EXHIBIT 10.48
CONFIDENTIAL
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Concurrent Lease Agreement
Made as of September 14, 1999
BETWEEN
IKON OFFICE SOLUTIONS, INC.
as Lessor and Collector
- and -
IKON CAPITAL, INC.
as Sub-Collector
- and -
IKON OFFICE SOLUTIONS, INC.
as Performance Guarantor
- and -
CARE TRUST
as Concurrent Lessee
DAVIES, WARD & BECK
Barristers & Solicitors
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions......................................................................... 2
1.2 Headings............................................................................ 18
1.3 Extended Meanings................................................................... 19
1.4 Non-Business Days................................................................... 19
1.5 Governing Law....................................................................... 19
1.6 Reference to Statutes............................................................... 19
1.7 Severability........................................................................ 19
1.8 PPSA Terms.......................................................................... 20
1.9 Currency............................................................................ 20
1.10 Deed................................................................................ 20
1.11 Rating Agency Ratings............................................................... 20
1.12 Months, Settlement Periods and Tranche Periods...................................... 20
1.13 Controlling Interest................................................................ 20
1.14 Schedules........................................................................... 20
ARTICLE 2
CONCURRENT LEASE
2.1 Grant of Concurrent Lease.......................................................... 21
2.2 Term of Concurrent Lease........................................................... 22
2.3 Rent for Concurrent Lease.......................................................... 22
2.4 Prepayment of Rent................................................................. 23
2.5 Remittances from Collections....................................................... 23
2.6 Level Two Credit Enhancement....................................................... 25
2.7 Satisfaction of Deferred Rent...................................................... 27
2.8 No Recourse........................................................................ 27
2.9 Concurrent Leases Limited by Program Limit......................................... 27
2.10 Payment of GST by the Concurrent Lessee............................................ 27
2.11 Acknowledgment and Quit Claim...................................................... 28
2.12 Swap Agreements.................................................................... 29
ARTICLE 3
TERMINATION WITH RESPECT TO CERTAIN EQUIPMENT
3.1 General............................................................................. 29
3.2 Liquidated Leases................................................................... 30
3.3 Lease Variations.................................................................... 31
3.4 Ineligible Leases................................................................... 32
3.5 Substituted Leases.................................................................. 32
3.6 Adverse Claims...................................................................... 33
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions Precedent for the Initial Concurrent Lease............................... 34
4.2 Conditions Precedent in Favour of the Concurrent Lessee for All Concurrent Leases... 36
4.3 Condition Precedent in Favour of the Lessor and the Performance Guarantor for All
Concurrent Leases......................................................... 37
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Concurrent Lessee............................ 38
5.2 General Representations and Warranties of the Lessor............................... 38
5.3 Representations and Warranties of the Performance Guarantor and IKON Capital....... 43
5.4 Eligibility Criteria Regarding the Leases and the Equipment........................ 45
5.5 Survival........................................................................... 50
ARTICLE 6
ADMINISTRATION
6.1 Designation of the Collector....................................................... 50
6.2 Standard of Care................................................................... 51
6.3 Authorization of Collector......................................................... 51
6.4 Enforcement of Leases.............................................................. 52
6.5 Assignment for Purpose of Enforcement.............................................. 52
6.6 Deposit of Collections............................................................. 52
6.7 Collector Amounts.................................................................. 53
6.8 Description of Services............................................................ 53
6.9 Additional Covenants of the Collector.............................................. 54
6.10 Negative Covenants of the Collector................................................ 59
6.11 Lease Amendments, Modifications and Waivers........................................ 60
6.12 Collector Termination Events....................................................... 60
6.13 Notice of Collector Termination Events............................................. 63
6.14 Effecting a Collector Transfer..................................................... 63
6.15 Appointment of Replacement Collector............................................... 63
6.16 Collection and Remittance of Taxes................................................. 63
6.17 Additional Collector Covenants Following a Collector Transfer...................... 64
6.18 Concurrent Lessee's Rights Following a Collector Transfer.......................... 64
6.19 Delegation in Favour of Securitization Agent....................................... 65
6.20 Payments to Securitization Agent................................................... 65
ARTICLE 7
TRIGGER EVENTS AND TERMINATION EVENTS
7.1 Meaning of Trigger Event........................................................... 66
7.2 Action Upon a Trigger Event........................................................ 68
7.3 Optional Termination of Concurrent Leases.......................................... 69
7.4 Meaning of Termination Event....................................................... 70
7.5 Action Upon a Termination Event.................................................... 71
7.6 Right of First Refusal............................................................. 71
7.7 Lack of Liquidity Support.......................................................... 72
ARTICLE 8
GENERAL COVENANTS AND POWER OF ATTORNEY
8.1 Affirmative Covenants of the Lessor................................................ 73
8.2 Reporting Requirements of the Lessor............................................... 76
8.3 Negative Covenants of the Lessor................................................... 78
8.4 Power of Attorney; Further Assurances.............................................. 79
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ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by the Lessor...................................................... 80
9.2 Notification of Potential Liability................................................ 81
9.3 Litigation......................................................................... 81
9.4 The Lessor to Remain Obligated..................................................... 82
9.5 Tax Indemnity...................................................................... 82
9.6 Tax Credit......................................................................... 83
9.7 Survival........................................................................... 84
ARTICLE 10
GUARANTEE
10.1 Guarantee.......................................................................... 84
10.2 Validity of the Performance Guarantor's Obligations as Guarantor................... 84
10.3 Subrogation........................................................................ 85
10.4 Authorization by the Performance Guarantor as Guarantor............................ 86
10.5 Changes in the Lessor.............................................................. 86
10.6 Covenants of the Performance Guarantor as Guarantor................................ 86
10.7 Taxes.............................................................................. 87
10.8 Judgment Currency.................................................................. 87
ARTICLE 11
MISCELLANEOUS
11.1 Liability of the Concurrent Lessee, the Credit Enhancer and the Securitization
Agent.............................................................................. 88
11.2 Change in Circumstances............................................................ 88
11.3 Amendments, Waivers, Etc........................................................... 89
11.4 Notices, Etc....................................................................... 89
11.5 No Waiver; Remedies................................................................ 91
11.6 Binding Effect; Assignability...................................................... 91
11.7 Costs and Expenses................................................................. 92
11.8 Confidentiality.................................................................... 92
11.9 Capital Cost Allowance............................................................. 93
11.10 Effect of Agreement................................................................ 93
11.11 Termination........................................................................ 93
11.12 Execution in Counterparts.......................................................... 94
SCHEDULES
SCHEDULE A - Form of Concurrent Lease Request
SCHEDULE B - Location of Records and Bank Accounts that Receive Direct Payments
SCHEDULE C - Standard Form Leases
SCHEDULE D - Form of Portfolio Report
SCHEDULE E - Form of Promissory Note (GST)
SCHEDULE F - List of Predecessors
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CONCURRENT LEASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of September 14, 1999.
B E T W E E N:
IKON OFFICE SOLUTIONS, INC.,
a corporation incorporated under the laws of Ontario,
(hereinafter referred to as the "Lessor"),
- and -
IKON CAPITAL, INC.,
a corporation incorporated under the laws of Canada,
(hereinafter referred to as "IKON Capital"),
- and -
IKON OFFICE SOLUTIONS, INC.,
a corporation incorporated under the laws of the State of Ohio,
(hereinafter referred to as the "Performance Guarantor"),
- and -
THE TRUST COMPANY OF BANK
OF MONTREAL,
a trust company incorporated under the laws of Canada and
licensed to carry on business as a trustee in each of the
provinces of Canada, in its capacity as trustee of CARE TRUST, a
trust established and existing under the laws of the Province of
Ontario,
(in such capacity, hereinafter referred to as the "Concurrent
Lessee").
WHEREAS the Lessor is the owner of the Equipment, and desires to grant
a lease to the Concurrent Lessee, and the Concurrent Lessee desires to lease
from the Lessor, concurrently with the interest of the Lessees pursuant to the
Designated Eligible Leases, the Equipment, all on the terms and subject to the
terms of this Agreement;
AND WHEREAS IKON Capital has been requested and is willing to act as
sub-collector hereunder;
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AND WHEREAS the Performance Guarantor desires to guarantee the
performance by the Lessor of its obligations under this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises, covenants and agreements of the parties herein contained and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by each of the parties), the parties hereby covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
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In this Agreement, unless the context requires otherwise, the
following terms shall have the following meanings, respectively:
"Administrative Charges" means, with respect to a Designated Eligible Lease,
late payment charges, extension fees, termination fees, charges for returned
cheques or dishonoured payments or dishonoured transfer instructions and similar
charges, in each case payable by the Lessee, provided the same does not form
part of payments on account of Rent payable by the Lessees under such lease;
"Advance Rate" means 92%;
"Adverse Claim" means a security interest, lien, adverse claim, title retention
agreement, pledge, assignment (whether or not by way of security), charge,
encumbrance, mortgage, right of set-off, lease or other right or claim of any
Person, other than the Concurrent Lessee or Persons claiming under or through
the Concurrent Lessee, ranking ahead of or pari passu with the security interest
of the Concurrent Lessee;
"Affiliate", in respect of a specified Person, means any other Person:
(a) that is either directly or indirectly controlled by the specified
Person or by a Person or Persons that also control the specified
Person; or
(b) that either directly or indirectly controls the specified Person,
and, for the purposes of this definition, "control" shall mean de facto control,
being the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise;
"Affiliated Lessee" means any Lessee which is an Affiliate of another Lessee;
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"Aggregate Financed Balance" means, on a particular date, the aggregate Financed
Balances of all Designated Eligible Leases on that date, excluding Designated
Eligible Leases relating to Equipment in respect of which the Concurrent Lease
shall have been terminated on or prior to that date in accordance with the
provisions hereof and, for greater certainty, excluding the Financed Balances of
any Designated Eligible Leases which are Defaulted Leases on such date;
"Available L/C Amount" means, on any date, the maximum amount available to be
drawn on the Level Two Credit Enhancement, which amount shall be equal to the
lesser of:
(1) the Stated L/C Amount on such date; and
(2) the Available L/C Amount for the immediately preceding Remittance Date
minus all drawings, if any, on the Level Two Credit Enhancement made
in accordance with section 2.6(a) plus all amounts paid to the Credit
Enhancer or deposited to the L/C Funding Account pursuant to section
2.5(i)(ii), in each case, on such prior Remittance Date,
provided that, with respect to the initial Remittance Date, the Available L/C
Amount shall be equal to the Stated L/C Amount;
"Business Day" means any day (other than a Saturday, Sunday or public holiday)
on which banks are open for business in Toronto, Ontario, Calgary and Edmonton,
Alberta and Malvern, Pennsylvania;
"CIRR" means, in respect of a Designated Eligible Lease, on any date, the rate
of interest per annum designated as the combined internal rate of return or CIRR
in the Concurrent Lease Request with respect to such Designated Eligible Lease
and equivalent to the discount which when applied to (a) the total payments
(excluding payment of the Residual Amount and Administrative Charges and
security deposits) to be made over the Term of such Designated Eligible Lease
and (b) the Residual Amount in respect of such Designated Eligible Lease,
results in a present value of the Designated Eligible Lease equal to the
aggregate cost, at the time of creation of such Designated Eligible Lease, of
the Equipment in respect of such Designated Eligible Lease;
"Closing Date" means September 14, 1999, or such other date as may be mutually
agreed between the parties;
"Collection Account" means an Eligible Deposit Account established in the name
of the Collector as trustee for and on behalf of the Concurrent Lessee, which
account shall be separate and segregated from the Collector's own assets, shall
bear interest and which shall initially be account number 001-1097780, transit
number 25329, maintained at the branch of Bank of Montreal located at 236, 167
Street and Stony Plain Road, Edmonton, Alberta T5P 4B3;
"Collection Costs" means all reasonable out-of-pocket costs and expenses of (a)
the Collector, if other than the Lessor or an Affiliate of the Lessor, and (b)
the Concurrent Lessee, in administering
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and collecting the Designated Eligible Leases and the related Equipment and
enforcing the Related Rights related thereto, including reasonable legal
expenses of the Collector or the Concurrent Lessee, as the case may be;
"Collections" means, without duplication, all cash collections and other cash
proceeds on account of Rent under the Designated Eligible Leases and cash
collections and other cash proceeds in respect of the Related Rights, in either
case received by any of the Performance Guarantor, the Collector, the Lessor or
IKON Capital, including all insurance proceeds, all Administrative Charges, all
Liquidation Proceeds, all Investment Income, all amounts paid by the Collector
or the Lessor pursuant to sections 3.2, 3.3, 3.4, 3.6, 7.3 or 7.6, all money
drawn from the Letter of Credit or the L/C Funding Account, all amounts received
by the Concurrent Lessee as a result of the termination, modification or
amendment of any Swap Agreement (excluding any Settlement Amounts to the extent
used to enter into another Swap Agreement), any amounts received pursuant to any
Swap Agreement (excluding the Settlement Amount), and any other amounts deemed
to be Collections hereunder or required to be deposited into the Collection
Account hereunder, but for all purposes excluding payments or recoveries made in
respect of the Residual Amount upon the termination or enforcement of any
Designated Eligible Lease and Taxes payable by the Lessees or received by the
Collector and remitted to the appropriate governmental authority under section
6.8(i) and security deposits made by Lessees;
"Collector" means the Person designated as the Collector for the time being
pursuant to section 6.1 and after a Collector Transfer shall include any
Replacement Collector;
"Collector Termination Event" has the meaning ascribed thereto in section 6.12;
"Collector Transfer" has the meaning ascribed thereto in section 6.14;
"Concentration Limit" means an amount, in respect of a Lessee at the time the
relevant Equipment became subject to a Concurrent Lease hereunder, equal to 2%
of the Aggregate Financed Balance, provided, however, that the "Concentration
Limit" may from time to time be changed by the Concurrent Lessee, with the
consent of the Rating Agency and the Credit Enhancer, with such change to be
effective only in respect of Concurrent Leases entered into on and after the
date of such change, and provided further that in the case of a Lessee and any
Affiliated Lessees, the Concentration Limit shall be calculated as if such
Lessee and such Affiliated Lessees are one Lessee;
"Concurrent Lease" has the meaning ascribed thereto in section 2.1(a);
"Concurrent Lease Request" means a notice, substantially in the form of Schedule
A, delivered by the Lessor to the Concurrent Lessee pursuant to section 2.1,
which Concurrent Lease Request shall have attached thereto a list of the
relevant Designated Eligible Leases, listed by the Lessor's assigned lease
number, which govern the Equipment that the Lessor proposes the Concurrent
Lessee concurrently lease hereunder (including particulars regarding the related
Cut-Off Date, the CIRR, the Financed Balance and the Residual Amount of each
listed Designated Eligible Lease and the prepayment amount relating thereto as
of the related Cut-Off Date);
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"Concurrent Lessee's Account" means the Concurrent Lessee's account maintained
at an Eligible Institution which shall initially be the main Toronto branch of
Bank of Montreal (account number 1316-573, transit number 0002) or such other
account as has been most recently designated by the Concurrent Lessee, by
written notice given to the Lessor, as the Concurrent Lessee's Account for the
purposes hereof;
"Credit and Collection Policies" means the customary policies and practices of
the Collector relating to the creditworthiness of lessees, the making of
collections and the enforcement of contracts relating to the Designated Eligible
Leases, the Lease Entitlements and the Related Rights, as such policies and
practices may be amended from time to time in accordance with the provisions of
this Agreement, which policies and practices, as in effect at and prior to the
date hereof, have resulted in the historical collections results furnished to
the Concurrent Lessee;
"Credit Enhancement Agreement" means the credit enhancement agreement between
the Lessor, the Collector, IKON Capital, the Performance Guarantor, the
Concurrent Lessee and the Credit Enhancer dated the date hereof providing for
the Level Two Credit Enhancement;
"Credit Enhancement Fee" means the L/C Fee (as defined in the Credit Enhancement
Agreement) payable pursuant to section 5 of the Credit Enhancement Agreement;
"Credit Enhancer" means, initially, State Street Bank and Trust Company and
after replacement thereof any other Person having a long-term unsecured debt
rating of at least AA (low) by the Rating Agency (or an equivalent rating by a
United States rating agency recognized by the Rating Agency) and who by any
means whatsoever, including any letter of credit, surety bond, cash collateral
account, spread account, guaranteed rate agreement, refinancing facility, tax
protection agreement, interest rate swap agreement or other similar arrangement,
provides credit enhancement in respect of the Designated Eligible Leases and/or
the Notes issued to fund the prepayment of rent in respect of such Designated
Eligible Leases;
"Cut-Off Date" means, with respect to any Concurrent Lease entered into
hereunder, the first day of the Reporting Period in which the related Lease Date
will occur as set out in the Concurrent Lease Request delivered by the Lessor to
the Concurrent Lessee in accordance with section 2.1(a);
"Deed of Settlement" means the deed of settlement pursuant to which the
Concurrent Lessee was established, as the same may be amended from time to time;
"Default Ratio" means, in respect of any particular Reporting Period, the ratio
(expressed as a percentage) of (a) the product of (i) the aggregate Financed
Balances of all Designated Eligible Leases which became Defaulted Leases during
such Reporting Period (including Designated Eligible Leases, the Concurrent
Lease relating to which has been terminated pursuant to sections 3.5 or 7.3(c)),
net of any recoveries in respect of each Designated Eligible Lease which had
been a Defaulted Lease and (ii) 12, to (b) prior to the Termination Date, the
amount obtained when the Aggregate Financed Balance on the last day of each of
the previous 12 Reporting Periods is divided by 12, and after the Termination
Date, the Aggregate Financed Balance on the last day of such Reporting Period;
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"Defaulted Lease" means a Designated Eligible Lease in respect of which (a) any
Scheduled Payment owing thereunder is uncollectible or is deemed to be
uncollectible in accordance with the Credit and Collection Policies, or (b) any
Scheduled Payment thereunder is more than 120 days past due; provided, however,
that, to the extent permitted by the Credit and Collection Policies, the
Collector shall be entitled to extend the time for payment for certain
Designated Eligible Leases beyond 120 days provided that the failure of the
related Lessor to make the required payments thereunder, and any such extension
granted by the Lessor, is not due to the credit quality or credit worthiness of
such Lessee, in which case such extended Designated Eligible Lease shall not be
a Defaulted Lease unless the aggregate Financed Balances of all other Designated
Eligible Leases for which any such extension has been granted, when taken
together with the Financed Balance of the Designated Eligible Lease at issue,
exceeds 1% of the Aggregate Financed Balance at the time of determination, and
provided further that, for greater certainty, any extended Designated Eligible
Lease that is not a Defaulted Lease by virtue of the foregoing proviso shall
continue to be considered a 90 Day Past Due Lease for purposes of this
Agreement;
"Deferred Rent" has the meaning ascribed thereto in section 2.4;
"Deferred Rental Account" means an Eligible Deposit Account established in the
name of the Concurrent Lessee, which account shall bear interest and which shall
initially be account number 1350-077, transit number 0002, maintained at the
main branch of Bank of Montreal in Toronto, Ontario;
"Deferred Rental Rate" means 2%;
"Deferred Rental Excess Amount" means, on any Reporting Date, the amount of the
cash maintained in the Deferred Rental Account in excess of the Deferred Rental
Required Amount calculated as of the immediately preceding Settlement Date;
"Deferred Rental Floor" means, on any date, the product obtained when (a) the
highest amount that has formed the Deferred Rental Required Amount prior to such
date, is multiplied by (b) 40%;
"Deferred Rental Required Amount" means, on any Reporting Date, the greatest of
(a) the amount obtained when the Deferred Rental Rate is multiplied by the
Aggregate Financed Balance, (b) the amount obtained when the Aggregate Financed
Balance is multiplied by 1.5 times the Default Ratio and (c) the Deferred Rental
Floor, in each case calculated as of the immediately preceding Settlement Date;
"Delinquency Ratio" means, in respect of any Reporting Period, the ratio
(expressed as a percentage) calculated by dividing (a) the aggregate Financed
Balances of all Delinquent Leases as of the last day of such Reporting Period by
(b) the Aggregate Financed Balance as of the last day of such Reporting Period;
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"Delinquent Lease" means a Designated Eligible Lease in respect of which any
portion of any Scheduled Payment has not been made within 61 days after the date
on which the Scheduled Payment was due;
"Designated Eligible Lease" means one of the equipment lease agreements entered
into by Lessees in respect of Equipment which is also the subject of a
Concurrent Lease hereunder, together with all supplements, amendments,
transaction documents, confirmations and customer agreements relating thereto,
providing, among other things, for the use by the Lessee thereunder of the
Equipment forming the subject matter thereof;
"Eligible Deposit Account" means either (a) an account with an Eligible
Institution, or (b) a segregated trust account with the corporate trust
department of a depositary institution organized under the laws of Canada or a
province thereof and authorized to act as a trustee for funds deposited in such
account, so long as any of the securities of such depositary institution shall
have a credit rating from the Rating Agency in one or more of its generic credit
rating categories which signifies investment grade;
"Eligible Institution" means a depositary institution which at all times (a) has
either (i) a long-term unsecured debt rating not lower than AA (low) by the
Rating Agency or (ii) a short-term unsecured debt rating not lower than R-1
(middle) by the Rating Agency, or (b) has its obligations with respect to the
relevant matter guaranteed by an institution with either of the ratings referred
to in (a);
"Eligible Investments" means, at any particular date, book-based securities,
negotiable instruments or securities, in each case, maturing not later than the
Business Day preceding the next succeeding Reporting Date after such date
represented by instruments in bearer or registered form which evidence any of:
(a) direct obligations of, or obligations fully guaranteed as to the
timely payment of principal and interest by, the Government of Canada;
(b) any security having a rating of at least R-1 (middle) (or the
equivalent thereof) from the Rating Agency, provided that, at any
time, no more than $2 million may be invested in any one security of a
particular issuer of the type referred to in this section (b); and
(c) any other class of investment approved in writing by the
Securitization Agent, the Credit Enhancer and the Rating Agency (other
than those set out in (a) and (b) above),
and, without limiting the generality of the foregoing, if so qualified,
securities of the Concurrent Lessee, the Securitization Agent, the Liquidity
Agent and any Affiliate thereof may be considered Eligible Investments for the
purposes of this definition;
"Eligible Lease" has the meaning ascribed thereto in section 5.4;
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"Equipment" means, collectively, the office and business equipment and other
tangible personal property, together with all accessions, upgrades, additions
and enhancements thereto, which form the subject matter of a Designated Eligible
Lease or the Designated Eligible Leases, as the context requires, whether
provided by the Lessor, or a Predecessor or any other Person, to the Lessee or
Lessees on an installed or an uninstalled basis;
"ETA" means Part IX of the Excise Tax Act (Canada);
"Final Termination Date" means the first day following the Termination Date on
or by which the last remaining Designated Eligible Lease has been terminated or
liquidated in full, whether as a result of the expiry of the term thereof,
through the receipt of Collections or Liquidation Proceeds or otherwise, or is
sold to any Person (excluding the Credit Enhancer) for value (paid in cash);
"Financed Balance" means, with respect to a Designated Eligible Lease at a
particular date, the aggregate of the present value of each Scheduled Payment
(including arrears thereof) to be made over the remaining Term of the Designated
Eligible Lease, calculated by discounting to such date each such Scheduled
Payment (including arrears thereof) at the CIRR applicable to such Designated
Eligible Lease on such date;
"Funding Discount" means an amount determined for each Tranche Period, whether
occurring prior to or after the Termination Date, pursuant to the following
formula:
(UPR x TR x TP) + (AOB x TR x TP)
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365 365
where:
"UPR" means an amount equal to the aggregate Unamortized Prepaid Rent
for all Designated Eligible Leases hereunder, calculated as of the
second Settlement Date preceding the last day of such Tranche Period;
"TP" means the number of days in such Tranche Period;
"TR" means the Tranche Rate for such Tranche Period; and
"AOB" means the aggregate Unamortized Prepaid Rent under all
Designated Eligible Leases in respect of which the related Equipment
became subject to a Concurrent Lease hereunder during the Reporting
Period immediately preceding the last day of the relevant Tranche
Period, calculated as of the relevant Cut-Off Date;
"Governmental Authority" means the government of any sovereign state or any
political subdivision thereof, or of any political subdivision of a political
subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory, administrative or other functions of or pertaining to government.
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"Gross-Up" has the meaning ascribed thereto in section 9.6;
"Grossed-Up Payment" has the meaning ascribed thereto in section 9.6;
"GST" means all amounts payable under the ETA or pursuant to any similar value
added tax legislation in any other jurisdiction of Canada that is stated to be
harmonized with the GST which, for greater certainty, shall include the HST and
the QST;
"Guarantee" means the guarantee and other provisions contained in Article 10;
"Guaranteed Obligations" has the meaning ascribed thereto in section 10.1;
"Hedging Costs" in respect of a Concurrent Lease hereunder and each Tranche
Period, means the net amount (other than Settlement Amounts) payable by the
Concurrent Lessee pursuant to any Swap Agreement entered into by, or assigned
to, the Concurrent Lessee in connection with this Agreement;
"HST" means the harmonized sales tax imposed under the ETA;
"Indebtedness" means:
(a) indebtedness for borrowed money or for the deferred purchase price of
property or services;
(b) the redemption price of any redeemable preference shares;
(c) obligations evidenced by bonds, debentures, notes or other similar
instruments;
(d) obligations as lessee under leases which, in accordance with generally
accepted accounting principles, would be treated as capital leases;
(e) obligations in respect of letters of credit or similar instruments
issued or accepted by any bank or other institution;
(f) obligations under direct or indirect guarantees in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in any
of sections (a) through (e) above; and
(g) obligations (calculated on a mark to market basis) under any "eligible
financial contracts" (as such term is defined in the Bankruptcy and
Insolvency Act (Canada));
provided, however, that (i) "Indebtedness" shall not include obligations both
(A) classified as accounts payable or accrued liabilities under generally
accepted accounting principles and (B)
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incurred in the ordinary course of business, and (ii) no obligation included in
Indebtedness shall be included under more than one of any of sections (a)
through (g) above;
"Indemnified Amounts" has the meaning ascribed thereto in section 9.1;
"Indemnified Parties" has the meaning ascribed thereto in section 9.1;
"Initial Deposited Amount" means, with respect to any Designated Eligible Leases
subject to a Concurrent Lease Request, an amount equal to the aggregate Financed
Balances of those leases on the related Cut-Off Date, multiplied by the greater
of (a) the Deferred Rental Rate, and (b) the product of (i) the Default Ratio,
calculated as of the Settlement Date immediately preceding the relevant Lease
Date, and (ii) 1.5;
"Initial Liquidation Payment" has the meaning ascribed thereto in section 3.1;
"Insolvency Statutes" has the meaning ascribed thereto in section 5.2(q);
"Investment Income" means all investment income or other proceeds, including
interest or other similar amounts, net of any investment losses, earned on funds
on deposit, from time to time, in the Collection Account, the Deferred Rental
Account and the L/C Funding Account;
"L/C Funding Account" has the meaning ascribed thereto in section 2.6(b)(ii);
"L/C Funding Account Surplus" means, on any date, the amount, if any, by which
the amount on deposit in the L/C Funding Account exceeds the then Available L/C
Amount;
"L/C Funding Date" means the date on which the Concurrent Lessee makes a draw on
the Letter of Credit in either of the circumstances contemplated in section
2.6(b) and deposits the amount of such draw into the L/C Funding Account;
"Lease Date" has the meaning ascribed thereto in section 2.1(a);
"Lease Entitlements" has the meaning ascribed thereto in section 2.11;
"Lease Termination Date" means the day that, in accordance with section 7.2 or
7.5, is declared as, or automatically becomes, the Lease Termination Date;
"Lessee" means, in respect of a Designated Eligible Lease, the Person, other
than the Lessor, who is shown as a party to such Designated Eligible Lease, and
includes any co-lessee and any guarantor or other Person who owes or is
responsible for or agrees to make payments in respect of such Designated
Eligible Lease;
"Letter of Credit" means the irrevocable letter of credit delivered by the
Credit Enhancer to the Concurrent Lessee pursuant to the terms of the Credit
Enhancement Agreement;
-11-
"Level Two Credit Enhancement" means (a) at any time prior to the L/C Funding
Date, the Letter of Credit, and (b) at any time on or after the L/C Funding
Date, the funds on deposit from time to time in the L/C Funding Account;
"Liquidated Lease" means any Designated Eligible Lease enforced by the Collector
either through sale or re-lease of all or part of the Equipment forming the
subject matter thereof, or through enforcement of a judgment or otherwise;
"Liquidation Proceeds" means all monies collected from whatever source in
respect of a Liquidated Lease (including through the re-leasing of the relevant
Equipment) net of the sum of any amounts paid or remitted by the Collector in
accordance with applicable law to the Lessee or to a Governmental Authority in
respect of Taxes on the sale or other disposition of the Equipment (or part
thereof) subject to such Liquidated Lease and the amount of any reasonable out-
of-pocket costs and expenses incurred by the Collector in enforcing any
Liquidated Lease or in refurbishing the Equipment subject thereto;
"Liquidity Agent" has the meaning ascribed thereto in the Liquidity Agreement;
"Liquidity Agreement" means the agreement made as of January 27, 1998, between
the Concurrent Lessee, the banks and other financial institutions whose names
appear on Schedule 1 to such agreement and Bank of Montreal, as such agreement
may be amended or supplemented from time to time;
"90 Day Past Due Lease" means a Designated Eligible Lease in respect of which
(a) any portion of any Scheduled Payment has not been made within 91 days after
the date on which the Scheduled Payment was due or which would be classified as
non-performing or written off as uncollectible in accordance with the Credit and
Collection Policies, or (b) the Lessee is a Person who would satisfy section
7.1(i) if the words "the Lessor" were changed to "Lessee" in each instance in
section 7.1(i);
"90 Day Past Due Ratio" means, in respect of any Reporting Period, the ratio
(expressed as a percentage) calculated by dividing (a) the aggregate Financed
Balances of all 90 Day Past Due Leases as of the last day of such Reporting
Period (including any 90 Day Past Due Lease, the Concurrent Lease related to
which has been terminated pursuant to sections 3.5 or 7.3(c)) by (b) the
Aggregate Financed Balance as of the last day of such Reporting Period;
"Note Obligations" means the aggregate amount of (a) in the case of discount
Notes, the face amount at maturity of such Notes, and (b) in the case of
interest-bearing Notes, the face amount thereof plus accrued interest thereon at
the rate stipulated therein to the maturity thereof.
"Notes" means short-term debt obligations issued by the Concurrent Lessee
pursuant to the trust indenture made as of January 27, 1998 between the
Concurrent Lessee and Montreal Trust Company of Canada, the proceeds of sale of
which are used to finance the entering into of, and the maintenance of the
Concurrent Lessee's interest in, Concurrent Leases hereunder (including Notes
issued to repay maturing Notes issued by the Concurrent Lessee for such
purpose);
-12-
"Officer's Certificate" means a certificate signed by the chairman of the board,
the president, any vice-president, the secretary, the treasurer or the
controller of the Lessor, IKON Capital or the Performance Guarantor, as the case
may be;
"Overcollateralization Date" means the day that the Aggregate Financed Balance
declines below $80 million;
"Parent Company" means each corporation, if any, of which the Collector is a
Subsidiary, provided that, in the case of the Lessor, "Parent Company" shall
mean the Performance Guarantor only and shall not include any corporation of
which the Performance Guarantor is a Subsidiary;
"Person" means an individual, partnership, association, corporation, trust,
joint venture, unincorporated association or organization, proprietorship, board
or body established by statute, any Governmental Authority or other entity;
"Portfolio Report" means a report substantially in the form of Schedule D;
"PPSA" means the Personal Property Security Act (Ontario) and the comparable
legislation of any other province or territory of Canada;
"Predecessor" means any one of the predecessor corporations of the Lessor listed
on Schedule F hereto;
"Prepaid Rent" means the sum required to prepay the Rent due under any
Concurrent Lease, which sum shall be equal to the product of (a) the aggregate
Financed Balances of the Designated Eligible Leases relating to the relevant
Concurrent Lease as of the relevant Cut-Off Date and (b) the Advance Rate;
"Prime Rate" means the fluctuating annual interest rate which, on any day, shall
be equal to the rate of interest most recently established by Bank of Montreal
at its head office in Toronto, Ontario as its reference rate of interest for the
purpose of determining interest rates it will charge on that day for demand
loans made in Canada in Canadian Dollars to its Canadian commercial customers
and which it refers to as its "prime rate";
"Program Amount" means, for any Reporting Date, the amount calculated pursuant
to the following formula:
A (AFB + FB - V - AWO)
where:
"A" means (a) prior to either the Lease Termination Date or the
Overcollateralization Date, the Advance Rate, and (b) on and after
either the Lease Termination Date or the Overcollateralization Date,
1;
-13-
"AFB" means the Aggregate Financed Balance on the second Settlement
Date immediately preceding such Reporting Date;
"FB" means the aggregate Financed Balances of all Designated Eligible
Leases in respect of which the related Equipment became subject to a
Concurrent Lease hereunder during the Reporting Period immediately
preceding such Reporting Date calculated as of the Cut-Off Date of
each such Concurrent Lease;
"V" means the Aggregate Financed Balance on the Settlement Date
immediately preceding such Reporting Date; and
"AWO" means the Financed Balances of any Designated Eligible Leases
which became Defaulted Leases during the Reporting Period immediately
preceding the Reporting Date directly as a result of (a) facts
relating to any Designated Eligible Leases that resulted in a breach
of the Lessor's representations and warranties hereunder, or (b) an
Adverse Claim arising through the Lessor, IKON Capital or the
Performance Guarantor after the Cut-off Date applicable to the
Concurrent Lease in respect of such Designated Eligible Lease;
"Program Fee" has the meaning ascribed thereto in section 6.20(a)(i);
"Program Limit" means $200,000,000, or such greater amount as the parties may
agree to in writing with the approval of the Credit Enhancer and the Rating
Agency;
"PST" means Taxes payable under the Retail Sales Tax Act (Ontario) or any
similar statute of any other jurisdiction in Canada, other than the Province of
Quebec;
"QST" means the Quebec Sales Tax payable under the QSTA;
"QSTA" means An Act Respecting the Quebec Sales Tax;
"Rating Agency" means Dominion Bond Rating Service Limited and its successors
and, at any particular time hereafter, may include any other nationally
recognized credit rating agency or agencies then authorized by the
Securitization Agent to rate securities issued by the Concurrent Lessee;
"Records" means all contracts, books, records and other documents and
information (including computer programmes, tapes, diskettes, punch cards, data
processing software and related property and rights) maintained by or on behalf
of the Lessor, IKON Capital or the Performance Guarantor evidencing or otherwise
relating to any Equipment concurrently leased or intended to be concurrently
leased by the Lessor to the Concurrent Lessee, or relating to the related
Designated Eligible Leases, Lessees, Related Rights, Lease Entitlements,
Collections or the Collection Account and, after the entering into of the
Concurrent Lease of any such Equipment by the Concurrent Lessee, shall include
all such records, information and material maintained or required to be
-14-
maintained by the Collector in respect thereof in accordance with the Credit and
Collection Policies and this Agreement;
"Reconciliation Amount" means, in respect of a Liquidated Lease calculated upon
the final determination of the amount of Liquidation Proceeds received in
respect of such Liquidated Lease, the positive amount obtained, when the Rent
Portion of the Liquidation Proceeds for such Liquidated Lease is subtracted from
the Initial Liquidation Payment for such Liquidated Lease;
"Related Rights", with respect to any Designated Eligible Lease, means any of
the following that secures payment or performance, either directly or
indirectly, of the Lessee's obligations to pay Scheduled Payments and
Administrative Charges following the Lease Date under such Designated Eligible
Lease:
(a) any Adverse Claim in any assets mortgaged, pledged, assigned or
otherwise encumbered, including all amounts paid by the Lessee to the
Lessor by way of advance rent payments, security deposits or
otherwise, and all financing statements and similar registrations and
notices covering any collateral subject to the aforementioned Adverse
Claims;
(b) all guarantees, indemnities and repurchase agreements or arrangements
of whatever kind;
(c) all proceeds of any policies of life, disability and general liability
insurance covering the Lessee (whether maintained by the relevant
Lessee, the Lessor or any other Person) which have been assigned to or
for the benefit of the Lessor or pursuant to which the Lessor has been
named as an insured party;
(d) all proceeds of any policies of insurance relating to physical damage,
loss, destruction or breakdown of the Equipment subject to such
Designated Eligible Lease (whether maintained by the relevant Lessee,
the Lessor or any other Person); and
(e) all proceeds of the foregoing, including any payment respecting
indemnity or compensation for loss of or damage to any of the
foregoing;
"Remittance Date" means, in respect of a Reporting Period, the last Business Day
of the Reporting Period immediately following such Reporting Period;
"Rent" means, with respect to any Designated Eligible Lease, that portion of
each remaining Scheduled Payment to be made by the Lessee that represents a
payment on account of the rent charged under the Designated Eligible Lease for
the use and possession of the Equipment forming the subject matter of such
Designated Eligible Lease;
-15-
"Rent Portion of Liquidation Proceeds" means, with respect to a Liquidated Lease
at a particular date, an amount determined according to the following formula:
A x LP
---
A+B
where:
"A" means the Financed Balance of such Liquidated Lease as at such
date;
"B" means the Residual Amount relating to such Liquidated Lease; and
"LP" means the Liquidation Proceeds relating to such Liquidated Lease;
"Replacement Collector" means, at any time following a Collector Transfer, the
Person whom the Concurrent Lessee designates from time to time by notice given
to the Lessor as the Replacement Collector;
"Replacement Collector Fee" means the actual fee payable to a Replacement
Collector, which fee shall be such commercially reasonable amount as may be
negotiated between the Concurrent Lessee and such Replacement Collector from
time to time;
"Reporting Date" means, in respect of a Reporting Period, the day that is five
Business Days prior to the Remittance Date pertaining to such Reporting Period.
"Reporting Period" means a calendar month, except that the first Reporting
Period shall be the period beginning on the Cut-Off Date related to the initial
Concurrent Lease hereunder and ending September 30, 1999 and the last Reporting
Period shall be the Reporting Period in which the Final Termination Date occurs;
"Residual Amount" means the dollar value ascribed by the Lessor at the
commencement date of a Designated Eligible Lease as the value of the Equipment
forming the subject matter of such Designated Eligible Lease as at the end of
the Term of such Designated Eligible Lease;
"Residual Portion of Liquidation Proceeds" means, with respect to a Liquidated
Lease at a particular date, an amount determined according to the following
formula:
B x LP
---
A+B
where:
"A" means the Financed Balance of such Liquidated Lease as at such
date;
-16-
"B" means the Residual Amount relating to such Designated Eligible
Lease; and
"LP" means the Liquidation Proceeds relating to such Liquidated Lease;
"Scheduled Payment" means, with respect to a Designated Eligible Lease, any
payment required to be made by the Lessee pursuant to the Designated Eligible
Lease on account of Rent but, for greater certainty, exclusive of Administrative
Charges and payments to be made upon the termination of such Designated Eligible
Lease in respect of the Residual Amount, if any, and excluding any security
deposits paid by the Lessee at the time the Designated Eligible Lease is entered
into;
"Securitization Agent" means Nesbitt Burns Inc.;
"Settlement Amount" has the meaning ascribed thereto in any Swap Agreement;
"Settlement Date" means the last day of a Reporting Period;
"Standard Form Leases" means the forms of transaction documents and
confirmations annexed collectively as Schedule C hereto, which forms are used by
the Lessor as of the Closing Date to constitute the agreements pursuant to which
the Lessor leases Equipment to the Lessees and such other forms of leases which
may be used by the Lessor after the Closing Date which have substantially
similar terms to the Standard Form Leases annexed hereto;
"Stated L/C Amount" means (a) on any date prior to the Lease Termination Date,
the lesser of (i) $16 million and (ii) 8% of the aggregate Unamortized Prepaid
Rent in respect of all Designated Eligible Leases, calculated as at such date of
calculation, subject to Concurrent Leases hereunder on such date, and (b) on any
date on and after the Lease Termination Date, the lesser of (i) $16 million and
(ii) 8% of the aggregate Unamortized Prepaid Rent in respect of all Designated
Eligible Leases, calculated as at the Remittance Date immediately preceding the
Lease Termination Date, subject to Concurrent Leases hereunder on such preceding
Remittance Date;
"Substituted Lease" has the meaning ascribed thereto in section 3.5;
"Subsidiary" has the meaning ascribed thereto in the Securities Act (Ontario),
as in effect at the date hereof;
"Sub-Collector" has the meaning ascribed thereto in section 6.1;
"Swap Agreement" means an interest rate hedge, option, swap or similar agreement
assigned to or entered into pursuant to section 4.1 or 4.2 between the
Concurrent Lessee and a third party acceptable to the Credit Enhancer (such
third party to have a long term unsecured debt rating of no less than AA (low)
from the Rating Agency) in connection with each Concurrent Lease Request, such
agreement to be in a form acceptable to the Concurrent Lessee, the Lessor and
the Credit Enhancer;
-17-
"Swap Rate" means the rate payable by the Concurrent Lessee and specified as the
"Swap Rate" in the related Swap Agreement;
"Swap Unwinding Costs" means any amounts required to be paid by the Concurrent
Lessee, including any unwinding costs, as a result of the termination of all or
a portion of a Swap Agreement in accordance with section 2.12;
"Tangible Net Worth" means, at any date, the remainder of (a) the sum of all
amounts to be included under shareholders' equity on the balance sheet of the
Lessor in accordance with Canadian generally accepted accounting principles
prepared as of such date minus (b) the sum of goodwill and other items treated
as intangibles in accordance with Canadian generally accepted accounting
principles on such balance sheet;
"Tax Credit" has the meaning ascribed thereto in section 9.6;
"Taxes" means any withholding, stamp, general corporation, property, capital,
large corporations, excise, GST, sales or other tax or any fee, levy, assessment
or other governmental charge, including any related penalties or interest
(excluding taxes imposed upon the Concurrent Lessee with respect to its income);
"Term" means, with respect to a Designated Eligible Lease, the period commencing
on the commencement date thereof and ending on the termination date thereof;
"Termination Date" means the earlier of:
(i) the Lease Termination Date; and
(ii) August 31, 2001, which date may be extended by notice from the
Concurrent Lessee to the Lessor upon agreement to such extension
by the Lessor, the Securitization Agent and the Credit Enhancer;
"Termination Event" has the meaning ascribed thereto in section 7.4;
"Time of Closing" means 9:00 o'clock a.m. (Toronto time) on the Closing Date, or
such other time as may be mutually agreed;
"Tranche" means the Notes issued (a) on a Remittance Date to repay maturing
Notes, or (b) on a Lease Date to fund a Concurrent Lease Request;
"Tranche Amount" means, in respect of a Tranche, the dollar amount of the
proceeds from the issuance of the Notes associated with such Tranche;
"Tranche Period" means, with respect to each Tranche Amount, (a) in respect of
the first Remittance Date following any Concurrent Lease hereunder, the period
from and including the
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related Lease Date to, but excluding, such first Remittance Date and (b) in
respect of any other Remittance Date, the period from and including the
immediately preceding Remittance Date to, but excluding, such Remittance Date;
"Tranche Rate" means either (a) the rate of interest per annum which is the
equivalent of the discount rate at which Notes issued in respect of a Tranche
are sold by any dealer or other agent selected by the Concurrent Lessee, or (b)
if the Notes are interest bearing, the rate of interest per annum payable in
respect of Notes issued in respect of a Tranche;
"Trigger Event" has the meaning ascribed thereto in section 7.1;
"Trust GST" has the meaning ascribed thereto in section 2.10;
"Unamortized Prepaid Rent" means, with respect to a Designated Eligible Lease,
the product of (a) the Advance Rate, and (b) the Financed Balance of that
Designated Eligible Lease; and
"Weighted Average Term" means, in respect of a group of Designated Eligible
Leases, a fraction the numerator of which is the aggregate of the products
obtained when the Financed Balance of each such Designated Eligible Lease is
multiplied by the remaining Term thereof and the denominator of which is the
aggregate Financed Balances of all such Designated Eligible Leases.
1.2 Headings
--------
The division of this Agreement into Articles, sections, subsections,
paragraphs, clauses and other subdivisions, the provision of a table of contents
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, section, subsection, paragraph,
clause, Schedule or other portion hereof and include the recitals and any
agreement supplemental hereto. Unless something in the subject matter or context
is inconsistent therewith, references herein to Articles, sections, subsections,
paragraphs, clauses and Schedules are to Articles, sections, subsections,
paragraphs, clauses and Schedules of this Agreement.
1.3 Extended Meanings
-----------------
Words importing the singular shall include the plural and vice versa
and words importing gender shall include all genders. Words importing natural
persons shall include all Persons. Any defined term used in the singular
preceded by "any" or "each" shall be taken to indicate any number of the members
of the relevant class. Every use of the word "including" or "includes" herein
shall be construed as meaning, respectively, "including, without limitation" and
"includes, without limitation".
-19-
1.4 Non-Business Days
-----------------
Whenever any payment to be made hereunder shall be stated to be due or
any action to be taken hereunder shall be stated to be required to be taken on a
day other than a Business Day, unless otherwise specifically provided for
herein, such payment shall be made or such action shall be taken on the next
succeeding Business Day.
1.5 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein. Each of the parties hereto hereby attorns to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
1.6 Reference to Statutes
---------------------
All references herein to any statute or any provision thereof shall,
unless expressly provided to the contrary herein, include all regulations made
thereunder or in connection therewith from time to time and shall include such
statute or provision as the same may be amended, re-enacted or replaced from
time to time.
1.7 Severability
------------
In the event that one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality or enforceability of the remaining
provisions hereof shall not be affected or impaired thereby. Each of the
provisions of this Agreement is hereby declared to be separate and distinct.
1.8 PPSA Terms
----------
Unless the context otherwise requires, all terms used herein which are
defined in the PPSA (Ontario) and are not specifically defined herein shall have
the meanings ascribed to them respectively in the PPSA (Ontario).
1.9 Currency
--------
All amounts expressed herein in terms of money refer to lawful
currency of Canada and all payments to be made hereunder shall be made in such
currency.
1.10 Deed
----
It is the intention of the parties that this Agreement, including each
Concurrent Lease, when duly executed and delivered by the parties, shall
constitute a deed.
-20-
1.11 Rating Agency Ratings
---------------------
Except as otherwise specifically provided for herein, all specific
ratings referred to herein are ratings of the initial Rating Agency, being
Dominion Bond Rating Service Limited. If any Rating Agency is substituted for
another Rating Agency, the specific ratings herein shall be the ratings of such
substituted Rating Agency equivalent to the ratings of Dominion Bond Rating
Service Limited or such Rating Agency, as the case may be, mutatis mutandis.
1.12 Months, Settlement Periods and Tranche Periods
----------------------------------------------
When reference is made herein to a month, unless otherwise stated, it
shall be construed to mean a calendar month. When reference is made herein to a
Reporting Period or Tranche Period next preceding a date or time, it shall be
construed to mean the Reporting Period or Tranche Period, as the case may be,
ending immediately prior to the commencement of the Reporting Period or Tranche
Period during which such date or time occurs.
1.13 Controlling Interest
--------------------
For the purposes of this Agreement, a Person or Persons holds a
controlling interest in a body corporate if such Person or Persons directly or
indirectly controls such body corporate and, for the purposes of this section
1.13, "control" shall mean de facto control, being the power to direct the
management and policies of a body corporate, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
1.14 Schedules
---------
The following Schedules annexed hereto are incorporated herein by
reference and are deemed to be part hereof:
Schedule A - Form of Concurrent Lease Request
Schedule B - Location of Records and Bank Accounts that Receive
Direct Payments
Schedule C - Standard Form Leases
Schedule D - Form of Portfolio Report
Schedule E - Form of Promissory Note (GST)
Schedule F - List of Predecessors
ARTICLE 2
CONCURRENT LEASE
2.1 Grant of Concurrent Lease
-------------------------
(1) Subject to the terms and conditions hereof, from time to time prior to
the Termination Date, the Lessor may, by delivering a Concurrent Lease Request
to the Concurrent Lessee at least
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five Business Days prior to the requested closing date specified in the
Concurrent Lease Request (each, a "Lease Date"), but not more than once in any
Reporting Period, request that the Concurrent Lessee, concurrently with and
subject to the rights of the Lessees under the Designated Eligible Leases
relating thereto, agree to enter into a lease effective as of the Cut-Off Date
specified in the Concurrent Lease Request to possess and use the Equipment set
out in such Concurrent Lease Request (any such lease granted by the Lessor to
and in favour of the Concurrent Lessee as aforesaid being referred to herein as
a "Concurrent Lease"). Unless the Concurrent Lessee notifies the Lessor that the
Concurrent Lessee has elected not to enter into a Concurrent Lease within two
Business Days of receipt of a Concurrent Lease Request, then, subject to the
terms and conditions hereof, including section 4.2(c), the Concurrent Lessee
will be deemed to have agreed to lease from the Lessor the Equipment set out in
such Concurrent Lease Request on the terms and conditions of this Agreement.
Each Concurrent Lease Request shall specify the Cut-Off Date related to the
Concurrent Leases requested thereunder, the requested Lease Date, (which shall
be the first day of a Tranche Period) the amount of Prepaid Rent required to
prepay the Rent under such Concurrent Leases in accordance with section 2.4,
(which in each case shall be for a minimum amount of $5 million) and the
aggregate Residual Amount relating to such Concurrent Lease Request; provided,
however, that the Concurrent Lessee shall have no obligation to concurrently
lease any Equipment set out in a Concurrent Lease Request (i) if the Notes to be
issued pursuant to such Concurrent Lease Request would have an outstanding
aggregate principal amount of less than $5 million or would mature on a date
other than the next succeeding Remittance Date or (ii) if more than one Tranche
would be outstanding after the issuance of Notes in connection with such
Concurrent Lease Request or (iii) until such time as the Lessor and the
Concurrent Lessee have agreed on the Swap Rate relating to such Concurrent Lease
Request, each acting reasonably, and the Concurrent Lessee shall have entered
into a Swap Agreement in respect thereof in accordance with section 4.1 or 4.2,
as the case may be.
(2) It is hereby expressly acknowledged and agreed that the interest of
the Concurrent Lessee under each Concurrent Lease in and to the Equipment
thereunder is that of lessee only, and that title to all such Equipment shall
remain vested in the Lessor. It is further expressly acknowledged and agreed
that (i) the grant by the Lessor to the Concurrent Lessee of each Concurrent
Lease shall constitute the Concurrent Lessee, in the place and stead of the
Lessor, as the lessor to the Lessees of the Equipment thereunder, and (ii) the
rights of the Lessees with respect to the possession and use of the Equipment
shall be the same as under the Designated Eligible Leases and may be asserted
against the Concurrent Lessee to the same extent as such rights could be
asserted against the Lessor prior to the grant of the Concurrent Lease.
(3) In its capacity as lessor to the Concurrent Lessee, and so that the
Concurrent Lessee will not be in violation of its obligation as lessor to the
Lessees or any of them, the Lessor covenants and agrees to and in favour of the
Concurrent Lessee that, subject to the Credit and Collection Policies, at all
times during the term of each Concurrent Lease, the Lessor will comply with and
perform each term, condition, representation, warranty and covenant required to
be complied with or performed by the Lessor under each Designated Eligible
Lease.
-22-
(4) In its capacity as lessor to each Lessee under each Designated
Eligible Lease, the Concurrent Lessee covenants and agrees to and in favour of
the Lessor to cause and require each Lessee, and during any period that the
Concurrent Lessee is in actual possession of and using the Equipment or any of
them, the Concurrent Lessee further covenants and agrees to comply with and
perform each term, condition, representation, warranty and covenant required to
be complied with or performed by a Lessee under the relevant Designated Eligible
Lease.
2.2 Term of Concurrent Lease
------------------------
The term of each Concurrent Lease in respect of any Equipment shall
commence at the opening of business on the related Cut-Off Date and, unless
terminated or deemed terminated earlier in accordance with the provisions
hereof, shall terminate at 11:59 p.m. (Toronto time) on the day that is the
first day after the day on which the Designated Eligible Lease relating to such
Equipment is terminated. It is hereby expressly acknowledged and agreed that the
Lessor's title and ownership with respect to any of the Equipment shall be
subject to the rights of the Concurrent Lessee under each Concurrent Lease with
respect to such Equipment, and, consequently, except as otherwise provided
herein, upon the termination or liquidation of the Designated Eligible Lease
relating to any Equipment (whether upon the expiry of the Term thereof or as a
result of a default by the Lessee thereunder or otherwise), the Concurrent
Lessee shall, until the expiry of the term of the Concurrent Lease relating to
such Equipment, have the exclusive right to possess and use such Equipment as
provided for in this Article 2. Except as provided herein, the Lessor shall not
be entitled to terminate the Concurrent Lease in respect of the Equipment
forming the subject matter of any Designated Eligible Lease.
2.3 Rent for Concurrent Lease
-------------------------
In consideration of the grant by the Lessor to the Concurrent Lessee
of each Concurrent Lease, the Concurrent Lessee shall pay to the Lessor during
the term of each such Concurrent Lease, on the first day of each calendar month
after the relevant Lease Date, as monthly rent, an amount equal to 99.99% of the
sum of all payments of Rent forming part of the Scheduled Payments to be made in
respect of the relevant Designated Eligible Leases during the most recently
completed Reporting Period. GST, plus any other tax payable under a statute of
a province of Canada similar to the ETA, subject to such reasonable
modifications as may be required in the circumstances will be added to any
amount so paid. The GST registration number of the Lessor is 873008189.
2.4 Prepayment of Rent
------------------
The Lessor acknowledges and agrees that the Concurrent Lessee may
satisfy and discharge its obligations to make all monthly rent payments required
by section 2.3 by (a) paying to the Lessor on the Lease Date, by certified
cheque or by wire transfer to an account designated by the Lessor, as a
prepayment of rent, a sum equal to the Prepaid Rent less the Initial Deposited
Amount and (b) paying to the Lessor deferred rent (the "Deferred Rent") pursuant
to and in accordance with sections 2.5 and 2.7, each of which payments shall be
made without the need on the
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part of the Lessor to provide the Concurrent Lessee with any invoices. The
Concurrent Lessee hereby agrees to cause the Initial Deposited Amount to be
deposited into the Deferred Rental Account. Notwithstanding the foregoing, the
Lessor shall provide the Concurrent Lessee with any invoices or other
documentation necessary for the Concurrent Lessee to claim GST input tax credits
and input tax refunds.
2.5 Remittances from Collections
----------------------------
On each Remittance Date, unless otherwise required herein, the
Collector shall, and hereby covenants to, deposit all Collections for the
immediately preceding Reporting Period into the Collection Account and the
Concurrent Lessee hereby authorizes and directs the Collector, on or before each
Remittance Date, to apply the Collections for such immediately preceding
Reporting Period to make the following deposits and payments from the Collection
Account (and with respect to section (n)(ii) below only, payments from the
Deferred Rental Account), to the extent of such Collections, in the following
order of priority:
(1) to the counterparty under any Swap Agreement, an amount equal to the
Hedging Costs (if greater than zero), to the extent not previously
paid;
(2) after a Collector Transfer, to the Replacement Collector, an amount
equal to the Replacement Collector Fee that has accrued and remains
unpaid on such Remittance Date and to the Replacement Collector or the
Concurrent Lessee, as applicable, any amounts owed and remaining
unpaid pursuant to section 6.20(a)(ii);
(3) into the Concurrent Lessee's Account, any amounts outstanding in
respect of the Funding Discount in respect of each outstanding Tranche
on such Remittance Date, plus any accrued interest on any such overdue
amounts;
(4) into the Concurrent Lessee's Account, the Program Amount in respect of
the previous Reporting Period, together with any previously payable
Program Amounts to the extent not paid, plus any accrued interest on
any such overdue amounts, calculated from the respective Remittance
Date on which any such overdue amount was required to be paid, at a
rate equal to the then applicable Tranche Rate in respect of
outstanding Notes;
(5) into the Concurrent Lessee's Account, any amounts outstanding in
respect of the Program Fee on such Remittance Date;
(6) to the Credit Enhancer or applicable Governmental Authority, in
payment of the sum of (i) the Credit Enhancement Fee for the Tranche
Period immediately preceding such Remittance Date, together with any
other unpaid Credit Enhancement Fees (with interest thereon at the
Prime Rate plus 3.0%), and (ii) all Taxes (as such term is defined in
the Credit Enhancement Agreement) and other amounts payable to or by
the Credit Enhancer in respect of such Credit Enhancement Fees and
interest;
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(7) to the Credit Enhancer or applicable Governmental Authority, in
payment of (i) an amount equal to the sum of (x) the accrued and
unpaid interest, if any, due and payable to the Credit Enhancer on any
amounts drawn by the Concurrent Lessee on the Credit Enhancement
pursuant to section 2.6, and (y) all Taxes (as such term is defined in
the Credit Enhancement Agreement) and other amounts payable with
respect to or by the Credit Enhancer with respect to such interest, to
the extent not previously paid, and (ii) any amounts drawn by the
Concurrent Lessee on the Credit Enhancement and not previously
reimbursed to the Credit Enhancer or, after the L/C Funding Date,
deposited to the L/C Funding Account;
(8) to the Credit Enhancer or applicable Governmental Authority, in
payment of the aggregate of all other amounts due and payable to the
Credit Enhancer and all Taxes, (as such term is defined in the Credit
Enhancement Agreement), to the extent not previously paid;
(9) into the Concurrent Lessee's Account, any amounts payable by the
Lessor pursuant to sections 6.20(b), 11.2 and 11.7, to the extent
agreed to by the Credit Enhancer and not previously paid;
(10) to the Lessor, the aggregate Reconciliation Amounts for such Reporting
Period;
(11) into the Deferred Rental Account, the amount required to ensure that
the amount on deposit in the Deferred Rental Account is maintained at
the Deferred Rental Required Amount;
(12) at the option of the Concurrent Lessee, and upon the written direction
of the Concurrent Lessee to the Collector prior to the Remittance
Date, to any holder of an Adverse Claim referred to in section 3.6 to
the extent the Lessor has been deemed to have received a Collection
pursuant thereto but has not made the deposit required pursuant to
section 3.6;
(13) into the Concurrent Lessee's Account, all other amounts (including
interest) owed to or owned by the Concurrent Lessee hereunder, to the
extent not previously paid or so deposited; and
(14) prior to the earlier of the occurrence of the Lease Termination Date
or the Overcollateralization Date, to the Lessor on account of
Deferred Rent (i) any amounts remaining from the Collections received
during the relevant Reporting Period after payment of all amounts
required by (a) through (m) above, and (ii) from the Deferred Rental
Account, the Deferred Rental Excess Amount, if any, provided that, on
and after the earlier to occur of the Lease Termination Date and the
Overcollateralization Date, any amount that would otherwise be payable
to the
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Lessor pursuant to this section 2.5(n) shall be deposited, or shall
remain on deposit, as the case may be, in the Deferred Rental Account.
If, on any Remittance Date prior to the Final Termination Date, Collections are
insufficient to make the payments and deposits referred to in (a) through (i)
above, inclusive, the Lessor shall deposit the amount of the deficiency to the
Collection Account from funds on deposit in the Deferred Rental Account to the
extent funds are available in the Deferred Rental Account and apply such amount
to the payment of any unpaid amount under, and in the priority set forth in,
sections 2.5(a) through (i), inclusive.
2.6 Level Two Credit Enhancement
----------------------------
(1) If, on any Remittance Date, the amount on deposit in the Deferred
Rental Account is reduced to zero (after giving effect to all deposits to and
withdrawals from the Deferred Rental Account on such Remittance Date in
accordance with section 2.5), the Concurrent Lessee shall make a drawing on the
Level Two Credit Enhancement in an amount equal to the lesser of (i) the
Available L/C Amount on such Remittance Date, and (ii) the amount, if any, by
which (A) the sum of the amounts required to be paid or deposited on such
Remittance Date under sections 2.5(a) through (e), inclusive, exceeds (B) the
sum of (x) the Collections for the Reporting Period prior to such Remittance
Date, and (y) the amount, if any, on deposit in the Deferred Rental Account on
such Remittance Date prior to making any of the payments required under sections
2.5(a) through (e).
Any amount drawn on the Level Two Credit Enhancement on any Remittance
Date pursuant to this section 2.6(a) shall be applied by the Concurrent Lessee
to make the requisite payments and deposits under sections 2.5(a) through (e),
inclusive.
(2) If, at any time, the rating of the long term unsecured debt
obligations of the Credit Enhancer is reduced to below AA(low) by the Rating
Agency, or to the extent that the Rating Agency is not then rating the long term
unsecured debt of the Credit Enhancer, to below an equivalent rating by a United
States rating agency recognized by the Rating Agency, the Concurrent Lessee
shall, within 60 days following such an occurrence, either:
(1) replace the Letter of Credit with an irrevocable letter of credit
with a stated amount not less than the then Available L/C Amount
and issued by a successor Credit Enhancer satisfactory to the
Lessor and the Rating Agency, or make any other arrangement
satisfactory to the Lessor, the Rating Agency and the
Securitization Agent; or
(2) cause a draw to be made under the Letter of Credit in an amount
equal to the Available L/C Amount and deposit such amount into an
Eligible Deposit Account established in the name of the
Concurrent Lessee and known as the "L/C Funding Account".
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(3) Funds on deposit in the L/C Funding Account on any Remittance Date,
after giving effect to any withdrawals to be made from the L/C Funding Account
on such Remittance Date pursuant to section 2.6(a), shall be invested by the
Concurrent Lessee in Eligible Investments at the direction of the Credit
Enhancer, as provided in section 6(e) of the Credit Enhancement Agreement. Any
such Eligible Investments shall mature not later than the Business Day preceding
the next succeeding Reporting Date so that such funds will be available for
withdrawal on or prior to the following Remittance Date in accordance with and
to the extent provided for in section 2.6(a). The proceeds of any such
investments shall be invested in Eligible Investments in accordance with the
provisions of this section 2.6(c). The Concurrent Lessee shall hold possession
of the negotiable instruments or securities, if any, evidencing such Eligible
Investments. On each Remittance Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Remittance Date on funds on
deposit in the L/C Funding Account shall be applied in accordance with the
Credit Enhancement Agreement. For purposes of determining the availability of
funds or the balances in the L/C Funding Account for any reason, all investment
earnings on such funds shall be deemed not to be available or on deposit.
(4) If the L/C Funding Account Surplus on any Remittance Date, after
giving effect to all deposits to and withdrawals from the L/C Funding Account
with respect to such Remittance Date, is greater than zero, the Concurrent
Lessee shall withdraw from the L/C Funding Account and apply in accordance with
the Credit Enhancement Agreement, an amount equal to the amount of such L/C
Funding Account Surplus.
(5) Upon the earliest to occur of (i) the Final Termination Date, and (ii)
the day on which all Notes have been paid in full, the Concurrent Lessee shall
withdraw from the L/C Funding Account for application in accordance with the
Credit Enhancement Agreement all amounts on deposit in the L/C Funding Account.
(6) Notwithstanding any provision of this Agreement, from and after the
L/C Funding Date, the L/C Funding Account shall replace the Letter of Credit for
all purposes of this Agreement. As a result, after the L/C Funding Date unless
the context requires otherwise, (i) any reference in this Agreement to a draw
under the Letter of Credit shall be deemed to refer to a withdrawal from the L/C
Funding Account, and (ii) any reference in section 2.5(g)(ii) to a payment to
the Credit Enhancer shall be deemed to refer to a deposit into the L/C Funding
Account; provided, however, that from and after the L/C Funding Date the Credit
Enhancer shall still be entitled to receive payments pursuant to sections
2.5(f), (g)(i) and (h).
2.7 Satisfaction of Deferred Rent
-----------------------------
Forthwith after the Final Termination Date (or such earlier date as
may be agreed upon by the Concurrent Lessee and the Lessor), and provided that
the Concurrent Lessee and the Credit Enhancer have each received all amounts
that are required to be paid to them pursuant to section 2.5, the Concurrent
Lessee shall, in full satisfaction of its obligation to pay the then outstanding
amount of Deferred Rent, if any, (a) pay to the Lessor all Collections in the
possession or control of the Concurrent Lessee or any Replacement Collector and
all amounts then on deposit
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in the Deferred Rental Account and the Collection Account, and (b) terminate all
Concurrent Leases whereupon the Concurrent Lessee shall cease to have any
interest in or to any Designated Eligible Leases, Equipment, Related Rights or
any proceeds thereof, such that from and after such time, the Lessor shall hold
and enjoy all right, title and interest in and to all Designated Eligible
Leases, Equipment, Related Rights and all proceeds thereof, free and clear of
all Adverse Claims created by the Concurrent Lessee or any Replacement
Collector, but without any other representation or warranty (whether express,
implied, statutory or otherwise) by or on behalf of the Concurrent Lessee.
2.8 No Recourse
-----------
Except as set forth herein, in the event that the Lessee under any
Designated Eligible Lease is unable, neglects or refuses to satisfy its
financial or other obligations thereunder, or is in default thereunder for any
reason whatsoever, no recourse shall be had by the Concurrent Lessee against the
Lessor therefor.
2.9 Concurrent Leases Limited by Program Limit
------------------------------------------
No Concurrent Leases may be granted hereunder if, after giving effect
thereto and the issue of Notes to fund payment of the Prepaid Rent in respect of
such Concurrent Leases, (a) the aggregate Unamortized Prepaid Rent for all
Designated Eligible Leases would exceed the Program Limit or (b) the aggregate
Tranche Amounts in respect of all Notes outstanding on the relevant date would
exceed the aggregate Unamortized Prepaid Rent in respect of all Designated
Eligible Leases subject to Concurrent Leases hereunder as of the immediately
preceding Cut-Off Date.
2.10 Payment of GST by the Concurrent Lessee
---------------------------------------
The Lessor agrees that the Concurrent Lessee may satisfy its
obligation to pay GST to the Lessor in respect of the Prepaid Rent provided for
in section 2.4 (the "Trust GST") by way of a promissory note executed by the
Concurrent Lessee in favour of the Lessor in an amount equal to the amount of
Trust GST plus the amount of any interest paid or payable to the Concurrent
Lessee in accordance with the ETA and the QSTA received by the Trust in respect
of the input tax credit or input tax refund entitlement of the Concurrent
Lessee, and otherwise substantially in the form set out in Schedule E, in
accordance with the following provisions:
(1) the Concurrent Lessee shall have a reporting period for the purposes
of the ETA and QSTA that is a calendar month;
(2) the Concurrent Lessee shall file returns under section 238 of the ETA
and section 468 of the QSTA on or before the fifth Business Day
following the end of the Reporting Period in which (or in respect of
which) the Concurrent Lessee paid the Trust GST (as represented by the
promissory note) and shall claim in such returns an input tax credit
and input tax refund (including in respect of the full amount of the
Trust GST) for that period pursuant to the applicable provisions of
the ETA and QSTA;
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(3) the Concurrent Lessee shall pay to the Lessor, within three Business
Days of such time or times as the Concurrent Lessee receives any net
tax refund in respect of the Trust GST, the amount of any such net tax
refund, together with any interest thereon received by the Concurrent
Lessee, in satisfaction of the promissory note; and
(4) the Concurrent Lessee shall assign to the Lessor, as security for the
obligations of the Concurrent Lessee under the promissory note, all of
the right, title and interest of the Concurrent Lessee in and to any
net tax refund receivable by the Concurrent Lessee in respect of the
Trust GST, together with any interest receivable thereon. The rights
and recourses of the Lessor with respect to any amounts owing by the
Concurrent Lessee to the Lessor in respect of the Tax and under the
promissory note shall be limited to the enforcement of such assignment
and otherwise at law against such security. The Lessor shall not be
entitled to enforce any right or recourse against any other property
or assets of the Concurrent Lessee with respect to any liability of
the Concurrent Lessee to the Lessor under this section 2.10 or the
promissory note.
2.11 Acknowledgment and Quit Claim
-----------------------------
The Lessor acknowledges that, as a consequence of the grant of rights
by the Lessor to the Concurrent Lessee under this Agreement and pursuant to each
Concurrent Lease Request, and the liability of the Concurrent Lessee to pay to
the Lessor the rent or Prepaid Rent and Deferred Rent, as the case may be, under
the Concurrent Leases as provided for in this Article 2, the Concurrent Lessee
is entitled, among other things, to receive all relevant Collections as of and
from the opening of business on the relevant Cut-Off Date. Accordingly, each of
the Concurrent Lessee and the Lessor hereby acknowledges that, on each Lease
Date, all of the Lessor's right, title and interest in the following Lease
Entitlements (as defined below), as they relate to the related Equipment
concurrently leased by the Concurrent Lessee hereunder, shall, by virtue of the
Concurrent Lease thereof, vest in the Concurrent Lessee as of and from the
opening of business on the related Cut-Off Date:
(1) all of the Lessor's right, title and interest in, to and under the
Designated Eligible Leases (excluding, for greater certainty, title to
the Equipment forming the subject matter of such leases and the
Residual Amount, if any, applicable to any such leases) and (i) the
original credit application originally executed by each Lessee and any
credit analysis and credit agency report and the "quality indicator
score" records relating to the Lessees, if any, and (ii) all other
documents kept on file by the Lessor at the respective offices of the
Lessor, IKON Capital or the Performance Guarantor at the locations
specified in Schedule B evidencing the Related Rights and/or relating
to the Designated Eligible Leases, the Lessees or the Equipment;
(2) all of the Lessor's right, title and interest in and to all
Collections made after the relevant Cut-Off Date including rights, if
any, under direct debit agreements with Lessees, and all cheques,
notes, instruments of payment and other remittances relating thereto;
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(3) all of the Lessor's right, title and interest in and to the Related
Rights created pursuant to or relating to the Designated Eligible
Leases; and
(4) all proceeds from any or all of the foregoing
(all of the property and rights transferred, assigned and conveyed pursuant to
this section 2.11 being collectively referred to herein as the "Lease
Entitlements").
2.12 Swap Agreements
---------------
If the Lessor elects to terminate all Concurrent Leases pursuant to
section 7.3 or if the Concurrent Lessee elects to sell all such Concurrent
Leases pursuant to section 7.6, or if any Concurrent Lease is terminated
pursuant to any of sections 3.2, 3.3(c) or 3.4, the Concurrent Lessee shall have
the right, but not the obligation, to terminate, modify or amend any portion of
the Swap Agreement entered into by the Concurrent Lessee in connection with such
Concurrent Leases. To the extent the Concurrent Lessee terminates, modifies or
amends a Swap Agreement in such circumstances, it shall notify the Lessor in
writing at least one Business Day prior to effecting such termination,
modification or amendment. The Concurrent Lessee agrees that it shall cause all
proceeds received by it as a result of the termination, modification or
amendment of a Swap Agreement (net of any amounts used to enter into another
Swap Agreement) pursuant to this section 2.12 to be deposited to the Collection
Account.
ARTICLE 3
TERMINATION WITH RESPECT TO CERTAIN EQUIPMENT
3.1 General
-------
The provisions of this Article 3 are in addition to and not in
limitation of the indemnification provisions set out in this Agreement and the
other covenants, rights and remedies described herein.
3.2 Liquidated Leases
-----------------
The parties acknowledge that the Collector is obligated, in accordance
with this Agreement and the Credit and Collection Policies, to enforce a
Designated Eligible Lease that is to become a Liquidated Lease, including, by
taking possession of and/or re-leasing the Equipment to a third party or selling
the Equipment forming the subject matter of such Lease and by enforcing the
Related Rights. The Concurrent Lessee shall be entitled to require the Lessor
to terminate the Concurrent Lease with respect to the Equipment forming the
subject matter of such Liquidated Lease by notice in writing to the Lessor or as
provided for in this section 3.2. If, one Business Day prior to a transfer of
title to, or repossession of, the Equipment by the Collector in connection with
the enforcement of a Designated Eligible Lease, the Concurrent Lessee shall not
have provided the
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Lessor with notice that it does not wish to exercise its option to terminate the
Concurrent Lease with respect to such Equipment, the Concurrent Lessee shall be
deemed to have exercised such option with respect to such Equipment, and,
subject to the next following sentence, the Concurrent Lease shall be and shall
be deemed to be terminated with respect to such Equipment as of the date of such
transfer of title to, or repossession of, such Equipment by the Collector. Such
termination shall be effective upon the payment by the Lessor to the Concurrent
Lessee, by deposit to the Collection Account, as a refund of a portion of the
Prepaid Rent paid by the Concurrent Lessee in respect of such Equipment, of an
amount equal to the lesser of:
(1) the Rent Portion of Liquidation Proceeds relating to such Designated
Eligible Lease in respect of all Reporting Periods, calculated on the
date on which the Collector transferred title to or took repossession
of the Equipment; and
(2) the Unamortized Prepaid Rent relating to such Designated Eligible
Lease, calculated as at such date, plus the portion of the Hedging
Costs that relates to the Financed Balance of such Designated Eligible
Lease on that date, plus any Swap Unwinding Costs, plus any other
amounts owed to the Concurrent Lessee hereunder in respect of such
Designated Eligible Lease;
provided, that, to the extent the Liquidation Proceeds with respect to such
Liquidated Lease shall not have been identified or otherwise determined on the
first Settlement Date occurring after the relevant Designated Eligible Lease is
determined to be a Liquidated Lease, the Collector shall pay to the Concurrent
Lessee (an "Initial Liquidation Payment"), by deposit to the Collection Account
no later than the Remittance Date for the Reporting Period in which such
Settlement Date occurs, the amount referred to in (b) above. Upon the making of
the Initial Liquidation Payment in the manner referred to above, the Lessor
shall become entitled to receive, in accordance with section 2.5, the
Reconciliation Amount, if any, relating to such Liquidated Lease.
Upon the payment to the Concurrent Lessee of such amount (including by
the making of the Initial Liquidation Payment), (i) the Concurrent Lease
relating to the relevant Equipment shall be and shall be deemed to have been
terminated, (ii) the Lessor shall cease to be entitled to any further payments
of Deferred Rent in respect of such Equipment, (iii) the Concurrent Lessee shall
be deemed to have released, re-assigned and reconveyed to the Lessor all of its
right, title and interest in and to such Equipment and the Lease Entitlements
(insofar as they relate to the Liquidated Lease relating to such Equipment)
without recourse, and subject only to the representations and warranties of the
Concurrent Lessee that such right, title and interest is held beneficially by it
and is released, transferred, assigned and conveyed to the Lessor free and clear
of any Adverse Claims created, suffered or permitted to exist by the Concurrent
Lessee, and (iv) the Collector shall pay or transfer to the Lessor all other
proceeds of the Liquidated Lease, if any, subsequently received by the Collector
from the Lessee under such Liquidated Lease. Upon the final determination of
the Liquidation Proceeds with respect to any Liquidated Lease, the Collector
shall pay to the Lessor the Residual Portion of the Liquidation Proceeds for
such Lease.
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3.3 Lease Variations
----------------
(a) If, in accordance with Article 6 hereof and the Credit and
Collection Policies, the Collector proposes to:
(i) allow a Lessee to purchase the Equipment forming the subject matter
of its Designated Eligible Lease prior to the expiry of the Term
thereof;
(ii) terminate a Designated Eligible Lease prior to the expiry of the
Term thereof for any reason other than a default on the part of the
Lessee;
(iii) extend the Term of a Designated Eligible Lease beyond its stated
Term; or
(iv) decrease the amount or number of the Scheduled Payments required
under any Designated Eligible Lease,
it shall provide reasonably prompt written notice thereof to the Concurrent
Lessee and the Credit Enhancer. Subject to section 3.3(b), upon receipt of such
notice the Concurrent Lessee shall be entitled to require the Lessor to
terminate the Concurrent Lease with respect to the Equipment forming the subject
of the relevant Designated Eligible Lease, in which case the Collector shall be
entitled to take any such action described in any of sections 3.3(a)(i) through
(iv) only following the termination of the Concurrent Lease relating to such
Equipment. If, one Business Day prior to the completion of any of the actions
referred to in any of sections 3.3(a)(i) to (iv) above, the Concurrent Lessee
shall not have provided the Lessor with notice that it does not wish to exercise
its option to terminate the Concurrent Lease with respect to such Equipment, the
Concurrent Lessee shall be deemed to have exercised such option with respect to
such Equipment and the Concurrent Lease shall be and shall be deemed to be
terminated with respect to such Equipment as of the date of completion of any
such action.
(b) If an event referred to in either section 3.3(a)(i) or (ii) occurs
as a direct result of the Lessee requesting such termination on a basis
unsolicited by the Collector, the Concurrent Lessee shall be deemed to have
exercised the option referred to in section 3.3(a) and the Concurrent Lease
shall be and shall be deemed to be terminated with respect to such Equipment as
of the date of completion of the action under section 3.3(a)(i) or (ii), as the
case may be.
(c) Any such termination under section 3.3(a) or (b) shall be effective
upon the payment by the Lessor to the Concurrent Lessee, by deposit to the
Collection Account, as a refund of a portion of the Prepaid Rent paid by the
Concurrent Lessee in respect of the relevant Equipment, of an amount equal to
the Unamortized Prepaid Rent relating to the relevant Designated Eligible Lease,
calculated as at the date on which such payment is made to the Collector plus
the portion of the Hedging Costs that relates to the Financed Balance under such
Designated Eligible Lease on that date plus any Swap Unwinding Costs, plus any
other amounts owed to the Concurrent Lessee hereunder in respect of such
Designated Eligible Lease. Upon the payment of such amount to the Concurrent
Lessee, (i) the Concurrent Lease relating to such Equipment shall be and shall
be deemed
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to have been terminated, (ii) the Lessor shall cease to be entitled to
any further payments of Deferred Rent in respect of such Equipment, (iii) the
Concurrent Lessee shall be deemed to have released, re-assigned and reconveyed
to the Lessor all of its right, title and interest in and to such Equipment and
the Lease Entitlements (insofar as they relate to the Designated Eligible Lease
relating to such Equipment), without recourse, and subject only to the
representations and warranties of the Concurrent Lessee that such right, title
and interest is held beneficially by it and is released, transferred, assigned
and conveyed to the Lessor free and clear of any Adverse Claims created,
suffered or permitted to exist by the Concurrent Lessee, and (iv) the Collector
shall pay or transfer to the Lessor all other proceeds of the Designated
Eligible Lease, if any, subsequently received by the Collector from the Lessee
under such Designated Eligible Lease.
3.4 Ineligible Leases
-----------------
Promptly upon discovering that an eligibility requirement contained in
section 5.4 has not been satisfied with respect to any Designated Eligible Lease
or Designated Eligible Leases or that an event described in section 7.1(h) has
occurred, the Lessor shall inform the Concurrent Lessee in writing, in
reasonable detail, with respect thereto, or the Concurrent Lessee shall so
inform the Lessor with respect thereto, as the case may be. Unless such event
or state of facts shall have been cured on or before the first Settlement Date
following the receipt of such notice, the Lessor will promptly pay to the
Concurrent Lessee, by deposit to the Collection Account, an amount equal to the
Unamortized Prepaid Rent in respect of any such Designated Eligible Lease
materially adversely affected thereby, calculated as at the date on which such
payment is made, plus the portion of the Hedging Costs that relates to the
Financed Balance under such Designated Eligible Lease on such date, plus any
Swap Unwinding Costs, plus any other amounts owed to the Concurrent Lessee
hereunder in respect of such Designated Eligible Lease.
Upon the payment of such amount, (i) the Concurrent Lease shall be and
shall be deemed to have been terminated by the Lessor with respect to the
Equipment forming the subject matter of the relevant Designated Eligible Lease,
(ii) the Lessor shall cease to be entitled to any further payments of Deferred
Rent in respect of such Equipment, (iii) the Concurrent Lessee shall be deemed
to have released, re-assigned and reconveyed to the Lessor all of its right,
title and interest in and to such Equipment and Lease Entitlements (insofar as
they relate to the Designated Eligible Lease relating to such Equipment),
without recourse, and subject only to the representations and warranties of the
Concurrent Lessee that such right, title and interest is held beneficially by it
and is released, transferred, assigned and conveyed to the Lessor free and clear
of any Adverse Claims created, suffered or permitted to exist by the Concurrent
Lessee and (iv) the Collector shall pay or transfer to the Lessor all other
proceeds of the Designated Eligible Lease, if any, subsequently received by the
Collector from the Lessee under such Designated Eligible Lease.
3.5 Substituted Leases
------------------
The Lessor shall have the option to substitute a Designated Eligible
Lease which is an Eligible Lease (a "Substituted Lease") for a 90 Day Past Due
Lease, provided that:
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(1) the sum of the aggregate Financed Balances of all Substituted Leases
shall not exceed 10% of the highest Aggregate Financed Balance amount
on any date prior to the date such substitution occurs;
(2) at the time of such substitution, the aggregate Financed Balances of
such Substituted Leases shall be at least equal to the aggregate
Financed Balances of the 90 Day Past Due Leases being substituted; and
(3) the Substituted Leases have approximately the same Weighted Average
Term and CIRR as the 90 Day Past Due Leases being substituted.
Contemporaneously with the substitution of such Substituted Leases, the Lessor
shall grant to the Concurrent Lessee, and the Concurrent Lessee shall accept,
concurrently with and subject to the rights of the Lessees under the Substituted
Leases relating thereto, a Concurrent Lease in respect of the Equipment forming
the subject matter of such Substituted Leases. Contemporaneously with the
substitution of the Substituted Leases, (i) the Concurrent Leases shall be and
shall be deemed to have been terminated by the Lessor with respect to the
Equipment forming the subject matter of the 90 Day Past Due Leases so
substituted, (ii) the Lessor shall cease to be entitled to any further payments
of Deferred Rent in respect of such Equipment, (iii) the Concurrent Lessee shall
be deemed to have released, re-assigned and reconveyed to the Lessor all of its
right, title and interest in and to such Equipment and Lease Entitlements
(insofar as they relate to the 90 Day Past Due Lease relating to such Equipment)
without recourse, and subject only to the representations and warranties of the
Concurrent Lessee that such right, title and interest is held beneficially by it
and is released, transferred, assigned and conveyed to the Lessor free and clear
of any Adverse Claims created, suffered or permitted to exist by the Concurrent
Lessee and (iv) the Collector shall pay or transfer to the Lessor all other
proceeds of the 90 Day Past Due Lease, if any, subsequently received by the
Collector from the Lessee under such 90 Day Past Due Lease.
3.6 Adverse Claims
--------------
(1) If on any day prior to the Termination Date, any Adverse Claim arising
through the Lessor is asserted against the Lessor's or the Concurrent Lessee's
interest in any Equipment, the Lessor shall, for all purposes hereof, be
irrebuttably deemed to have received, for the Concurrent Lessee's account on
such day, a Collection equal to the Unamortized Prepaid Rent relating to the
relevant Designated Eligible Lease as of the next following Remittance Date,
plus the portion of the Hedging Costs that relates to the Financed Balance under
such Designated Eligible Lease, as of such next following Remittance Date, plus
any Swap Unwinding Costs, plus any other amounts owed to the Concurrent Lessee
hereunder in respect of such Designated Eligible Lease, and the Lessor shall
deposit such amount into the Collection Account on such next following
Remittance Date unless, pursuant to section 6.6, the Lessor is required to make
deposits of Collections into the Collection Account on the next following
Business Day after receipt thereof, in which case the Lessor shall deposit such
amount to the Collection Account on such next following Business Day after the
day it becomes aware of the circumstances requiring a deposit under this section
3.6.
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(2) Upon deposit into the Collection Account of the amount contemplated
under (a) above, (i) the Concurrent Lease relating to such Equipment shall be
and shall be deemed to have been terminated, (ii) the Lessor shall cease to be
entitled to any further payments of Deferred Rent in respect of such Equipment,
(iii) the Concurrent Lessee shall be deemed to have released, re-assigned and
reconveyed to the Lessor all of its right, title and interest in and to such
Equipment and the Lease Entitlements (insofar as they relate to the Designated
Eligible Lease relating to such Equipment), without recourse, and subject only
to the representations and warranties of the Concurrent Lessee that such right,
title and interest is held beneficially by it and is released, transferred,
assigned and conveyed to the Lessor free and clear of any Adverse Claims
created, suffered or permitted to exist by the Concurrent Lessee, and (iv) the
Collector shall pay or transfer to the Lessor all other proceeds of the
Designated Eligible Lease, if any, subsequently received by the Collector from
the Lessee under such Designated Eligible Lease.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions Precedent for the Initial Concurrent Lease
-----------------------------------------------------
On or before the Closing Date, unless waived by each of the Concurrent
Lessee, the Rating Agency and the Credit Enhancer in writing, the following
shall have occurred or the Lessor, IKON Capital or the Performance Guarantor
shall have delivered to the Concurrent Lessee the following, as the case may be,
in each case in form and substance satisfactory to the Concurrent Lessee:
(1) evidence that each of the Lessor, IKON Capital and the Performance
Guarantor is duly existing under its jurisdiction of incorporation,
along with certificates of status or compliance or other evidence
satisfactory to the Concurrent Lessee and its counsel, each acting
reasonably, that the Lessor is duly qualified, licensed or registered
in each of the jurisdictions in which it carries on its present
business and operations, except where the failure to be so qualified,
licensed or registered in any such jurisdiction does not have and will
not have a material adverse effect on the conduct of the business of
the Lessor or any material adverse effect on the validity,
enforceability or collectability of any of the Designated Eligible
Leases or the Lease Entitlements;
(2) a certificate of an officer of each of the Lessor, IKON Capital and
the Performance Guarantor, to be in full force and effect as of the
Closing Date, providing for and certifying the resolutions of the
board of directors of the Lessor, IKON Capital and the Performance
Guarantor approving and authorizing the execution, delivery and
performance of this Agreement and the other documents to be delivered
by the Lessor, IKON Capital and the Performance Guarantor hereunder,
the granting of Concurrent Leases hereunder and the assignment of the
Lease Entitlements hereunder;
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(3) incumbency certificates of the officers of the Lessor, IKON Capital
and the Performance Guarantor executing this Agreement and the other
documents to be delivered by the Lessor, IKON Capital and the
Performance Guarantor hereunder showing their names, offices and
specimen signatures on which certificates the Concurrent Lessee shall
be entitled to conclusively rely until such time as the Concurrent
Lessee receives from the Lessor, IKON Capital or the Performance
Guarantor, as the case may be, a replacement certificate meeting the
requirements of this section 4.1(c);
(4) to the extent not previously received, or as required by the Credit
Enhancer or the Rating Agency, reports showing the results of the
searches conducted in each of the provinces of Canada, other than the
Provinces of Prince Edward Island, Newfoundland and Saskatchewan,
against the Lessor and each Predecessor on the Business Day
immediately preceding the Closing Date (or as near as practicable
thereto) to determine the existence of any Adverse Claims in the
assets of the Lessor or in the Equipment or the Lease Entitlements;
(5) sample copies of each of the Standard Form Leases and other documents
generally used or required by the Lessor in each of the provinces of
Canada with respect to Equipment and to provide for the Related
Rights, including credit application forms and direct debit
authorization forms;
(6) executed copies of this Agreement, the Credit Enhancement Agreement
and the other agreements and instruments called for hereunder;
(7) opinions of counsel to the Lessor, IKON Capital and the Performance
Guarantor dated as of the Closing Date, together with supporting
opinions of local counsel in such provinces of Canada as the
Concurrent Lessee, the Credit Enhancer and the Rating Agency, each
acting reasonably, may determine;
(8) copies of verification statements, officially stamped or marked to
indicate that copies of such documents have been filed with the
appropriate Governmental Authorities in all the Provinces of Canada
or, if officially stamped copies are not available prior to the
Closing Date, photocopies of documents accepted for filing or
registration, of all financing statements or financing statements
providing for the renewal of any prior registrations or other similar
statements or other registrations, if any, filed in such province or
provinces with respect to the grant of the Concurrent Lease and the
transfer, assignment and conveyance of the Lease Entitlements to
ensure recognition as against third parties of the interests of the
Concurrent Lessee under the Concurrent Lease in the Equipment and the
interests of the Concurrent Lessee in the Lease Entitlements, in each
case showing the Lessor's address as #810, 715-5th Avenue S.W.,
Calgary, Alberta T2P 2X6;
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(9) evidence that such Persons as the Concurrent Lessee may have
designated who have registered financing statements or similar
instruments against the Lessor shall have entered into such agreements
or amended their registrations, filings or recordings so as to negate
any interest in the Equipment or the Lease Entitlements capable of
encumbering or defeating the interests of the Concurrent Lessee
therein;
(10) the Lessor shall have paid to the Concurrent Lessee the amount of
certain expenses of the Concurrent Lessee which the Lessor has agreed
to reimburse to the Concurrent Lessee pursuant to section 11.7;
(11) an Advance Ruling Certificate shall have been issued to the Concurrent
Lessee by the Director of Investigation and Research, Bureau of
Competition Policy, pursuant to the Competition Act (Canada) in
connection with the transactions contemplated hereby, which
certificate shall be in full force and effect;
(12) such other documentation as may be required by the Concurrent Lessee
or its counsel, Davies, Ward & Beck, or by the Lessor and the
Performance Guarantor or their counsel, Tory Tory DesLauriers and
Binnington, or by the Credit Enhancer or its counsel, Fraser Milner,
or by the Rating Agency, in each case acting reasonably; and
(13) the Concurrent Lessee shall have entered into a Swap Agreement as
required under section 2.1(a).
4.2 Conditions Precedent in Favour of the Concurrent Lessee for All
---------------------------------------------------------------
Concurrent Leases
- -----------------
Prior to the granting of each Concurrent Lease hereunder (including
the first Concurrent Lease), the following shall have occurred, or the Lessor or
the Performance Guarantor, as the case may be, shall have delivered to the
Concurrent Lessee the following, in each case in form and substance satisfactory
to the Concurrent Lessee:
(1) the Concurrent Lessee shall have received a Concurrent Lease Request,
in form and substance satisfactory to the Concurrent Lessee, dated
within 20 Business Days prior to the Lease Date and containing such
additional information, with respect to the Designated Eligible
Leases, the Equipment or otherwise, as may be reasonably requested by
the Concurrent Lessee;
(2) on the date of such Concurrent Lease (immediately prior to, at the
time of and after giving effect to such Concurrent Lease), the
following statements will be true, and the Lessor, IKON Capital and
the Performance Guarantor, by the Lessor accepting any payment
pursuant to section 2.3 or 2.4 in respect of a Concurrent Lease, will
be deemed to have certified that:
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(1) the representations and warranties contained in Article 5 of this
Agreement (excluding the representations and warranties contained
in section 5.1) are correct on and as of the relevant Lease Date
as though made on and as of such date; and
(2) no event has occurred and is continuing, or would result from the
granting of such Concurrent Lease, that constitutes either a
Trigger Event or a Termination Event or would constitute either a
Trigger Event or a Termination Event by further requirement that
notice be given or time elapse or both;
(3) a Swap Agreement shall have been executed by the relevant parties
similar in form to the Swap Agreement entered into with respect to the
initial Concurrent Lease under section 4.1, or in such other form
approved by the Securitization Agent and the Credit Enhancer, and the
fixed rate payable under such Swap Agreement shall be less than or
equal to the Prime Rate at the time the Swap Agreement is entered
into, unless otherwise approved by the Credit Enhancer; and
(4) all documents, instruments and agreements required by the terms hereof
to be delivered to the Concurrent Lessee shall be so delivered and
shall be satisfactory in form and substance to the Concurrent Lessee,
acting reasonably, and the Concurrent Lessee shall have received such
other approvals, opinions or documents as it may reasonably request.
4.3 Condition Precedent in Favour of the Lessor and the Performance
---------------------------------------------------------------
Guarantor for All Concurrent Leases
- -----------------------------------
Prior to the granting of each Concurrent Lease hereunder (including
the first Concurrent Lease), the Concurrent Lessee, by entering into any such
Concurrent Lease, will be deemed to have certified that the representations and
warranties contained in section 5.1 are correct on and as of the relevant Lease
Date as though made on and as of such date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Concurrent Lessee
-------------------------------------------------------
The Concurrent Lessee represents and warrants to the Lessor and the
Performance Guarantor, and acknowledges that each of the Lessor and the
Performance Guarantor is relying upon such representations and warranties in
consummating the transactions contemplated hereby and in entering into each
Concurrent Lease hereunder, that as of the Closing Date and as of each Lease
Date:
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(1) The Trust Company of Bank of Montreal, or any successor trustee of
CARE Trust, is a trust corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and, pursuant to the Deed of Settlement, has full power
and authority to execute and deliver this Agreement and the other
documents to be delivered by it hereunder and to perform the terms and
conditions hereof and thereof;
(2) CARE Trust is a trust validly existing under the laws of the Province
of Ontario;
(3) the execution, delivery and performance by the Concurrent Lessee of
this Agreement and all instruments, agreements and documents
contemplated to be executed and delivered by the Concurrent Lessee
hereunder are within the powers of the Concurrent Lessee, do not
contravene, the Deed of Settlement or any other indenture, agreement
or instrument to which the Concurrent Lessee is a party and constitute
legal, valid and binding obligations of the Concurrent Lessee
enforceable against it in accordance with their terms; and
(4) there are no actions, suits or proceedings in existence or, to the
knowledge of the Concurrent Lessee, pending or threatened against or
affecting the Concurrent Lessee, or the property of the Concurrent
Lessee, in any court, or before any arbitrator of any kind, or before
or by any governmental body, which may materially adversely affect the
ability of the Concurrent Lessee to perform its obligations under this
Agreement and all instruments, agreements and documents contemplated
to be executed and delivered by the Concurrent Lessee hereunder.
5.2 General Representations and Warranties of the Lessor
----------------------------------------------------
The Lessor represents and warrants to the Concurrent Lessee, and
acknowledges that the Concurrent Lessee is relying upon such representations and
warranties in consummating the transactions contemplated hereby and in entering
into each Concurrent Lease hereunder, that, as of the Closing Date and as of
each Lease Date:
(1) the Lessor is a corporation validly existing under the laws of its
jurisdiction of incorporation and is duly qualified to do business in
every jurisdiction where failure to be so qualified would materially
adversely affect the collectibility of the Designated Eligible Leases
or the Lease Entitlements or the enforcement of the Related Rights;
(2) the execution, delivery and performance by the Lessor of this
Agreement, any Concurrent Lease Request and the other documents
delivered by it hereunder, and the transactions contemplated hereby
and thereby, are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene:
(1) its constating documents or by-laws;
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(2) any law, rule or regulation applicable to it;
(3) any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note or other agreement or instrument
binding upon it or affecting its property which is of a material
nature; or
(4) any order, writ, judgment, award, injunction or decree binding on
it or affecting its property which is of a material nature;
and do not result in or require the creation of any Adverse Claim upon
or with respect to any of its properties other than with respect
hereto;
(3) no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Lessor of this
Agreement, or the other documents delivered by it hereunder, except
for such notices or filings that are required to reflect the
Concurrent Lessee's interest in the Equipment which is the subject of
a Designed Eligible Lease and concurrently leased hereunder and in all
other Lease Entitlements and Related Rights relating thereto;
(4) this Agreement, each Concurrent Lease Request and all other documents
delivered by the Lessee hereunder have been duly executed and
delivered by the Lessee or on its behalf;
(5) this Agreement, each Concurrent Lease Request and the other documents
to be delivered hereunder constitute legal, valid and binding
obligations of the Lessee enforceable against it in accordance with
their terms (assuming due and valid authorization, execution and
delivery thereof by the other parties thereto) subject to applicable
bankruptcy, insolvency, reorganization, winding-up, moratorium,
arrangement or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a
proceeding in equity or at law);
(6) the consolidated balance sheet of the Lessor as at September 30, 1998
and the related statements of income and retained earnings for the
fiscal year then ended, copies of which have been furnished to the
Concurrent Lessee together with a certificate of a senior financial
officer of the Performance Guarantor certifying the accuracy of such
statements, fairly present in all material respects consolidated
financial position of the Lessor as at such date and the consolidated
results of the operations of the Lessor for the period ended on such
date, all in accordance with generally accepted accounting principles;
and since September 30, 1998 there has been no material adverse change
in any such financial position or operations;
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(7) the consolidated balance sheet of the Lessor as at March 31, 1999 and
the related statements of income and retained earnings for the fiscal
quarter then ended, copies of which have been furnished to the
Concurrent Lessee together with a certificate of a senior financial
officer of the Performance Guarantor certifying the accuracy of such
statements, fairly present in all material respects the financial
position of the Lessor as at such date and the results of the
operations of the Lessor for the period ended on such date, all in
accordance with generally accepted accounting principles; and since
March 31, 1999 there has been no material adverse change in such
financial position or operations;
(8) all filings, recordings, registrations or other actions required under
this Agreement have been made or taken as referred to in Article 4 in
each jurisdiction necessary or appropriate to validate, preserve,
perfect or protect the interests of the Concurrent Lessee under the
Concurrent Leases and the Equipment subject to the Concurrent Leases
and the ownership interests of the Concurrent Lessee in, and the
rights of the Concurrent Lessee to collect, any and all of the Lease
Entitlements, including the right to enforce the Related Rights with
respect to the Designated Eligible Leases and the Equipment;
(9) there is no fact known to the Lessor (other than matters of a general
economic nature) that materially adversely affects (i) the business,
operations, property, assets or condition (financial or otherwise) of
the Lessor or its Subsidiaries, taken as a whole, or (ii) the Lessor,
the Designated Eligible Leases, the Equipment or the Lease
Entitlements, that has not been disclosed herein or in other
documents, certificates and written statements furnished to the
Concurrent Lessee or its advisors, the Credit Enhancer or the Rating
Agency for use in connection with the evaluation and entering into of
the transactions contemplated hereby;
(10) as of the date hereof, the chief executive office and the chief place
of business of the Lessor is located at #810, 715-5th Avenue S.W.,
Calgary, Alberta T2P 2X6 and the books, records, documents and
Designated Eligible Leases in which the Lessor has any interest and
other printed information (excluding policies or certificates of
insurance) evidencing or relating to the Designated Eligible Leases,
the Lessees, the Equipment and the Lease Entitlements are located at
the offices of the Lessor shown in Schedule B;
(11) there are no actions, suits or proceedings, of which the Lessor has
not advised the Concurrent Lessee in writing, against or affecting the
Lessor or any of its Affiliates or any of their respective property
before any court, governmental body or arbitrator (nor to its
knowledge, any such actions pending or threatened) which may
materially adversely affect the financial condition of the Lessor or
its ability to perform its obligations hereunder or under the other
documents delivered by it hereunder and the Lessor is not in default
with respect to any order of any court, governmental body or
-41-
arbitrator which materially adversely affects the Lessor's ability to
perform its obligations hereunder or thereunder;
(12) no event of default has occurred and is outstanding under any
agreement or instrument referred to in section 5.2(b)(iii) which would
entitle the creditor, secured party or lessor thereunder, without the
requirement of having to give any further notice or that a further
specified period of time shall have elapsed, to accelerate the payment
by the Lessor of a material amount;
(13) all taxes, including, without limitation, sales, social services and
goods and services taxes relating to each Designated Eligible Lease
are the obligation of the Lessee thereunder;
(14) each Designated Eligible Lease and the Equipment leased thereunder is
and will at all times be owned by the Lessor free and clear of any
Adverse Claims and no effective financing statements or other
instrument similar in effect covering any Designated Eligible Lease,
the Equipment leased thereunder or the Lease Entitlements and Related
Rights relating thereto is or will at any time be on file in any
recording office except such as may be filed in favour of the
Concurrent Lessee in accordance with this Agreement, or in respect of
which the secured party thereunder has acknowledged that it claims no
security interest or subordinates its security interest in the
Designated Eligible Leases, the Equipment leased thereunder and the
Lease Entitlements and Related Rights relating thereto.
(15) each Lease set out on a Concurrent Lease Request is an Eligible Lease,
and has been registered or recorded, or a financing statement in
respect thereof has been registered, in accordance with the
requirements of the Credit and Collections Policy;
(16) no Portfolio Report (if prepared by the Lessor, or to the extent that
information contained therein is supplied by the Lessor), Concurrent
Lease Request, information, exhibit, financial statement, document,
book, record or report furnished or to be furnished by the Lessor to
the Concurrent Lessee, the Credit Enhancer or the Rating Agency in
connection with this Agreement is or will be inaccurate in any
material respect as of the date it is or will be dated or (except as
otherwise disclosed to the receiving party at such time) as of the
date so furnished, or contains or will contain any material
misstatement of fact or omits or will omit to state a material fact or
any fact necessary to make the statements contained therein not
materially misleading;
(17) the Lessor is not a bankrupt, an insolvent person, in insolvent
circumstances or on the eve of or in contemplation of insolvency or
unable to meet its engagements or obligations, as applicable, within
the meaning of the Bankruptcy and Insolvency Act (Canada), the
Companies' Creditors Arrangement Act (Canada), the Assignment and
Preferences Act (Ontario) and the Fraudulent Conveyances Act (Ontario)
(the "Insolvency Statutes");
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(18) the Lessor will not become an insolvent person or be put in insolvent
circumstances or become unable to meet its engagements or obligations,
as applicable, within the meaning of any of the Insolvency Statutes by
entering into, or immediately after completion of the transactions
contemplated by, this Agreement;
(19) the Lessor has as of the date hereof fully complied with all of its
obligations under each Designated Eligible Lease and all other
agreements, including relevant maintenance contracts, entered into by
the Lessor in connection therewith;
(20) information technology issues arising or which may arise from matters
related to the year 2000 and related risks will not have a material
adverse effect on the business or operations of the Lessor or on the
collectibility or enforceability of the Lease Entitlements or the
ability of the Lessor to collect Lease Entitlements or the ability of
the Lessor, IKON Capital or the Performance Guarantor to perform its
obligations hereunder;
(21) the Lessor is not a non-resident as defined under the Income Tax Act
(Canada);
(22) the Lessor has treated and will continue to treat the Designated
Eligible Leases for income tax purposes as leases, and not sales, and
has prepared and filed and will continue to prepare and file its tax
returns under the Income Tax Act (Canada) and any applicable
corresponding provincial legislation with respect to income tax in a
manner consistent with the foregoing treatment;
(23) the Lessor has delivered to the Concurrent Lessee true copies of all
forms of lease agreements now used by the Lessor in connection with
the entering into of a lease for Equipment;
(24) no event has occurred and is continuing and no condition exists which
constitutes a Trigger Event or a Termination Event:
(25) transactions contemplated herein do not require compliance with the
Bulk Sales Act (Ontario) or any similar legislation of any other
jurisdiction;
(26) the microfiche or other records and materials containing particulars
of the Lessees, the Equipment and the Lease Entitlements made
available to the Concurrent Lessee from time to time will be true and
correct in all material respects; and
(27) the computer records of the Lessor which contain particulars of the
Designated Eligible Leases will contain notations, marks or other
designations sufficient to identify that the Equipment subject to such
leases have been leased by the Lessor to the Concurrent Lessee
hereunder.
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5.3 Representations and Warranties of the Performance Guarantor and IKON
--------------------------------------------------------------------
Capital
-------
Each of the Performance Guarantor and IKON Capital represents and
warrants to the Concurrent Lessee, and acknowledges that the Concurrent Lessee
is relying upon such representations and warranties in consummating the
transactions contemplated hereby and in entering into each Concurrent Lease
hereunder, that, as of the Closing Date and as of each Lease Date:
(1) each of the Performance Guarantor and IKON Capital is a corporation
validly existing under the laws of its jurisdiction of incorporation;
(2) the execution, delivery and performance by each of the Performance
Guarantor and IKON Capital of this Agreement and the other documents
to be delivered by each of them hereunder are within its corporate
powers, have been duly authorized by all necessary corporate action
and do not contravene:
(1) its charter documents or by-laws;
(2) any law, rule or regulation applicable to it;
(3) any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note or other agreement or instrument
binding upon it or affecting its property which is of a material
nature; or
(4) any order, writ, judgment, award, injunction or decree binding
on it or affecting its property which is of a material nature;
(3) no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by each of
the Performance Guarantor and IKON Capital of this Agreement and any
other documents delivered by it hereunder;
(4) this Agreement and all other documents delivered by the Performance
Guarantor and IKON Capital hereunder have been duly executed and
delivered by them or on their behalf;
(5) this Agreement constitutes a legal, valid and binding obligation of
each of the Performance Guarantor and IKON Capital enforceable
against it in accordance with its terms (assuming due and valid
authorization, execution and delivery thereof by the other parties
thereto) subject to applicable bankruptcy, reorganization,
insolvency, reorganization, winding-up, moratorium, arrangement or
similar laws affecting creditors' rights generally and subject, as
to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in
equity or at law);
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(6) as of the date hereof, the chief executive office and the chief
place of business of the Performance Guarantor is located at 70
Valley Stream Parkway, Malvern, Pennsylvania, U.S.A. and the chief
executive office and the chief place of business of IKON Capital is
located at 16007-116 Avenue, Edmonton, Alberta and the books,
records, documents and Designated Eligible Leases in which IKON
Capital has any interest and other printed information (excluding
policies or certificates of insurance) evidencing or relating to the
Designated Eligible Leases, the Lessees, the Equipment and the Lease
Entitlements are located at the offices of IKON Capital shown in
Schedule B;
(7) no written information furnished to the Concurrent Lessee or its
advisors, the Credit Enhancer or the Rating Agency by or on behalf
of the Performance Guarantor or IKON Capital (or known to the
Performance Guarantor or IKON Capital in the case of any document
not furnished by or on behalf of them) in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state any material fact
that is required to be stated or that is necessary to be stated to
make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading;
(8) there are no actions, suits or proceedings of which either of the
Performance Guarantor or IKON Capital has not advised the Concurrent
Lessee in writing against or affecting it or any of its property
before any court, governmental body or arbitrator (nor to its
knowledge, any such actions pending or threatened) which may
materially adversely affect the financial condition of either of the
Performance Guarantor or IKON Capital, or either of their abilities
to perform their respective obligations hereunder or under the other
documents delivered by either of them hereunder and neither of the
Performance Guarantor nor IKON Capital is in default with respect to
any order of any court, governmental body or arbitrator which
materially adversely affects its ability to perform its obligations
hereunder or thereunder;
(9) the Performance Guarantor is not insolvent within the meaning of the
Bankruptcy Code of the United States, in insolvent circumstances or
on the eve of or in contemplation of insolvency or unable to meet
its engagements or obligation and IKON Capital is not a bankrupt, an
insolvent person, in insolvent circumstances or on the eve of or in
contemplation of insolvency or unable to meet its engagements or
obligations, as applicable, within the meaning of any of the
Insolvency Statutes;
(10) neither the Performance Guarantor nor IKON Capital, will become
insolvent or be put in insolvent circumstances or become unable to
meet its engagements or obligations, as applicable, within, in the
case of the Performance Guarantor, the meaning of the Bankruptcy
Code of the United States, and, in the case of IKON Capital, the
meaning of any of the Insolvency Statutes, by entering into, or
immediately after completion of the transactions contemplated by,
this Agreement;
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(11) the microfiche or other records and materials containing particulars
of the Designated Eligible Lessees, the Equipment and the Lease
Entitlements made available to the Concurrent Lessee from time to
time will be true and correct in all material respects;
(12) the Performance Guarantor, either directly or indirectly, through a
holding company is the registered and beneficial owner of all of the
issued and outstanding shares in the capital of the Lessor and IKON
Capital;
(13) no material default has occurred and is outstanding under any
agreement or instrument referred to in section 5.3(b)(iii) which
default would materially and adversely affect either the Performance
Guarantor's or IKON Capital's ability to perform its respective
obligations hereunder or under the other documents delivered by it
hereunder;
(14) in the case of the Performance Guarantor, its long term debt is
rated by Moody's Investor Services, Inc. at Baa 3 or better and by
Standard & Poor's Rating Group at BBB- or better; and
(15) in the case of the Performance Guarantor, no Concurrent Lease
Request or financial statement furnished or to be furnished by the
Lessor to the Concurrent Lessee is or will be inaccurate in any
material respect as of the date it is or will be dated or (except as
otherwise disclosed to the Concurrent Lessee at such time) as of the
date so furnished, or contains or will contain any material
misstatement of fact or omits or will omit to state a material fact
or any fact necessary to make the statements contained therein not
materially misleading.
5.4 Eligibility Criteria Regarding the Leases and the Equipment
-----------------------------------------------------------
Each Designated Eligible Lease and the related Equipment and Lease
Entitlements, shall satisfy the following eligibility criteria as at the
relevant Cut-Off Date and Lease Date (such lease being referred to herein as an
"Eligible Lease"):
(1) (i) each Designated Eligible Lease was entered into in one of the
provinces or territories of Canada by the Lessor, or by a
Predecessor, for the lease and licence of the Equipment contemplated
thereby in the ordinary course of the Lessor's business and complies
in all material respects with the Credit and Collection Policies;
each such Designated Eligible Lease was fully and properly executed
by the parties thereto and is in a form substantially similar to one
of the Standard Form Leases; (ii) the rights of the Lessor under
each Designated Eligible Lease are secured by a valid, subsisting
and enforceable first priority Adverse Claim in favour of the Lessor
in the related Equipment, which Adverse Claim has been perfected or
otherwise protected by all necessary or appropriate filings,
registrations, recordings or other actions in each jurisdiction
necessary to ensure the priority of such Adverse Claim; (iii) each
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Designated Eligible Lease contains customary and enforceable
provisions such that the rights and remedies of the Lessor and its
assigns shall be adequate for realization against the Equipment,
subject to the limitations on enforcement referred to in paragraph (e)
below; (iv) the Lessee under each Designated Eligible Lease is located
in a Province or Territory of Canada and no such Lessee is the
government of Canada or of a Territory of Canada; (v) each Designated
Eligible Lease is denominated and payable in Canadian dollars and
provides for monthly, quarterly, semi-annual or annual payments with a
fixed rate of interest and the Scheduled Payments fully amortize the
Financed Balance of such Designated Eligible Lease at the relevant
Cut-Off Date (other than any obligation to make a payment with respect
to the Residual Amount) at the CIRR thereof over the remaining Term of
such Designated Eligible Lease but do not amortize or otherwise
provide for the payment of all or any part of the Residual Amount; and
(vi) the Term of each Designated Eligible Lease does not exceed 84
months following the relevant Cut-Off Date and the aggregate Financed
Balances of all Designated Eligible Leases, the Terms of which are
greater than 66 months, do not exceed 15% of the Aggregate Financed
Balance;
(2) none of the Equipment has been sold, transferred, assigned, encumbered
or pledged by the Lessor to any Person other than the Lessees, and the
Lessor has good and marketable title to (i) each Designated Eligible
Lease and the Equipment (subject to the rights of the relevant
Lessees) forming the subject matter of each Designated Eligible Lease,
(ii) the related Lease Entitlements and (iii) all chattel paper
relating thereto, free and clear of all Adverse Claims and rights of
others, other than those created pursuant to this Agreement, and
immediately upon the transfer thereof, the Concurrent Lessee shall
have good and marketable title to the Lease Entitlements, free and
clear of all Adverse Claims and rights of others;
(3) the information set forth in each Concurrent Lease Request shall be
true and correct in all material respects as of the close of business
on the relevant Lease Date;
(4) each Designated Eligible Lease, and the lease to the Lessee thereunder
of the related Equipment, shall have complied at the time it was
originated or made, and at the relevant Cut-Off Date and Lease Date
shall comply, in all material respects, with all requirements of
applicable law which would affect the enforceability of such
Designated Eligible Lease, including any applicable consumer
protection legislation and interest rate disclosure legislation;
(5) each Designated Eligible Lease represents the legal, valid and binding
payment obligation in writing of the Lessee, enforceable by the Lessor
and its assigns against such Lessee in accordance with its terms
(subject to applicable law, including the limitations on enforcement
contained in the Bankruptcy and Insolvency Act (Canada)) and each such
Designated Eligible Lease constitutes the Lessee's obligation to pay
to the Lessor and its assigns the amounts and at the time or times
specified in such Designated Eligible Lease;
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(6) the Lease Entitlements are fully assignable by the Lessor without the
consent of the Lessee, including without making any filing or
recording or obtaining any consent under any federal or provincial
legislation;
(7) there is no federal, provincial or local law or ordinance under which
any of the Lease Entitlements shall be subject to any Taxes, nor will
any payment or remittance to be made by or on behalf of the Lessor on
its own behalf or on behalf of any Lessee under this Agreement be
subject to Taxes; provided, however, that such statement shall not
extend to any Taxes payable on the income of the Concurrent Lessee,
Taxes payable by virtue of the non-resident status of the Concurrent
Lessee or Taxes payable in respect of GST or PST payable by the
Lessees;
(8) the Lessor has complied in all material respects with all of its
obligations under each Designated Eligible Lease and under all other
agreements, instruments and documents entered into by the Lessor in
connection therewith, including all maintenance and service contracts,
if any;
(9) the Lessor, or a Predecessor, approved the lease of the relevant
Equipment to each of the Lessees and the Lessor (or IKON Capital) has
administered all of the Designated Eligible Leases, the Equipment and
the Lease Entitlements, in each case, in accordance with the Credit
and Collection Policies;
(10) (i) no Lessee is an Affiliate of the Lessor, (ii) no Lessee under any
Designated Eligible Lease is a Lessee under any other Designated
Eligible Lease that is a Delinquent Lease, and (iii) no Lessee has, at
any time prior to the Lease Date, renegotiated the terms of payment of
a Designated Eligible Lease in a manner that would render incorrect
the information set out in the relevant Concurrent Lease Request;
(11) all of the Equipment complies with the specifications, warranties and
representations made with respect thereto in the relevant Designated
Eligible Lease;
(12) the Designated Eligible Leases are all triple net leases requiring the
Lessees thereunder to pay all taxes and maintenance associated with
the Equipment; all Scheduled Payments under each Designated Eligible
Lease are absolute and unconditional obligations of the Lessee or
Lessees under such Designated Eligible Lease regardless of any
defence, set-off, counterclaim or abatement for any reason; no
Designated Eligible Lease imposes any delivery, repair, maintenance,
warranty or other affirmative obligations upon the Lessor thereunder;
and no Designated Eligible Lease entitles the Lessee to terminate or
cancel the Designated Eligible Lease except upon payment of an amount
at least equal to the Financed Balance of such Designated Eligible
Lease, determined at the time of payment;
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(13) there are no agreements, representations, warranties, conditions or
covenants, whether oral, written, express or implied, on the part of
the Lessor affecting or relating to any Equipment forming the subject
matter of any Designated Eligible Lease save as expressly set out
herein and in such Designated Eligible Lease;
(14) there has been no prepayment whatsoever under any Designated Eligible
Lease that would render incorrect the information set out in the
relevant Concurrent Lease Request; none of the Designated Eligible
Leases has been rewritten or extended owing to the delinquency of or
credit issues associated with the Lessee; the Equipment forming the
subject matter of each Designated Eligible Lease has been delivered
to and accepted by the Lessee under such Designated Eligible Lease;
the Lessor, as of the Lease Date for a Designated Eligible Lease, has
no knowledge that any of the related Equipment is defective or that
any related manufacturer's warranty with respect to any Equipment is
not in good standing or is illegal, invalid or unenforceable and the
result of such illegality, invalidity or unenforceability is or may
result in the value of the relevant Equipment being less than the
original Financed Balance of the relevant Designated Eligible Lease
as at the lease date of the relevant Designated Eligible Lease;
(15) no Designated Eligible Lease has been satisfied or rescinded, no
rights subordinated, nor has any Equipment been released from the
Adverse Claim of the Related Rights under a Designated Eligible Lease
in whole or in part;
(16) the Lessor has not granted any consents, approvals, extensions or
waivers under or in respect of any Designated Eligible Lease;
(17) no right of rescission, set-off, counterclaim or defence has been
asserted or threatened with respect to any Designated Eligible Lease,
and no Person has contested the validity of any such Designated
Eligible Lease; no Lessee has any right of rescission, set-off,
counterclaim or defence under any Designated Eligible Lease;
(18) no Adverse Claims or claims have been filed for work, labour or
materials relating to Equipment that would rank prior to, or equal to
or pari passu with, the Adverse Claim granted by the Lessee in its
interests in the Equipment in favour of the Lessor;
(19) subject to the other provisions of this section 5.4, no default,
breach, violation or event permitting acceleration under the terms of
any Designated Eligible Lease has occurred, and no continuing
condition that with notice or lapse of time would constitute a
default, breach, violation or event permitting acceleration under the
terms of any Designated Eligible Lease has arisen;
(20) no Designated Eligible Lease is subject to the laws of any
jurisdiction under which the sale, transfer or assignment of such
Designated Eligible Lease or of any rights
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and benefits thereunder by the Lessor to the Concurrent Lessee under
this Agreement would be unlawful, void or voidable;
(21) all Lessees are required to remit all monies required to be paid in
respect of the Designated Eligible Leases to one of the locations
specified in Schedule B or to one of the bank accounts listed in
Schedule B, as such Schedule B may be amended from time to time by
the Lessor upon the Lessor delivering a revised Schedule B to the
Concurrent Lessee and the Securitization Agent;
(22) the rate shown on the microfiche or other records provided to the
Concurrent Lessee with respect to each Designated Eligible Lease is
the same as the CIRR of such Designated Eligible Lease on its Cut-Off
Date;
(23) no Designated Eligible Lease was a Delinquent Lease, a 90 Day Past
Due Lease or a Defaulted Lease as of the relevant Cut-Off Date;
(24) as of each Lease Date, no Lessee was noted in the Lessor's, IKON
Capital's or the Performance Guarantor's records as being the subject
of a bankruptcy proceeding;
(25) each Designated Eligible Lease constitutes chattel paper, and the
Lease Entitlements constitute one or more of chattel paper, money,
instruments or intangibles;
(26) after giving effect to the Concurrent Lease of all Equipment
requested pursuant to a Concurrent Lease Request, the aggregate
Financed Balances of all Designated Eligible Leases owing by such
Lessee and by any Affiliate thereof will not exceed the Concentration
Limit in respect of such Lessee;
(27) each Designated Eligible Lease provides that the Lessee is required
to maintain, at the Lessee's expense, insurance covering the loss of
or damage to the Equipment with the Lessor as a named insured or loss
payee;
(28) the Designated Eligible Leases subject to each Concurrent Lease
Request, taken as a whole, shall have a weighted average CIRR equal
to or greater than the Prime Rate plus 2%;
(29) the initial Rent payment under each Designated Eligible Lease is due
not later than during the Reporting Period in which the Lease Date in
respect of such Designated Eligible Lease occurs or the next
following Reporting Period;
(30) the original cost of any individual item of tangible personal
property forming part of the Equipment subject to a Designated
Eligible Lease shall not exceed $1 million;
(31) after giving effect to the Concurrent Lease of all Equipment subject
to a Concurrent Lease Request, the aggregate Financed Balances of all
Designated Eligible Leases
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requiring payments (i) other than on a monthly basis shall not exceed
40% of the Aggregate Financed Balance and (ii) on an annual basis
shall not exceed 5% of the Aggregate Financed Balance.
5.5 Survival
--------
The representations, warranties and covenants of the Concurrent Lessee,
the Lessor, IKON Capital and the Performance Guarantor contained in this
Agreement shall survive the consummation of the transactions contemplated by
this Agreement and, notwithstanding the occurrence of such events, shall
continue in full force and effect until the earlier of (a) such time as all
amounts payable to, and obligations owed to, the Trust hereunder have been paid
or otherwise satisfied and (b) the date which is for a period of two years from
the Final Termination Date.
ARTICLE 6
ADMINISTRATION
6.1 Designation of the Collector
----------------------------
By executing and delivering this Agreement, the Lessor is designated
as the Collector until a Collector Transfer, and hereby agrees to perform the
duties and obligations of the Collector pursuant to the terms hereof and at no
cost to the Concurrent Lessee. Subject to the provisions of this Agreement, the
Collector shall administer and service, and collect amounts owing under, the
Designated Eligible Leases as agent for the Concurrent Lessee until the Final
Termination Date. The Collector may, with the Concurrent Lessee's prior written
consent, subcontract with any other Person (a "Sub-Collector") for the
administration and collection of the Designated Eligible Leases; provided,
however, that no such consent shall be required in connection with the
enforcement of any particular Designated Eligible Lease that does not involve
any such subcontracting with respect to Designated Eligible Leases generally;
and provided further that the Collector shall remain liable for the performance
of the duties and obligations so subcontracted, and the payment of all
associated costs, and all other duties and obligations of the Collector pursuant
to the terms of this Agreement. Subject to the foregoing, so long as the Lessor
is the Collector, IKON Capital or a third party, with the approval of the
Concurrent Lessee, may be designated as a Sub-Collector. In that regard, IKON
Capital or any permitted successor is hereby appointed a Sub-Collector and
agrees to continue to perform the duties and obligations it has been delegated
by the Collector on or prior to the date hereof, in accordance with the
provisions of this Agreement, and shall not resign from such position, unless
and until (i) the Lessor agrees to perform such duties and obligations itself,
or (ii) the Concurrent Lessee designates a new Collector in accordance with this
Article 6 and specifically determines to release IKON Capital or any permitted
successor from its designation as Sub-Collector, at which time, the Concurrent
Lessee may or may not appoint a new Sub-Collector.
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6.2 Standard of Care
----------------
The Collector, as agent for the Concurrent Lessee (to the extent
provided herein), shall perform its duties hereunder with reasonable care and
diligence, using that degree of skill and attention that the Collector exercises
in managing, servicing, administering, collecting on and performing similar
functions relating to comparable leases and related entitlements that it
services for itself or other Persons.
6.3 Authorization of Collector
--------------------------
Without limiting the generality of the authority granted by the
designation of any Person as Collector, and subject to the other provisions of
this Agreement, the Collector is hereby authorized and empowered by the
Concurrent Lessee to take any and all reasonable steps in its name and on its
behalf necessary or desirable, and not inconsistent with the concurrent lease of
the Equipment by the Concurrent Lessee, except that the Collector shall not be
required to notify any Person of the Concurrent Lessee's interest therein until
the occurrence of a Trigger Event or Termination Event, to collect all amounts
due under any and all Designated Eligible Leases, including to execute and
deliver, on behalf of the Concurrent Lessee and any subsequent assignees, any
and all instruments of satisfaction or cancellation, or partial or full release
or discharge, and all other comparable instruments, with respect to the
Equipment, the Designated Eligible Leases or the Lease Entitlements and, after
delinquency of any Designated Eligible Lease, and to the extent permitted under
and in compliance with applicable law and regulations, to commence proceedings
with respect to enforcing payment of such Designated Eligible Lease and the
Lease Entitlements, and adjusting, settling or compromising the account or
payment thereof, to the same extent as the Lessor could have done if it had
continued to directly lease the Equipment. The Concurrent Lessee shall furnish
the Collector with any powers of attorney and other documents that are within
the ability of the Concurrent Lessee to furnish and which are reasonably
necessary or appropriate to enable the Collector to carry out its servicing and
administrative duties hereunder as agent of the Concurrent Lessee.
6.4 Enforcement of Leases
---------------------
The Collector is authorized to enforce and protect the Concurrent
Lessee's rights and interests in and under the Designated Eligible Leases and
the related Lease Entitlements and the Concurrent Lessee's right to receive
payment in respect thereof, and the Collector may commence or defend proceedings
in the name of the Concurrent Lessee (or any agent thereof, including the
Collector) for the purpose of enforcing or protecting any rights under any
Designated Eligible Lease or the related Lease Entitlements or against any
Lessee personally. In no event shall the Collector be entitled to take any
action that would make the Concurrent Lessee a party to any litigation without
the Concurrent Lessee's express prior written consent except only to the extent
necessarily incidental to the enforcement by the Collector of any Designated
Eligible Lease or the related Lease Entitlements.
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6.5 Assignment for Purpose of Enforcement
-------------------------------------
If the Collector shall commence a legal proceeding to enforce any
rights under any Designated Eligible Lease or the related Lease Entitlements or
against a Lessee personally in accordance with this Agreement, the Concurrent
Lessee shall thereupon be deemed to have automatically assigned such Designated
Eligible Lease or Lease Entitlements to the Collector, solely for the purpose of
and only to the extent necessarily incidental to the enforcement by the
Collector of such rights. The Collector shall hold such assigned Designated
Eligible Lease or Lease Entitlements in trust for the Concurrent Lessee and the
same shall be deemed to have been automatically re-assigned to the Concurrent
Lessee when the assignment to the Collector ceases to be necessary for the
enforcement by the Collector of such rights. If in any enforcement suit or
legal proceeding it shall be held that the Collector may not enforce a right
under a Designated Eligible Lease or the related Lease Entitlements on the
grounds that it shall not be a real party in interest or a holder entitled to
enforce rights in respect of the Designated Eligible Lease or the related Lease
Entitlements, the Concurrent Lessee shall, at the Collector's expense and
direction, take steps as are necessary to enforce such Designated Eligible Lease
or Lease Entitlements.
6.6 Deposit of Collections
----------------------
During such time prior to a Collector Transfer as (a) the Collector
has a long-term unsecured debt rating of at least BBB (low) by the Rating Agency
or an equivalent rating by a recognized Canadian or United States rating agency,
(b) the obligation of the Collector to deposit Collections received by it to the
Collection Account are fully guaranteed by an entity having a long-term
unsecured debt rating of at least BBB (low) by the Rating Agency or an
equivalent rating by a recognized Canadian or United States rating agency, or
(c) the Securitization Agent, the Rating Agency or the Credit Enhancer have not
notified the Collector to the contrary, the Collector may use for its own
benefit all Collections received with respect to Designated Eligible Leases
during a Reporting Period until the occurrence of the Remittance Date related to
such Reporting Period during the immediately following Reporting Period, at
which time the Collector shall deposit all such Collections into the Collection
Account. At any other time, the Collector shall deposit all Collections to the
Collection Account on the Business Day next following the day on which such
Collections are received. All Collections deposited to the Collection Account
shall be held for the benefit of the Concurrent Lessee and shall be withdrawn
from the Collection Account only in accordance with the terms of this Agreement.
6.7 Collector Amounts
-----------------
On each Reporting Date, the Collector shall provide the Concurrent
Lessee with an Officer's Certificate specifying all amounts payable pursuant to
section 2.5 of this Agreement.
6.8 Description of Services
-----------------------
The Collector shall, unless the Concurrent Lessee directs otherwise
with the approval of the Credit Enhancer and the Rating Agency, take or cause to
be taken all such reasonable actions
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as may be necessary or advisable from time to time to administer and service
each Designated Eligible Lease and the related Lease Entitlements in accordance
with this Agreement and applicable law. Without limiting the generality of the
foregoing (but subject to the exceptions expressed in the preceding sentence),
the Collector shall, in accordance with the Credit and Collection Policies, with
respect to each Designated Eligible Lease:
(1) take or cause to be taken all such actions as may be necessary or
desirable from time to time to collect the Designated Eligible Lease
in accordance with the terms and provisions thereof;
(2) keep an account with respect to the Designated Eligible Lease and post
to it all payments received under or in respect of such Designated
Eligible Lease;
(3) deposit all Collections in respect of the Designated Eligible Lease to
the Collection Account as required by section 6.6, regardless of any
defence, set-off right or counterclaim;
(4) give timely notice to the Lessee of the Designated Eligible Lease of
any payment or other default thereunder;
(5) record the Designated Eligible Lease as being delinquent or defaulted;
(6) investigate all delinquencies and defaults under the Designated
Eligible Lease;
(7) respond to all reasonable enquiries of the Lessee of the Designated
Eligible Lease or other obligors under the Related Rights;
(8) take such steps as are necessary to maintain the perfection and
priority, as the case may be, of the Adverse Claims, if any, created
pursuant to the Designated Eligible Lease and the Related Rights and,
subject to section 6.8(m) and (n) of this Agreement, to refrain from
releasing any such Adverse Claim in whole or in part except to the
extent that the Collector would have done so in a similar situation
with respect to lease agreements administered by it on its own behalf;
(9) subject to section 6.16, make all payments to Governmental Authorities
and others where a statutory lien or deemed trust having priority over
the Concurrent Lessee's interest in the Equipment relating to the
Designated Eligible Lease has arisen, provided that nothing herein
shall preclude the Collector from contesting any claim in the ordinary
course of business and in good faith, and remit all amounts of Taxes
owing in respect of such Equipment;
(10) determine the advisability of taking action and instituting and
carrying out legal proceedings with respect to the Designated Eligible
Lease and the Lease Entitlements pertaining thereto in case of default
by the Lessee under such Designated Eligible
-54-
Lease and take such action and institute and carry out such legal
proceedings determined by it to be advisable;
(11) maintain Records with respect to each Designated Eligible Lease and
the Lease Entitlements pertaining thereto and grant representatives of
the Concurrent Lessee reasonable access to examine and make copies of
the Records and a reasonable opportunity to discuss matters relating
to the administration and servicing of each Designated Eligible Lease
and the Lease Entitlements pertaining thereto with personnel of the
Collector involved in such administration and servicing during
business hours, including the opportunity to see and review
information systems and software in operation;
(12) hold as trust property for and on behalf of the Concurrent Lessee,
free of any Adverse Claim (other than the leasehold interest or
Adverse Claims created pursuant to this Agreement), all Records with
respect to the Designated Eligible Leases at any one or more of the
offices identified in Schedule B until the Final Termination Date;
(13) execute and deliver all such assignments, releases and discharges of
the Designated Eligible Leases as are required by the terms thereof
and upon receipt of all amounts due thereunder; and
(14) settle, compromise and otherwise deal with any claims under the
Designated Eligible Leases or the Related Rights if necessary,
advisable or otherwise permitted in accordance with the Credit and
Collection Policies.
6.9 Additional Covenants of the Collector
-------------------------------------
From the date of this Agreement until the Final Termination Date, the
Collector covenants and agrees that it shall, unless the Concurrent Lessee, with
the approval of each of the Credit Enhancer and the Rating Agency, shall
otherwise consent in writing:
(1) comply with all laws, rules, regulations and orders applicable to the
Collector and its business and properties and the Designated Eligible
Leases, except where the failure to do so would not materially
adversely affect the Concurrent Lessee's interests hereunder, or the
concurrent Lessee's interests in or the enforceability of the
Designated Eligible Leases (including the collectibility of the Lease
Entitlements) or the ability of the Collector to perform its
obligations hereunder or thereunder;
(2) preserve and maintain its corporate existence, rights, franchises and
privileges in its jurisdiction of incorporation and qualify and remain
qualified as an extra-provincial or other out-of-jurisdiction
corporation in each jurisdiction in which the failure to do so would
materially adversely affect the interests of the Concurrent Lessee
hereunder, or the Concurrent Lessee's interests in or the
enforceability of the
-55-
Designated Eligible Leases (including the collectibility of the Lease
Entitlements) or the ability of the Collector to perform its
obligations thereunder or hereunder;
(3) notify the Concurrent Lessee at least ten Business Days prior to
changing its corporate name;
(4) notify the Concurrent Lessee at least 30 Business Days prior to
changing its chief place of business or chief executive office;
(5) comply in all respects with the Credit and Collection Policies in
regard to each Designated Eligible Lease and the Lease Entitlements
and notify the Concurrent Lessee, on each Settlement Date prior to the
occurrence of a Trigger Event or Termination Event, or promptly,
following the occurrence of a Trigger Event or Termination Event, of
any amendments to a Designated Eligible Lease made in accordance with
the Credit and Collection Policies which would result in the
information set out in any Concurrent Lease Request no longer being
accurate;
(6) at its own expense, employ and provide general administrative,
supervisory and accounting staff and general overhead as may from time
to time be reasonably required to carry out its obligations hereunder;
(7) pay from its own funds all general administrative expenses and other
costs incurred by the Collector in carrying out its obligations
hereunder and all fees and expenses of any administrator appointed or
subcontractor retained by it;
(8) maintain, or caused to be maintained, true and correct at all times
the representations and warranties made in sections 5.2(a) to (e),
inclusive, of this Agreement as if the references to "it" and "the
Lessor" therein (as the context so permits) were read as "the
Collector";
(9) cause its employees to perform their employment responsibilities in
collecting and administering the Designated Eligible Leases, the
Equipment and the Lease Entitlements in the same manner as if the
Equipment were directly leased to the Lessees by the Collector, except
(i) to the extent necessary or desirable to accommodate the exercise
by the Concurrent Lessee of its rights under this Agreement, or (ii)
as otherwise required hereby or thereby;
(10) maintain and implement prudent and reasonable administrative and
operating procedures (including an ability to recreate the Records in
the event of the destruction of the originals of such Records) and
keep and maintain all Records and other information reasonably
necessary or advisable for the enforcement of all Designated Eligible
Leases and the Lease Entitlements and Related Rights related thereto
(including Records adequate to permit the daily identification of all
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Collections under and adjustments to each Designated Eligible
Lease the Lease Entitlements);
(11) (i) furnish to the Concurrent Lessee promptly, from time to time,
such documents, Records, information or reports with respect to
the Designated Eligible Leases, the Equipment subject thereto
and the Lease Entitlements and the Related Rights relating
thereto or the conditions or operations, financial or
otherwise, of the Collector as may be in existence in written
form or, if available in databases maintained by the Collector,
may be produced with existing software and which the Concurrent
Lessee may from time to time reasonably request; and
(ii) at any time and from time to time during regular business
hours, permit the Concurrent Lessee, its agents or
representatives upon two Business Days' prior notice to (i)
examine and make copies of all Records relating to the
Designated Eligible Leases, the Equipment subject thereto and
the Lease Entitlements and the Related Rights relating thereto
in the possession (or under the control) of the Lessor, and
(ii) visit the offices and properties of the Lessor for the
purpose of examining such Records and discussing matters
relating to the Designated Eligible Leases, the Equipment
subject thereto and the Lease Entitlements and the Related
Rights relating thereto and the Lessor's performance under the
Designated Eligible Leases or hereunder with any of the
Lessor's officers or employees having knowledge of such
matters;
(12) to the extent the Records consist in whole or in part of computer
programs which are licensed by the Collector, the Collector will,
forthwith upon the occurrence of a Collector Termination Event, use
its best efforts to arrange for the licence or sublicense of such
programs to the Concurrent Lessee for the limited purpose of
permitting the Concurrent Lessee or any Replacement Collector to
administer and collect the Designated Eligible Leases and to enforce
the rights acquired by the Concurrent Lessee in respect of the
Related Rights;
(13) perform the covenants described in sections 8.1(g), (j) and 8.2(f) of
this Agreement as if the references to "it" and "the Lessor" therein
(as the context so permits) were read as "the Collector";
(14) other than by providing actual notice of such sale, transfer and
assignment to the Lessees of such Designated Eligible Leases or the
obligors under any Related Rights with respect thereto, take all
steps reasonably necessary, or in the opinion of the Concurrent
Lessee or its counsel advisable, (i) to validate, protect or perfect
the interest of the Concurrent Lessee in the Designated Eligible
Leases or Lease Entitlements, and (ii) to defeat the assertion by any
third party (other than a third party claiming through or under the
Concurrent Lessee) of any Adverse Claim in the Designated Eligible
Leases or the Lease Entitlements;
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(15) on each Reporting Date:
(1) deliver or cause to be delivered to the Concurrent Lessee and
the Credit Enhancer a Portfolio Report relating to the
Designated Eligible Leases and the Equipment for the related
Reporting Period and relating to all transactions between the
Lessor and the Concurrent Lessee during such Reporting Period,
such report to be current as of the close of business of the
Collector on the Settlement Date of such Reporting Period;
(2) upon the Concurrent Lessee's reasonable request therefor,
deliver or cause to be delivered to the Concurrent Lessee a
listing by the Lessee of all Designated Eligible Leases and an
aging report for all such leases, each as of such day; and
(3) upon the Concurrent Lessee's reasonable request therefor,
provide to the Concurrent Lessee any other information or
documentation relating to any Designated Eligible Lease that
may be in existence in written form or, if available in Records
maintained by the Collector, that may be produced with the
Collector's existing software, provided that there shall always
be in written form or producible with the Collector's existing
software from the Records information indicating as to each
Designated Eligible Lease the Lessee thereunder, the amounts
owing thereunder and the location of the Records relating
thereto;
(16) co-operate with, and offer such assistance as may reasonably be
requested by, the chartered accountants selected by the Concurrent
Lessee to furnish reports in respect of the Concurrent Lessee, the
Concurrent Leases and the servicing of the Designated Eligible Leases
and Related Rights under this Agreement, and furnish in respect of
the preceding fiscal year, addressed to the Concurrent Lessee and
such other Persons as the Concurrent Lessee may reasonably designate,
an Officer's Certificate of the Collector (on behalf of the
Collector, without personal liability) who is familiar with this
Agreement certifying that, to the knowledge of such officer, the
Collector complied in such calendar year with its obligations
hereunder except to the extent non-compliance therewith did not
materially adversely affect the interests of the Concurrent Lessee
and except as further set forth in such certificate;
(17) upon request of the Concurrent Lessee and with the Collector's
written consent, such consent not to be unreasonably withheld, and at
the Collector's expense, direct the Collector's auditors to assist
the Concurrent Lessee's auditors to the extent and in such manner as
is reasonably required for the Concurrent Lessee's auditors to report
on the status of the Concurrent Leases under this Agreement;
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(18) promptly after the Collector becomes aware thereof, provide the
Concurrent Lessee, the Rating Agency and the Credit Enhancer with
notice of any litigation or other court or arbitration proceeding
brought against the Collector and/or its Subsidiaries and/or any
Parent Company in which (i) injunctive or similar relief is sought in
respect of which there is a reasonable possibility of a determination
that would materially adversely affect the Collector's ability to
perform its obligations hereunder, or (ii) the amount at issue is
$1,000,000 or more in excess of insurance coverage;
(19) provide the Concurrent Lessee, the Rating Agency and the Credit
Enhancer with such other information respecting any change in the
financial condition or operations of the Collector and/or its
Subsidiaries and/or any Parent Company as may materially adversely
affect the ability of the Collector to perform its obligations
hereunder;
(20) provide the Concurrent Lessee, the Rating Agency and the Credit
Enhancer with ten Business Days' notice prior to taking any action
that may adversely affect the perfection, validity or protection of
the Concurrent Lessee's rights to collect or enforce the Designated
Eligible Leases and the proceeds thereof, including the right to
enforce the Related Rights;
(21) promptly after the Collector becomes aware thereof, but in any event
no later than two Business Days thereafter, provide the Concurrent
Lessee, the Rating Agency and the Credit Enhancer with notice of any
Collector Termination Event that is continuing when the Collector
becomes aware thereof; and
(22) cause all relevant computer date-related systems used by the
Collector to perform its duties as Collector relating to the
Concurrent Leases and the servicing of the Designated Eligible Leases
and the Equipment, including related supporting data and files, to
function correctly when dealing with date/times and date/time related
data and to, without interruption, accurately process date/time data
from, into, and between the 20th and 21st centuries, and the years
1999 and 2000, and perform leap year calculations, and to not, as a
result of the processing of such data, (i) malfunction in any
material respect, or (ii) cease to function. "accurately process", as
referred to above, includes accurately inputting, outputting,
extracting, displaying, calculating, comparing, sorting and
sequencing such data.
6.10 Negative Covenants of the Collector
-----------------------------------
From the date of this Agreement until the Final Termination Date, the
Collector covenants and agrees that it shall not, unless each of the Concurrent
Lessee, the Rating Agency and the Credit Enhancer shall otherwise consent in
writing (such consent not to be unreasonably withheld or delayed):
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(1) make any material change to the Credit and Collection Policies that
would be adverse to the Concurrent Lessee's interests in, or the
collectibility or enforceability of, the Designated Eligible Leases,
the Lease Entitlements or the Related Rights (but the Collector may
make such other non-material changes as it considers necessary or
advisable from time to time), nor will it apply different credit,
collection and administration policies and procedures to Designated
Eligible Leases or to leases which are to become Designated Eligible
Leases than it applies with respect to leases owned by or to be owned
by it;
(2) except as contemplated by section 3.3, extend, amend or otherwise
modify the terms of any Designated Eligible Lease (other than
adjusting, settling or compromising the account or payment of a
Designated Eligible Lease pursuant to this Article 6 and except for
deferments in the ordinary course of business which are consistent
with the Credit and Collection Policies), or amend, modify or waive
any term or condition of any contract related thereto except in the
case of any such contracts or any amendments, modifications or waivers
contemplated by section 6.11;
(3) (i) enter into any transaction of reorganization, consolidation,
amalgamation, merger or arrangement, as a result of which any other
Person, including for these purposes a continuing corporation
resulting from the amalgamation of the Collector with any other body
corporate, becomes, by operation of law or otherwise, the owner of all
or substantially all the assets of the Collector or any Parent Company
and that materially and adversely affects the Collector's (or such
continuing corporation's) ability to service the Designated Eligible
Leases or to perform any of its other obligations under this
Agreement, or (ii) liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution) or transfer, sell, lease or otherwise
dispose of its assets as an entirety or substantially as an entirety,
unless the Concurrent Lessee, the Rating Agency and the Credit
Enhancer have otherwise approved;
(4) release any security, guarantee or insurance securing any indebtedness
under any of the Designated Eligible Leases, except to the extent that
granting such release is in accordance with this Agreement, the Credit
and Collection Policies and the Collector's usual practices as an
obligee or such security, guarantee or insurance is replaced in a form
acceptable to the Concurrent Lessee, acting reasonably; or
(5) take or omit to take any action if the taking or omitting to take such
action by the Collector would constitute a breach by the Collector of
any representation, warranty or covenant in this Agreement or in any
other document delivered hereunder or thereunder or contemplated
hereby or thereby.
6.11 Lease Amendments, Modifications and Waivers
-------------------------------------------
In performing its obligations hereunder, the Collector may, without
the necessity of obtaining the prior consent of the Concurrent Lessee, enter
into and grant modifications, waivers and
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amendments to the terms of any Designated Eligible Lease so long as such
modifications, waivers or amendments: (a) are made in accordance with the Credit
and Collection Policies; (b) do not reduce the amount or extend the time for
payment of any Scheduled Payment to be paid under a Designated Eligible Lease
(other than to permit termination of a Designated Eligible Lease which does not
otherwise provide for termination by requiring that the Lessee pay, in lieu of
all future Scheduled Payments with respect to the Designated Eligible Lease, an
amount which equals or exceeds the Financed Balance at such time) or the
Lessee's absolute and unconditional obligation to make payment of the same; (c)
do not reduce or adversely affect the Lessee's obligation to maintain, service,
insure and care for the Equipment forming the subject matter of such Designated
Eligible Lease or would permit the alteration of any of such Equipment in any
way which could adversely affect such Designated Eligible Lease's present or
future value; and (d) otherwise could not adversely affect the interests of the
Concurrent Lessee or the Credit Enhancer in, or the collectibility or
enforceability of, the Designated Eligible Leases, the Lease Entitlements or the
Related Rights; provided, however, that no such amendment, modification or
waiver shall be permitted where the making of it could cause a Designated
Eligible Lease to no longer be an Eligible Lease if such Designated Eligible
Lease were the subject of a new Concurrent Lease hereunder.
6.12 Collector Termination Events
----------------------------
Upon the occurrence or existence of one or more of the following
events or facts which is continuing (a "Collector Termination Event"), the
Concurrent Lessee shall be entitled to effect a Collector Transfer:
(1) any failure of the Collector to pay or deposit any amount to be paid
or deposited by it under this Agreement when due;
(2) any failure on the part of the Collector to duly perform or observe
any terms, conditions, covenants or agreements of the Collector set
forth under this Agreement, other than such as are specifically
referred to in paragraph (a) above, which failure continues unremedied
for a period of 10 days after the date on which the Collector receives
written notice thereof from the Concurrent Lessee;
(3) the incorrectness when made or furnished, or deemed to have been made
or furnished, by or on behalf of the Collector pursuant hereto of any
warranty, representation or statement, which incorrectness materially
adversely affects or has materially adversely affected the Concurrent
Lessee's or the Credit Enhancer's interests, if such material adverse
effect remains unremedied for a period of 10 Business Days after the
date on which the Concurrent Lessee gives written notice thereof to
the Collector;
(4) the non-payment at its final maturity, or the acceleration as a result
of a default by any one of the Lessor, IKON Capital, the Performance
Guarantor, any Replacement Collector and any of the Subsidiaries or
Parent Companies of any Replacement Collector of the principal amount
of any Indebtedness of it and the aggregate of all
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such sums not paid by it is in excess of $1 million (or its equivalent
in other currencies), in the case of each such entity other than the
Performance Guarantor, and U.S.$10 million in the case of the
Performance Guarantor, and, in any such case, the time for payment of
such Indebtedness shall not have been effectively extended, as a
result of which the ability of the Collector to comply with its
obligations as Collector under this Agreement, in the opinion of the
Concurrent Lessee, acting reasonably, is likely to be impaired in any
material respect;
(5) the occurrence of an event of default, as defined in any indenture or
instrument under which any one of the Performance Guarantor, the
Lessor, IKON Capital, any Replacement Collector and any of the
Subsidiaries or Parent Companies of any Replacement Collector has at
any time, or shall after the date of this Agreement have, outstanding
any Indebtedness, that is continuing if such Indebtedness shall have
become accelerated so that an amount in excess of $1 million (or its
equivalent in other currencies), in the case of each such entity other
than the Performance Guarantor, and U.S. $10 million in the case of
the Performance Guarantor, shall have become due and payable by it
prior to the date on which the same would otherwise have become due
and payable and such acceleration shall not have been rescinded or
annulled or such event of default shall not be remedied or cured,
whether by payment or otherwise, by it within the time provided in
such indenture or instrument, as a result of which the ability of the
Collector to comply with its obligations as Collector under this
Agreement, in the opinion of the Concurrent Lessee, acting reasonably,
is likely to be impaired in any material respect;
(6) the taking of possession by an encumbrancer (including a receiver,
receiver manager or trustee) of any assets of any one of the
Performance Guarantor, the Lessor, IKON Capital, any Replacement
Collector and any of the Subsidiaries or Parent Companies of any
Replacement Collector (other than solely to perfect an Adverse Claim
therein) which constitute a material part of its assets, or the
levying or enforcement or a distress or execution or any similar
process against a material part of its assets that remains unsatisfied
for such period as would permit a sale or other disposition of such
assets to occur;
(7) the issuance or levying of a writ of execution, attachment or similar
process against all or a material portion of the property of any one
of the Lessor, IKON Capital, the Performance Guarantor, any
Replacement Collector and any of the Subsidiaries or Parent Companies
of any Replacement Collector, in connection with any judgment against
it in any amount that materially affects its property if such writ of
execution, attachment or similar process shall not have been stayed or
dismissed after 30 days;
(8) the entry by any one of the Lessor, IKON Capital, the Performance
Guarantor, any Replacement Collector and any Parent Companies of any
Replacement Collector into any transaction of reorganization,
amalgamation or arrangement, or the sale, lease or
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other disposition by it of its assets as an entirety or substantially
as an entirety except as otherwise permitted by this Agreement;
(9) the failure by any one of the Lessor, IKON Capital, the Performance
Guarantor, any Replacement Collector and any of the Subsidiaries or
Parent Companies of any Replacement Collector to generally pay its
debts as they become due, or the admission in writing by it of its
inability to pay its debts generally or the making by it of an
assignment for the benefit of its creditors;
(10) the filing, under any applicable Insolvency Statute, by any one of the
Lessor, IKON Capital, the Performance Guarantor, any Replacement
Collector and any of the Subsidiaries or Parent Companies of any
Replacement Collector of a notice of intention to make a proposal to
some or all of its creditors;
(11) the commencement or filing of a petition, notice or application by or
against any one of the Lessor, IKON Capital, the Performance
Guarantor, any Replacement Collector and any of the Subsidiaries or
Parent Companies of any Replacement Collector of any proceedings to
adjudicate it a bankrupt or insolvent or seeking liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law of any jurisdiction,
whether now or after the date of this Agreement in effect, relating to
the dissolution, liquidation, winding-up, bankruptcy, insolvency,
reorganization of insolvent debtors, arrangement of insolvent debtors,
readjustment of debt, moratorium of debts or relief of debtors, or
seeking the entry of an order for relief by the appointment of a
receiver, receiver manager, administrator, inspector, liquidator or
trustee or other similar official for it or for any substantial part
of its property and, if any such proceeding has been instituted
against any one of the Lessor, IKON Capital, the Performance
Guarantor, any Replacement Collector and any of the Subsidiaries or
Parent Companies of any Replacement Collector, either such proceeding
has not been stayed or dismissed within 45 days or any of the actions
sought in such proceeding (including the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar
official) are granted in whole or in part, or the performance by any
one of the Lessor, IKON Capital, the Performance Guarantor, any
Replacement Collector and any of the Subsidiaries or Parent Companies
of any Replacement Collector of any act, or the omission to perform
any act, that authorizes or indicates its consent to, approval of or
acquiescence in, any such proceeding; or
(12) the occurrence of any material adverse change in the financial
condition or operations of any one of the Lessor, IKON Capital, the
Performance Guarantor, any Replacement Collector and any of the
Subsidiaries or Parent Companies of any Replacement Collector that
continues to materially and adversely affect the Collector's ability
to service the Designated Eligible Leases or to perform any of its
other obligations under this Agreement three Business Days after
notice thereof from the Concurrent Lessee, or the Securitization Agent
on its behalf, to the affected party.
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6.13 Notice of Collector Termination Events
--------------------------------------
The giving by the Lessor of notice to the Concurrent Lessee as
required hereunder of any event, fact or circumstance that, with the giving of
notice, with or without the passage of time, may become a Collector Termination
Event, shall be deemed to constitute the giving of notice by the Concurrent
Lessee to the Collector of the same on the same date as the Lessor gives such
notice.
6.14 Effecting a Collector Transfer
------------------------------
At any time when it is entitled to do so pursuant to the terms of
this Agreement, the Concurrent Lessee may effect a termination of a Collector's
designation as Collector hereunder (a "Collector Transfer") by giving notice to
the Collector of its decision to terminate the Collector's engagement as
Collector, which termination shall take effect at the time specified in such
notice, or, failing the specification of any time, upon the appointment of a
Replacement Collector.
6.15 Appointment of Replacement Collector
------------------------------------
At any time when it is entitled to do so pursuant to the terms of
this Agreement, the Concurrent Lessee may by instrument in writing designate and
appoint as the Replacement Collector any Person acceptable to the Rating Agency
and the Credit Enhancer.
6.16 Collection and Remittance of Taxes
----------------------------------
(1) While the Lessor is the Collector, it shall be entitled to retain any
amounts paid by Lessees in respect of Taxes payable in connection with
Designated Eligible Leases. To the extent that any such amounts are deposited
to the Concurrent Lessee's Account or otherwise held by the Concurrent Lessee,
the Concurrent Lessee shall forthwith remit all such amounts to the Collector.
(2) After the appointment of the first Replacement Collector, the
Collector shall, unless the Collector is remitting such Taxes directly to the
applicable Government Authority, by notice to the Lessor, remit to the Lessor
out of Collections the amount of any Taxes owing in respect of the Equipment
relating to the Designated Eligible Leases, in which event the Lessor shall
comply with the remittance obligations set out in section 6.8(i) as if the same
were amended so that the word "Collector" reads "the Lessor".
6.17 Additional Collector Covenants Following a Collector Transfer
-------------------------------------------------------------
From and after a Collector Transfer until the Final Termination Date,
the Collector and the Lessor covenant and agree that they shall, in addition to
any other obligations, upon the request of the Concurrent Lessee:
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(1) instruct the Lessee of each Designated Eligible Lease (and any other
Persons, if applicable, in the case of the Related Rights) to remit
all payments due under the Designated Eligible Leases and Related
Rights to the Replacement Collector;
(2) remit to the Replacement Collector all payments received by the
Collector from Lessees and from other Persons, if applicable, under
the Related Rights;
(3) segregate all cash, cheques and other instruments constituting
Collections in a manner acceptable to the Concurrent Lessee and the
Rating Agency and, immediately upon receipt, deposit all such cash,
cheques and instruments, duly endorsed or with duly executed
instruments of transfer, to the Concurrent Lessee's Account;
(4) endorse and make such notations on the Records as and in the manner
that the Concurrent Lessee may reasonably direct, including to
evidence the Concurrent Lessee's concurrent lease of the Equipment
and its interest in the Designated Eligible Leases, the Lease
Entitlements and the Related Rights;
(5) deliver up copies or originals of all Records (including computer
diskettes or tapes containing all information necessary or reasonably
desirable to enable the Concurrent Lessee or its agent to collect the
amounts owing under the Designated Eligible Leases, together with a
printed copy or microfiche of all such information) to the Concurrent
Lessee or as it may otherwise direct in writing (or retain the same
in segregated storage if so directed), and provide the Concurrent
Lessee or its agent with all reasonable assistance necessary to
decipher the information contained on the computer diskettes or
tapes; and
(6) perform any and all acts and execute and deliver any and all
documents as may reasonably be requested by the Concurrent Lessee in
order to effect the purposes of this Agreement or to enable the
Replacement Collector to collect and enforce the Designated Eligible
Leases and any Related Right related thereto.
6.18 Concurrent Lessee's Rights Following a Collector Transfer
---------------------------------------------------------
Upon a Collector Transfer, the Concurrent Lessee may, but is not
required to, at any time (unless prior to such time the Lessor shall have
refunded to the Concurrent Lessee the relevant portion of the Prepaid Rent in
respect of all Designated Eligible Leases, and satisfied all of its obligations
with respect thereto), directly or through the Replacement Collector, without
limitation:
(1) subject to the terms of the Credit Enhancement Agreement, perform the
services, duties and functions specified in sections 6.8, 6.9, 6.16
and 6.17 of this Agreement with respect to the Equipment, the
Designated Eligible Leases and Related Rights in any manner that the
Concurrent Lessee reasonably deems fit;
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(2) notify any Lessee of the concurrent lease by the Concurrent Lessee of
the Equipment and the sale, transfer and assignment by the Lessor of
the Lease Entitlements under this Agreement;
(3) contact any Lessee for any reasonable purpose, including for the
performance of audits and verification analyses, and the determination
of account balances and other data maintained by the predecessor
Collector;
(4) direct any Lessee to make all payments on account of any Designated
Eligible Leases directly to the Concurrent Lessee at an address
designated by the Concurrent Lessee or to such third party (including
the Replacement Collector) or bank or depositary as may be designated
by the Concurrent Lessee;
(5) request any Lessee to change the instructions for any direct debit or
electronic funds transfer otherwise payable to the Lessor or the
Collector; and
(6) proceed directly against any Lessee and take any and all other
actions, in the Lessor's name or otherwise, necessary or reasonably
desirable to collect the Designated Eligible Leases, enforce the
Related Rights or effect any related result.
6.19 Delegation in Favour of Securitization Agent
--------------------------------------------
The Concurrent Lessee may delegate to the Securitization Agent all or
any of its powers, rights and discretion hereunder, and the Securitization Agent
may from time to time take such actions and exercise such powers for and on
behalf of the Concurrent Lessee as are delegated to it or contemplated hereby
and all such actions and powers as are reasonably incidental thereto. Each of
the Lessor, the Performance Guarantor and the Collector shall be entitled to and
shall be fully protected in relying on any instruction made or given by the
Securitization Agent in accordance with this section 6.19 without being required
to obtain evidence or confirmation of such delegation, and shall have no
liability to the Concurrent Lessee in respect of such reliance.
6.20 Payments to Securitization Agent
--------------------------------
(1) The Lessor shall pay to the Securitization Agent or the Replacement
Servicer, as the case may be, from and after the date hereof:
(i) on each Reporting Date a monthly fee (the "Program Fee") at a
rate set out in the mandate letter dated February 4, 1999 between
the Concurrent Lessee, the Lessor and the Performance Guarantor;
and
(ii) all Collection Costs, if any, of the Replacement Collector and
the Concurrent Lessee, as specified in reasonable detail in
writing by the Replacement Collector and/or the Concurrent
Lessee/Securitization Agent, from time to time.
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(2) The Lessor shall also pay to the Securitization Agent such reasonable
fees and expenses as the Concurrent Lessee, the Lessor and the Performance
Guarantor agree the Securitization Agent may charge or incur in respect of each
amendment to this Agreement and each waiver of any provision of this Agreement
requested by the Lessor or the Performance Guarantor or required or initiated as
a result of the Lessor's, IKON Capital's or the Performance Guarantor's actions
that requires the Securitization Agent, in its sole discretion, in order to
approve such amendments or waiver, to perform a credit review of the transaction
or event associated with or giving rise to such amendment or waiver.
ARTICLE 7
TRIGGER EVENTS AND TERMINATION EVENTS
7.1 Meaning of Trigger Event
------------------------
The term "Trigger Event" means any of the following events or
circumstances:
(1) a Collector Termination Event has occurred;
(2) the Lessor or IKON Capital fails to make any payment or deposit to be
made by it hereunder when due or to remit to the Collector when due
any amounts referred to in Article 2;
(3) the Lessor, IKON Capital or the Performance Guarantor fails to perform
or observe any material term, condition or covenant to be performed or
observed by it hereunder (other than that specified in section
7.1(b)), and such failure remains unremedied for 10 days after notice
thereof has been given by the Concurrent Lessee to the Lessor, IKON
Capital or the Performance Guarantor, as the case may be;
(4) any representation or warranty made by the Lessor, IKON Capital or the
Performance Guarantor (or any of their respective officers) in or
pursuant to this Agreement, any Concurrent Lease Request, any
Portfolio Report or any other material agreement related hereto or
thereto proves to have been false or incorrect in any material respect
when made and, if capable of being corrected, such falseness or
incorrectness remains unremedied for 10 Business Days after notice
thereof has been given by the Concurrent Lessee to the Lessor, IKON
Capital or the Performance Guarantor, as the case may be;
(5) at any date, on or after October 15, 1999, the Tangible Net Worth of
the Lessor is less than $1 million;
(6) at any time, the Performance Guarantor fails to maintain a rating of
at least Baa3 or better from Moody's Investor Services, Inc. and BBB-
or better from Standard & Poor's Rating Group;
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(7) (i) the Lessor, IKON Capital or the Performance Guarantor fails to
pay any Indebtedness or the redemption price of any redeemable
preferred shares included in its Indebtedness when due (whether
by scheduled maturity, required prepayment, acceleration, demand
or otherwise) and such failure continues after the applicable
grace period, if any, specified in any agreement or instrument
relating to such Indebtedness; or
(ii) any other default under any agreement or instrument relating to
any Indebtedness, or any other event, shall occur if the effect
of such default or event is to accelerate the maturity of any
Indebtedness,
provided, however, that a Trigger Event shall not occur by virtue of
this section 7.1(g) unless the aggregate amount of such Indebtedness
is equal to or exceeds $1 million (or, in the case of the Performance
Guarantor, U.S. $10 million) or its equivalent in any other currency
or currencies, and any such failure remains unremedied for three
Business Days after notice thereof to the Lessor, IKON Capital or the
Performance Guarantor, as the case may be;
(8) except as permitted hereby, any Concurrent Lease ceases to create or
result in a legal and binding obligation in favour of the Concurrent
Lessee and any such failure remains unremedied for three Business Days
after notice thereof to the Lessor;
(9) any of the Lessor, IKON Capital or the Performance Guarantor shall
generally not pay its debts as they become due, or shall admit in
writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceedings
shall be instituted by or against any of the Lessor, IKON Capital or
the Performance Guarantor seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or
its debts under any law of any jurisdiction, whether now or after the
date of this Agreement in effect, relating to the dissolution,
liquidation or winding-up, bankruptcy, insolvency, reorganization of
insolvent debtors, arrangement of insolvent debtors, readjustment of
debt, moratorium of debts or relief of debtors, or seeking the entry
of an order for relief by the appointment of a receiver, receiver
manager, administrator, inspector, liquidator or trustee or other
similar official for it or for any substantial part of its property
and, if any such proceeding has been instituted against any of the
Lessor, IKON Capital or the Performance Guarantor, either such
proceeding has not been stayed or dismissed within 45 days or any of
the actions sought in such proceeding (including the entry of an order
for relief or the appointment of a receiver, trustee, custodian or
other similar official) are granted in whole or in part, or the
Lessor, IKON Capital or the Performance Guarantor, as the case may be,
takes any corporate action to authorize, or indicate its consent to,
approval of or acquiescence in, any of the actions described in this
section 7.1(i);
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(10) in the reasonable opinion of the Securitization Agent after
consultation with the Rating Agency, there shall have been any
material adverse change in the financial condition or operations of
any one of the Lessor, IKON Capital or the Performance Guarantor
since the date of its most recent quarterly or year end financial
statements which materially adversely affects the Lessor's, IKON
Capital's or the Performance Guarantor's ability to perform its
obligations hereunder or the collectibility or enforceability of the
Designated Eligible Leases, the Lease Entitlements or the Related
Rights and such material adverse effect continues for three Business
Days after notice thereof from the Concurrent Lessee, or the
Securitization Agent on its behalf, to the Lessor, IKON Capital or
the Performance Guarantor, as the case may be;
(11) there shall have occurred any change in the controlling interest of
either IKON Capital or the Lessor that has not been approved by the
Concurrent Lessee, the Credit Enhancer and the Rating Agency in
writing;
(12) the Collections received during any two Reporting Periods are less
than the amount required to make the payments required by sections
2.5 (a) through (i), inclusive, in respect of those Reporting
Periods;
(13) there shall come into existence any prohibition at law against the
Lessor, as a lessor, or the Concurrent Lessee, as a lessee,
concurrently leasing the Equipment or acquiring the Lease
Entitlements pursuant to this Agreement;
(14) for the most recent three months, the average Delinquency Ratio
exceeds 6.50%;
(15) for the most recent three months, the average 90 Day Past Due Ratio
exceeds 4.50%; and
(16) for the most recent three months, the average Default Ratio exceeds
4.50%.
7.2 Action Upon a Trigger Event
---------------------------
Upon the occurrence of any Trigger Event described in sections
7.1(c), (d), (e), (f), (j), (k) and (m) the Concurrent Lessee or its authorized
agent may, by notice to the Lessor, declare the Lease Termination Date to have
occurred on the date specified in such notice, which date shall be not less than
two Business Days subsequent to the date such notice is given to the Lessor. If
a Portfolio Report discloses that any Trigger Event described in sections 7.1(n)
through (p), inclusive, has occurred or if the Lessor gives notice to the
Concurrent Lessee that any such Trigger Event has occurred, or if the Concurrent
Lessee gives notice to the Lessor that the Concurrent Lessee has determined that
any such Trigger Event has occurred, the Lease Termination Date shall occur
automatically upon the delivery of such Portfolio Report or the giving of such
notice by the Lessor to the Concurrent Lessee or by the Concurrent Lessee to the
Lessor, as the case may be, without the
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necessity of any further notice. Upon the occurrence of any other Trigger Event
described in section 7.1, the Lease Termination Date will occur automatically,
without the necessity of any notice. Upon any such declaration or automatic
occurrence, the Concurrent Lessee will have, in addition to its rights and
remedies hereunder and under any documents related hereto, all other rights and
remedies under applicable laws and otherwise, which rights and remedies will be
cumulative; provided that, notwithstanding the foregoing, the Concurrent Lessee
shall not have the right to sell, transfer, lease, encumber or otherwise dispose
of all or any of its rights under the Concurrent Leases other than to the Credit
Enhancer in accordance with the Credit Enhancement Agreement, it being the
intention of the Lessor and the Concurrent Lessee that the Designated Eligible
Leases will continue to be administered and serviced in accordance with the
provisions of Article 6 hereof and that the Concurrent Leases will be liquidated
in accordance with section 2.5. Notwithstanding the above, the Concurrent
Lessee, with the consent of the Rating Agency and the Credit Enhancer, may waive
any Trigger Event in its sole discretion.
7.3 Optional Termination of Concurrent Leases
-----------------------------------------
If, at any time:
(1) a Trigger Event or Termination Event has occurred and is continuing;
(2) the Concurrent Lessee has drawn upon the liquidity support provided
pursuant to the Liquidity Agreement;
(3) a Designated Eligible Lease is a 90 Day Past Due Lease;
(4) the Concurrent Lessee makes a demand for payment to the Lessor in
respect of a change of circumstance pursuant to section 11.2; or
(5) following the Termination Date, the Aggregate Financed Balance is less
than 10% of the Program Limit as at the Termination Date,
the Lessor may, subject to the Concurrent Lessee's rights under section 7.6,
elect by notice (an "Optional Termination Notice") to the Concurrent Lessee, to
terminate, in the case of (c) above, the Concurrent Lease relating to the
affected Designated Eligible Lease or, in any other case, all of the Concurrent
Leases, by making a payment, as a refund of the outstanding portion of the
Prepaid Rent paid by the Concurrent Lessee in respect of such Concurrent Lease
or Concurrent Leases of the affected Equipment and all Related Rights thereto.
The termination of the Concurrent Lease or Concurrent Leases shall be effective
upon the payment, by deposit to the Collection Account, by the Lessor to the
Concurrent Lessee of an amount equal to the sum of (i) the aggregate Unamortized
Prepaid Rent relating to the affected Designated Eligible Lease or Designated
Eligible Leases, calculated as at such date, (ii) the portion of the Hedging
Costs that relates to the Financed Balances under those leases on that date, and
(iii) any other fees, costs and expenses accrued and reasonably incurred by the
Concurrent Lessee, or any other amounts otherwise owing to the Concurrent
Lessee, in connection with or under this Agreement or with respect to such
Designated Eligible Lease or
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Designated Eligible Leases to the date of such payment, including any Swap
Unwinding Costs. Upon the payment to the Concurrent Lessee of such amount, (A)
the Concurrent Lease relating to the relevant Equipment shall be and shall be
deemed to have been terminated, (B) the Lessor shall cease to be entitled to any
further payments of Deferred Rent in respect of such Equipment, (C) the
Concurrent Lessee shall be deemed to have released, re-assigned and reconveyed
to the Lessor all of the Concurrent Lessee's right, title and interest in and to
such Equipment and the relevant Lease Entitlements (insofar as they relate to
the Designated Eligible Leases relating to such Equipment), without recourse,
and subject only to the representations and warranties of the Concurrent Lessee
that such right, title and interest is held beneficially by it and is released,
transferred, assigned and conveyed to the Lessor or as it may direct free and
clear of any Adverse Claims created, suffered or permitted to exist by the
Concurrent Lessee, and (D) the Collector shall pay or transfer to the Lessor all
other proceeds of such Designated Eligible Leases, if any, subsequently received
by the Collector from the Lessees under such Designated Eligible Leases.
7.4 Meaning of Termination Event
----------------------------
The term "Termination Event" means any of the following events or
circumstances:
(1) the liquidity support provided pursuant to the Liquidity Agreement has
terminated or is otherwise unavailable and no alternative or
replacement liquidity support is available to the Concurrent Lessee;
(2) an "Event of Default" occurs under the Credit Enhancement Agreement,
the Level Two Credit Enhancement provided pursuant to the Credit
Enhancement Agreement has terminated or is otherwise unavailable, or
the L/C Funding Account has not been established and funded pursuant
to section 2.6 and, in any such case, no alternative or replacement
Level Two Credit Enhancement is available to the Concurrent Lessee;
(3) the interest rate hedge provided under a Swap Agreement has terminated
or is otherwise unavailable (including a rating decline of any swap
counterparty to a level such that it no longer qualifies as an
Eligible Institution hereunder) and no alternative equivalent swap
arrangements are available to the Concurrent Lessee; and
(4) the Notes issued or to be issued by the Concurrent Lessee are rated
lower than R-1 (high) by the Rating Agency or notice has been received
from the Rating Agency that, unless the program being conducted under
this Agreement is terminated, the Notes will be downgraded to below R-
1 (high) by the Rating Agency or the rating will be withdrawn by the
Rating Agency.
7.5 Action Upon a Termination Event
-------------------------------
Upon the occurrence of any Termination Event, the Concurrent Lessee or
its authorized agent may, by notice to the Lessor, declare the Lease Termination
Date to have occurred on the date specified in such notice, which date shall be
not less than two Business Days subsequent
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to the date such notice is given to the Lessor. Upon any such declaration, the
Concurrent Lessee will have, in addition to its rights and remedies hereunder
and under any documents related hereto, all other rights and remedies under
applicable laws and otherwise, which rights and remedies will be cumulative.
Notwithstanding the above, the Concurrent Lessee, with the consent of the Rating
Agency and the Credit Enhancer, may waive any Termination Event in its sole
discretion.
7.6 Right of First Refusal
----------------------
(1) Upon and only upon the occurrence of a Termination Event, the
Concurrent Lessee may, subject to the right of first refusal of the Lessor as
set out in section 7.6(b) and the provisions of section 11.8, sell, assign and
transfer all of the Concurrent Lessee's right, title and interest in, to or
under any and all Concurrent Leases, including Lease Entitlements and Related
Rights relating to the underlying Designated Eligible Leases, then held by the
Concurrent Lessee. Upon any such sale, assignment or transfer, the purchaser
thereunder shall be fully subrogated to all rights, benefits and privileges of
the Concurrent Lessee hereunder in respect of the Concurrent Leases other than
in respect of the Level Two Credit Enhancement, the Letter of Credit and the
Credit Enhancer.
(2) If the Concurrent Lessee elects to make such sale pursuant to section
7.6(a), the Concurrent Lessee will give notice thereof to the Lessor and the
Credit Enhancer and, subject to section 7.7, the Lessor (or an Affiliate of the
Lessor designated by the Lessor) will have the option, exercisable for two
Business Days from the date that the Concurrent Lessee's notice is sent to the
Lessor, to purchase such Concurrent Leases and the Related Rights by paying to
the Concurrent Lessee, by deposit to the Collection Account, an amount equal to
the Unamortized Prepaid Rent in respect of each Designated Eligible Lease,
calculated as at the date on which such payment is made, plus the Hedging Costs
that relates to the Financed Balance under such Designated Eligible Lease on
such date, plus any other fees, costs and expenses accrued and reasonably
incurred by the Concurrent Lessee, or any other amounts otherwise owing to the
Concurrent Lessee, in connection with or under this Agreement or with respect to
such Designated Eligible Lease to the date of such payment, including any Swap
Unwinding Costs. Such payment shall be made at or before 4:00 p.m. (Toronto
time) on the second Business Day after the Concurrent Lessee's notice is sent to
the Lessor under this section 7.6(b). Upon such payment being made, (i) the
Concurrent Leases shall be deemed to have been terminated by the Lessor with
respect to the Equipment forming the subject matter of the relevant Designated
Eligible Leases, (ii) the Lessor shall cease to be entitled to any further
payments of Deferred Rent in respect of such Equipment and (iii) the Concurrent
Lessee shall be deemed to have released, re-assigned and reconveyed to the
Lessor all of its right, title and interest in and to such Equipment and Lease
Entitlements (insofar as they relate to the Designated Eligible Leases relating
to such Equipment), without recourse, and subject only to the representations
and warranties of the Concurrent Lessee that such right, title and interest is
held beneficially by it and is released, transferred, assigned and conveyed to
the Lessor free and clear of any Adverse Claims created, suffered or permitted
to exist by the Concurrent Lessee, and (iv) the Collector shall pay or transfer
to the Lessor all other proceeds of such Designated Eligible Leases, if any,
subsequently received by the Collector from the Lessees under such Designated
Eligible Leases.
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7.7 Lack of Liquidity Support
-------------------------
(1) The Concurrent Lessee agrees to give the Lessor and the Credit
Enhancer not less than 120 days' prior notice of any proposed non-renewal of the
Liquidity Agreement and shall notify the Lessor and the Credit Enhancer of the
termination of the liquidity support under the Liquidity Agreement as a result
of such non-renewal, in each case forthwith upon the Concurrent Lessee becoming
aware thereof. If such notice of non-renewal of the Liquidity Agreement is
provided to the Lessor, the Lessor shall have 90 days from the date of such
notice to notify the Concurrent Lessee that it will exercise its right of first
refusal under section 7.6(b) in the event of any proposed sale, assignment or
transfer by the Concurrent Lessee pursuant to section 7.6(a), failing which the
Lessor shall not be entitled to exercise its right of first refusal under
section 7.6(b). If the Lessor so notifies the Concurrent Lessee, the Lessor
shall exercise its right of first refusal on the date of the occurrence of the
Termination Event resulting from the termination of the liquidity support under
the Liquidity Agreement.
(2) The Concurrent Lessee agrees to give the Lessor and the Credit
Enhancer notice of a termination of the liquidity support under the Liquidity
Agreement resulting from the downgrading of the long-term credit rating of the
Liquidity Agent to a rating of A or A (high) by the Rating Agency, forthwith
upon the Concurrent Lessee becoming aware thereof. If such notice is provided to
the Lessor, the Lessor shall have 45 days (plus the number of days of any
extension pursuant to in the parenthetical at the end of this section 7.7(b))
from the date of such notice to notify the Concurrent Lessee that it will
exercise its right of first refusal under section 7.6(b) in the event of any
proposed sale, assignment or transfer by the Concurrent Lessee pursuant to
section 7.6(a), failing which the Lessor shall not be entitled to exercise its
right of first refusal under section 7.6(b). If the Lessor so notifies the
Concurrent Lessee, the Lessor shall exercise its right of first refusal on or
prior to the date that is 60 days from the date that the Concurrent Lessee gave
notice to the Lessor pursuant to this section 7.7(b) (plus the number of days of
any extension to such 60-day period agreed upon between the Lessor, the
Securitization Agent and the Rating Agency).
(3) In circumstances other than those referred to in sections 7.7(a) and
(b) where the liquidity support provided pursuant to the Liquidity Agreement
will terminate or will otherwise become unavailable, the Concurrent Lessee
agrees to give the Lessor and the Credit Enhancer as many days prior notice
thereof as is practicable and shall notify the Lessor and the Credit Enhancer of
the termination of the liquidity support under the Liquidity Agreement, in each
case forthwith upon the Concurrent Lessee becoming aware thereof.
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ARTICLE 8
GENERAL COVENANTS AND POWER OF ATTORNEY
8.1 Affirmative Covenants of the Lessor
-----------------------------------
From the date hereof until the Final Termination Date, the Lessor
covenants and agrees that it will, unless the Concurrent Lessee, with the
approval of the Rating Agency and the Credit Enhancer, shall otherwise consent
in writing:
(1) comply with all laws, rules, regulations and orders applicable to the
Lessor and its business and properties and the Designated Eligible
Leases, except where the failure to do so would not materially
adversely affect the Concurrent Lessee's interests hereunder, the
collectibility or enforceability of the Designated Eligible Leases,
the Lease Entitlements or the Related Rights or the ability of the
Lessor or the Collector to perform its obligations hereunder or
thereunder;
(2) preserve and maintain its corporate existence, rights, franchises and
privileges in its jurisdiction of incorporation, and qualify and
remain qualified as an extra-provincial corporation or other out-of-
jurisdiction corporation in each jurisdiction in which the failure to
do so would materially adversely affect the interests of the
Concurrent Lessee hereunder, the collectibility or enforceability of
the Designated Eligible Leases, the Lease Entitlements or the Related
Rights or the ability of the Lessor or the Collector to perform its
obligations thereunder or hereunder;
(3) hold as trust property for and on behalf of the Concurrent Lessee, at
any one or more of the offices designated under the heading
"Locations" in Schedule B, with respect to each Designated Eligible
Lease, until the obligations in respect of such Designated Eligible
Lease have been satisfied, the following documents or instruments,
which are hereby constructively delivered to the Concurrent Lessee:
(1) the original Designated Eligible Leases;
(2) the original credit application, the credit analysis and the credit
agency report (unless no such report could be obtained in respect of
the Lessee) and the "quality indicator score" records, if any,
relating to the Lessee, all in accordance with the Credit and
Collection Policies;
(3) all other documents that the Lessor shall keep on file, in accordance
with its customary procedures, evidencing the Related Rights; and
(4) any and all other documents that the Lessor shall keep on file, in
accordance with its customary procedures, relating to a Designated
Eligible Lease, a Lessee or any Equipment;
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(4) except to the extent of actions to the contrary resulting from the
exercise by the Concurrent Lessee of its rights hereunder, cause
employees working in the offices designated under the heading
"Locations" in Schedule B to perform their responsibilities in
collecting and administering the Designated Eligible Leases, the
Equipment and the Lease Entitlements in the same manner as if the
Lease Entitlements were owned by the Lessor;
(5) permit the Concurrent Lessee and the Credit Enhancer, acting through
the Collector, at any reasonable time and from time to time to
inspect, audit, check and make abstracts from the Lessor's books,
accounts, Records or other papers pertaining to the Designated
Eligible Leases, the Equipment and the Lease Entitlements. From time
to time upon the reasonable written request of the Concurrent Lessee,
the Lessor shall permit the Concurrent Lessee and the Credit Enhancer
to meet with and make inquiries of the managers of the Lessor at the
offices listed under the heading "Locations" in Schedule B. From time
to time upon the reasonable written request of the Concurrent Lessee,
the Lessor, at its own expense, will deliver to the Concurrent Lessee
and the Credit Enhancer or any agent selected by the Concurrent
Lessee, as the case may be: (i) information indicating, as to each
Designated Eligible Lease, the Lessee thereunder, the Financed Balance
thereof and the location of any documents and instruments relating to
such Designated Eligible Lease; and (ii) any Designated Eligible Lease
and such Records and invoices pertaining thereto and evidence thereof
as the Concurrent Lessee may deem necessary to enable it to enforce
its rights thereunder. Upon and following the occurrence of a
Termination Event, at the request of the Concurrent Lessee, if the
Concurrent Lessee, in its reasonable discretion, deems it necessary or
appropriate to protect its interest therein, the Lessor shall (x)
assemble all of the documents, instruments and other Records relating
to the Designated Eligible Leases, the Equipment and the Lease
Entitlements, or which are otherwise necessary or desirable to collect
the Lease Entitlements or enforce the Related Rights, and shall make
the same available to the Concurrent Lessee and the Credit Enhancer at
one or more of the offices listed under the heading "Locations" in
Schedule B, and (y) segregate all cash, cheques and other instruments
received by the Lessor from time to time constituting Collections in a
manner acceptable to the Concurrent Lessee and shall, immediately upon
receipt, remit all such cash, cheques and instruments, duly endorsed
or with duly executed instruments of transfer, to the Concurrent
Lessee or its designee;
(6) in the event that a Person other than the Lessor is appointed
Replacement Collector or the Lessor fails to comply with any of the
provisions hereof, then, at the request of the Concurrent Lessee, the
Lessor shall make such notations on such books, records, documents and
instruments relating to the Designated Eligible Leases, the Equipment
and the Lease Entitlements in the possession of the Lessor, including
all Designated Eligible Leases and Related Rights, as may be requested
by the Concurrent Lessee to evidence the interest of the Concurrent
Lessee therein and, if so requested, the Lessor shall store the same
in a separate storage area, segregated
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from information or records relating to all Equipment and their
related leases not leased to the Concurrent Lessee pursuant to this
Agreement, so marked, or deliver the same to the Concurrent Lessee;
(7) at the request of the Concurrent Lessee, provide to the Concurrent
Lessee a report setting forth such information as the Concurrent
Lessee may reasonably request with respect to the Designated Eligible
Leases, the Equipment, the Lease Entitlements, the Related Rights,
this Agreement and the transactions contemplated hereby;
(8) maintain and implement prudent and reasonable administrative and
operating procedures (including an ability to recreate records
evidencing the Designated Eligible Leases and the Lease Entitlements
and Related Rights relating thereto in the event of the destruction of
the originals thereof) and keep and maintain all books, records,
documents and other information reasonably necessary or advisable for
the collection and enforcement of all Designated Eligible Leases,
Lease Entitlements and Related Rights;
(9) permit the Concurrent Lessee through the Lessor in its capacity as
Collector and the Credit Enhancer at any reasonable time and from time
to time to inspect the data processing systems used by the Lessor to
service, administer and collect the Designated Eligible Leases and, in
the event that the Lessor is not the Collector, to permit the
Collector to use, through the Lessor only (and not directly), any
computer or computer related equipment, together with all necessary
software, that had been used by the Lessor to service, administer and
collect the Designated Eligible Leases immediately prior to the Lessor
ceasing to be the Collector; provided, however, that such right shall
be exercised in a manner that does not interfere with the Lessor's
operations and at a mutually convenient time or times;
(10) keep its chief place of business and chief executive office, and the
offices where it keeps the Records and other documents concerning the
Designated Eligible Leases and the Equipment (and all original
documents relating thereto), at the addresses listed in Schedule B.
The Lessor shall give the Concurrent Lessee and the Credit Enhancer 30
days' prior written notice of any change in the address of its chief
place of business and chief executive office, and written notice
promptly after any change in the address of any other office listed
under the heading "Locations" in Schedule B, and each such notice
shall be deemed to amend Schedule B accordingly;
(11) comply in all material respects with the Credit and Collection
Policies in regard to each Designated Eligible Lease and fully
perform, in a timely fashion, and comply with all terms, covenants and
other provisions required to be performed and observed by the Lessor
under each Designated Eligible Lease;
(12) notify the Concurrent Lessee at least ten Business Days prior to
changing its corporate name;
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(13) if at any time the Lessor proposes to sell, assign, grant an Adverse
Claim in, or otherwise transfer any interest in any Equipment forming
the subject matter of a Designated Eligible Lease or any Lease
Entitlements to any prospective purchaser, lessee, licensee, lender
or other transferee, give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs that, if they
refer in any manner whatsoever to any Designated Eligible Lease,
indicate that the Equipment forming the subject matter of such
Designated Eligible Lease have been leased to the Concurrent Lessee
and the Collections relating to such Designated Eligible Lease have
been assigned to the Concurrent Lessee, unless such Designated
Eligible Lease shall have been paid in full or unless the Concurrent
Lease shall have been terminated in respect of the Equipment forming
the subject matter of such Designated Eligible Lease;
(14) unless otherwise agreed by the Concurrent Lessee, if, as a result of
the entering into of a Concurrent Lease hereunder, the aggregate
Financed Balances of Designated Eligible Leases that relate to
Lessees located in any jurisdiction in Canada (other than those
provinces or such other jurisdictions, if any, for which an opinion
has been provided previously) would exceed the product obtained when
the Program Limit is multiplied by 2%, the Lessor shall deliver to
the Concurrent Lessee, the Rating Agency and the Credit Enhancer,
contemporaneously with the delivery of the relevant Concurrent Lease
Request hereunder, appropriate local counsel opinions in respect of
such jurisdiction;
(15) perform its obligations hereunder as Collector for so long as it
remains designated as Collector hereunder; and
(16) make or cause to be made all filings, recordings, registrations and
take all other actions in each jurisdiction necessary or appropriate
to validate, preserve, perfect or protect the interests of the
Concurrent Lessee in the Equipment under the Concurrent Leases and
the ownership interests of the Concurrent Lessee in and the rights of
the Concurrent Lessee to collect any and all of the Lease
Entitlements, including the right to enforce the Related Rights with
respect to the Equipment.
8.2 Reporting Requirements of the Lessor
------------------------------------
From the date hereof until the Final Termination Date, the Lessor
covenants and agrees that it will, unless the Concurrent Lessee shall otherwise
consent in writing, deliver to the Concurrent Lessee, the Securitization Agent,
the Rating Agency and the Credit Enhancer:
(1) within five Business Days after the Lessor becomes aware of a
material adverse change in the business, operations, properties,
business prospects or condition (financial or otherwise) (other than
matters of a general economic nature) of the Lessor or its
Subsidiaries, or of an occurrence of a breach of its obligations
under this
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Agreement, notice of such change or occurrence together with a
statement by a responsible officer of the Lessor specifying the facts,
the nature and period of existence of any such breach, condition or
event and the action that the Lessor has taken, is taking and/or
proposes to take with respect thereto;
(2) promptly after the Lessor becomes aware thereof, notice of any
litigation or other court or arbitration proceeding brought against
the Lessor and/or any of its Subsidiaries and/or any Parent Company in
which (i) the amount in excess of insurance coverage that is at issue
is $1,000,000 or more or (ii) injunctive or similar relief is sought
in respect of which there is a reasonable possibility of a
determination that would materially adversely affect the Lessor's
ability to perform its obligations hereunder;
(3) 30 days' notice prior to the Lessor taking any action that will
adversely affect the perfection, validity or protection of the
interests of the Concurrent Lessee under the Concurrent Lease in the
Equipment and the ownership interests of the Concurrent Lessee in, to
and under the Lease Entitlements and the right of the Concurrent
Lessee to collect on the Designated Eligible Leases and the proceeds
thereof, including the right to enforce the Related Rights;
(4) reasonably promptly after the implementation of any material change in
the Credit and Collection Policies other than a change that is not
restricted pursuant to section 6.10(a), a written description of such
change;
(5) with reasonable promptness, such other information, reports or
documents concerning the Designated Eligible Leases, the Equipment,
the Lessees, the Lease Entitlements and the Credit and Collection
Policies as the Concurrent Lessee may from time to time reasonably
request; and
(i) as soon as available and in any event within 60 days after
the end of each of the first three quarters in each fiscal
year of the Lessor, the unaudited consolidated balance sheet
of the Lessor as of the end of such quarter and the
unaudited consolidated statements of income of the Lessor
for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by a
senior financial officer of the Lessor as to the accuracy of
the information contained therein;
(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Lessor, a copy of the
unaudited consolidated financial statements for such year
for the Lessor, such financial statements to contain at
least a balance sheet, an earnings statements, a statement
of changes in financial position and a statement of
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retained earnings and certified by a senior financial
officer of the Lessor as to the accuracy of the
information contained therein;
(3) promptly after the sending or filing thereof, copies of
all reports which the Lessor sends to any holders of
securities which it has offered to the public, and
copies of all reports and documents which the Lessor
files with any securities commission or any similar
regulatory body;
(4) as soon as possible, and in any event within five
Business Days after an officer of the Lessor becomes
aware or ought to have become aware of the occurrence
of each Trigger Event or Termination Event or each
event which, with the giving of notice or lapse of time
or both, would constitute a Trigger Event or
Termination Event, a statement of the Lessor's V-P
Finance setting forth details as to such Trigger Event
or Termination Event or event and the action which the
Lessor has taken and/or is proposing to take with
respect thereto; and
(5) promptly, from time to time, such other documents,
records, information or reports with respect to the
Designated Eligible Leases or the conditions or
operations, financial or otherwise, of the Lessor as
the Concurrent Lessee may from time to time reasonably
request.
8.3 Negative Covenants of the Lessor
--------------------------------
From the date hereof until the Final Termination Date, the Lessor
covenants and agrees that it will not, unless the Concurrent Lessee, with the
approval of each of the Credit Enhancer and the Rating Agency, shall otherwise
consent in writing:
(1) except as otherwise provided herein, and whether by operation of law
or otherwise, sell, assign or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to any of the
Designated Eligible Leases, the Equipment and the Lease Entitlements
or assign any right to receive payment under, or to enforce the
Lessor's interest in, any of the Designated Eligible Leases, the
Equipment and the Lease Entitlements, in each case, other than the
leasehold interests and Adverse Claims created in favour of the
Concurrent Lessee pursuant to this Agreement;
(2) make any material change in the character of its businesses or in its
Credit and Collection Policies which change would, in either case,
have a material adverse effect on the Concurrent Lessee's interest in,
or impair the collectability or enforceability of or any payment
under, any Designated Eligible Lease or the Equipment or Lease
Entitlements related thereto, or the enforcement of any Related
Rights, provided that any such changes that do not have such effect
shall be permissible;
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(3) subject to subsection 6.17(a), make any change in the instructions to
Lessees regarding payments to be made under the Designated Eligible
Leases, which change would result in a material increase in the cost
or difficulty of collecting and identifying payments from Lessees;
(4) except to the extent of actions to the contrary resulting from the
exercise by the Concurrent Lessee of its rights hereunder, keep,
deliver or maintain any records or other evidence at the offices
designated under the heading "Locations" in Schedule B which would
enable employees to identify which Equipment have been leased or
licensed to the Concurrent Lessee hereunder and which Designated
Eligible Leases relate thereto;
(5) take or omit to take any action if the taking or omitting to take such
action by the Lessor would constitute a breach by the Lessor of any
representation, warranty or covenant of the Lessor in this Agreement
or in any other document delivered pursuant to this Agreement or
contemplated hereby; or
(6) enter into any transaction of reorganization, amalgamation or
arrangement, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution) or, other than with respect to sales,
assignments, leases, licences or transfers of computer hardware and
software, or of leases and licences relating thereto or any rights or
benefits thereunder, in the ordinary course of business, sell, lease
or otherwise dispose of its assets as an entirety or substantially as
an entirety; except that the Lessor may, provided that it delivers
prior written notice to the Concurrent Lessee, enter into a
transaction of reorganization, amalgamation, or arrangement, so long
as (i) such transaction will not materially adversely affect the
validity, enforceability and collectability of the Designated Eligible
Leases, the Lease Entitlements or the Related Rights, and (ii) as a
condition to the completion of such transaction, the continued or
reorganized corporation shall have executed an agreement of assumption
to perform every obligation of the Lessor hereunder and under the
other agreements, instruments and documents executed and delivered by
the Lessor hereunder or otherwise contemplated hereby.
8.4 Power of Attorney; Further Assurances
-------------------------------------
(1) The Lessor hereby grants to the Concurrent Lessee an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of the Lessor or in the name of the Concurrent Lessee all steps
necessary or advisable to endorse or negotiate an instrument, bill of exchange
or other writing or to otherwise enforce or realize on any Designated Eligible
Lease or other right of any kind held or owned by the Lessor or transmitted to
or received by the Lessor or the Concurrent Lessee as payment on account or
otherwise in respect of the Designated Eligible Lease, and to execute and
deliver, in the Lessor's name and on the Lessor's behalf, such instruments and
documents necessary or desirable to evidence or protect the interests of the
Concurrent Lessee in the Equipment and the Lease Entitlements and to execute and
file, in the Lessor's name and on
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Capital or the Performance Guarantor pursuant hereto or thereto, which
shall have been false, incorrect or inaccurate when made or deemed
made;
(2) the failure by the Lessor, IKON Capital or the Performance Guarantor
to comply with any applicable law, rule or regulation with respect to
any Designated Eligible Lease, Related Rights or Equipment or the non-
conformity of any Designated Eligible Lease, Related Rights or
Equipment with any such applicable law, rule or regulation;
(3) the failure to vest and maintain vested in the Concurrent Lessee a
perfected Adverse Claim in respect of the interests of the Concurrent
Lessee as concurrent lessee of the Equipment and a perfected ownership
interest in the Lease Entitlements, including all Related Rights, in
each case free and clear of any Adverse Claim whether existing at the
time of the consummation of the transactions contemplated hereby or at
any time thereafter, other than the leasehold interests and Adverse
Claims created in favour of the Concurrent Lessee pursuant to this
Agreement;
(4) any dispute, claim, set-off or defence (other than a discharge in
bankruptcy of the Lessee or a statutory seize or sue defence pursuant
to applicable law where the Collector has enforced an Adverse Claim in
the relevant Equipment) of a Lessee to the payment of any amount owing
under a Designated Eligible Lease (including a defence based on the
Designated Eligible Lease not being a legal, valid and binding
obligation of such Lessee enforceable against it in accordance with
its terms and further including any warranty or product liability
claim or personal injury or property damage suit or other similar or
related claims);
(5) any claim for personal injury, death, property damage or product
liability which may arise by reason of, result from or be caused by,
or relate to the use, operation, maintenance or ownership of, the
Equipment; and
(6) any material failure of the Lessor to perform its duties or
obligations, as Collector or otherwise, in accordance with the
provisions of this Agreement.
9.2 Notification of Potential Liability
-----------------------------------
The Lessor will, upon learning of potential situations involving
possible liability under this Article 9, promptly notify the Concurrent Lessee
thereof.
9.3 Litigation
----------
At the request of the Concurrent Lessee, the Lessor shall, at its
expense, co-operate with the Concurrent Lessee in any action, suit or proceeding
brought by or against the Concurrent Lessee relating to any of the transactions
contemplated by this Agreement, any Equipment subject to a Concurrent Lease or
any of the Lease Entitlements (other than an action, suit or proceeding by
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the Lessor against the Concurrent Lessee). In addition, the Lessor agrees to
notify the Concurrent Lessee and the Concurrent Lessee agrees to notify the
Lessor, at the Lessor's expense, promptly upon learning of any pending or
threatened action, suit or proceeding, if the judgment or expenses of defending
such action, suit or proceeding would be covered by section 9.1 and (except for
an action, suit or proceeding by the Lessor against the Concurrent Lessee) the
Concurrent Lessee and the Lessor shall consult with each other concerning the
defence and prior to settlement; provided, however, that if (i) the Lessor shall
have acknowledged that section 9.1 would cover any judgment or expenses in any
action, suit or proceeding, and (ii) in the sole determination of the Concurrent
Lessee, the Lessor has the financial ability to satisfy such judgment or
expenses, then the Lessor shall have the right, on behalf of the Concurrent
Lessee but at the Lessor's expense, to defend such action, suit or proceeding
with counsel selected by the Lessor, and shall have sole discretion as to
whether to litigate, appeal or enter into an exclusively monetary settlement.
9.4 The Lessor to Remain Obligated
------------------------------
Save as expressly provided herein: (i) the Lessor shall remain
responsible and liable under the Designated Eligible Leases (and any Related
Rights relating thereto) to the extent set forth in such leases and Related
Rights or otherwise to perform all of its duties and obligations thereunder and
to service the Designated Eligible Leases to the same extent as if the
Concurrent Lease had not been granted hereunder and the Lease Entitlements and
had not been transferred to the Concurrent Lessee hereunder; and (ii) the
exercise by the Concurrent Lessee of any of its rights hereunder shall not
release the Lessor from any of its duties or obligations under such Designated
Eligible Leases unless by operation of law the exercise of such rights has the
effect of releasing the Lessor from its duties and obligations or would render
performance by the Lessor thereof of no practical benefit to the Concurrent
Lessee.
9.5 Tax Indemnity
-------------
The Lessor agrees to defend and to save the Indemnified Parties
harmless from and against any and all liabilities arising out of the
transactions contemplated by this Agreement with respect to or resulting from
any delay in paying or any omission to pay any Taxes otherwise required under
this Agreement to be paid or withheld and remitted by or on behalf of the Lessor
on its own behalf, on behalf of the Concurrent Lessee or on behalf of any Lessee
(including any Taxes contemplated in section 5.4(g)). If the Lessor shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable by or on behalf of the Lessor on its own behalf or on behalf of any
Lessee to the Concurrent Lessee hereunder or in connection with the execution,
delivery, filing and recording hereof and of the other documents to be delivered
hereunder and the consummation of the transactions contemplated hereby, or if
the Concurrent Lessee shall be required to pay any Taxes in respect of any sum
received by the Concurrent Lessee from the Lessor hereunder:
(1) the sum payable to the Concurrent Lessee shall be increased as may be
necessary (or an amount shall be owed to the Concurrent Lessee) so
that, after all required deductions, withholdings or payments in
respect of such Taxes have been made, the
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Concurrent Lessee receives or retains an amount equal to the sum that
the Concurrent Lessee would have received or retained had no such
deductions, withholdings or payments been made;
(2) Lessor shall make such deductions or withholdings; and
(3) the Lessor shall pay forthwith the full amount deducted or withheld to
the relevant taxation authority or other authority in accordance with
applicable law and will provide to the Concurrent Lessee copies of
such forms as are required to be provided to such authority evidencing
the payment by the Lessor.
For greater certainty, it is hereby acknowledged by the parties hereto
that the Lessor shall not be liable to indemnify the Indemnified Parties under
this section for any Taxes payable by, or required to be withheld by, the Lessor
on account of Taxes payable on the income of the Concurrent Lessee, Taxes
payable by virtue of the non-resident status of the Concurrent Lessee or Taxes
payable on the capital of the Concurrent Lessee.
9.6 Tax Credit
----------
If a payment (a "Grossed-Up Payment") made by the Lessor includes an
amount (a "Gross-Up") referred to in section 9.5, and the Concurrent Lessee is
able to apply for or otherwise take advantage of any tax credit, deduction in
computing income or similar benefit by reason of any withholding or deduction
made by the Lessor in respect of the Grossed-Up Payment (such credit, deduction
or benefit hereinafter being referred to as a "Tax Credit"), then the Concurrent
Lessee will, at the expense of the Lessor, use reasonable endeavours to obtain
the Tax Credit and, if it realizes the Tax Credit (whether by way of reducing
taxes payable, receiving a tax refund, or otherwise), the Concurrent Lessee
shall, subject to the provisos to this section 9.6, pay to the Lessor such
amount, if any (not exceeding the Gross-Up) as is determined in the discretion
of the Concurrent Lessee to be equal to the net after-tax value to the
Concurrent Lessee of such part of the Tax Credit as is reasonably attributable
to such withholding or deduction having regard to all dealings giving rise to
similar credits, deductions or benefits in relation to the same tax period and
to the cost of obtaining the same. Any such reimbursement shall be conclusive
evidence of the amount due to the Lessor and shall be accepted by it in full and
final settlement of its rights of reimbursement hereunder; provided that
notwithstanding the foregoing, (i) nothing herein contained shall interfere with
the right of the Concurrent Lessee to arrange its tax affairs in whatever manner
it deems fit and, in particular, the Concurrent Lessee shall not be under any
obligation to claim relief from its corporate profits or similar tax liability
in respect of any such deduction or withholding in priority to any other relief,
claims, credits or deductions available to it; and (ii) the Concurrent Lessee
shall not be obligated to disclose to the Lessor any information regarding its
tax affairs or tax computations; provided, further, that if, as a result of (x)
an audit of the Concurrent Lessee by its auditors or by a taxing authority, or
(y) any change to the affairs of the Concurrent Lessee or to the available
information concerning such affairs, which change is relevant to the
determination that reimbursement with respect to a Tax Credit is payable to the
Lessor hereunder, the Concurrent Lessee determines, in its discretion, that any
such payment made by the Concurrent Lessee to the
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Lessor hereunder would not have been made had the Concurrent Lessee known the
results of such audit or anticipated such change, or would have been made in a
smaller amount, then the Lessor shall pay to the Concurrent Lessee the amount of
such payment which the Concurrent Lessee so determines to have been an
overpayment.
9.7 Survival
--------
Without limiting the generality of section 5.5, but for greater
certainty, it is expressly acknowledged and agreed by the parties hereto that
the obligations of the Lessor under this Article 9 shall survive the
consummation of the transactions contemplated by this Agreement and,
notwithstanding the occurrence of such events, shall continue in full force and
effect indefinitely.
ARTICLE 10
GUARANTEE
10.1 Guarantee
---------
The Performance Guarantor hereby unconditionally and irrevocably
guarantees to the Concurrent Lessee the due and punctual performance, observance
and payment by the Lessor of all of the terms, covenants, conditions,
agreements, undertakings, indemnities (including, for certainty, the indemnities
by the Lessor under Article 9) and obligations on the part of the Lessor to be
performed, observed or paid under this Agreement or any document related thereto
in accordance with the terms hereof and thereof, including any agreement of the
Lessor to pay any sum under this Agreement and any other instrument, agreement
and document to be delivered by it hereunder (all such terms, covenants,
conditions, agreements, undertakings, indemnities and obligations on the part of
the Lessor to be performed, observed and paid, being collectively called the
"Guaranteed Obligations"). In the event that the Lessor shall fail in any
manner whatsoever to perform, observe or pay any of the Guaranteed Obligations
when the same shall be required to be performed, observed or paid, then the
Performance Guarantor will itself duly and punctually perform, observe and pay,
or cause to be duly and punctually performed, observed or paid, the Guaranteed
Obligations, and it shall not be a condition to the accrual of the obligation of
the Performance Guarantor hereunder to perform, observe or pay any of the
Guaranteed Obligations (or to cause the same to be performed, observed or paid)
that the Concurrent Lessee shall have first made any request of or demand upon
or give any notice to the Performance Guarantor or to the Lessor or have
initiated any action or proceeding against the Performance Guarantor or the
Lessor in respect thereof. The Concurrent Lessee may proceed to enforce the
obligations of the Performance Guarantor under this section 10.1 without first
pursuing or exhausting any right or remedy which the Concurrent Lessee may have
against the Lessor, any other Person, the Designated Eligible Leases or any
other property.
10.2 Validity of the Performance Guarantor's Obligations as Guarantor
----------------------------------------------------------------
The validity and enforceability of this Guarantee shall not be
impaired or affected by:
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(1) any extension, modification or renewal of, or indulgence with respect
to, or substitutions for, the Guaranteed Obligations or any part
thereof or any agreement relating thereto at any time;
(2) any failure or omission to enforce any right, power or remedy with
respect to the Guaranteed Obligations or any part thereof or any
agreement relating thereto, or any collateral securing the Guaranteed
Obligations or any part thereof;
(3) any waiver of any right, power or remedy or of any default with
respect to the Guaranteed Obligations or any part thereof or any
agreement relating thereto or with respect to any collateral securing
the Guaranteed Obligations or any part thereof;
(4) any release, surrender, compromise, settlement, waiver, subordination
or modification, with or without consideration, of any collateral
securing the Guaranteed Obligations or any part thereof, any other
guarantees with respect to the Guaranteed Obligations or any part
thereof, or any other obligation of any person or entity with respect
to the Guaranteed Obligations or any part thereof;
(5) the enforceability or validity of the Guaranteed Obligations or any
part thereof or the genuineness, enforceability or validity of any
agreement relating thereto or with respect to any collateral securing
the Guaranteed Obligations or any part thereof; or
(6) the application of payments received from any source to the payment of
indebtedness other than the Guaranteed Obligations, any part thereof
or amounts which are not covered by this Guarantee even though the
Concurrent Lessee might lawfully have elected to apply such payments
to any part or all of the Guaranteed Obligations or to amounts which
are not covered by this Guarantee,
all whether or not the Performance Guarantor shall have had notice or knowledge
of any act or omission referred to in the foregoing clauses (a) through (f) of
this section 10.2. The Performance Guarantor's liability hereunder shall be
several and independent of any other guarantees or other obligations at any time
in effect with respect to the Guaranteed Obligations or any part thereof and the
Performance Guarantor's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other guarantees
or other obligations.
10.3 Subrogation
-----------
Until the Guaranteed Obligations are paid in full, the Performance
Guarantor shall not exercise any right of subrogation with respect to any
payments made by it pursuant to this Guarantee. The Performance Guarantor
waives any benefit of the collateral, if any, which may from time to time secure
the Guaranteed Obligations or any part thereof and authorizes the Concurrent
Lessee to take any action or exercise any remedy with respect thereto, which the
Concurrent Lessee in its sole discretion shall determine, without notice to the
Performance Guarantor.
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10.4 Authorization by the Performance Guarantor as Guarantor
-------------------------------------------------------
The Concurrent Lessee may continue to enter into Concurrent Leases
from time to time without notice to or authorization from the Performance
Guarantor regardless of the Lessor's financial or other condition at the time of
any such purchase. The Performance Guarantor acknowledges to the Concurrent
Lessee that it has adequate means to obtain from the Lessor on a continuing
basis all information concerning the financial condition of the Lessor and the
collectibility of the Concurrent Leases, and agrees with the Concurrent Lessee
that the Concurrent Lessee shall not have any obligation to disclose or discuss
with the Performance Guarantor any information which it has respecting the
financial condition of the Lessor or the collectibility of any Concurrent
Leases.
10.5 Changes in the Lessor
---------------------
This Guarantee shall not be discharged or otherwise affected by any
change in the name of the Lessor or in the objects, capital structure or
constitution of the Lessor, or by the Lessor being amalgamated or merged with
another corporation, but shall, notwithstanding any such event, continue to
apply to all Guaranteed Obligations whether theretofore or thereafter incurred,
and in the case of the Lessor being merged, consolidated or amalgamated with
another corporation, this Guarantee shall apply to the liabilities of the
resulting corporation, and the term "the Lessor" shall include each such
resulting corporation.
10.6 Covenants of the Performance Guarantor as Guarantor
---------------------------------------------------
The Performance Guarantor covenants with the Concurrent Lessee that,
during the currency of this Guarantee:
(1) without limiting the guarantee in section 10.1, it will ensure that
the Lessor at all time complies with the Credit and Collection
Policies;
(2) it will deliver to the Concurrent Lessee (i) within 60 days after the
end of each of its first three fiscal quarters, copies of its
unaudited quarterly financial statements on a consolidated basis; and
(ii) within 120 days after the end of each of its fiscal years, copies
of its audited financial statements on a consolidated basis, such
financial statements in each case to include a balance sheet and
statement of retained earnings, income statement and statement of
charges in financial position prepared in accordance with U.S.
generally accepted accounting principles; and
(3) it will continue to be, either directly or indirectly, the registered
and beneficial owner of all of the issued and outstanding shares in
the capital of the Lessor.
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10.7 Taxes
-----
All payments to be made by the Performance Guarantor hereunder shall
be made free and clear of any deduction, withholding or other Taxes. If the
Performance Guarantor is required by law to make any deduction or withholding on
account of Tax or otherwise from any such payment, the sum due from it in
respect of such payment shall be increased to the extent necessary to ensure
that after the making of such deduction or withholding, the Concurrent Lessee
receives a net sum equal to the sum which it would have received had no
deduction or withholding been made.
10.8 Judgment Currency
-----------------
If any sum due from the Performance Guarantor under this Guarantee or
any order or judgment given or made in relation hereto must be converted from
the currency (the "First Currency") in which the same is payable hereunder or
under such order or judgment into another currency (the "Second Currency") for
the purpose of:
(1) making or filing a claim or proof against the Performance Guarantor;
(2) obtaining an order or judgment in any court or other tribunal; or
(3) enforcing any order or judgment given or made in relation hereto,
the Performance Guarantor shall indemnify and hold harmless the Concurrent
Lessee from and against any loss suffered as a result of any discrepancy
between:
(a) the rate of exchange used for such purpose to convert the sum in
question from the First Currency into the Second Currency; and
(b) the rate or rates of exchange at which the Concurrent Lessee may, in
the ordinary course of business, purchase the First Currency with the
Second Currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
The foregoing indemnity shall constitute a separate obligation of the
Performance Guarantor distinct from its other obligations hereunder and shall
survive the giving or making or any judgment or order in relation to all or any
of such other obligations.
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ARTICLE 11
MISCELLANEOUS
11.1 Liability of the Concurrent Lessee, the Credit Enhancer and the
---------------------------------------------------------------
Securitization Agent
- --------------------
Neither the Concurrent Lessee, the Securitization Agent nor any of
their respective directors, officers, agents or employees will be liable
pursuant to this Agreement for any action taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, and notwithstanding any term or provision hereof to the contrary,
each of the Lessor, IKON Capital and the Performance Guarantor hereby
acknowledges and agrees that the Securitization Agent acts as agent for the
Concurrent Lessee and, unless the Securitization Agent becomes the Replacement
Collector, has no duties or obligations to, will incur no liability to, and does
not act as an agent in any capacity for, the Lessor, IKON Capital or the
Performance Guarantor. Neither the Credit Enhancer, nor any of its directors,
officers, agents or employees shall be liable pursuant to this Agreement for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, other than for its or their own gross negligence or willful misconduct
or breach of contract, and for the purposes of this section 11.1 only, the
Lessor shall be deemed to have entered into this Agreement as agent for the
Credit Enhancer and its directors, officers, agents and employees, all of whom,
for the purposes of this section 11.1 only, shall be deemed to be parties
hereto.
11.2 Change in Circumstances
-----------------------
If either:
(1) the introduction of, or any change (including any change by way of
imposition or increase of any reserve requirements) in or in the
interpretation of, any law by any court or governmental authority, in
each case made after the date hereof; or
(2) the compliance by the Concurrent Lessee or the Credit Enhancer with
any changed or introduced guideline or request made after the date
hereof from any Governmental Authority (whether or not having the
force of law),
has the effect of:
(3) increasing the cost to the Concurrent Lessee of making, funding or
maintaining any Concurrent Lease hereunder or agreeing to make
Concurrent Leases hereunder, or reducing the rate of return to the
Concurrent Lessee in connection therewith or as a result of reserves
(including reserves against capital) to be made therefor or requiring
the payment of Taxes in respect of the capital of the Concurrent
Lessee;
(4) reducing the amount payable with regard to any Designated Eligible
Lease; or
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(5) requiring the Concurrent Lessee to make a payment it would not
otherwise have been required to make, calculated by reference in whole
or in part to the Designated Eligible Leases or the Equipment,
the Lessor shall, from time to time, upon demand by the Concurrent Lessee, pay
to the Concurrent Lessee that portion of such increased costs incurred, amounts
not received or receivable, compensation for such reduction in rate of return or
required payment made, which is directly attributable to making, funding or
maintaining any Concurrent Lease hereunder. The Concurrent Lessee shall deliver
to the Lessor a certificate setting forth its computation of such increased
costs, amounts not received or receivable, reduction in rate of return or
required payment made or to be made, which computation may utilize such
averaging and attribution methods that the Concurrent Lessee, acting reasonably,
believes to be applicable. The Concurrent Lessee shall promptly notify the
Lessor of any event or circumstance which could result in any payment being
required to be made to the Concurrent Lessee pursuant to this section 11.2.
11.3 Amendments, Waivers, Etc.
-------------------------
No amendment or waiver of any provision of this Agreement nor consent
to any departure by the Lessor, IKON Capital, the Performance Guarantor or the
Concurrent Lessee therefrom shall be effective in whole or in part unless the
amendment or waiver shall be in writing and signed by (a) the Lessor, IKON
Capital, the Performance Guarantor and the Concurrent Lessee (with respect to an
amendment), (b)(i) the Concurrent Lessee or any agent on its behalf (with
respect to a waiver or consent by it), (ii) the Lessor (with respect to a waiver
or consent by it), (iii) IKON Capital (with respect to a waiver or consent by
it), or (iv) the Performance Guarantor (with respect to a waiver or consent by
it), (c) the Securitization Agent to the extent it effects the rights, duties or
obligations of the Securitization Agent, and (d) the Credit Enhancer, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. Each proposed amendment of this
Agreement that is considered by the Concurrent Lessee to be a material amendment
shall be subject to the approval of the Rating Agency, and the Rating Agency
shall be provided with prior notice of all other proposed amendments of this
Agreement. Other than for the mandate letter described in section 6.20(a), this
Agreement contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written agreements or
undertakings.
11.4 Notices, Etc.
-------------
All notices, documents and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and shall be valid and
effective if delivered or sent by facsimile transmission (with receipt
confirmed) to each party hereto, as follows:
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(1) in the case of the Lessor:
IKON Office Solutions, Inc.
#810, 715-5th Avenue S.W.
Calgary, Alberta
T2P 2X6
Attention: Controller
Facsimile No.: (403) 264-9963;
(2) in the case of IKON Capital:
IKON Capital, Inc.
16007-116 Avenue
Edmonton, Alberta
T5M 3Y1
Attention: Controller
Telecopier No.: (780) 489-4411;
(3) in the case of the Performance Guarantor:
IKON Office Solutions, Inc.
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
U.S.A.
Attention: Treasurer
Facsimile No.: (610) 408-7022;
(4) in the case of the Concurrent Lessee:
CARE Trust
c/o Nesbitt Burns Inc.
3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Attention: Managing Director, Securitization and Structured
Finance
Facsimile No.: (416) 359-1910;
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(5) in the case of the Credit Enhancer:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Attention: Officer in Charge, Letter of Credit Department
Facsimile No.: (617) 451-2127; and
(6) in the case of the Rating Agency:
Dominion Bond Rating Service Limited
200 King Street West, Suite 1304
Sun Life Centre, West Tower
Toronto, Ontario
M5H 3T4
Attention: Structured Finance
Facsimile No.: (416) 593-5904;
or to such other address or facsimile number as shall be designated by such
party by written notice to the other parties hereto delivered in accordance with
this section 11.4. All such notices and communications shall be deemed to have
been received and shall be effective, in the case of delivery, on the day of
delivery, and, in the case of notice by facsimile transmission, on the day of
transmittal thereof if sent during normal business hours of the recipient and on
the next succeeding Business Day if not sent during normal business hours of the
recipient.
11.5 No Waiver; Remedies
-------------------
No failure on the part of the Concurrent Lessee to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
11.6 Binding Effect; Assignability
-----------------------------
This Agreement shall be binding upon and enure to the benefit of the
Lessor, IKON Capital, the Performance Guarantor and the Concurrent Lessee, and
their respective successors and permitted assigns; provided, however, that none
of the Lessor, IKON Capital or the Performance Guarantor may assign its rights
hereunder or any interest herein without the prior written consent of the
Concurrent Lessee, the Concurrent Lessee may not assign its rights hereunder or
any interest herein without the prior written consent of the Lessor and the
Performance Guarantor and the Concurrent Lessee may not lease, sublease, license
or sublicense to any other Person any of the
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Equipment, in each case except as specifically provided for in this Agreement.
This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms.
11.7 Costs and Expenses
------------------
In addition to the rights of indemnification granted to the Concurrent
Lessee under Article 9 hereof, the Lessor agrees to pay the Concurrent Lessee on
demand for all costs and expenses in connection with the preparation, execution,
delivery and administration of this Agreement and documents relating hereto,
including the taking of any actions hereunder or thereunder (including agents'
fees), and the other documents and transactions contemplated hereby or thereby,
the reasonable fees and expenses of the Securitization Agent, any fees payable
to the Rating Agency, the reasonable fees and expenses of any agents of the
Concurrent Lessee (or their counsel), printing costs, GST on the costs and
expenses referred to in this section, the reasonable fees and out-of-pocket
expenses of legal counsel for the Concurrent Lessee, including local counsel
with respect to the transactions contemplated hereby, the reasonable fees and
out-of-pocket expenses of legal counsel for the Concurrent Lessee with respect
to advising the Concurrent Lessee as to its rights and remedies under this
Agreement and the documents relating hereto after the Closing Date, and all
costs and expenses, if any (including reasonable legal fees and expenses), in
connection with the enforcement of such agreements and documents and the other
documents to be delivered hereunder or thereunder or contemplated hereby or
thereby. In the event the Lessor pays any GST, the Concurrent Lessee covenants
and agrees to use its reasonable best efforts to assist the Lessor to obtain a
rebate or refund thereof if available in the circumstances, including by
providing the Lessor with invoices showing the Lessor as the party being billed.
11.8 Confidentiality
---------------
Each of the Concurrent Lessee, the Lessor, IKON Capital and the
Performance Guarantor shall make all reasonable efforts to hold all non-public
information, obtained pursuant to this Agreement and the transactions
contemplated hereby or effected in connection herewith in accordance with its
customary procedures for handling its confidential information of this nature
and shall not use any such information for purposes not related to this
Agreement, provided that, notwithstanding the foregoing, the parties may make
disclosure of such non-public information (i) as requested or required by any
governmental agency or representative thereof or pursuant to legal process or
when required under applicable law, (ii) to the Rating Agency, (iii) to the
Credit Enhancer, (iv) to the Liquidity Agent, (v) to implement the terms of this
Agreement or to enforce any rights which the Concurrent Lessee, the Lessor, IKON
Capital or the Performance Guarantor, as the case may be, may have to collect
any Designated Eligible Lease or to enforce their respective rights with respect
to any Equipment, Lease Entitlements or Related Rights, or (vi) to a Replacement
Collector, provided that the Replacement Collector has agreed to be bound by the
provisions of this section 11.8. Unless specifically prohibited by applicable
law or court order, each party hereto shall notify the other party hereto of any
request by any governmental agency or representative thereof or other Person for
disclosure of any such non-public information prior to disclosure of such
information to permit the party affected to contest such disclosure, if
possible.
-93-
11.9 Capital Cost Allowance
----------------------
The Concurrent Lessee acknowledges that the Lessor is the owner of the
Equipment for purposes of claiming capital cost allowance under the Income Tax
Act (Canada) and therefore the Concurrent Lessee agrees not to make a claim for
capital cost allowance in respect of the Equipment.
11.10 Effect of Agreement
-------------------
Each of the Lessor, IKON Capital, the Performance Guarantor and the
Concurrent Lessee hereby expressly acknowledges that this Agreement is intended
to create a relationship of lessor on the one hand, and lessee on the other,
with respect to the Equipment, and of transferee and transferor with respect to
the Lease Entitlements. Each of the Lessor and the Concurrent Lessee hereby
expressly disclaims any intention to establish a trust relationship or to
constitute either the Lessor or the Concurrent Lessee as the agent of the other.
The Lessor, on the one hand, and the Concurrent Lessee, on the other, covenant
with each other that they will not, at any time, allege or claim that a
relationship of trust or agency is created hereby, except as otherwise expressly
provided for herein.
11.11 Termination
-----------
This Agreement shall remain in full force and effect until the Final
Termination Date; provided, however, that the Concurrent Lessee's rights and
remedies with respect to any incorrect representation or warranty made or deemed
to be made by the Lessor, IKON Capital or the Performance Guarantor herein, the
indemnification and payment provisions hereof and the provisions of Article 10
shall be continuing and will survive any termination hereof for a period of two
years commencing on the Final Termination Date.
-94-
11.12 Execution in Counterparts
-------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
IKON OFFICE SOLUTIONS, INC.
by: /s/ Karin M. Kinney
-----------------------------------
Name: Karin M. Kinney
Title: Secretary
IKON CAPITAL, INC.
by: /s/ Karin M. Kinney
-----------------------------------
Name: Karin M. Kinney
Title: Secretary
IKON OFFICE SOLUTIONS, INC.
by: /s/ Karin M. Kinney
-----------------------------------
Name: Karin M. Kinney
Title: Secretary
-95-
THE TRUST COMPANY OF BANK OF
MONTREAL,
in its capacity as trustee of CARE TRUST by its
Securitization Agent, NESBITT BURNS INC.
by: /s/ Paul Smeeton
-------------------------------------
Name: Paul Smeeton
Title: Vice-President and Director,
Securitization and Structured
Finance
by: /s/ Jerry Marriot
--------------------------------------
Name: Jerry Marriot
Title: Vice-President, Securitization and
Structured Finance
SCHEDULE A
FORM OF CONCURRENT LEASE REQUEST
--------------------------------
TO: CARE TRUST
c/o NESBITT BURNS INC.
3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Telecopier No.: (416) 359-1910
This Concurrent Lease Request is delivered to you pursuant to section
2.1 of a concurrent lease agreement made as of September 14, 1999 (the
"Concurrent Lease Agreement") between IKON Office Solutions, Inc. (the
"Lessor"), IKON Capital, Inc., IKON Office Solutions, Inc. and CARE Trust (the
"Concurrent Lessee").
The Lessor hereby gives notice to the Concurrent Lessee that it grants
to the Concurrent Lessee, a lease to possess and use the Equipment (as listed in
the attached Report), all in accordance with the terms of the Concurrent Lease
Agreement.
Lease Date: ________________________
Financed Balance subject
to Concurrent Lease: ________________________
Prepaid Rent: ________________________
Amount deposited into
Deferred Rental Account: ________________________
Amount paid to the Lessor: ________________________
DATED the ____ day of ___________________, ______.
IKON OFFICE SOLUTIONS, INC.
By: _________________________________
(Authorized Officer)
SCHEDULE B
LOCATION OF RECORDS AND BANK ACCOUNTS THAT
RECEIVE DIRECT PAYMENTS
----------------------------------------------------
Location of Records:
IKON Capital
16007 - 116 Avenue
Edmonton, Alberta
T5M 3Y1
Location of Bank Accounts:
Canadian Imperial Bank of Commerce
10058 - 170 Street Westgate
Edmonton, Alberta
T5S 2G3
(Transit #04959, Account #105317)
SCHEDULE C
STANDARD FORM LEASES
--------------------
[LETTERHEAD OF IKON OFFICE SOLUTIONS APPEARS HERE]
[LOGO] Lease Agreement
------------------------------------------
Office Solutions CUSTOMER NO.
------------------------------------------
LEASE NO.
- ------------------------------------------------------------------------------------------------------------------------------------
LESSEE NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS PRESENTLY LEASING
THROUGH IOS
- ------------------------------------------------------------------------------------------------------------
P.O. BOX [_] YES [_] NO
- ------------------------------------------------------------------------------------------------------------
CITY, PROVINCE & POSTAL CODE
- ------------------------------------------------------------------------------------------------------------------------------------
PERSON TO CONTACT TEL NO. (Inc. Area Code) YEARS IN BUSINESS
AND TITLE
- ------------------------------------------------------------------------------------------------------------------------------------
PRE-AUTHORIZED PAYMENT PLAN: LEASE START DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Lessor/Seller is authorized to draw Rental payments or amounts due from
the bank account shown to the right and as per the attached sample cheque. Bank:________________________________________________
Authorized Signature: ___________________________________________________ Address:_____________________________________________
Title: __________________________________________________________________ Acct.# ______________________________________________
Please attach unsigned sample cheque. Contact: ____________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
LOCATION OF EQUIPMENT: NAME AND ADDRESS
(If different from above) OF LANDLORD:
- ------------------------------------------------------------------------------------------------------------------------------------
SALES REPRESENTATIVE BRANCH LOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Including Model and Serial No.(s):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TERM PAYMENT WILL BE MADE NO OF RENTAL AMOUNT P.S.T. G.S.T TOTAL RENTAL PAYMENT
PAYMENTS
- ------------ [_] Monthly
NO. OF MONTHS [_] Quarterly -----------------------------------------------------------------------------
[_] Annually Indicate Prov. Sales Tax Permit Number, If Applicable
- ------------------------------------------------------------------------------------------------------------------------------------
TERMS AND CONDITIONS OF LEASE - ADDITIONAL TERMS AND CONDITIONS ON THE REVERSE SIDE HEREOF AND ANY SCHEDULES FORM A PART OF THIS
LEASE
- ------------------------------------------------------------------------------------------------------------------------------------
THE UNDERSIGNED ACKNOWLEDGES TO HAVE READ THE ENTIRE AGREEMENT AND ACCEPTS THE TERMS AND CONDITIONS THEREOF
1. RENTAL. Lessee shall pay to the Lessor as rental for the Equipment, the periodic rent payments set forth above. Such rent
payments shall be payable at Lessor's Head Office as follows: first rent payment upon the execution hereof by Lessee and
subsequent rent payments in every calendar month or other calendar period, after the month of shipment on the 1st of such month
of period. Rent hereunder is payable without abatement: provided that a charge may be assessed on any partial receipt of
Equipment by Lessee from time to time prior to the actual commencement date of the Agreement computed from the respective dates
of such receipts and said payment shall become due and payable on said actual commencement date.
2. SECURITY INTEREST. Undersigned acknowledges that statements under the various provincial Personal Property Security Acts,
including publication forms under the Civil Code of Quebec, may be registered with respect to the above referred to transaction
and hereby waive receipt of, and the right to receive, a copy of any such registered statement, certified statement or
verification statement with respect thereto. Lessee agrees to complete and sign any documents or take such other actions which
the Lessor deems reasonably necessary to protect and continue Lessor's title and security interest under this Agreement.
Lessee shall indemnify the Lessor against any assertions or claims by third parties that would jeopardize the Lessor's
security interest.
- -------------------------------------------- -----------------------------------------------------------------------------------
LESSEE
EXECUTED AS LESSOR (Legal Name) ____________________________________________________________________
IKON Office Solutions, Inc. _________________________________________________________________________________
The undersigned affirms that he/she is duly authorized to execute this Agreement
By: ______________________________________________ Title ______________________
Authorized Signature
By: ___________________________________ By: ______________________________________________ Title ______________________
Authorized Signature Authorized Signature
- -------------------------------------------- -----------------------------------------------------------------------------------
[LOGO OF IKON CAPITAL APPEARS HERE]
No locataire
-------------------------------------
CONTRAT DE LOCATION
_____________________________________________ -------------------------------------
(ci-apres appele le "locateur) No contrat de location
-
- ------------------------------------------------------------------------------------------------------------------------------------
NOM
DU CLIENT
- ------------------------------------------------------------------------------------------------------------------------------------
ADRESSE
- ------------------------------------------------------------------------------------------------------------------------------------
CASIER POSTAL
- ------------------------------------------------------------------------------------------------------------------------------------
VILLE ET ????????????????????
PROVINCE
- ------------------------------------------------------------------------------------------------------------------------------------
PERSONNE A RE????? ??????????????????
- ------------------------------------------------------------------------------------------------------------------------------------
Le locateur est autorise a prelever du compte de banque indique a droite et tel que sur le TYPE D'ENTREPRISE
specimen de cheque ci-joint, le montant du loyer ou autres sommes dues.
BANQUE
Signature autorisee: ______________________________________________ _____________________________________
ADRESSE
Titre: ______________________________________________ _____________________________________
N DE PERSONNE A
PRIERE DE JOINDRE UN SPECIMEN DE CHEQUE NON SIGNE COMPTE CONTRACTER
- ------------------------------------------------------------------------------------------------------------------------------------
EMPLACEMENT DE L'EQUIPEMENT
(SI DIFFERENT DE CLOESSUS)
- ------------------------------------------------------------------------------------------------------------------------------------
PROPRIETARIE NOM ET ADRESSE DU PROP ????????????????
DES DEUX [_]
- ------------------------------------------------------------------------------------------------------------------------------------
QUANTITE DESCRIPTION DE ????????????????????????????????????????
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DUREX LES VERSEMENTS NOMBRE DE DEBUT MONTANT DU LOYER AXE DE VENTRE TAX DE VENTE ??? DU LOYER
NOMBRE DE MOIS DE LOYER VERSEMENTS DU ??????? VOIR VOIR
SERONT EFFECTIFS DE LOYER BARL
M / J / A
[_] MENSUELLEMENT
---------------------------------------------------------------------
[_] TRIMESTRIELLEMENT NOMBRE DE COPIES INCLUSES ENGAGEMENT MINIMUM COOT PAR COPIE
DANS LE MONTANT DU LOUER DE COPIES
[_] ANNUELLEMENT
- ---------------------------------------------------------------
DE CONTRAT DEMEURERA EN VIGUEUR POUR DES TERMES SUBSEQUENTS
CONSECUTIES DE 24 MOIS, A MOINS QUE LUNE OU L'AUTRE DESPARTIES
---------------------------------------------------------------------
Y METTE FIN PAR AVIS ECRIT DONNE
AJOUTER LES TAXES APPLICABLES A MOINS DINOIQUER VOTRE N D'EXEMPTION
- ------------------------------------------------------------------------------------------------------------------------------------
MODALITES ET CONDITIONS DU CONTRAT DE LOCATION - LES MODALITES ET CONDITIONS AU VERSO FONT PARTIE INTEGRANTE DE CE CONTRAT
- ------------------------------------------------------------------ ---------------------------------------------------------------
Le iocateur ne ser a pas lie par le present contrat de location LE SOUSSIGNE RECONNAIT AVOIR LU ET COMPRIS LE CONTRAT AU
(le'contrat') a moins que preuve de son acceptance par le locateur COMPLET ET EN ACCEPTE LES CONDITIONS
ne sont fate par la signature d'un dungeant dument autonse du ---------------------------------------------------------------
locateur dans l'espace prevu a cas fins ci-dessous. Nom legal complet du locataire
__________________________________________________________________ _______________________________________________________________
DATE D'ACCEPTATION PAR LE LOCATEUR Date
__________________________________________________________________ _______________________________________________________________
pour Les soussignes reconnaissent etre autorises a signer le contrat
__________________________________________________________________ _______________________________________________________________
Par Par Titre
Signataire autorise Signataire autorise
__________________________________________________________________ _______________________________________________________________
Titre Par Titre
Signataire autorise
__________________________________________________________________ _______________________________________________________________
Toutes modifications apportees au present contrat devront etra paraphees uniquement par les signataires de ce dernier.
Les sections ombrees devront etre remplies avant la signature du client.
CONDITIONS GENERALES
En contrepartie des engagements enonces au recto et au verso des 5. INSTALLATION, ENTRETIEN ET REPARATION: Le client est
presentes et pour autra contrepartie bonne et valable (dont il est responsable, a ses frais, de la invaison, de l'installation,
accuse reception et suffisance), le locateur et le client de l'enlevement, de retour, de l'entretien, du maintien en
conviennent de ce qui suit. etat et de la reparation (y compris les pieces de rechange) de
l'equipement. Aucun ajout et/ou madrication n'est effectue
1. CONTRAT: Par les presentes, le locateur loue au client et la sans l'autorisation ecrite de locateur. Toute manipulation de
client loua du locateur l'equipement decrit dans les details du equipement doit etre effectuee par une partie autorisee par le
contrat. locateur.
2. CHOIX DE L'EQUIPEMENT: Le client a lui-meme choisi l'equipement 6. EMPLACEMENT, UTILISATION ET INSPECTION: L'equipement doit
et reconnait qu'il est le saul responsable de son caractere etre situe et utilise a l'endroit prevu au contrat. Le client
approprie, de son installation et de sa livraison. Si l'equipement utilise l'equipement avec soins et seulement a des fins
ne se conforme pas aux exigences du client, cela ne diminuera en commerciates, industrielles ou professionnelles. Le locateur
nen ses obligations. peut en tout temps inspecter l'equipement et consuiter tous
les registres de client relabfs a l'equipement.
3. LOYER: Pendant la duree du contrat, le client fait au locateur,
sans autre avis ni demande le nombre total de versements de loyer 7. PERTES ET DOMMAGES. Le client assume pendant l'entiere
suivant les montants indiques dans les details du contrat. Ces duree du present contrat incluant le retour de l'equipement
versements de loyer seront exigibles a l'avance par le locateur tout risque de perte d'endommagement de destruction de voi,
a l'adesse indiquee ci-dessus (ou toute autre adresse specifiee par de saisie ou de prise de possession de tout ou partie de
le locateur) comme suit, le premier versement est effectue par le l'equipement. Acune parte ne liberera le client de ses
client au moment ou il signe les presentes et, des apres la penode obligations aux termes des cresentes.
civile couverte par ce premier versement, les versements subsequents
seront effectues pendant la duree entiere dans le cas des versements 8. PROPROETE ET IDENTIFICATION: L'equipement est la
mensueis, le premier de chaque mois ou dans le cas de versements propriete personnelle et mobiliere absolue du locateur et le
echelonnes sur toute autre penode civie, le premier jour de cette demeurera en tout temps pour la duree du present contrat ne
penade. LE PREMIER VERSEMENT DE LOYER NE SERA EN AUCUN CAS REMBOURSE doit pas etra rattache ou attacne ni autrement devenir un
AU CLIENT. accessoire fixe ou un accessoire a des biens immeubies ou a
des biens meubles et le client n'aura aucun droit, titre ou
4. INTERETS SUR LES PAIEMENTS EN SOUFFRANCE. Le client paiera sans interet dans ledit equipement sauf comme il est expressement
avis des interets au faux de 24% l'an calcules et composes enonce dans les oresentes.
mensuellement et non a l'avance sur tout paiement de loyer en
souffrance ainsi oue sur toute autre somme due en vertu au present
contrat, incluant tout jugement
SCHEDULE D
FORM OF PORTFOLIO REPORT
------------------------
IKON Office Solutions, Inc. SCHEDULE D
Monthly Portfolio Report For the Reporting Period Ending: 30-Sep-99
- --------------------------------------------------------------------------------
For the Reporting Period Ending: 30-Sep-99
Reporting Date: 22-Oct-99
Remittance Date: 29-Oct-99
1 Monthly Activity
- -------------------------------------------------------------------------------
Aggregate Financed Balance, Beginning of Month 89,000,000.00
Leases Sold During the Month -
Principal Collections-Scheduled (3,150,000.00)
Principal Collections-Unscheduled (425,000.00)
Deemed Collections (125,000.00)
Defaulted Leases (1,750,000.00)
-------------------------------------------------------------------------
Aggregate Financed Balance, End of Month 83,550,000.00
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interest Collected 741,666.67
-------------------------------------------------------------------------
Number of Leases, Beginning of Month 3,750
Leases Sold During the Month -
Leases Fully Paid (250)
Deemed Collections (30)
Defaulted Leases (80)
-------------------------------------------------------------------------
Number of Leases, End of Month 3,390
-------------------------------------------------------------------------
2 Trigger Events
- -------------------------------------------------------------------------------
Number of Delinquent Leases 25
$ Amount of Delinquent Leases 2,235,000.00
-------------------------------------------------------------------------
Delinquency Ratio - Current Month 2.68%
Delinquency Ratio - Previous Month 4.97%
Delinquency Ratio - 2nd Previous Month 6.75%
-------------------------------------------------------------------------
3 Month Average Delinquency Rate 4.97%
-------------------------------------------------------------------------
3 Month Trigger Ratio 6.50%
-------------------------------------------------------------------------
Number of 90 Day Past Due Leases 20
$ Amount of 90 Day Past Due Leases 1,800,000.00
-------------------------------------------------------------------------
90 Day Past Due Ratio - Current Month 2.15%
90 Day Past Due Ratio - Previous Month 2.75%
90 Day Past Due Ratio - 2nd Previous Month 4.00%
-------------------------------------------------------------------------
3 Month Average 90 Day Past Due Rate 2.97%
-------------------------------------------------------------------------
3 Month Trigger Ratio 4.50%
-------------------------------------------------------------------------
Monthly Defaulted Leases - Gross 1,750,000.00
Recoveries -
-------------------------------------------------------------------------
Net Defaults 1,750,000.00
-------------------------------------------------------------------------
Default Ratio - Current Month 2.09%
Default Ratio - Previous Month 3.40%
Default Ratio - 2nd Previous Month 4.35%
-------------------------------------------------------------------------
3 Month Average Default Rate 3.28%
-------------------------------------------------------------------------
3 Month Trigger Ratio 4.50%
-------------------------------------------------------------------------
3 Payments
- -------------------------------------------------------------------------------
Total Collections 4,441,666.67
(i) Hedging Costs
Swap Amortizing Amount 89,000,000.00
Tranche Period (days) 30
---------------------------------------------------------------------
Funding Differential
Swap Rate 5.75%
BA Rate 4.65% 1.10%
---------------------------------------------------------------------
Hedging Costs 80,465.75
---------------------------------------------------------------------
(ii) Replacement Servicer Fee -
(iii) Funding Discount
Tranche Amount 89,000,000.00
Tranche Period (days) 30
Tranche Rate 3.65%
---------------------------------------------------------------------
Funding Discount 267,000.00
---------------------------------------------------------------------
(iv) Program Amount
Aggregate Financed Balance, end of previous Period 89,000,000.00
Concurrent Lease Requests issued during the Period -
Aggregate Financed Balance, end of Current Period 83,550,000.00
---------------------------------------------------------------------
Difference 5,450,000.00
---------------------------------------------------------------------
Program Amount Subordination rate 8.00% 5,014,000.00
---------------------------------------------------------------------
(v) Program Fee 18,287.67
(vi) Credit Enhancement Fee 18,082.19
(vii) Swap Unwinding Costs -
Deferred Rental Account
Balance, previous Settlement Date 4,500,000.00
Cash Available (956,168.95)
-------------------------------------------------------------------------
Subtotal 3,543,831.05
Deferred Rental Required Amount 4,539,000.00
-------------------------------------------------------------------------
Excess (Shortfall) (995,168.95)
-------------------------------------------------------------------------
Deferred Rent 0.00
-------------------------------------------------------------------------
IKON Office Solutions, Inc. hereby certifies to CARE Trust that all information
contained in this Portfolio Report is true and accurate and has been prepared in
accordance with the Concurrent Lease Agreement between IKON Office Solutions,
Inc. as Lessor, IKON Office Solutions, Inc. as Performance Guarantor, IKON
Capital, Inc. as Sub-Collector and CARE Trust dated September 14, 1999, and that
no event has occurred and is continuing which constitutes, or but for the
requirement that notice be given or time elapse would constitute, a Trigger
Event or a Termination Event (as defined in the said Concurrent Lease
Agreement).
IKON Office Solutions, Inc.
By: _____________________________
Title: _____________________________
Date: _____________________________
SCHEDULE E
FORM OF PROMISSORY NOTE (GST)
-----------------------------
PROMISSORY NOTE
---------------
THIS PROMISSORY NOTE is made by the undersigned, The Trust Company of
Bank of Montreal, a trust company incorporated under the laws of Canada and
registered under the laws of the Province of Ontario, in its capacity as trustee
of CARE Trust, being a trust established under the laws of the Province of
Ontario (the "Concurrent Lessee"), in favour of IKON Office Solutions, Inc. (the
"Lessor"), a corporation continued and existing under the laws of the Province
of Ontario.
WHEREAS pursuant to the Concurrent Lease Agreement (the "Agreement")
made as of September 14, 1999 between the Concurrent Lessee, the Lessor, IKON
Capital, Inc. and the IKON Office Solutions, Inc., the Lessor has granted to the
Concurrent Lessee a lease and licence to possess and use the Equipment (such
lease and licence being referred to herein as the "Concurrent Lease"), subject
to the terms and conditions contained in the Agreement;
AND WHEREAS pursuant to section 2.3 and subject to section 2.4 of the
Agreement, in consideration of the grant by the Lessor to the Concurrent Lessee
of the Concurrent Lease, the Concurrent Lessee has agreed to pay to the Lessor,
on the first day of each calendar month during the term of the Agreement, as
monthly rent an amount to equal to 99.99% of the sum of all payments of Rent
forming part of the Scheduled Payments to be made in respect of the Designated
Eligible Leases during the most recently completed Reporting Period;
AND WHEREAS pursuant to section 2.4 of the Agreement, the Concurrent
Lessee has satisfied and discharged its obligations to make all monthly rent
payments by paying to the Lessor, by certified cheque on the date hereof as a
prepayment of rent, the sum of $. (the "Prepaid Rent") and by agreeing to pay
deferred rent as provided for therein;
AND WHEREAS the consideration mentioned as aforesaid shall be
exclusive of the tax payable under the Excise Tax Act (Canada) (the "ETA") and
the tax payable under An Act Respecting the Quebec Sales Tax (the "QSTA") (the
taxes payable under the ETA and the QSTA are hereinafter, collectively, referred
to as the "GST") which will be added to any amount so paid;
AND WHEREAS pursuant to section 2.10 of the Agreement, the Concurrent
Lessee may satisfy its obligation to pay the Lessor the GST in respect of the
Prepaid Rent by way of a promissory note which will be subject to section 2.10
of the Agreement;
NOW THEREFORE THIS PROMISSORY NOTE WITNESSES that, for value received,
the undersigned promises to pay to the order of the Lessor at Toronto, Ontario,
Canada, the amount in lawful money of Canada that is equal to the sum of the GST
in respect of the Prepaid Rent as aforesaid and an amount equal to any interest
paid to the Concurrent Lessee in respect of any input tax credit entitlement of
the Concurrent Lessee. The aforesaid amount shall be payable within
three Business Days of the receipt by the Concurrent Lessee of any set refund of
GST in accordance with the following provisions:
(a) the Concurrent Lessee shall have a reporting period for the purposes
of the ETA and the QSTA that is a calendar month;
(b) the Concurrent Lessee shall file a return under section 238 of the ETA
and section 468 of the QSTA on or before the fifth Business Day
following the end of the reporting period in which (or in respect of
which) the Concurrent Lessee paid the GST (as represented by this
promissory note) and shall claim in such return an input and the QSTA
tax credit and input tax refund for the reporting period pursuant to
the applicable provisions of the ETA; and
(c) the Concurrent Lessee hereby assigns to the Lessor, as security for
the obligations of the Concurrent Lessee under this promissory note,
all of the right, title and interest of the Concurrent Lessee in and
to any net tax refund receivable by the Concurrent Lessee in respect
of the GST, together with any interest receivable thereon. The rights
and recourse of the Lessor with respect to any amounts owing by the
Trust to the Lessor under this promissory note shall be limited to the
enforcement of such assignment and otherwise at law against the
security hereby granted. the Lessor shall not be entitled to enforce
any right or recourse against any other property or assets of the
Concurrent Lessee with respect to any liability of the Concurrent
Lessee to the Lessor under this promissory note.
This promissory note shall be subject to the following conditions and
restrictions:
(a) this promissory note evidences the obligations of the undersigned to
pay to the Lessor the amount of the GST in respect of the Prepaid
Rent, and the obligations of the undersigned hereunder shall terminate
upon the termination of such obligation to pay the Lessor the GST in
respect of the Prepaid Rent whether as a result of the payment of such
amount or the extinguishment of such liability by way of set-off,
crediting or otherwise, or for any other reason; and
(b) the undersigned shall have the right, but not the obligations to repay
the whole or any part of the outstanding amount of this promissory
note without notice, penalty or bonus.
All capitalized terms used in this promissory note shall, unless the
context requires otherwise, have the meanings ascribed thereto under the
Agreement.
This promissory note shall be binding upon the undersigned in its
capacity as trustee of the Concurrent Lessee (and not in its personal capacity)
and upon the Concurrent Lessee and its successors and assigns, and this
promissory note shall enure to the benefit of and be enforceable by the Lessor
and any of its successors and assigns.
-3-
This promissory note and the rights, obligations and relations of the
Concurrent Lessee and the Lessor shall be governed by and construed in
accordance with the laws of the Province of Ontario.
DATED the . day of ., 199..
THE TRUST COMPANY OF
BANK OF MONTREAL in its capacity as Trustee of
CARE TRUST by NESBITT BURNS INC., as agent for
CARE TRUST
by _______________________________________
_______________________________________
c/o Nesbitt Burns Inc.
3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Attention: Managing Director, Securitization
and Structured Finance
Telecopier No.: (416) 359-1910
SCHEDULE F
LIST OF PREDECESSORS
--------------------
SCHEDULE F
List of Predecessors
Province Name of Corporation to be Searched
- -------- ----------------------------------
Ontario Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada, Inc./Alco Canada, Inc.
- Systems De Bureau
1142836 Ontario Inc.
1142837 Ontario Inc.
1140935 Ontario Inc.
1048174 Ontario Ltd.
Fulline Office Products, Inc.
MGL Copy Systems Inc.
Bradcor Systems Inc.
228094 Ontario Inc.
1148608 Ontario Inc.
1137559 Ontario Inc.
1148189 Ontario Inc.
CDP - Copy Duplicating Products Canada, Ltd.
1064954 Ontario Inc.
1070148 Ontario Inc.
North American Financial Inc.
Woodbine Business Equipment Depot, Inc.
1069241 Ontario Inc.
OPS Business Systems Inc.
1199109 Ontario Inc.
Office Products Centre (Hamilton) Inc.
Star Business Machines Limited
London Photocopy (1994) Inc.
564658 Ontario Limited
Kempenfelt Kopy Systems Inc.
National Typewriter & Office Equipment Co., Ltd.
MGL Office Systems Inc.
-2-
Office Products Management Inc.
Office Photocopier Suppliers Ltd.
Digital Reprographics Imaging & Systems, Inc.
Image Systems Solutions, Inc.
Knarf Holdings Ltd.
NTI Inc.
MAC Distributors Limited
Leaside Properties Ltd.
Canadian Legal Copies Inc.
Montreal Legal Copies Inc./Copies Legales Montreal Inc.
Toronto Logal Copies Inc.
1254407 Ontario Ltd.
4006558 Ontario Limited
NTI Business Equipment Limited
NTI Business Equipment Systems Ltd.
NTI National Limited
Technocopie Inc.
Quebec Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada, Inc./Alco Canada Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Copie Innovation
CCI Bureatique
9008-0441 Quebec Inc.
2253-2193 Quebec Inc.
Superior Business Machines
Technocopie Inc.
Knafr Holdings, Inc.
NTI Inc.
Canadian Legal Copies Inc.
Montreal Legal Copies
Alberta Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada, Inc./Alco Canada, Inc. -
Systems De Bureau
-3-
IKON Office Solutions, Inc./Ikon Solutionsde Bureau
Inc.
Calgary Copier Ltd.
228094 Ontario Inc.
Alco Office Systems, Edmonton Inc.
Wesfax Communication Services Ltd.
Scot Office Supplies Ltd.
Paul's Business Machines Services Ltd.
Superior Venture Group Ltd.
Superior Reproductions Ltd.
Superior Personnel Ltd.
British Columbia Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada Inc./Alco Canada, Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Benndorf-Verster Limited
Select Business Machines Inc.
Prudential Lease Corp.
1199109 Ontario Inc.
RK Wilkinson Ltd.
UKE Holdings Inc.
A1 Advanced Business Machines Inc.
Scot Office Supplies Ltd.
Reid Office Supplies Ltd.
Adcash Business Machines (1977) Ltd.
Centron Business Equipment Ltd.
1254406 Ontario Ltd.
Prime Copy Office Systems Ltd.
Steelhead Business Products (Victoria) Ltd.
Sunstar Office Equipment Ltd.
Superior Ventures Group Ltd.
Superior Reproductions Ltd.
Superior Personnel Ltd.
Garvo Ventures Inc.
-4-
Leaside Properties Ltd.
Charles Oliver Golf Pro Limited
Manitoba Bureau-Tech Ikon, Inc.
Alco Office Systems-Canada, Inc./Alco Canada, Inc.-
Systems
De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
CDP - Copy Duplicating Products Canada Ltd.
BCBMP Holdings Ltd.
National Typewriter & Office Equipment Co., Ltd.
New Brunswick Bureau-Tech Ikon, Inc.
Alco Office Solutions, Inc./Alco Canada, Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Halifax Office Products Limited
1148608 Ontario Inc.
River Valley Office Products Limited
Newfoundland Bureau-Tech Ikon, Inc.
Alco Office Systems-Canada, Inc./Alco Canada, Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Halifax Office Products Limited
Nova Scotia Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada Inc./Alco Canada Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Halifax Office Products Limited
1148608 Ontario Inc.
River Valley Office Products Limited
Prince Edward Island Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada Inc./Alco Canada Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Halifax Office Products Limited
Saskatchewan Bureau-Tech Ikon, Inc.
Alco Office Systems - Canada Inc./Alco Canada Inc. -
Systems De Bureau
IKON Office Solutions, Inc./Ikon Solutions de Bureau
Inc.
Alco Office Systems, Edmonton Inc.
-5-
United Office Machines Ltd.
Paul's Business Machines Services Ltd.