EXHIBIT 10.10
TRANSFER AGREEMENT
Dated as of December 1, 1998
Between
IOS CAPITAL, INC.
as Originator
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and
IKON FUNDING-1, LLC
as Transferee
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS 1
SECTION 1.01. Certain Defined Terms 1
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Adverse Claim 1
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Affiliate 1
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Alternate Base Rate 1
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Business Day 1
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Chargeback Ratio 2
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Chargeback Receivable 2
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Collection Agent 2
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Collection Agent Fee 2
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Collections 2
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Contract 2
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Credit and Collection Policy 2
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Dealer 3
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Debt 3
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Designated Obligor 3
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Dilution 3
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Eligible Marketplace 3
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Eligible Receivable 3
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Equipment 5
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ERISA 5
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Event of Termination 5
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Facility 5
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Facility Termination Date 5
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Federal Funds Rate 6
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General Trial Balance 6
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Government Obligor 6
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Incipient Event of Termination 6
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Indemnified Amounts 6
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Obligor 6
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Originator Report 6
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Outstanding Balance 6
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Parent 6
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Periodic Payments 7
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Person 7
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Purchase Price 7
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Receivable 7
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Receivables Transfer Agreement 7
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Receivables Transfer Request 7
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Related Contract 7
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Related Security 7
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Scheduled Termination Date 8
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Settlement Date 8
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Support Agreement 8
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Transaction Document 8
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Transfer 8
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Transfer Date 8
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Transferred Receivable 8
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UCC 8
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SECTION 1.02. Other Terms 8
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ARTICLE II
AMOUNTS AND TERMS OF TRANSFERS AND CONTRIBUTIONS 9
SECTION 2.01. Facility 9
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SECTION 2.02. Making Transfers 9
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SECTION 2.03. Collections 10
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SECTION 2.04. Settlement Procedures 10
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SECTION 2.05. Payments and Computations, Etc. 11
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SECTION 2.06. True Sales and/or Contributions. 11
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ARTICLE III
CONDITIONS OF TRANSFERS 12
SECTION 3.01. Conditions Precedent to Initial Transfer
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from the Originator 12
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SECTION 3.02. Conditions Precedent to All Transfers 12
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES 13
SECTION 4.01. A. Representations and Warranties of the
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Originator 13
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B. Representation and Warranty of the
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Transferee 15
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ARTICLE V
COVENANTS 16
SECTION 5.01. A. Covenants of the Originator 16
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B. Covenants of the Transferee. 20
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SECTION 5.02. Grant of Security Interest 21
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ARTICLE VI
ADMINISTRATION AND COLLECTION 21
SECTION 6.01. Designation of Collection Agent 21
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SECTION 6.02. Duties of Collection Agent 22
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SECTION 6.03. Collection Agent Fee 23
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SECTION 6.04. Certain Rights of the Transferee 23
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SECTION 6.05. Rights and Remedies 23
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SECTION 6.06. Transfer of Records to Transferee 24
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ARTICLE VII
EVENTS OF TERMINATION 25
SECTION 7.01. Events of Termination 25
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ARTICLE VIII
INDEMNIFICATION 27
SECTION 8.01. Indemnities by the Originator 27
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ARTICLE IX
MISCELLANEOUS 27
SECTION 9.01. Amendments, Etc. 27
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SECTION 9.02. Notices, Etc. 27
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SECTION 9.03. Binding Effect: Assignability 28
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SECTION 9.04. Costs, Expenses and Taxes 28
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SECTION 9.05. No Proceedings 28
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SECTION 9.06. Confidentiality 29
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SECTION 9.07. GOVERNING LAW 29
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SECTION 9.08. Third Party Beneficiary 29
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SECTION 9.09. Tax Treatment 29
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SECTION 9.10. Execution in Counterparts 29
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EXHIBIT A Credit and Collection Policy
EXHIBIT B List of Marketplaces
EXHIBIT C Principal Place of Business and Location of Records
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TRANSFER AGREEMENT
Dated as of December 1, 1998
IOS CAPITAL, INC., a Delaware corporation (the "Originator"), and IKON
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FUNDING-1, LLC, a Delaware limited liability company (the "Transferee"), agree
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as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and used
throughout this Agreement (in addition to those defined above) are defined in
Article I of this Agreement.
(2) The Originator has Receivables that it wishes to transfer to the
Transferee, and the Transferee is prepared to accept such Receivables on the
terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms . As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adverse Claim" means a lien, security interest, or other charge or
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encumbrance, or any other type of preferential arrangement.
"Affiliate" means, as to any Person, any other Person that, directly or
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indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Alternate Base Rate" means a fluctuating interest rate per annum as shall
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be in effect from time to time, which rate shall be at all times equal to the
greater of:
(a) the rate of interest announced publicly by PNC Bank, National
Association in Pittsburgh, Pennsylvania, from time to time as its base
commercial lending rate; and
(b) the Federal Funds Rate plus 0.50%.
"Business Day" means any day on which banks are not authorized or
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required to close in New York City or Pittsburgh, Pennsylvania.
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"Chargeback Ratio" means the ratio (expressed as a percentage) computed as
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of the last day of each calendar month by dividing (i) the aggregate amount of
all Related Contracts having one or more Receivables that were Chargeback
Receivables on such day or that would have been Chargeback Receivables on such
day had they not been written off the books of the Transferor during such month
by (ii) the aggregate amount of all Related Contracts on such day.
"Chargeback Receivable" means a Receivable:
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(i) as to which any payment, or part thereof, remains unpaid for 180 or
more days from the original due date for such payment; or
(ii) as to which the Obligor thereof or any other Person obligated thereon
or owning any Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type described in
Section 7.01(g); or
(iii) which, consistent with the Credit and Collection Policy, would be
retransferred to the related Dealer as uncollectible.
"Collection Agent" means at any time the Person then authorized pursuant
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to Section 6.01 to service, administer and collect Transferred Receivables.
"Collection Agent Fee" has the meaning specified in Section 6.03.
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"Collections" means, with respect to any Receivable, (a) all cash
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collections and other cash proceeds of such Receivable, including, without
limitation, any proceeds resulting from the repurchase of such Receivable by
IKON Office Solutions, Inc. and all cash proceeds of Related Security with
respect to such Receivable (including, without limitation, payments under the
related Contract due upon or in connection with (i) Obligor's default under the
Contract, (ii) loss, theft or damage to the related Equipment, or (iii) renewal
of the Contract); provided, that Collections shall not include collections which
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represent the payment of (x) maintenance charges or (y) insurance premiums, (b)
all Collections deemed to have been received pursuant to Section 2.04 and (c)
all other proceeds of such Receivable.
"Contract" means a closed-end lease agreement between the Originator and
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an Obligor having an original lease term not exceeding 72 months, in
substantially the form of one of the forms of written contract set forth in
Annex A to the Receivables Transfer Agreement or otherwise approved by the
Transferee, pursuant to or under which such Obligor shall be obligated to pay
for the lease of equipment from time to time.
"Credit and Collection Policy" means those receivables credit and
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collection policies and practices of the Originator in effect on the date of
this Agreement applicable to the Receivables and described in Exhibit A hereto,
as modified in compliance with this Agreement.
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"Dealer" means any Person originating Receivables relating to Equipment
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located in an Eligible Marketplace.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
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evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"Designated Obligor" means, at any time, each Obligor; provided, however,
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that any Obligor shall cease to be a Designated Obligor upon notice by the
Transferee to the Originator.
"Dilution" means, with respect to any Receivable, the aggregate amount of
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any reductions or adjustments in the Outstanding Balance of such Receivable as a
result of any defective, rejected, returned or repossessed Equipment or services
or any cash discount or other adjustment or setoff.
"Eligible Marketplace" means any of the marketplaces set forth on Exhibit
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B hereto, as such Exhibit may be amended from time to time by the Originator
with the consent of the Transferee.
"Eligible Receivable" means, at the relevant time of determination, a
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Receivable:
(i) the Obligor of which (a) is a United States resident, (b) is not the
Originator or any Affiliate thereof, and (c) is not a Governmental
Obligor; provided, that Obligors with respect to Contracts having an
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aggregate Outstanding Balance of not greater than 5% of the aggregate
Outstanding Balance of all Eligible Receivables may be Governmental
Obligors;
(ii) the Obligor of which has not been disapproved by the Transferee on or
prior to the date of the Transfer and which, at the time of the
Transfer, is not the Obligor of any Chargeback Receivables;
(iii) which at the time of the Transfer is not a Chargeback Receivable;
(iv) (a) which arises under a Contract with a remaining term of not more
than 60 months; provided, that Contracts having an aggregate
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Outstanding Balance of not greater than 5% of the aggregate
Outstanding Balance of all Eligible Receivables may have a remaining
term of up to 72 months;
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and
(b) which, according to such Contract, consists of substantially
equal monthly Periodic Payments which are required to be paid within
30 days of the billing date therefor; provided, that Contracts
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having an aggregate Outstanding Balance of not greater than 4% of
the aggregate Outstanding Balance of all Eligible Receivables may
have payments which are not substantially equal monthly payments;
(v) which arose pursuant to a Contract which is "chattel paper" within
the meaning of Section 9-105 of the UCC of the applicable
jurisdictions governing the perfection of the interest created in
the Receivables;
(vi) which is denominated and payable in United States dollars in the
United States;
(vii) which arises under a Contract (a) which has been duly authorized and
which, together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of the
Obligor of such Receivable enforceable against such Obligor in
accordance with its terms and is not subject to any dispute, offset,
counterclaim or defense whatsoever (except as limited by applicable
bankruptcy law), (b) in respect of which, prior to the date it is
transferred hereunder, the Equipment has been delivered and
accepted, (c) which pursuant to its terms is not cancellable by the
lessee before the end of its stated term (other than, in the case of
Contracts related to Governmental Obligors, by reason of nonrenewal
of appropriations) and (d) which, if related to a Governmental
Obligor, has not been canceled before the end of its stated term by
reason of nonrenewal of appropriations;
(viii) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, truth in
lending, consumer leasing, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices
and privacy) and with respect to which none of the Transferor, the
Originator or the related Obligor is in violation of any such law,
rule or regulation in any material respect;
(ix) with regard to which there exists only one executed original
Contract, which is in the possession of the Originator on the
Transfer Date of such Receivable;
(x) which represents payments due to the Originator and does not
represent any payments payable for the account of any Person other
than the Originator under the Contract relating to such Receivable
or any sales or use tax payable under such Contract;
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(xi) which satisfies all applicable requirements of the Credit and
Collection Policy;
(xii) which, after giving effect to the acquisition thereof, would not
result in the aggregate Outstanding Balance of Related Contracts of
any single Obligor exceeding 2% of the aggregate Outstanding Balance
of all Related Contracts;
(xiii) as to which, at or prior to the time of the Transfer, the Transferee
has not notified the Originator that such Receivable (or class of
Receivables) is not acceptable for transfer to the Transferee;
(xiv) the transfer or assignment of which does not contravene any
applicable law, rule or regulation;
(xv) which was originated in an Eligible Marketplace; and
(xvi) which, after giving effect to the acquisition thereof, would not
result in the Aggregate Outstanding Balance of Related Contracts of
Obligors located in any single state exceeding 15% (or, in the case
of Indiana and Texas, 20%) of the Aggregate Outstanding Balance of
all Related Contracts.
"Equipment" means, with respect to any Receivable, office, business or
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other equipment leased or sold to an Obligor by the Originator pursuant to a
Contract (including any modifications or substitutions of equipment pursuant to
the Original Contract giving rise to such Receivable).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Event of Termination" has the meaning specified in Section 7.01.
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"Facility" means the willingness of the Transferee to consider accepting
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Transfers of Receivables from the Originator from time to time pursuant to the
terms of this Agreement.
"Facility Termination Date" means the earliest of (i) the Scheduled
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Termination Date, (ii) the date of termination of the Facility pursuant to
Section 7.01 and (iii) the date which the Originator designates by at least two
Business Days' notice to the Transferee.
"Federal Funds Rate" means, with respect to any day, the rate set forth in
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H.15(519) for that day opposite the caption "Federal Funds (Effective)." If on
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any date of determination, such rate is not published in H.15(519), such rate
will be the rate set forth in Composite 3:30 P.M. Quotations for U.S. Government
Securities for that day under the caption "Federal Funds/Effective Rate." If on
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any date of determination, the appropriate rate is not published in
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either H.15(519) or Composite 3:30 P.M. Quotations for U.S. Government
Securities, such rate will be the arithmetic mean of the rates for the last
transaction in overnight federal funds arranged by three leading brokers of
federal funds transactions in New York City prior to 9:00 a.m., New York City
time, on that day.
"General Trial Balance" of the Originator on any date means the
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Originator's accounts receivable trial balance (whether in the form of a
computer printout, magnetic tape or diskette) on such date, listing Obligors and
the Receivables respectively owed by such Obligors on such date together with
the aged Outstanding Balances of such Receivables, in form and substance
satisfactory to the Transferee.
"Governmental Obligor" means an Obligor that is the federal government, the
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government of any state or governmental subdivision or any agency of the federal
government or the government of any state.
"Incipient Event of Termination" means an event that but for notice or
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lapse of time or both would constitute an Event of Termination.
"Indemnified Amounts" has the meaning specified in Section 8.01.
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"Obligor" means a Person obligated to make payments to the Originator
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pursuant to a Contract; provided that in the event that any payments in respect
of a Contract are made by any other person, such other Person shall be deemed to
be an Obligor.
"Originator Report" means a report, in form and substance satisfactory to
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the Transferee, furnished by the Collection Agent to the Transferee pursuant to
Section 6.02(b).
"Outstanding Balance" of any Contract at any date means the net present
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value of the total Periodic Payments due to Originator over the remaining term
of the Contract (net of any security deposits or advance rental payments
received by Originator) and not yet paid by the Obligor, discounted at the
implied interest rate used by the Originator or the applicable Dealer in
originating such Contract, as determined by subtracting all amounts representing
unearned interest from the aggregate amount of such Periodic Payments.
"Parent" means Ikon Office Solutions, Inc., an Ohio corporation.
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"Periodic Payments" means the aggregate base rental amounts coming due on a
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periodic basis pursuant to the Contracts giving rise to Receivables, excluding
any maintenance charges or, with respect to Contracts covering photocopiers, any
per copy charges.
"Person" means an individual, partnership, corporation (including a
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business trust), limited liability company, limited liability partnership, joint
stock company, trust, unincorporated
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association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Purchase Price" has the meaning set forth in Section 2.02(b).
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"Receivable" means the indebtedness of any Obligor under a Contract, and
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includes the right to payment of any interest or finance charges and other
obligations of such Obligor with respect thereto.
"Receivables Transfer Agreement" means that certain Receivables Transfer
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Agreement, dated as of the date hereof, among the Transferee, as transferor,
Market Street Funding Corporation, as issuer, PNC Bank, National Association, as
agent, and the Originator, as originator and collection agent, as amended or
restated from time to time.
"Receivables Transfer Request" has the meaning specified in Section
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2.02(a).
"Related Contract" means, with respect to a Transfer Date, any Contract
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included in the Contracts transferred to the Transferee pursuant to Section 2.02
on such Transfer Date; provided, that after the Outstanding Balance of such
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Contract has been collected, it shall no longer constitute a "Related Contract"
hereunder.
"Related Security" means with respect to any Receivable:
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(i) all other security interests or liens and property subject thereto
(other than Equipment) from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements
signed by an Obligor describing any collateral securing such
Receivable;
(ii) all guaranties (other than the Support Agreement) insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable (or insuring for
loss or liability with respect to the related Equipment), whether
pursuant to the Contract related to such Receivable or otherwise and
all of the Transferor's rights (if any) to recourse, repurchase or
indemnity against any dealer, including any Dealer, or other Person,
with respect to such Receivable; and
(iii) the Related Contract and all other books, records and other
information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and
rights) relating to such Receivable and the related Obligor.
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"Scheduled Termination Date" shall mean November 30, 2001; provided that
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unless the Transferee notifies the Originator in writing not less than 30 days
prior to the then-current Scheduled Termination Date, the Scheduled Termination
Date shall be automatically extended to the date that is 364 days following such
Scheduled Termination Date.
"Settlement Date" means the fifteenth calendar day of each month (or if
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such day is not a Business Day, the immediately succeeding Business Day);
provided, however, that following the occurrence of an Event of Termination,
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Settlement Dates shall occur on such days as are selected from time to time by
the Transferee or its designee in a written notice to the Collection Agent.
"Support Agreement" means the operating agreement, dated October 22, 1996
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between the Originator and the Parent.
"Transaction Document" means any of this Agreement, the Receivables
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Transfer Agreement and all other agreements and documents delivered and/or
related hereto or thereto.
"Transfer" means a transfer by the Originator of Receivables to the
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Transferee pursuant to Article II.
"Transfer Date" has the meaning specified in Section 2.02(a).
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"Transferred Receivable" means any Receivable which, pursuant to the
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procedure described in Section 2.02(d), has been identified as a Transferred
Receivable.
"UCC" means the Uniform Commercial Code as from time to time in effect in
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the specified jurisdiction.
SECTION 1.02. Other Terms. Capitalized terms used and not defined herein
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shall have the meanings assigned to them in the Receivables Transfer Agreement.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of Pennsylvania, and not specifically defined
herein, are used herein as defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF TRANSFERS AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions hereinafter set forth
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and without recourse (except to the extent as is specifically provided herein),
from time to time during the period from the date hereof to the Facility
Termination Date, the Originator shall transfer to the Transferee, and the
Transferee shall accept from the Originator, Receivables of the Originator that
were originated in an Eligible Marketplace. Each Transfer of such Receivables
shall include the transfer to the Transferee of the Related Security and
Collections with respect thereto.
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SECTION 2.02. Making Transfers.
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(a) Transfers. Each Transfer from the Originator shall be made on notice
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from the Originator to the Transferee given no later than 10:00 A.M. (New York
City time) on the date of such Transfer. Each such request for a Transfer (each
a "Receivables Transfer Request") shall specify the date of such Transfer (which
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shall be a Business Day) and the proposed Purchase Price (as determined pursuant
to Section 2.02(b)) for such Transfer. On the date of each Transfer (each a
"Transfer Date"), the Transferee shall, upon satisfaction of the applicable
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conditions set forth in Article III, make available to the Originator the
Purchase Price for such Transfer in accordance with Section 2.02(c). The
Originator agrees that at least once a week, it shall request a Transfer in
accordance with the terms hereof, of all Receivables of the Originator
originated in an Eligible Marketplace that do not already constitute Transferred
Receivables, as identified in accordance with Section 2.02(d) below.
(b) Determination of Purchase Price. The "Purchase Price" for the
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Receivables that are the subject of any Transfer hereunder shall be equal to the
aggregate Outstanding Balance of such Receivables.
(c) Payment of Purchase Price. On each Transfer Date, the Transferee shall
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pay to the Originator the Purchase Price for the applicable Transfer in cash, to
the extent of funds obtained by the Transferee on such date under the
Receivables Transfer Agreement, after satisfying the Transferee's obligations
under the Receivables Transfer Agreement and after netting any amounts owed to
the Transferee by the Originator hereunder (including amounts owed under Section
2.04), and to the extent such Purchase Price remains unpaid, such remaining
portion of such Purchase Price shall be deemed to be a true contribution to
capital made by the Originator to the Transferee.
(d) Identification of Transferred Receivables. On each Transfer Date, each
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Receivable of the Originator originated in an Eligible Marketplace that does not
already constitute a Transferred Receivable shall be identified as Transferred
Receivables. Upon such identification, the Originator shall deliver to the
Transferee, on or prior to such Transfer Date, a list of Related Contracts for
the Receivables so identified, which list shall also be delivered to the Agent
in accordance with paragraph (j) of Exhibit IV of the Receivables Transfer
Agreement. Such list shall evidence the Transferred Receivables for such
Transfer Date.
SECTION 2.03. Collections. (a) Unless otherwise agreed, the Collection
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Agent shall, on each Settlement Date, deposit into an account of the Transferee
or the Transferee's assignee all Collections of Transferred Receivables then
held by the Collection Agent.
(b) In the event that the Originator believes that Collections which are
not Collections of Transferred Receivables have been deposited into an account
of the Transferee or the Transferee's assignee, the Originator shall so advise
the Transferee and, on the Business Day
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following such identification, the Transferee shall remit, or shall cause to be
remitted, all Collections so deposited which are identified, to the Transferee's
satisfaction, to be Collections of Receivables which are not Transferred
Receivables to the Originator.
SECTION 2.04. Settlement Procedures. (a) If on any day the Outstanding
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Balance of any Transferred Receivable is reduced or adjusted as a result of any
defective, rejected, returned or repossessed Equipment or services or any cash
discount or other adjustment made by the Originator, or any setoff or dispute
between the Originator and an Obligor due to a claim arising out of the same or
any other transaction, the Originator shall be deemed to have received on such
day a Collection of such Transferred Receivable in the amount of such reduction
or adjustment. If the Originator is not the Collection Agent, the Originator
shall pay to the Collection Agent on or prior to the next Settlement Date all
amounts deemed to have been received pursuant to this subsection.
(b) Upon discovery by the Originator or the Transferee or the Agent of
a breach of any of the representations and warranties made or deemed made by the
Originator in Section 4.01(i) with respect to any Transferred Receivable, such
party shall give prompt written notice thereof to the other party, as soon as
practicable and in any event within three Business Days following such
discovery. The Originator shall be deemed to have received a Collection in full
of such Transferred Receivable, and all other Receivables relating to the same
Contract, and make available to the Transferee on the next succeeding Settlement
Date an amount equal to the Outstanding Balance of such Transferred Receivable.
Upon such amount being made available, the Transferee shall retransfer such
Transferred Receivables to the Originator. Each retransfer of a Transferred
Receivable shall include the Related Security with respect to such Transferred
Receivable. If the Originator is not the Collection Agent, the Originator shall
pay to the Collection Agent on or prior to the next Settlement Date the amount
required to be paid pursuant to this subsection.
(c) Except as stated in subsection (a) or (b) of this Section 2.04 or as
otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.
SECTION 2.05. Payments and Computations, Etc. (a) All amounts to be paid or
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deposited by the Originator or the Collection Agent hereunder shall be paid or
deposited no later than 11:00 A.M. (New York City time) on the day when due in
same day funds to an account designated in writing by the Transferee to the
Originator on or prior to the initial Transfer hereunder.
(b) The Originator shall, to the extent permitted by law, pay to the
Transferee interest on any amount not paid or deposited by the Originator
(whether as Collection Agent or
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otherwise) when due hereunder at an interest rate per annum equal to 2% per
annum above the Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
elapsed. Whenever any payment or deposit to be made hereunder shall be due on a
day other than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit.
SECTION 2.06. True Sales and/or Contributions. (a) Each of the Originator
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and the Transferee intend the transactions hereunder to constitute true sales
and/or true contributions of the Transferred Receivables, Related Security and
Collections with respect thereto by the Originator to the Transferee providing
the Transferee with all of the Originator's right, title and interest in and to
the Transferred Receivables, Related Security and Collections with respect
thereto, and no party hereto intends the transactions contemplated hereunder to
be, or for any purpose (other than for purposes of federal or state income or
franchise, sale and use or bulk sale taxes) to be characterized as, a loan from
the Transferee to the Originator.
(b) In the event (but only to the extent) that the conveyance of
Transferred Receivables, the Related Security and Collections with respect
thereto hereunder is characterized by a court, governmental authority or
regulatory body as a loan rather than a sale or contribution, the Originator
shall be deemed hereunder to have granted to the Transferee, and the Originator
hereby assigns and grants to Transferee, a security interest in all of the
Originator's right, title and interest now or hereafter existing in, to and
under all Transferred Receivables, the Related Security and all Collections with
respect thereto.
ARTICLE III
CONDITIONS OF TRANSFERS
SECTION 3.01. Conditions Precedent to Initial Transfer from the Originator.
------------------------------------------------------------
The initial Transfer of Receivables from the Originator hereunder is subject to
the conditions precedent that the Transferee shall have received on or before
the date of such Transfer the following, each (unless otherwise indicated) dated
such date, in form and substance satisfactory to the Transferee:
(a) Certified copies of the resolutions of the Board of Directors of the
Originator approving this Agreement and certified copies of all documents
evidencing other necessary corporate or limited liability company action and
governmental approvals, if any, with respect to this Agreement.
11
(b) A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers of the
Originator authorized to sign this Agreement and the other documents to be
delivered by it hereunder.
(c) Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the date of the initial Transfer,
naming the Originator as the debtor and the Transferee as the secured party, or
other similar instruments or documents, as the Transferee may deem necessary or
desirable under the UCC of all appropriate jurisdictions or other applicable law
to perfect the Transferee's security interest in the Transferred Receivables and
Related Security and Collections with respect thereto.
(d) Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Transferred Receivables, Related Contracts or
Related Security previously granted by the Originator.
(e) Completed requests for information, dated on or before the date of
such initial Transfer, listing the financing statements referred to in
subsection (c) above and all other effective financing statements filed in the
jurisdictions referred to in subsection (c) above that name the Originator as
debtor, together with copies of such other financing statements (none of which
shall cover any Transferred Receivables, Related Contracts or Related Security).
(f) Payment by the Transferee to the Originator for the initial Transfer
hereunder will constitute acknowledgment that the conditions set forth above
have been satisfied or waived.
SECTION 3.02. Conditions Precedent to All Transfers. The obligation of the
-------------------------------------
Transferee to accept each Transfer (including the initial Transfer) hereunder
shall be subject to the further conditions precedent that:
(a) With respect to any such Transfer, on or prior to the date of such
Transfer, the Originator shall have delivered to the Transferee, (i) if
requested by the Transferee, the Originator's General Trial Balance (which if in
magnetic tape or diskette format shall be compatible with the Transferee's
computer equipment) as of a date not more than 31 days prior to the date of such
Transfer, and (ii) a written report identifying, among other things, the
Receivables to be included in such Transfer and the then outstanding Transferred
Receivables and the aged balance thereof, in each case correlated to Transfers;
(b) With respect to any such Transfer, on or prior to the date of such
Transfer, the Collection Agent shall have delivered to the Transferee, in form
and substance satisfactory to the Transferee, a completed Originator Report for
the most recently ended reporting period for which information is required
pursuant to Section 6.02(b) and containing such additional information as may
reasonably be requested by the Transferee;
12
(c) At the request of the Transferee or its assignee, the
Originator will mark its master data processing records regarding the
Transferred Receivables and each Contract giving rise to Transferred Receivables
and all other relevant records evidencing the Receivables which are the subject
of such Transfer with a legend, acceptable to the Transferee, stating that such
Receivables, the Related Security and Collections with respect thereto, have
been transferred in accordance with this Agreement; and
(d) On the date of such Transfer the following statements shall be
true (and the Originator, by accepting the amount of such Transfer, shall be
deemed to have certified that):
(i) The representations and warranties contained in Section
4.01 are correct on and as of the date of such Transfer
as though made on and as of such date; and
(ii) No event has occurred and is continuing, or would result
from such Transfer, that constitutes an Event of
Termination or would constitute an Incipient Event of
Termination.
(e) The Transferee shall have received such other approvals, opinions
or documents as the Transferee may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. A. Representations and Warranties of the Originator.
------------------------------------------------
The Originator represents and warrants as follows:
(a) The Originator is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified, unless the failure to so qualify
would not have a material adverse effect on (i) the interests of the Transferee
hereunder, (ii) the collectibility of the Transferred Receivables, or (iii) the
ability of the Originator or the Collection Agent to perform their respective
obligations hereunder.
(b) The execution, delivery and performance by the Originator of this
Agreement and the other documents to be delivered by it hereunder, including the
Originator's transfer of Receivables hereunder, (i) are within the Originator's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) do not contravene (1) the Originator's charter or by-laws, (2) any
law, rule or regulation applicable to the Originator, (3) any contractual
restriction binding on or affecting the Originator or its property or (4) any
order, writ, judgment, award, injunction or decree binding on or affecting the
Originator or its property, and (iv) do not result in or require the creation of
any lien, security interest or other charge or encumbrance upon
13
or with respect to any of its properties (except for the transfer of the
Originator's interest in the Transferred Receivables pursuant to this
Agreement). This Agreement has been duly executed and delivered by the
Originator.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Originator of this Agreement
or any other document to be delivered thereunder.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Originator enforceable against the Originator in accordance
with its terms.
(e) The balance sheets of the Originator and its subsidiaries as at
September 30, 1997 and June 30, 1998, and the related statements of income and
retained earnings of the Originator and its subsidiaries for the fiscal year
then ended, copies of which have been furnished to the Transferee, fairly
present the financial condition of the Originator and its subsidiaries as at
such date and the results of the operations of the Originator and its
subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since June 30, 1998
there has been no material adverse change in the business, operations, property
or financial or other condition of the Originator.
(f) There is no pending or threatened action or proceeding affecting
the Originator or any of its subsidiaries before any court, governmental agency
or arbitrator which may materially adversely affect the financial condition or
operations of the Originator or any of its subsidiaries or the ability of the
Originator to perform its obligations under this Agreement, or which purports to
affect the legality, validity or enforceability of this Agreement.
(g) No proceeds of any Transfer will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
(h) No transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(i) Each Receivable transferred by the Originator hereunder is an
Eligible Receivable on the date of the related Transfer except for those
Receivables identified by the Originator as not being Eligible Receivables in
the list of Receivables delivered to the Agent on the related Transfer Date in
accordance with paragraph (j) of Exhibit IV of the Receivables Purchase
Agreement, and the Originator owns and has the right to transfer each
Transferred Receivable, together with the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim (other than any Adverse
Claim arising solely as the result of any action taken by the Transferee). When
the Transferee accepts a Transfer, it shall acquire a valid and perfected first
priority ownership interest in each Transferred Receivable and the Related
Security and Collections with respect thereto free and clear of any Adverse
Claim (other than any Adverse
14
Claim arising solely as the result of any action taken by the Transferee), and
no effective financing statement or other instrument similar in effect covering
any Transferred Receivable, any interest therein, the Related Security or
Collections with respect thereto is on file in any recording office except for
those filed in favor of the Originator, as secured party, which cover only
Equipment, accessories, attachments and additions thereto (and substitutions and
proceeds thereof) and such as may be filed in favor of Transferee in accordance
with this Agreement or in connection with any Adverse Claim arising solely as
the result of any action taken by the Transferee.
(j) Each Originator Report (if prepared by the Originator, or to the
extent that information contained therein is supplied by the Originator),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished at any time by the Originator to the Transferee in
connection with this Agreement is or will be accurate in all material respects
as of its date or (except as otherwise disclosed to the Transferee at such time)
as of the date so furnished, and no such document contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
(k) The principal place of business and chief executive office of the
Originator and the office where the Originator keeps its records concerning the
Receivables are located at the respective addresses set forth on Exhibit C
hereof.
(l) The Originator is not known by and does not use any trade name or
doing-business-as name.
(m) With respect to any programs used by the Originator in the
servicing of the Receivables, no sublicensing agreements are necessary in
connection with the designation of a new Collection Agent pursuant to Section
6.01(b) so that such new Collection Agent shall have the benefit of such
programs (it being understood that, however, the Collection Agent, if other than
-- ----- ---------- ----
the Originator, shall be required to be bound by a confidentiality agreement
reasonably acceptable to the Originator).
(n) The transfers of Receivables by the Originator to the Transferee
pursuant to this Agreement, and all other transactions between the Originator
and the Transferee, have been and will be made in good faith and without intent
to hinder, delay or defraud creditors of the Originator.
(o) If less than all of the Receivables of the Originator have been
transferred to the Transferee pursuant to this Agreement, no selection procedure
was utilized by the Originator in selecting the Transferred Receivables to be
transferred to the Transferee hereunder which is adverse to the interests of the
Transferee or would reasonably be expected to result in the Transferred
Receivables containing a higher percentage of Chargeback Receivables than the
15
percentage of Chargeback Receivables in the Receivables retained by the
Originator. With respect to each Transferred Receivable, such Receivable is
representative of all of the Receivables owned by the Originator.
(p) Each Contract giving rise to a Receivable provides for Periodic
Payments that will fully amortize such Receivable over the term of the Contract
related thereto and, except in accordance with the Credit and Collection Policy,
the Originator has not extended or amended, modified or waived the terms of any
Receivable or any Contract relating to any Receivable.
b. Representation and Warranty of the Transferee. The Transferee is
---------------------------------------------
acquiring the Transferred Receivables, the Related Security and Collections with
respect thereto in good faith, without knowledge of any Adverse Claim against,
interest in, or defense to the payment of such assets (other than any Adverse
Claim arising solely as the result of any action taken by the Transferee)..
ARTICLE V
COVENANTS
SECTION 5.01. A. Covenants of the Originator. From the date hereof
---------------------------
until the first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Chargeback
Receivables:
(a) Compliance with Laws, Etc. The Originator will comply in all
-------------------------
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its corporate existence, rights, franchises,
qualifications and privileges except to the extent that ' the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and privileges
would not materially adversely affect the collectibility of the Transferred
Receivables or the ability of the Originator to perform its obligations under
this Agreement.
(b) Offices, Records and Books of Account. The Originator will keep
-------------------------------------
its principal place of business and chief executive office and the office where
it keeps its records concerning the Transferred Receivables at the respective
addresses set forth on Exhibit D hereof or, upon 30 days' prior written notice
to the Transferee, at any other locations in jurisdictions where all actions
required by Section 5.01(i) shall have been taken and completed. The Originator
also will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Transferred Receivables and related Contracts in the event of the destruction of
the originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Transferred Receivables (including, without limitation, records adequate to
permit the daily identification of each new Transferred Receivable and all
Collections of and adjustments to each existing Transferred Receivable). The
Originator shall make a notation in its
16
books and records, including its computer files, to indicate which Receivables
have been transferred to the Transferee hereunder.
(c) Performance and Compliance with Contracts and Credit and
--------------------------------------------------------
Collection Policy. The Originator will, at its expense, timely and fully perform
- -----------------
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Transferred Receivables,
and timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Transferred Receivable and the related
Contract.
(d) Sales, Liens, Etc. Except for the transfers contemplated herein,
-----------------
the Originator will not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, any Transferred Receivable, Related Security, related Contract
or Collections, or upon or with respect to any account to which any Collections
of any Transferred Receivables are sent, or assign any right to receive income
in respect thereof.
(e) Extension or Amendment of Transferred Receivables. Except as
-------------------------------------------------
provided in Section 6.02(c), the Originator will not extend, amend or otherwise
modify the terms of any Transferred Receivable, or amend, modify or waive any
term or condition of any Contract related thereto. The Originator shall notify
the Transferee promptly upon any change in the implied interest rate used by the
Originator or any Dealer in originating Contracts.
(f) Change in Business or Credit and Collection Policy. The
--------------------------------------------------
Originator will not make any change in the character of its business or in the
Credit and Collection Policy that would, in either case, materially adversely
affect the collectibility of the Transferred Receivables or the ability of the
Originator to perform its obligations under this Agreement.
(g) Audits. The Originator will, from time to time during regular
------
business hours as requested by the Transferee or its assigns, permit the
Transferee, or its agents, representatives or assigns, (i) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Originator relating to Transferred Receivables and the Related
Security, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of the Originator for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
Transferred Receivables and the Related Security or the Originator's performance
hereunder or under the Contracts with any of the officers or employees of the
Originator having knowledge of such matters.
(h) Change in Payment Instructions to Obligors. The Originator will
------------------------------------------
not make any change in its instructions to Obligors regarding payments to be
made by it unless the Transferee shall have received notice of such change.
17
(i) Further Assurances.
------------------
(i) The Originator agrees from time to time, at its expense,
promptly to execute and deliver all further instruments
and documents, and to take all further actions, that may
be necessary or desirable, or that the Transferee or its
assignee may reasonably request, to perfect, protect or
more fully evidence the transfer of Receivables under this
Agreement, or to enable the Transferee or its assignee to
exercise and enforce its respective rights and remedies
under this Agreement. Without limiting the foregoing, the
Originator will, upon the request of the Transferee or its
assignee, (A) execute and file such financing or
continuation statements, or amendments thereto, and such
other instruments and documents, that may be necessary or
desirable to perfect, protect or evidence such Transferred
Receivables; and (B) deliver to the Transferee copies of
all Contracts relating to the Transferred Receivables and
all records relating to such Contracts and the Transferred
Receivables, whether in hard copy or in magnetic tape or
diskette format (which if in magnetic tape or diskette
format shall be compatible with the Transferee's computer
equipment).
(ii) The Originator authorizes the Transferee or its assignee
to file financing or continuation statements, and
amendments thereto and assignments thereof, relating to
the Transferred Receivables and the Related Security, the
related Contracts and the Collections with respect thereto
without the signature of the Originator where permitted by
law. A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement where
permitted by law.
(iii) The Originator shall perform its obligations under the
Contracts related to the Transferred Receivables to the
same extent as if the Transferred Receivables had not been
transferred.
(j) Reporting Requirements. The Originator will provide to the
----------------------
Transferee the following:
(i) as soon as available and in any event within 60 days after
the end of the first three quarters of each fiscal year of
the Originator, balance sheets of the Originator and its
subsidiaries as of the end of such quarter and statements
of income and retained earnings of the Originator and its
subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the
Originator;
18
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Originator, a
copy of the annual report for such year for Ikon Office
Solutions, Inc. and the Annual Report on Form 10-K for the
Originator and its subsidiaries, containing financial
statements for such year audited by Ernst & Young LLP or
other independent public accountants acceptable to the
Agent;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Termination or
Incipient Event of Termination, a statement of the chief
financial officer of the Originator setting forth details
of such Event of Termination or Incipient Event of
Termination and the action that the Originator has taken
and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of
all reports that the Originator sends to any of its
securityholders, and copies of all reports and
registration statements that the Originator or any
subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly after the filing or receiving thereof, copies of
all reports and notices that the Originator or any
Affiliate files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or that the Originator or any
Affiliate receives from any of the foregoing or from any
multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA) to which the Originator or any
Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the
assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the
imposition of liability on the Originator and/or any such
Affiliate in excess of $5,000,000;
(vi) at least ten Business Days prior to any change in the
Originator's name, a notice setting forth the new name and
the effective date thereof;
(vii) concurrently with the delivery of each Originator Report
by the Collection Agent, a statement as to whether or not
all of the Receivables under all Contracts arising during
the immediately preceding month have been transferred by
the Originator to the Transferee and, if less than all of
such Receivables have been transferred, a summary of those
Receivables not transferred; and
19
(viii) such other information respecting the Transferred
Receivables or the condition or operations, financial or
otherwise, of the Originator as the Transferee may from
time to time reasonably request.
(k) Separate Conduct of Business. The Originator will:
----------------------------
(i) maintain separate corporate records and books of account
from those of the Transferee;
(ii) conduct its business from an office separate from that of
the Transferee;
(iii) ensure that all oral and written communications, including
without limitation, letters, invoices, purchase orders,
contracts, statements and applications, will be made
solely in its own name;
(iv) have stationery and other business forms and a mailing
address and a telephone number separate from those of the
Transferee;
(v) not hold itself out as having agreed to pay, or as being
liable for, the obligations of the Transferee;
(vi) not engage in any transaction with the Transferee except
as contemplated by this Agreement or as permitted by the
Receivables Transfer Agreement;
(vii) continuously maintain as official records the resolutions,
agreements and other instruments underlying the
transactions contemplated by this Agreement; and
(viii) disclose on its annual financial statements the effects of
the transactions contemplated by this Agreement in
accordance with generally accepted accounting principles.
B. Covenants of the Transferee. From the date hereof until the
---------------------------
termination of this Agreement, the Transferee will:
(a) maintain separate corporate records and books of account from
those of the Originator;
(b) conduct its business from an office separate from that of the
Originator;
20
(c) ensure that all oral and written communications, including
without limitation, letters, invoices, purchase orders,
contracts, statements and applications, will be made solely in
its own name;
(d) have stationery and other business forms and a mailing address
and a telephone number separate from those of the Originator;
(e) not hold itself out as having agreed to pay, or as being liable
for, the obligations of the Originator; and
(f) continuously maintain as official records the resolutions,
agreements and other instruments underlying the transactions
contemplated by this Agreement.
SECTION 5.02. Grant of Security Interest. To secure all obligations of
--------------------------
the Originator arising in connection with this Agreement, and each other
agreement entered into in connection with this Agreement, including, without
limitation, Indemnified Amounts, payments on account of Collections received or
deemed to be received, and any other amounts due the Transferee hereunder, the
Originator hereby assigns and grants to Transferee, a security interest in all
of the Originator's right, title and interest now or hereafter existing in, to
and under all Receivables originated in Eligible Marketplaces, the Related
Security and all Collections with respect thereto which do not constitute
Transferred Receivables.
21
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
-------------------------------
administration and collection of the Transferred Receivables shall be conducted
by such Person (the "Collection Agent") so designated hereunder from time to
----------------
time. Until the Transferee or its assignee gives notice to the Originator of the
designation of a new Collection Agent, the Originator is hereby designated as,
and hereby agrees to perform the duties and obligations of, the Collection Agent
pursuant to the terms hereof. The Originator agrees that such notice may be
given at any time in the Transferee's or assignee's discretion. Upon the
Originator's receipt of such notice, the Originator agrees that it will
terminate its activities as Collection Agent hereunder in a manner which the
Transferee (or its designee) believes will facilitate the transition of the
performance of such activities to the new Collection Agent, and the Originator
shall use its best efforts to assist the Transferee (or its designee) to take
over the servicing, administration and collection of the Transferred
Receivables, including, without limitation, providing access to and copies of
all computer tapes or disks and other documents or instruments that evidence or
relate to Transferred Receivables maintained in its capacity as Collection Agent
and access to all employees and officers of the Originator responsible with
respect thereto. The Transferee at any time after giving such notice may
designate as Collection Agent any Person (including itself) to succeed the
Originator or any successor Collection Agent, if such Person shall consent and
agree to the terms hereof. The Collection Agent may, with the prior consent of
the Transferee, subcontract with any other Person for the servicing,
administration or collection of Transferred Receivables. Any such subcontract
shall not affect the Collection Agent's liability for performance of its duties
and obligations pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent. (a) The Collection Agent
--------------------------
shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Transferred Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. The
Transferee hereby appoints the Collection Agent, from time to time designated
pursuant to Section 6.01, as agent to enforce its rights in the Transferred
Receivables, the Related Security and the Collections with respect thereto. In
performing its duties as Collection Agent, the Collection Agent shall exercise
the same care and apply the same policies as it would exercise and apply if it
owned the Transferred Receivables and shall act in the best interests of the
Transferee and its assignees.
(b) Prior to the 15th calendar day of each month, the Collection Agent
shall prepare and forward to the Transferee (i) an Originator Report, relating
to all then outstanding Transferred Receivables, and the Related Security and
Collections with respect thereto, in each case, as of the close of business of
the Collection Agent on the last day of the immediately preceding month, and
(ii) if requested by the Transferee, a listing by Obligor of all Transferred
22
Receivables correlating Transferred Receivables and Transfers, together with an
aging report of such Transferred Receivables.
(c) If no Event of Termination or Incipient Event of Termination
shall have occurred and be continuing, the Originator, while it is the
Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Transferred
Receivable as the Originator deems appropriate to maximize Collections thereof.
(d) The Originator shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Originator and the Transferee in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Transferred Receivables.
(e) The Collection Agent shall as soon as practicable following
receipt turn over to the Originator any cash collections or other cash proceeds
received with respect to Receivables not constituting Transferred Receivables
less all reasonable and appropriate out-of-pocket costs and expenses of the
Collection Agent of servicing, collecting and administering the Receivables to
the extent not covered by the Collection Agent Fee received by it.
(f) The Collection Agent also shall perform the other obligations of
the "Collection Agent" set forth in this Agreement with respect to the
Transferred Receivables.
SECTION 6.03. Collection Agent Fee. The Transferee shall pay to the
--------------------
Collection Agent, so long as it is acting as the Collection Agent hereunder, a
periodic collection fee (the "Collection Agent Fee") of 1.50% per annum on the
--------------------
average daily outstanding Transferee's Interest with respect to the Transferred
Receivables, payable on the fifteenth calendar day of each month (or, if such
day is not a Business Day, the immediately succeeding Business Day) or such
other day during each calendar month as the Transferee and the Collection Agent
shall agree. The Collection Agent Fee shall be payable solely to the extent
Collections are available therefor in accordance with the priorities set forth
in the Receivables Transfer Agreement. So long as the Originator is acting as
the Collection Agent hereunder, amounts paid as the Collection Agent Fee
pursuant to this Section 6.03 shall reduce, on a dollar-for-dollar basis, the
obligation of the Transferee to pay the "Collection Agent Fee" pursuant to
--------------------
Section 1.04(c) of the Receivables Transfer Agreement, provided that such
obligation of the Transferee shall in no event be reduced below zero.
SECTION 6.04. Certain Rights of the Transferee. (a) The Transferee
--------------------------------
may, at any time, give notice of the transfer of Transferred Receivables and/or
direct the Obligors of Transferred Receivables and any Person obligated on any
Related Security, or any of them, that payment of all amounts payable under any
Transferred Receivable shall be made directly to the Transferee or its designee.
23
(b) The Originator shall, at any time upon the Transferee's request
and at the Originator's expense, give notice of the transfer of Transferred
Receivables to each Obligor of Transferred Receivables and direct that payments
of all amounts payable under such Transferred Receivables be made directly to
the Transferee or its designee.
(c) At the Transferee's request and at the Originator's expense, the
Originator and the Collection Agent shall (i) assemble all of the documents,
instruments and other records (including, without limitation, computer tapes and
disks) that evidence or relate to the Transferred Receivables, and the related
Contracts and Related Security, or that are otherwise necessary or desirable to
collect the Transferred Receivables, and shall make the same available to the
Transferee at a place selected by the Transferee or its designee, and (ii)
segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Transferred Receivables in a manner acceptable
to the Transferee and, promptly upon receipt, remit all such cash, checks and
instruments, duly indorsed or with duly executed instruments of transfer, to the
Transferee or its designee. The Transferee shall also have the right to make
copies of all such documents, instruments and other records at any time.
(d) The Originator authorizes the Transferee to take any and all steps
in the Originator's name and on behalf of the Originator that are necessary or
desirable, in the determination of the Transferee, to collect amounts due under
the Transferred Receivables.
SECTION 6.05. Rights and Remedies. (a) If the Originator or the
-------------------
Collection Agent fails to perform any of its obligations under this Agreement,
the Transferee may (but shall not be required to) itself perform, or cause
performance of, such obligation, and, if the Originator (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Transferee
incurred in connection therewith shall be payable by the Originator as provided
in Section 8.01 or Section 9.04 as applicable.
(b) The Originator shall perform all of its obligations under the
Contracts related to the Transferred Receivables to the same extent as if the
Originator had not transferred Receivables hereunder and the exercise by the
Transferee of its rights hereunder shall not relieve the Originator from such
obligations or its obligations with respect to the Transferred Receivables. The
Transferee shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall the Transferee be
obligated to perform any of the obligations of the Originator thereunder.
(c) The Originator shall cooperate with the Collection Agent in
collecting amounts due from Obligors in respect of the Transferred Receivables.
SECTION 6.06. Transfer of Records to Transferee . Each Transfer of
---------------------------------
Receivables hereunder shall include the transfer to the Transferee of all of the
Originator's right and title to and interest in the records relating to such
Receivables and shall include an irrevocable non-exclusive license to the use of
the Originator's computer software system to access and create
24
such records. Such license shall be without royalty or payment of any kind, is
coupled with an interest, and shall be irrevocable until all of the Transferred
Receivables are either collected in full or become Chargeback Receivables.
The Originator shall take such action requested by the Transferee, from
time to time hereafter, that may be necessary or appropriate to ensure that the
Transferee has an enforceable interest in the records relating to the
Transferred Receivables and rights to the use of the Originator's computer
software system to access and create such records.
In recognition of the Originator's need to have access to the records
transferred to the Transferee hereunder, the Transferee hereby grants to the
Originator an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Originator's business or in
performance of its duties as Collection Agent, provided that (i) the Originator
shall not disrupt or otherwise interfere with the Transferee's use of and access
to such records during such license period and (ii) the Originator consents to
the assignment and delivery of the records (including any information contained
therein relating to the Originator or its operations) to any assignees or
transferees of the Transferee provided they agree to hold such records
confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination . If any of the following events
---------------------
("Events of Termination") shall occur and be continuing:
---------------------
(a) The Collection Agent (if the Originator or any of its Affiliates)
(i) shall fail to perform or observe any term, covenant or agreement under this
Agreement (other than as referred to in clause (ii) of this subsection (a)) and
such failure shall remain unremedied for three Business Days after the receipt
of notice or actual knowledge thereof or (ii) shall fail to make when due any
payment or deposit to be made by it under this Agreement; or
(b) The Originator shall fail (i) to transfer to the Transferee when
requested any rights, pursuant to this Agreement, which the Originator then has
as Collection Agent, or (ii) to make any payment required under Section 2.04(a)
or 2.04(b); or
(c) Any representation or warranty made or deemed made by the
Originator (or any of its officers) under or in connection with this Agreement
or any information or report delivered by the Originator pursuant to this
Agreement shall prove to have been incorrect or untrue in any material respect
when made or deemed made or delivered; or
(d) The Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such
25
failure shall remain unremedied for 10 days after written notice thereof shall
have been given to the Originator by the Transferee; or
(e) The Originator or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $10,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) [Reserved]
(g) The Originator or any of its subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Originator or
any of its subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 30 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or the Originator or
any of its subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (g); or
(h) A Trigger Event shall have occurred under the Receivables Transfer
Agreement; or
(i) There shall have occurred any material adverse change in the
financial condition or operations of the Originator since June 30, 1998; or
there shall have occurred any event which may materially adversely affect the
collectibility of the Transferred Receivables or the ability of the Originator
to collect Transferred Receivables or otherwise perform its obligations under
this Agreement;
26
then, and in any such event, the Transferee may (with the consent of the Agent),
by notice to the Originator, take either or both of the following actions: (x)
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred) and (y) without
limiting any right under this Agreement to replace the Collection Agent,
designate another Person to succeed the Originator as Collection Agent;
provided, that, automatically upon the occurrence of any event (without any
- --------
requirement for the passage of time or the giving of notice) described in
paragraph (g) of this Section 7.01, the Facility Termination Date shall occur,
the Originator (if it is then serving as the Collection Agent) shall cease to be
the Collection Agent, and the Transferee (or its assigns or designees) shall
become the Collection Agent. Upon any such declaration or designation or upon
such automatic termination, the Transferee shall have, in addition to the rights
and remedies under this Agreement, all other rights and remedies with respect to
the Receivables provided after default under the UCC and under other applicable
law, which rights and remedies shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Originator. Without limiting any
-----------------------------
other rights which the Transferee may have hereunder or under applicable law,
the Originator hereby agrees to indemnify the Transferee and its assigns and
transferees (each, an "Indemnified Party") from and against any and all damages,
-----------------
claims, losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), awarded against or incurred by any
-------------------
Indemnified Party in connection with the transactions contemplated by this
Agreement. It is expressly agreed and understood by the parties hereto (i) that
the foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require the Originator to indemnify
any Person (a) for Receivables which are not collected, not paid or
uncollectible on account of the insolvency, bankruptcy, or financial inability
to pay of the applicable Obligor, (b) for damages, losses, claims or liabilities
or related costs or expenses resulting from such Person's gross negligence or
willful misconduct, or (c) for any income taxes or franchise taxes incurred by
such Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.
27
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement or consent to any departure by the Originator therefrom shall
be effective unless in a writing signed by the Transferee and consented to by
the Agent (as defined in the Receivables Transfer Agreement) and, in the case of
any amendment, also signed by the Originator, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such material amendment
-------- -------
shall be effective until both Moody's and S&P have notified the Agent in writing
that such action will not result in a reduction or withdrawal of the rating of
any of the Issuer's commercial paper notes. No failure on the part of the
Transferee 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.
SECTION 9.02. Notices, Etc. All notices and other communications
------------
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall be
effective when sent (and shall be followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.
SECTION 9.03. Binding Effect: Assignability . (a) This Agreement shall
-----------------------------
be binding upon and inure to the benefit of the Originator, the Transferee and
their respective successors and assigns; provided, however, that the Originator
-------- -------
may not assign its rights or obligations hereunder or any interest herein
without the prior written consent of the Transferee. In connection with any
assignment by the Transferee of all or a portion of the Transferred Receivables,
the assignee shall, to the extent of its assignment, have all rights of the
Transferee under this Agreement (as if such buyer or assignee, as the case may
be, were the Transferee hereunder) except to the extent specifically provided in
the agreement between the Transferee and such assignee.
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Chargeback Receivables; provided, however, that rights and remedies with respect
-------- -------
to any breach of any representation and warranty made by the Originator pursuant
to Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and
9.06 shall be continuing and shall survive any termination of this Agreement.
28
SECTION 9.04. Costs, Expenses and Taxes . (a) In addition to the rights
-------------------------
of indemnification granted to the Transferee pursuant to Article VIII hereof,
the Originator agrees to pay on demand all costs and expenses in connection with
the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Transferee (including the reasonable allocable fees of the Transferee's in-house
counsel) with respect thereto and with respect to advising the Transferee as to
its rights and remedies under this Agreement, and the Originator agrees to pay
all costs and expenses, if any (including reasonable counsel fees and expenses),
in connection with the enforcement of this Agreement and the other documents to
be delivered hereunder excluding, however, any costs of enforcement or
--------- -------
collection of Transferred Receivables.
(b) In addition, the Originator agrees to pay any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and the Originator agrees to save each Indemnified Party
harmless from and against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 9.05. No Proceedings . The Originator hereby agrees that it
--------------
will not institute against the Transferee any proceeding of the type referred to
in Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (i) the Facility Termination Date and (ii) the date on which
all of the Transferred Receivables are either collected in full or become
Chargeback Receivables.
SECTION 9.06. Confidentiality . Unless otherwise required by applicable
---------------
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to (i) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Transferee's assignees, if they agree in each case
to hold it confidential.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF PENNSYLVANIA (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT
THAT THE PERFECTION OF THE TRANSFEREE'S INTEREST IN THE RECEIVABLES OR REMEDIES
HEREUNDER IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF PENNSYLVANIA.
SECTION 9.08. Third Party Beneficiary . Each of the parties hereto
-----------------------
hereby acknowledges that the Transferee may assign all or any portion of its
rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and the Originator hereby consents to any such
29
assignments. All such assignees, including parties to the Receivables Transfer
Agreement in the case of assignment to such parties, shall be third party
beneficiaries of, and shall be entitled to enforce the Transferee's rights and
remedies under, this Agreement to the same extent as if they were parties
thereto, except to the extent specifically limited under the terms of their
assignment.
SECTION 9.09. Tax Treatment. It is the intention of the Originator and
-------------
the Transferee that for federal, state and local income and franchise tax
purposes, the Transferee's Interest will be treated as evidence of indebtedness
of the Originator secured by the Receivables, the Related Security and
Collections and other proceeds thereof. The Originator and the Transferee, by
entering into this Agreement, intend to treat the Transferee's Interest as
indebtedness. The provisions of this Agreement and all related Transaction
Documents shall be construed to further such intentions of the parties hereto.
SECTION 9.10. Execution in Counterparts . This Agreement may be
-------------------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
30
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.
ORIGINATOR: IOS CAPITAL, INC.
By: /s/ Jack Quinn
----------------------------
Name: Jack Quinn
Title:
for purposes of notices, with a copy to:
Ikon Office Solutions, Inc.
70 Valley Stream Pkwy.
Malvern, PA 19355
Attn: Jack Quinn
Facsimile No.: (610) 408-7022
1
TRANSFEREE: IKON FUNDING-1, LLC
By: IKON FUNDING, INC.
By: /s/ Robert K. McLain
--------------------------
Name: Robert K. McLain
Title: President
2
EXHIBIT A
---------
CREDIT AND COLLECTION POLICY
1
EXHIBIT B
---------
LIST OF MARKETPLACES
1
EXHIBIT C
---------
The principal place of business and chief executive offices of the
Transferor are located at:
IKON FUNDING-1, LLC
501 Silverside Road, Suite 28
Wilmington, Delaware 19809
The original records concerning the Receivables (and all original
documents related thereto) are located at the offices of the Collection Agent
at:
IOS CAPITAL, INC.
1738 Bass Road
Macon, Georgia 31210
1