings constitute "supporting
obligations" (as defined in the New York Uniform Commercial Code) and one or
more of the following: "letter of credit rights", "instruments", and/or
"investment property" (each as defined in the New York Uniform Commercial
Code).
5.8. Rights Under Leases; Security Interest.
(a) IKON acknowledges and agrees that, notwithstanding GECITS'
entry into and GE's administration of any Program Financing Contract or Program
Stream Financing utilizing an Assumed Name (or any other name the use of which
IKON may license to GE and GECITS) and/or GE's and GECITS' receipt of payments
made payable to it under an Assumed Name (or any such other IKON-licensed name)
in respect of such Program Financing Contract or Program Stream Financing, IKON
shall not except as otherwise expressly set forth in this Agreement (but
subject to Section 5.8(c)(ii)), (i) (A) have any rights or interests in any
Program Financing Contract or Program Stream Financing (as applicable), the
Equipment subject thereto or in any payments made in respect thereof or (B)
attempt to collect any payments made in respect thereof or (unless expressly
agreed to by GE in writing) repossess or consent to or accept the return of any
Equipment (other than for maintenance of such Equipment) or (ii) amend, waive
or otherwise modify the terms of any Program Financing Contract or Program
Stream Financing in any way whatsoever.
(b) IKON (or the Customer to the extent agreed to by such
Customer) shall bear all risk of loss to the Equipment until the Transfer Date
applicable to such Equipment. All sales of Equipment to GECITS under the
Program shall (i) include the manufacturer's warranty to the extent that IKON
is permitted to assign such warranty by the manufacturer of the particular
Equipment, and (ii) to the extent that clause (i) above is applicable to the
particular Equipment, permit the assignment by GECITS to Customers of all such
warranties and licenses applicable to the particular Equipment.
(c) (i) Neither IKON nor any other IKON Company shall be
entitled to amend, modify or terminate any Program Stream Financing Agreement
in any manner adverse to GE or GECITS (including by (A) reducing the amount of
any Program Stream Financing Payment thereunder or any other payments or
amounts in respect of such Program Stream
27
Financing that GE or GECITS is entitled to retain, for its own account,
pursuant to Section 5.3(b), (B) extending the time to make payment of any
Program Stream Financing Payment thereunder or any amounts constituting
Purchased Assets in respect thereof, or (C) changing any of the obligations of
GE and GECITS thereunder) other than as expressly contemplated by Section 6.3.
(ii) Notwithstanding anything to the contrary in this
Section 5.8, each of GE and GECITS hereby (x) grants to IKON the right to
negotiate with Obligors in respect of Program Financing Contracts to modify or
eliminate the Equipment Service Obligations thereunder (and to correspondingly
increase, decrease or eliminate the Base Equipment Service Payments thereunder
thereafter to become due in respect thereof), and (y) agrees to promptly
execute such amendments or modifications to Program Financing Contracts as may
be necessary to effect the modification or elimination of the Equipment Service
Obligations thereunder, so long as IKON shall comply with each of the following
conditions:
(A) IKON shall promptly provide GE and GECITS with
each such amendment or other modification, which amendment or other
modification shall contain (1) the lease schedule number of the applicable
Program Financing Contract and (2) the date such amendment or other
modification is proposed to become effective; and
(B) In connection with any such amendment or other
modification to a Program Financing Contract which has the effect of reducing
the Minimum Periodic Payment thereunder, (1) the amount of such reduction
shall, in no event, exceed the Base Equipment Service Payment due under such
Program Financing Contract (calculated immediately prior to giving effect to
such amendment or other modification) and (2) the Lease Payment or any other
payments or amounts under such Program Financing Contract that GE or GECITS is
entitled to retain, for its own account, pursuant to Section 5.3(a) shall, in
no event, be reduced or otherwise affected by any such amendment or other
modification.
(ii) Notwithstanding anything to the contrary set forth in
this Agreement, in connection with any fixed-term extension or renewal of any
Program Financing Contract, GECITS shall be entitled to reduce the amount of
the Lease Payment thereunder (and, except to the extent in conjunction with a
reallocation as provided under Section 5.1(c)(y)) without giving effect to any
modifications to the other components thereof, the Minimum Periodic Payment
thereunder); provided that (x) the amount of such reduction shall, in no event,
exceed the Lease Payment due under such Program Financing Contract (calculated
immediately prior to giving effect to such extension or renewal) and (y) the
Base Equipment Service Payment, the CPC Charges, the Service Sales Tax Payment
or any other payments or amounts under such Program Financing Contract that
IKON is entitled to pursuant to Section 5.3(a) shall, in no event, be reduced
or otherwise affected by any such reduction.
(d) To secure the performance of all of its obligations under
this Agreement and the accuracy of IKON's representations and warranties
hereunder, IKON hereby grants to GECITS as of each Transfer Date a continuing
first priority Lien in the Program Financing Contracts, the Program Stream
Financings and, in each case, the Equipment subject or related thereto, the
Purchased Assets in respect thereof and the proceeds thereof to be transferred
to
28
GECITS on such Transfer Date. For purposes of such grant, this Agreement shall
constitute a security agreement under applicable Law. In connection with the
Liens granted hereby, IKON hereby authorizes GE and GECITS to execute and
file, on or before the date hereof, one or more financing statements (naming
IKON, as debtor and GECITS, as secured party) and similarly all continuation
statements, in a manner and in such places as may be required by applicable
Law to fully preserve, maintain and protect the Lien of GECITS in the Program
Financing Contracts, the Program Stream Financings, the Equipment subject or
related thereto, the Purchased Assets in respect thereof and the proceeds
thereof. The Liens granted to GECITS in any particular item of Equipment (and
any related IKON Originating Financing Contract, SLG Financing Contract,
Program Stream Financing, Purchased Assets or proceeds thereof) shall
automatically terminate without any further action of any party hereto upon
the repurchase of such item of Equipment (and any related IKON Originated
Financing Contract, SLG Financing Contract, Program Stream Financing or
Purchased Assets) by IKON from GECITS in accordance with this Agreement (it
being agreed that any such automatic release of any Lien on any item of
Equipment (and any related IKON Originated Financing Contract, SLG Financing
Contract, Program Stream Financing or Purchased Assets) shall in no way affect
any other Liens granted to GECITS in respect of any other item of Equipment
(or any IKON Originated Financing Contract, SLG Financing Contract, Program
Stream Financing or Purchased Assets related thereto or proceeds thereof).
GECITS shall execute and file such UCC-3 termination statements as IKON may,
from time to time, reasonably request to evidence the release of any Liens as
contemplated by the immediately preceding sentence; provided, that in the
event that IKON requests that GE file UCC-3 termination statement more
frequently that once per Program Year, IKON shall be responsible for any costs
incurred by GE (including reasonable out-of-pocket costs and expenses) in
connection with such additional filings.
5.9. Syndication. (a) Subject to the terms of the applicable
Program Financing Contract, or Program Stream Financing Agreement, GECITS
shall be permitted to securitize, syndicate or otherwise transfer any or all
of its rights under any Program Financing Contract or Program Stream Financing
that it has funded or purchased (and under any related representations,
warranties, covenants or indemnifications); provided, however, that (i) if any
such securitization, syndication or other transfer occurs, GE shall (unless
GECITS determines that doing so shall materially impair its ability to so
transfer such Program Financing Contract or Program Stream Financing on
acceptable terms) continue to be responsible for the billing and collecting of
such Program Financing Contract or Program Stream Financing, in the manner
contemplated by this Agreement, to the extent that GE is permitted to do so
under the Trademark License Agreement and applicable Law, and (ii) GECITS
shall not securitize, syndicate or otherwise assign any of its rights under
any Program Financing Contract or Program Stream Financing to any Person set
forth on Annex E. Any securitization, syndication or transfer otherwise
permitted under this Section 5.9(a) shall be prohibited hereunder if such
securitization, syndication or transfer would, in any material respect, have
an adverse impact on any of IKON's rights under Sections 3.1, 5.2, 5.3,
6.1(a)(ii), 6.1(b), 6.1(d), 6.1(e), 6.3, 10.2 or Schedule 1 with respect to
the Program Stream Financings or Program Financing Contracts covered thereby.
(b) During the Term, IKON shall have the right to originate
and/or syndicate (i) any Excluded Transaction, (ii) any proposed Originated
29
Financing Contract, IKON Originated Financing Contract, SLG Financing Contract
or Program Stream Financing that has been rejected for funding by GE and (iii)
any proposed Originated Financing Contract, IKON Originated Financing Contract,
SLG Financing Contract or Program Stream Financing conditionally approved by
GE, presented by IKON to the Customer and subsequently rejected by such
Customer.
5.10. Financings with Recourse or Other Support. With respect to
any proposed Originated Financing Contract, IKON Originated Financing Contract,
SLG Financing Contract or Program Stream Financing, IKON may, at its option,
offer to provide (or GE may request that IKON provide) price, rate or yield
assistance or residual pricing support to GECITS or discounts, free services or
rebates in connection with such Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract, Program Stream Financing or related
Equipment. In addition, from time to time IKON may offer to provide (or GE may
request that IKON provide) GECITS with recourse for losses suffered by GECITS
in connection with a proposed Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract or Program Stream Financing. If
GECITS determines in its sole discretion to enter into any such proposed
Originated Financing Contract or to purchase from IKON any IKON Originated
Financing Contract, SLG Financing Contract or Program Stream Financing with
such offered or requested recourse to IKON, IKON and GECITS shall, on each such
occasion, agree as to the extent of IKON's liability and IKON and GECITS shall
execute mutually acceptable agreements and indemnities with respect thereto.
If IKON offers to provide to GECITS any such recourse in respect of a proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing, GECITS shall promptly notify
IKON as to whether, in its sole discretion, GECITS shall approve such
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing (as applicable).
5.11. Transferred Servicing Agreements. During the Term, upon the
request of IKON, GE shall enter into one or more new Transferred Servicing
Agreements in connection with the sale or syndication (to new or existing
syndications partners of IKON) of Serviced Assets or Equipment to become the
subject of one or more lease and/or rental agreements, so long as at the time
IKON requests that GE enter into such agreement, GE has sufficient systems,
personnel and all capabilities to perform the obligations under such
Transferred Servicing Agreement (including to perform the application and
remittance of payments required of GE in the manner contemplated thereby). Any
servicing fees in respect of any Transferred Servicing Agreement entered into
by GE pursuant to this Section 5.11 shall be paid by IKON under and pursuant to
the terms of the Servicing Agreement.
5.12. Execution and Assignment of Certain Program Financing
Contracts. In the event that, with respect to any proposed Originated
Financing Contract that has been rejected for funding by GE pursuant to Section
5.5 or 5.6 hereof, IKON requests, in writing (including any writing in an
agreed electronic format), that GECITS both (a) execute such proposed
Originated Financing Contract and (b) transfer, assign and convey such proposed
Originated Financing Contract to IKON immediately after such execution, then
unless GE determines, in its reasonable discretion, that the execution and
transfer of such proposed Originated Financing Contract would violate or result
in the violation of any applicable Law, then GECITS shall
30
execute such proposed Originated Financing Contract and promptly thereafter
(A) IKON shall acquire from GECITS and GECITS shall transfer, assign and
convey to IKON all of GECITS' right, title and interest in and to such
proposed Originated Financing Contract on an "AS-IS, WHERE-IS" basis, without
representation, warranty or recourse of any kind and (B) IKON shall assume and
GECITS shall transfer and delegate to IKON all of GECITS' duties and
obligations under such Originated Financing Contract. Each of GE, GECITS and
IKON acknowledge and agree that, except to the extent of any fees required to
be paid pursuant to Section 10.3, there shall be no fees (including any Base
Origination Fees, Incremental Origination Fees or Volume Origination Fees) due
or payable in respect of any proposed Originated Financing Contract executed
by GECITS pursuant to this Section 5.12.
5.13. Non-Standard Financing Contracts. (a) IKON has provided to
GE for GE's review, true and complete copies of the Financing Contracts more
particularly described on Exhibit K (the "Representative Contracts"), none of
which is documented in the form of the Standard Form Documentation. GE
acknowledges and agrees that if IKON shall present to GE for funding under the
Program any proposed SLG Financing Contract containing terms and conditions
(including any terms and conditions implied as a matter of Law or specified in
the applicable RFP) that are, taken as a whole and as determined by GE in its
sole discretion, as or more favorable to the lessor than the terms and
conditions of any of the Representative Contracts (each, a "Comparable
Contract"), GE would not reject such Comparable Contract based solely on its
failure to be in the form of the Standard Form Documentation; provided,
however, that the foregoing shall be subject to the right of GE to (i) require
that IKON provide the additional representations, warranties, covenants and/or
indemnities set forth in Exhibit M, if and to the extent the applicable
Comparable Contract contains terms and conditions substantially equivalent to
those for which the additional representations, warranties, covenants and
indemnities set forth in Exhibit M are intended, and (ii) require that IKON
provide additional representations, warranties, covenants and/or indemnities
if and to the extent the applicable Comparable Contract contains terms and
conditions which (A) are not otherwise contained in the Representative
Contracts and (B) (1) include covenants or obligations of a type not otherwise
included in the definition "Equipment Service Obligations" and/or (2) add
cancellation, termination, default, buy-out or purchase rights or options
thereunder or representations and warranties of the lessor thereunder, in each
case, not otherwise permitted under the Standard Form Documentation.
(b) GE will use commercially reasonable efforts to approve,
solely from a documentation perspective, proposed Financing Contracts that are
not proposed SLG Financing Contracts but are otherwise Comparable Contracts,
subject to the provisions of this Section 5.13 and the other provisions of this
Agreement.
(c) IKON acknowledges and agrees that (i) GE applies an
integrated approach to funding decisions encompassing credit, pricing,
documentation, equipment, legal requirements (including changes in applicable
law) and other risk factors, (ii) the provisions of this Section 5.13 shall not
be deemed to limit in any manner (A) GE's sole discretion under Section 4.2 to
make credit decisions in respect of proposed Program Financing Contracts and
Program Stream Financings, or (B) GE's rights under Section 5.4 to review and
negotiate proposed Financing Contracts, and (iii) any credit line established
by GE for a Customer (unless otherwise specified
31
in writing by GE) shall only be a credit line for transactions documented on
Standard Form Documentation.
(d) Nothing contained in this Section 5.13 shall be deemed to
(i) obligate GE to approve or fund any Operating Rental Contract, or
(ii) relieve IKON of its obligation under Section 5.4(b)(i) to seek to utilize
the Standard Form Documentation.
5.14. Program Reliance and Recourse. GE shall give IKON prompt
written notice if GE determines that availability under any reliance and/or
recourse limits established by GE in respect of the Program shall be or shall
become insufficient to support GE's estimate of six month's worth of
incremental reliance and/or recourse associated with proposed Program Financing
Contracts and Program Stream Financings expected to be submitted by IKON to GE
for funding hereunder (assuming historical levels of portfolio run-off and new
originations). In such event, IKON may request that GE accept cash collateral,
a letter of credit or other cash equivalent on terms and conditions
satisfactory to GE and in an amount mutually agreed by GE and IKON as a
reasonable estimate of expected incremental reliance and/or recourse associated
with proposed Program Financing Contracts and Program Stream Financings
expected to be submitted by IKON to GE for funding hereunder during the
following six month period (in which case such recourse and/or reliance limits
shall be increased by the amount of such cash collateral, drawable amount under
such letter of credit or value of such other cash equivalents). IKON
acknowledges and agrees that the establishment and/or adjustment of any IKON
reliance and/or recourse limits shall be in GE's final authority (and may be
made without notice to IKON, except to the extent any such adjustment shall
result in a notice obligation under the first sentence of this Section 5.14)
and that this Section 5.14 shall not be deemed to limit in any manner GE's sole
discretion under Section 4.2 to make credit decisions in respect of proposed
Program Financing Contracts and proposed Program Stream Financings. Either of
GE or IKON may request that the agenda of any Executive Committee meeting
include a review of existing reliance and/or recourse limits, current
availability thereunder and future reliance and/or recourse funding needs and
strategies.
ARTICLE 6.
ADMINISTRATION
6.1. Administration of GE Portfolio.
(a) Customer Inquiries: Asserted Service Failures. (i) GE shall
conduct its communications with Customers under Program Financing Contracts and
Program Stream Financings in a courteous, prompt and efficient manner and shall
use its commercially reasonable efforts to answer Customers' and IKON's
inquiries relating to Program Financing Contracts and Program Stream Financings
on Business Days via an "800" or other toll-free telephone line from 8:00 AM to
8:00 PM (New York City time). Customer inquiries received when no personnel
are available shall be recorded electronically and responded to promptly.
(i) GE shall notify IKON (including through the dispute
resolution tool used by IOS Capital immediately prior to the Pre-Closing
Merger), within three (3) Business
32
Days after GE's receipt of notice of any assertion by any Obligor under a
Program Financing Contract or Program Stream Financing that an IKON Company or
any of its respective agents or contractors has failed to comply with any of
its Equipment Service Obligations or other obligations to such Obligor. Any
such notice by GE shall (A) to the extent delivered through the dispute
resolution tool referenced above, be in accordance with the past practices of
IOS Capital immediately before giving effect to the Pre-Closing Merger, and
(B) in all other cases, include a copy of any related written assertion, the
identity of the Customer and, to the extent GE has knowledge thereof, the
nature of the Customer's assertions as to the failure of the applicable IKON
Company or any of its respective agents or contractors to comply with any such
obligations (each, an "Asserted Service Failure").
(b) Collections; Litigation; Recoveries. GE shall have the full
right and authority to xxxx and collect the Program Financing Contracts and
Program Stream Financings and pursue any and all available remedies against
Obligors in connection with any defaults thereunder (including commencing
litigation and foreclosing against such Obligor (or requesting that IKON
repossess Equipment and other property subject to such Program Financing
Contracts or Program Stream Financings pursuant to Section 6.2(a))). Subject
to Section 6.1(b)(iii), GE or GECITS shall notify the IKON Relationship Manager
not less than ten (10) Business Days prior to commencing any litigation against
an Obligor under a Program Financing Contract, Program Facilities Management
Agreement or Program Equipment Management Agreement in respect of any breach by
such Obligor thereunder; provided, that in no event shall GE or GECITS be
required to deliver any such notice in connection with any litigation commenced
following a Bankruptcy Event (or event which with the passage of time would
constitute a Bankruptcy Event) with respect to such Obligor. Notwithstanding
anything to the contrary set forth herein, in no event shall GE or GECITS be
required or obligated to commence litigation or collection activities against
any Obligor under any Program Financing Contract or with respect to any Program
Stream Financing.
(ii) Cure by IKON of Certain Payment Defaults. Within ten
(10) Business Days after IKON shall have been notified by GE of its intention
to commence litigation against an Obligor in respect of such Obligor's breach
under a Program Financing Contract, Program Facilities Management Agreement or
Program Equipment Management Agreement, IKON shall be entitled to purchase from
GECITS all of GECITS' right, title and interest in such Program Financing
Contract or the related Program Stream Financing (as applicable), in each case,
together with the Equipment related thereto and any Purchased Assets in respect
thereof, on an "AS-IS, WHERE-IS" basis, without representation, warranty or
recourse of any kind, other than Agreed Warranties, by paying to GECITS an
amount equal to (1) with respect to any Program Stream Financing, the Net Book
Value thereof as of the date of such purchase, or (2) with respect to any
Program Financing Contract, the greater of (x) the Net Book Value of such
Program Financing Contract as of the date of such purchase and (y) the
Securitization Purchase Price in respect thereof (if any) as of the date of
such purchase.
(iii) IKON Compliance Deficiencies. From time to time after
the date hereof, GE may provide IKON with a listing, in writing (which listing
may be in the form of a delinquency report or on-line queue), of any delinquent
Program Financing Contracts and Program Stream Financing Agreements where the
related Obligor has asserted an Asserted
33
Service Failure as a reason for its nonpayment thereunder. As promptly as
practicable (and in any event within the applicable Determination Period) IKON
shall (A) evaluate all such Obligor's assertions, (B) seek to resolve with
each such Obligor all issues relating to such Obligor's assertions and (C)
based on the foregoing, notify GE in writing as to whether the applicable IKON
Company is in compliance with, or has cured any non-compliance in respect of,
its Equipment Service Obligations or other obligations with respect to all of
the Equipment subject to such Program Financing Contract or Program Stream
Financing Agreement (as applicable). If IKON does not notify GE in writing,
prior to the end of the Determination Period, that such IKON Company is in
compliance with, or has cured any non- compliance in respect of, its Equipment
Service Obligations or other obligations with respect to all of the Equipment
subject to such Program Financing Contract or Program Stream Financing
Agreement (as applicable), then IKON shall be required, within one (1)
Business Day after the end of the applicable Determination Period, to purchase
from GECITS (on an "AS-IS, WHERE- IS" basis, without representation, warranty
or recourse of any kind, other than Agreed Warranties) all of GECITS' right,
title and interest in the related Program Financing Contract or Program Stream
Financing (as applicable) (together with the Equipment related thereto and any
Purchased Assets in respect thereof) for a purchase price equal to (1) with
respect to any Program Stream Financing, the Net Book Value thereof as of the
date of such purchase, or (2) with respect to any Program Financing Contract,
the greater of (x) the Net Book Value of such Program Financing Contract as of
the date of such purchase and (y) the Securitization Purchase Price in respect
thereof (if any) as of the date of such purchase. Any notice or listing
provided to IKON by IOS Capital prior to the date hereof (including via the
dispute resolution tool referred to in Section 6.l(a)(ii)) shall be deemed,
solely for purposes of the notice requirements and notice periods contained in
this Section 6.1(b)(iii), to have been delivered by GE on the date so provided
by IOS Capital.
(iv) If (A) IKON shall not be required to purchase, pursuant
to Section 6.1(b)(iii), any Program Financing Contract or Program Stream
Financing referred to in the first sentence thereof, (B) (1) there shall be a
final determination (which shall either be or become non-appealable) by a
Governmental Entity that the Obligor is not obligated to make all of the
payments under such Program Financing Contract or all Program Stream Financing
Payments in respect of such Program Stream Financing (or that such Obligor is
only obligated to make a portion of such payments) as a consequence of an IKON
Company's (or any of their respective agents' or contractors') failure to
comply with any of their respective Equipment Service Obligations or other
obligations of an IKON Company to the Obligor or (2) with respect to any
Program Financing Contract or Program Stream Financing Agreement that is a
Performance Cancellation Contract, the Obligor thereunder shall have (x) given
IKON notice of a breach of IKON's Equipment Service Obligations thereunder in
accordance with the terms of such Program Financing Contract or Program Stream
Financing Agreement (as applicable) and (y) notified IKON following any
applicable cure period in respect thereof that it is electing to exercise its
right to terminate such Program Financing Contract or Program Stream Financing
Agreement (as applicable) pursuant to the terms thereof as a result of such
uncured breach, and (C) IKON shall not have previously purchased such Program
Financing Contract or the Program Stream Financing related to such Program
Stream Financing Agreement pursuant to Section 6.1(b)(iii), then GE shall
promptly thereafter notify IKON of such determination and IKON shall
34
thereupon be obligated, promptly upon GE's written demand therefor, (1) to pay
GE any and all damages, costs or other amounts required by a Governmental
Entity in any such proceedings or related proceedings to be paid by GE or any
of its Affiliates, or any of their respective directors, officers, employees,
representatives or agents, to the extent arising out of an IKON Company's (or
any of their respective agents' or contractors') failure to comply with any of
their respective obligations to the Obligor, and (2) to purchase (on an
"AS-IS, WHERE-IS" basis, without representation, warranty or recourse of any
kind, other than Agreed Warranties) from GECITS all of GECITS' right, title
and interest in the related Program Financing Contract or Program Stream
Financing (as applicable) (together with the Equipment related thereto and any
Purchased Assets in respect thereof) for a purchase price equal to (I) with
respect to any Program Stream Financing, the Net Book Value thereof as of the
date of such purchase, or (II) with respect to any Program Financing Contract,
the greater of (x) the Net Book Value of such Program Financing Contract as of
the date of such purchase and (y) the Securitization Purchase Price in respect
thereof (if any) as of the date of such purchase.
(v) The remedies available under this Section 6.1(b) with
respect to any actual or alleged failure by an IKON Company (or any of their
respective agents and contractors) to comply with any of their respective
Equipment Service Obligations, or other obligations of an IKON Company, to an
Obligor under a Program Financing Contract or with respect to any Program
Stream Financing (an "IKON Servicing Breach") shall apply to the exclusion of
any indemnification remedy under the Asset Purchase Agreement for Damages
arising out of the failure of such Obligor to make one or more payments under
any Purchased Financing Contract or in respect of any Program FM Stream
Financing purchased by GECITS under the Asset Purchase Agreement (as
applicable) as a consequence of an actual (or asserted) IKON Servicing Breach
(it being agreed that nothing contained in this Section 6.1(b)(v) shall in any
way limit or impair GE's remedies under the Asset Purchase Agreement in respect
of any Third Party Actions (as defined therein)).
(c) IKON Power of Attorney. (i) For the purposes of exercising
GE's rights and carrying out its obligations under the Program, IKON hereby
makes and appoints GE (and any employees or agents of GE designated by GE from
time to time) as IKON's true and lawful attorney-in-fact for the purpose of
endorsing checks with respect to any Program Financing Contract or Program
Stream Financing.
(ii) With respect to each IKON Originated Financing
Contract, for the purposes of exercising GE's and GECITS' rights and carrying
out its obligations under this Agreement, IKON hereby further makes,
constitutes and appoints GE (and its and any of VFS Macon's employees or agents
designated by GE from time to time) as IKON's true and lawful attorney-in-fact
for the purpose of executing, endorsing, and otherwise signing for and on
behalf of IKON any and all documentation with respect to such IKON Originated
Financing Contract contemplated to be executed by IKON.
(iii) With respect to each IKON Originated Financing
Contract, SLG Financing Contract, Program Equipment Management Agreement and
Program Facilities Management Agreement, for the purposes of exercising GE's
and GECITS' rights and carrying out its obligations under this Agreement, IKON
hereby further makes, constitutes and appoints
35
GE (and its and any of VFS Macon's employees or agents designated by GE from
time to time) as IKON's true and lawful attorney-in-fact for the purpose of
executing, endorsing, and otherwise signing for and on behalf of IKON: (A) any
and all instruments, documents and agreements which may be necessary to
assign, convey and transfer to GECITS good and marketable title to such IKON
Originated Financing Contract, SLG Financing Contract, Program EM Stream
Financing or Program FM Stream Financing (as applicable) and the Equipment and
Purchased Assets subject thereto; and (B) all correspondence and notices to
Customers as to the assignment of such IKON Originated Financing Contract, SLG
Financing Contract, Program EM Stream Financing or Program FM Stream Financing
(as applicable) to GECITS or its designee pursuant to Section 5.7(c).
(d) Repurchase of Certain Operating Rentals. (i) If (A) GE
receives notice from an Obligor under any Operating Rental Contract
constituting a Purchased Financing Contract that such Obligor has elected to
cancel such Operating Rental Contract in accordance with the terms thereof, or
(B) any payment under any Operating Rental Contract constituting a Purchased
Financing Contract becomes eligible for write-off pursuant to the Write-Off
Policy, then GE shall promptly notify IKON of such cancellation notice or
delinquency (which notice (x) in the case of a cancellation notice, shall set
forth the date on which such cancellation shall become effective (after giving
effect to any applicable notice period under such Operating Rental Contract)
and (y) in the case of any delinquency of the type described above, may be in
the form of a delinquency report or on-line queue). Within ten (10) Business
Days after the effectiveness of any Obligor cancellation of any Operating
Rental Contract (as described in clause (A) above) or within ten (10) Business
Days after the delivery to IKON of a delinquency notice referred to in clause
(B) above with respect to any Operating Rental Contract (as applicable), IKON
shall purchase such Operating Rental Contract from GECITS and GECITS shall
sell to IKON such Operating Rental Contract (and any Equipment subject thereto
and any Purchased Assets in respect thereof) on an "AS-IS, WHERE-IS" basis
without representation or warranty (other than Agreed Warranties) for a
purchase price equal to the Net Book Value thereof at the time of such
purchase.
(ii) The remedies available under this Section 6.1(d) shall
apply to the exclusion of any indemnification remedy under the Asset Purchase
Agreement for Damages arising out of the failure of an Obligor under an
Operating Rental Contract to make one or more payments under such Operating
Rental Contract (it being agreed that nothing contained in this Section
6.1(d)(ii) shall in any way limit or impair GE's remedies under the Asset
Purchase Agreement in respect of any Third Party Actions (as defined therein)).
(e) Settlement and Litigation Proceeds. Unless the terms of any
applicable Securitization Documents otherwise provide (in which case the terms
of such Securitization Documents shall govern), GE shall be entitled to settle
or compromise any claims and obligations under any Program Financing Contract
in its sole discretion. The net proceeds of any such settlement or compromise
with respect to any Program Financing Contract, and the net proceeds of any
litigation to collect amounts under any Program Financing Contract (which shall
in each case exclude the return of the applicable Equipment), in each case, to
the extent received prior to the write-off of amounts under such Program
Financing Contract (i.e., to the extent received prior to the time such Program
Financing Contract becomes a Written-Off Financing
36
Contract, in which case Section 1 of Schedule 1 shall apply) shall, unless the
terms of any applicable Securitization Documents otherwise require (in which
case the terms of such Securitization Document shall govern), be allocated pro
rata among (i) all Lease Payments thereunder not yet due, (ii) the Service
Profit Element thereunder, (iii) the applicable Residual (but only to the
extent the related Equipment shall not have been returned to GE or GECITS),
(iv) the unamortized origination fees thereunder (other than the Volume
Origination Fee) and (v) all other amounts then billed and unpaid under such
Financing Contract. Notwithstanding the foregoing, amounts received in
connection with any early termination of a Program Financing Contract in
accordance with Section 6.3 shall not be allocated pursuant to the preceding
sentence.
6.2. De-Installation, Repossession and Remarketing Support. (a)
Subject to Section 6.2(b), at the request of GE at any time and from time to
time, IKON shall repair, refurbish, insure and store, and use its reasonable
commercial efforts to remarket on a non-discriminatory basis, such Equipment as
may be subject or related to a Program Financing Contract, Program Stream
Financing or Closing Date IKON Retained Financing Contract serviced by GE as GE
may specify. In addition, at the request of GE at any time and from time to
time, IKON may agree to de-install or repossess such Equipment as may be
subject or related to a Program Financing Contract, Program Stream Financing or
Closing Date IKON Retained Financing Contract serviced by GE as GE may specify;
provided that IKON shall not be obligated to de-install or repossess any such
Equipment to the extent that and for so long as GE, GECITS or IKON, as
applicable, does not have the legal right to do so. Unless waived by IKON, the
fee payable by GE to IKON in respect of any de-installation or repossession of
Equipment subject or related to a Program Financing Contract or Program Stream
Financing shall be IKON's cost of the de-installation or repossession of such
Equipment (including reasonable out-of-pocket costs).
(b) During the Term, GE shall have the right to refurbish and/or
remarket any and all Equipment as may be subject or related to a Program
Financing Contract, Program Stream Financing or Closing Date IKON Retained
Financing Contract serviced by GE, in such manner as GE determines, in its sole
discretion. In the event that GE determines to utilize remarketing and
refurbishment services of IKON, GE shall notify IKON of such determination, and
IKON shall be entitled to accept or decline (in IKON's sole discretion) GE's
request for remarketing and refurbishment services; provided that IKON shall be
deemed to have accepted GE's request for the remarketing and refurbishment of
such Equipment if such Equipment is set forth on the Wholesale Equipment Price
List. If IKON shall elect to remarket such Equipment:
(i) Prior to the Systems Facilitation Date, any such
remarketing by IKON shall be effected by means of the purchase by IKON from
GECITS of the Equipment (other than Equipment subject to the Closing Date IKON
Retained Financing Contract that has not been purchased by GECITS pursuant to
Section 10.6), on an "AS-IS, WHERE-IS" basis and without representation or
warranty of any kind, other than Agreed Warranties, for an amount equal to the
Wholesale Fair Market Value of such Equipment.
(ii) From and after the Systems Facilitation Date, any such
remarketing and refurbishment shall be performed as follows:
37
(A) IKON shall recommend the repair and refurbishment
of Equipment to such extent and in such manner as, in IKON's reasonable
judgment, shall maximize the sales or lease proceeds from the remarketing
thereof, and GE shall be entitled to accept or reject any such recommendation
by IKON. Following any acceptance by GE of any repair and/or refurbishment
recommendation by IKON with respect to any Equipment, IKON shall repair and/or
refurbish such Equipment at an aggregate cost, including commission, equal to
the sum of (x) 30% of sale proceeds (less any de-installation or repossession
fees payable by GE to IKON in respect of such Equipment) plus (y) an agreed
refurbishment charge.
(B) Promptly following the sale of any such item of
Equipment, IKON shall remit (or cause to be remitted) to GECITS the proceeds of
such sale, net of the costs described in Section 6.2(b)(ii)(A). On a monthly
basis, IKON shall deliver to GECITS an invoice for all refurbishment services
performed pursuant to this Section.
(C) The remarketing, repair and refurbishment
services described above shall be provided by IKON (or a third party designated
by IKON) on a basis that does not discriminate between GECITS' Equipment and
used Equipment remarketed, refurbished and/or re-sold by IKON for its own
account, for the account of any other IKON Company or for the account of any
third party.
(iii) IKON shall use reasonable commercial efforts to cause
the Systems Facilitation Date to occur not later than December 31, 2005 (or as
soon thereafter as possible).
(c) In the event that GE repairs, refurbishes and/or remarkets
Equipment subject or related to any Program Financing Contract, Program Stream
Financing or Closing Date IKON Retained Financing Contracts on its own behalf,
GE shall be entitled to a fee in respect thereof equal to the sum of (x) 30% of
any sale proceeds thereof plus (y) an agreed refurbishment charge.
6.3. Cancel/Upgrades; Mid-Term Buy Outs.
(a) Cancel/Upgrades. (i)(B) If during the Term, in connection with
GECITS' entering into an Originated Financing Contract or purchasing an IKON
Originated Financing Contract, an SLG Financing Contract or a Program Stream
Financing (each, a "Replacement Financing") after the date hereof, IKON
desires to cause (I) the termination of an existing Program Financing Contract
or Program Stream Financing (and any Program Stream Financing Agreement
related thereto) with the related Obligor that covers Equipment that is to be
replaced by other Equipment to be leased under or in respect of such
Replacement Financing or (II) the extension of the stated contractual term of
any Program Stream Financing Agreement (and, consequently, any Program Stream
Financing related thereto) or Program Financing Contract (other than any
extension of the type referred to in Section 6.5(c)) (the Program Financing
Contract or Program Stream Financing to be so terminated or extended, in each
case, being referred to as a "Replaced Financing"), then IKON shall be
entitled to require GECITS to terminate such Replaced Financing and transfer
to IKON all of GECITS' interest in the Equipment subject thereto and any
Purchased Assets in respect thereof upon (and in
38
consideration of) the payment by IKON to GE of an amount equal to (1) with
respect to any Replaced Financing that is a Program Stream Financing, the Net
Book Value of such Program Stream Financing as of the time of such termination
(which, upon IKON's written request to GECITS, shall be less any billed but
uncollected Late Charges related thereto in respect of periods from and after
the date hereof), or (2) with respect to any Replaced Financing that is a
Program Financing Contract, the greater of (x) the Net Book Value of such
Program Financing Contract (which, upon IKON's written request to GECITS,
shall be less any billed but uncollected Late Charges in respect of periods
from and after the date hereof) and (y) the Securitization Purchase Price
thereof (if any), in each case, as of the time of such termination.
(B) Within fifteen (15) Business Days of the end of
each month during each Program Year, GE shall prepare and deliver to IKON a
report setting forth GE's calculation of the Pre-Mid Term Upgrade Percentage
and the Overall Upgrade Percentage, in each case, for such Program Year,
determined as of the end of the immediately preceding month (such report being
referred herein as the "Program Upgrade Report" for a Program Year). The GE
Relationship Manager and the IKON Relationship Manager shall meet no less
frequently than quarterly to assess IKON's interim compliance, during each
Program Year, with the standards for the Pre-Mid Term Upgrade Percentage and
the Overall Upgrade Percentage set forth in Section 6.2(a)(i)(B)(1) and (2)
below.
(1) If the Pre-Mid Term Upgrade Percentage for
any Program Year, as set forth in the Program Upgrade Report for the last month
of any Program Year, exceeds ten percent (10%), then IKON shall pay to GE,
within ten (10) Business Days of its receipt of such Program Upgrade Report, an
amount equal to the Pre-Mid Term Make-Whole Amount for such Program Year.
(2) If the Overall Upgrade Percentage for any
Program Year, as set forth in the Program Upgrade Report for the last month of
any Program Year, exceeds fifty percent (50%), then IKON shall pay to GE,
within ten (10) Business Days of its receipt of such Program Upgrade Report, an
amount equal to the positive difference between (x) the Overall Upgrade Make-
Whole Amount for such Program Year minus (y) the Pre-Mid Term Make-Whole
Amount, if any, required to be paid by IKON to GE for such Program Year
pursuant to clause (1) above.
(ii) If, after the end of the Term, IKON desires to cause
the termination of an existing Program Financing Contract or Program Stream
Financing (and any Program Stream Financing Agreement related thereto) prior to
its stated termination date, then IKON shall be entitled to require GECITS to
terminate such Program Financing Contract or Program Stream Financing and
transfer to IKON all of GECITS' interest in the Equipment subject thereto and
any Purchased Assets in respect thereof upon (and in consideration of) the
payment by IKON to GECITS of an amount equal to (A) with respect to any Program
Stream Financing, the Net Economic Value of such Program Stream Financing as of
the time of such termination, or (B) with respect to any Program Financing
Contract, the greater of (x) the Net Economic Value of such Program Financing
Contract and (y) the Securitization Purchase Price thereof (if any), in each
case, as of the time of such termination.
39
(iii) IKON further covenants and agrees that:
(A) in connection with any request by an Obligor
under a Purchased Financing Contract to elect to pursue an upgrade or
substitution of the Equipment subject or related thereto during any period
following the original stated contractual term thereof, IKON shall (to the
extent such Obligor has an option to make such an election (whether in writing
or otherwise)) promptly exercise its option pursuant to Section 6.3(a)(i) or
6.3(a)(ii) (as applicable) to require GECITS to terminate such Purchased
Financing Contract , and
(B) in connection with any request by an Obligor
under a Program Financing Contract (other than any Purchased Financing
Contract) or in respect of a Program Federal Stream Financing (to the extent
purchased by GECITS pursuant to this Agreement or the Federal Assignment
Agreement) to elect to pursue an upgrade or substitution of the Equipment
subject or related thereto during period following the original stated
contractual term thereof, IKON shall, to the extent such Obligor satisfies the
applicable contractual conditions thereto, promptly exercise its option,
pursuant to Section 6.3(a)(i) or 6.3(a)(ii) (as applicable), to require GECITS
to terminate such Program Financing Contract or the applicable Federal
Financing Contract.
(b) Sale Reversals. If, during the 60-day period immediately
following the Transfer Date of any Equipment subject or related to a Program
Financing Contract or a Program Stream Financing, IKON desires to cause the
termination of such Program Financing Contract or Program Stream Financing in
connection with a "sale reversal," then IKON shall be entitled to require that
GECITS terminate such Program Financing Contract or Program Stream Financing
(as applicable) and transfer to IKON all of GECITS' interest in the Equipment
subject thereto upon (and in consideration of) the payment by IKON to GECITS of
an amount equal to the sum of (i) the Net Book Value of such Program Financing
Contract or Program Stream Financing (as applicable) as of the time of
termination plus (ii) any Volume Origination Fee paid or payable by GECITS in
respect of such Program Financing Contract or Program Stream Financing.
(c) Other Terminations. (i) If an Obligor initiates a request for
a Program Financing Contract that is a Bundled Financing Contract (other than a
defaulted Program Financing Contract) to be terminated (or if, after the Term,
GE or GECITS desires to terminate a Program Financing Contract, other than a
defaulted Program Financing Contract, with an Obligor), in each case other than
(A) under the circumstances set forth in Section 6.3(a) or 6.3(b) or (B) in
accordance with the terms of the applicable Program Financing Contract, then
provided that (x) GE shall deliver to IKON notice of such Obligor request at
least two (2) Business Days prior to delivering any buy-out quote or other
termination payment to such Obligor, and (y) GE shall deliver notice to such
Obligor of any such buy-out quote or termination payment only in writing,
addressed to the billing address of such Obligor, GE and GECITS shall be
entitled to terminate such Program Financing Contract so long as IKON receives,
at the time of such termination, an amount not less than seventy-five percent
(75%) of the sum of (1) all due but uncollected Base Equipment Service
Payments, CPC Payments and Service Sales Tax Payments under such Program
Financing Contract at the time of such termination, plus (2) the sum of all
future Base Equipment Service Payments not yet due under such Program Financing
Contract; provided that any amounts received by GE or GECITS in connection with
any termination of any
40
Program Financing Contract of the type contemplated by this Section 6.3(c)(i))
shall be allocated, pro rata, between (x) the amounts set forth in clause (1)
and (2) above, and (y) all amounts otherwise due and to become due under such
Program Financing Contract which GECITS is entitled to retain, for its own
account, pursuant to Section 5.3(a). IKON shall use commercially reasonable
efforts to cooperate with GE and GECITS in connection with any discussions or
settlement negotiations with Customers that have initiated a request for a
Program Financing Contract to be terminated under the circumstances described
in this Section 6.3(c)(i) (including by promptly responding to any proposals
made by GE, GECITS or such Customer relating to the settlement of amounts due
or to become due thereunder).
(ii) If a Customer initiates a request for a Program Stream
Financing Agreement (or any Program Stream Financing thereunder) to be
terminated (or if, after the Term, IKON desires to terminate a Program Stream
Financing Agreement (or any Program Stream Financing thereunder)), in each case
other than (A) under the circumstances set forth in Section 6.3(a) or 6.3(b) or
(B) in accordance with the terms of the applicable Program Stream Financing
Agreement, then IKON shall be entitled to terminate such Program Stream
Financing Agreement (or Program Stream Financing thereunder) so long as GECITS
receives, at the time of such termination, an amount not less than seventy-five
percent (75%) of the sum of (1) all due but uncollected Program Stream
Financing Payments and other payments or amounts in respect of such Program
Stream Financing that GE or GECITS is entitled to retain, for its own account,
pursuant to Section 5.3(b), in each case, at the time of such termination, plus
(2) the sum of all future Program Stream Financing Payments not yet due
thereunder; provided that any amounts received by IKON in connection with any
termination of any Program Stream Financing Agreement of the type contemplated
by this Section 6.3(c)(ii)) shall be allocated, pro rata, between (x) the
amounts set forth in clause (1) and (2) above, and (y) all amounts otherwise
due and to become due under such Program Stream Financing Agreement which IKON
is entitled to retain, for its own account, pursuant to Section 5.3(b). GE and
GECITS shall use commercially reasonable efforts to cooperate with IKON in
connection with any discussions or settlement negotiations with Customers that
have initiated a request for a Program Stream Financing Agreement (or any
Program Stream Financing thereunder) to be terminated under the circumstances
described in this Section 6.3(c)(ii) (including by promptly responding to any
proposals made by IKON or such Customer relating to the settlement of amounts
due or to become due thereunder).
(iii) GE shall promptly notify IKON of any Customer request
received by GE or GECITS to modify or terminate any Equipment Service
Obligations under any Program Financing Contract or Program Stream Financing
Agreement (and the amount of any Base Equipment Service Payment in respect
thereof).
6.4. Administrative Support from IKON. IKON shall promptly notify
GE of the identity and location of any Equipment relating to any Program
Financing Contract or Program Stream Financing for which IKON wishes to
substitute alternate Equipment in satisfaction of any warranty claims or to
remedy any Equipment failure or service problems (together with the identity of
such alternate Equipment (which shall, in each case, be Equipment with like or
improved condition, having the same or greater value and functionality) and
IKON shall use its commercially reasonable efforts to promptly notify GE of (a)
all requests made to
41
IKON by Customers for the relocation of any Equipment that is the subject of a
Program Financing Contract or Program Stream Financing to locations other than
those specified in such Program Financing Contract or the related Program
Stream Financing Agreement (as applicable), the assignment of such Customer's
interest in any such Program Financing Contract or the related Program Stream
Financing Agreement (or Program Stream Financing thereunder) or any related
Equipment or sublease of any such Equipment and (b) any removal, loss or
destruction known to IKON of any Equipment that is the subject of a Program
Financing Contract or Program Stream Financing Agreement. IKON shall use its
best efforts to promptly implement a process by which all requests made to
IKON by Customers to relocate any Equipment to locations other than those
specified in the applicable Program Financing Contract or Program Stream
Financing Agreement, assign such Customer's interest in any Program Financing
Contract or Program Stream Financing Agreement or any related Equipment or to
sublease any such Equipment, are promptly communicated to GE. IKON shall not
move, relocate or otherwise cooperate with any change in the location of any
Equipment to locations other than those specified in the applicable Program
Financing Contract or Program Stream Financing Agreement unless (x) in the
case of any such move, relocation or change to a location outside of the
United States, IKON shall have received a copy of GE's prior written consent
to such move, relocation or change or (y) in the case of any such move,
relocation or change to a location within the United States, IKON shall
deliver written notice to GE thereof (whether in hard copy or through the
transmission of such information through the maintenance queue in IKONICS)
within ten (10) days after such move, relocation or change.
6.5. Evergreen Rentals. (a) If GE receives, pursuant to any
Program Financing Contract, Lease Payments in respect of periods following the
stated termination date of such Program Financing Contract, pursuant to any
Program Facilities Management Agreement, Program FM Stream Financing Payments
in respect of periods following the stated termination date thereof, or
pursuant to any Program Equipment Management Agreement, Program EM Stream
Financing Payments in respect of periods following the stated termination date
thereof (the payments in clauses (i), (ii) and (iii) above being hereinafter
referred to as "Evergreen Rentals"), GE shall retain such Evergreen Rentals
for its own account (subject to Section 1 of Schedule 1).
(b) Lease Payments or Program Stream Financing Payments in
respect of any fixed- or firm-term renewal of any Program Financing Contract,
Program FM Stream Financing or Program EM Stream Financing that shall have
theretofore reached its stated contractual term shall be deemed to be Evergreen
Rentals for purpose of this Agreement, and such renewals shall not constitute
new Originated Financing Contracts, IKON Originated Financing Contracts, SLG
Financing Contracts or new Program FM Stream Financings, Program EM Stream
Financings or Replacement Financings or, except as provided in Section 1 of
Schedule 1, give rise to any other payments to IKON (whether for origination
fees or otherwise).
(c) GECITS shall be entitled to enter into any amendment to any
Program Financing Contract (whether prior to the end of the stated contractual
term thereof or otherwise) which extends such stated contractual term of such
Program Financing Contract and, in addition to such extension, permits the
Obligor thereunder to terminate such Program Financing Contract (subject to the
satisfaction of certain conditions by such Obligor) without payment by such
42
Obligor of the full Net Book Value thereof at the time of such termination
(whether in connection with a cancellation, upgrade or otherwise). Lease
Payments received by GE or GECITS in respect of any such Program Financing
Contract (to the extent both in respect of (x) periods after the original
stated contractual term of such Program Financing Contract and (y) Equipment
subject to such Program Financing Contract, in each case, immediately prior to
giving effect to any such amendment) shall be deemed to be Evergreen Rentals
for purpose of this Agreement, and any such extension shall not constitute a
new Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Replacement Financing or, except as provided in Section 1
of Schedule 1, give rise to any other payments to IKON (whether for origination
fees or otherwise).
6.6. Performance of Services; Force Majeure. (a) Each of GE,
GECITS and IKON acknowledges and agrees that the ability of each party to
perform its obligations under this Agreement, the Servicing Agreement, the
Subservicing Agreements, the Services Agreement and/or the Marketplace
Servicing Agreement may be subject to the prior or concurrent performance by
the other party of certain related services. In consequence of the foregoing,
each of GE, GECITS and IKON further agree that upon the occurrence and during
the continuance of any breach under this Agreement, the Servicing Agreement,
the Subservicing Agreements, the Services Agreement and/or the Marketplace
Servicing Agreement by GE, GECITS or IKON (as applicable), the other party
shall be relieved of any of its performance obligations under this Agreement,
Servicing Agreement, the Subservicing Agreements, the Services Agreement
and/or the Marketplace Servicing Agreement (as applicable) to the extent that
(and for so long as) such breach has the effect of causing the non-breaching
party to be unable to perform its obligations thereunder.
(b) No party shall be considered to be in default in the
performance or observation of any of its duties or obligations under this
Agreement if its failure to so perform or observe any such duty or obligation
shall be caused by or result from a Force Majeure Event; provided, however,
such party shall not be relieved of its duties or obligations hereunder if such
failure is caused by or related to removable or remediable causes which such
party fails to remove or remedy using commercially reasonable efforts within a
commercially reasonable time period. If any party is rendered unable to
perform or observe any of its obligations under this Agreement by reason of a
Force Majeure Event, it shall give verbal notice of such fact to the other
party no more than one (1) Business Day after the occurrence of such Force
Majeure Event, followed by written notice given to such other party no more
than five (5) Business Days thereafter. Such notices shall give a reasonably
detailed description of such Force Majeure Event and provide the affected
party's reasonable estimate of the period of time for which it will likely be
unable to observe or perform any of its duties or obligations hereunder due to
such Force Majeure Event. The affected party shall exercise commercially
reasonable efforts to remove such inability with all reasonable dispatch and
provide notice to the other party within one (1) Business Day of the cessation
of such Force Majeure Event.
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ARTICLE 7.
AUDIT RIGHTS
7.1. Audit Rights.
(a) (i) GE and GECITS will, on an annual basis, cause their
external auditors to perform audit procedures, and issue an audit report to
IKON's external auditors, in respect of the reports relating to IKON's fiscal
year end entitled "balance sheet - detailed Oracle" and "income statement -
detailed Oracle" required to be delivered by GE to IKON pursuant to the
Services Agreement or, to the extent GE shall no longer be required to deliver
such reports, the data that would have been utilized by GE in preparation
thereof (such reports or data, the "Financial Data"). In connection with the
performance of such audit procedures, GE and GECITS will (x) afford their
external auditors access to the books, records, files and papers used or held
for use by GE or GECITS in connection with the conduct of the Program and
relating to the servicing of all Program Financing Contracts and Program Stream
Financings, the servicing of the Financing Contracts constituting part of the
Retained Portfolio pursuant to the Servicing Agreement or any servicing
agreement constituting a Securitization Document and/or the services provided
pursuant to the Services Agreement, and (y) cause their external auditors to
permit the external auditors of IKON to perform such procedures as are
reasonably necessary to satisfy their obligations under AU 543. GE shall not
unreasonably condition, withhold or delay its approval of the nature, scope or
timing of the audit procedures, and shall consider changes in applicable Law in
its consideration thereof.
(ii) In addition to the annual audit procedures described in
clause (i) above, GE and GECITS will, on a quarterly basis, cause their
external auditors to perform (x) a review of the Financial Data and issue a
review report to IKON's external auditors, and (y) such other procedures,
including testing, and report their findings in respect thereof to IKON and its
external auditors, in each case as the parties may mutually agree. The agreed-
upon procedures to be performed pursuant to clause (y) above shall be confirmed
in advance by IKON and GE in writing, but shall, at a minimum, be reasonably
designed to satisfy IKON and its external auditors as to confirmation (to the
agreed-upon level of materiality) of (I) the origination and other fees payable
by GE or GECITS to IKON under this Agreement, including without limitation,
amounts payable pursuant to Sections 10.1 and 10.2 hereof (including the
amounts payable to IKON pursuant to Schedule 1 hereto), (II) servicing fees
payable by IKON to GE under the Servicing Agreement and the Services Agreement,
(III) the application and remittance of payments by GE in accordance with the
terms of Sections 5.2 and 5.3 hereof, the Servicing Agreement and any servicing
agreement constituting a Securitization Document (as applicable), and
(IV) charges against the loss pool in accordance with Section 10.6 hereof.
Notwithstanding the foregoing, GE and GECITS shall afford the external auditors
of IKON access to the books, records, files and papers used or held for use by
GE or GECITS and relating to periods prior to the date hereof solely for the
purpose of performing the quarterly review of the Financial Data for the fiscal
quarter of IKON ending on March 31, 2004, provided that such review shall be
upon reasonable prior notice, during normal business hours and in such a manner
as shall not unduly interfere with or interrupt the operation of GE's or
GECITS' business, the conduct of the
44
Program or GE's performance of any of its servicing obligations under the
Servicing Agreement, any servicing agreement constituting a Securitization
Document and/or the Services Agreement.
(iii) GE shall cause its external auditors to prepare and
deliver to IKON and its external auditors, on an annual basis (based on
procedures performed through an agreed upon "strike-date" occurring prior to
the end of IKON's fiscal year, and supplemented by a roll-forward through the
end of IKON's fiscal year), a Type II SAS 70 report. In addition to the
nature, scope and timing of the report to be issued by the external auditors of
GE in respect thereof, the specific procedures to be performed shall be
confirmed in advance by IKON and GE in writing but shall, at a minimum, be
designed to evaluate GE's description of controls as they pertain to GE's
servicing of (A) Program Financing Contracts and Program Stream Financings
pursuant to this Agreement (but only to the extent that such servicing relates
to amounts due and payable to IKON under this Agreement) and (B) Financing
Contracts constituting part of the Retained Portfolio pursuant to the Servicing
Agreement or any servicing agreement constituting a Securitization Document
(the "GE Specified Controls"), including whether the GE Specified Controls were
suitably designed to achieve specified control objectives, whether the GE
Specified Controls had been in place as of the time specified in the applicable
report, and whether the GE Specified Controls that were tested were operating
with sufficient effectiveness to provide reasonable assurance that the related
control objectives were achieved during IKON's fiscal year (or such portion
thereof as the Program was in effect). GE and GECITS shall, and shall cause
their external auditors to, endeavor to alert IKON promptly of any identified
weakness in respect of GE Specified Controls with the intent that IKON have an
opportunity to review and understand the findings in advance of any IKON fiscal
year reporting requirements. GE shall not unreasonably condition, withhold or
delay its approval of the nature, scope or timing of the SAS 70 review, and
shall consider changes in applicable Law in its consideration thereof.
(iv) The costs (including actual out-of-pocket costs in
connection with any procedures performed by GE's external auditors) incurred by
GE as a result of any review conducted pursuant to Sections 7.1(a)(i),
7.1(a)(ii) and 7.1(a)(iii) shall be borne exclusively by IKON.
(b) (i) At GE's request, IKON will, on an annual basis, cause
its external auditors to perform audit procedures, and issue an audit report to
GE's external auditors, in respect of the Program Financing Contracts and
Program Stream Financings serviced by IKON pursuant to the Marketplace
Servicing Agreement (the "IKON Serviced Assets"). In connection with the
performance of such audit procedures, IKON will (x) afford their external
auditors access to the books, records, files and papers used or held for use by
IKON in connection the IKON Serviced Assets and/or the services provided
pursuant to the Services Agreement, and (y) cause its external auditors to
permit the external auditors of GE to perform such procedures as are reasonably
necessary to satisfy their obligations under AU 543. IKON shall not
unreasonably condition, withhold or delay its approval of the nature, scope or
timing of the audit procedures, and shall consider changes in applicable Law in
its consideration thereof.
(ii) At GE's request, in addition to the annual audit
procedures described in clause (i) above, IKON will, on a quarterly basis,
cause its external auditors to
45
perform (x) a review of the IKON Serviced Assets and issue a review report to
GE's external auditors, and (y) such other procedures, including testing, and
report their findings in respect thereof to GE and its external auditors, in
each case as the parties may mutually agree. The agreed-upon procedures to be
performed pursuant to clause (y) above shall be confirmed in advance by IKON
and GE in writing, but shall, at a minimum, be reasonably designed to satisfy
GE and its external auditors as to confirmation (to the agreed-upon level of
materiality) of (I) the proceeds received by IKON in connection with the sale
of Off-Lease Equipment, IKON Off-Lease Equipment and Defaulted Equipment
during the Term, (II) the fees paid or payable by GE to IKON in connection
with the syndication of Rejected Eligible Financing Contracts, (III) servicing
fees payable by GE to IKON under the Services Agreement, and (IV) the
application and remittance of payments by IKON to GE in accordance with the
terms of the Marketplace Servicing Agreement.
(iii) The costs (including actual out-of-pocket costs in
connection with any procedures performed by IKON's external auditors) incurred
by IKON as a result of any review conducted pursuant to Sections 7.1(b)(i) and
7.1(b)(ii) shall be borne exclusively by GE.
(c) The parties each agree to provide access, upon request,
during normal business hours and in such a manner as shall not unduly interfere
with or interrupt the operation, conduct or management of the other party's
business or the Program, to books and records and personnel as necessary or
appropriate to provide assistance in respect of the requesting party's response
to (i) any tax audit or proceeding, or (ii) any Third Party Actions or
inquiries addressed to the requesting party from any Governmental Entity;
provided that to the extent any such requests for assistance are extraordinary
and out of the ordinary course of business (and/or materially exceed the scope
of such assistance provided by IKON to IOS Capital or vice versa prior to the
Pre-Closing Merger), the requesting party shall pay the costs (including
reasonable out-of-pocket costs) incurred by the party providing such assistance
pursuant to this Section 7.1(c).
ARTICLE 8.
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1. General Representations and Warranties of IKON. IKON hereby
represents and warrants to GE, GECITS and their respective successors and
permitted assigns that as of the date hereof:
(a) There are no civil, criminal or administrative Actions
pending (including any counterclaims) or, to IKON's knowledge, threatened,
against IKON which if adversely determined against IKON would reasonably be
likely to have an IKON Material Adverse Effect.
(b) On the date hereof, the location of IKON's state of
incorporation is Ohio.
8.2. Transactional Representations and Warranties of IKON. With
respect to each Originated Financing Contract, each IKON Originated Financing
Contract, each SLG Financing Contract, each Program EM Stream Financing and
each Program FM Stream
46
Financing, IKON hereby represents and warrants to GE, GECITS and their
respective successors and permitted assigns that as of the Transfer Date with
respect to the Equipment subject or related to such Financing Contract or
Program Stream Financing:
(a) Immediately prior to the sale, transfer, conveyance or
assignment of any Equipment subject or related to such Program Financing
Contract, Program FM Stream Financing or Program EM Stream Financing (and any
related IKON Originated Financing Contract, SLG Financing Contract, Program FM
Stream Financing, Program EM Stream Financing or Purchased Assets (as
applicable)) by IKON pursuant to this Agreement, IKON had good and valid title
to such Equipment (and any related IKON Originated Financing Contract, SLG
Financing Contract, Program FM Stream Financing, Program EM Stream Financing
and Purchased Assets (as applicable)), free and clear of any and all Liens of
any nature (including Liens arising under the federal, state or local tax Laws
or the Employee Retirement Income Security Act of 1974, as amended) except for
Liens for property taxes that are not, as of such Transfer Date, due and
payable, and, upon the sale, transfer, conveyance or assignment of any
Equipment subject or related to such Program Financing Contract, Program EM
Stream Financing or Program FM Stream Financing (and any related IKON
Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing, Program EM Stream Financing and Purchased Assets (as applicable)) by
IKON pursuant to this Agreement, GECITS (or GE's designee under Section 5.7(c))
shall have good and valid title to such Equipment (and any related IKON
Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing, Program EM Stream Financing and Purchased Assets (as applicable))
free and clear of any and all Liens of any nature (including Liens arising
under the federal, state or local tax Laws or the Employee Retirement Income
Security Act of 1974, as amended), other than the rights of the Customer under
the Program Financing Contract, Program Facilities Management or Program
Equipment Management Agreement (as applicable) relating thereto. This
Agreement constitutes a valid sale, transfer, conveyance and assignment from
IKON to GECITS (or GE's designee under Section 5.7(c)) (and not solely a
transfer for security purposes) of the Equipment subject to such Program
Financing Contract or related to such Program FM Stream Financing or Program EM
Stream Financing (and any related IKON Originated Financing Contract, SLG
Financing Contract, Program FM Stream Financing, Program EM Stream Financing
and Purchased Assets (as applicable)).
(b) Other than the original "master" Program Financing Contract
or Program Stream Financing Agreement (if applicable) or, in each case, prior
amendments or addendum, true, correct and complete copies of each of which, to
the extent so requested by GE or GECITS, have been previously made available to
GE and GECITS, there are no documents, instruments or other agreements entered
into by IKON and the Customer or IKON and any Person, other than GECITS, in
connection with such Program Financing Contract, Program FM Stream Financing or
Program EM Stream Financing that affect, modify or limit any of GECITS' rights
under such Program Financing Contract, Program FM Stream Financing or Program
EM Stream Financing (as applicable) that is not contained in the Document
Package that was delivered to GE pursuant to Section 5.5 in connection with
such Program Financing Contract, Program FM Stream Financing or Program EM
Stream Financing on or prior to the Transfer Date with respect to the
47
Equipment subject or related thereto. To the best of IKON's knowledge, each
Document Package is true, correct, complete and accurate in all material
respects.
(c) No member of IKON's sales force has received written notice
or has any knowledge, except as specifically disclosed to GE and GECITS in
writing as part of the Document Package for any proposed Program Financing
Contract, Program FM Stream Financing or Program EM Stream Financing: (i) of
any material fact or circumstance which would impair the validity or the
enforceability of such proposed Program Financing Contract, Program FM Stream
Financing (or the Program Facilities Management Agreement to which such Program
FM Stream Financing relates) or Program EM Stream Financing (or the Program
Equipment Management Agreement to which such Program EM Stream Financing
relates); or (ii) that the Customer intends to reject or revoke its acceptance
of the Equipment subject or related to such proposed Program Financing
Contract, Program FM Stream Financing or Program EM Stream Financing. None of
IKON, any of its Affiliates or any of their respective employees or agents has
participated in, and none of them has any knowledge of, any fraudulent act
committed in connection with any proposed Program Financing Contract, any
Program Facilities Management Agreement to which such Program FM Stream
Financing relates or any Program Equipment Management Agreement to which such
Program EM Stream Financing relates. There has not been any act, failure to
act, omission or misrepresentation by IKON that modifies or amends any Program
Financing Contract, Program FM Stream Financing (or the Program Facilities
Management Agreement to which such Program FM Stream Financing relates) or
Program EM Stream Financing (or the Program Equipment Management Agreement to
which such Program EM Stream Financing relates). There has not been any
misconduct or misrepresentation by any IKON Company in the sourcing,
negotiation or documentation of a Program Financing Contract, Program FM Stream
Financing (or the Program Facilities Management Agreement to which such Program
FM Stream Financing relates) or Program EM Stream Financing (or the Program
Equipment Management Agreement to which such Program EM Stream Financing
relates) (including misrepresentations by any employee, representative or agent
of such IKON Company to an Obligor, Customer or an IKON Company) or that
nullifies, limits or in any way affects the genuineness, validity or
enforceability of any obligation of a Customer or Obligor in respect of any
proposed Program Financing Contract, Program FM Stream Financing or Program EM
Stream Financing.
(d) Except as otherwise disclosed to GE or GECITS in writing, to
the knowledge of each Responsible Officer of IKON, all of the Equipment subject
or related to such Program Financing Contract, Program FM Stream Financing or
Program EM Stream Financing is in conformity with all applicable Laws, except
that no representation or warranty is made in this clause (d) as to the
conformity of any Equipment with any applicable intellectual property Laws.
(e) With respect to each SLG Financing Contract and each Program
Stream Financing the Obligor in respect of which is a State and Local
Government Entity, (i) IKON has complied, in all material respects, with all
bidding requirements applicable to such SLG Financing Contract, Program
Equipment Management Agreement or Program Facilities Management Agreement
related to such Program Stream Financing and with all requirements of any RFPs
applicable thereto, including those requirements applicable to the Equipment
subject
48
thereto and all applicable federal and state statutes and regulations
including those governing equal employment opportunity, affirmative action and
environmental protection and (ii) IKON is the "contractor", or assignee of the
"contractor", named in and subject to such RFPs.
8.3. Covenants of IKON. IKON hereby covenants to GE, GECITS and
their respective successors and assigns that throughout the term of this
Agreement:
(a) IKON shall comply (and shall cause each other IKON Company to
comply) in all respects with all of their agreements or commitments with
Obligors under or relating to each Program Financing Contract, each Program
Stream Financing Agreement and the Equipment covered thereby, including (i)
IKON's or any other IKON Company's obligation (if any) to maintain insurance
with respect to such Equipment, (ii) IKON's or any other IKON Company's
Equipment or software service, maintenance, third party billing, warranty,
facilities management, labor, staffing, supply, reporting, fleet management,
image management commitment and other similar obligations and (iii) any other
obligations that IKON has agreed, in writing (as among itself, GE and GECITS)
to assume or retain (the obligations in clauses (i), (ii) and (iii)
collectively being referred to as the "Equipment Service Obligations").
(b) IKON shall comply with all acts, rules, regulations, orders,
decrees and directions of any Governmental Entity applicable to it, including
in connection with IKON's distribution or sale of Equipment.
(c) With respect to each SLG Financing Contract, Program FM
Stream Financing and Program EM Stream Financing in respect of which the
Obligor thereunder is a State and Local Government Entity, (i) IKON shall
comply with all bidding requirements applicable to such SLG Financing Contract,
Program Facilities Management Agreement related to such Program FM Stream
Financing or Program Equipment Management Agreement related to such Program EM
Stream Financing (as applicable) and with all requirements of any RFPs
applicable thereto, including those requirements applicable to the Equipment
subject thereto and all applicable federal and state statutes and regulations
including those governing equal employment opportunity, affirmative action and
environmental protection and (ii) in the event of a Non-Appropriation of Funds
with respect to such SLG Financing Contract or such Program FM Stream
Financing, IKON shall not sell, lease, rent or otherwise provide to the State
and Local Government Entity that is the Obligor thereunder any Equipment
serving essentially the same purpose and function (within the same building) as
the Equipment subject to such SLG Financing Contract or related to such Program
FM Stream Financing or Program EM Stream Financing for a period of one (1) year
from the date of such Non-Appropriation of Funds, unless IKON repurchases such
SLG Financing Contract, Program FM Stream Financing or Program EM Stream
Financing from GECITS for an amount equal to the Net Book Value thereof at the
time of such purchase.
(d) IKON shall immediately notify GE upon any Responsible Officer
of IKON or any of its Affiliates obtaining any knowledge of any fraudulent act
of the type described in Section 8.2(c).
49
(e) All property taxes assessed or imposed on or prior to the
Transfer Date with respect to any Equipment subject to a Program Financing
Contract (other than a Purchased Financing Contract) or related to a Program
Stream Financing shall be timely remitted by IKON to the appropriate taxing
authority and IKON shall, on request, provide or cause to be provided to GE,
evidence of such payment as promptly as possible. In the event that any xxxx
for any property taxes required to be remitted by IKON pursuant to this Section
8.3(e) is received by GE or GECITS, GE or GECITS (as the case may be) shall
promptly deliver such xxxx to IKON.
(f) Except upon fifteen (15) days' prior written notice to GE,
IKON shall not (i) change its jurisdiction of organization from that referred
to in Section 8.1(b) or (ii) change its corporate name.
(g) If IKON shall cease to be a reporting company under Section
13(a) or 15(d) of the Exchange Act, or shall otherwise cease to file or be
obligated to file with the Securities and Exchange Commission (the
"Commission") Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
IKON shall provide to GE the practical equivalents thereof (at the same times
as shall otherwise apply with respect to IKON's filing of such financial
statements and reports) which shall be accompanied by a certificate, executed
by an officer of IKON, certifying that the information contained therein fairly
present in all material respects the financial position of IKON on a
consolidated basis as of the dates thereof and the results of operations of
IKON on a consolidated basis for the periods covered thereby, all in conformity
with United States generally accepted accounting principles applied on a
consistent basis (subject, in the case of quarterly financial statements, to
normal year-end adjustments that shall not be material in amount).
Notwithstanding the foregoing, in the event that (i) IKON would otherwise be
required, pursuant to the provisions of this Section 8.3, to provide GE with
the practical equivalents of Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q (the "Equivalent Financial Reports") and (ii) 100% of the capital
stock of IKON is acquired by a company that files annual, quarterly and
periodic reports under Section 13(a) or 15(d) of the Exchange Act (the
"Acquiring Company") and (iii) such Acquiring Company irrevocably and
unconditionally guarantees all, but not less than all, of the liabilities and
obligations of IKON under this Agreement and each of the IKON Operative
Agreements, then so long as such Acquiring Company continues to file all such
reports under Section 13(a) or 15(d) of the Exchange Act as and when due, IKON
shall not be required to deliver the Equivalent Financial Reports to GE
pursuant to this Section.
(h) IKON shall give GE written notice of the occurrence of any
Material Adverse Change within five Business Days after such occurrence.
(i) On or prior to the Transfer Date with respect to any
Equipment subject or related to any proposed Program Financing Contract,
Program FM Stream Financing or Program EM Stream Financing, all such Equipment
shall be delivered to the location indicated in the related Program Financing
Contract or, with respect to a Program FM Stream Financing or Program EM Stream
Financing, the related Program Stream Financing Agreement.
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8.4. Representations and Warranties of GE and GECITS. Each of GE
and GECITS hereby represents and warrants to IKON, and its successors and
permitted assigns that, as of the date hereof:
(a) GECITS (i) is duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization, (ii) has the
requisite power (x) to own and lease its Property and (y) except for such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, would not reasonably be expected to have a GE
Material Adverse Effect, to carry on its business as now being conducted and
(iii) is duly qualified to conduct business and is in good standing as a
foreign Person in all jurisdictions in which the character or location of the
Property owned or leased by it or the nature of the business conducted by it
requires such authorization or qualification, except where the failure to be so
qualified or authorized has not and would not reasonably be expected to have a
GE Material Adverse Effect.
(b) GECITS has all requisite power and authority to execute and
deliver, and to perform its obligations under, this Agreement and each other GE
Operative Agreement to which it is a party.
(c) The execution and delivery of this Agreement and each other
GE Operative Agreement to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action on the part of GECITS.
(d) This Agreement and each other GE Operative Agreement to which
GECITS is a party constitute the legal, valid and binding obligation of GECITS,
enforceable against it in accordance with their respective terms, except as
enforcement thereof may be limited by the Bankruptcy Exception.
(e) None of the execution and delivery by GECITS of this
Agreement or any other GE Operative Agreement to which it is a party, the
compliance by GECITS with the terms and provisions hereof and thereof, or the
consummation by GECITS of the transactions contemplated hereby and thereby,
will conflict with, constitute a default under or result in a breach of any of
the terms, conditions or provisions of or create a right of termination or
cancellation under (i) the certificate of incorporation or by-laws of GECITS,
(ii) any Law to which GECITS, any of its Subsidiaries or any of their
respective Properties are subject or (iii) any indenture, loan agreement,
mortgage, deed of trust or other agreement or instrument to which GECITS or any
of its Subsidiaries is a party or which is binding on any of their respective
Properties, except, in the case of this clause (iii), for such conflicts,
breaches or defaults as shall not, individually or in the aggregate, have a GE
Material Adverse Effect.
(f) There are no civil, criminal or administrative Actions
pending (including any counterclaims) or, to GECITS' knowledge, threatened,
against GECITS which if adversely determined against GECITS would reasonably be
likely to have a GE Material Adverse Effect.
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(g) The execution and delivery by GECITS of this Agreement and
each other GE Operative Agreement to which it is a party and the consummation
by GECITS of the transactions contemplated hereby or thereby, will neither
require any notices, reports or other filings to be made by GECITS with, nor
require any consents, licenses, permits, authorizations or approvals from, (i)
any Governmental Entity or (ii) any other Person, other than (A) those already
obtained, given, effected or taken prior to the date hereof, in the case of
clauses (i) and (ii) above and (B) those the failure of which to obtain or make
would not reasonably be expected to have a GE Material Adverse Effect, in the
case of clause (ii).
(h) Each of GE and GECITS has entered into such agreements with
VFS Macon as are necessary to secure the services and performance of VFS Macon
employees under this Agreement.
8.5. Covenants of GE and GECITS. Each of GE and GECITS hereby
covenants to IKON and its successors and assigns that throughout the term of
this Agreement:
(a) GECITS shall comply in all respects with all of its
agreements or commitments with Obligors, in its capacity as equipment lessor,
under or relating to each Originated Financing Contract, IKON Originated
Financing Contract and SLG Financing Contract; provided that in no event shall
GECITS be deemed to have any obligations whatsoever in respect of the Equipment
Service Obligations thereunder (which the parties hereby agree, for the
avoidance of doubt, shall be the sole and exclusive obligations of IKON).
(b) Each GE Party shall comply with all acts, rules, regulations,
orders, decrees and directions of any Governmental Entity applicable to it,
including in connection with provision of financing for Equipment under the
Program.
(c) GECITS shall timely remit to the appropriate taxing authority
all property taxes assessed or imposed after the applicable Transfer Date with
respect to any Equipment subject or related to any Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract or Program
Financing Stream. In the event that any xxxx for any property taxes required
to be remitted by GECITS pursuant to this Section 8.5(c) is received by IKON,
IKON shall promptly deliver such xxxx to GECITS.
(d) None of GE, GECITS or VFS Macon shall authorize, assign or
require any Financial Sales Specialist or functional equivalent employed by any
of them in connection with the Program (each, an "FSS") to perform any
comparable role for GECITS, VFS Macon or the GE Commercial Finance business
unit of GE, in connection with any vendor financing program between GECITS, VFS
Macon or the GE Commercial Finance business unit of GE, and any Person set
forth on Annex E at any time any such employee is both (i) engaged as an FSS
and (ii) either collocated (whether on a full-time or part-time basis) with
IKON at an IKON facility or temporarily on any IKON facility premises (provided
that the premises subleased by GE from IKON located in Macon, Georgia shall not
be deemed to constitute an IKON facility).
52
ARTICLE 9.
REMEDIES
9.1. IKON Indemnities. IKON shall indemnify and hold harmless
each GE Party, its Affiliates and each of their respective employees, officers,
directors and agents, from and against any and all Damages suffered or incurred
by any of them resulting from, arising out of or in connection with (a) any
breach by IKON of any of its representations or warranties hereunder or under
any other IKON Operative Agreement, (b) any failure by IKON to perform any
covenant, agreement or obligation to be performed by IKON pursuant to this
Agreement or any other IKON Operative Agreement, (c) any failure by IKON to
comply with applicable bulk sale or bulk transfer Laws or similar Laws and
regulations in connection with the transactions contemplated by this Agreement,
(d) the use by IKON of, or (except in the case of willful misconduct by GE) the
reliance by IKON on, any credit, financial or other information obtained or
prepared by GE in connection with the credit review of any Application or
proposed Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing and delivered to IKON pursuant
to Section 5.5(d), or (e) any Financing Contract requested by IKON to be
executed by GE and transferred to IKON pursuant to the provisions of Section
5.12; provided that Section 6.1(b) and 6.1(d) shall be the sole remedy for GE
and GECITS for Damages (other than Damages to GE or GECITS arising in
connection with any Third Party Action) represented by the failure of any
Obligor to make one or more payments under a Program Financing Contract or with
respect to a Program FM Stream Financing or Program EM Stream Financing (as
applicable) as a consequence of an IKON Servicing Breach.
9.2. GE Indemnities. GE and GECITS shall indemnify and hold
harmless IKON, its Affiliates and each of their respective employees, officers,
directors and agents, from and against any and all Damages suffered or incurred
by any of them resulting from, arising out of or in connection with (a) any
breach by any GE Party of any of its representations or warranties hereunder or
under any other GE Operative Agreement, (b) any failure by any GE Party to
perform any covenant, agreement or obligation to be performed by it pursuant to
this Agreement or any other GE Operative Agreement or (c) any failure by GECITS
to comply with applicable bulk sale or bulk transfer Laws or similar Laws and
regulations in connection with any transfer by GECITS of Program Financing
Contracts and Program Stream Financings to IKON pursuant to this Agreement.
9.3. Indemnification Procedure for Third Party Actions. For the
purposes of administering the indemnification provisions of Sections 9.1 and
9.2, the following procedures shall apply to Third Party Actions following the
date hereof:
(a) An Indemnitee shall notify the Indemnitor in writing within
30 days following the receipt of notice of any Third Party Action against such
Indemnitee that gives rise to a claim for indemnity pursuant to Section 9.1 or
9.2 (any 30-day notification requirement shall begin to run, in the case of a
Third Party Action which is amended so as to give rise to an event for which
indemnification may be sought under this Agreement, from the first day such
Indemnitee receives notice that such Third Party Action is amended to include
any claim for
53
which indemnity may be sought pursuant to Section 9.1 or 9.2),
such notice shall describe in reasonable detail the basis of such Third Party
Action. The failure to give notice as required by this Section 9.3(a) in a
timely fashion shall not result in a waiver of any right to indemnification
hereunder except to the extent the Indemnitor's ability to defend against such
Third Party Action is materially and adversely affected by the failure of the
Indemnitee to give notice in a timely fashion as required by this Section
9.3(a).
(b) The Indemnitor shall be entitled (but not obligated) to
assume the defense or settlement of any such Third Party Action, or to
participate in any negotiations or proceedings to settle or otherwise eliminate
any such Third Party Action, if it shall provide the Indemnitee a written
acknowledgement of its liability for the indemnity against Damages relating to
such Third Party Action. If the Indemnitor assumes any such defense or
settlement or any such negotiations, it shall pursue such defense, settlement
or negotiations in good faith. If the Indemnitor fails to elect in writing
within 15 Business Days of the notification referred to above to assume the
defense, the Indemnitee may engage counsel to defend, settle or otherwise
dispose of such Third Party Action which counsel shall be reasonably
satisfactory to the Indemnitor; provided, however, that the Indemnitee shall
not settle or compromise any such Third Party Action without the prior written
consent or agreement of the Indemnitor (which consent shall not be unreasonably
withheld or delayed).
(c) In cases where the Indemnitor has assumed the defense or
settlement with respect to a Third Party Action, the Indemnitor shall be
entitled to assume the defense or settlement thereof with counsel of its own
choosing; provided, however, that: (A) the Indemnitee (and its counsel) shall
be entitled to continue to participate at its own cost (except as provided
below) in such Third Party Action and to participate in any negotiations or
proceedings to settle or otherwise eliminate, any such Third Party Action; (B)
the Indemnitor shall not be entitled to settle or compromise any such Third
Party Action without the prior written consent or agreement of the Indemnitee
(which consent shall not be unreasonably withheld or delayed); provided,
further, that if and only if such consent is withheld and the settlement or
compromise involves only the payment of monetary damages and provides an
unconditional release of the Indemnitee, the Indemnitor's liability shall be
limited to the amount for which the Indemnitor agreed with the claimant to
settle and the Indemnitor shall remain responsible for its costs and attorneys'
fees to the date such settlement was rejected by the Indemnitee and the
Indemnitee shall be responsible for the attorneys' fees and disbursements in
respect of such claim thereafter; and (C) after written notice by the
Indemnitor to the Indemnitee (as provided above) of its election to assume
control of the defense or settlement of any claim, the Indemnitor shall not be
liable to such Indemnitee hereunder for any attorneys' fees and disbursements
subsequently incurred by such Indemnitee in connection therewith (except as
provided below).
(d) In the event indemnification is requested, the relevant
Indemnitor, its representatives and agents shall have access to the premises,
books and records of the Indemnitee or parties seeking such indemnification and
their Affiliates to the extent reasonably necessary to assist it in defending
or settling any such Third Party Action; provided, however, that such access
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of the Indemnitee or Indemnitees. Except as
reasonably necessary to assist it in defending or settling such Third Party
Action, the Indemnitee shall not be required to disclose
54
any information with respect to itself or any of its Affiliates (or former
Affiliates), and the Indemnitee shall not be required to participate in the
defense of any claim to be indemnified hereunder (except as otherwise
expressly set forth herein), unless otherwise reasonably required or necessary
in the defense of any claim to be indemnified hereunder. Notwithstanding
anything in this Agreement to the contrary, in no event shall any Indemnitee
be obligated to make any disclosure, or to take or refrain from taking any
action that in its reasonable judgment, could prejudice its position or waive
any privilege in respect of any claim for indemnification against the
Indemnitor pursuant to this Section 9.3. All costs and expenses incurred by an
Indemnitee in connection with any access or cooperation requested by the
Indemnitor shall be borne by the Indemnitor. GE, GECITS and IKON shall
reasonably cooperate to attempt to resolve or mitigate Damages with respect to
any such Third Party Action; provided, however, that in no event shall a
party's compliance with the foregoing obligation to reasonably cooperate be a
basis for any claim that any such party shall have waived, limited,
relinquished or otherwise impaired, any rights such party may have pursuant to
this Agreement or be raised as a defense to any such rights.
(e) In the event the Indemnitor shall request that an Indemnitee
participate in the defense or settlement of an Indemnification Event, the
Indemnitor shall pay the costs incurred by the Indemnitee.
(f) All indemnities and obligations under this Article 9 shall
survive the expiration or termination of this Agreement and the expiration or
termination of any Program Financing Contract or Program Stream Financing
Agreement until the expiration of the statute of limitations applicable to the
matter for which indemnity is sought, and shall be payable promptly upon
presentation of an invoice from the indemnified party therefor.
9.4. Purchase of Program Financing Contracts, Program Stream
Financings and Equipment. In the event of a material breach by IKON of any
representation, warranty or covenant set forth in Sections 8.2, 8.3(c) or
8.3(i) relating to an event or circumstance affecting a particular Program
Financing Contract, Program Stream Financing or Equipment subject or related to
such Program Financing Contract or Program Stream Financing, GE or GECITS may
give written notice to IKON specifying the nature of such breach in reasonable
detail, and if within thirty (30) days after IKON's receipt of such notice,
IKON has not cured or caused to be cured such breach, then without limiting or
otherwise waiving any of its other rights or remedies as may be available in
law or in equity including claims for Damages arising in connection with any
Third Party Action or, GE or GECITS may require IKON to purchase (and IKON
shall purchase) such Program Financing Contract or Program Stream Financing (as
applicable) and any related Equipment at a price equal to the Net Book Value
thereof as of the date of such notice. Upon receipt of such amount, GECITS
shall transfer the applicable Program Financing Contract or Program Stream
Financing and any Equipment subject thereto to IKON on an "AS-IS, WHERE-IS"
basis, without any representation or warranty whatsoever (other than Agreed
Warranties with respect thereto). Any such repurchase shall occur on a date
specified by GE or GECITS, which date shall not be less than three (3) nor more
than thirty (30) days after the expiration of such 30-day period.
55
9.5. Personal Property Tax Reimbursement. In the event that, at
any time after the date hereof, GECITS shall be required to remit to any
applicable Governmental Entity, any payments in respect of property taxes (i)
due in respect of Equipment subject to a Purchased Financing Contract or
Program Facilities Management Agreement, the Program FM Stream Financing in
respect of which was purchased by GECITS pursuant to the Asset Purchase
Agreement that, as of the date hereof, constitutes a Property Tax Inclusive
Financing Contract and (ii) due in respect of any period after the date hereof
and prior to the end of the stated contractual term of such Purchased Financing
Contract or Program Facilities Management Agreement (as applicable), then
promptly (and in no event later than ten (10) Business Days) following receipt
by IKON of written notice from GE or GECITS of such payment, IKON shall remit
to GECITS the full amounts of any such payments so paid by GECITS.
9.6. Right of Offset. GE and GECITS shall have the right to
offset, as against any amounts owed by it to IKON under this Agreement, any
collections that GE, GECITS or an ABS Entity would have received under the
Securitization Documents but for the application (pursuant to the "Shared
Collections" provisions of the Securitization Documents) of such collections to
pay amounts owing under the Non-Purchased Securitization Documents.
9.7. Limitation on Damages. No party shall be liable for any
Special Damages, for any reason whatsoever, in connection with this Agreement
(including pursuant to this Article 9); provided that (i) the non-payment by
Obligors (A) under any Program Financing Contract of any amounts under and in
accordance with any Program Financing Contract or (B) of any Program Stream
Financing Payment or other amounts payable under any Program Stream Financing
Agreement shall in no event constitute Special Damages and (ii) any Special
Damages required, as a result of a breach by a party hereto of this Agreement,
to be paid by the other party to this Agreement to any Person (other than to a
party to this Agreement or any of its Affiliates) pursuant to a final judgment
or order arising out of an action or proceeding by such Person shall be deemed
to be direct damages to the party required to pay such Special Damages and
shall constitute indemnifiable Damages under this Agreement.
ARTICLE 10.
FEES; OTHER AGREEMENTS; LOSS POOL
10.1. Origination Fees. (a) GECITS shall pay to IKON, within five
(5) Business Days after the end of each week during the Term, the Base
Origination Fee for all Originated Financing Contracts entered into and for
all SLG Financing Contracts, IKON Originated Financing Contracts, Program FM
Stream Financings and Program EM Stream Financings funded by GECITS during
such week.
(b) GECITS shall pay to IKON, within ten (10) Business Days after
the end of each calendar month during the initial five (5) years of the Program
(so long as such calendar month occurs during the Term), the difference of (i)
the Volume Origination Fee for the cumulative Funded Volume (for the period
from the date hereof through the end of such month) minus (ii) the Volume
Origination Fee theretofore paid by GECITS in respect of all prior months;
provided that the cumulative Volume Origination Fee with respect to Funded
Volume
56
through the end of such calendar month shall in no event exceed the
product of (x) $4,222,500 multiplied by (y) the number of months during the
Term that have elapsed through the end of such calendar month.
(c) If the cumulative Funded Volume for the initial five (5)
years of the Program is greater than $5 Billion, and the Funded Volume in one
or more Program Years during the initial five (5) years of the Program is
greater than $1.9 Billion, then GECITS shall, for each such Program Year in
which Funded Volume is greater than $1.9 Billion, pay to IKON within ten (10)
Business Days after the fifth anniversary of the date hereof, the product of
(i) 0.35% multiplied by (ii) the amount of such Funded Volume in excess of $1.9
Billion for such Program Year.
10.2. Other Agreements. The provisions of Section 1 of Schedule 1
are hereby incorporated by reference in their entirety.
10.3. Rejected Application Fee. If, during any Program Year, the
aggregate sales price of the Equipment subject to Rejected Eligible Financing
Contracts syndicated by IKON to any of Citibank N.A., De Xxxx Xxxxxx
International B.V. or Xxxxx Fargo & Company (or any Subsidiary of the ultimate
parent company of any thereof) during such Program Year exceeds $25 Million,
then promptly after notice by IKON to GE of the syndication of any such
Rejected Eligible Financing Contract the aggregate sales price of the Equipment
subject thereto (when taken together with the aggregate sales price with
respect to Equipment subject to all Rejected Eligible Financing Contracts
syndicated during such Program Year) shall exceed $25 Million (which notice
shall be accompanied by any supporting documentation reasonably requested by GE
or GECITS), GECITS shall pay to IKON, on a weekly basis, a fee in respect of
such Rejected Eligible Financing Contract equal to the positive difference (if
any) of (a) the Base Origination Fee that would have been payable by GECITS if
the related Rejected Eligible Financing Contract had been accepted for funding
under the Program minus (b) the origination, syndication or other fee paid (or
payable) to any IKON Company in respect of such syndication; provided that in
no event shall the fee payable by GECITS in respect of any such Rejected
Eligible Financing Contract exceed one-third of the Base Origination Fee that
would have been payable by GECITS if the related Rejected Eligible Financing
Contract had been accepted for funding under the Program. In connection with
any syndication of a proposed Rejected Eligible Financing Contract, IKON shall
seek to obtain a market-based origination, syndication or similar fee in
respect thereof.
10.4. Year One Expense Reimbursement. Within 60 days of the date
hereof, IKON shall pay to GE an amount equal to $10 Million (the "Expense
Reimbursement") in consideration of expenses associated with the Retained
Portfolio expected to be incurred by GE in the first Program Year (including,
by way of example only, the on-boarding of the Transferred Employees to GE's
(or an Affiliate of GE's) payroll and benefit systems, the training of the
Transferred Employees in respect of the Program services, monitoring and
reporting the portfolio performance and systems integration activity (including
data migration and mapping from IKON's lease accounting systems)). IKON
acknowledges that its obligation to make such payment shall be unconditional,
and that the payment of the Expense Reimbursement shall be non-refundable and
shall not (i) require GE to provide IKON or any of its Affiliates any
57
accounting of the related expenses or (ii) reduce, offset or defer any other
amounts due to GE or GECITS pursuant to this Agreement.
10.5. [INTENTIONALLY OMITTED].
10.6. Loss Pool. (a) On the date hereof there shall be established a
notional loss pool in an amount equal to the sum of (x) $10 Million (which
amount is intended to address IKON's concerns with respect to unforeseen
economic conditions and/or uncertainty with respect to the order in which
losses shall be realized with respect to the Closing Date IKON Retained
Financing Contracts, as compared to the Purchased Financing Contracts) plus (y)
the reserve for lease/loan loss or lease/loan default set forth on the Final
Adjusted Closing Date Schedule in accordance with the section of the Accounting
Principles (each as defined in the Asset Purchase Agreement) headed "Lease
Default Reserves". There shall be applied against (so as to reduce) such
notional loss pool written-off amounts associated with (i) the Financing
Contracts in the Retained Portfolio (but only to the extent in existence on the
date hereof) that shall not have, as of the date hereof, either reached the end
of their contractually stated term or been written-off (each, a "Closing Date
IKON Retained Financing Contract") and (ii) (A) Purchased Financing Contracts
and (B) Program FM Stream Financings purchased (directly or indirectly) by
GECITS from IKON pursuant to the Asset Purchase Agreement. IKON shall be
required to sell to GECITS (on an "AS-IS, WHERE-IS" basis without
representation or warranty other than Agreed Warranties), and GECITS shall be
required to purchase from IKON, such Closing Date IKON Retained Financing
Contracts (and the Equipment subject thereto) at the IKON Net Book Value
thereof at the time of such purchase if (i) the amounts under such Financing
Contract are then eligible for write-off under the IOS Capital write-off policy
attached as Exhibit G hereto and (ii) the loss pool balance then exceeds the
aggregate amount of the IKON Net Book Value in respect thereof at such time.
Except as otherwise required pursuant to the terms of any Subservicing
Agreement or any of the Securitization Documents, recoveries in respect of
written-off Purchased Financing Contracts, Program FM Financing Streams
purchased by GECITS pursuant to the Asset Purchase Agreement and purchased
Closing Date IKON Retained Financing Contracts (and the Equipment subject
thereto) shall be applied as provided in Section 1 of Schedule 1.
(b) This Section 10.6 shall have no further force and effect upon
any termination or expiration of the Term and purchase by IKON of GECITS'
interests in the Program Financing Contracts, Program Stream Financings and ABS
Entities.
10.7. Other Agreements. The provisions of Section 2 of Schedule 1
are hereby incorporated by reference in their entirety.
ARTICLE 11.
TERM AND TERMINATION
11.1. Term of Agreement. The Program shall have a five (5) year
initial term commencing on the date hereof, which term shall automatically
renew at the end of such initial term for a further three (3) or five (5) year
renewal term (at IKON's election, to be exercised not
58
later than one year prior to the end of the initial Term) unless IKON provides
to GE at least one (1) year's prior written notice of its intent to terminate
the Program at the end of the initial term (the initial five (5) year term, as
it may be extended as provided above and/or terminated pursuant to Section
11.2, the "Term"). In the event that IKON does not elect to terminate the term
of the Program at the end of the initial five (5) year term (and,
consequently, the Term continues beyond such initial five-year period without
having been earlier terminated), GE shall pay to IKON a renewal fee equal to
$6 Million on the first Business Day of the renewal term.
11.2. Termination Rights.
(a) GE Termination Rights. GE shall have the right to terminate
the Program and GECITS' obligation to fund future volume prior to the end of
the Term upon the occurrence and during the continuance of any of the following
events (each, a "GE Termination Event"):
(i) Material Adverse Change of IKON, which means the
occurrence of any of the following:
(A) The occurrence of any default (after giving
effect to any applicable notice or cure periods) or event of default under any
indebtedness of IKON (or any other IKON Company) for borrowed money (or any
indebtedness for borrowed money guaranteed by IKON or any other IKON Company)
in excess of $15,000,000 in the aggregate, or
(B) The occurrence of a Bankruptcy Event with respect
to IKON.
(ii) Material, willful and bad faith breach by IKON of any
of Sections 3.2, 3.3 or 6.2 of this Agreement, which breach, if curable, is not
cured within sixty (60) days' written notice thereof from GE, specifying the
nature of such breach in reasonable detail.
(iii) Material breach by IKON (other than any breach of the
type described in Section 11.2(a)(ii) above) (A) of any of Sections 3.2, 3.3 or
6.2 of this Agreement or (B) of material payment obligations of any IKON
Company under any of the documentation to be entered into in connection with
the Program (other than as a result of a good faith dispute by IKON with
respect thereto), in each case, which breach, if curable, is not cured within
sixty (60) days' written notice thereof from GE, specifying the nature of such
breach in reasonable detail.
(b) IKON Termination Right. IKON shall have the right to
terminate the Program and GE's or GECITS' right of first opportunity prior to
the end of the Term upon the occurrence and during the continuance of any of
the following events (each an "IKON Termination Event"):
(i) Material, willful and bad faith breach by a GE Party of
any of Sections 4.1, 4.2, 4.3, 5.3 or 6.3(a) of this Agreement, which breach,
if curable, is not cured within sixty (60) days' written notice thereof from
IKON, specifying the nature of such breach in reasonable detail.
59
(ii) Material breach by a GE Party (other than any breach of
the type described in Section 11.2(b)(i) above) (A) of any of Sections 4.1,
4.2, 4.3, 5.3 or 6.3(a) of this Agreement or (B) of material payment
obligations of GE under any of the documentation to be entered into in
connection with the Program (other than as a result of a good faith dispute by
GE with respect thereto), in each case, which breach, if curable, is not cured
within sixty (60) days' written notice thereof from IKON, specifying the nature
of such breach in reasonable detail.
(iii) A Credit Review Turnaround Failure or a Document Review
Turnaround Failure.
11.3. Consequences of Termination.
(a) Upon the termination of the Term, pursuant to Section
11.2(b), as a consequence of the occurrence of an IKON Termination Event, IKON
(or a Person designated by IKON) shall be entitled to purchase or cause a third
party to purchase all, but not less than all, of GECITS' interest in each of
(i) the Program Financing Contracts and Program Stream Financings then directly
held by GECITS and the related Equipment for a purchase price equal to the
quotient obtained by dividing (x) the sum of the aggregate Net Book Values of
all such Program Financing Contracts and Program Stream Financings at the time
of such purchase plus the aggregate Net Economic Values of all such Program
Financing Contracts and Program Stream Financings at the time of such purchase
by (y) two (2) and (ii) the ABS Entities for a purchase price, without double
counting any of the amounts contained in clause (i) above, computed in the same
manner as the value of the equity of the ABS Entities and their related assets
are determined under the Asset Purchase Agreement for purposes of determining
the Final Adjusted Closing Date Schedule, except that the Financing Contracts
(and related Equipment) held by the ABS Entities shall be valued at an amount
equal to the quotient obtained by dividing (x) the sum of the aggregate Net
Book Values of all such Financing Contracts at the time of such purchase plus
the aggregate Net Economic Values of all such Financing Contracts at the time
of such purchase by (y) two (2).
(A) In the event that IKON purchases (or causes
another Person to purchase) the Program Financing Contracts, Program Stream
Financings and ABS Entities held by GECITS as provided in this Section 11.3(a),
(1) IKON and GE shall be required to execute such amendments to the
Securitization Documents and take such other actions as shall be required to
cause IKON or one of its Subsidiaries to be substituted for GE as servicer
under such Securitization Documents, (2) GE shall be required to deliver to
IKON true and complete copies of all of the Securitization Documents (and all
amendments, modifications and waivers thereto) entered into by GE at any time
after the date hereof and (3) GE shall be required to reimburse IKON for all
reasonable out-of-pocket costs incurred by IKON in connection with such
substitution of servicer.
(B) In addition (and irrespective of whether IKON
purchases the Program Financing Contracts, Program Stream Financings and ABS
Entities as provided in this Section 11.3(a)), (1) GE shall be required to
continue to provide services to IKON with respect to IKON's Retained Portfolio
on the terms set forth in the Servicing Agreement until such time as IKON has
notified GE that it has engaged a third party to provide such services for
60
IKON; provided, that in no event shall GE be required to continue to provide
such services to IKON for a period longer than one (1) year following the date
of termination of the Program, and (2) IKON shall use all commercially
reasonable efforts, following a termination of the Program as a result of an
IKON Termination Event, to engage a third party to provide such services to
IKON with respect to IKON's Retained Portfolio.
(C) In the event that the Program is terminated by
IKON, pursuant to Section 11.2(b), as a result of the occurrence of an IKON
Termination Event, IKON shall be entitled to payment by GE of (and GE shall be
required to pay to IKON within ten (10) Business Days after such termination of
the Program) the Program Termination Fee.
(b) At the end of the Term, other than as a consequence of a GE
Termination Event or an IKON Termination Event pursuant to Section 11.2(a) or
11.2(b) respectively:
(i) GE shall be required to continue to provide services
with respect to IKON's Retained Portfolio on the terms set forth in the
Servicing Agreement until such time as IKON has notified GE that it has engaged
a third party to provide such services for IKON; provided, that in no event
shall GE be required to continue to provide such services to IKON for a period
longer than one (1) year following the date of termination of the Program,
(ii) IKON shall use all commercially reasonable efforts,
following the expiration of the Term, to engage a third party to provide such
services to IKON with respect to IKON's Retained Portfolio, and
(iii) IKON shall be required to reimburse GE for all
severance, facility, wind-down and similar costs incurred by GE, VFS Macon or
any of their Affiliates in connection with the wind-down of the Program
operations during the one-year period following such termination of the Term.
(c) Upon the termination of the Term, pursuant to Section
11.2(a), as a consequence of the occurrence of a GE Termination Event:
(i) IKON shall be required to reimburse GE for all
severance, facility, wind-down and similar costs incurred by GE, VFS Macon or
any of their Affiliates in connection with the wind-down of the Program
operations during the one-year period following such termination of the Term.
(ii) (A) GE shall be required to continue to provide
services with respect to IKON's Retained Portfolio on the terms set forth in
the Servicing Agreement until such time as IKON has notified GE that it has
engaged a third party to provide such services for IKON; provided, that in no
event shall GE be required to continue to provide such services to IKON for a
period longer than one (1) year following the date of termination of the
Program and (B) IKON shall use all commercially reasonable efforts, following
the termination of the Program as a consequence of a GE Termination Event, to
engage a third party to provide such services to IKON with respect to IKON's
Retained Portfolio.
61
(iii) GE shall be entitled to payment by IKON of (and IKON
shall be required to pay to GE within ten (10) Business Days after such
termination of the Program) the Program Termination Fee.
(d) If IKON elects to purchase the Program Financing Contracts,
Program Stream Financings and ABS Entities from GECITS pursuant to Sections
11.3(a) above, then:
(i) IKON shall provide written notice to GE of such
election within 90 days of the effective date of such termination of the Term,
setting forth a date for such purchase, which date shall not be less than ten
(10) nor more than fifteen (15) Business Days after GE's receipt of such
notice.
(ii) On the date specified in the notice referred to in
Section 11.3(d)(i), (A) IKON shall purchase from GECITS (by transferring to
GECITS, in immediately available funds, all amounts required to be paid by it
pursuant to Section 11.3(a) above) and (B) GECITS shall sell, transfer and
assign to IKON, and IKON shall purchase from GECITS, all such Program Financing
Contracts, Program Stream Financings, equity interests in the ABS Entities and
all related Equipment on an "AS-IS, WHERE-IS" basis, without recourse,
representation or warranty of any kind, other than Agreed Warranties.
(e) Notwithstanding any of the foregoing, the rights and
obligations of IKON, GE and GECITS described in Sections 5.2, 5.3, 5.7(a)(iv),
6.1(b), 6.1(d), 6.2, 6.3(a)(ii), 8.3(a), 8.3(e), 8.5(a), 8.5(c), Article 9,
Section 10.2 (solely to the extent applicable to Sections 1(a), 1(b) and 1(c)
of Schedule 1), 10.4 and Sections 1(a), 1(b) and (c) of Schedule 1 shall
survive any termination of the Program under this Article 11, unless IKON (or
an entity designated by IKON) elects to and does purchase all of the Program
Financing Contracts, Program Stream Financings and equity interests in the ABS
Entities from GECITS pursuant to the purchase options described in
Section 11.3.
(f) Upon the termination of the Program for any of the reasons
provided above and the purchase by IKON (or a third party) of all of the
Program Financing Contracts, Program Stream Financings and interests in the ABS
Entities held by GECITS, IKON shall have the right to cause GE and GECITS to
provide to IKON, for a reasonable fee to be agreed by GE and IKON, (i) the
necessary information, files, records and electronic data feeds to transition
the servicing of such Program Financing Contracts and Program Stream Financings
to IKON's platform, and (ii) a continuation of the servicing of such Program
Financing Contracts and Program Stream Financings, in each case, pursuant to a
transition services agreement mutually acceptable to IKON and GE. In no event
shall GE be required to perform for IKON any services pursuant to such
transition services agreement for a period longer than one (1) year (it being
agreed that if IKON shall terminate GE's servicing of the Program Financing
Contracts prior to the end of such one year period, GE shall not be required to
continue to provide services to IKON with respect to the IKON Retained
Portfolio pursuant to Section 11.3(a)(B), 11.3(b)(i) or 11.3(c)(iii) beyond
such earlier termination date.
62
ARTICLE 12.
MISCELLANEOUS
12.1. Confidentiality. (a) Any non-public and proprietary business
strategies or business plans of any IKON Company that is identified by IKON as
confidential or proprietary in nature (whether oral, written or otherwise) and
provided by IKON or any of its Affiliates or representatives to GE in
connection with the Program (and any analyses, notes, compilations or other
information incorporating such information), and any non-public and
proprietary business strategies or business plans of GE or any of its
Affiliates that is identified by GE as confidential or proprietary in nature
(whether oral, written or otherwise) and provided to IKON or any of its
Affiliates or representatives (and any analyses, notes, compilations or other
information incorporating such information) (such confidential or proprietary
information of a party is referred to as such party's "Confidential
Information"), shall be held in confidence by the receiving party to at least
the same extent that and in at least the same manner as such receiving party
protects its own confidential or proprietary information, but in any event to
an extent and in a manner that is at least commercially reasonable. A
receiving party shall not, without the other party's prior written approval,
(x) disclose Confidential Information of the other party to any other Person
or (y) use Confidential Information for any purpose whatsoever, other that in
connection with the Program and the transactions contemplated thereby.
Notwithstanding the foregoing, Confidential Information may be disclosed: (i)
to GE's and its Affiliates' or IKON's or its Subsidiaries' respective
directors, officers, employees, representatives, accountants, counsel or
special counsel who the receiving party determines should know or have access
to such information and who have been instructed or have a duty to keep such
information confidential in accordance with the terms hereof; (ii) to the
extent that such disclosure is reasonably necessary to permit the receiving
party to perform its duties and its obligations under this Agreement or any GE
Operative Agreement or IKON Operative Agreement (as applicable); (iii) to such
other Persons who are reasonably deemed necessary by GE and IKON, as the case
may be, in connection with the enforcement of their rights under this
Agreement or any GE Operative Agreement or IKON Operative Agreement (as
applicable); (iv) by GE or its Affiliates (A) to potential investors,
purchasers or financing sources in connection with any actual or proposed sale
or syndication of a Program Financing Contract or Program Financing Stream or
any participation or interest therein or (B) to the extent required or
appropriate to be disclosed in response to a reasonable request by rating
agencies or underwriters in connection with financing transactions undertaken
by GE or its Affiliates, who agree or are under a duty to hold such
information confidential in accordance with the terms hereof; (v) by IKON or
its Subsidiaries to the extent required or appropriate to be disclosed in
response to a reasonable request by rating agencies or underwriters in
connection with financing transactions undertaken by IKON or its Subsidiaries
(as borrower or obligor), who agree or are under a duty to hold such
information confidential in accordance with the terms hereof; and (vi) to the
extent required pursuant to applicable Law or by any Governmental Entity
(including, but not limited to, the Internal Revenue Service, state taxing
authorities, the Commission or federal or state judicial authorities);
provided that if a receiving party becomes obligated pursuant to any Order or
subpoena to disclose any Confidential Information of the other party, then the
receiving party shall promptly provide the other party with written notice
thereof (including the circumstances relating to such
63
obligation and the information sought to be disclosed) so as to permit the
other party (at its sole discretion) seek a protective order or other
appropriate remedy, and the receiving party shall cooperate reasonably with
the other party in its efforts in connection therewith.
(b) The provisions of Section 12.1(a) shall not apply to any
information which (i) is or becomes available to the public other than as a
result of a breach by a receiving party or any of its Affiliates of the
provisions of this Section 12.1; (ii) was known to the receiving party on a
non-confidential basis prior to the time the receiving party obtained such
information from the other party, and such knowledge was obtained by the
receiving party from sources that are not known to the receiving party to be in
violation of any legal or contractual obligation to the disclosing party by
disclosing such information to the receiving party (a "Permitted Source");
(iii) becomes available to the receiving party on a non-confidential basis from
a source, other than the other party or its Affiliates, that is a Permitted
Source; or (iv) is independently developed by the receiving party without
violating any obligation under this Section 12.1.
(c) In addition, GE and GECITS further agree not to disclose to
any Person set forth on Annex E (or any person which GE knows to be a
Subsidiary or Affiliate thereof) (i) any information provided to them by IKON
or another IKON Company (whether electronically or in writing) in the form of
customer lists of IKON, IKON customer business plans or strategies, proprietary
pricing information or plans, or strategic alliance or joint venture agreements
or (ii) any analyses, notes, compilations or other information of GE or GECITS
incorporating any of the information referred to in clause (i) above. Any
information of the type described in clause (i) or (ii) above shall be treated
as Confidential Information for purposes of the last sentence of Section
12.1(a) and for purposes of Section 12.1(b).
(d) The agreements set forth in this Section 12.1 shall survive
the expiration or termination of the Term for a period of two (2) years.
12.2. Amendments. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by an instrument in writing
signed by each of the parties hereto or, in the case of a waiver, by or on
behalf of the party waiving compliance.
12.3. Integrated Contract. Except for the Confidentiality
Agreement, the Servicing Agreement, the Services Agreement, the Subservicing
Agreements, the Trademark License Agreement, the Federal Assignment Agreement
and the Marketplace Servicing Agreement, this Agreement, and any written
amendments to this Agreement satisfying the requirements of Section 12.2: (i)
constitute the entire agreement between IKON, GE and GECITS with respect to the
subject matter hereof or thereof, and (ii) supersede and replace all
correspondence, understandings and communications between the parties hereto
with respect to the transactions contemplated by this Agreement.
12.4. Governing Law. This Agreement and the legal relations
between the parties hereto arising hereunder shall be governed by and construed
in accordance with the Laws of the State of New York, without regard to the
principles regarding the choice of Law.
64
12.5. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by registered mail or
certified mail, postage prepaid, by overnight courier service, or by telecopy
or other written form of electronic communication:
If to IKON, at:
IKON OFFICE SOLUTIONS, INC.
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
CRAVATH, SWAINE & XXXXX LLP
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
and if to GE or GECITS, at:
GENERAL ELECTRIC CAPITAL CORPORATION
00 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
and
GENERAL ELECTRIC CAPITAL CORPORATION
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel, GE Commercial Finance
with a copy to:
WEIL, GOTSHAL & XXXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as shall be furnished in writing by GE or GECITS (on
the one hand) or IKON (on the other hand), to the others, and any such notice
or communication shall be deemed to have been given as of the date so mailed,
dispatched or transmitted (except that a notice of
65
change of address shall not be deemed to have been given until received by the
addressees). Failure or delay in delivering any notice, demand, request,
consent, approval, declaration or other communication to any Person designated
to receive a copy thereof shall in no way adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication to the primary recipient.
12.6. No Assignment. This Agreement may not be assigned, except by
operation of law; provided, however, that each of GE and GECITS may assign its
rights hereunder to one or more of its Affiliates and may, subject to Section
5.9, assign its rights in respect of one or more Financing Contracts and
related Equipment to any Person. No assignment otherwise permitted hereunder
shall, without the written consent of IKON, relieve GE or GECITS from any of
its liabilities hereunder. Nothing contained in this Section 12.6 shall limit
or impair in any manner any of GE's, GECITS' or IKON's rights under and
pursuant to Section 5.9.
12.7. Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
12.8. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties hereto.
12.9. Announcements. GE and IKON agree to consult with each other
prior to issuing any press release or otherwise making any public statement
with respect to the transactions contemplated hereby, and shall not issue any
such press release or make any such public statement prior to such consultation
and without the prior consent of the other party (which consent shall not be
unreasonably withheld or delayed), except as may be required by any Law or
pursuant to any listing agreement with any securities exchange or any stock
exchange regulations.
12.10.Severability. If at any time subsequent to the date hereof,
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of
no force and effect, but the illegality or unenforceability of such provision
shall have no effect upon, and shall not impair the enforceability of, any
other provision of this Agreement.
12.11.Binding Effect. This Agreement and the covenants, terms and
conditions set forth herein shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
12.12.Waiver of Jury Trial. EACH OF THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY EXHIBIT HERETO, OR ANY COURSE OF
66
CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING
TO THE FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES
HERETO TO ENTER INTO THIS AGREEMENT.
12.13.Exclusive Jurisdiction. Except as otherwise expressly
provided in this Agreement, the parties hereto agree that any Action seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
be brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such Action and irrevocably
waives, to the fullest extent permitted by Law, any objection which it may now
or hereafter have to the laying of the venue of any such Action in any such
court or that any such Action which is brought in any such court has been
brought in an inconvenient forum. Each party agrees that service of process on
such party as provided in Section 12.5 shall be deemed effective service of
process on such party. Notwithstanding anything to the contrary in this
Agreement, each party shall submit at all times to personal jurisdiction in the
State of New York.
00.00.Xx Third Party Beneficiary. This Agreement is not intended
and shall not be construed to confer upon any Person other than the parties
hereto any rights or remedies hereunder except that the parties hereto agree
and acknowledge that the agreements and covenants contained in Article 9 are
intended for the benefit of the indemnitees referred to therein (each such
Person, a "Third Party Beneficiary"), and that each such Indemnitee, although
not a party to this Agreement, shall be and is hereby constituted a direct and
irrevocable third party beneficiary of the agreements and covenants contained
in Article 9 and shall have the right to enforce such agreements and covenants
against the applicable party thereto in all respects fully and to the same
extent as if such Third Party Beneficiary were a party hereto. Notwithstanding
the foregoing, this Agreement (including Article 9) may be amended or waived by
GE, GECITS and IKON at any time and from time to time in accordance with
Section 12.2 and any such amendment or waiver shall be fully effective with
respect to the rights of the Third Party Beneficiaries under Article 9.
12.15.Expenses. Except as otherwise specifically set forth in this
Agreement, IKON (on the one hand) and GE and GECITS (on the other hand) will
each be responsible for the payment of their own respective costs and expenses
incurred in connection with the negotiations leading up to, and the performance
of, their respective obligations pursuant to this Agreement.
12.16.Misdirected Payments or Communications.
(a) In the event that GE, GECITS or IKON receives any payment
from a third party which is properly due to the other party, such receiving
party shall, promptly upon becoming aware of such receipt, remit or cause to be
remitted such payment to the appropriate Person. Such payment shall at all
times be the property of the party to whom it is properly due and shall be held
in trust for such Person's benefit until remitted to such Person.
67
(b) In the event that GE, GECITS or IKON receives any
communication from a third party which should have been properly delivered to
the other party, such receiving Party shall, promptly upon becoming aware of
such receipt, deliver or cause to be delivered such communication to the
appropriate Person.
12.17.Representation by Counsel; Interpretation. The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
00.00.Xx Partnership. Nothing contained in this Agreement shall be
construed to constitute the creation of a partnership, joint venture,
employment, fiduciary or similar relationship between the parties for any
purposes, or to characterize IKON, GE or GECITS or any of their respective
Affiliates as partners, or as joint venturers or as the agent of the other
party for any purposes. It is the intention of GE, GECITS and IKON that
(i) GECITS be the sole owner of any Equipment subject to any Program Financing
Contract or related to any Program Stream Financing financed by GECITS through
the Program and (ii) IKON be the sole owner of any Equipment the Financing
Contract in respect of which is being billed, collected and administered by GE
pursuant to the Servicing Agreement. None of GE, GECITS or IKON shall take any
position inconsistent with this characterization. IKON, GE and GECITS and each
of their respective Affiliates shall at all times remain independent
contractors with respect to this Agreement and the Program.
12.19.Further Assurances. Upon the reasonable written request of
any of IKON, GE or GECITS, the other parties shall make, execute or endorse,
acknowledge, and file or deliver to the requesting party, from time to time
such schedules, confirmatory assignments, conveyances, transfer endorsements,
certificates, reports and other assurances or instruments and take such further
steps relating to any Financing Contract or Program Stream Financing or any
related Equipment as the requesting party shall have reasonably requested. Any
Person making a request under this Section 12.19 shall bear the reasonable
costs and expenses incurred by the Person to whom such request is made in
connection with such Person's compliance with such request.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized representatives as of the
date set forth above.
GENERAL ELECTRIC GE CAPITAL INFORMATION
CAPITAL CORPORATION TECHNOLOGY SOLUTIONS, INC.
By: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
IKON OFFICE SOLUTIONS, INC.
By:
------------------------------
Name:
Title:
[SIGNATURE PAGE TO PROGRAM AGREEMENT]
ANNEX A
Program Agreement Definitions
I. Capitalized Terms. As used herein, the following terms shall have
the meanings set forth below.
"ABS Entities" means IKON Receivables, LLC and IKON Receivables-1,
LLC.
"Accounting Principles" has the meaning assigned to such term in
the Asset Purchase Agreement.
"Acquiring Company" has the meaning assigned to such term in
Section 8.3(g).
"Action" means any action, complaint, investigation, petition, suit
or other proceeding, whether civil, criminal or administrative or in law or in
equity, by or before any arbitrator or Governmental Entity.
"Administration Fees" has the meaning assigned to such term in
Section 1.1(b).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such Person.
"Agreed Warranty" means (a) with respect to GECITS' interest in any
Program Financing Contract or Program Stream Financing, that GECITS is
transferring good and valid title to such interest free and clear of all liens
(other than those arising through an IKON Company), (b) with respect to GECITS'
interest in any Equipment, that GECITS is transferring to IKON such title
thereto as IKON conveyed to GECITS under this Agreement or the Asset Purchase
Agreement, free and clear of all liens arising through GECITS after the
Transfer Date with respect thereto (other than (i) any lien for taxes not yet
due and payable, (ii) any mechanic's or materialmen's lien, which a lessee or
borrower under the related Program Financing Contract or Program Stream
Financing Agreement is required to remove, (iii) any other lien on the lessee's
or borrower's interest in such Equipment which is permitted in accordance with
the terms of the applicable Program Financing Contract or Program Stream
Financing Agreement, (iv) with respect to the Equipment, the interest of a
Customer under the related Program Financing Contract or Program Stream
Financing Agreement, (v) any grant of an interest in or right to purchase such
Equipment to the related Customer (or any Affiliate thereof) in connection with
the related Program Financing Contract or Program Stream Financing Agreement,
(vi) any liens arising through the related Customer (or any Affiliate thereof),
or (vii) any agreement to transfer Equipment in connection with any foreclosure
or repossession, and/or remarketing, thereof) and (c) with respect to the
equity interests in the ABS Entities, (i) that GECITS is transferring good and
valid title to such equity interest to IKON free and clear of all liens (other
than those arising through an IKON Company) and (ii) each of the
representations and warranties set forth on Annex D.
i
"Agreement" means this Program Agreement and all exhibits, annexes
and schedules hereto (as the same may be amended or modified from time to
time).
"Allocation Policy" has the meaning assigned to such term in
Section 5.1(a).
"Application" means any request, delivered to GE by IKON pursuant
to Section 5.5 hereof, to establish or increase a credit line for a Customer.
"Application Methodology" has the meaning assigned to such term in
Section 5.2.
"Asserted Service Failure" has the meaning assigned to such term in
Section 6.1(a)(ii).
"Asset Purchase Agreement" means the Asset Purchase Agreement,
dated December 10, 2003, among GE, IOS Capital and IKON (as the same may be
amended or modified from time to time).
"Assumed Name" means each of "IKON Financial Services", "IKON
Office Solutions" and "IKON Management Services".
"Bankruptcy Event" means, with respect to any Person, (i) the
commencement by such Person of a voluntary case under, or the consent by such
Person to the entry of a decree or order for relief in an involuntary case
under, any federal, state or foreign bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or other similar law now or hereafter
in effect or (ii) the consent by such Person to the appointment of, or taking
possession by, a receiver, conservator, custodian, liquidator, assignee,
trustee or sequestrator (or other similar official) of such Person or of any
substantial part of its Property or (iii) the making of a general assignment by
such Person generally to pay its debts for the benefit of creditors or (iv) the
admission in writing of such Person of its inability to pay its debts as they
become due in the ordinary course of business or (v) the commencement of
liquidation or dissolution of such Person or (vi) the adoption of a resolution
by its directors or shareholders in furtherance of any of the foregoing or
(vii) a case or proceeding shall have been commenced against such Person in a
court of competent jurisdiction seeking (A) a decree or an order for relief in
respect of such Person under any bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar law now or hereafter in effect or
(B) the appointment of a receiver, conservator, custodian, liquidator,
assignee, trustee or sequestrator (or other similar official) of such Person or
of any substantial part of its Property or (C) the ordering of the winding up
or liquidation of its affairs and (in the case of this clause (vii)) the
continuance of such case or proceeding unstayed and in effect for a period of
sixty (60) days.
"Bankruptcy Exception" means, with respect to any agreement,
contract or commitment, any limitation thereon imposed by any bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar law
affecting creditors' rights and remedies generally and, with respect to the
enforceability thereof, by general principles of equity.
ii
"Base Equipment Service Payment" means, (a) with respect to any
Program Financing Contract or Program Stream Financing Agreement (other than
any Federal Contract, the Equipment, Program Federal Stream Financing and
Purchased Assets subject or related to which are transferred by IKON to GECITS
prior to the Federal Program Integration Date), that portion of the Minimum
Periodic Payment thereunder deemed, as between GE and IKON and in accordance
with Section 5.1, to be allocable to IKON's Equipment Service Obligations
thereunder and (b) with respect to any Federal Financing Contract, the
Equipment, Program Federal Stream Financing and Purchased Assets subject or
related to which are transferred by IKON to GECITS prior to the Federal Program
Integration Date, has the meaning assigned to such term in the Federal
Assignment Agreement.
"Base Origination Fee" with respect to any Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract, Program
FM Stream Financing or Program EM Stream Financing means an amount equal to the
product of (a) the sum of (x) the Purchase Price of the Equipment (other than
Non-Core Equipment) subject or related to such Originated Financing Contract,
IKON Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing or Program EM Stream Financing plus (y) the purchase price of
required to be paid by GECITS to any third party supplier thereof in connection
with the purchase of any Non-Core Equipment subject or related to such
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract, Program FM Stream Financing or Program EM Stream Financing,
multiplied by (b) 3%.
"Bundled Financing Contract" means (i) each Program Financing
Contract or Federal Financing Contract in respect of which, in accordance with
the Allocation Policy, the Minimum Periodic Payment thereunder is allocable, in
part, to the lease or rental of the related Equipment and, in part, to the
Equipment Service Obligations of IKON in respect of such Equipment, (ii) each
Program Facilities Management Agreement and (iii) each Program Equipment
Management Agreement.
"Business as Usual" means the level of care, observation, diligence
and performance consistent with that exercised by IOS Capital (immediately
prior to the Pre-Closing Merger) in connection with the Purchased Financing
Contracts, except to the extent the parties agree in writing otherwise.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks are authorized or required to close in New York City.
"Closing Date IKON Retained Financing Contract" has the meaning
assigned to such term in Section 10.6.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commissioned Rates" means an additional charge, expressed as a
percentage, determined by IKON to be added to the rates set forth in the GE
Rate Sheets and (when so added to the rates set forth in the GE Rate Sheets)
utilized to determine the rates to Customers to be
iii
offered by IKON's sales force in connection with the leasing and financing of
Equipment pursuant to the Program.
"Comparable Contracts" has the meaning assigned to such term in
Section 5.13.
"Confidentiality Agreement" means that certain confidentiality
agreement, dated May 23, 2003, between GE and IKON.
"Confirmation of Acceptance" with respect to any Equipment means
(a) any written statement, in form and substance satisfactory to GE, of an
Obligor that such Equipment has been accepted by such Obligor in connection
with the related Program Financing Contract or Program Stream Financing, or
(b) any telephone confirmation by the applicable Obligor, satisfactory to GE,
that such Equipment has been accepted by such Obligor in connection with the
related Program Financing Contract or Program Stream Financing.
"Control" means, with respect to any Person, the indirect or direct
possession of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that (without limiting the generality
of the foregoing) any Person directly or indirectly owning at least fifty
percent (50%) of the equity interests or fifty percent (50%) of any class of
voting securities of any other Person shall be deemed to Control such other
Person. "Controlled" shall have a correlative meaning.
"CPC Payment" has the meaning assigned to such term in Section 1.1.
"CPI Charges" has the meaning assigned to such term in Section 1.1.
"Credit Approval Period" means, (a) with respect to any Application
for a Customer (other than the United States Government) for a line of credit
(whether or not in respect of a proposed Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract, Program FM Stream
Financing or Program EM Stream Financing), four (4) business hours if such
credit line for such Customer is Score Card Eligible, and (b) otherwise two (2)
Business Days (it being agreed that prior to the Federal Program Integration
Date, the Credit Approval Period shall not be applicable to, and shall not be
measured in respect of, any Application for a Customer that is the United
States Government).
"Credit Approval Policy" means the policy attached as Exhibit B
hereto, as the same may be amended or modified from time to time by GE in
accordance with this Agreement.
"Credit Enhancement" means any Property pledged, assigned,
mortgaged, made, delivered or transferred as security for the performance of
any obligation under or with respect to any Program Financing Contract or
Program Stream Financing.
"Credit Review Turnaround Failure" means the failure by GE, for at
least two (2) consecutive calendar quarters that commence 90 days or more after
the date hereof, to both (a) approve, conditionally approve or reject at least
90% of all Applications submitted by IKON
iv
within the applicable Credit Approval Period, and (b) satisfy its obligations
to IKON under Section 5.5(a).
"Credit Revocation Cutoff Date" with respect to a GE Termination
Event of the type described in Section 11.2(a)(ii) or 11.2(a)(iii), means the
60th day after the date that GE and GECITS shall have been notified or
otherwise shall have become aware of the occurrence of such GE Termination
Event unless, prior to such 60th day, GE shall have notified IKON in writing
that it desires to extend such Credit Revocation Cutoff Date to a date (as
determined by GE and specified in such notice) that is not more than 120 days
after the occurrence of such event (in which case the Credit Revocation Cutoff
Date with respect such event shall be the date specified in the notice of
extension).
"Customer" means a customer of an IKON Company that desires to
acquire, or has acquired (including by rental or lease), any Equipment from an
IKON Company pursuant to a Financing Contract or a proposed Financing Contract
and any guarantor of the obligations of such customer; provided, however, that
a Customer shall not include any Person acquiring such Equipment for personal,
family, household or agricultural use or for resale.
"Damages" means any loss (including liquidated damages), liability,
judgment, settlement, award (including back-pay awards), claim, cost, damage,
deficiency, Tax, penalty, fine or expense, whether or not arising out of third
party claims (including interest, penalties, reasonable attorneys' fees and
expenses, court costs and all reasonable out-of-pocket amounts paid in
investigation, defense or settlement of any of the foregoing and enforcement of
any rights of indemnification against any Indemnitor or with respect to any
appeal). "Damages" shall not include Special Damages (other than any Special
Damages required to be paid by an Indemnitee to any Person (other than to a
party to this Agreement or any of its Affiliates), which Special Damages shall
be deemed to be direct losses of the Person required to pay such Special
Damages).
"Dealer Compensation Report" has the meaning assigned to such term
in the Services Agreement.
"Defaulted Equipment" means Equipment which (a) has been sold, re-
leased or otherwise disposed of by GE or IKON and (b) was, at the time of such
sale or disposition, subject to a Written-Off Financing Contract.
"Designee" means a GE Designee or an IKON Designee, as the case may
be.
"Determination Period" means, with respect to any Program Financing
Contract or Program Stream Financing Agreement included in any listing,
delivered to IKON in accordance with Section 6.1(b)(iii), of delinquent Program
Financing Contracts or Program Stream Financing Agreements in respect of which
the Obligors thereunder have asserted an Asserted Service Failure as a reason
for non-payment thereunder, (a) the period commencing on the date GE delivers
such listing and ending 90 days thereafter (or, if IKON notifies GE prior to
the end of such 90-day period that it is still pursuing such Obligor's
assertions towards a satisfactory resolution with such Obligor, 120 days after
receipt of any such listing), with respect
v
to any Program Financing Contract or Program Stream Financing Agreement that
is not a Performance Cancellation Contract and (b) the shorter of (x) any
applicable notice period provided for in such Program Financing Contract or
Program Stream Financing Agreement (as applicable) and (y) the 90 or 120 day
period referred to in clause (a) above, in each case, with respect to any
Program Financing Contract or Program Stream Financing Agreement that is a
Performance Cancellation Contract.
"Dispute" has the meaning assigned to such term in Section
4.1(b)(ii).
"Discount Rate" with respect to (a) an Originated Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract, Program
FM Stream Financing or Program EM Stream Financing originated after the date
hereof, means a rate equal to the sum of the applicable like term swap rate for
AAA rated companies as of the date such Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract or Program Stream
Financing (as applicable) is funded by GE plus an incremental amount (expressed
as a percentage) included in the rates set forth in the GE Rate Sheets (as in
effect on the date such Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract or Program Stream Financing is
funded by GE) that is applicable to such Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract or Program Stream
Financing based on the transaction size, Obligor credit rating under the Credit
Approval Policy then in effect (as determined by GE), term, Equipment type and
other factors with respect thereto, (b) a Program Federal Stream Financing
transferred to GECITS prior to the Federal Program Integration Date, has the
meaning set forth in the Federal Assignment Agreement and (c) a Purchased
Financing Contract or Program FM Stream Financing purchased by GECITS pursuant
to the Asset Purchase Agreement, means the "buy-rate" for such Purchased
Financing Contract or Program FM Stream Financing (as applicable) reflected in
the books and records of IOS Capital (immediately prior to the Pre-Closing
Merger).
"Disposed Financing OEC Amount" for any Program Year, as of any
time, means (without duplication of any amounts) the aggregate Original
Equipment Cost of all Equipment subject to Program Financing Contracts, Program
Stream Financing Agreements or Financing Contracts in the Retained Portfolio
which has, as of such time, been cancelled or terminated (whether in connection
with the expiration of the term thereof, a Customer buyout, an upgrade or
otherwise, and whether prior to, upon or following the stated contractual term
thereof) during such Program Year (it being understood that any Financing
Contract in any extension or renewal term or in month-to-month after the end of
the contractually stated term shall not be deemed to have been cancelled or
terminated solely as a result of such extension, renewal or month-to-month
status).
"Document Package" has the meaning assigned to such term in Section
5.5(b).
"Document Review Turnaround Failure" means the failure by GE, for
at least two (2) consecutive calendar quarters that commence 90 days or more
after the date hereof, to both (a) respond (including by approving,
conditionally approving or rejecting) within three (3) Business Days to
proposed changes to Standard Form Documentation submitted by IKON in respect of
at least 90% of the proposed Originated Financing Contracts, IKON Originated
vi
Financing Contract and SLG Financing Contracts, in the aggregate, submitted to
GE during such quarter and (b) satisfy its obligations under Section
5.4(b)(ii).
"Equipment" means any office equipment, intangible property,
periodic software licenses, prepaid data subscription rights or office
furnishings and related services sold or distributed by IKON or any of its
Subsidiaries, including the right to use and transfer by license, sublicense or
otherwise, any software included with such Property, as well as any and all
substitute, successor or alternative technologies therefor; provided that for
all purposes of this Agreement, Equipment shall include Non-Core Equipment
subject or related to any Originated Financing Contract, IKON Originated
Financing Contract, SLG Financing Contract or Program Stream Financing only to
the extent that the funding or purchase of such Non-Core Equipment by GE is
expressly approved by GE.
"Equipment Sales Tax Payment" means, (a) with respect to any
Program Financing Contract or Program Stream Financing Agreement that is a
Sales Tax Inclusive Financing Contract (other than any Federal Financing
Contract the Equipment, Program Federal Stream Financing and Purchased Assets
subject or related to which are transferred by IKON to GECITS prior to the
Federal Program Integration Date), that portion of the Sales Tax Payment
thereunder attributable to the Lease Payment or Program Stream Financing
Payment thereunder (as applicable) and (b) with respect to any Federal
Financing Contract the Equipment, Program Federal Stream Financing and
Purchased Assets subject or related to which are transferred by IKON to GECITS
prior to the Federal Program Integration Date, has the meaning assigned to such
term in the Federal Assignment Agreement.
"Equipment Service Obligations" has the meaning assigned to such
term in Section 8.3(a).
"Equivalent Financial Reports" has the meaning assigned to such
term in Section 8.3(g).
"Evergreen Rentals" has the meaning assigned to such term in
Section 6.5.
"Exceptions Manual" means the exceptions manual, in the form
attached hereto as Exhibit I-2, as the same may be modified or amended from
time to time upon the written approval of GE.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Transaction" means any rental or lease of Equipment (a)
to any potential Customer that shall have had an Application rejected by GE,
within one (1) year of the date of determination, as a result of such Customer
having a credit risk rating of `5' or higher; provided, however, that in no
event shall any financing opportunity with such Customer be deemed to be an
Excluded Transaction if recourse to IKON or another IKON Company is offered or
provided in connection with any such financing opportunity, (b) to any Obligor
under a Program Financing Contract or in respect of a Program Stream Financing
that has been terminated by GECITS, within one (1) year of the date of
determination, as a result of a payment
vii
default thereunder, (c) to any Obligor that is, at the time, an adversary in a
lawsuit with GECITS as a result of such Obligor's default in its obligation to
make any (i) Lease Payments due under a Program Financing Contract or (ii)
Program Stream Financing Payments in respect of a Program Stream Financing (as
applicable), (d) under any proposed Financing Contract, to the extent that it
is both (i) required to be offered to any existing syndication partner of IKON
listed on Annex C hereto in connection with the upgrade of Equipment subject
to Financing Contracts held by such syndication partner pursuant to the terms
of the IKON syndication agreement with such syndication partner as in effect
on the date hereof and (ii) purchased or originated by such syndication
partner pursuant to the terms of such syndication agreement, (e) through a
minority- or woman-owned business, (f) under or pursuant to an Operating
Rental Contract or (g) to the United States Government.
"Executive Committee" has the meaning assigned to such term in
Section 2.1(a).
"Facilities Management Agreement" means any Financing Contract
(a) in respect of which IKON is the initial lessor thereunder, (b) pursuant to
the terms of which IKON, as initial lessor, has agreed both to (i) lease or
rent Equipment to the Obligor thereunder and (ii) perform Equipment Service
Obligations in respect of the Equipment subject thereto and (c) the Equipment
Service Obligations in respect of which include an obligation to provide daily
on-site equipment or software service or other similar services to the Obligor
thereunder.
"Fax Funding Delivery Date" means (a) with respect to any
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Federal Financing Contract with respect to which the
Transfer Date in respect of the Equipment related thereto occurs during the 90-
day period commencing on the date hereof, the date that is 30 days after such
Transfer Date, and (b) with respect to any Originated Financing Contract, IKON
Originated Financing Contract, SLG Financing Contract or Federal Financing
Contract with respect to which the Transfer Date in respect of the Equipment
related thereto occurs more than 90 days after the date hereof, the date that
is 20 days after such Transfer Date.
"Federal Assignment Agreement" means the Purchase and Assignment
Agreement the form of which is attached hereto as Exhibit L.
"Federal Financing Contract" means any Financing Contract (i) under
which the related Obligor is the United States Government, (ii) entered into by
IKON after the date hereof and (iii) in respect of which the right to receive
the equipment lease or rental payments thereunder is or is to be purchased by
GECITS pursuant to (A) the Federal Assignment Agreement, at any time prior to
the Federal Program Integration Date and (B) this Agreement, from and after the
Federal Program Integration Date.
"Federal Program Integration Date" has the meaning assigned to such
term in Section 3.5.
"Final Adjusted Closing Date Schedule" has the meaning assigned to
such term in the Asset Purchase Agreement.
viii
"Financing Contract" means any contract (including any amendment
thereto or assignment, assumption, renewal or novation thereof) in existence on
or after the date hereof and any ancillary agreements relating thereto (other
than any Equipment Service Obligation agreements), in the form of a lease of or
rental agreement with respect to Equipment (it being agreed that for purposes
of this Agreement, (a) each lease schedule to a master lease agreement shall be
deemed to be an individual Financing Contract, (b) each Program Facilities
Management Agreement and each Program Equipment Management Agreement shall
constitute a Financing Contract and (c) if, in connection with the extension of
any Program Financing Contract of the type contemplated by Section 6.5(c)
above, GECITS and the Customer shall agree to lease or rent new Equipment
pursuant to such Program Financing Contract in connection with such extension,
then for all purposes of this Agreement, the lease or rental of such new
Equipment (in accordance with the terms of such existing Program Financing
Contract) shall be deemed to constitute a new and separate Financing Contract
solely to the extent of such new Equipment).
"Force Majeure Event" means, with respect to any Person, an event
that is beyond the reasonable control of such Person after taking into account
(in the case of a GE Party or IKON) the disaster recovery policy of that
Person, which events may include acts of God, war, terrorism, rioting, fires,
floods, earthquakes, hurricanes, interruption of utility services and acts of
any Governmental Entity.
"FSS" has the meaning assigned to such term in Section 8.5(d).
"Funded Volume" means, with respect to any period of determination,
the difference between (a) the sum of (i) the aggregate Purchase Price of
Equipment (other than Non-Core Equipment) funded by GECITS in respect of
Originated Financing Contracts, IKON Originated Financing Contracts, SLG
Financing Contracts, Program EM Stream Financings and Program FM Stream
Financings during such period in connection with the Program, plus
(ii) aggregate purchase price of Non-Core Equipment paid by GE or GECITS to
third party equipment suppliers in respect of Non-Core Equipment subject or
related to Originated Financing Contracts, IKON Originated Financing Contracts,
SLG Financing Contracts, Program EM Stream Financings and Program FM Stream
Financings during such period in connection with the Program, minus (b) the sum
of (i) the aggregate Purchase Price of Equipment subject to all Originated
Financing Contracts, IKON Originated Financing Contracts, SLG Financing
Contracts, Program EM Stream Financings and Program FM Stream Financings and
(ii) the aggregate purchase price of Non-Core Equipment paid by GE or GECITS to
third party equipment suppliers in respect of Non-Core Equipment subject or
related to all Originated Financing Contracts, IKON Originated Financing
Contracts, SLG Financing Contracts, Program EM Stream Financings and Program FM
Stream Financings, in each case, in respect of which IKON shall have effected a
"sale reversal" pursuant to Section 6.3(b) during such period in connection
with the Program.
"GE" means General Electric Capital Corporation, a Delaware
corporation.
"GE Designees" has the meaning assigned to such term in Section
2.1(a).
ix
"GE Guaranty" means that certain Guaranty, dated as of the date
hereof, given and made by GE in favor of IKON (as the same may be amended or
modified from time to time).
"GE Material Adverse Effect" means (a) a material and adverse
effect on GE's business, assets, operations or condition (financial or
otherwise) or (b) any event or occurrence which has, or would reasonably be
expected to have, a material and adverse effect on GE's or GECITS' ability to
perform its obligations under this Agreement or any other GE Operative
Agreement.
"GE Party" means each of GE and GECITS.
"GE Operative Agreement" means this Agreement, the Servicing
Agreement, the Subservicing Agreements, the Marketplace Servicing Agreement,
the Services Agreement, the Syndication Subservicing Agreement, the Trademark
License Agreement the GE Guaranty and the Federal Assignment Agreement.
"GE Rate Sheets" means the rate sheets for the Program attached
hereto as Exhibit J and in effect on the date hereof, as such rate sheets may
be modified by GE from time to time subject to the provisions of Section 4.1.
"GE Relationship Manager" has the meaning assigned to such term in
Section 2.2.
"GE Specified Controls" has the meaning assigned to such term in
Section 7.1(a)(ii).
"GE Termination Event" has the meaning assigned to such term in
Section 11.2(a).
"Governmental Entity" means any domestic or foreign federal, state,
provincial, local, county or municipal government, governmental, judicial,
regulatory or administrative agency, department, commission, board, bureau,
court or other authority or instrumentality.
"IKON" means IKON Office Solutions, Inc., an Ohio corporation.
"IKON Canada" means IKON Office Solutions, Inc., an Ontario
corporation.
"IKON Companies" has the meaning assigned to such term in Section
1.1.
"IKON Designees" has the meaning assigned to such term in Section
2.1(a).
"IKON Evergreen Rentals" means, with respect to any Closing Date
IKON Retained Financing Contract, that portion of the periodic minimum payment
thereunder received by IKON in respect of periods following the stated
contractual term of such Financing Contract that is allocated in the books and
records of IOS Capital (immediately prior to the Pre-Closing Merger) to the
rental or lease of the Equipment subject thereto.
x
"IKON Material Adverse Effect" means (a) a material and adverse
effect on IKON's business, assets, operations or condition (financial or
otherwise) or (b) any event or occurrence which has, or would reasonably be
expected to have, a material and adverse effect on IKON's ability to perform
its obligations under this Agreement or any other IKON Operative Agreement.
"IKON Net Book Value" (a) of a Closing Date IKON Retained Financing
Contract that is not an Operating Rental Contract, at any time, means the sum
of (i) all due but uncollected equipment lease or rental payments under such
Financing Contract at such time plus (ii) the net present value of all future
equipment lease or rental payments not then due thereunder, discounted at the
implicit rate of interest under such Financing Contract plus (iii) the net
present value of the booked residual in respect of the Equipment subject to
such Financing Contract, discounted at the "buy-rate" for such Closing Date
IKON Retained Financing Contract reflected in the books and records of IOS
Capital (immediately prior to the Pre-Closing Merger) and (b) of a Closing Date
IKON Retained Financing Contract that is an Operating Rental Contract, at any
time, means the difference between (i) the Original Equipment Cost of the
Equipment subject thereto minus (ii) all accumulated depreciation taken in
respect of such Equipment, as reflected on the books of IKON in accordance with
the Accounting Principles.
"IKON Off-Lease Equipment" means Equipment (other than Defaulted
Equipment) which has (a) (i) previously been subject or related to a Purchased
Financing Contract or Program FM Stream Financing (to the extent purchased by
GECITS (directly or indirectly) pursuant to the Asset Purchase Agreement)
repurchased by IKON from GE pursuant to any of Section 5.7(a), 6.1(b), 6.1(d),
8.3(c) or 9.4 hereof or Section 2.07(a) or 5.04(b)(v) of the Asset Purchase
Agreement or (ii) previously been subject to a Closing Date IKON Retained
Financing Contract (in each case, other than a Written-Off Financing Contract)
and (b) (i) prior to the Systems Facilitation Date, been returned to IKON,
repossessed by (or on behalf of) IKON, purchased by the Obligor thereunder or
otherwise ceased to be subject to such Purchased Financing Contract, Program
Facilities Management Agreement or Closing Date IKON Retained Financing
Contract (as applicable) or (ii) on or after the Systems Facilitation Date,
been both (A) returned to IKON, repossessed by (or on behalf of) IKON,
purchased by the Obligor thereunder or otherwise ceased to be subject to such
Purchased Financing Contract, Program Facilities Management Agreement or
Closing Date IKON Retained Financing Contract (as applicable) and (B) sold, re-
leased or otherwise disposed of by GE or IKON.
"IKON Operative Agreement" means this Agreement, the Servicing
Agreement, the Subservicing Agreements, the Marketplace Servicing Agreement,
the Services Agreement, the Syndication Subservicing Agreement, the Trademark
License Agreement and the Federal Assignment Agreement.
"IKON Originated Financing Contract" means a Financing Contract
(i) in respect of which IKON or IOS Capital, LLC is the named lessor
thereunder, (ii) which has been executed by IKON as the lessor thereunder (or
by GE acting on behalf of IKON pursuant to the power of attorney granted to GE
under Section 6.1(c)(ii)), and (iii) which has been or is to be transferred to
GE pursuant to Section 5.7 (it being agreed that any SLG Financing Contract
shall, in no event, be deemed to constitute an IKON Originated Financing
Contract).
xi
"IKON Pre-Termination Evergreen Contract" means a Closing Date IKON
Retained Financing Contract that, on the date of termination of the Term, is
paying IKON Evergreen Rentals.
"IKON Relationship Manager" has the meaning assigned to such term
in Section 2.2.
"IKON Specified Controls" has the meaning assigned to such term in
Section 7.1(b)(ii).
"IKON Termination Event" has the meaning assigned to such term in
Section 11.2(b).
"Indemnification Event" shall mean any Third Party Action for which
a Person is entitled to indemnification under this Agreement.
"Indemnitee" means any Person entitled to indemnity pursuant to the
terms of this Agreement.
"Indemnitor" means the indemnifying person in the case of any
obligation to indemnify pursuant to the terms of this Agreement.
"Insurance Proceeds" means any amounts paid or payable on claims
under any insurance policy maintained by an Obligor covering losses arising as
a result of the theft or physical damage to Equipment subject to a Program
Financing Contract or in respect of a Program Stream Financing.
"Late Charges" has the meaning assigned to such term in Section
1.1.
"Law" means any statute, rule, regulation, code, Order,
constitution, ordinance, common law, standard, limitation, compliance schedule,
written direction, request or treaty, whether legislatively, judicially,
administratively or otherwise promulgated, of any Governmental Entity.
"Lease Payment" means, with respect to any Program Financing
Contract, that portion of the Minimum Periodic Payment thereunder deemed, as
between GE and IKON and in accordance with Section 5.1, to be allocable to the
rental or lease of the Equipment subject thereto.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), preference, priority, adverse claim, charge, or other
security agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
xii
"Marketplace Servicing Agreement" means the Marketplace Servicing
Agreement, dated as of the date hereof, by and between GECITS and IKON (as the
same may be amended or modified from time to time).
"Material Adverse Change" has the meaning assigned to such term in
Section 11.2(a)(i).
"Minimum Periodic Payment" has the meaning assigned to such term in
Section 1.1.
"Net Book Value" (a) of a Program Financing Contract that is not an
Operating Rental Contract, at any time, means the sum of (i) all due but
uncollected payments under such Program Financing Contract at such time that GE
is entitled to retain for its own account pursuant to Section 5.3(a) plus (ii)
the net present value of all future Lease Payments not then due thereunder,
discounted at the Discount Rate applicable thereto plus (iii) the net present
value of the Residual in respect of the Equipment subject to such Program
Financing Contract, discounted at the Discount Rate applicable thereto plus
(iv) the unamortized portion of all origination fees (other than the Volume
Origination Fee) for such Program Financing Contract at such time, (b) of a
Program Stream Financing at any time means the sum of (i) all due but
uncollected Program Stream Financing Payments and other payments and amounts
under the applicable Program Stream Financing Agreement at such time that GE is
entitled to retain for its own account pursuant to Section 5.3(b), plus (ii)
the net present value of all future Program Stream Financing Payments not then
due under such Program Stream Financing Agreement, discounted at the Discount
Rate applicable thereto plus (iii) the net present value of the Residual in
respect of the Equipment subject to the related Program Stream Financing
Agreement, discounted at the Discount Rate applicable thereto plus (iv) the
unamortized portion of all origination fees (other than the Volume Origination
Fee) for such Program Stream Financing at such time, and (c) of an Operating
Rental Contract at any time means the difference between (i) the Original
Equipment Cost of the Equipment subject thereto minus (ii) all accumulated
depreciation taken in respect of such Equipment, as reflected on the books of
GECITS in accordance with generally accepted accounting principles.
"Net Economic Value" of a Program Financing Contract or Program
Stream Financing, at any time, means 108.2% of the Net Book Value thereof at
such time.
"Non-Appropriation of Funds" means, (a) with respect to any SLG
Financing Contract, Program FM Stream Financing or Program EM Stream Financing
the Obligor in respect of which is a State and Local Government Entity, that
(i) the State and Local Government Entity that is the Obligor thereunder has
not been granted an appropriation of funds at any time after the commencement
of the term of such SLG Financing Contract, Program FM Stream Financing or
Program EM Stream Financing in connection with the use by such State and Local
Government Entity of the Equipment governed thereby or for equipment which is
functionally similar to such Equipment, (ii) operating funds are not otherwise
available to the State and Local Government Entity to make the payments that
are due and to become due under such SLG Financing Contract, Program FM Stream
Financing or Program EM Stream Financing, (iii) there is no other legal
procedure or available funds by or with which such payments can be
xiii
made and (iv) the non-appropriation did not result from an act or omission by
such State and Local Government Entity, and (b) with respect to any Program
Financing Contract or Program Stream Financing Agreement (other than any SLG
Financing Contract), that (i) the Obligor thereunder has agreed, pursuant to
one or more agreements with a State and Local Government Entity (collectively,
the "Prime Agreement"), to provide for the lease or rental of the Equipment
subject or related to such Program Financing Contract or Program Stream
Financing Agreement (as applicable) to such State and Local Government Entity
and (ii) such Prime Agreement is subject to non-appropriation of funds of the
type described in clause (a) above.
"Non-Core Equipment" means (a) office equipment or furnishings that
are not distributed or sold by IKON or any IKON Company in the ordinary course
of business or (b) other equipment financed by GE Vendor Financial Services
pursuant to manufacturer or dealer vendor program agreements or arrangements.
"Non-Purchased Securitization Parties" means IKON Receivables
Funding, LLC, IKON Receivables-2, LLC, IKON Office Solutions, Inc., a
corporation organized under the laws of Ontario, IKON Capital, Inc., a
corporation organized under the laws of Canada, IKON Funding-4, LLC and IKON
Funding-5, LLC.
"Non-Purchased Securitization Documents" means (i) the Assignment
and Servicing Agreement, dated as of April 1, 2003, among IOS Capital, IKON
Receivables Funding, LLC and IKON Receivables-2, LLC, (ii) the Assignment and
Servicing Agreement, dated as of May 1, 2002, among IOS Capital, IKON
Receivables Funding, LLC and IKON Receivables-2, LLC, (iii) the Concurrent
Lease Agreement, dated as of September 14, 1999, among IKON Office Solutions,
Inc., a corporation organized under the Laws of Ontario, IKON Capital, Inc., a
corporation organized under the Laws of Canada, the Seller and BNY Trust
Company of Canada, as trustee of the Care Trust, (iv) the Transfer and
Servicing Agreement, dated as of December 1, 2001, among IKON Funding-4, LLC,
IOS Capital, the Seller and SunTrust Bank and (v) all related agreements and
other documents, each such aforementioned document, as amended.
"Obligor" means any Person that is an obligor, borrower or lessee
under any Financing Contract.
"Off-Lease Equipment" means Equipment (other than (x) Defaulted
Equipment or (y) Equipment repurchased by IKON from GE pursuant to any of
Sections 5.7(a), 6.1(b), 6.1(d), 6.3(a), 6.3(b), 8.3(c), 9.4 or 11.3 hereof or
Section 2.07(a) or 5.04(b)(v) of the Asset Purchase Agreement) which has (a)
previously been subject to a Program Financing Contract, Program Facilities
Management Agreement or Program Equipment Management Agreement (in each case,
other than a Written-Off Financing Contract) and (b) been both (i) returned to
GE, repossessed by (or on behalf of) GE, purchased by the Obligor thereunder or
otherwise ceased to be subject to such Program Financing Contract, Program
Facilities Management Agreement or Program Equipment Management Agreement (as
applicable) and (ii) sold, re-leased or otherwise disposed of by GE or IKON.
xiv
"Operating Rental Contract" means each Financing Contract in the
form of a rental agreement in respect of Equipment which is, by its express
terms or pursuant to applicable Law, cancelable by the Obligor thereunder for
any reason or for no reason (whether or not upon prior notice).
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Original Equipment Cost" means, with respect to any item of
Equipment, the original cost of such Equipment as established on the books and
records of the Person that owned such Equipment at the inception of the
Financing Contract to which such Equipment is subject (it being agreed that the
Original Equipment Cost of any item of Equipment subject or related to any
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing Agreement shall be (a) the
Purchase Price in respect thereof, with respect to Equipment that does not
constitute Non-Core Equipment and (b) the purchase price paid or required to be
paid by GECITS to any third party supplier thereof (other than IKON or any
other IKON Company) with respect to any Equipment that constitutes Non-Core
Equipment).
"Originated Financing Contract" has the meaning assigned to such
term in Section 1.1.
"Overall Upgrade Excess OEC Percentage" for any Program Year, means
a fraction, expressed as a percentage, (a) the numerator of which is the
positive difference, if any, between (i) the Overall Upgrade OEC Amount for
such Program Year (determined as of end of such Program Year), minus (ii) the
Overall Upgrade OEC Allowance for such Program Year, and (b) the denominator of
which is the Overall Upgrade OEC Amount for such Program Year (determined as of
end of such Program Year).
"Overall Upgrade Make-Whole Amount" for any Program Year, means the
product of (a) 8.2% multiplied by (b) the product of (i) the Overall Upgrade
Excess OEC Percentage for such Program Year (determined as of end of such
Program Year) multiplied by (ii) the sum (without duplication of any amounts)
of (A) the Net Book Value of all Program Financing Contracts and Program Stream
Financings which have been upgraded or refinanced prior to their respective
stated contractual terms during such Program Year, plus (B) the IKON Net Book
Value of all Financing Contracts in the Retained Portfolio which have been
upgraded or refinanced prior to their respective stated contractual terms
during such Program Year.
"Overall Upgrade OEC Allowance" for any Program Year, means the
product of (x) fifty percent (50%) multiplied by (y) the Disposed Financing OEC
Amount for such Program Year (determined as of end of such Program Year).
"Overall Upgrade OEC Amount" for any Program Year, as of any time,
means (without duplication of any amounts) the aggregate Original Equipment
Cost of all Equipment subject to Program Financing Contracts, Program Stream
Financing Agreements or Financing
xv
Contracts in the Retained Portfolio which have been upgraded or refinanced
prior to their respective stated contractual terms during such Program Year,
as of such time.
"Overall Upgrade Percentage" for any Program Year, as of any time,
means a fraction, expressed as a percentage, (a) the numerator of which is the
Overall Upgrade OEC Amount for such Program Year, as of such time, and (b) the
denominator of which is the Disposed Financing OEC Amount for such Program
Year, as of such time.
"Performance Cancellation Contract" means any Program Financing
Contract or Program Stream Financing Agreement in respect of which the Obligor
thereunder has the right to terminate such contract, pursuant to applicable Law
or pursuant to such Program Financing Contract or Program Stream Financing
Agreement (as applicable), or pursuant to any other document or agreement
between the Obligor thereunder and the lessor, upon the failure of any IKON
Company to comply with its Equipment Service Obligations thereunder.
"Person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization,
Governmental Entity or other entity, as well as any syndicate or group that
shall be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934.
"Pre-Closing Merger" means the merger of IOS Capital with and into
IKON as contemplated by (and in accordance with) the Asset Purchase Agreement.
"Pre-Mid Term Excess OEC Percentage" for any Program Year, means a
fraction, expressed as a percentage, (a) the numerator of which is the positive
difference, if any, between (i) the Pre-Mid Term OEC Amount for such Program
Year (determined as of end of such Program Year), minus (ii) the Pre-Mid Term
OEC Allowance for such Program Year, and (b) the denominator of which is the
Pre-Mid Term OEC Amount for such Program Year (determined as of end of such
Program Year).
"Pre-Mid Term Make-Whole Amount" for any Program Year, means the
product of (a) 8.2% multiplied by (b) the product of (i) the Pre-Mid Term
Excess OEC Percentage for such Program Year (determined as of end of such
Program Year) multiplied by (ii) the sum (without duplication of any amounts)
of (A) the Net Book Value of all Program Financing Contracts and Program Stream
Financings which have been upgraded or refinanced prior to their respective
stated contractual terms during such Program Year prior to the expiration of
one-half of the original contractual term thereof, plus (B) the IKON Net Book
Value of all Financing Contracts in the Retained Portfolio which have been
upgraded or refinanced prior to their respective stated contractual terms
during such Program Year prior to the expiration of one-half of the original
contractual term thereof.
"Pre-Mid Term OEC Allowance" for any Program Year, means the
product of (x) ten percent (10%) multiplied by (y) the Disposed Financing OEC
Amount for such Program Year (determined as of end of such Program Year).
xvi
"Pre-Mid Term OEC Amount" for any Program Year, as of any time,
means (without duplication of any amounts) the aggregate Original Equipment
Cost of all Equipment subject to Program Financing Contracts, Program Stream
Financing Agreements or Financing Contracts in the Retained Portfolio which
have, as of such time, been upgraded or refinanced prior to their respective
stated contractual terms during such Program Year prior to the expiration of
one-half of the original contractual term thereof.
"Pre-Mid Term Upgrade Percentage" for any Program Year, as of any
time, means a fraction, expressed as a percentage, (a) the numerator of which
is the Pre-Mid Term OEC Amount for such Program Year, as of such time, and (b)
the denominator of which is the Disposed Financing OEC Amount for such Program
Year, as of such time.
"Pre-Termination Evergreen Contract" means a Program Financing
Contract or Program Stream Financing held by GE that, on the date of
termination of the Term, is paying Evergreen Rentals.
"Program" means the agreements and arrangements between GE and IKON
with respect to a financing program for Customers of the IKON Companies as
contemplated by this Agreement and otherwise agreed by GE and IKON.
"Program Commission Policy" has the meaning assigned to such term
in Section 3.2(e).
"Program EM Stream Financing" means any right, purchased or to be
purchased by GECITS from IKON pursuant to the Asset Purchase Agreement or this
Agreement, to receive the Program EM Stream Financing Payments under, and any
payments made in connection with the exercise by an Obligor of any right to
purchase Equipment subject to, any Program Equipment Management Agreement.
"Program EM Stream Financing Payment" means, with respect to any
Program Equipment Management Agreement, that portion of the Minimum Periodic
Payment thereunder deemed, as among GE, GECITS and IKON in accordance with
Section 5.1, to be allocable to the rental or lease of Equipment subject
thereto.
"Program Equipment Management Agreement" means any Financing
Contract (a) in respect of which IKON is the initial lessor thereunder, (b)
pursuant to the terms of which IKON, as initial lessor, has agreed both to
(i) lease or rent Equipment to the Obligor thereunder and (ii) perform
Equipment Service Obligations in respect of the Equipment subject thereto,
(c) the Equipment Service Obligations in respect of which do not include any
obligation to provide on-site equipment or software service or other similar
services to the Obligor thereunder and (d) in respect of which the right to
receive the equipment lease or rental payments thereunder and the Purchased
Assets in respect thereof is or is to be purchased by GECITS pursuant to
Section 5.7; provided that if a Program Equipment Management Agreement also
constitutes a Federal Financing Contract, such Financing Contract shall be
deemed, solely for purposes of Sections 5.7, 8.2, 8.3, 10.1, 10.2, 10.3 and
Schedule 1 not to constitute a Program Equipment Management Agreement.
xvii
"Program Facilities Management Agreement" means any Facilities
Management Agreement in respect of which the right to receive the equipment
lease or rental payments thereunder and the Purchased Assets in respect thereof
is or is to be purchased by GECITS pursuant to Section 5.7; provided that if a
Program Facilities Management Agreement also constitutes a Federal Financing
Contract, such Financing Contract shall be deemed, solely for purposes of
Sections 5.7, 8.2, 8.3, 10.1, 10.2, 10.3 and Schedule 1, not to constitute a
Program Facilities Management Agreement.
"Program Federal Stream Financing" means any right, purchased or to
be purchased by GECITS from IKON pursuant to this Agreement or the Federal
Assignment Agreement under, and any payments made in connection with the
exercise by an Obligor of any right to purchase Equipment subject to, any
Federal Financing Contract.
"Program Federal Stream Financing Payment" (a) with respect to any
Federal Financing Contract transferred to GECITS prior to the Federal Program
Integration Date, has the meaning assigned to such term in the Federal
Assignment Agreement and (b) with respect to any Federal Financing Contract
transferred to GECITS from and after the Federal Program Integration Date,
means that portion of the Minimum Periodic Payment thereunder deemed, as among
GE, GECITS and IKON in accordance with Section 5.1, to be allocable to the
rental or lease of Equipment subject thereto.
"Program Financing Contract" means any Purchased Financing
Contract, IKON Originated Financing Contract, SLG Financing Contract or
Originated Financing Contract (including any amendment, assignment, assumption,
renewal or novation thereof and any ancillary agreements (other than any
Equipment Service Obligation agreements) thereto); it being agreed that a
Closing Date IKON Retained Financing Contract shall not constitute a Program
Financing Contract notwithstanding any purchase thereof by GE or GECITS in
accordance with this Agreement.
"Program FM Stream Financing" means any right, purchased or to be
purchased by GECITS from IKON pursuant to the Asset Purchase Agreement or this
Agreement, to receive the Program FM Stream Financing Payments under, and any
payments made in connection with the exercise by an Obligor of any right to
purchase Equipment subject to, any Program Facilities Management Agreement.
"Program FM Stream Financing Payment" means, with respect to any
Program Facilities Management Agreement, that portion of the Minimum Periodic
Payment thereunder deemed, as among GE, GECITS and IKON in accordance with
Section 5.1, to be allocable to the rental or lease of Equipment subject
thereto.
"Program Stream Financing" means any Program Federal Stream
Financing, Program FM Stream Financing or Program EM Stream Financing.
"Program Stream Financing Agreement" means any Program Facilities
Management Agreement, Program Equipment Management Agreement or Federal
Financing Contract.
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"Program Stream Financing Payment" means any Program Federal Stream
Financing Payment, Program EM Stream Financing Payment or any Program FM Stream
Financing Payment.
"Program Termination Fee" means (a) with respect to any termination
of the Program as a consequence of (i) a GE Termination Event of the type
described in Section 11.2(a)(ii) or (ii) an IKON Termination Event of the type
described in Section 11.2(b)(i), $30,000,000 and (b) in all other events,
$15,000,000.
"Program Upgrade Report" has the meaning assigned to such term in
Section 6.3(a)(i)(B).
"Program Year" means the period commencing on the date hereof (or
any anniversary thereof) and ending on a date that is both (a) one year
thereafter and (b) during the Term.
"Property" means all property and assets of whatsoever nature,
including personal property, whether tangible or intangible, and claims, rights
and choses in action.
"Property Tax Inclusive Financing Contract" means any Financing
Contract in respect of which the personal property tax reimbursement payments
are not separately identified or billed to the Obligor on invoices or billing
statements with respect thereto.
"Purchase Price" means (a) with respect to the Equipment subject to
any Originated Financing Contract, IKON Originated Financing Contract, or SLG
Financing Contract, an amount equal to result of (i) the net present value, as
of the lease commencement date, of all unpaid Lease Payments under such
Originated Financing Contract, IKON Originated Financing Contract or SLG
Financing Contract (as applicable) through the stated termination date thereof,
discounted at the Discount Rate with respect to such Originated Financing
Contract, IKON Originated Financing Contract or SLG Financing Contract, plus
(ii) the net present value, as of the lease commencement date (determined based
on a discount rate equal to the Discount Rate with respect to such Originated
Financing Contract, IKON Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract), of the Residual (as determined
in accordance with the Residual Policy) in respect of the Equipment subject to
such Originated Financing Contract, IKON Originated Financing Contract or SLG
Financing Contract minus (iii) the purchase price paid or required to be paid
by GE to any third party supplier of Non-Core Equipment included in such
Equipment, and (b) with respect to the Equipment subject to any Program Stream
Financing, an amount equal to result of (i) the net present value, as of the
contract commencement date, of all unpaid Program Stream Financing Payments
under the related Program Stream Financing Agreement through the stated
termination date thereof, discounted at the Discount Rate with respect to such
Program Stream Financing, plus (ii) the net present value, as of the lease
commencement date (determined based on a discount rate equal to the Discount
Rate with respect to such Program Stream Financing), of the Residual (as
determined in accordance with the Residual Policy) in respect of the Equipment
related to such Program Stream Financing minus (iii) the purchase price paid or
required to be paid by GECITS to any third party supplier of Non-Core Equipment
included in such Equipment.
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"Purchased Assets" means (a) with respect to any IKON Originated
Financing Contract or SLG Financing Contract, collectively, (i) all right,
title and interest of IKON in and to, but none of IKON's or any other Person's
obligations under, such Financing Contract and all Credit Enhancements relating
thereto, (ii) the related Financing Contract files, (iii) all payments due and
to become due thereon or paid thereunder, (iv) all Insurance Proceeds, and (v)
all proceeds and income of the foregoing or relating thereto and (b) with
respect to any Program Stream Financing, collectively, (i) all right, title and
interest of IKON in and to, but none of IKON's or any other Person's
obligations under, such Program Stream Financing and a pro rata portion of
IKON's rights in and to any Credit Enhancements relating thereto, (ii) the
Financing Contract files with respect thereto, (iii) all Program Stream
Financing Payments, Administration Fees, sundry charges, Equipment Sales Tax
Payments and Uplift Payments due and to become due thereon or paid thereunder,
together with any Late Charges which may accrue, from time to time, in respect
thereof, (iv) all Equipment casualty payments required to be made by the
Obligor under the related Program Stream Financing Agreement, (v) all Insurance
Proceeds, (vi) all proceeds and income of the foregoing or relating thereto and
(vii) all Obligor indemnity payments required to be made under the related
Program Stream Financing Agreement, to the extent relating to (A) the Equipment
related to such Program Stream Financing or (B) any of the items described in
clauses (b)(i) through (b)(vi).
"Purchased Financing Contract" has the meaning assigned to such
term in the Asset Purchase Agreement.
"Rejected Eligible Financing Contract" means each proposed
Originated Financing Contract, IKON Originated Financing Contract or SLG
Financing Contract (other than any Excluded Financing Contract) that meets each
of the following criteria:
(a) such proposed Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract was (i) rejected by GE
pursuant to Section 5.5 or 5.6, (ii) conditionally approved by GE
pursuant to Section 5.5 or 5.6, if the terms of such conditional approval
(to the extent relating to such Obligor) were subsequently rejected by
the applicable Customer or (iii) conditionally approved by GE pursuant to
Section 5.5 or 5.6, if the terms of such conditional approval (to the
extent relating to the provision, by IKON, of any recourse, credit
support or other accommodation) were subsequently rejected by IKON; and
(b) such proposed Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract was originated by IKON; and
(c) such proposed Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract was syndicated by IKON in
its entirety, to any of Citibank N.A., De Xxxx Xxxxxx International B.V.
or Xxxxx Fargo & Company or any Subsidiary of the ultimate parent company
of any thereof (on terms no less favorable to IKON than those offered to
GE), within 30 days thereafter; and
(d) such proposed Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract provides an economic return
to Citibank N.A., De
xx
Xxxx Xxxxxx International B.V. or Xxxxx Fargo & Company (or any
Subsidiary of the ultimate parent company of any thereof) (as
applicable) no more favorable than the economic return to GE under the
Program; and
(e) such proposed Originated Financing Contract, IKON Originated
Financing Contract or SLG Financing Contract does not constitute an
Excluded Transaction or a Financing Contract that is not written on the
Standard Form Documentation.
"Replaced Financing" has the meaning assigned to such term in
Section 6.3(a).
"Replacement Financing" has the meaning assigned to such term in
Section 6.3(a).
"Representative Contracts" has the meaning assigned to such term in
Section 5.13.
"Residual" with respect to any Equipment means GECITS' booked
residual with respect to such Equipment as in effect at the inception of the
related Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing financed by GECITS under this
Agreement after the date hereof (or, in the case of a Purchased Financing
Contract or Program FM Stream Financing purchased by GECITS pursuant to the
Asset Purchase Agreement, as in effect on the date hereof).
"Residual Policy" means the policy attached as Exhibit A hereto, as
the same may be amended or modified from time to time by GE pursuant to Section
4.3 (it being agreed that during the period commencing on the date hereof
through (but excluding) the Federal Program Integration Date, the Residual
Policy shall not be applicable to any Equipment subject or proposed to be
subject to any Federal Financing Contract).
"Responsible Officer" of IKON means any (i) director, officer, vice
president or senior vice president of IKON (or any other IKON Company made a
party hereto pursuant to the provisions of Section 3.4), (ii) individual set
forth on Annex F, (iii) any legal counsel of any IKON Company engaged in the
administration, management or operations of the Program or (iv) the IKON
Relationship Manager.
"Retained Portfolio" means, collectively, (a) IKON's and the Non-
Purchased Securitization Parties' (other than IKON Canada's) portfolio of
Financing Contracts retained (and not sold to GECITS pursuant to the Asset
Purchase Agreement) on the date hereof, (b) all Financing Contracts and all
proposed Program Stream Financings originated by IKON after the date hereof
which (i) are rejected for funding by GE (or the conditional approvals in
respect of which are rejected by the applicable Customers) or (ii) constitute
Excluded Transactions and, in each case, are originated and retained by IKON,
(c) all Program Financing Contracts and Program Stream Financings which are
purchased by IKON from GE pursuant to this Agreement, and (d) those stand-alone
service contracts (including FM service contracts) that are both (i) entered
into in connection with any Program Financing Contract or any Financing
Contract of the type described in clauses (a) and (b) and (ii) of the type
being billed and collected by IOS
xxi
Capital on the date hereof (and immediately prior to giving effect to the
Pre-Closing Merger) (it being acknowledged and agreed that in no event shall
the Retained Portfolio include any agreement of the type referred to in
clauses (a) through (d) above to the extent such agreement relates to the
sale, lease or rental of Equipment to, or the provision of Equipment
maintenance and servicing for, Customers at locations outside the United
States).
"RFP" means any Request for Proposal or other purchase or offering
document issued from time to time by a Person for the acquisition of any
Property.
"Right of First Opportunity" has the meaning set forth in Section
3.3.
"Sales Tax Inclusive Financing Contract" means any Financing
Contract in respect of which the state sales/use/franchise tax reimbursement
payments are not separately identified or billed to the Obligor on invoices or
billing statements with respect thereto.
"Sales Tax Payment" (a) means, with respect to each Program
Financing Contract or Program Stream Financing Agreement (i) that is a Sales
Tax Inclusive Financing Contract ((other than any Federal Financing Contract
the Equipment, Program Federal Stream Financing and Purchased Assets subject or
related to which are transferred by IKON to GECITS prior to the Federal Program
Integration Date), that portion of the Minimum Periodic Payment thereunder
deemed, as among GE, GECITS and IKON and in accordance with Section 5.1, to be
allocable to the applicable Obligor's sales/use/franchise tax reimbursement
obligations thereunder and (ii) that is a Sales Tax Inclusive Financing
Contract the Equipment, Program Federal Stream Financing and Purchased Assets
subject or related to which are transferred by IKON to GECITS prior to the
Federal Program Integration Date, has the meaning assigned to such term in the
Federal Assignment Agreement or (b) that is not a Sales Tax Inclusive Financing
Contract, a separately invoiced payment in respect of the sales/use/franchise
tax reimbursement obligations of the Obligor thereunder.
"Score Card Eligible" means, with respect to an Application for a
Customer for a line of credit (whether or not in respect of a proposed
Originated Financing Contract, IKON Originated Financing Contract, SLG
Financing Contract or Program Stream Financing), that such Application is
eligible for automatic decision under and pursuant to the Credit Approval
Policy.
"Securitization Documents" means the agreements set forth in
Schedule 3.21(a) to the Asset Purchase Agreement and each and every agreement
and closing document to which the Seller or any ABS Entity is or was a party in
connection with any Securitization Transaction, but excluding any Financing
Contract, each such aforementioned document, as amended.
"Securitization Purchase Price" means, with respect to any Program
Financing Contract, an amount equal to the sum of (a) the amount required to be
paid pursuant to the terms of any applicable Securitization Document in
connection with the repurchase by GE of such Program Financing Contract from
the applicable ABS Entity pursuant to any repurchase options contained therein
plus (b) the net present value of the booked residual in respect of the
Equipment subject to such Financing
xxii
Contract, discounted at the "buy-rate" for such Financing Contract, as
reflected in the books and records of IOS Capital (immediately prior to the
Pre-Closing Merger).
"Securitization Transaction" means any transaction or series of
transactions that have been entered into by IKON or any of its Subsidiaries
pursuant to which IKON or any of its Subsidiaries has sold, conveyed, or
otherwise transferred, or may sell, convey or otherwise transfer, pursuant to a
Securitization Document, to an ABS Entity, any "accounts", "general
intangibles", "instruments" or "chattel paper" (as such terms are defined in
the Uniform Commercial Code), in each case whether now existing or arising in
the future.
"Service Profit Element" means, with respect to any Program
Financing Contract or Program Stream Financing Agreement as of any time, an
amount equal to 50% of all future Base Equipment Service Payments thereunder.
"Service Sales Tax Payment" means, (a) with respect to any Program
Financing Contract or Program Stream Financing Agreement (other than any
Federal Financing Contract the Equipment, Program Federal Stream Financing and
Purchased Assets subject or related to which are transferred by IKON to GECITS
prior to the Federal Program Integration Date), that portion of the Sales Tax
Payment thereunder attributable to the Base Equipment Service Payment and the
CPC Charges thereunder and (b) with respect to any Federal Financing Contract
the Equipment, Program Federal Stream Financing and Purchased Assets subject or
related to which are transferred by IKON to GECITS prior to the Federal Program
Integration Date, has the meaning assigned to such term in the Federal
Assignment Agreement.
"Serviced Assets" has the meaning assigned to such term in the
Servicing Agreement.
"Services Agreement" means the Administrative Services Agreement,
dated as of the date hereof, by and between GE and IKON (as the same may be
amended or modified from time to time).
"Servicing Agreement" means the IKON Retained Business Servicing
Agreement, dated as of the date hereof, by and between GE and IKON (as the same
may be amended or modified from time to time).
"SLG Financing Contract" means a Financing Contract (i) pursuant to
which the Customer is a State and Local Government Entity, (ii) entered into
after the date hereof and (iii) which has been or is to be transferred to GE
pursuant to Section 5.7. No Program Facilities Management Contract and no
Program Equipment Management Agreement shall, in any event, be deemed to
constitute an SLG Financing Contract.
"Special Damages" means special, incidental, exemplary,
consequential or punitive losses or damages; provided, however, that "Special
Damages" shall not include any Damages relating to (a) the failure of GE or
GECITS to receive the amounts payable in accordance with the terms of any
Program Financing Contract or Program Stream Financing Agreement, to the extent
such amounts may properly be retained by GE or GECITS pursuant to
xxiii
Section 5.3(a)(ii) or 5.3(b)(i) or (b) the failure of IKON to receive the
amounts payable in accordance with the terms of any Program Financing Contract
or Program Stream Financing Agreement, to the extent such amounts are required
to be remitted by GE or GECITS to IKON pursuant to Section 5.3(a)(i) or
5.3(b)(ii).
"Standard Form Documentation" means each form Financing Contract,
in the form attached hereto as Exhibit I-1, with such modifications or
additions as may be permitted pursuant to the Exceptions Manual or as may
otherwise be agreed by GE and IKON (if applicable) in accordance with Section
5.4.
"State and Local Government Entity" means a Customer that is a
state or a political subdivision of the state in which it is located or the
District of Columbia and which, if the SLG Financing Contract applicable to
such Customer contemplates that interest income received by the lessor or
obligee shall be Tax-Exempt Income, qualifies as an issuer of a state or local
bond for purposes of Section 103 of the Code.
"Subservicing Agreements" means (i) Subservicing Agreement, dated
as of March 31, 2004, between IKON and GE; (ii) Amendment No. 1, dated as of
March 31, 2004, to Transfer and Servicing Agreement, by and among IKON Funding-
4, LLC, IOS Capital, the Seller and SunTrust Bank, and consented to by the
Syndication Agent and the Class A Note Purchasers and the Class B Note
Purchasers, dated as of December 1, 2001; and (iii) Amendment No. 1, dated as
of March 31, 2004, to Note Purchase Agreement, among IKON Funding-4, LLC,
SunTrust Bank, IOS Capital, the Seller, the Class A Note Purchasers, the Class
B Note Purchasers and Fleet Capital Corporation, dated as of December 1, 2001,
in each case, as the same may be amended, modified, restated or supplemented
from time to time.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which an aggregate of fifty percent
(50%) or more of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors, managers, trustees or other
controlling persons, is, at the time, directly or indirectly, owned or
Controlled by such Person and/or one or more Subsidiaries of such Person
(irrespective of whether, at the time, capital stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"Syndication Subservicing Agreement" means the Syndication
Subservicing Agreement, dated as of the date hereof, by and between GE and IKON
(as the same may be amended or modified from time to time).
"Systems Facilitation Date" means the date that IKON's IT systems
enable it to track the refurbishment and sale of individual items of Equipment
(but in no event later than June 30, 2006).
"Tax-Exempt Income" means any interest income received by the
lessor, payee or obligee under a Program Financing Contract which is not
contemplated to be included in such lessor's, payee's or obligee's gross income
under the Code.
xxiv
"Tax-Exempt Public Sector Financing" means (i) each SLG Financing
Contract (but excluding any Financing Contract involving a usage based fee
arrangement) and (ii) each Program FM Stream Financing or Program EM Stream
Financing in respect of which the Obligor thereunder or related thereto is a
State and Local Government Entity, in each case, in respect of which the
interest income derived from such Tax-Exempt Public Sector Financing may
properly be excluded from the gross income of the lessor, payee or obligee
under such SLG Financing Contract, Program FM Stream Financing or Program EM
Stream Financing (as applicable) pursuant to Section 103 of the Code or any
predecessor thereof.
"Term" has the meaning assigned to such term in Section 11.1.
"Third Party Action" means any Action, assertion, allegation, cause
of action, demand, notice of actual or potential liability or responsibility,
claim for reimbursement or contribution, Order, request or demand under claim
of authority to take action or refrain from taking action, Lien, proceeding in
condemnation, execution upon judgment, or other claim, in each case, by a
Person (other than a GE Party , IKON or any other Person entitled to
indemnification under Section 9.1 or 9.2) against a GE Party, IKON or any other
Person entitled to indemnification under Section 9.1 or 9.2, as the case may
be.
"Trademark License Agreement" means that certain Trademark License
Agreement, dated as of the date hereof, by and among GE, GECITS and IKON (as
the same may be amended or modified from time to time).
"Transfer Date" means (a) with respect to any Equipment (other than
Equipment subject to any Federal Financing Contract purchased or to be
purchased by GECITS pursuant to the Federal Assignment Agreement) and any
related IKON Originated Financing Contract, SLG Financing Contract, Program FM
Stream Financing, Program EM Stream Financing or Purchased Assets (as
applicable), the earliest date that each of the conditions to the shipment by
IKON of such Equipment to the applicable Customer set forth in Section 5.6
hereof shall have been satisfied or waived by GE and (b) with respect to any
Equipment purchased or to be purchased by GECITS pursuant to the Federal
Assignment Agreement and the related Program Federal Stream Financing and
Purchased Assets, the earliest date that each of the conditions to shipment by
IKON of such Equipment set forth in the Federal Assignment Agreement shall have
been satisfied or waived by GE.
"Transferred Employees" has the meaning specified in the Asset
Purchase Agreement.
"Transferred Servicing Agreement" means an agreement between GE and
a purchaser from IKON of Equipment or Serviced Assets which (a) provides for
the billing and collecting by GE of (i) leases and/or rental agreements
entered into by Customers (other than Customers in respect of which an
Application shall have been rejected by GE as a result of such Customer having
a credit risk rating of `5' or higher) in respect of Equipment or (ii) such
transferred Serviced Assets, in each case, on behalf of such purchaser, and (b)
is (unless otherwise expressly agreed by GE, in its sole discretion) no less
favorable to GE in any material
xxv
respect (including with respect to the term of such agreement and the
termination rights in respect thereof) than the terms of Syndication
Subservicing Agreement.
"United States Government" means the United States government or
any agency, department or instrumentality thereof.
"Uplift Allocation Percentage" means, with respect to any Property
Tax Inclusive Financing Contract, an amount equal to 2% (or such other amount
as shall be determined by GE to be applicable to such Financing Contract
pursuant to Section 5.1(a)(i)(A)).
"Uplift Payment" (a) means, with respect to each Program Financing
Contract or Program Stream Financing Agreement (i) that is a Property Tax
Inclusive Financing Contract (other than any Federal Financing Contract the
Equipment, Program Federal Stream Financing and Purchased Assets subject or
related to which are transferred by IKON to GECITS prior to the Federal Program
Integration Date), that portion of the Minimum Periodic Payment thereunder
deemed, as among GE, GECITS and IKON and in accordance with Section 5.1, to be
allocable to the applicable Obligor's personal property tax reimbursement
obligations thereunder and (ii) that is a Property Tax Inclusive Financing
Contract the Equipment, Program Federal Stream Financing and Purchased Assets
subject or related to which are transferred by IKON to GECITS prior to the
Federal Program Integration Date, has the meaning assigned to such term in the
Federal Assignment Agreement or (b) that is not a Property Tax Inclusive
Financing Contract, a separately invoiced payment in respect of the personal
property tax reimbursement obligations of the Obligor thereunder.
"VFS Macon" means VFS Macon, Inc., a Delaware corporation.
"Volume Origination Fee" means with respect to any Funded Volume
for any period, an amount equal to the product of (i) 5.144% multiplied by (ii)
such Funded Volume.
"Wholesale Equipment Price List" means the price list previously
delivered to GE by IKON which sets forth for each item of Equipment listed
thereon, the Wholesale Fair Market Value therefor (which amount shall be
expressed net of all out-of-pocket sales, disposition and other similar costs
and expenses), as such price list may be amended by IKON from time to time upon
not less than 30 days' prior notice to GE.
"Wholesale Fair Market Value" means, for any item of Equipment,
(a) the wholesale fair market value thereof as set forth on the Wholesale
Equipment Price List, or (b) if such Equipment is not set forth on the
Wholesale Equipment Price List and IKON shall have agreed to perform
remarketing and refurbishment services in respect thereof prior to the Systems
Facilitation Date, such other value as shall be mutually agreed between IKON
and GE.
"Write-Off Policy" means the write-off policy attached hereto as
Exhibit G.
"Written-Off Financing Contract" means any (a) Closing Date IKON
Retained Financing Contract that was purchased by GE from IKON in accordance
with Section 10.6 and has been written-off by GE for any reason prior to the
earlier to occur of (i) the expiration of its
xxvi
stated contractual term and (ii) the end of the Term, (b) Program Financing
Contract that has been written off by GE for any reason prior to the earlier
to occur of (i) the expiration of its stated contractual term and (ii) the end
of the Term, (c) Purchased Financing Contract that was written-off by IKON
both prior to the date hereof and prior to the end of its stated contractual
term and (d) Program FM Stream Financing or Program EM Stream Financing that
that has been written off by GE for any reason prior to the earlier to occur
of (i) the expiration of the stated contractual term of the related Program
Stream Financing Agreement and (ii) the end of the Term.
II. Interpretation and Rules of Construction. In this Agreement,
except to the extent that the context otherwise requires:
(a) when a reference is made in this Agreement to an article,
section, exhibit or schedule, such reference is to an Article or Section of, or
an Exhibit or a Schedule to, this Agreement unless otherwise indicated;
(b) whenever the words "include", "includes" or "including" are
used in this Agreement, they are deemed to be followed by the words "without
limitation";
(c) the words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision of this Agreement; and
(d) the definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms
xxvii
