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Exhibit 10.12
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EXECUTION COPY
RECEIVABLES TRANSFER AGREEMENT
Dated as of September 19, 2000
Among
IKON FUNDING-2, LLC,
As Transferor,
IOS CAPITAL, INC.,
As Originator and Collection Agent,
PARK AVENUE RECEIVABLES CORPORATION,
As Conduit Transferee,
THE SEVERAL FINANCIAL INSTITUTIONS
PARTY HERETO
FROM TIME TO TIME,
as APA Transferees
THE CHASE MANHATTAN BANK
As Administrative Agent
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TABLE OF CONTENTS
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ARTICLE I AMOUNTS AND TERMS OF TRANSFER................................... 1
SECTION 1.01. Facility................................................ 1
SECTION 1.02. Consideration and Terms................................. 2
SECTION 1.03. Settlement Procedures................................... 3
SECTION 1.04. Payment of Fees and Yield............................... 6
SECTION 1.05. Payments and Computations, Etc.......................... 6
SECTION 1.06. Increased Costs......................................... 7
SECTION 1.07. Requirements of Law..................................... 7
SECTION 1.08. Inability to Determine Eurodollar Rate.................. 8
SECTION 1.09. Breakage Costs.......................................... 8
SECTION 1.10. Retransfer of Receivables............................... 9
SECTION 1.11. Security Interest....................................... 10
ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TRIGGER EVENTS...... 10
SECTION 2.01. Representations and Warranties; Covenants............... 10
SECTION 2.02. Trigger Events.......................................... 10
ARTICLE III INDEMNIFICATION, REPURCHASE, ETC............................... 11
SECTION 3.01. Indemnities by the Transferor........................... 11
SECTION 3.02. Recourse for Yield...................................... 12
SECTION 3.03. Repurchase of Ineligible and Certain Other Receivables.. 13
ARTICLE IV ADMINISTRATION AND COLLECTION OF RECEIVABLES................... 13
SECTION 4.01. Designation of Collection Agent......................... 13
SECTION 4.02. Duties of Collection Agent.............................. 14
SECTION 4.03. Certain Rights of the Administrative Agent.............. 14
SECTION 4.04. Rights and Remedies..................................... 15
SECTION 4.05. Further Actions Evidencing Transfers.................... 15
SECTION 4.06. Covenants of the Collection Agent and the Originator.... 16
SECTION 4.07. Indemnities by the Collection Agent..................... 16
ARTICLE V MISCELLANEOUS.................................................. 17
SECTION 5.01. Amendments, Etc......................................... 17
SECTION 5.02. Notices, Etc............................................ 18
SECTION 5.03. Assignability........................................... 20
SECTION 5.04. Costs, Expenses and Taxes............................... 20
SECTION 5.05. No Proceedings; Limitation on Payments.................. 21
SECTION 5.06. Confidentiality......................................... 21
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SECTION 5.07. GOVERNING LAW........................................... 21
SECTION 5.08. Execution in Counterparts............................... 22
SECTION 5.09. Termination............................................. 22
SECTION 5.10. Tax Treatment........................................... 22
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EXHIBITS
EXHIBIT I - Definitions
EXHIBIT II - Conditions of the Transfer
EXHIBIT III - Representations and Warranties
EXHIBIT IV - Covenants
EXHIBIT V - Trigger Events
EXHIBIT VI - Principal Place of Business and Location of Records
ANNEXES
ANNEX A - Form of Contract
ANNEX B - Form of Transferor Report
ANNEX C - Form of Transfer Notice
ANNEX D - Form of Paydown Notice
SCHEDULES
SCHEDULE I -- Credit and Collection Policy
SCHEDULE II -- Receivables
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RECEIVABLES TRANSFER AGREEMENT
Dated as of September 19, 2000
CAPITAL, INC., a Delaware corporation (together with its successors and assigns,
the "Originator" and in its capacity as collection agent, together with its
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successors and assigns in such capacity, the "Collection Agent"), PARK AVENUE
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RECEIVABLES CORPORATION, a Delaware corporation (together with its successors
and assigns, "PARCO"or the "Conduit Transferee"), the APA TRANSFEREES from time
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to time party hereto (the "APA Transferees") and THE CHASE MANHATTAN BANK
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(together with its successors and assigns, "Chase"), a New York state banking
corporation, as administrative agent for the benefit of PARCO and the APA
Transferees (in such capacity, together with its successors and assigns in such
capacity, the "Administrative Agent"), agree as follows:
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this Agreement. References in Exhibits to "the Agreement" refer to this
Agreement, as amended, modified or supplemented from time to time.
Security, and the Conduit Transferee may desire to, and the APA Transferees (if
requested) shall, accept such transfer of such undivided percentage interests,
subject to the terms and conditions of this Agreement. Accordingly, the parties
agree as follows:
ARTICLE I AMOUNTS AND TERMS OF TRANSFER SECTION 1.01. Facility. Upon the terms
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and subject to the conditions set forth herein, prior to the Facility
Termination Date, (a) the Transferor may, at its option from time to time,
transfer to the Administrative Agent, on behalf of the Active Transferees, and
(b) the Administrative Agent may, in its sole discretion, on behalf of PARCO
(prior to an occurrence of a PARCO Termination Event), and the Administrative
Agent shall on behalf of the APA Transferees (following an occurrence of a PARCO
Termination Event or in the event PARCO elects not to accept such transfer)
accept such transfer and assignment from the Transferor of, without recourse
except as provided herein, undivided percentage ownership interests in a pool of
Receivables, together with Related Security and Collections with respect
thereto, from time to time (each, a "Transfer"). Under no circumstances shall
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the Administrative Agent accept any Transfer if, after giving effect to such
Transfer, the Aggregate Capital would exceed the Transfer Limit.
(b) The Transferor may, upon at least 30 days' notice to the Administrative
Agent, terminate this facility in whole or, from time to time, reduce in part
the unused portion of the Transfer Limit; provided that each partial reduction
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shall be in the amount of at least $10 million or an integral multiple thereof
and that, unless terminated in whole, the Transfer Limit shall in no event be
reduced below $100 million. Any such reduction in the Transfer Limit shall 1
4860144 simultaneously reduce the respective Commitments of the APA Transferees
Pro Rata in an aggregate amount equal to 102% of the amount of such reduction in
the Transfer Limit.
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SECTION 1.02. Consideration and Terms. (a) On any date prior to the Facility
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Termination Date, the Transferor may request a Transfer, which Transfer shall be
in a minimum amount of $10,000,000 and increments of $100,000 in excess thereof,
by delivering to the Administrative Agent not later than 11:00 a.m. (New York
time), three Business Days prior to such requested Transfer (each, a "Transfer
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Date"), written notice in the form of Annex C specifying the proposed Transfer
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Date and setting forth detailed information regarding the Receivables to be
included in such Transfer, including an addendum to Schedule II hereto. The
total amount to be paid by the Active Transferees in respect of such Transfer
shall be equal to the Aggregate Adjusted Outstanding Balance of the Related
Contracts for the Receivables included in such Transfer (the "Consideration" for
such Receivables).
(b) Promptly upon receipt of such notice, the Administrative Agent shall
deliver a copy thereof to each of the Transferees. By 3 p.m. (New York City
time) on each Transfer Date, upon satisfaction of the applicable conditions set
forth in Exhibit II hereto, (x) the Active Transferees shall make available to
the Administrative Agent their respective Pro Rata shares of the Consideration
in respect of such Transfer by deposit of such amounts in same day funds to the
Administrative Agent's Account and, after the receipt by the Administrative
Agent of such funds, the Administrative Agent will cause such Consideration to
be paid to the Transferor in immediately available funds prior to 4:00 p.m. (New
York City time) to the Transferor's account no. 21000-1177-1909 at First Union
Bank, Philadelphia, Pennsylvania (ABA#0312-0146-7); provided, however, that in
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the case of each Transfer other than the initial Transfer, the applicable
Consideration may be netted against all amounts on such payments of Capital to
be deposited in the Administrative Agent's Account on such date by the
Collection Agent pursuant to Section 1.03 and (y) the Transferor does hereby
(effective on the date of each Transfer automatically and without any further
documentation) transfer to the Administrative Agent for the benefit of the
applicable Transferees all of the related Receivables, the Related Contracts,
the Related Security and the Collections in respect thereof. The Active
Transferees shall on or before the tenth day of each month (or if such day is
not a Business Day, on the preceding Business Day), notify the Administrative
Agent, and the Administrative Agent shall notify the Transferor, of the Yield
accrued with respect to the prior Settlement Period or portion thereof. Each
Transfer to the Administrative Agent on behalf of the Active Transferees
hereunder shall be allocated Pro Rata to each such Transferee.
(c) Each APA Transferee's obligation hereunder shall be several, such that
the failure of any APA Transferee to make a payment in connection with any
Transfer hereunder shall not relieve any other APA Transferee of its obligation
hereunder to make payment for any Transfer. Further, in the event any APA
Transferee fails to satisfy its obligation to accept a Transfer as required
hereunder, upon receipt of notice of such failure from the Administrative Agent,
subject to the limitations set forth herein, each of the non-defaulting APA
Transferees shall accept a transfer of its respective Pro Rata share of such
defaulting APA Transferee's applicable share of 4860144 the related Transfer
(determined without regard to the Commitment of the defaulting APA Transferee).
Notwithstanding anything in this paragraph to the contrary, no APA Transferee
shall be required to accept a transfer pursuant to this paragraph for an amount
which would cause the Capital of such APA Transferee (after giving effect to
such transfer) to exceed its
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Commitment.
SECTION 1.03. Settlement Procedures. (a) Collection of the Receivables
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shall be administered by the Collection Agent, in accordance with the terms of
this Agreement. The Transferor shall provide to the Collection Agent on a timely
basis all information needed for such administration.
(b) The Collection Agent shall, on each day on which Collections are
received by it, set aside and hold in trust for the Transferees such Collections
and shall deposit into the Administrative Agent's Account,
(i) on each Settlement Date, from such Collections, an amount equal
to accrued and unpaid Yield and any fees owed to the Administrative Agent
pursuant to Section 1.04(a);
(ii) on each Settlement Date, an amount equal to the Collection
Agent Fee accrued but unpaid during the preceding Settlement Period; and
(iii) on each Settlement Date, from such Collections, an amount equal
to the portion of Collections received during the preceding Settlement
Period remaining after application pursuant to the preceding clauses (i)
and (ii); provided that prior to the Facility Termination Date, the amount
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to be deposited pursuant to this clause (iii) will not exceed the product
of (A) a fraction, the numerator of which is the Required Balance and the
denominator of which is the aggregate Outstanding Balance of the Related
Contracts and (B) the amount of such Collections;
provided, however, that the aggregate amount deposited pursuant to this
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subsection (b) shall not exceed the sum of the Aggregate Capital of, and accrued
Yield and Collection Agent Fee on, the Receivables plus the aggregate of any
other amounts then owed by the Transferor to any Transferee, the Administrative
Agent or Affected Person hereunder.
Notwithstanding the foregoing, unless a Trigger Event or Potential Trigger
Event has occurred, for so long as the Originator is the Collection Agent, the
Collection Agent shall not be required to set aside Collections, but may
commingle the Collections with its own funds and make the deposits required to
the Administrative Agent's Account pursuant to this paragraph (b) on the dates
required. For so long as the Originator is the Collection Agent, the Collection
Agent shall not be required to deposit the Collection Agent Fee to the
Administrative Agent's Account as required by clause (ii) of this paragraph (b)
but may retain such fee from the Collections remaining after the deposits
required pursuant to clause (i) of this paragraph (b).
(c) (i) Upon receipt of funds deposited into the Administrative Agent's
Account pursuant to subsection (b)(i) or (b)(ii) above, the Administrative
Agent shall distribute such funds, together with any funds received in
respect of the PARCO Cap, as follows: Pro Rata to each Transferee in
payment of accrued but unpaid Yield on the Capital of such Transferee and
to the Administrative Agent in respect of any fees owed pursuant to
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Section 1.04(a).
(ii) Upon receipt of funds deposited into the Administrative Agent's
Account pursuant to subsection (b)(ii) above, the Administrative Agent
shall distribute such funds, in an amount equal to the accrued but unpaid
Collection Agent Fee, to the Collection Agent on account of the Collection
Agent Fee.
(iii) Upon receipt of funds deposited into the Administrative Agent's
Account pursuant to subsection (b)(iii) above, the Administrative Agent
shall distribute such funds as follows: first, to the Administrative Agent
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for Pro Rata distribution to each Transferee in reduction to zero of all
Capital of such Transferee, second, to the Administrative Agent for the
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account of the Transferees, the Administrative Agent or any Affected
Person, as applicable, in payment of any other amounts owed by the
Transferor hereunder, and third, to the Transferor for its own account.
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(d) For the purposes of this Section 1.03:
(i) Upon discovery by the Originator or the Transferor or the
Administrative Agent of a breach of any of the representations or
warranties made or deemed made by the Originator in paragraph (h) of
Exhibit III with respect to any Receivable or the Related Security, such
party shall give prompt written notice thereof to the other party, as soon
as practicable and in any event within three Business Days following such
discovery. The Transferor shall be deemed to have received on such day a
Collection in full of such Receivable and all other Receivables relating to
the same Contract, in the amount of the Outstanding Balance of such
Contract plus Yield accrued and to accrue thereon through the end of the
then current Settlement Period, and the amount of each such Collection
shall be applied as provided in this Section 1.03; and
(ii) if and to the extent the Administrative Agent or any Transferee
shall be required for any reason to pay over to an Obligor any amount
received on its behalf hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Transferor and,
accordingly, the Administrative Agent or such Transferee, as the case may
be, shall have a claim against the Transferor for such amount, payable when
and to the extent that any distribution from or on behalf of such Obligor
is made in respect thereof.
(e) Except as provided in paragraph (i) of Section 1.03(d), or as
otherwise required by 4 4860144 applicable law or the relevant Contract, all
Collections received from an Obligor of any Receivables shall be applied to the
Receivables of such Obligor in the order of the age of the due but unpaid
amounts with respect to such Receivables, starting with the oldest such due but
unpaid amount, unless such Obligor designates its payment for application to
specific Receivables.
(f) The Transferor shall forthwith deliver to the Collection Agent an
amount equal to all Collections deemed received by the Transferor pursuant to
Section 1.03(d)(i) above and the
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Collection Agent shall hold or distribute such Collections in accordance with
Section 1.03(b). If Collections are then being paid to the Administrative Agent,
the Collection Agent shall forthwith cause such deemed Collections to be paid to
the Administrative Agent. If a Trigger Event or Potential Trigger Event has
occurred, so long as the Transferor shall hold any Collections or deemed
Collections required to be paid to the Collection Agent or the Administrative
Agent, it shall hold such Collections in trust and separate and apart from its
own funds and shall clearly mark its records to reflect such trust.
(g) The Transferor may reduce the Aggregate Capital upon delivery of a
notice in the form of Annex D at least ten Business Days' (in the case of
reductions in excess of $25,000,000) or at least two Business Days' (in the case
of reduction of $25,000,000 or less), to the Active Transferees and the
Administrative Agent, by remitting to the Administrative Agent's Account (i)
cash and (ii) instructions to apply such cash to the Pro Rata reduction of each
Transferee's Capital and Yield accrued and to accrue thereon (until such cash
can be used to pay commercial paper notes). The Transferor shall pay all
breakage and other costs related to such Capital reduction; provided, however,
that each of the Transferees and the Administrative Agent shall use its
reasonable best efforts to minimize any breakage costs.
(h) The Transferor may, upon at least ten Business Days' notice to the
Administrative Agent, repurchase all of the Receivables on any Settlement Date
(the "Repurchase Date") by remitting to the Administrative Agent's Account on or
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prior to such Repurchase Date, for distribution in accordance with subsection
1.03(c) above, cash in an amount equal to the Aggregate Capital, plus all
accrued and unpaid Yield thereon, and all other amounts which are payable under
this Agreement. A repurchase of Receivables made pursuant to this subsection
1.03(h) shall include the Related Security and Collections with respect thereto.
SECTION 1.04. Payment of Fees and Yield. (a) Fees. The Transferor shall
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pay to the Administrative Agent certain fees in the amounts and on the dates set
forth in a separate fee agreement of even date herewith (as amended,
supplemented or otherwise modified, the "Fee Letter") between the Transferor and
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the Administrative Agent.
(b) Yield. On or before the tenth day of each month (or if such day is not
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a Business Day, on the preceding Business Day), the Administrative Agent shall
calculate the Tranche Rate applicable to each Tranche funded or maintained by a
Transferee for each day in the prior Settlement Period and the Administrative
Agent shall notify the Servicer of such rates.
(c) Collection Agent Fee The Collection Agent shall be entitled to receive
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a fee (the "Collection Agent Fee") of one-twelfth of 1.50% per month on the
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average daily Aggregate Capital from the date of the first Transfer of
Receivables until the date on which such Aggregate Capital is reduced to zero,
payable on each Settlement Date. The Collection Agent Fee shall be payable
solely from Collections pursuant to, and subject to the priority of payment set
forth in, Section 1.03.
SECTION 1.05. Payments and Computations, Etc. (a) Unless otherwise
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specified herein, all amounts to be paid or deposited by the Transferor or the
Collection Agent hereunder
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to or for the account of the Administrative Agent, PARCO or any other Transferee
shall be paid or deposited no later than 11:00 a.m. (New York City time) on the
day when due in same day funds to the Administrative Agent's Account. Upon
receipt of funds deposited into the Administrative Agent's Account, the
Administrative Agent shall distribute such funds to the Persons entitled thereto
in accordance with the provisions of this Agreement or retain such funds for its
own account, as appropriate.
(b) The Transferor shall, to the extent permitted by law, pay interest on
any amount not paid or deposited by the Transferor (whether as Collection Agent
or otherwise) when due hereunder, at an interest rate per annum equal to 2% per
annum above the Base Rate, payable on demand.
(c) Unless otherwise specified herein, all computations of interest under
subsection (b) above and all computations of Yield, fees, and other amounts
hereunder shall be made on the basis of a year of 360 days for the actual number
of days elapsed. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of such payment or deposit.
SECTION 1.06. Increased Costs. (a) If the Administrative Agent, any
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Transferee, any other entity which enters into a commitment to acquire
Receivables or interests therein, or any entity which provides credit
enhancement or any of their respective Affiliates (each an "Affected Person")
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determines that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Affected Person and such Affected Person
determines that the amount of such capital is increased by or based upon the
existence of any commitment to accept transfers of or otherwise to maintain the
investment in Receivables or interests therein hereunder or under any
commitments to a Transferee related to this Agreement or to the funding thereof
or any related liquidity facility or credit enhancement facility (or any
participation therein) and other commitments of the same type, then, upon demand
by such Affected Person (with a copy to the Administrative Agent), the
Transferor shall immediately pay to the Administrative Agent, for the account of
such Affected Person (as a third-party beneficiary), from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person in the light of such circumstances, to the extent that such
Affected Person reasonably determines such increase in capital to be allocable
to the existence of any of such commitments. A certificate as to such amounts
submitted to the Transferor and the Administrative Agent by such Affected Person
shall be conclusive and binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements) in or in
the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to a Transferee of agreeing to accept the Transfer of or accepting such
Transfers, or maintaining the ownership of the Receivables or interests therein
in respect of which Yield is
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computed by reference to the Eurodollar Rate, then upon demand by such
Transferee (with a copy to the Administrative Agent), the Transferor shall
immediately pay to the Administrative Agent, for the account of such Transferee
(as a third-party beneficiary), from time to time as specified by such
Transferee, additional amounts sufficient to compensate such Transferee for such
increased costs. A certificate as to such amounts submitted to the Transferor
and the Administrative Agent by a Transferee shall be conclusive and binding for
all purposes, absent manifest error.
SECTION 1.07. Requirements of Law. In the event that any requirement of
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law or any change therein or in the interpretation or application thereof by the
relevant governmental authority to a Transferee after the date hereof or
compliance by a Transferee with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority:
(i) does or shall subject such Transferee to any tax of any kind
whatsoever with respect to this Agreement or change the basis of taxation
of payments to such Transferee on account of Collections, Yield or any
other amounts payable hereunder (excluding taxes imposed on the income of
such Transferee, and franchise taxes imposed on such Transferee, by the
jurisdiction under the laws of which such Transferee is organized or a
political subdivision thereof); or
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Transferee which are not otherwise included
in the determination of the Eurodollar Rate or the Base Rate hereunder;
and the result of any of the foregoing is to increase the cost to such
Transferee of maintaining an interest in Receivables or to reduce any amount
receivable hereunder, then, in any such case, the Transferor shall pay such
Transferee, upon its demand, any additional amounts necessary to compensate such
Transferee for such additional cost or reduced amount receivable with regard to
such Transferee's Receivables. All such amounts shall be payable as incurred. A
certificate from such Transferee or the Administrative Agent, as the case may
be, to the Transferor certifying, in reasonably specific detail, the basis for,
calculation of, and amount of such additional costs shall be conclusive in the
absence of manifest error.
SECTION 1.08. Inability to Determine Eurodollar Rate. In the event that
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the Administrative Agent shall have determined prior to the first day of any
Settlement Period (which determination shall be conclusive and binding upon the
parties hereto) by reason of circumstances affecting the interbank Eurodollar
market, either (a) dollar deposits in the relevant amounts and for the relevant
Settlement Period are not available, (b) adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for such Settlement Period or (c) the
Eurodollar Rate determined pursuant hereto does not accurately reflect the cost
to the Transferees (as conclusively determined by the Administrative Agent) of
maintaining Receivables during
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such Settlement Period, the Administrative Agent shall promptly give telephonic
notice of such determination, confirmed in writing, to the Transferor prior to
the first day of such Settlement Period. Until such notice has been withdrawn by
the Administrative Agent, no further Tranches shall be funded or maintained at
the Eurodollar Rate. The Administrative Agent agrees to withdraw any such notice
as soon as reasonably practicable after the Administrative Agent is notified of
a change in circumstances which makes such notice inapplicable.
SECTION 1.09. Breakage Costs. If (a) any payment of Capital as to which
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Yield is computed by reference to the Eurodollar Rate or the CP Rate is made by
the Transferor to or for the account of any Transferee other than on the last
day of a Settlement Period, as a result of a payment pursuant to Sections 1.03,
1.10 or 3.03 or for any other reason, or (b) the Termination Date shall occur
during any Settlement Period, or (c) any payment of Capital is made by the
Transferor to a Transferee or an Affected Person other than on the last day of a
Settlement Period upon a purchase and assumption of rights and obligations under
this Agreement as a result of a demand by the Transferor, the Transferor shall,
upon demand by such Transferee or Affected Person (with a copy to the
Administrative Agent), immediately pay to the Administrative Agent for the
account of such Transferee or Affected Person (as a third-party beneficiary) any
amounts required to compensate such Transferee or Affected Person for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment, including, without limitation, any loss (including loss of
anticipated profits), costs or expenses incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Transferee or Affected
Person to fund or maintain its interest in the Receivables. A certificate as to
such amounts submitted to the Transferor and the Administrative Agent by such
Transferee or Affected Person shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 1.10. Retransfer of Receivables. At any time after the Aggregate
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Capital is reduced to less than 10% of the highest amount of Aggregate Capital
outstanding on or prior to the Facility Termination Date, the Transferor may, at
its option, upon not less than thirty days notice to the Administrative Agent,
accept the retransfer from the Administrative Agent on the Settlement Date next
succeeding such thirty day period or on such other date as shall be mutually
agreed to by the Administrative Agent and the Transferor (the "Retransfer
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Date"), of all of the Receivables and the Related Security then held by the
----
Administrative Agent for an amount equal to the Aggregate Capital outstanding as
at the Retransfer Date (after application of all Collections received on or
prior to such date) plus any accrued and unpaid Yield as at such date plus any
other amounts then owed by the Transferor under this Agreement. The Transferor
shall be entitled to all Collections from the Receivables retransferred to the
Transferor in accordance with this Section 1.10 which are received after the
Retransfer Date and the Collection Agent shall set aside and hold in trust for,
and shall pay forthwith to, the Transferor all such Collections. The terms and
provisions of this Agreement shall continue to be effective or be reinstated, as
the case may be, if any such payment is rescinded or must otherwise be returned
to the Transferor upon the insolvency, bankruptcy or reorganization of the
Transferor or an Obligor or otherwise, all as though such payment had never been
made. On the Retransfer Date:
(i) all of the Receivables and Related Security shall be
retransferred to the Transferor without any representation or warranty
other than that they are free and clear
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of any Adverse Claims created by or through the Transferees or the
Administrative Agent, and
(ii) the Administrative Agent shall deliver to the Transferor executed
UCC-3 Termination Statements, terminating the interest of the
Administrative Agent in all such Receivables and Related Security,
thereupon the Transferor shall be vested with all right, title and interest in
such Receivables and Related Security, and the Administrative Agent and the
Transferees shall no longer hold any interest in any of such Receivables or
Related Security.
SECTION 1.11. Security Interest. As collateral security for the
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performance by the Transferor of all the terms, covenants and agreements on the
part of the Transferor (whether as Transferor or otherwise) to be performed
under this Agreement or any document delivered in connection with this Agreement
in accordance with the terms thereof, including the punctual payment when due of
all obligations of the Transferor hereunder or thereunder, whether for the
payment of Capital, Yield, indemnification payments, fees, expenses or
otherwise, the Transferor hereby assigns to the Administrative Agent for its
benefit and the ratable benefit of the Transferees, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the Transferees,
a present and continuing security interest in, all of the Transferor's right,
title and interest in and to:
(a) the Transfer Agreement, including, without limitation, (i) all rights
of the Transferor to receive moneys due or to become due under or pursuant to
the Transfer Agreement, (ii) all security interests and property subject thereto
from time to time purporting to secure payment of monies due or to become due
under or pursuant to the Transfer Agreement, (iii) all rights of the Transferor
to receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to the Transfer Agreement (except any rights that might arise under the
Support Agreement), (iv) claims of the Transferor for damages arising out of or
for breach of or default under the Transfer Agreement, and (v) the right of the
Transferor to compel performance and otherwise exercise all remedies thereunder,
(b) all Receivables and the Related Security and Collections with respect
thereto,
(c) all amounts due from the cap provider under the PARCO Cap, and
(d) to the extent not included in the foregoing, all proceeds of any and
all of the foregoing.
ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TRIGGER EVENTS
SECTION 2.01. Representations and Warranties; Covenants. The Transferor
-----------------------------------------
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, set forth in Exhibits III and IV, respectively,
hereto.
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SECTION 2.02. Trigger Events. If any of the Trigger Events set forth in
--------------
Exhibit V hereto shall occur and be continuing, the Administrative Agent may, by
notice to the Transferor, take either or both of the following actions: (x)
declare the Termination Date to have occurred, and (y) designate another Person
to succeed the Originator as the Collection Agent; provided, that, automatically
--------
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in paragraph (h) of Exhibit V, the
Termination Date shall occur, the Originator (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Administrative
Agent or its designee shall become the Collection Agent. Upon any such
declaration or designation or upon any such automatic termination, the
Transferees and the Administrative Agent shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided after default under the UCC of the appropriate jurisdiction or
jurisdictions and under other applicable law, which rights and remedies shall be
cumulative.
ARTICLE III INDEMNIFICATION, REPURCHASE, ETC.
SECTION 3.01. Indemnities by the Transferor. Without limiting any other
-----------------------------
rights that the Administrative Agent or any Transferee or any of their
respective Affiliates or its agents (each, an "Indemnified Party") may have
-----------------
hereunder or under applicable law, the Transferor hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
-------------------
from this Agreement or the use of proceeds of any Transfer or the acceptance of
the transfer of the Receivables or in respect of any Receivable, Related
Contract or Related Security, excluding, however, (a) Indemnified Amounts to the
--------- -------
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables or (c) any income taxes or
franchise taxes imposed on such Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized or any political subdivision
thereof, arising out of or as a result of this Agreement or the acceptance of
the transfer of the Receivables or in respect of any Receivable, Related
Contract or Related Security. Without limiting or being limited by the
foregoing, the Transferor shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from any of the following:
(i) any representation or warranty or statement made by the
Transferor (or any of its officers) under or in connection with this
Agreement and the other Transaction Documents which shall have been
incorrect in any material respect when made;
(ii) the failure by the Transferor to comply with any applicable law,
rule or regulation (including, without limitation, usury or consumer law)
with respect to any Receivable, the related Contract or the Related
Security; or the failure of any Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
10
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(iii) the failure of the Administrative Agent (for the benefit of the
Transferees) to acquire a valid and perfected security interest in the
Receivables and the Related Security and Collections in respect thereof
under Article 9 of the UCC of any applicable jurisdiction, free and clear
of any Adverse Claim;
(iv) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables or the Related Security and Collections in respect thereof,
whether at the time of the transfer of an interest therein or at any
subsequent time;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the lease or sale of the related Equipment or services
related to such Receivable or the furnishing or failure to furnish such
Equipment or other services or alleging violation by the Transferor of any
laws in connection with such lease or sale activities;
(vi) any failure of the Transferor to perform its duties or
obligations in accordance with the provisions hereof or to perform its
duties or obligations under the Related Contracts;
(vii) any products or personal liability claim arising out of or in
connection with any Equipment or other merchandise, services or activities
which are the subject of any Related Contract;
(viii) the commingling by the Transferor or any of its Affiliates
(including without limitation the Originator in its capacity as Collection
Agent) of Collections of Receivables at any time with other funds;
(ix) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of any Transfer or the acceptance of the
transfer of Receivables or in respect of any Receivable, Related Security
or Related Contract; or
(x) any fine, penalty, tax or other charge asserted against any
Indemnified Party by any governmental authority or agency or any other
Person resulting from any Obligor's use, possession or ownership of any
Equipment.
SECTION 3.02. Recourse for Yield. The Transferor hereby agrees to pay
------------------
to the Administrative Agent, for Pro Rata distribution to each Transferee, (a)
on the last day of each Settlement Period, any deficiency between (i)
Collections applied to payment of accrued but unpaid Yield on such last day
pursuant to Section 1.03(b)(i), and (ii) the amount of accrued but
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unpaid Yield on such last day on the Capital.
SECTION 3.03. Repurchase of Ineligible and Certain Other Receivables. (a)
------------------------------------------------------
The Transferor shall, upon not less than two Business Days' notice from the
Administrative Agent, repurchase (at the repurchase price specified in Section
3.03(b) below) on the next succeeding Settlement Date:
(i) any Receivable that was not an Eligible Receivable at the time of
the related Transfer; or
(ii) any Receivable as to which the Administrative Agent (for the
benefit of the Transferees) does not have a first priority perfected
interest free and clear of any Adverse Claim.
(b) Each repurchase of a Receivable under Section 3.03(a) above shall
include the repurchase of all other Receivables relating to the same Contract.
The repurchase price shall be an amount equal to the Outstanding Balance of the
related Contract plus accrued but unpaid Yield allocable thereto to the date of
repurchase. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Receivables received during the Settlement Period
preceding such Settlement Date and the amount of each such Collection shall be
applied as provided in Section 1.03.
ARTICLE IV ADMINISTRATION AND COLLECTION OF RECEIVABLES
SECTION 4.01. Designation of Collection Agent. The servicing,
-------------------------------
administration and collection of the Receivables shall be conducted by the
Collection Agent so designated hereunder from time to time. Until the
Administrative Agent gives notice to the Transferor of the designation of a new
Collection Agent, the Originator is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms hereof. The Administrative Agent at any time 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 Administrative Agent,
subcontract with any other Person for the servicing, administration or
collection of the Receivables. Any such subcontract shall not affect the
Collection Agent's liability for performance of its duties and obligations
pursuant to the terms hereof.
SECTION 4.02. Duties of Collection Agent. (a) The Collection Agent shall
--------------------------
take or cause to be taken all such actions as may be necessary or
advisable to collect each Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Transferor and the
Administrative Agent hereby appoint the Collection Agent, from time to time
designated pursuant to Section 4.01, as agent for themselves and for the
Transferees to enforce their respective rights and interests in the Receivables,
the Related Security and the related Contracts. In performing its duties as
Collection Agent, the Collection Agent shall exercise the same care
12
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and apply the same policies as it would exercise and apply if it owned such
Receivables and shall act in the best interests of the Transferor and the
Transferees.
(b) The Collection Agent shall administer the Collections in accordance
with the procedures described in Section 1.03.
(c) The Collection Agent shall hold in trust for the Transferor and each
Transferee, in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Receivables.
(d) The Collection Agent shall, as soon as practicable following receipt,
turn over to the Transferor any cash collections or other cash proceeds received
with respect to receivables not transferred to the Administrative Agent and the
Transferees pursuant to this Agreement.
(e) The Collection Agent shall, from time to time at the request of the
Administrative Agent, furnish to the Administrative Agent (promptly after any
such request) a calculation of the amounts set aside for the Administrative
Agent and the Transferees pursuant to Section 1.03.
(f) Prior to the 13th calendar day of each month, the Collection Agent
shall prepare and forward to the Administrative Agent a Transferor Report
relating to the Receivables outstanding on the last day of the immediately
preceding month.
SECTION 4.03. Certain Rights of the Administrative Agent.
------------------------------------------
Following the occurrence of a Trigger Event or Potential Trigger Event,
(a) The Administrative Agent may direct the Obligors that all
payments under the Related Contracts be made directly to the Administrative
Agent or its designee.
(b) At the Administrative Agent's request and at the Transferor's
expense, the Transferor shall notify each Obligor of the interest of the
Administrative Agent in the Receivables under this Agreement and direct
that payments be made directly to the Administrative Agent or its designee.
(c) At the Administrative Agent's request and at the Transferor's
expense, the Transferor and the Collection Agent shall (A) assemble all of
the documents, instruments and other records (including, without
limitation, computer tapes and disks) that evidence or relate to the
Receivables and the Related Contracts and Related Security, or that are
otherwise necessary or desirable to collect the Receivables, and shall make
the same available to the Administrative Agent at a place selected by the
Administrative Agent or its designee, and (B) segregate all cash, checks
and other instruments received by it from time to time constituting
Collections in a manner acceptable to the Administrative Agent and,
promptly upon receipt, remit all such cash, checks and instruments, duly
indorsed or with duly executed instruments of transfer, to the
Administrative Agent or its designee.
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(d) The Transferor authorizes the Administrative Agent to take any
and all steps in the Transferor's name and on behalf of the Transferor that
are necessary or desirable, in the determination of the Administrative
Agent, to collect amounts due under the Receivables, including, without
limitation, endorsing the Transferor's name on checks and other instruments
representing Collections and enforcing the Receivables and the Related
Security and related Contracts.
SECTION 4.04. Rights and Remedies. (a) If the Collection Agent fails to
-------------------
perform any of its obligations under this Agreement, the Administrative Agent
may (but shall not be required to) itself perform, or cause performance of, such
obligation; and the Administrative Agent's costs and expenses incurred in
connection therewith shall be payable by the Transferor (if the Collection Agent
that fails to so perform is the Transferor or its designee).
(b) The Transferor and the Originator shall perform their respective
obligations under the Related Contracts to the same extent as if the Receivables
had not been transferred and the exercise by the Administrative Agent on behalf
of the Transferees of their rights under this Agreement shall not release the
Collection Agent or the Transferor from any of their duties or obligations with
respect to any Receivables or Related Contracts. Neither the Administrative
Agent nor the Transferees shall have any obligation or liability with respect to
any Receivables or Related Contracts, nor shall any of them be obligated to
perform the obligations of the Transferor thereunder.
(c) In the event of any conflict between the provisions of Article IV of
this Agreement and Article VI of the Transfer Agreement, the provisions of this
Agreement shall control.
SECTION 4.05. Further Actions Evidencing Transfers. The Originator
------------------------------------
agrees from time to time, at its expense, to promptly execute and deliver all
further instruments and documents, and to take all further actions, that may be
reasonably necessary or desirable, or that the Administrative Agent may
reasonably request, to perfect, protect or more fully evidence the Receivables
transferred hereunder, or to enable the Transferees or the Administrative Agent
to exercise and enforce their respective rights and remedies hereunder. Without
limiting the foregoing, the Originator will upon the request of the
Administrative Agent (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and documents,
that may be reasonably necessary or desirable, or that the Administrative Agent
may reasonably request, to perfect, protect or evidence such interests in
Receivables; (ii) segregate the Related Contracts and other records in its lease
files pertaining to each Receivable; and (iii) mark its master data processing
records evidencing such Receivables and the Related Contracts, in each case in a
manner reasonably acceptable to the Administrative Agent, evidencing that such
Receivables have been transferred.
SECTION 4.06. Covenants of the Collection Agent and the Originator.
----------------------------------------------------
(a) Audits. The Collection Agent will, from time to time during regular
------
business hours as requested by the Administrative Agent, permit the
Administrative Agent, or its agents or representatives (including independent
public accountants, which may be the Collection Agent's independent
14
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public accountants), (i) to conduct periodic audits of the Receivables, the
Related Security and the related books and records and collections systems of
the Collection Agent, (ii) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of the Collection Agent relating
to the Receivables and the Related Security, including, without limitation, the
Related Contracts, and (iii) to visit the offices and properties of the
Collection Agent for the purpose of examining such materials described in clause
(ii) above, and to discuss matters relating to the Receivables and the Related
Security or the Collection Agent's performance hereunder with any of the
officers or employees of the Collection Agent having knowledge of such matters.
(b) Change in Credit and Collection Policy. The Originator will not make
--------------------------------------
any change in the Credit and Collection Policy that would impair the
collectibility of any Receivable or the ability of the Originator (if it is
acting as Collection Agent) to perform its obligations under this Agreement.
SECTION 4.07. Indemnities by the Collection Agent. Without limiting
-----------------------------------
any other rights that the Administrative Agent, any Transferee or any of their
respective Affiliates (each, a "Special Indemnified Party") may have hereunder
-------------------------
or under applicable law, and in consideration of its appointment as Collection
Agent, the Collection Agent hereby agrees to indemnify each Special Indemnified
Party from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all of the foregoing being collectively referred to
as "Special Indemnified Amounts") arising out of or resulting from any of the
---------------------------
following (excluding, however, (a) Special Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Special Indemnified Party, (b) recourse for uncollectible Receivables or (c) any
income taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party arising out of or as a result of this Agreement or the
ownership of interests in the Receivables or in respect of any Receivable or any
Contract):
(i) any representation or warranty or statement made or deemed made
by the Collection Agent under or in connection with this Agreement which
shall have been incorrect in any material respect when made;
(ii) the failure by the Collection Agent to comply with any
applicable law, rule or regulation with respect to any Receivable or
Contract; or the failure of any Receivable or Contract to conform to any
such applicable law, rule or regulation;
(iii) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables, the Related Contracts and the Related Security and Collections
in respect thereof, whether at the time of any transfer or reinvestment or
at any subsequent time;
(iv) any failure of the Collection Agent to perform its duties or
obligations in accordance with the provisions of this Agreement;
15
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(v) the commingling of Collections at any time by the Collection
Agent with other funds other than as specifically permitted herein;
(vi) any action or omission by the Collection Agent reducing or
impairing the rights of the Transferees with respect to any Receivable or
the value of any Receivable;
(vii) any Collection Agent Fees or other costs and expenses payable
to any replacement Collection Agent, to the extent in excess of the
Collection Agent Fees payable to the Collection Agent hereunder; or
(viii) any claim brought by any Person other than a Special
Indemnified Party arising from any activity by the Collection Agent or its
Affiliates in servicing, administering or collecting any Receivable.
ARTICLE V MISCELLANEOUS
SECTION 5.01. Amendments, Etc. No failure or delay on the part of the
---------------
Administrative Agent or any Transferee in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The
rights and remedies herein provided shall be cumulative and nonexclusive of any
rights or remedies provided by law. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by the
Transferor, the Collection Agent, the Administrative Agent and the Required
Transferees and, if such amendment is material, the Rating Agencies, to the
extent required by the terms and provisions of the commercial paper program of
PARCO, have provided written confirmation that such amendment will not result in
a reduction or withdrawal of the rating of the Commercial Paper; provided that
--------
the consent of all of the Transferees hereto shall be required for any
amendment, modification or supplement relating to (i) the definitions of
"Eligible Receivables," "Facility Termination Date," "Required Transferees,"
"Required Balance," "Discount" and "Applicable Percentage" and any defined terms
incorporated therein, (ii) the reduction or postponement of the time for payment
of any fee or other amount payable to or on behalf of such Transferees or (iii)
this Section 5.01.
SECTION 5.02. Notices, Etc. All notices, demands and other communications
------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(which shall include electronic transmission), shall be personally delivered,
express couriered, electronically transmitted (in which case a hard copy shall
also be sent by regular mail) or mailed by registered or certified mail and
shall, unless otherwise expressly provided herein, be effective when received at
the address specified below for the listed parties or at such other address as
shall be specified in a written notice furnished to the other parties hereunder.
16
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If to the Transferor:
IKON FUNDING-2, LLC
1738 Bass Road
Macon, Georgia 31210
Attention: Russell Slack, President
Telephone:
Telecopy:
If to the Originator or Collection Agent:
IOS CAPITAL, INC.
1738 Bass Road
Macon, Georgia 31210
Attention: Harry G. Kozee
Telephone: (912) 471-2306
Telecopy: (912) 471-2388
with a copy to:
IKON OFFICE SOLUTIONS, INC.
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
Attention: Jack Quinn
Telephone: (610) 408-7165
Telecopy: (610) 408-7022
17
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If to the Administrative Agent or the APA Transferees:
THE CHASE MANHATTAN BANK
450 West 33rd Street
15th Floor
New York, NY 10001
Attention: Lara Graff
CFMS-PARCO Manager
Telephone: (212) 946-3748
Telecopy: (212) 946-8098
with a copy to:
CHASE SECURITIES INC.
270 Park Avenue, 7/th/ Floor
New York, NY 10017
Attention: Paterno Luzano
Telephone: (212) 834-5381
Telecopy: (212) 834-6562
If to PARCO:
PARK AVENUE RECEIVABLES CORPORATION
c/o Global Securitization Services, LLC
114 West 47th Street, Suite 1715
New York, New York 10036
Attention: President
Telephone: (212) 302-5151
Telecopy: (212) 302-8767
With a copy to the Administrative Agent
SECTION 5.03. Assignability. (a) This Agreement and each Transferee's
-------------
rights and obligations herein (including rights in the Receivables) shall be
assignable by each Transferee and its successors and assigns if the
Administrative Agent shall have received confirmation from each of the Rating
Agencies that such assignment will not result in the withdrawal or downgrade of
the then-current ratings of PARCO's outstanding Commercial Paper; provided, that
--------
no such confirmation shall be required if such assignment is made by PARCO to
any other Transferee hereunder or to any Transferee that is a party to a
liquidity facility supporting the Commercial Paper. Each assignor of
Receivables or any interest therein shall notify the Administrative Agent and
the Transferor of any such assignment; provided, that no such notice shall be
--------
required if such assignment is made by PARCO to any other Transferee hereunder
or to any Transferee that is a party to a liquidity facility supporting the
commercial paper notes of PARCO. Each assignor of Receivables may, in
connection with the assignment or participation, disclose to the assignee or
participant any information, relating to the Transferor or the Receivables,
which was furnished to
18
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such assignor by or on behalf of the Transferor or by the Administrative Agent;
provided that, prior to any such disclosure, the assignee or participant agrees
--------
to preserve the confidentiality of any confidential information relating to the
Transferor received by it from any of the foregoing entities.
(b) This Agreement and the rights and obligations of the Administrative
Agent herein shall be assignable by the Administrative Agent and its successors
and assigns; provided that any costs incurred by the Administrative Agent in
--------
connection with such assignment shall be for the account of the Administrative
Agent.
(c) The Transferor may not assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Administrative
Agent, which consent will not be unreasonably withheld.
(d) Without limiting any other rights that may be available under
applicable law, the rights of the Transferees may be enforced through them or by
their agents.
SECTION 5.04. Costs, Expenses and Taxes. (a) In addition to the rights
-------------------------
of indemnification granted under Section 3.01 hereof, the Transferor agrees to
pay on demand all costs and expenses of the Administrative Agent and the
Transferees and their respective Affiliates in connection with the preparation,
execution, delivery, amendment and administration (including periodic auditing
of Receivables) of this Agreement, any transfer agreement or similar agreement
relating to the transfer of interests in Receivables and the other documents and
agreements to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Transferees and their respective Affiliates and agents
with respect thereto and with respect to advising the Administrative Agent, the
Transferees and their respective Affiliates and agents as to their rights and
remedies under this Agreement and all costs and expenses, if any (including
reasonable counsel fees and expenses) of the Administrative Agent, the
Transferees and their respective Affiliates and agents, in connection with the
enforcement of this Agreement, and the other documents and agreements to be
delivered hereunder.
(b) The Transferor shall pay any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other documents or agreements to be delivered hereunder. The
Transferor agrees to save each Indemnified Party harmless from and against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees, any and all stamp and other taxes and fees payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other documents or agreements to be delivered hereunder. The Transferor
agrees to save each Indemnified Party harmless from and against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 5.05. No Proceedings; Limitation on Payments. (a) Each of the
--------------------------------------
Originator, the Transferor, the Administrative Agent, each Transferee, each
assignee of a Receivable or any interest therein and each entity which enters
into a commitment to acquire Receivables or
19
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interests therein hereby agrees that it will not institute against, or join any
other person in instituting against, PARCO any proceeding of the type referred
to in paragraph (h) of Exhibit V so long as any Commercial Paper issued by PARCO
shall be outstanding and there shall not have elapsed one year plus one day
since the last day on which any such Commercial Paper shall have been
outstanding. Each of the Originator, the Administrative Agent, each Transferee,
each assignee of a Receivable or any interest therein and each entity which
enters into a commitment to acquire Receivables or interests therein hereby
agrees that it will not institute against, or join any other person in
instituting against, the Transferor any proceeding of the type referred to in
paragraph (h) of Exhibit V so long as any Commercial Paper issued by PARCO to
finance the Capital shall be outstanding and there shall not have elapsed one
year plus one day since the last day on which any such Commercial Paper shall
have been outstanding.
(b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, PARCO shall have no obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to PARCO after paying or making provision for the payment of its
Commercial Paper. All payment obligations of PARCO hereunder are contingent on
the availability of funds in excess of the amounts necessary to pay its
Commercial Paper; and each of the Transferor, the Collection Agent, the
Administrative Agent and the Transferees agree that they shall not have a claim
under Section 101(5) of the Bankruptcy Code if and to the extent that any such
payment obligation exceeds the amount available to PARCO to pay such amount
after paying or making provision for the payment of its Commercial Paper.
Notwithstanding anything in this Agreement or any other Transaction Document to
the contrary, the Transferor shall have no obligation to pay any amount required
to be paid by it hereunder or thereunder in excess of any amount available to
the Transferor after paying or making provision for the payment of the items set
forth in Section 1.03(c)(i), (ii) and the first clause of (iii). All payment
------------------ ---- -----
obligations of the Transferor hereunder are contingent on the availability of
funds in excess of the amounts necessary to pay such items; and each of the
Collection Agent, the Administrative Agent, the Transferees and the Affected
Persons agree that they shall not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation exceeds
the amount available to the Transferor to pay such amounts after paying or
making provision for the payment thereof.
(c) The provisions of this Section 5.05 shall survive any termination of
------------
this Agreement.
SECTION 5.06. Confidentiality . Unless otherwise required by applicable
---------------
law, the Transferor agrees to maintain the confidentiality of this Agreement
(and all drafts thereof) in communications with third parties and otherwise;
provided, that this Agreement may be disclosed to (a) third parties to the
--------
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrative Agent, and (b) the Transferor's legal counsel and auditors if
they agree to hold it confidential.
SECTION 5.07. GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF
20
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LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
INTERESTS OF THE TRANSFEREES IN THE RECEIVABLES OR REMEDIES HEREUNDER, IN
RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF NEW YORK.
SECTION 5.08. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 5.09. Termination. (a) Except as provided in subsection (b)
-----------
below, this Agreement shall terminate on the Termination Date. Upon the
occurrence of the Termination Date, the Administrative Agent will, at the
Transferor's cost and expense, take such actions as are reasonably requested to
terminate this Agreement and the Transfer contemplated thereby (including,
without limitation, executing UCC termination statements).
(b) The provisions of Sections 1.06, 1.07, 1.08, 1.09, 3.01, 4.07, 5.04,
5.05 and 5.06 shall survive any termination of this Agreement.
SECTION 5.10. Tax Treatment. It is the intention of the Transferor and
-------------
the Administrative Agent that for federal, state and local income and franchise
tax purposes, the Capital will be treated as evidence of indebtedness of the
Transferor secured by the Receivables, the Related Security and Collections and
other proceeds thereof. The Transferor, the Administrative Agent, PARCO and the
other Transferees, by entering into this Agreement, intend to treat the Capital
as indebtedness.
SECTION 5.11. Agent Conflict Waiver. The Administrative Agent acts in
---------------------
various capacities with respect to the maintenance and administration of PARCO's
commercial paper program (including, as administrative agent for PARCO, as
issuing and paying agent, as provider of other backup facilities, and as a
provider of other services or facilities from time to time, the "Agent Roles").
-----------
Each of the parties hereto hereby acknowledges and consents to any and all Agent
Roles, waives any objections it may have to any actual or potential conflict of
interest caused by the Administrative Agent acting as the administrative agent
for PARCO or as a related APA Transferee or as a liquidity or credit support
provider under PARCO's commercial paper program and acting as or maintaining any
of the Agent Roles, and agrees that in connection with any Agent Role, the
Administrative Agent may take, or refrain from taking, any action which it in
its discretion deems appropriate.
The provisions of this Agreement and all related Transaction Documents
shall be construed to further such intentions of the parties hereto.
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
TRANSFEROR: IKON FUNDING-2 LLC
By: IKON FUNDING, INC., its Manager
By:
Name: Russell Slack
Title: President
S_1
<PAGE>
ORIGINATOR IOS CAPITAL, INC.
AND
COLLECTION
AGENT: By:
Name: J. F. Quinn
Title: Treasurer
S_2
<PAGE>
CONDUIT TRANSFEREE: PARK AVENUE RECEIVABLES
CORPORATION
By:
Name:
Title:
S_3
<PAGE>
ADMINISTRATIVE AGENT: THE CHASE MANHATTAN BANK
By:
Name:
Title:
S_4
<PAGE>
APA TRANSFEREE: THE CHASE MANHATTAN BANK
By:
Name:
Title:
S_5
<PAGE>
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Active Transferees" means, (i) prior to an occurrence of a PARCO
------------------
Termination Event, PARCO and (ii) following an occurrence of a PARCO Termination
Event (or in the event PARCO elects not to accept a Transfer from the Transferor
hereunder), the APA Transferees.
"Administrative Agent" shall have the meaning assigned to such term in the
--------------------
preamble.
"Administrative Agent's Account" means the special account (account number
------------------------------
###-##-####; ABA number 021-000-021) of the Administrative Agent designated "The
PARCO Funding Account."
"Adverse Claim" means a lien, security interest or other charge or
-------------
encumbrance, or any other type of preferential arrangement.
"Affected Person" has the meaning set forth in Section 1.06.
---------------
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Aggregate Adjusted Outstanding Balance" means, with respect to any
--------------------------------------
Receivables to be transferred pursuant to Section 1.02, the aggregate
Outstanding Balance of the Contracts related to such Receivables less the
Discount with respect to such Receivables.
"Aggregate Capital" means, at any time, the sum of the outstanding Capital
-----------------
of each Transferee at such time.
"Aggregate Commitment" means, at any time, the sum of the outstanding
--------------------
Commitments of each Transferee at such time.
"Agreement" shall have the meaning assigned to such term in the preamble.
---------
"APA Transferees" shall have the meaning assigned to such term in the
---------------
preamble.
"Applicable Margin" shall mean on any date of determination 1.50%.
-----------------
"Applicable Percentage" means, with respect to the Consideration payable
---------------------
with respect to
I_1
<PAGE>
Receivables, a percentage equal to the greater of (i) 15% or (ii) the product of
(a) three, (b) the weighted average life of such Receivables expressed in years
and fractions thereof and as reported in the most recent Transferor Report and
(c) the product of (i) average of the Default Ratios for the twelve months
preceding the related Transfer Date and (ii) 12; provided, however, that after
-------- -------
the occurrence of a Trigger Event, the Applicable Percentage for any date of
determination shall be the greater of (i) the percentage calculated above and
(ii) a percentage equal to (A) the product of (x) the aggregate Outstanding
Balance of the Receivables on the date of occurrence of such Trigger Event, (y)
the Applicable Percentage on the date of occurrence of such Trigger Event and
(z) 0.25, divided by (B) the aggregate Outstanding Balance of the Receivables on
such date of determination.
"Asset Purchase Agreement" shall mean each asset purchase agreement,
------------------------
liquidity asset purchase agreement, or other similar agreement pursuant to which
any bank or group of banks or financial institutions agrees to purchase or make
loans secured by (or otherwise advance funds against) all or any portion of
PARCO's interest in the transferred Receivables, Related Security and
Collections in order to support PARCO's repayment of the Commercial Paper issued
to fund or maintain such interest.
"Base Rate" shall mean with respect to PARCO, a rate per annum equal to the
---------
sum of (x) the greater of (i) the prime rate of interest announced by the
Administrative Agent from time to time, changing when and as said prime rate
changes (such rate not necessarily being the lowest or best rate charged by the
Administrative Agent) and (ii) the sum of (A) 1.50% and (B) the rate equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it and
(y) the Applicable Margin.
"Base Rate Tranche" means, with respect to any Transferee, a Tranche funded
-----------------
or maintained by such Transferee as to which Yield is calculated at the Base
Rate.
"Business Day" means any day on which (i) banks are not authorized or
------------
required to close in New York City and (ii) if this definition of "Business Day"
is utilized in connection with the Eurodollar Rate, dealings are carried out on
the London interbank market.
"Capital" means, with respect to any Transferee, the aggregate
-------
Consideration paid by such Transferee for all Transfers that have occurred on or
prior to such date, reduced from time to time by Collections distributed on
account of Receivables and applied to reduce Capital pursuant to Section
1.03(c)(iii) of the Agreement; provided, that if such Capital shall have been
--------
reduced by any distribution and thereafter all or a portion of such distribution
is rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution, as though it
had not been made.
I_2
<PAGE>
"Closing Date" means September 21, 2000.
------------
"Collection Agent" means at any time the Person then authorized pursuant to
----------------
Section 4.01 of the Agreement to administer and collect Receivables.
"Collection Agent Fee" has the meaning specified in Section 1.04(c) of the
--------------------
Agreement.
"Collections" means, with respect to any Receivable, (i) all cash
-----------
collections and other cash proceeds of such Receivable, including, without
limitation, any proceeds resulting from the repurchase of such Receivable by
IKON Office Solutions, Inc. and all cash proceeds of Related Security with
respect to such Receivable (including, without limitation, payments under the
related Contract due upon or in connection with (a) Obligor's default under the
Contract, (b) loss, theft or damage to the related Equipment, or (c) renewal of
the Contract), and (ii) any Collection of such Receivable deemed to have been
received pursuant to the Agreement; provided, that Collections shall not include
--------
collections which represent the payment of (x) maintenance charges or (y)
insurance premiums.
"Commercial Paper" means the short-term promissory notes of PARCO issued by
----------------
PARCO in the United States commercial paper market.
"Commitment" means, respectively, the Commitment of each APA Transferee as
----------
set forth below such APA Transferee's name on the signature pages to the Asset
Purchase Agreement or as set forth in the assignment agreement or the assumption
agreement pursuant to which such APA Transferee became a party thereto.
"Conduit Transferee" has the meaning set forth in the preamble.
------------------
"Consideration" has the meaning set forth in Section 1.02(a) of the
-------------
Agreement.
"Contract" means a closed-end lease agreement between the Originator and an
--------
Obligor having an original lease/loan term not exceeding 72 months, in
substantially the form of one of the forms of written contract set forth in
Annex A hereto or otherwise approved by the Administrative Agent, which has been
sold to Transferor pursuant to the Transfer Agreement, pursuant to or under
which such Obligor shall be obligated to pay for the lease of Equipment.
"CP Rate" shall mean, with respect to any CP Tranche funded or maintained
-------
by PARCO, the rate equivalent to the weighted average of (i) the weighted
average of the discount rates on all of PARCO's Commercial Paper issued at a
discount and outstanding during the related Settlement Period, converted to an
annual yield-equivalent rate on the basis of a 360-day year, which rates shall
include dealer fees and commissions and (ii) the weighted average of the annual
interest rates payable on all interest-bearing PARCO Commercial Paper
outstanding during the related Settlement Period, on the basis of a 360-day
year, which rates shall include dealer fees and commissions; provided, that to
--------
the extent that the Facility is funded by a specific issuance of PARCO's
Commercial Paper, the "CP Rate" shall equal the rate or weighted average of the
rates applicable to such issuance.
I_3
<PAGE>
"CP Tranche" means a Tranche funded or maintained by PARCO as to which
----------
Yield is calculated at the CP Rate.
"Credit and Collection Policy" means those receivables collection policies
----------------------------
and practices of the Originator in effect on the date of the Agreement and
described in Schedule I hereto, as modified in compliance with the Agreement.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
----
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as Obligor under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"Default Ratio" means the ratio (expressed as a percentage) computed as of
-------------
the last day of each calendar month by dividing (i) the aggregate Outstanding
Balance of all Receivables that became Defaulted Receivables during such month
by (ii) the aggregate Outstanding Balance of all Receivables on the last day of
such month.
"Defaulted Receivable" means a Receivable:
--------------------
(i) as to which any payment, or part thereof, remains unpaid for
more than 120 days from the original due date for such payment;
(ii) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type described in paragraph
(h) of Exhibit V; or
(iii) which, consistent with the Credit and Collection Policy, would
be written off the Transferor's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage) computed as
-----------------
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 Delinquent
Receivables on such day by (ii) the aggregate amount of all Related Contracts on
such day.
"Delinquent Receivable" means a Receivable:
---------------------
(i) as to which any payment, or part thereof, remains unpaid for 60
or more days from the original due date for such payment; or
I_4
<PAGE>
(ii) which, consistent with the Credit and Collection Policy, would be
classified as delinquent by the Originator or the Transferor.
"Designated Account" means an account in the name of and owned by the
------------------
Administrative Agent, designated by the Administrative Agent in a writing
delivered to the Transferor, for the purpose of receiving Collections of
Receivables.
"Discount" means, with respect to any group of Receivables, the product of
--------
(a) the aggregate Outstanding Balance of the Related Contracts relating to such
Receivables and (b) the Applicable Percentage in respect of such Receivables.
"Eligible Receivable" means, at any time, a Receivable:
-------------------
(i) the Obligor of which is (a) a United States resident, (b) is
not the Transferor or any Affiliate thereof, and (c) is not a Governmental
Obligor; provided, that Obligors with respect to Contracts having an
--------
aggregate Outstanding Balance of not greater than 3% of the aggregate
Outstanding Balance of all Eligible Receivables may be Governmental
Obligors;
(ii) the Obligor of which has not been disapproved by the
Administrative Agent on or prior to the date of the Transfer and which, at
the time of the Transfer, is not the Obligor of any Defaulted Receivables;
(iii) which is not a Defaulted Receivable or a Delinquent Receivable;
which arises under a Contract duly authorized by the parties thereto (which
parties had the legal capacity to enter into such Contract) which is in
full force and effect and which is legal valid and binding obligation of
the related Obligor, enforceable against such Obligor in accordance with
its terms;
(iv) (a) which arises under a Contract with a remaining term of not
more than 60 months; provided, that Contracts having an aggregate
--------
Outstanding Balance of not greater than 5% of the aggregate Outstanding
Balance of all Eligible Receivables may have a remaining term of up to 72
months;
and
(b) which, 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 having
--------
an aggregate Outstanding Balance of not greater than 2% 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;
I_5
<PAGE>
(vi) which is denominated and payable in United States dollars in
the United States;
(vii) which arises under a Contract (a) which has not been amended,
modified, or altered in any material respect (except in writing and copies
of any such writing is attached to the Contract) and (b) which has been
duly authorized and which, together with such Receivable, is in full force
and effect and constitutes the legal, valid and binding obligation of the
Obligor of such Receivable enforceable against such Obligor in accordance
with its terms and is not subject to any dispute, offset, counterclaim or
defense whatsoever (except as limited by applicable bankruptcy law), (c) in
respect of which, prior to the date it is transferred hereunder, the
Equipment has been delivered and accepted, (d) which pursuant to its terms
may not be canceled, terminated or prepaid by the Obligor before the end of
its stated term (other than Contracts which contain early termination or
prepayment clauses which require the Obligor to pay the remainder of all
scheduled payments under such Contract upon cancellation or prepayment,
and, in the case of Contracts related to Governmental Obligors, by reason
of nonrenewal of appropriations), (e) which, if related to a Governmental
Obligor, has not been canceled before the end of its stated term by reason
of nonrenewal of appropriations, and (f) which is not a consumer lease;
(viii) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, truth in lending,
consumer leasing, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which none of the Transferor, the Originator or the related Obligor is
in violation of any such law, rule or regulation in any material respect;
(ix) with regard to which there exists only one executed original
Contract, which is in the possession of Transferor on the Transfer Date of
such Receivable;
(x) which was selected for transfer by a procedure not designed to
adversely affect the credit quality of the Receivables;
(xi) which represents payments due to the Originator and does not
represent any payments payable for the account of any Person other than the
Originator under the Contract relating to such Receivable or any sales or
use tax payable under such Contract;
(xii) which was originated by the Originator in accordance with, and
otherwise satisfies all applicable requirements of, the Credit and
Collection Policy;
(xiii) which, after giving effect to the acquisition thereof, would
not result in the aggregate Outstanding Balance of Related Contracts of any
single Obligor exceeding 1.5% of the aggregate Outstanding Balance of all
Related Contracts;
I_6
<PAGE>
(xiv) as to which, at or prior to the time of the Transfer, the
Administrative Agent has not notified the Transferor that such Receivable
(or class of Receivables) is not acceptable for transfer to PARCO
hereunder;
(xv) the transfer or assignment of which does not require the
Obligor's consent, and which does not contravene any applicable law, rule
or regulation;
(xvi) with respect to which (a) the related Obligor has not been
released, (b) the Related Contract has not been satisfied, canceled,
subordinated or rescinded, and (c) no Equipment subject to the Related
Contract has been released from the Related Contract;
(xvii) which Equipment subject to the related Contract has not been
released and such Contract requires the related Obligor to maintain
insurance on such Equipment in an amount sufficient to fully insure such
Equipment;
(xviii) which, after giving effect to the acquisition thereof, would
not result in the aggregate Outstanding Balance of Related Contracts of
Obligors located in any single state exceeding 10% (except in the case of
Texas, which may not exceed 21%, and California, Georgia and Pennsylvania,
which may not individually exceed 15%) of the aggregate Outstanding Balance
of all Related Contracts; and
(xix) which has an implied interest rate of at least 7.00% per
annum.
"Equipment" with respect to any Receivable means office, business or other
---------
equipment leased or sold to an Obligor by the Originator pursuant to a Contract
(including any modifications or substitutions of equipment pursuant to the
original Contract giving rise to such Receivable).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Tranche funded
---------------
or maintained by any Transferee (or any liquidity or credit support provider of
PARCO), the Applicable Margin plus a rate per annum equal to the sum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) of (i) the rate obtained
by dividing (A) the applicable LIBOR Rate by (B) a percentage equal to 100%
minus the reserve percentage used for determining the maximum reserve
-----
requirement as specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is applicable
to the Administrative Agent during the related Settlement Period in respect of
eurocurrency or eurodollar funding, lending or liabilities (or, if more than one
percentage shall be so applicable, the daily average of such percentage for
those days in such Settlement Period during which any such percentage shall
I_7
<PAGE>
be applicable) plus (ii) the then daily net annual assessment rate (rounded
----
upwards, if necessary, to the nearest 1/100 of 1%) as estimated by the
Administrative Agent for determining the current annual assessment payable by
the Administrative Agent to the Federal Deposit Insurance Corporation in respect
of eurocurrency or eurodollar funding, lending or liabilities.
"Facility Termination Date" means the earlier of the Scheduled Termination
-------------------------
Date, or the Termination Date.
"Fee Letter" has the meaning set forth in Section 1.04.
----------
"Governmental Obligor" means an Obligor that is the federal government, the
--------------------
government of any state or governmental subdivision or any agency of the federal
government or the government of any state.
"IKON Group" means, collectively, the Transferor, the Originator and the
----------
Parent.
"Indemnified Amounts" has the meaning specified in Section 3.01 of the
-------------------
Agreement.
"Indemnified Party" has the meaning specified in Section 3.01 of the
-----------------
Agreement.
"Investment Grade" means, with respect to any entity's long-term public
----------------
senior debt securities, a rating of at least "BBB-" by S& P and of at least
"Baa3" by Moody's.
"LIBOR Rate" shall mean, with respect to any Eurodollar Tranche funded or
----------
maintained by any Transferee (or any liquidity or credit support provider of
PARCO), the rate at which deposits in dollars are offered to the Administrative
Agent, in the London interbank market at approximately 11:00 a.m. (London time)
two Business Days before the first day of the related Settlement Period in an
amount approximately equal to the portion of Capital to which the Eurodollar
Rate is to apply and for a period of time approximately equal to the applicable
Settlement Period.
"Material Adverse Change" means any set of circumstances or events which
-----------------------
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of the Agreement or any other
Transaction Document, (b) is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Transferor, the Collection Agent or the
Originator or any of their successors or assigns (the "Transferor Parties"), (c)
------------------
impairs materially or could reasonably be expected to impair materially the
ability of the Transferor Parties to duly and punctually pay or perform their
respective obligations under the Agreement or any other Transaction Document, or
(d) impairs materially or could reasonably be expected to impair materially the
ability of the Administrative Agent or any Transferee, to the extent permitted,
to enforce their legal remedies pursuant to the Agreement or any other
Transaction Document.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto.
-------
"Obligor" means a Person obligated to make payments pursuant to a Contract;
-------
provided
--------
I_8
<PAGE>
that in the event that any payments in respect of a Contract are made by any
other Person, such other Person shall be deemed to be an Obligor.
"Other Corporations" means the Parent, the Originator and all of the
------------------
Parent's Subsidiaries except the Transferor.
"Originator" shall have the meaning assigned to such term in the preamble.
----------
"Outstanding Balance" of any Contract or Receivables with respect thereto
-------------------
at any date means the net present value of the total Periodic Payments due to
Transferor over the remaining term of the Contract or that have become due and
payable on or prior to such date but remain unpaid on such date (net of any
security deposits or advance rental payments received by Transferor) and not yet
paid by the Collection Agent pursuant to the provisions of Section 1.03(b),
discounted monthly at the Receivables Discount Rate in effect on the Transfer
Date of such Contract or Receivable, as determined by subtracting all amounts
representing unearned interest from the aggregate amount of such Periodic
Payments.
"PARCO" shall have the meaning assigned to such term in the preamble.
-----
"PARCO Cap" means the interest rate cap or other hedging arrangement
---------
entered into by the Transferor (or the rights under which have been assigned to
the Transferor) for the purpose of hedging the interest rate risk associated
with transferred Receivables bearing interest at a fixed rate, which cap (A)
shall have a "strike price" equal to (i) the Receivables Discount Rate as of the
Transfer Date of such Receivables, minus (ii) the Collection Agent Fee rate
(1.50%), minus (iii) 0.25% and (B) shall be entered into with a cap provider
having a short-term rating of A-1/P-1 or the equivalent.
"PARCO Termination Event" means (i) the providers of PARCO's program
-----------------------
liquidity and/or letter of credit facilities shall have given notice that an
event of default has occurred and is continuing under their respective
agreements with PARCO or (ii) the expiration of the commitments of all liquidity
providers under the Asset Purchase Agreement.
"Parent" means IKON Office Solutions, Inc., an Ohio corporation.
------
"Periodic Payments" means the aggregate base rental amounts coming due on a
-----------------
periodic basis pursuant to the Contracts giving rise to Receivables, excluding
any maintenance charges or, with respect to Contracts covering photocopiers, any
per copy charges.
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.
"Potential Trigger Event" means an event that but for notice or lapse of
-----------------------
time or both would constitute a Trigger Event.
I_9
<PAGE>
"Pro Rata" means, with respect to any Transferee, pro rata based on such
--------
Transferee's outstanding Capital. So long as PARCO is the Active Transferee,
its Pro Rata share of any amount shall be equal to 100% of such amount.
"Program Fee" is defined in the Fee Letter.
-----------
"Receivable" means the obligations of any Obligor under a Related Contract,
----------
and includes monies received subsequent to the related Transfer Date with
respect to (i) all Periodic Payments and (ii) all obligations of such Obligor
to pay interest or finance charges and other obligations of such Obligor (other
than obligations in respect of taxes or insurance or similar escrow arrangements
of any kind) with respect thereto, and all other payments (other than in respect
of taxes or insurance or similar escrow arrangements of any kind) received by
the Transferor pursuant to such Contract, excluding any maintenance charges or,
with respect to Contracts covering photocopiers, any per copy charges. A
Receivable arising under a Related Contract for which the Outstanding Balance
has been collected shall no longer constitute a "Receivable" outstanding
hereunder
"Receivables Discount Rate" means, on any Transfer Date, a rate per annum
-------------------------
equal to the sum of (i) the CP Rate on the third Business Day prior to such
Transfer Date, (ii) the Collection Agent Fee rate (1.50%) and (iii) 0.75%.
"Related Contract" means a Contract included in the List of Contracts
----------------
delivered to the Administrative Agent pursuant to paragraph (j) of Exhibit IV
hereof; provided, that after the Outstanding Balance of such Contract has been
--------
collected, it shall no longer constitute a "Related Contract" hereunder.
"Related Security" means with respect to any Receivable:
----------------
(i) all Equipment related to such Receivable;
(ii) all security interests or liens and property (including
without limitation Equipment) securing or purporting to secure payment of
such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements signed by
an Obligor describing any collateral securing such Receivable;
(iii) all guaranties (other than the Support Agreement), insurance
and other agreements 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
Originator's and the Transferor's rights (if any) to recourse, repurchase
or indemnity against any Person with respect to such Receivable; and
(iv) the related Contract and all other books, records and other
information
I_10
<PAGE>
(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.
"Required Balance" means, with respect to any Settlement Date, an amount
----------------
equal to (a) the Aggregate Capital on such Settlement Date divided by (b) (i)
one minus (ii) the Applicable Percentage.
"Required Transferees" shall mean the Transferees having Commitments which,
--------------------
in the aggregate, equals at least 66 2/3% of the Aggregate Commitment, or, if
the Commitments have been terminated, having Capital which, in the aggregate,
equals at least equal 66 2/3% of the Aggregate Capital; provided that the
--------
Commitment or Capital of any APA Transferee that has not paid all amounts due
and owing by it in respect of Transfers (or portions thereof) that it was
obligated to make, shall not be included in any calculations made pursuant to
this definition.
"S&P" means Standard & Poor's Ratings Services, a division of the McGraw-
---
Hill Companies, Inc. and any successor thereto.
"Scheduled Termination Date" shall mean two Business Days prior to the
--------------------------
Scheduled Commitment Termination Date as defined in the Asset Purchase
Agreement.
"Settlement Date" means the fifteenth day of each calendar month, or, if
---------------
such day is not a Business Day, the next succeeding Business Day.
"Settlement Period" means: (i) initially the period commencing on (and
-----------------
including) the date of the initial transfer or funding of such Receivables and
ending on (and including) the last day of the calendar month in which such
Settlement Period began, and (ii) thereafter, each calendar month, provided,
--------
that
(i) any Settlement Period (other than of one day) which
would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day;
(ii) in the case of any Settlement Period which commences
before the Facility Termination Date and would otherwise end on a date
occurring after the Facility Termination Date, such Settlement Period
shall end on such Facility Termination Date and the duration of each
Settlement Period which commences on or after the Facility Termination
Date shall be of such duration as shall be selected by the
Administrative Agent; and
(iii) any Settlement Period in respect of which Yield is
computed by reference to the CP Rate may be terminated at the election
of, and upon notice thereof to the Transferee, by the Administrative
Agent at any time, in which case the Receivables allocated to such
terminated Settlement Period shall be allocated to a new Settlement
Period commencing on (and including) the date of such
I_11
<PAGE>
termination and ending on (but excluding) the next following
Settlement Date, and shall accrue Yield at the Eurodollar Rate or the
Base Rate, in the Administrative Agent's sole discretion.
"Special Indemnified Amounts" has the meaning specified in Section 5.07 of
---------------------------
the Agreement.
"Special Indemnified Party" has the meaning specified in Section 5.07 of
-------------------------
the Agreement.
"Subsidiary" means any corporation or other entity of which securities
----------
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by the Transferor, the Originator or the Parent, as the case
may be, or one or more Subsidiaries, or by the Transferor, the Originator or the
Parent, as the case may be, and one or more Subsidiaries.
"Support Agreement" means the operating agreement, dated as of October 22,
-----------------
1996, between the Originator and the Parent, as such agreement may be amended or
supplemented or otherwise modified from time to time.
"Termination Date" means the earlier of (a) the date specified pursuant to
----------------
Section 2.02 of the Agreement, and (b) the date on which each Transferee
receives an amount equal to its Capital plus accrued Yield thereon plus all
other amounts due to it under the Agreement and the Administrative Agent
receives all amounts due to it under the Agreement.
"Tranche" shall mean with respect to any Transferee, each portion of such
-------
Transferee's Capital being funded or maintained by reference to a particular
interest rate basis.
"Tranche Rate" means, with respect to any Tranche, the rate (which shall be
------------
either the CP Rate, Base Rate, or the Eurodollar Rate as selected at the sole
discretion of the Administrative Agent) at which such Tranche is funded or
maintained by the applicable Transferee; it being understood that at all times
on and after the occurrence and continuation of a Trigger Event, the Tranche
Rate with respect to any Tranche, for any Transferee shall be equal to the Base
Rate applicable to such Transferee, plus 2.00% per annum.
"Transaction Document" means any of the Agreement, the Transfer Agreement
--------------------
and all other agreements and documents delivered and/or related hereto or
thereto.
"Transfer" has the meaning specified in Section 1.01 of the Agreement.
--------
"Transfer Agreement" means the Transfer Agreement dated as of the date
------------------
hereof between the Transferor and the Originator, as such agreement may be
amended from time to time.
"Transfer Date" has the meaning specified in Section 1.02(a) of the
-------------
Agreement.
"Transfer Limit" means, at any time, the Aggregate Commitment then in
--------------
effect divided
I_12
<PAGE>
by 1.02.
"Transferee" means PARCO and each APA Transferee, as applicable.
----------
"Transferor" shall have the meaning assigned to such term in the preamble.
----------
"Transferor Report" means a report, in substantially the form of Annex B
-----------------
hereto, furnished by the Collection Agent to the Administrative Agent pursuant
to Section 4.02 of the Agreement.
"Trigger Event" has the meaning specified in Exhibit V.
-------------
"UCC" means the Uniform Commercial Code as from time to time in effect in
---
the specified jurisdiction.
"Yield" means, with respect to any Transferee:
-----
(a) for any Tranche for any Settlement Period with respect to any
Transferee to the extent such Tranche will be funded by such Transferee
during such Settlement Period through the issuance of Commercial Paper:
CPR x C x ED/360
(b) for any Tranche for any Settlement Period with respect to any
Transferee to the extent such Tranche will not be funded by such
Transferee during such Settlement Period through the issuance of Commercial
Paper:
TR x C x ED/Year
where:
TR = the Eurodollar Rate or Base Rate, as applicable,
for such Tranche for such Settlement Period with
respect to such Transferee,
C = the portion of the Capital and any capitalized
interest allocated to such Tranche during such
Settlement Period with respect to such Transferee,
CPR = the CP Rate for the Tranche for such Settlement
Period with respect to such Transferee,
ED = the actual number of days during such Settlement
Period, and
Year = if such Tranche is funded based upon: (i) the
Eurodollar Rate, 360 days, and (ii) the Base Rate,
365 or 366 days, as applicable,
I_13
<PAGE>
provided, that no provision of the Agreement shall require the payment or permit
--------
the collection of Yield in excess of the maximum permitted by applicable law;
and provided further, that Yield for any Tranche shall not be considered paid by
-------- -------
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
- - - - - -
Other Terms. All accounting terms not specifically defined herein shall be
-----------
construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York and not specifically
defined herein, are used herein as defined in such Article 9.
I_14
<PAGE>
EXHIBIT II
CONDITIONS OF TRANSFERS
1. Conditions Precedent to the Initial Transfer. The initial Transfer is
--------------------------------------------
subject to the conditions precedent that the Administrative Agent shall have
received on or before the date of such Transfer the following, each (unless
otherwise indicated) dated such date, in form and substance satisfactory to the
Administrative Agent:
(a) Certified copies of the resolutions of the Board of Directors of the
Transferor approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary limited liability
company action and governmental approvals, if any, with respect to the
Transaction Documents and such actions.
(b) Certified copies of the resolutions of the Board of Directors of the
Originator approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the Transaction Documents
and such actions.
(c) A certificate of the Secretary or Assistant Secretary of the
Transferor certifying the names and true signatures of the officers of the
Transferor, authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.
(d) A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers of the
Originator authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.
(e) A copy of the organizational documents of the Transferor, and a
certificate as to the good standing of the Transferor from such Secretary of
State or other official, dated as of a recent date.
(f) Acknowledgment copies or time stamped receipt copies of proper
statements, duly filed on or before the Initial Transfer (or such later date as
determined by the Administrative Agent) under the UCC of all jurisdictions that
the Administrative Agent may deem necessary or desirable in order to perfect the
interests contemplated by the Agreement.
(g) Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the (i) Receivables, Related Contracts or Related
Security previously granted by the Transferor and the Originator and (ii) the
collateral security referred to in Section 1.11.
(h) Completed requests for information, listing all effective financing
statements filed in the jurisdictions referred to in subsection (f) above that
name the Transferor as debtor, together with copies of such other financing
statements (none of which shall cover any Receivables,
II_1
<PAGE>
Related Contracts, Related Security or the collateral security referred to in
Section 1.11).
(i) An opinion of Mayer, Brown and Platt, addressed to the Administrative
Agent and the Transferees, in form and substance reasonably acceptable to the
Administrative Agent, regarding substantive consolidation in the event of a
bankruptcy of the Originator and such other matters as the Administrative Agent
may reasonably request.
(j) An opinion of Mayer, Brown and Platt, addressed to the Administrative
Agent and the Transferees, in form and substance reasonably acceptable to the
Administrative Agent, regarding "true sale" between the Originator and the
Transferor in the event of a bankruptcy of the Originator and such other matters
as the Administrative Agent may reasonably request.
(k) An opinion of special counsel to the Originator, addressed to the
Administrative Agent and the Transferees, in form and substance reasonably
acceptable to the Administrative Agent, regarding the validity, perfection and
first priority of the security interest granted by the Originator to the
Transferor, the validity, perfection and first priority of the security interest
granted by the Transferor to the Administrative Agent, on behalf of the
Transferees, and such other matters as the Administrative Agent may reasonably
request.
(l) An opinion of the general counsel to the Transferor and the Originator,
addressed to the Administrative Agent and the Transferees, in form and substance
reasonably acceptable to the Administrative Agent, regarding the enforceability
of the Transaction Documents to which each is a party and the validity of the
creation of the security interest.
(m) An opinion of the general counsel of the Originator and the Transferor,
addressed to the Administrative Agent and the Transferees, in form and substance
reasonably acceptable to the Administrative Agent, regarding certain corporate
matters.
(n) The Fee Letter duly executed by all parties thereto, and payment of all
fees required to be paid on the Closing Date, and reimbursement of the
Administrative Agent and the Transferees for all costs and expenses of the
closing of the transaction (including reasonable legal fees and costs).
(o) The Transfer Agreement, duly executed by all parties thereto.
(p) Satisfactory results of a review and audit by the Administrative Agent
of the Originator's collection, operating and reporting systems, Credit and
Collection Policy, historical receivables data and accounts.
(q) The following financial information of the Transferor and the
Collection Agent and their respective Subsidiaries: (i) audited financial
statements prepared in accordance with GAAP on a consolidated and consolidating
basis (consolidating statements need not be audited by such accountants) for the
period January 1, 1999 through December 31, 1999 and (ii) consolidated and
consolidating unaudited financial statements for the fiscal quarter ended June
30, 2000.
II_2
<PAGE>
(r) A letter from each Rating Agency rating PARCO's Commercial Paper
confirming its rating of PARCO's Commercial Paper or that such rating will not
be withdrawn or downgraded after giving effect to the Agreement and the
transactions contemplated hereby.
(s) A officer's certificate of each of the Originator and the Transferor
certifying that the representations and warranties of the Originator set forth
in the Transfer Agreement and of the Transferor set forth herein hereof are true
and correct in all material respects as of the Closing Date.
(t) A Pro Forma Transferor Report.
(u) The Transferor shall have entered into, or been assigned the rights
under, the PARCO Cap.
Payment of the Consideration for the initial Transfer hereunder shall
constitute acknowledgment by the Administrative Agent that all of the conditions
set forth have been fulfilled or waived.
2. Additional Conditions Precedent. Each Transfer shall be subject to
-------------------------------
the further conditions precedent that:
(a) on or prior to the date of such Transfer, the Collection Agent shall
have delivered to the Administrative Agent, in form and substance satisfactory
to the Administrative Agent, a completed Transferor Report dated within 30 days
prior to the date of such Transfer together with a listing by Obligor of all
Receivables and such additional information as may reasonably be requested by
the Administrative Agent;
(b) on the date of such Transfer the following statements shall be true
(and acceptance of the proceeds of such Transfer shall be deemed a
representation and warranty by the Transferor that such statements are then
true):
(i) The representations and warranties of the Transferor contained
in Exhibit III are correct on and as of the date of such Transfer as though
made on and as of such date;
(ii) The representations and warranties of the Originator contained
in the Transaction Documents are correct on and as of the date of such
Transfer as though made on and as of such date;
(iii) No event has occurred and is continuing, or would result from
such Transfer, that constitutes a Trigger Event or Potential Trigger Event;
II_3
<PAGE>
(iv) The Facility Termination Date shall not have occurred or, in the
case of PARCO, no PARCO Termination Event shall have occurred;
(v) The Aggregate Capital does not exceed the Transfer Limit;
(vi) The outstanding Outstanding Balance of all Eligible Receivables
is not less than the Required Balance.
(c) the Administrative Agent shall have received such other approvals,
opinions or documents as it may reasonably request; and
(d) the Administrative Agent shall have received the list of the Related
Contracts to be included in such Transfer that is required to be delivered
pursuant to paragraph (j) of Exhibit IV hereof.
II_4
<PAGE>
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Transferor represents and warrants as follows:
(a) The Transferor is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware, and is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Transferor of the
Transaction Documents (i) are within the Transferor's limited liability company
powers, (ii) have been duly authorized by all necessary limited liability
company action, (iii) do not contravene (1) the Transferor's organizational
documents, (2) any law, rule or regulation applicable to the Transferor, (3) any
contractual restriction binding on or affecting the Transferor or its property
or (4) any order, writ, judgment, award, injunction or decree binding on or
affecting the Transferor or its property, and (iv) do not result in or require
the creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties (other than those created pursuant to
the Transaction Documents); and no transaction contemplated by the Agreement
requires compliance with any bulk sales act or similar law. Each of the
Transaction Documents has been duly executed and delivered by the Transferor.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Transferor of the Transaction
Documents, except for the filing of the UCC financing statements which are
referred to therein.
(d) Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Transferor enforceable against the Transferor in
accordance with its terms.
(e) The balance sheets of the Originator and its Subsidiaries as at
December 31, 1999 and June 30, 2000 and the related statements of income and
retained earnings of the Originator and its Subsidiaries for the fiscal year
then ended, copies of which have been furnished to the Administrative Agent,
fairly present the financial condition of the Originator and its Subsidiaries as
at such date and the results of the operations of Originator and its
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since June 30, 2000
there has been no material adverse change in the business, operations, property
or financial or other condition of the Originator. Since the date of its
formation, there has not been a material adverse change in the business,
operations, property or financial or other condition of the Transferor.
(f) There is no pending or threatened action or proceeding affecting the
Originator or any of its Subsidiaries before any court, governmental agency or
arbitrator which would materially adversely affect the financial condition or
operations of the Originator or any of its
III_1
<PAGE>
Subsidiaries or the ability of the Transferor or the Originator to perform their
respective obligations under the Transaction Documents, or which purports to
affect the legality, validity or enforceability of the Transaction Documents;
neither the Originator nor any Subsidiary is in default with respect to any
order of any court, arbitration or governmental body.
(g) No proceeds of any Transfer will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended.
(h) Each Receivable transferred by the Transferor hereunder is an Eligible
Receivable on the date of the related Transfer, and the Transferor has the right
to transfer such Receivable and all Related Security together with the Contract
related thereto, free and clear of any Adverse Claim, other than the effect of
the Agreement and the transactions contemplated hereby. Upon each Transfer, the
Administrative Agent (for the benefit of the Transferees) will acquire a valid
and perfected first priority interest in each Receivable and in the Related
Security (except to the extent noted above) and Collections with respect
thereto. No effective financing statement or other instrument similar in effect
covering any Related Contract or any Receivable or the Related Security or
Collections with respect thereto is on file in any recording office except for
those filed in favor of the Administrative Agent relating to the Agreement and
those filed by the Transferor pursuant to the Transfer Agreement.
(i) Each Transferor Report (if prepared by the Originator or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Transferor, the Originator or any Affiliate thereof), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of the Transferor or the Originator to the
Administrative Agent or any Transferee in connection with the Agreement is or
will be accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrative Agent or the Transferees, as the case may be, at
such time) as of the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
(j) The principal place of business and chief executive office of the
Transferor and the office where the Transferor keeps its records concerning the
Receivables are located at the respective addresses identified on Exhibit VI.
(k) The Outstanding Balance with respect to each Receivable, as of the date
of Transfer of such Receivable, is correctly set forth on Schedule II (as
supplemented pursuant to Section 1.02(a)).
(l) Schedule II (as supplemented pursuant to Section 1.02(a)) sets forth
accurately and completely in all material respects, as of the date of Transfer
of each Receivable, the information with respect to each such Receivable
transferred on such date.
(m) Each Contract giving rise to a Receivable provides for Periodic
Payments that will fully amortize such Receivable over the term of the Contract
related thereto and the Transferor
III_2
<PAGE>
has not extended the maturity or adjusted the Outstanding Balance of any
Receivable, or amended, modified or waived the terms of any Receivable or any
Contract relating to any Receivable such that the interests of the
Administrative Agent or the Transferees would be materially and adversely
affected thereby.
(n) The Transferor is not known by and does not use any tradename or doing-
business-as name.
(o) The Transferor was formed on August 29, 2000. The Transferor has no
Subsidiaries.
(p) (i) The fair value of the property of the Transferor is greater than
the total amount of liabilities, including contingent liabilities, of the
Transferor, (ii) the present fair salable value of the assets of the Transferor
is not less than the amount that will be required to pay all probable
liabilities of the Transferor on its debts as they become absolute and matured,
(iii) the Transferor does not intend to, and does not believe that it will,
incur debts or liabilities beyond the Transferor's abilities to pay such debts
and liabilities as they mature and (iv) the Transferor is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which the Transferor's property would constitute unreasonably
small capital.
(q) With respect to each Receivable, the Transferor shall have received
such Receivable from the Originator in exchange for payment (made by the
Transferor to the Originator in accordance with the provisions of the Transfer
Agreement) of cash in an amount which constitutes fair consideration and
reasonably equivalent value. Each such transfer referred to in the preceding
sentence shall not have been made for or on account of an antecedent debt owed
by the Originator to the Transferor and no such transfer is or may be voidable
or subject to avoidance under any section of the Federal Bankruptcy Code.
(r) With respect to each Receivable transferred hereunder, such
Receivable is representative of all of the Receivables owned by the Transferor.
III_3
<PAGE>
EXHIBIT IV
COVENANTS
Until the Termination Date, unless the Administrative Agent shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. The Transferor will comply in all material
-------------------------
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its limited liability company existence, rights, franchises,
qualifications and privileges except to the extent that the failure so to comply
with such laws, rules and regulations or the failure so to preserve and maintain
such existence, rights, franchises, qualifications and privileges would not
materially adversely affect the collectibility of the Receivables or the ability
of the Transferor to perform its obligations under the Transaction Documents.
(b) Offices, Records and Books of Account. The Transferor will keep its
-------------------------------------
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables (and all original documents
relating thereto) at the respective addresses set forth on Exhibit VI of the
Agreement or, upon 30 days' prior written notice to the Administrative Agent, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrative Agent to protect and perfect the interest in the Receivables
have been taken and completed. The Transferor also will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables and Related Contracts in
the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable).
(c) Performance and Compliance with Related Contracts and Credit and
----------------------------------------------------------------
Collection Policy. The Transferor will, at its expense, timely and fully
-----------------
perform and comply with all material provisions, covenants and other promises
required to be observed by it under the Related Contracts, and timely and fully
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the Related Contract.
(d) Sales, Liens, Etc. The Transferor will not sell, assign (by operation
-----------------
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, its interest in any Receivable
transferred to the Administrative Agent or the Transferees under the Agreement
or any Related Security, Related Contract or Collections, or assign any right to
receive income in respect thereof.
(e) Extension or Amendment of the Receivables. The Transferor will not,
-----------------------------------------
and will not permit the Collection Agent to, extend the maturity or adjust the
Outstanding Balance of any Receivable or otherwise modify the terms of any
Receivable, or amend, modify or waive any
IV_1
<PAGE>
term or condition of any Related Contract such that the interests of the
Administrative Agent or the Transferees would be materially and adversely
affected thereby.
(f) Change in Business or Credit and Collection Policy. (i) The Transferor
--------------------------------------------------
will not make any change in the character of its business, and (ii) the
Transferor will not make, and will not permit the Originator to make, any change
in the Credit and Collection Policy that would, in either case, materially
adversely affect the collectibility of the Receivables or the ability of the
Transferor or the Originator to perform their respective obligations under the
Transaction Documents.
(g) Change in Payment Instructions to Obligors. The Transferor will not
------------------------------------------
make any change in its instructions to Obligors of Related Contracts regarding
payments to be made to the Transferor unless the Administrative Agent shall have
received notice of and agreed to such addition, termination or change.
(h) Further Action Evidencing the Transfer. The Transferor will from time
--------------------------------------
to time, execute and deliver all further instruments and documents and take all
further action that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the interest in the Receivables, the
Related Contracts, and the Related Security and Collections with respect thereto
transferred to the Administrative Agent (for the benefit of the Transferees)
under the Agreement or to enable the Administrative Agent or any Transferee to
exercise or enforce any of its rights under the Transaction Documents. Without
limiting the generality of the foregoing, the Transferor will, or will cause the
Collection Agent to, (i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate, including, without
limitation, (A) filing such financing statements as may be reasonably necessary,
in the Administrative Agent's opinion, to perfect the security interest of the
Administrative Agent in the right, title and interest of the Transferor in
Equipment granted hereunder, within 30 days of the Initial Transfer Date, and
(B) provide an opinion of counsel with respect to the perfection of such
security interest, in form and substance satisfactory to the Administrative
Agent, within 30 days of the Initial Transfer Date; (ii) providing to the
Administrative Agent, from time to time, all information regarding the location
of any such Equipment as may be reasonably necessary, in the Administrative
Agent's opinion, to prepare any financing statement relating to such Equipment;
; and (iii) upon the occurrence of a Trigger Event or Potential Trigger Event,
(x) mark conspicuously each Related Contract with a legend, acceptable to the
Administrative Agent, evidencing that an interest in the Receivable has been
transferred to the Administrative Agent (for the benefit of the Transferees)
under the Agreement; and (y) code the Collection Agent's master data processing
records evidencing Receivables and Related Contracts to the foregoing effect.
The Transferor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables and the Related Security
without the signature of the Transferor where permitted by law. A photocopy or
other reproduction of the Agreement shall be sufficient as a financing statement
where permitted by law. If the Transferor fails after notice to perform any of
its agreements or obligations under the Transaction Documents, the
Administrative Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or
IV_2
<PAGE>
obligation, and the expenses of the Administrative Agent incurred in connection
therewith shall be payable as provided in the Agreement.
(i) Assembly of Documents. The Transferor will, or will cause the
---------------------
Collection Agent to, at the Administrative Agent's request following the
occurrence of a Trigger Event or Potential Trigger Event, (A) assemble all
documents, instruments and other records (including, without limitation,
computer tapes and disks) which evidence or relate to the Receivables, and the
Related Contracts and Related Security, or which are otherwise necessary or
desirable to collect the Receivables, and make the same available to the
Administrative Agent at a place selected by the Administrative Agent or its
designee, and (B) segregate all cash, checks and other instruments received by
it or the Collection Agent from time to time constituting Collections of
Receivables in a manner acceptable to the Administrative Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Administrative
Agent or its designee.
(j) Delivery of List of Related Contracts. The Transferor will on or prior
-------------------------------------
to the date of each Transfer, deliver to the Administrative Agent a complete and
accurate list of each Related Contract, together with the contract number, the
name of the Obligor and the Outstanding Balance thereof.
(k) Reporting Requirements. The Transferor will provide to the
----------------------
Administrative Agent (in multiple copies, if requested by the Administrative
Agent) the following:
(i) as soon as available and in any event within 60 days after the
end of the first three quarters of each fiscal year of the Originator,
balance sheets of the Originator and its Subsidiaries as of the end of such
quarter and statements of income and retained earnings of the Originator
and its Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the chief
financial officer of the Originator;
(ii) as soon as available and in any event within 120 days after the
end of each fiscal year of the Originator, a copy of the annual report for
such year for the Parent and the Annual Report on Form 10-K for the
Originator and its Subsidiaries, containing financial statements for such
year audited by Price Waterhousecoopers LLP, or other independent public
accountants acceptable to the Administrative Agent;
(iii) as soon as possible and in any event within five days after the
occurrence of each Trigger Event or Potential Trigger Event, a statement of
the chief financial officer of the Transferor setting forth details of such
Trigger Event or Potential Trigger Event and the action that the Transferor
has taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports that the Originator sends to any of its securityholders, and copies
of all reports and registration statements that the Originator or any
Subsidiary files with the Securities and Exchange Commission or any
national securities exchange;
IV_3
<PAGE>
(v) promptly after the filing or receiving thereof, copies of all
reports and notices that the Originator or any Affiliate of either thereof
files under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or that the Originator
or any Affiliate of either thereof receives from any of the foregoing or
from any multiemployer plan (within the meaning of Section 4001(a)(3) of
ERISA) to which the Originator or any Affiliate of either thereof is or
was, within the preceding five years, a contributing employer, in each case
in respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of
liability on the Originator and/or any such Affiliate in excess of
$5,000,000;
(vi) at least ten Business Days prior to any change in the
Transferor's or Originator's name, a notice setting forth the new name and
the effective date thereof;
(vii) promptly, from time to time, such other information, documents,
records or reports respecting the Receivables or the condition or
operations, financial or otherwise, of the Transferor, the Originator or
any of its subsidiaries as the Administrative Agent may from time to time
reasonably request;
(viii) promptly after the Transferor obtains knowledge thereof,
notice of any (a) litigation, investigation or proceeding which may exist
at any time between the Transferor or the Originator and any governmental
authority which, in either case, if not cured or if adversely determined,
as the case may be, would have a material adverse effect on the business,
operations, property or financial or other condition of the Transferor or
the Originator; (b) litigation or proceeding adversely affecting the
Transferor's ability to perform its obligations under the Transaction
Documents or the Originator's ability to perform their obligations under
the Transaction Documents or (c) litigation or proceeding adversely
affecting the Transferor or the Originator in which in the case of the
Originator, the amount involved is $10,000,000 or more and not covered by
insurance or in which injunctive or similar relief is sought;
(ix) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Transferor or the Originator;
(x) promptly after the Transferor obtains knowledge thereof, notice
of any "Event of Termination", "Incipient Event of Termination" or
"Facility Termination Date" under the Transfer Agreement;
(xi) so long as any Capital shall be outstanding, as soon as
possible and in any event no later than the day of occurrence thereof,
notice that the Originator has stopped selling or contributing to the
Transferor, pursuant to the Transfer Agreement, newly arising Receivables;
IV_4
<PAGE>
(xii) at the time of the delivery of the financial statements
provided for in clauses (i) and (ii) of this paragraph, a certificate of
the chief financial officer or the treasurer of the Transferor to the
effect that, to the best of such officer's knowledge, no Trigger Event or
Potential Trigger Event has occurred and is continuing or, if any such
Trigger Event or Potential Trigger Event has occurred and is continuing,
specifying the nature and extent thereof; and
(xiii) promptly after receipt thereof, copies of all notices received
by the Transferor from the Originator under the Transfer Agreement.
(l) Separateness. (i) The Transferor shall at all times be managed by an
------------
entity which has at least one independent director, who (x) is not currently
and has not been during the five years preceding the date of the Agreement an
officer, director or employee of an Affiliate of the Originator or any Other
Corporation, (y) is not a current or former officer or employee of the
Originator and (z) is not a stockholder of any Other Corporation or any of their
respective Affiliates.
(ii) The Transferor shall not direct or participate in the
management of any other entity's operations.
(iii) The Transferor shall conduct its business from an office
separate from that of any other entity (but which may be located in the
same facility as one or more of the Other Corporations).
(iv) The Transferor shall at all times be adequately capitalized in
light of its contemplated business.
(v) The Transferor shall at all times provide for its own operating
expenses and liabilities from its own funds.
(vi) The Transferor shall maintain its assets and transactions
separately from those of any other entity and reflect such assets and
transactions in financial statements separate and distinct from those of
any other entity and evidence such assets and transactions by appropriate
entries in books and records separate and distinct from those of any other
entity. The Transferor shall hold itself out to the public under the
Transferor's own name as a legal entity separate and distinct from all
other entities. The Transferor shall not hold itself out as having agreed
to pay, or as being liable, primarily or secondarily, for, any obligations
of any other entity.
(vii) The Transferor shall not become liable as a guarantor or
otherwise with respect to any Debt or contractual obligation of any other
entity.
(viii) The Transferor shall not make any payment or distribution of
assets with respect to any obligation of any other entity or grant an
Adverse Claim on any of its assets to secure any obligation of any other
entity.
IV_5
<PAGE>
(ix) The Transferor shall not make loans, advances or otherwise
extend credit to any other entity.
(x) Each of the Transferor's sole member and manager shall hold
regular duly noticed meetings of its respective Board of Directors and make
and retain minutes of such meetings.
(xi) The Transferor shall have bills of sale (or similar instruments
of assignment) and, if appropriate, UCC-1 financing statements, with
respect to all assets purchased from any other entity.
(xii) The Transferor shall not engage in any transaction with any of
the Other Corporations, except as permitted by its organizational
documents.
(m) Transfer Agreement. The Transferor will not amend, waive or modify any
------------------
provision of the Transfer Agreement or waive the occurrence of any "Event of
Termination" under the Transfer Agreement, without in each case the prior
written consent of the Administrative Agent. The Transferor will perform all of
its obligations under the Transfer Agreement in all material respects and will
enforce the Transfer Agreement in accordance with its terms in all material
respects.
(n) Nature of Business. The Transferor will not engage in any business
------------------
other than the purchase of Receivables, Related Security and Collections from
the Originator and the transactions contemplated by the Agreement. The
Transferor will not create or form any Subsidiary.
(o) Mergers, Etc. The Transferor will not merge with or into or
------------
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by the Agreement and the Transfer
Agreement.
(p) Distributions, Etc. The Transferor will not declare or make any
------------------
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interest in the
Transferor, or return any capital to its members as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any payment in respect of
any membership interest in the Transferor or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding; provided, however, that
-------- -------
the Transferor may declare and pay cash distributions on its membership
interests to its members so long as (i) no Trigger Event or Potential Trigger
Event shall then exist or would occur as a result thereof, (ii) such
distributions are in compliance with all applicable law including the law of the
state of Delaware, and (iii) such distribution have been approved by all
necessary and appropriate action of the Transferor.
IV_6
<PAGE>
(q) Debt. The Transferor will not incur any Debt, other than any Debt
----
incurred pursuant to the Agreement and the Transfer Agreement.
(r) Limited Liability Company Agreement. The Transferor will not amend or
-----------------------------------
delete Section 5.1 or 5.5 of its Limited Liability Company Agreement.
(s) Covenant of the Transferor and the Originator. Until the latest of the
---------------------------------------------
Facility Termination Date, the date on which no Capital of or Yield on any
Receivable shall be outstanding or the date all other amounts owed by the
Transferor hereunder to the Transferees or the Administrative Agent are paid in
full, each of the Transferor and the Originator will, at their respective
expense, from time to time during regular business hours as requested by the
Administrative Agent, permit the Administrative Agent or its agents or
representatives (including independent public accountants, which may be the
Transferor's or the Originator's independent public accountants), (i) to conduct
periodic audits of the Receivables, the Related Security and the related books
and records and collections systems of the Transferor or the Originator, as the
case may be, (ii) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in the possession or under the control of the Transferor or the Originator, as
the case may be, relating to Receivables and the Related Security, including,
without limitation, the Contracts, and (iii) to visit the offices and properties
of the Transferor or the Originator, as the case may be, for the purpose of
examining such materials described in clause (ii) above, and to discuss matters
relating to the Receivables and the Related Security or the Transferor's or the
Originator's performance under the Transaction Documents or under the Contracts
with any of the officers or employees of the Transferor or the Originator, as
the case may be, having knowledge of such matters. In addition, upon the
Administrative Agent's request at least once per year, the Transferor will, at
its expense, appoint independent public accountants (which may, with the consent
of the Administrative Agent, be the Transferor's regular independent public
accountants), or utilize the Administrative Agent's representatives or auditors,
to prepare and deliver to the Administrative Agent a written report with respect
to the Receivables and the Credit and Collection Policy (including, in each
case, the systems, procedures and records relating thereto) on a scope and in a
form reasonably requested by the Administrative Agent.
(t) Collections. At all times following the designation by the
-----------
Administrative Agent of any Designated Account, the Transferor will deposit, or
cause to be deposited, all Collections to such Designated Account.
(u) Deposits to Designated Accounts. The Transferor and the Collection
-------------------------------
Agent will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Designated Account cash or cash proceeds other
than Collections of Receivables.
IV_7
<PAGE>
EXHIBIT V
TRIGGER EVENTS
Each of the following, unless waived in writing by the Administrative Agent
(other than as set forth in clause (h) which cannot be waived), shall be a
"Trigger Event":
--------------
(a) The Collection Agent (if the Originator or any of its Affiliates) (i)
shall fail to perform or observe any term, covenant or agreement under the
Agreement (other than as referred to in clause (ii) of this paragraph (a)) and
such failure shall remain unremedied for three Business Days after receipt of
notice or actual knowledge thereof or (ii) shall fail to make when due any
payment or deposit to be made by it under the Agreement; or
(b) The Transferor or the Originator shall fail (i) to transfer to the
Administrative Agent when requested any rights pursuant to the Agreement which
the Transferor or the Originator then has as Collection Agent or otherwise or
(ii) to make any payment required under Section 1.03, 3.02 or 3.03 of the
Agreement; or
(c) Any representation or warranty made by the Transferor or the
Originator (or any of their respective officers) under the Transaction
Documents, or any information or report delivered by the Transferor or the
Originator pursuant to the Transaction Documents shall prove to have been
incorrect or untrue in any material respect when made or delivered; or
(d) The Transferor shall fail to perform or observe any other term,
covenant or agreement contained in the Transaction Documents on its part to be
performed or observed and any such failure shall remain unremedied for ten days
after written notice thereof shall have been given to the Transferor by the
Administrative Agent; or
(e) The Originator shall fail to perform or observe any term, covenant or
agreement contained in the Transaction Documents on its part to be performed or
observed and any such failure shall remain unremedied for ten days after written
notice thereof shall have been given to the Originator by the Administrative
Agent (or, with respect to a failure to deliver the Transferor Report pursuant
to Section 4.02 of the Agreement such failure shall remain unremedied for three
days, without a requirement for notice); or
(f) Any member of the IKON Group or any Subsidiary thereof shall fail to
pay any principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least $10,000,000 in the aggregate when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be
V_1
<PAGE>
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
(g) Any Transfer shall for any reason cease to create, or the interest of
the Administrative Agent (for the benefit of the Transferees) in any Receivable
shall for any reason cease to be, a valid and perfected first priority interest
in each Receivable and the Related Security and Collections with respect
thereto; or the security interest created pursuant to Section 1.11 shall for any
reason cease to be a valid first priority security interest in the collateral
security referred to in such Section; or
(h) Any member of the IKON Group or any Subsidiary thereof shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against any
such member or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
any member of the IKON Group or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this paragraph (h); or
(i) As of the last day of any calendar month:(i) the Default Ratio
averaged over the three-month period ending on such day exceeds 1% or (ii) the
Delinquency Ratio averaged over the three-month period ending on such day
exceeds 18%; or
(j) There shall have occurred any material adverse change in the business,
operations, property or financial or other condition of the Originator since
June 30, 2000 or the Transferor since the date of its formation; or there shall
have occurred any event which may materially adversely affect the collectibility
of the Receivables, the ability of the Collection Agent or the Transferor to
collect the Receivables or the ability of the Originator or the Transferor to
perform its respective obligations under the Transaction Documents; or
(k) Any rating of the long-term debt obligations of the Originator are
withdrawn or reduced below Investment Grade; or
(l) An "Event of Termination" or "Facility Termination Date" shall occur
under the Transfer Agreement, or the Transfer Agreement shall cease to be in
full force and effect; or
V_2
<PAGE>
(m) All of the members' interests of the Transferor shall cease to be
owned, directly or indirectly, by the Originator; or
(n) On the last day of any calendar month, (a) the aggregate Outstanding
Balance of all Eligible Receivables is less than (b) the Required Balance.
(o) The Transferor shall fail to comply with the covenant contained in
clause (k)(x) of Exhibit IV.
----------
V_3
<PAGE>
EXHIBIT VI
The principal place of business and chief executive offices of the
Transferor are located at:
IKON FUNDING-2, LLC
1738 Bass Road
Macon, Georgia 31210
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
VI_1
<PAGE>
ANNEX A
Form of Contract
VI_2
<PAGE>
ANNEX B
Form of Transferor Report
<PAGE>
ANNEX C
FORM TRANSFER NOTICE
______________, _____
THE CHASE MANHATTAN BANK
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Lara Graff
Ladies and Gentlemen:
Reference is hereby made to the Receivables Transfer Agreement, dated as of
September ___, 2000 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-2, LLC, as Transferor, IOS
-------------------------------
Capital, Inc., as Originator and Collection Agent, Park Avenue Receivables
Corporation, as Conduit Transferee, the APA Transferees from time to time party
thereto and The Chase Manhattan Bank, as Administrative Agent. Capitalized
terms used in this Transfer Notice and not otherwise defined herein shall have
the meanings assigned thereto in the Receivables Transfer Agreement.
This letter constitutes a Transfer Notice pursuant to Section 1.02(a) of
---------------
the Receivables Transfer Agreement. The Transferor desires to effect a Transfer
on ____________, _____ for Consideration of $___________. /1/ The Aggregate
Adjusted Outstanding Balance of the Receivables to be transferred in connection
herewith is $____________, as shown on the attached addendum to Schedule II to
-----------
the Receivables Transfer Agreement.
The Transferor hereby represents and warrants as of the date hereof, and as
of the date of Transfer, as follows:
(i) The representations and warranties of the Transferor contained
in Exhibit III are correct on and as of the date of the Transfer as though
made on and as of such date;
(ii) The representations and warranties of the Originator contained
in the Transaction Documents are correct on and as of the date of the
Transfer as though made on and as of such date;
(iii) No event has occurred and is continuing, or would result from
the Transfer, that constitutes a Trigger Event or Potential Trigger Event;
------------------------------
/1/ Minimum amount of $10,000,000 and increments of $100,000 in excess thereof.
<PAGE>
(iv) The Facility Termination Date has not have occurred or, in the
case of PARCO, no PARCO Termination Event has not occurred;
(v) The Aggregate Capital does not exceed the Transfer Limit;
(vi) The outstanding Outstanding Balance of all Eligible Receivables
is not less than the Required Balance.
Attached hereto is a true and correct schedule setting forth detailed
information regarding the Receivables to be included in the proposed Transfer,
including an addendum to Schedule II to the Receivables Transfer Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to be
executed by its duly authorized officer as of the date first above written.
IKON FUNDING-2, LLC
By:_______________________________
Name:
Title:
<PAGE>
ANNEX D
FORM OF PAYDOWN NOTICE
______________, _____
THE CHASE MANHATTAN BANK
450 West 33rd Street,
15th Floor
New York, NY 10001
Attention: Lara Graff
Ladies and Gentlemen:
Reference is hereby made to the Receivables Transfer Agreement, dated as of
September 19, 2000 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-2, LLC, as Transferor, IOS
-------------------------------
Capital, Inc., as Originator and Collection Agent, Park Avenue Receivables
Corporation, as Conduit Transferee, the APA Transferees from time to time party
thereto and The Chase Manhattan Bank, as Administrative Agent. Capitalized
terms used in this Transfer Notice and not otherwise defined herein shall have
the meanings assigned thereto in the Receivables Transfer Agreement.
This letter constitutes a Paydown Notice pursuant to Section 1.03(g) of the
---------------
Receivables Transfer Agreement. The Transferor desires to reduce the Aggregate
Capital on ____________, _____/2/ by the application of $___________ in cash to
pay the Aggregate Capital and Yield accrued and to accrue (until such cash can
be used to pay Commercial Paper notes) with respect to such Aggregate Capital,
together with all costs related to such reduction of Capital.
IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to be
executed by its duly authorized officer as of the date first above written.
IKON FUNDING-2, LLC
By:_______________________________
Name:
Title:
_____________________
/2/ Notice must be given at least ten Business Days' prior to the requested
paydown date, in the case of reductions in excess of $25,000,000, or at least
two Business Days' prior to the requested paydown date, in the case of
reductions of $25,000,000 or less.
