Exhibit 10.3
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Execution Copy
INSURANCE AND INDEMNITY AGREEMENT
AMBAC ASSURANCE CORPORATION,
as Insurer,
IKON RECEIVABLES, LLC,
as Issuer,
IKON RECEIVABLES-I, LLC,
as Seller,
IOS CAPITAL, INC.,
as Originator and as Servicer,
and
XXXXXX TRUST AND SAVINGS BANK,
as Indenture Trustee
IKON RECEIVABLES, LLC LEASE-BACKED NOTES
Dated as of October 7, 1999
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in Article
I of this Agreement.)
Page
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ARTICLE I 1
DEFINITIONS 1
Section 1.01. Defined Terms 1
Section 1.02. Other Definitional Provisions. 4
ARTICLE II 5
REPRESENTATIONS, WARRANTIES AND COVENANTS 5
Section 2.01. Representations and Warranties of IOS Capital 5
Section 2.02. Affirmative Covenants of IOS Capital 6
Section 2.03. Negative Covenants of IOS Capital 7
Section 2.04. Representations and Warranties of the Insurer 8
Section 2.05. Representations and Warranties and Covenants of the Seller 10
Section 2.06. Representations and Warranties of the Issuer 10
Section 2.07. Affirmative Covenants of the Issuer 13
Section 2.08. Negative Covenants of the Issuer 15
ARTICLE III 16
THE POLICIES; REIMBURSEMENT 16
Section 3.01. Issuance of the Policies 16
Section 3.02. Payment of Fees and Premium 18
Section 3.03. Reimbursement Obligation 19
Section 3.04. Indemnification 20
Section 3.05. Payment Procedure 22
ARTICLE IV 23
FURTHER AGREEMENTS 23
Section 4.01. Effective Date; Term of the Insurance Agreement 23
Section 4.02. Further Assurances and Corrective Instruments 23
Section 4.03. Obligations Absolute 24
Section 4.04. Assignments; Reinsurance; Third-Party Rights 26
Section 4.05. Liability of the Insurer 27
Section 4.06. Annual Servicing Audit and Certification 27
ARTICLE V 27
DEFAULTS AND REMEDIES 27
Section 5.01. Defaults 27
Section 5.02.Remedies; No Remedy Exclusive 28
Section 5.03. Waivers 29
ARTICLE VI 30
MISCELLANEOUS 30
Section 6.01. Amendments, Etc 30
Section 6.02. Notices 30
Section 6.03. Severability 32
Section 6.04. Governing Law 32
Section 6.05. Consent to Jurisdiction 32
Section 6.06. Consent of the Insurer 33
Section 6.07. Counterparts 33
Section 6.08. Headings 33
Section 6.09. Trial by Jury Waived 34
Section 6.10. Limited Liability 34
Section 6.11. Entire Agreement 34
Section 6.12. Indenture Trustee 34
INSURANCE AND INDEMNITY AGREEMENT (as it may be amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated as of October
7, 1999, by and among IOS Capital, Inc., as Originator and as Servicer, Ambac
Assurance Corporation, as Insurer, IKON Receivables, LLC, as Issuer, IKON
Receivables-I, LLC, as Seller, and Xxxxxx Trust and Savings Bank, as Indenture
Trustee.
PRELIMINARY STATEMENTS
A. The Indenture, dated as of October 1, 1999, relating to the IKON
Receivables, LLC Lease-Backed Notes, Series 1999-2, by and among the Issuer, the
Servicer and the Indenture Trustee (as it may be amended, modified or
supplemented from time to time as set forth therein) provides for, among other
things, the issuance of the Notes.
B. The Insurer has issued the Policy, pursuant to which it has agreed to
pay to the Indenture Trustee for the benefit of the Holders certain payments in
respect of the Notes.
C. The Insurer shall be paid a Premium as set forth herein.
D. IOS Capital, Inc., the Issuer, the Seller and the Indenture Trustee
have undertaken certain obligations in consideration for the Insurer's issuance
of its Policy.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Unless the context clearly requires otherwise,
all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Indenture or, if not defined therein, in the
Policy described below. For purposes of this Insurance Agreement, the following
terms shall have the following meanings:
"Closing Date" means October 7, 1999.
"Commission" means the Securities and Exchange Commission.
"Company Documents" means the Indenture, this Insurance Agreement, the
Notes, the Swap Documents and the Assignment and Servicing Agreement.
"Counterparty" means Xxxxxx Brothers Financial Products Inc., a Delaware
corporation, or its permitted successors or assigns under the Swap Documents.
"Default" means any event which results, or which with the giving of notice
or the lapse of time or both would result, in an Event of Servicing Termination.
"Documents" means the Company Documents and any other information relating
to the Asset Pool, IOS Capital, the Seller or the Issuer furnished to the
Insurer by IOS Capital, the Seller or the Issuer.
"Event of Servicing Termination" means any Event of Servicing Termination
specified in Section 5.01 of this Insurance Agreement.
"Financial Statements" means, with respect to IOS Capital, the consolidated
statements of financial condition as of September 30, 1998 and the statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended September 30, 1998 and the notes thereto.
"Holder" has the meaning given such term in the Policy.
"Indemnification Agreement" means the Indemnification Agreement dated as of
October 7, 1999 among the Insurer and the Underwriters.
"Indenture Trustee" means Xxxxxx Trust and Savings Bank, as indenture
trustee under the Indenture, and any successor thereto under the Indenture.
"Insurance Agreement" has the meaning given such term in the initial
paragraph hereof.
"Insurer" means Ambac Assurance Corporation, a Wisconsin domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Information" has the meaning given such term in Section 3.04(a)(v).
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IOS Capital" means IOS Capital, Inc., and any successors thereto, as the
Originator and the Servicer.
"Issuer" means IKON Receivables, LLC, a Delaware limited liability company,
or any successor thereto as provided for in the Indenture.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per annum
rate of interest publicly announced from time to time by Citibank, N.A. as its
prime or base lending rate (any change in such rate of interest to be effective
on the date such change is announced by Citibank, N.A.), plus 2% per annum and
(ii) the then applicable highest rate of interest on the Notes and (b) the
maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person on a consolidated basis with its subsidiaries or
(ii) the ability of such Person to perform its obligations under any of the
Company Documents.
"Moody's" means Xxxxx'x Investors Service, Inc., and any successor thereto.
"Notes" has the meaning given such term in the Indenture.
"Offering Document" means the Prospectus dated May 7, 1999, the Preliminary
Prospectus Supplement dated September 24, 1999, and the Prospectus Supplement
dated September 30, 1999, each in respect of the Notes, and any amendment or
supplement thereto, and any other offering document in respect of the Notes
prepared by IOS Capital that makes reference to the Policy.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
"Policy" means each of the following: (a) the certificate guaranty
insurance policy, #AB0306BE, together with all endorsements thereto, issued by
the Insurer to the Indenture Trustee, for the benefit of the Holders of the
Notes (the "Note Policy") and (b) the financial guaranty insurance policy,
SF0276BE, issued by the Insurer to the Counterparty (the "Swap Policy").
"Policies" means both of the Note Policy and the Swap Policy.
"Premium" means the premium payable in accordance with the Policy, with
respect to any Payment Date, the amount calculated by multiplying the Premium
Percentage by the Outstanding Principal Amount of the Notes on such Payment Date
prior to the distribution of any principal with respect to the Notes on such
Payment Date. All calculations of the Premium shall be based upon twelve 30-day
months and a 360-day year.
"Premium Percentage" shall mean 0.18% per annum.
"Registration Statement" means the registration statement on Form S-3 (No.
333-71073), including the prospectus, relating to the Notes, at the time it
became effective.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The XxXxxx-
Xxxx Companies, Inc., and any successor thereto.
"Transaction" means the transactions contemplated by the Company Documents,
including the transactions described in the Offering Document.
"Trust Indenture Act" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Underwriters" means, collectively, Xxxxxx Brothers Inc., Chase Securities
Inc., Deutsche Banc Alex. Xxxxx and PNC Capital Markets, Inc.
"Underwriting Agreement" means the Underwriting Agreement dated September
30, 1999 between Xxxxxx Brothers Inc., as representative of the several
Underwriters named in Schedule 1 to the Underwriting Agreement, and IOS Capital
with respect to the offer and sale of the Notes, as amended, modified or
supplemented from time to time.
"Underwriters' Information" has the meaning given such term in the
Indemnification Agreement.
Section 1.02. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Insurance
Agreement shall refer to this Insurance Agreement as a whole and not to any
particular provision of this Insurance Agreement, and Section, subsection,
Schedule and Exhibit references are to this Insurance Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation."
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of IOS Capital. IOS Capital
hereby makes to and for the benefit of the Insurer each of the representations
and warranties made by IOS Capital in the Indenture and the Assignment and
Servicing Agreement, including, but not limited to, Section 2 of the Assignment
and Servicing Agreement. Such representations and warranties are incorporated
herein by this reference as if fully set forth herein, and may not be amended
except by an amendment complying with the terms of Section 6.01. In addition,
IOS Capital represents and warrants as of the Closing Date as follows:
(a) Due Authorization. The execution, delivery and performance by IOS
Capital of the Company Documents to which it is a party, have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to or
filing with any Person, including any governmental entity or any of the
stockholders of IOS Capital, which have not previously been obtained or
given.
(b) Noncontravention. The execution and delivery by IOS Capital of
the Company Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the Company
Documents do not and will not:
(i) conflict with or result in any breach or violation of
any provision of the charter or bylaws of IOS Capital or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to IOS
Capital or any of its respective material properties, including
regulations issued by any administrative agency or other governmental
authority having supervisory powers over IOS Capital;
(ii) constitute a default by IOS Capital under, result in
the acceleration of any obligation under, or breach any provision of
any loan agreement, mortgage, indenture or other agreement or
instrument to which IOS Capital is a party or by which any of its
properties are or may be bound or affected; or
(iii) result in or require the creation of any lien upon or
in respect of any assets of IOS Capital, except as expressly
contemplated by the Company Documents.
(c) Valid and Binding Obligations. When executed and delivered by
IOS Capital, the Company Documents to which IOS Capital is a party will
constitute the legal, valid and binding obligations of IOS Capital
enforceable in
accordance with their respective terms, except as such enforceability may
be limited by insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles and
public policy considerations as to rights of indemnification for violations
of federal securities laws. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be validly issued and
outstanding and entitled to the benefits of the Indenture. IOS Capital will
not at any time in the future deny that the Company Documents constitute
the legal, valid and binding obligations of IOS Capital.
(d) Compliance With Securities Laws. The offer and sale of the Notes
comply in all material respects with all requirements of law, including all
registration requirements of applicable securities laws. The Indenture is
required to be qualified and has been qualified under the Trust Indenture
Act and the Issuer is not required to be registered as an "investment
company" under the Investment Company Act. IOS Capital will satisfy any of
the information reporting requirements of the Securities Exchange Act
arising out of the Transaction to which it, the Issuer or the Seller are
subject.
Section 2.02. Affirmative Covenants of IOS Capital. IOS Capital hereby
makes, to and for the benefit of the Insurer, all of the covenants made by IOS
Capital as Originator and Servicer in the Indenture and the Assignment and
Servicing Agreement, including, but not limited to, Sections 4, 5, 6, 7 and 8 of
the Assignment and Servicing Agreement (but with respect to such covenants made
by IOS Capital as Servicer, only for so long as IOS Capital is the Servicer).
Such covenants are hereby incorporated herein by this reference as if fully set
forth herein, and may not be amended except by an amendment complying with the
terms of Section 6.01. In addition, IOS Capital hereby agrees that during the
term of this Insurance Agreement, unless the Insurer shall otherwise expressly
consent in writing:
(a) Compliance With Agreements and Applicable Laws. IOS Capital shall
comply with the terms and conditions of and perform its obligations under
the Company Documents to which it is a party in all cases in which failure
to so comply or perform would result in a default thereunder and shall
comply with all material requirements of any law, rule or regulation
applicable to it.
(b) Access to Records; Discussions with Officers and Accountants. On
an annual basis, or upon the occurrence of a Material Adverse Change, IOS
Capital shall, upon the reasonable request of the Insurer, permit the
Insurer or its authorized agents:
(i) to inspect the books and records of IOS Capital as they
may relate to the Notes, the obligations of IOS Capital under the
Company Documents and the Transaction;
(ii) to discuss the affairs, finances and accounts of IOS
Capital with the Chief Operating Officer and the Chief Financial
Officer of IOS Capital; and
(iii) with IOS Capital's consent, which consent shall not
be unreasonably withheld or delayed, to discuss the affairs, finances
and accounts of IOS Capital with IOS Capital's independent
accountants, provided that an officer of IOS Capital shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours at the Insurer's expense and shall not unreasonably disrupt
the business of IOS Capital.
(c) Retirement of Notes. IOS Capital shall instruct the Indenture
Trustee in writing, upon a retirement or other payment of all of the Notes,
to surrender the Policy to the Insurer for cancellation.
(d) Disclosure Document. Each Offering Document delivered with
respect to the Notes shall clearly disclose that the Policy is not covered
by the property/casualty insurance security fund specified in Article 76 of
the New York Insurance Law.
(e) Third-Party Beneficiary. IOS Capital agrees that the Insurer
shall have all rights of a third-party beneficiary in respect of the
Indenture, and the Assignment and Servicing Agreement.
(f) Closing Documents. IOS Capital shall provide or cause to be
provided to the Insurer an executed original copy of each document executed
in connection with the Transaction within 30 Business Days after the date
of closing.
Section 2.03. Negative Covenants of IOS Capital. IOS Capital hereby agrees
that during the term of this Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) Impairment of Rights. IOS Capital shall not take any action, or
fail to take any action, if such action or failure to take action may
result in a Material Adverse Change specified in clause (ii) of the
definition of Material Adverse Change with respect to IOS Capital, or may
not interfere with the enforcement of any rights of the Insurer under or
with respect to any of the Company Documents. IOS Capital shall give the
Insurer written notice of any such action or failure to act on the earlier
of: (i) the date upon which any publicly available filing or release is
made with respect to such action or failure to act or (ii) promptly prior
to the date of consummation of such action or failure to act. IOS
Capital shall furnish to the Insurer all information requested by it that
is reasonably necessary to determine compliance with this paragraph.
(b) Amendments, Etc. IOS Capital shall not modify or amend, or
consent to any modification or amendment of, any of the terms, provisions
or conditions of the Company Documents to which it is a party without the
prior written consent of the Insurer thereto, but excluding any amendment
to the Offering Document required by law and excluding any modifications or
amendments to which, pursuant to the terms of the Company Documents,
Insurer's consent is not required.
(c) Successors. Except as provided in Section 10.02 of the Assignment
and Servicing Agreement or Section 8.08 of the Indenture, as applicable,
neither the Indenture Trustee nor IOS Capital shall terminate or designate,
or consent to the termination or designation of, any successor Servicer or
Indenture Trustee without the prior written approval of the Insurer, which
approval shall not be unreasonably withheld, conditioned or delayed.
Section 2.04. Representations and Warranties of the Insurer. The Insurer
represents and warrants to the Indenture Trustee (on behalf of the Noteholders),
the Issuer and IOS Capital as follows:
(a) Organization and Licensing. The Insurer is a duly organized and
validly existing Wisconsin stock insurance company duly qualified to
conduct an insurance business in the State of Illinois.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue each Policy and execute and deliver this Insurance
Agreement and to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. All proceedings legally required for
the issuance of the Policies and the execution, delivery and performance of
this Insurance Agreement have been taken and all licenses, orders, consents
or other authorizations or approvals of the Insurer's Board of Directors or
stockholders or any governmental boards or bodies legally required for the
enforceability of the Policies have been obtained; any proceeding not taken
and any license, authorization or approvals not obtained are not material
to the enforceability of the Policies.
(d) Enforceability. Each Policy, when issued, and this Insurance
Agreement will each constitute a legal, valid and binding obligation of the
Insurer, enforceable in accordance with its terms, subject to insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity and subject
to principles of public policy limiting the right to enforce the
indemnification provisions contained
therein and herein, insofar as such provisions relate to indemnification
for liabilities arising under federal securities laws.
(e) Financial Information. The consolidated financial statements of
the Insurer and its subsidiaries as of December 31, 1998 and 1997, and for
the three years ended December 31, 1998, included in the Annual Report on
Form 10-K of Ambac Financial Group, Inc. (which was filed with the
Commission on March 30, 1999, Commission File Number 1-10777), and the
unaudited consolidated financial statements of the Insurer and its
subsidiaries as of June 30, 1999 and for the periods ending June 30, 1999
and June 30, 1998, included in the Quarterly Report on Form 10-Q of Ambac
Financial Group, Inc. (which was filed with the Commission on August 13,
1999), are hereby incorporated by reference into the Prospectus Supplement
dated September 30, 1999 relating to the Notes and shall be deemed to be a
part hereof. Since June 30, 1999, there has been no Material Adverse Change
with respect to the financial condition of the Insurer that would affect
its ability to perform its obligations under the Policy.
(f) Insurer Information. The Insurer Information is true and correct
in all material respects and does not contain any untrue statement of a
material fact.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policies or this Insurance Agreement.
(h) No Conflict. The execution by the Insurer of this Insurance
Agreement will not, and the satisfaction of the terms hereof will not,
conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-Laws of the Insurer,
or any restriction contained in any contract, agreement or instrument to
which the Insurer is a party or by which it is bound or constitute a
default under any of the foregoing.
(i) Confidential Information. The Insurer agrees that it and its
shareholders, directors, agents, accountants and attorneys shall not use or
disclose any information provided to the Insurer pursuant to or in
connection with this Insurance Agreement or the issuance of the Policies or
otherwise related to the Transactions, including any matter of which it
becomes aware during the inspections conducted or discussions had pursuant
to Section 2.02(b), unless such information is readily available from
public sources or except as may be otherwise required by regulation, law or
court order or requested by appropriate governmental authorities or as
necessary to preserve its rights or security under or to enforce the
Company Documents; provided, however, that the foregoing shall
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not limit the right of the Insurer to make such information available to
its regulators, securities rating agencies, reinsurers, credit and
liquidity providers, counsel and accountants. If the Insurer is requested
or required (by oral questions, interrogatories, requests for information
or documents subpoena, civil investigative demand or similar process) to
disclose any information provided to the Insurer pursuant to or in
connection with this Insurance Agreement or the issuance of the Policies or
otherwise related to the Transactions, including any information of which
it becomes aware through such inspections or discussions, the Insurer will
promptly notify IOS Capital of such request(s) so that IOS Capital may seek
an appropriate protective order and/or waive the Insurer's compliance with
the provisions of this Insurance Agreement. If, in the absence of a
protective order or the receipt of a waiver hereunder, the Insurer is,
nonetheless, in the opinion of its counsel (which shall be delivered to IOS
Capital), compelled to disclose such information to any tribunal or else
stand liable for contempt or suffer other censure of significant penalty,
the Insurer may disclose such information to such tribunal that the Insurer
is compelled to disclose, provided that the Insurer shall promptly notify
IOS Capital that the Insurer has been compelled to so disclose and that the
Insurer shall use best efforts to provide to IOS Capital prior to
disclosure a copy of all information to be so disclosed.
(j) Rating. The Insurer is not aware of any facts that if disclosed
to Moody's or S&P would be reasonably expected to result in a downgrade of
the rating of the financial strength of the Insurer by either of such
Rating Agencies.
(k) 1933 Act Registration. Each Policy is exempt from registration
under the Act.
Section 2.05. Representations and Warranties and Covenants of the Seller.
The Seller hereby makes to and for the benefit of the Insurer each of the
representations and warranties and covenants made by the Seller in the
Assignment and Servicing Agreement, including, but not limited to, Section 3 and
Section 9 of the Assignment and Servicing Agreement. Such representations,
warranties and covenants are incorporated herein by this reference as if fully
set forth herein, and may not be amended except by an amendment complying with
the terms of Section 6.01.
Section 2.06. Representations and Warranties of the Issuer. The Issuer
hereby makes, to and for the benefit of the Insurer, each of the representations
and warranties made by the Issuer in the Indenture. Such representations and
warranties are incorporated herein by this reference as if fully set forth
herein, and may not be amended except by an amendment complying with the terms
of Section 6.01. In addition, the Issuer represents and warrants as of the
Closing Date as follows:
(a) Due Organization and Qualification. The Issuer is a limited
liability company, duly organized, validly existing and in good standing
under the laws of Delaware and the United States of America. The Issuer is
duly qualified to do business, is in good standing and has obtained all
necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted and as
described in the Offering Document and the performance of its obligations
under the Company Documents in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Company Document
unenforceable in any respect or would have a material adverse effect upon
the Transaction.
(b) Power and Authority. The Issuer has all necessary limited
liability company power and authority to conduct its business as currently
conducted and as described in the Offering Document, to execute, deliver
and perform its obligations under the Company Documents and to consummate
the Transaction.
(c) Due Authorization. The execution, delivery and performance of the
Company Documents by the Issuer has been duly authorized by all necessary
limited liability company action and does not require any additional
approvals or consents, or other action by or any notice to or filing with
any Person, including any governmental entity or any beneficial owner of
the Trust, which have not previously been obtained or given by the Trust.
(d) Noncontravention. The execution and delivery by the Issuer of the
Company Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the Company
Documents do not and will not:
(i) conflict with or result in any breach or violation of
any provision of the Amended and Restated Limited Liability Company
Agreement of the Issuer or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Issuer or any of its respective
material properties, including regulations issued by any
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitute a default by the Issuer under, result in
the acceleration of any obligation under, or breach any provision of
any loan agreement, mortgage, indenture or other agreement or
instrument to which the Issuer either is a party or by which any of
their properties are or may be bound or affected; or
(iii) result in or require the creation of any lien upon or
in respect of any assets of the Issuer, except as otherwise expressly
contemplated by the Company Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative agency
or arbitrator
against or affecting the Issuer, any properties or rights of the Issuer or
any of the Asset Pool pending or threatened, which, in any case, if decided
adversely to the Issuer could result in a Material Adverse Change with
respect to the Issuer.
(f) Valid and Binding Obligations. The Company Documents, when
executed and delivered by the Issuer, will constitute the legal, valid and
binding obligations of the Issuer, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and public
policy considerations as to rights of indemnification for violations of
federal securities laws. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be validly issued and
outstanding and entitled to the benefits of the Indenture.
(g) Compliance with Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Issuer that, if enforced, could result in a Material
Adverse Change with respect to the Issuer.
(h) Accuracy of Information. None of the Documents, as amended,
supplemented or superseded, furnished to the Insurer by the Issuer contains
any statement of a material fact which was untrue or misleading in any
material respect when made. Since the furnishing of the Documents, there
has been no change nor any development or event involving a prospective
change known to the Issuer that would render any of the Documents untrue or
misleading in any material respect.
(i) Compliance With Securities Laws. The offer and sale of the Notes
comply in all material respects with all requirements of law, including all
registration requirements of applicable securities laws. Without limiting
the foregoing, the Offering Document does not contain any untrue statement
of a material fact and does not omit to state a material fact necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading; provided, however, that no representation
is made with respect to the Insurer Information or with respect to the
Underwriters' Information. Neither the offer nor sale of the Notes by the
Issuer has been or will be in violation of the Securities Act or any other
federal or state securities laws. The Indenture is required to be qualified
under the Trust Indenture Act. The Issuer is not required to be registered
as an "investment company" under the Investment Company Act. The Issuer
will satisfy any of the information reporting requirements of the
Securities Exchange Act arising out of the Transaction to which it or the
Trust are subject.
(j) Solvency; Fraudulent Conveyance. The Issuer is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to
the Transaction, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its business, and the Issuer does
not intend to incur, or believe that it has incurred, debts beyond its
ability to pay as they mature. The Issuer does not contemplate the
commencement of insolvency, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Issuer or any of their assets. The Issuer is not
pledging the Asset Pool under the Indenture with any intent to hinder,
delay or defraud any of the Issuer's creditors.
(k) Principal Place of Business. The principal place of business of
the Issuer is 0000 Xxxx Xxxx, Xxxxx, Xxxxxxx 00000.
Section 2.07. Affirmative Covenants of the Issuer. The Issuer hereby makes,
to and for the benefit of the Insurer, all of the covenants of the Issuer set
forth in the Indenture, including, but not limited to, Section 9 of the
Indenture. Such covenants are incorporated herein by this reference, and may not
be amended except by an amendment complying with the terms of Section 6.01. In
addition, the Issuer hereby agrees that during the term of this Insurance
Agreement, unless the Insurer shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The Issuer shall
comply with the terms and conditions of and perform its respective
obligations under the Company Documents to which it is a party in all cases
in which failure to so comply or perform would result in a default
thereunder and shall comply with all material requirements of any law, rule
or regulation applicable to it.
(b) Existence. The Issuer and its successors and permitted assigns
shall maintain its existence as a limited liability company and shall at
all times continue to be duly organized under the laws of the State of
Delaware and duly qualified and duly authorized (as described in
subsections 2.06(a), (b) and (c) hereof) and shall conduct its business in
accordance with the terms of its Amended and Restated Limited Liability
Company Agreement.
(c) Access to Records; Discussions with Officers and Accountants. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Issuer shall, upon the reasonable request of the Insurer, permit the
Insurer or its authorized agents:
(i) to inspect the books and records of the Issuer as they
may relate to the Notes, the obligations of the Issuer under the
Company Documents and the Transaction;
(ii) to discuss the affairs, finances and accounts of the
Issuer with IOS Capital on behalf of the Issuer; and
(iii) with the Issuer's consent, which consent shall not be
unreasonably withheld or delayed, to discuss the affairs, finances and
accounts of the Issuer with the Issuer's independent accountants,
provided that an officer of the Issuer and IOS Capital shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Issuer.
(d) Notice of Material Events. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of the
following:
(i) the submission of any claim or the initiation or threat
of any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or against
the Issuer that (A) could reasonably be required to be disclosed to
the Commission or (B) would likely result in a Material Adverse Change
with respect to the Issuer, or the promulgation of any proceeding or
any proposed or final ruling in connection with any such litigation,
investigation or proceeding which would likely result in a Material
Adverse Change with respect to the Issuer;
(ii) any change in the location of the principal office of
the Issuer;
(iii) the occurrence of any Default or Event of Servicing
Termination, or any Material Adverse Change in respect of the Issuer;
(iv) the commencement of any proceedings by or against the
Issuer under any applicable reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of their assets; or
(v) the receipt of notice that (A) any license, permit,
charter, registration or approval necessary for the conduct of the
Issuer's business are to be, or may be suspended or revoked or (B) the
Issuer is to cease and desist any practice, procedure or policy
employed by the Issuer in the conduct of its business, and such
cessation may result in a Material Adverse Change with respect to the
Issuer.
(e) Financing Statements and Further Assurances. The Issuer shall,
upon the request of the Insurer, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, within
ten days of such request, such amendments hereto and such further
instruments and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the Company
Documents. In addition, the Issuer agrees to cooperate with S&P and Xxxxx'x
in connection with any review of the Transaction, conducted during normal
business hours and in a manner that does not unreasonably disrupt the
business of IOS Capital, that may be undertaken by S&P and Xxxxx'x after
the date hereof upon reasonable notice.
(f) Maintenance of Licenses. The Issuer shall maintain all licenses,
permits, charters and registrations which are material to the conduct of
its business.
(g) Third-Party Beneficiary. The Issuer agrees that the Insurer
shall have all rights of a third-party beneficiary in respect of the
Indenture.
Section 2.08. Negative Covenants of the Issuer. The Issuer hereby agrees
that during the term of this Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) Impairment of Rights. The Issuer shall not take any action, or
fail to take any action, if such action or failure to take action may
result in a Material Adverse Change specified in clause (ii) of the
definition of Material Adverse Change with respect to the Issuer or may not
interfere with the enforcement of any rights of the Insurer under or with
respect to any of the Company Documents. The Issuer shall give the Insurer
written notice of any such action or failure to act on the earlier of: (i)
the date upon which any publicly available filing or release is made with
respect to such action or failure to act or (ii) promptly prior to the date
of consummation of such action or failure to act. The Issuer shall furnish
to the Insurer all information requested by it that is reasonably necessary
to determine compliance with this paragraph.
(b) Amendments, Etc. The Issuer shall not modify or amend, or
consent to any modification or amendment of, any of the terms, provisions
or conditions of the Company Documents to which it is a party without the
prior written consent of the Insurer thereto, but excluding any amendment
to the Offering Document required by law and excluding any modifications or
amendments to which, pursuant to the terms of the Company Documents,
Insurer's consent is not required.
(c) Limitation on Mergers, Etc. The Issuer shall not consolidate
with or merge with or into any Person or transfer all or substantially all
of its
assets to any Person or liquidate or dissolve except as provided in the
Indenture or as permitted hereby. The Issuer shall furnish to the Insurer
all information requested by it that is reasonably necessary to determine
compliance with this paragraph.
(d) Successors. Except as provided in Section 10.02 of the
Assignment and Servicing Agreement or Section 8.08 of the Indenture, as
applicable, neither the Trustee nor IOS Capital shall terminate or
designate, or consent to the termination or designation of, any successor
Servicer or Trustee without the prior written approval of the Insurer,
which approval shall not be unreasonably withheld, conditioned or delayed.
ARTICLE III
THE POLICIES; REIMBURSEMENT
Section 3.01. Issuance of the Policies. The Insurer agrees to issue each
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) Payment of Initial Premium and Expenses. The applicable parties
shall have been paid by IOS Capital their related fees and expenses payable
in accordance with Section 3.02 within 5 Business Days of receipt of the
related invoice;
(b) Company Documents. The Insurer shall have received a copy of
each of the Company Documents, in form and substance reasonably
satisfactory to the Insurer, duly authorized, executed and delivered by
each party thereto;
(c) Certified Documents and Resolutions. The Insurer shall have
received a copy of the charter and bylaws of IOS Capital and the limited
liability company agreement and certificate of each of Seller and Issuer,
and (ii) a certificate of the Secretary or Assistant Secretary of IOS
Capital stating that attached thereto is a true, complete and correct copy
of resolutions duly adopted by the Board of Directors or a duly authorized
committee of IOS Capital, or the Managing Member of the Seller and the
Issuer, as the case may be, authorizing the execution, delivery and
performance by IOS Capital, the Seller or the Issuer, as the case may be,
of the Company Documents to which it is a party and the consummation of the
Transaction and that such charter, bylaws, limited liability company
agreements, certificates of formation and resolutions are in full force and
effect without amendment or modification on the Closing Date;
(d) Incumbency Certificate. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of each of IOS
Capital, the Seller and the Issuer certifying the names and signatures of
the officers of such entity authorized to execute and deliver the Company
Documents to which it is a party;
(e) Representations and Warranties; Certificate. The representations
and warranties of IOS Capital, the Seller and the Issuer set forth or
incorporated by reference in this Insurance Agreement shall be true and
correct on and as of the Closing Date as if made on the Closing Date, and
the Insurer shall have received a certificate of appropriate officers of
IOS Capital, the Seller and the Issuer to that effect;
(f) Opinions of Counsel. The Insurer shall have received all
opinions of counsel addressed to any of Xxxxx'x, S&P, the Indenture
Trustee, IOS Capital, the Issuer, the Seller, or the Underwriters in
respect of the Transaction, in form and substance reasonably satisfactory
to the Insurer, addressed to the Insurer and addressing such matters as the
Insurer may reasonably request, and the counsel providing each such opinion
shall have been instructed by its client to deliver such opinion to the
addressees thereof;
(g) Approvals, Etc. The Insurer shall have received true and correct
copies of all approvals, licenses and consents, if any, including any
required approval of the shareholders of IOS Capital, required in
connection with the Transaction;
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall be
pending or threatened before any court, governmental or administrative
agency or arbitrator in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with any of the Company
Documents or the consummation of the Transaction;
(i) Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court that would make the Transaction illegal or
otherwise prevent the consummation thereof;
(j) Satisfaction of Conditions of the Underwriting Agreement. All
conditions in the Underwriting Agreement relating to the Underwriters'
obligation to purchase the Notes shall have been satisfied, without taking
into account any waiver by any Underwriter of any condition unless such
waiver has been approved by the Insurer. The Insurer shall have received
copies of each of the documents, and shall be entitled to rely on each of
the documents, required to be delivered to any Underwriter pursuant to the
Underwriting Agreement;
(k) Issuance of Ratings. The Insurer shall have received
confirmation that the risk secured by the Note Policy constitutes a "BBB"
risk by S&P and a "Baa2" risk by Xxxxx'x and that the Notes, when issued,
will be rated "AAA" by S&P and "Aaa" by Xxxxx'x (or A-1+ by S&P and P-1 by
Xxxxx'x in the case of the Class A-1 Notes);
(l) No Default. No Default or Event of Servicing Termination shall
have occurred;
(m) Additional Items. The Insurer shall have received such other
documents, instruments, approvals or opinions reasonably requested by the
Insurer as may be reasonably necessary to effect the Transaction, including
evidence reasonably satisfactory to the Insurer that the conditions
precedent, if any, in the Company Documents have been satisfied; and
(n) Satisfactory Documentation. The Insurer and its counsel shall
have determined that all documents, Notes and opinions to be delivered in
connection with the Notes and the Swap Documents conform to the terms of
the Indenture, the Registration Statement, the Offering Document, the Swap
Documents and this Insurance Agreement.
Section 3.02. Payment of Fees and Premium.
(a) Legal and Accounting Fees. IOS Capital shall pay or cause to be
paid, within 5 Business Days of receipt of the related invoice, reasonable
legal fees, auditors' fees in connection with the provision of information
or any consent in connection with the Offering Document and disbursements
incurred by the Insurer in connection with the issuance of the Policies.
Any reasonable additional fees of the Insurer's counsel or auditors payable
in respect of any amendment or supplement to the Offering Document incurred
after the Closing Date shall be paid by IOS Capital on demand.
(b) Rating Agency Fees. IOS Capital shall promptly pay the initial
fees of S&P and Xxxxx'x with respect to the Notes and the transactions
contemplated hereby following receipt of a statement with respect thereto.
IOS Capital shall pay any subsequent fees of S&P or Xxxxx'x with respect
to, and directly allocable to, the Notes to the extent that such fees and
expenses result from actions of S&P or Xxxxx'x that are requested by IOS
Capital. The Insurer shall not be responsible for any fees or expenses of
S&P or Xxxxx'x. The fees for any other rating agency shall be paid by the
party requesting such other agency's rating.
(c) Premium.
(i) In consideration of the issuance by the Insurer of the
Policies, the Insurer shall be entitled to receive the Premium as and
when due in accordance with and from the funds specified by Section
3.03 of the Indenture.
(ii) The Premium paid under the Indenture shall be nonrefundable
without regard to whether any Notice for Payment is delivered to the
Insurer requiring the Insurer to make any payment under either Policy
or any other circumstances relating to the Notes or provision being
made for payment of the Notes prior to maturity.
Section 3.03. Reimbursement Obligation.
(a) As and when due, from, and only from, the funds specified in
Section 3.03 of the Indenture, the Insurer shall be entitled to
reimbursement for any payment made by the Insurer under either Policy,
which reimbursement shall be due and payable on the date that any amount is
paid thereunder, in an amount equal to the amount so paid and all amounts
previously paid that remain unreimbursed, together with interest on any and
all amounts remaining unreimbursed (to the extent permitted by law, if in
respect of any unreimbursed amounts representing interest) from the date
such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(b) IOS Capital agrees to pay to the Insurer, within 5 Business Days
of receipt of an invoice, as follows: any and all charges, fees, costs and
expenses that the Insurer may reasonably pay or incur, including reasonable
attorneys' and accountants' fees and expenses, in connection with (i) the
enforcement, defense or preservation of any rights in respect of any of the
Company Documents, including defending, monitoring or participating in any
litigation or proceeding (including any insolvency proceeding in respect of
any Transaction participant or any affiliate thereof) relating to any of
the Company Documents, any party to any of the Company Documents (in its
capacity as such a party) or the Transaction, or (ii) any amendment, waiver
or other action with respect to, or related to, any Company Document,
whether or not executed or completed.
(c) IOS Capital agrees to pay to the Insurer, within 5 Business Days
of receipt of an invoice, as follows: interest on any and all amounts
described in subclause (b) of this Section 3.03 from the date payable or
paid by such party until payment thereof in full, and interest on any and
all amounts described in Section 3.02 (a) from the date due until payment
thereof in full and interest on any and all
amounts described in Section 3.04 from the date due until payment thereof
in full, in each case, payable to the Insurer at the Late Payment Rate.
Section 3.04. Indemnification.
(a) In addition to any and all of the Insurer's rights of
reimbursement, indemnification, subrogation and to any other rights of the
Insurer pursuant hereto or under law or in equity, IOS Capital agrees to
pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents and each Person, if
any, who controls the Insurer within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act from and
against, any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or
relating to the transactions contemplated by the Company Documents by
reason of:
(i) any omission or action (other than of or by the Insurer
(including any Insurer Information, as defined below) or the
Underwriters) by IOS Capital in connection with the offering,
issuance, sale or delivery of any of the Notes prior to the completion
of the initial offering and distribution of the Notes;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director, officer,
employee or agent of IOS Capital in connection with any Transaction
arising from or relating to the Company Documents;
(iii) the violation by IOS Capital of any domestic or
foreign law, rule or regulation, or any judgment, order or decree
applicable to it;
(iv) the breach by IOS Capital of any representation,
warranty or covenant under any of the Company Documents or the
occurrence, in respect of IOS Capital, under any of the Company
Documents of any Event of Servicing Termination or any event which,
with the giving of notice or the lapse of time or both, would
constitute any Event of Servicing Termination (exclusive of clause (c)
of Section 5.01 hereof); or
(v) any untrue statement or alleged untrue statement of a
material fact contained in any Offering Document or the Registration
Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were
made, not misleading, except insofar as such claims, losses,
liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or expenses (including reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of
investigations) arise out of or are based upon any untrue statement or
omission in the an Offering Document other than the Underwriters'
Information and information furnished by the Insurer in writing
expressly for use therein (all such information so furnished being
referred to herein as "Insurer Information"), it being understood
that, in respect of the initial Offering Document, the Insurer
Information is limited to the information with respect to the Insurer
included under the caption "THE INSURER AND THE POLICY."
(b) The Insurer agrees to pay, and to protect, indemnify and save
harmless, IOS Capital and its respective officers, directors, shareholders,
employees, agents and each Person, if any, who controls IOS Capital within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act from and against, any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or expenses (including reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations)
of any nature arising out of or by reason of any untrue statement or
alleged untrue statement of a material fact contained in the Insurer
Information in any Offering Document or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading or a breach of any of the representations and
warranties of the Insurer contained in Section 2.04.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of which the indemnity provided in Section 3.04(a) or
(b) may be sought from IOS Capital, on the one hand, or the Insurer, on the
other (each, an "Indemnifying Party") hereunder, each such Indemnified
Party shall promptly notify the Indemnifying Party in writing, and the
Indemnifying Party shall assume the defense thereof, including the
employment of counsel satisfactory to the Indemnified Party and the payment
of all expenses. The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof at the expense of the Indemnified Party; provided, however, that
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the fees and expenses of such separate counsel shall be at the expense of
the Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to assume
the defense of such action or proceeding and employ counsel reasonably
satisfactory to the Indemnified Party in any such action or proceeding or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying
Party, and the Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Indemnifying
Party (in which case, if the Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not have the right
to assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the Indemnified Parties,
which firm shall be designated in writing by the Indemnified Party). The
Indemnifying Party shall not be liable for any settlement of any such
action or proceeding effected without its written consent to the extent
that any such settlement shall be prejudicial to the Indemnifying Party,
but, if settled with its written consent, or if there is a final judgment
for the plaintiff in any such action or proceeding with respect to which
the Indemnifying Party shall have received notice in accordance with this
subsection (c), the Indemnifying Party agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by
reason of such settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party (other
than due to application of this Section), each Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the basis of
the relative fault of the Indemnifying Party, on the one hand, and the
Indemnified Party, on the other hand. The relative fault of each
Indemnifying Party, on the one hand, and each Indemnified Party, on the
other, shall be determined by reference to, among other things, whether the
breach of, or alleged breach of, any of its representations and warranties
set forth are within the control of, the Indemnifying Party or the
Indemnified Party, and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section (11)f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
Section 3.05. Payment Procedure. In the event of any payment to the
Insurer, the Indenture Trustee and IOS Capital agree to accept the voucher or
other evidence of payment as prima facie evidence of the propriety thereof and
the liability, if any, described in Section 3.03 therefor to the Insurer. All
payments to be made to the Insurer under this Insurance Agreement shall be made
to the Insurer in lawful currency of the United States of America in immediately
available funds at the notice address for the Insurer as specified in the
Indenture on the date when due or as the Insurer shall otherwise
direct by written notice to the other parties hereto. In the event that the date
of any payment to the Insurer or the expiration of any time period hereunder
occurs on a day that is not a Business Day, then such payment or expiration of
time period shall be made or occur on the next succeeding Business Day with the
same force and effect as if such payment was made or time period expired on the
scheduled date of payment or expiration date.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement. This
Insurance Agreement shall take effect on the Closing Date and shall remain in
effect until the later of (a) such time as the Insurer is no longer subject to a
claim under either Policy and each Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by IOS
Capital and the Issuer hereunder or from any other source hereunder or under the
Company Documents and all amounts payable under the Notes have been paid in
full; provided, however, that the provisions of Sections 3.02, 3.03 and 3.04
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hereof shall survive any termination of this Insurance Agreement.
Section 4.02. Further Assurances and Corrective Instruments.
(a) Except at such times as an Insurer Default (as defined in the
Indenture) shall exist or shall have occurred, neither IOS Capital nor the
Indenture Trustee shall grant any waiver of rights under any of the Company
Documents to which any of them is a party without the prior written consent
of the Insurer, which shall not be unreasonably withheld, conditioned or
delayed and any such waiver without prior written consent of the Insurer
shall be null and void and of no force or effect.
(b) To the extent permitted by law, IOS Capital agrees that it will,
from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such
further instruments as the Insurer may reasonably request and as may be
required in the Insurer's reasonable judgment to effectuate the intention
of or facilitate the performance of this Insurance Agreement.
(c) IOS Capital will not cause or permit (i) the Seller to assign or
transfer any of its assets to any party, other than the transfers to the
Issuer in connection with the
Transaction, or to issue any notes or other evidences of indebtedness, or
to otherwise incur any indebtedness, or (ii) the Issuer to issue any notes
or other evidences of indebtedness, or to otherwise incur any indebtedness,
other than the indebtedness represented by the Notes, and the Issuer agrees
that it will not issue any notes or other evidences of indebtedness, or
otherwise incur any indebtedness, other than the indebtedness represented
by the Notes, in any such case, without the prior written consent of the
Insurer, such consent not to be unreasonably withheld.
Section 4.03. Obligations Absolute.
(a) The obligations of IOS Capital, the Seller and the Issuer
hereunder shall be absolute and unconditional and shall be paid or
performed strictly in accordance with this Insurance Agreement under all
circumstances irrespective of:
(i) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver, with respect to any of
the Company Documents or the Notes;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that IOS Capital may have at any time against
the Insurer or any other Person;
(iv) any document presented be forged, fraudulent, in connection
with invalid or insufficient either Policy proving to in any respect
or any statement therein being untrue or inaccurate in any respect;
(v) any payment by the Insurer under either Policy against
presentation of a certificate or other document that does not strictly
comply with the terms of such Policy;
(vi) any failure of IOS Capital to receive the proceeds from the
sale of the Notes; and
(vii) any other circumstances, other than payment in full, that
might otherwise constitute a defense available to, or discharge of,
IOS Capital in respect of any Company Document.
(b) IOS Capital, the Seller and the Issuer and any and all others who
are now or may become liable for all or any part of the obligations of IOS
Capital, the Seller and the Issuer under this Insurance Agreement
(including any successor to IOS Capital as Servicer) agree to be bound by
this Insurance Agreement and (i) to the extent permitted by law, waive and
renounce any and all redemption and exemption rights and the benefit of all
valuation and appraisement privileges against the indebtedness and
obligations evidenced by any Company Document or by any extension or
renewal thereof; (ii) waive presentment and demand for payment, notices of
nonpayment and of dishonor, protest of dishonor and notice of protest;
(iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the Company
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or to any defense other than payment, or to any right of setoff
or recoupment arising out of any breach under any of the Company Documents,
by any party thereto or any beneficiary thereof, or out of any obligation
at any time owing to IOS Capital; (v) agree that its liabilities hereunder
shall, except as otherwise expressly provided in this Section 4.03, be
unconditional and without regard to any setoff, counterclaim or the
liability of any other Persons for the payment hereof, (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall
operate only for such event and not for any subsequent event; (vii) consent
to any and all extensions of time that may be granted by the Insurer with
respect to any payment hereunder or other provisions hereof and to
the release of any security at any time given for any payment hereunder, or
any part thereof, with or without substitution, and to the release of any
Person or entity liable for any such payment; and (viii) consent to the
addition of any and all other makers, endorsers, guarantors and other
obligors for any payment hereunder, and to the acceptance of any and all
other security for any payment hereunder, and agree that the addition of
any such obligors or security shall not affect the liability of the parties
hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting IOS Capital or
the Indenture Trustee from pursuing any rights or remedies it may have
against any Person in a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
(a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. None
of IOS Capital, the Seller or the Issuer may assign its rights under this
Insurance Agreement, or delegate any of its duties hereunder, without the
prior written consent of the Insurer. Any assignments made in violation of
this Insurance Agreement shall be null and void.
(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
the Insurer may in its discretion determine; provided, however, that no
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such participation or reinsurance agreement or arrangement shall relieve
the Insurer of any of its obligations hereunder or under either Policy and
provided further that any reinsurer or participant will not have any rights
against IOS Capital, the Noteholders or the Indenture Trustee and that IOS
Capital, the Noteholders and the Indenture Trustee shall have no obligation
to have any communication or relationship with any reinsurer or participant
in order to enforce the obligations of the Insurer hereunder and under
either Policy.
(c) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right,
remedy or claim, express or implied, upon any Person, including,
particularly, any Holder, other than the Insurer against IOS Capital or IOS
Capital against the Insurer and all the terms, covenants, conditions,
promises and agreements contained herein shall be for the sole and
exclusive benefit of the parties hereto and their successors and permitted
assigns. Neither the Indenture Trustee nor any Holder shall have any right
to payment from any Premiums paid or payable hereunder or under the
Indenture or from any amounts paid by IOS Capital pursuant to Sections 3.02
or 3.03 hereof.
Section 4.05. Liability of the Insurer. Unless the Insurer shall have been
grossly negligent or guilty of wrongful misconduct, neither the Insurer nor any
of its officers, directors or employees shall be liable or responsible for: (a)
the use that may be made of the Policy by the Trust or for any acts or omissions
of the Trust in connection therewith; or (b) the validity, sufficiency, accuracy
or genuineness of documents delivered to the Insurer in connection with any
claim under either Policy, or of any signatures thereon, even if such documents
or signatures should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged (unless the Insurer shall have actual
knowledge thereof). In furtherance and not in limitation of the foregoing, the
Insurer may accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.06. Annual Servicing Audit and Certification. The annual
servicing audit required pursuant to Section 6.02 of the Servicing Agreement
shall be performed by an independent third party acceptable to the Insurer. Any
one of the five major nationally recognized firms of independent public
accountants is deemed to be acceptable.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Defaults. The occurrence of any of the following events
shall constitute an Event of Servicing Termination hereunder:
(a) Any representation or warranty made by IOS Capital, the Seller or
the Issuer hereunder or under the Company Documents, or in any certificate
furnished hereunder or under the Company Documents, shall prove to be
untrue or incomplete in any material respect; provided, however, that if
-------- -------
IOS Capital, the Seller or the Issuer effectively cures any such defects in
any representation or warranty under any Transaction Document or
certificate or report furnished under any Company Document, within the time
period specified in the related document as the cure period therefor, such
defect shall not in and of itself constitute an Event of Servicing
Termination;
(b) (i) IOS Capital shall fail to pay when due any amount payable by
IOS Capital unless such amounts are paid in full within the cure period
therefor, respectively, hereunder or (ii) a legislative body has enacted
any law that declares or a court of competent jurisdiction shall find or
rule that this Insurance Agreement or the Indenture is not valid and
binding on IOS Capital or the Issuer;
(c) The occurrence and continuance of a Servicer Event of Default
under the Assignment and Servicing Agreement;
(d) Any failure on the part of IOS Capital, the Seller or the Issuer
duly to observe or perform in any material respect any other of the
covenants or agreements on the part of IOS Capital, the Seller or the
Issuer contained in this Insurance Agreement or in any other Company
Document which continues unremedied beyond any cure period provided
therein, or, in the case of this Insurance Agreement, for a period of 30
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to IOS Capital by the Insurer
(with a copy to the Indenture Trustee) or by the Indenture Trustee (with a
copy to the Insurer); provided, further, that if such failure shall be of a
--------- -------
nature that it cannot be cured within 30 days, such failure shall not
constitute an Event of Servicing Termination hereunder, if within such 30-
day period IOS Capital, the Seller or the Issuer, as the case may be, shall
have given written notice to the Insurer and the Indenture Trustee of
corrective action it proposes to take, which corrective action is agreed in
writing by the Insurer to be satisfactory and IOS Capital, the Seller or
the Issuer shall thereafter pursue such corrective action diligently until
such default is cured;
(e) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state insolvency or similar law or the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against IOS Capital, the Seller or the
Issuer and such decree or order shall have remained in force undischarged
or unstayed for a period of 90 consecutive days;
(f) IOS Capital, the Seller or the Issuer shall consent to the
appointment of a conservator or receiver or liquidator or other similar
official in any involuntary insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to IOS
Capital, the Seller or the Issuer or of or relating to all or substantially
all of their respective property and if IOS Capital, the Seller or the
Issuer shall fail to take appropriate action resulting in the withdrawal or
dismissal of such proceeding within 30 Business Days; or
(g) IOS Capital, the Seller or the Issuer shall admit in writing its
inability to pay their debts generally as they become due, file a petition
to take advantage of or otherwise voluntarily commence a case or proceeding
under any applicable insolvency, reorganization or other similar statute,
make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Servicing Termination, the
Insurer may take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts, if any, then
due under this
Insurance Agreement, the Assignment and Servicing Agreement or the
Indenture or to enforce performance and observance of any obligation,
agreement or covenant of IOS Capital, the Seller or the Issuer under this
Insurance Agreement, the Assignment and Servicing Agreement or the
Indenture.
(b) Unless otherwise expressly provided, no remedy herein conferred
or reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies
given under this Insurance Agreement, the Assignment and Servicing
Agreement the Indenture or existing at law or in equity. No delay or
omission to exercise any right or power accruing under this Insurance
Agreement, the Assignment and Servicing Agreement or the Indenture upon the
happening of any event set forth in Section 5.01 shall impair any such
right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Insurer to exercise any remedy
reserved to the Insurer in this Article, it shall not be necessary to give
any notice, other than such notice as may be required by this Article.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by the
Insurer in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein
to the Insurer are declared in every case to be cumulative and not
exclusive of any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Servicing Termination hereunder, by a
writing setting forth the terms, conditions and extent of such waiver
signed by the Insurer and delivered to IOS Capital and the Indenture
Trustee. Unless such writing expressly provides to the contrary, any
waiver so granted shall extend only to the specific event or occurrence
which gave rise to the Event of Servicing Termination so waived and not to
any other similar event or occurrence which occurs subsequent to the date
of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Insurance Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto. No consent of any re-insurer or
participant contracted with by the Insurer pursuant to Section 4.04(b) hereof
shall be required for any amendment, modification, supplement or termination
hereof. IOS Capital agrees to provide a copy of any amendment to this Insurance
Agreement promptly to the Indenture Trustee and the rating agencies maintaining
a rating on any of the Notes at the request of IOS Capital. The Insurer agrees
to provide reasonable notice to the rating agencies maintaining a rating on any
of the Notes with respect to any proposed amendment. No act or course of
dealing shall be deemed to constitute an amendment, modification, supplement or
termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
and telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department - ABS
Telecopy No.: 000-000-0000
Confirmation: 212-668-0340
(in each case in which notice or other communication to the
Insurer refers to an Event of Servicing Termination, a claim on
either Policy or with respect to which failure on the part of the
Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication
should also be sent to the attention of the general counsel of
each of the Insurer and the Trustee and shall be marked to
indicate "URGENT MATERIAL ENCLOSED.")
(b) To IOS Capital:
IOS Capital, Inc.
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Vice President - Finance,
with a copy to the General Counsel
Facsimile: (000) 000-0000
with a copy to:
IKON Office Solutions, Inc.
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(c) To the Issuer:
IKON Receivables, LLC
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx XxXxxx
Facsimile: (000) 000-0000
with a copy to:
IKON Office Solutions, Inc.
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(d) To the Seller:
IKON Receivables-I, LLC
0000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx XxXxxx
Facsimile: (000) 000-0000
with a copy to:
IKON Office Solutions, Inc.
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(e) To the Indenture Trustee:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
Facsimile: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Severability. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 6.04. Governing Law. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
Section 6.05. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District
of
New York and any court in the State of New York located in the City and
County of New York, and any appellate court from any thereof, in any
action, suit or proceeding brought against it and to or in connection with
any of the Company Documents or the Transaction or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York state court or, to
the extent permitted by law, in such federal court. The parties hereto
agree that a final unappealable judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. To the
extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that the related documents or the subject matter
thereof may not be litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Service on IOS Capital may be made by mailing or delivering
copies of the summons and complaint and other process which may be served
in any suit, action or proceeding to the Servicer at the related addresses
listed in Section 6.02(b) and (c) herein. Such address may be changed by
the applicable party or parties, with the prior written consent of the
Insurer, by written notice to the other parties hereto.
(d) Nothing contained in this Insurance Agreement shall limit or
affect any party's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Company Documents
against any other party or its properties in the courts of any
jurisdiction.
Section 6.06. Consent of the Insurer. In the event that the consent of the
Insurer is required under any of the Company Documents, the determination
whether to grant or withhold such consent shall be made by the Insurer in its
sole discretion without any implied duty towards any other Person, except as
otherwise expressly provided therein.
Section 6.07. Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. Headings. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation.
Section 6.09. Trial by Jury Waived. Each party hereby waives, to the
fullest extent permitted by law, any right to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
any of the Company Documents or any of the transactions contemplated thereunder.
Each party hereto (A) certifies that no representative, agent or attorney of any
party hereto has represented, expressly or otherwise, that it would not, in the
event of litigation, seek to enforce the foregoing waiver and (B) acknowledges
that it has been induced to enter into the Company Documents to which it is a
party by, among other things, this waiver.
Section 6.10. Limited Liability. No recourse under any Company Document
or the Underwriting Agreement shall be had against, and no personal liability
shall attach to, any officer, employee, director, affiliate or shareholder of
any party hereto, as such, by the enforcement of any assessment or by any legal
or equitable proceeding, by virtue of any statute or otherwise in respect of any
of the Company Documents or the Underwriting Agreement, the Notes or the
Policies, it being expressly agreed and understood that each Company Document or
the Underwriting Agreement is solely a corporate obligation of each party
hereto, and that any and all personal liability, either at common law or in
equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches of any party hereto of any
obligations under any Company Document or the Underwriting Agreement is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.11. Entire Agreement. This Insurance Agreement and the Policies
set forth the entire agreement between the parties with respect to the subject
matter hereof and thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
Section 6.12. Indenture Trustee. The Indenture Trustee hereby acknowledges
and agrees to perform all its obligations and duties pursuant to the Company
Documents to which it is a party thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as
of the day and year first above mentioned.
Ambac Assurance Corporation,
as Insurer
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxx
---------------------------
Title: Vice President
--------------------------
IOS Capital, Inc.,
as Originator and as Servicer
By: /s/ Xxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxx
---------------------------
Title: Treasurer
--------------------------
IKON Receivables, LLC,
as Issuer
By: IKON Receivables Funding, Inc.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
---------------------------
Title: Treasurer
--------------------------
IKON Receivables-I, LLC,
By: IKON Receivables Funding, Inc.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
---------------------------
Title: Treasurer
--------------------------
Xxxxxx Trust and Savings Bank,
not in its individual capacity,
but solely as Indenture Trustee
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
---------------------------
Title: Vice President
--------------------------
