Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[x] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number - 0-12321
ANUHCO, INC.
State of Incorporation - Delaware
IRS Employer Identification No. - 46-0278762
9393 West 110th Street, Suite 100
Overland Park, Kansas 66210
Telephone Number - (913) 451-2800
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x . No.___.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Anuhco, Inc.
Common Stock, $0.01 par value
7,509,670 shares outstanding
as of August 9, 1995
Form 10-Q
Contains 17 pages
</PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Periods Ended June 30
(In Thousands, Except Per Share Data)
<CAPTION>
Second Quarter Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenue......................... $24,569 $25,174 $49,200 $46,357
Operating Expenses........................ 24,086 23,330 47,748 43,778
Operating Income.......................... 483 1,844 1,452 2,579
Nonoperating Income (Expense)
Interest income......................... 546 63 1,158 112
Interest expense........................ ( 63) ( 39) ( 66) ( 79)
Gain on sale of property and
equipment, net........................ 22 7 42 14
Other, net.............................. -- -- 1 1
Total nonoperating income (expense)... 505 31 1,135 48
Income from Continuing Operations
before Income Taxes..................... 988 1,875 2,587 2,627
Income Tax Provision (Note 2)............. 198 -- 518 --
Income from Continuing Operations......... 790 1,875 2,069 2,627
Income from Discontinued Operations
(Note 6)................................ -- 1,250 -- 1,250
Net Income................................ $ 790 $ 3,125 $ 2,069 $ 3,877
Average Common Shares Outstanding (Note 5) 7,555 7,543 7,554 7,543
Net Income Per Share from Continuing
Operations............................. $0.10 $0.25 $0.27 $0.35
Net Income Per Share from Discontinued
Operations............................. $0.00 $0.16 $0.00 $0.16
Net Income Per Share...................... $0.10 $0.41 $0.27 $0.51
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</PAGE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 Dec. 31
1995 1994
ASSETS (In Thousands)
<S> <C> <C>
Current Assets
Cash and temporary cash investments........... $ 3,724 $11,365
Short term investments........................ 30,834 26,893
Freight accounts receivable, less allowance
for doubtful accounts of $447 and $389,
respectively............................... 8,963 8,675
Finance accounts receivable, less allowance
for doubtful accounts of $226.............. 8,276 --
Other current assets.......................... 1,232 983
AFS Net Assets (Note 6)....................... 14,313 21,095
Total current assets....................... 67,342 69,011
Operating Property, at Cost
Revenue equipment............................. 18,756 15,939
Land.......................................... 2,826 2,761
Structures and improvements................... 7,408 6,859
Other operating property...................... 4,592 4,097
33,582 29,656
Less accumulated depreciation.............. (16,525) (15,239)
Net operating property................... 17,057 14,417
Long-Term Obligation Receivable................. -- 1,270
Intangibles and Other Assets (Note 7)........... 3,391 74
$87,790 $84,772
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable.............................. $ 957 $ 906
Accrued payroll and fringes................... 5,744 5,775
Claims and insurance accruals................. 304 247
Income tax payable............................ 370 --
Other accrued expenses........................ 909 425
Total current liabilities.................. 8,284 7,353
Shareholders' Equity
Preferred stock with $0.01 par value, author-
ized 1,000,000 shares, none outstanding..... -- --
Common stock with $0.01 par value, authorized
13,000,000 shares, outstanding 7,557,070 and
7,552,920 shares, respectively (Note 5)..... 76 76
Paid-in capital............................... 5,357 5,339
Retained earnings............................. 74,073 72,004
Total shareholders' equity................. 79,506 77,419
$87,790 $84,772
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</PAGE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the First Six Months Ended June 30
<CAPTION>
1995 1994
(In Thousands)
<S> <C> <C>
Cash Flows From Operating Activities -
Net income................................... $ 2,069 $ 3,877
Adjustments to reconcile net income to net
cash provided by operating activities -
Gain on sale of assets..................... ( 42) ( 14)
Depreciation and amortization.............. 1,335 1,112
Provision for doubtful accounts receivable. 109 --
Net increase (decrease) from change in
other working capital items affecting
operating activities.................... ( 250) ( 289)
Income from discontinued
operations (Note 6)..................... -- (1,250)
Net Cash Provided(Used) by operating activities 3,221 3,436
Cash Flows from Investing Activities -
Proceeds from discontinued operations
(Note 6)................................... 6,782 1,250
Purchase of finance subsidiary and related
software/service agreement................. (11,216) --
Purchase of operating property............... ( 3,772) (4,627)
Short-term investments, net.................. ( 3,941) (1,000)
(12,147) (4,377)
Cash Flows from Financing Activities -
Repayment of debt............................ -- ( 560)
Collection of long-term obligation receivable 1,270 --
Other........................................ 15 --
1,285 ( 560)
Net Increase (Decrease) In Cash and
Temporary Cash Investments................... ( 7,641) (1,501)
Cash and Temporary Cash Investments at
beginning of period.......................... 11,365 4,708
Cash and Temporary Cash Investments
at end of period............................. $ 3,724 $ 3,207
Cash Paid During the Period for:
Interest..................................... $ -- $ 79
Income Taxes................................. 97 43
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</PAGE>
<TABLE>
ANUHCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Periods Ended June 30
<CAPTION>
Second Quarter Six Months
1995 1994 1995 1994
(In Thousands)
<S> <C> <C> <C> <C>
Common Stock -
Balance at beginning and end of
period.............................. $ 76 $ 75 $ 76 $ 75
Paid-in Capital -
Balance at beginning of period........ $ 5,348 $ 5,321 $ 5,339 $ 5,319
Issuance of common shares under the
Incentive Stock Plan................ 9 1 18 3
Balance at end of period.............. $ 5,357 $ 5,322 $ 5,357 $ 5,322
Retained Earnings -
Balance at beginning of period........ $73,283 $12,416 $72,004 $11,664
Net Income............................ 790 3,125 2,069 3,877
Balance at end of period.............. $74,073 $15,541 $74,073 $15,541
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</PAGE>
ANUHCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principles of Consolidation
The consolidated financial statements include Anuhco and all of its
subsidiary companies ("the Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
The condensed financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC") and have not been examined or
reviewed by independent public accountants. In the opinion of
management, all adjustments necessary to present fairly the results
of operations have been made.
Pursuant to SEC rules and regulations, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted from these statements
unless significant changes have taken place since the end of the
most recent fiscal year. Anuhco believes that the disclosures
contained herein, when read in conjunction with the financial
statements and notes included, or incorporated by reference, in
Anuhco's Form 10-K, filed with the SEC on March 10, 1995, are
adequate to make the information presented not misleading. It is
suggested, therefore, that these statements be read in conjunction
with the statements and notes included, or incorporated by
reference, in the aforementioned report on Form 10-K.
2. Income Taxes
The Company accounts for income taxes in accordance with the
liability method as required in the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". The
impact of significant temporary differences and carryforwards
representing deferred tax assets and liabilities is determined
utilizing the enacted tax rates expected to be in effect when such
differences reverse. At December 31, 1994 the Company had utilized
substantially all of its net operating loss and tax credit
carryforwards, but anticipated the generation of additional tax
attributes during 1995 from the continued winddown of its
subsidiary, American Freight System, Inc. ("AFS") - See Note 6.
The provision for income taxes during the second quarter and first
six months represents the estimated tax provision, net of any such
additional tax attributes to be generated by AFS.
3. Profit Sharing
In September 1988, the employees of Crouse Cartage Company ("Crouse
Cartage"); a wholly owned subsidiary of Anuhco, approved the
establishment of a profit sharing plan ("the Plan"). The Plan is
structured to allow all employees (union and non-union) to ratably
share 50% of Crouse Cartage's income before income taxes (excluding
extraordinary items and gains or losses on the sale of assets) in
return for a 15% reduction in their wages. Plan distributions are
made on a quarterly basis. The Plan was recertified in 1991 and
1994, and shall continue in effect at least through March 31, 1998,
or until a replacement of the Collective Bargaining Agreement is
reached between the parties, whichever is later. The accompanying
consolidated balance sheet for the period ended June 30, 1995
includes an accrual for profit sharing costs of $1,021,507. The
accompanying consolidated statements of income include profit
sharing costs of $1,021,507 and $2,186,690 for the second quarter
and six months of 1995, respectively.
4. Revolving Credit Agreement
In September 1988, Crouse Cartage entered into a multi-year credit
agreement with a commercial bank which provided for maximum
borrowings equaling the lesser of $2,500,000 or the borrowing base,
as defined in such agreement. In July, 1994 the term of this
agreement was extended to June 30, 1996. There was no outstanding
balance on this revolving line of credit at June 30, 1995.
5. Shareholders' Equity
Income per share is based on the average number of common shares
outstanding during each period. The average number of common
shares so computed was 7,555,234 and 7,554,424 for the quarter and
year to date periods ending June 30, 1995, respectively, and
7,543,470 and 7,543,006 for the quarter and year to date periods
ending June 30, 1994, respectively.
6. AFS Net Assets
Under the provisions of a Joint Plan of Reorganization ("the Joint
Plan"), AFS is responsible for the administration of pre-July 12,
1991 creditor claims and conversion of assets owned before that
date. As claims are allowed and cash is available, distributions
to the creditors occur. The Joint Plan also provides for
distributions to Anuhco as unsecured creditor distributions occur
in excess of 50% of allowed claims. Anuhco also receives the full
benefit of any remaining assets of AFS through its ownership of AFS
stock, if unsecured creditors receive distributions, including
interest, equivalent to 130% of their claims.
AFS has made full payment of all its resolved claims and
liabilities. In June 1995, AFS paid an additional dividend of $6.8
million to Anuhco. The remaining AFS net assets are estimated to
have net realizable value of $14.3 million. The primary assets
include over $14 million in cash and deposits and $4 million of
receivables. Gross unresolved claims, primarily related to
workers' compensation insurance coverage, are approximately $10
million.
AFS is in the process of resolving these claims, however until this
process is completed the amount of liabilities cannot be
ascertained. The ultimate resolution of the amounts, validity and
priority of recorded liabilities and other claims is uncertain at
this time. Accordingly, AFS net assets reflect estimated amounts
due on such liabilities and claims.
7. Acquisition of Premium Finance Subsidiary
On May 31, 1995, Anuhco completed the acquisition of all of the
issued and outstanding stock of Agency Premium Resource, Inc. and
Subsidiary ("APR"). The purchase price, together with payments for
certain services to be rendered by the sellers after closing, was
approximately $11.5 million. In addition to the Stock Purchase
Agreement by which Anuhco acquired all of the APR stock, Anuhco
entered into a consulting agreement with Seafield Capital
Corporation ("Seafield"), the former majority shareholder of APR,
and an employment agreement with C. Ted McCarter, APR's president
and chief executive officer. Under the former, Anuhco is entitled
to consult with Seafield regarding APR for three years. Under the
latter, APR is entitled to the continuation of Mr. McCarter's
services as president and chief executive officer for five years.
This transaction was accounted for as a purchase. Anuhco utilized
a portion of its available cash to consummate the purchase. The
terms of the acquisition and the purchase price resulted from
negotiations between Anuhco and the APR shareholders, Seafield and
APR's Chief Executive Officer, C. Ted McCarter.
APR offers premium financing and related services through approved
insurance agencies, primarily throughout the midwestern United
States. Its wholly owned subsidiary, Agency Services, Inc.,
provides motor vehicle report services throughout the same
geographic area.
In connection with the purchase of APR, Anuhco recorded goodwill of
$2.3 million, which will be amortized on the straight-line basis
over 15 years, and a software and service agreement of $1.0
million, which will be amortized over 5 years.
APR has an agreement with a financial institution whereby it can
sell undivided interests in a designated pool of accounts
receivable, up to a maximum of $30 million, on an ongoing basis.
Anuhco has assumed certain guarantees of the securitized
receivables, $21.5 million as of June 30, 1995. The securitized
receivables are reflected as sold and therefore not included in the
accompanying consolidated balance sheet.
The following reflects the operating results of Anuhco for the
second quarter and six months ended June 30, 1995 and 1994,
assuming the acquisition occurred as of the beginning of each of
the respective periods:
<TABLE>
Pro Forma Operating Results
(Unaudited)
(in thousands, except per share data)
<CAPTION>
Second Quarter Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenue....... $25,247 $26,279 $50,785 $48,273
Income from Continuing
Operations............ 865 2,034 2,209 2,762
Income from Discontinued
Operations............ -- 1,250 -- 1,250
Net Income.............. $ 865 $ 3,284 $ 2,209 $ 4,012
Net Income Per Share:
Continuing Operations.. $0.11 $0.27 $0.29 $0.37
Discontinued Operations 0.00 0.16 0.00 0.16
Total................. $0.11 $0.43 $0.29 $0.53
</TABLE>
The pro forma results of operations are not necessarily indicative
of the actual results that would have been obtained had the
acquisition been made at the beginning of the respective periods,
or of results which may occur in the future.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Second quarter and six months ended June 30, 1995 compared to the
second quarter and six months ended June 30, 1994.
With the acquisition of APR on May 31, 1995, Anuhco now operates in
two distinct industries; transportation, through its subsidiary,
Crouse Cartage; and insurance premium finance, through its
subsidiary, APR.
Transportation - A comparative summary of transportation operating
expenses as a percent of transportation operating revenue follows:
<TABLE>
<CAPTION>
Percent of Operating Revenue
Second Quarter Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Salaries, wages and
employee benefits.......... 55.6% 53.6 55.3% 53.8%
Operating supplies
and expenses............... 11.1 10.2 11.6 10.9
Operating taxes
and licenses............... 2.7 2.6 2.7 2.7
Insurance and claims........ 2.3 2.2 2.2 2.3
Depreciation................ 2.7 2.4 2.6 2.4
Purchased transportation.... 21.7 21.3 21.4 21.9
Total operating expenses.... 96.1% 92.3% 95.8% 94.0%
</TABLE>
Operating Revenue - The changes in transportation operating revenue
are summarized in the following table (in thousands):
<TABLE>
<CAPTION>
Qtr 2 1995 Six Months 1995
vs. vs.
Qtr 2 1994 Six Months 1994
<S> <C> <C>
Increase (decrease) from:
Less-than-truckload shipments $ (919) $ 1,652
Less-than-truckload revenue
per shipment............... (117) 491
Truckload revenues........... 100 369
Net increase (decrease).... $ (936) $ 2,512
</TABLE>
Less-than-truckload ("LTL") operating revenues fell by 5.2% in the
second quarter of 1995 as compared to the same period of 1994.
This decline for the current quarter is in comparison to the record
quarter achieved by Crouse Cartage in 1994 due to the teamsters
union strike against certain competitors and the closing of a
regional competitor. During the second quarter of 1994, Crouse
Cartage's freight volumes rose over 30%, compared to the same
period of 1993, with minimal rate discounting due to the shortage
of capacity within the industry. While Crouse Cartage has
maintained a substantial portion of the additional freight volumes,
LTL tonnage fell 3.4% in the second quarter of 1995. The trucking
industry, including Crouse Cartage, was adversely impacted by the
softening of the economy and competitive market pressures on
freight rates during the second quarter of 1995.
LTL operating revenues rose 5.9% in the six months ended June 30,
1995, as compared to the six months ended June 30, 1994. This was
the net result of the continuation of the post-strike impacts
during the first quarter of 1995 in comparison to the pre-strike
first quarter of 1994 and the relative decline in second quarter
1995 revenues discussed above. Total LTL tonnage was 6.7% higher
for the six months of 1995.
Truckload operating revenues rose 1.9% and 3.6%, respectively, for
the second quarter and six months of 1995, on increased numbers of
TL shipments hauled of 1.2% and 3.6%, respectively. A 0.7%
improvement in TL revenue per shipment in the second quarter of
1995 added to the volume increase in that period.
Operating Expenses - Crouse Cartage's operating expenses as a
percentage of operating revenue, or operating ratio, rose from
92.3% to 96.1%, for the second quarter, and from 94.0% to 95.8%,
for the six months of 1994 and 1995, respectively. These increases
are primarily the result of higher salaries, wages and employee
benefits costs caused by; (1) a contractual increase in wages
effective April 1, 1995, and (2) contractual increase as a
percentage of union scale for those additional employees hired to
handle the increased freight volumes during and after the April,
1994 teamsters strike. Operating supplies and expenses also
increased as a percentage of operating revenue for the second
quarter and six months of 1995 as compared to the same periods of
1994, primarily due to higher fuel costs.
Premium Finance - The operating results of APR for the month of
June 1995 are included in the second quarter and six months 1995
operating results. During the month of June 1995, APR financed
$5.2 million in insurance premiums. APR's operating results were
not material to Anuhco's consolidated operating revenue or net
income for the second quarter or six months ended June 30, 1995.
In connection with the acquisition of APR, Anuhco recorded one-time
expenses of approximately $300,000.
Other - As a result of its strong cash position, Anuhco recorded
substantial increases in interest income for the second quarter and
six months ended June 30, 1995, from the corresponding periods of
1994. Anuhco's effective tax rate for the second quarter and six
months of 1995 was 20%. No provision was recorded during those
periods of 1994 due to the company's utilization of certain tax net
operating loss attributes.
FINANCIAL CONDITION
The Company's financial condition remained strong at June 30, 1995
with no debt and over $34 million in cash and investments at the
Anuhco level, as well as over $14 million in cash and investments
included in the net assets of AFS. In June 1995, AFS paid a
dividend of $6.8 million to Anuhco. During the second quarter of
1995 Anuhco completed the acquisition of APR and related software
and services using $11.5 million in available funds. In addition,
during the first six months of 1995, Crouse Cartage has purchased
$3.8 million of operating property and equipment, without incurring
any long term indebtedness.
In connection with the acquisition of APR, the Company became the
guarantor of an agreement under which APR sells undivided interests
in a designated pool of accounts receivable on an ongoing basis.
The maximum allowable receivables to be sold under this agreement
is $30 million and a total of $21.5 million of such receivables had
been securitized as of June 30, 1995. This agreement has been
extended by amendment to September 30, 1995. The Company has
pledged $22.8 million of short-term investments to provide
additional security to the receivable purchaser until a replacement
financing arrangement is obtained. The Company is currently
negotiating a replacement credit facility which it expects to close
under similar terms. The Company has sufficient available cash
and investments to finance APR's operations, even if an acceptable
financing arrangement is not closed prior to the termination of the
current arrangement.
On June 26, 1995, the Company adopted a program to repurchase up to
10% of its outstanding shares of common stock. This program was
activated in July 1995 and is being funded from available cash and
investments.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Reference is made to Item 3 of the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994.
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Shareholders was held on May 23, 1995.
(b) The board of directors previously reported to the Commission
was re-elected in its entirety.
(c) The matters voted upon at the Annual Meeting were as follows:
(1) All seven nominees for director were re-elected as
follows:
<TABLE>
<CAPTION>
Shares Voted
Nominee For Withheld
<S> <C> <C>
Joe J. Brown 5,623,008 184,899
William D. Cox 5,739,757 68,150
Lawrence D. ("Larry") Crouse 5,739,035 68,872
Donald M. Gamet 5,734,938 72,969
Roy R. Laborde 5,739,758 68,149
Eleanor Brantley Schwartz 5,736,508 71,399
Walter P. Walker 5,738,036 69,871
</TABLE>
(2) The selection of Arthur Andersen, LLP, as independent
public accountants was ratified with 5,633,206 shares
voting for, 46,979 shares voting against, 37,017 shares
abstaining and 90,705 shares not voted by brokers.
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2(a) Stock Purchase Agreement dated May 23, 1995 by
and among Anuhco, Inc., Seafield Capital
Corporation and C. Ted McCarter (incorporated by
reference from Exhibit 2(a) to the Current Report
on Form 8-K dated May 31, 1995 filed by the
Company with the Commission).
10(a) Consulting and Assignment Agreement dated May 31,
1995 by and between Seafield Capital Corporation
and Anuhco, Inc. (incorporated by reference from
Exhibit 10(a) to the Current Report on Form 8-K
dated May 31, 1995 filed by the Company with the
Commission).
10(b)(i) Receivables Purchase Agreement by and among
Agency Premium Resource, Inc., Seafield Capital
Corporation and Continental Bank N.A. dated July
16, 1993.
10(b)(ii) First Amendment to Receivables Purchase Agreement
by and among Agency Premium Resource, Inc.,
Seafield Capital Corporation and Continental Bank
N.A. dated September 15, 1993.
10(b)(iii) Second Amendment to Receivables Purchase
Agreement by and among Agency Premium Resource,
Inc., Seafield Capital Corporation and
Continental Bank N.A. dated August 29, 1994.
10(b)(iv) Third Amendment to Receivables Purchase Agreement
and Assumption Agreement by and among Agency
Premium Resource, Inc., Seafield Capital
Corporation, Anuhco, Inc. and Bank of America
Illinois dated May 31, 1995.
19(a) Report to Shareholders for the Second Quarter,
1995, dated August 10, 1995.
27 Financial Data Schedule
(b) Reports on Form 8-K
(1) A Current Report on Form 8-K, dated May 23, 1995, was
filed on May 23, 1995 to report the execution of
definitive agreements for the acquisition of all of the
outstanding stock of Agency Premium Resource, Inc.
and Subsidiary.
(2) A Current Report on Form 8-K, dated May 31, 1995, was
filed on June 15, 1995 to report the completion of the
acquisition of all of the outstanding stock of Agency
Premium Resource, Inc. and Subsidiary.
(3) Amendment Number 1 to Current Report on Form 8-K, dated
May 31, 1995, was filed on July 21, 1995 to report the
completion of the acquisition of all of the outstanding
stock of Agency Premium Resource, Inc. and Subsidiary.
The financial statements filed were as follows:
I. Historical Financial Statements of Agency Premium
Resource, Inc. and Subsidiary (business acquired).
Condensed Interim Financial Statements (unaudited)
Consolidated Balance Sheet as of March 31, 1995
Consolidated Statements of Earnings for the Three
Months Ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1995 and 1994
Notes to Condensed Interim Financial Statements
Annual Financial Statements -
Report for KPMG Peat Marwick LLP, dated February 9,
1995
Consolidated Balance Sheets as of December 31, 1994
and 1993
Consolidated Statements of Earnings for the years
ended December 31, 1994 and 1993
Consolidated Statements of Cash Flows for the years
ended December 31, 1994 and 1993
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1994 and 1993
Notes to Consolidated Financial Statements
II. Condensed Pro Forma Financial Statements of Anuhco,
Inc. and Agency Premium Resource, Inc. (Unaudited)
Description of Pro Forma Financial Statements
Condensed Pro Forma Balance Sheet at March 31, 1995
Condensed Pro Forma Statement of Earnings for the
year ended December 31, 1994
Condensed Pro Forma Statement of Earnings for the
three months ended March 31, 1995
Notes to Pro Forma Financial Statements
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Anuhco, Inc.
Registrant
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil, President
and Chief Financial Officer
Date: August 11, 1995
</PAGE>
EXHIBIT INDEX
Assigned
Exhibit
Number Description of Exhibit
2(a) Stock Purchase Agreement dated May 23, 1995 by and
among Anuhco, Inc., Seafield Capital Corporation and
C. Ted McCarter (incorporated by reference from
Exhibit 2(a) to the Current Report on Form 8-K dated
May 31, 1995 filed by the Company with the
Commission).
10(a) Consulting and Assignment Agreement dated May 31,
1995 by and between Seafield Capital Corporation and
Anuhco, Inc. (incorporated by reference from Exhibit
10(a) to the Current Report on Form 8-K dated May
31, 1995 filed by the Company with the Commission).
10(b)(i) Receivables Purchase Agreement by and among Agency
Premium Resource, Inc., Seafield Capital Corporation
and Continental Bank N.A. dated July 16, 1993.
10(b)(ii) First Amendment to Receivables Purchase Agreement by
and among Agency Premium Resource, Inc., Seafield
Capital Corporation and Continental Bank N.A. dated
September 15, 1993.
10(b)(iii) Second Amendment to Receivables Purchase Agreement
by and among Agency Premium Resource, Inc., Seafield
Capital Corporation and Continental Bank N.A. dated
August 29, 1994.
10(b)(iv) Third Amendment to Receivables Purchase Agreement
and Assumption Agreement by and among Agency Premium
Resource, Inc., Seafield Capital Corporation,
Anuhco, Inc. and Bank of America Illinois dated May
31, 1995.
19(a) Report to Shareholders for the Second Quarter, 1995,
dated August 10, 1995.
27 Financial Data Schedule
</PAGE/
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANUHCO, INC.
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000719271
<NAME> ANUHCO, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3724
<SECURITIES> 30834
<RECEIVABLES> 17912
<ALLOWANCES> 673
<INVENTORY> 0
<CURRENT-ASSETS> 67342
<PP&E> 33582
<DEPRECIATION> 16525
<TOTAL-ASSETS> 87790
<CURRENT-LIABILITIES> 8284
<BONDS> 0
<COMMON> 76
0
0
<OTHER-SE> 79430
<TOTAL-LIABILITY-AND-EQUITY> 87790
<SALES> 0
<TOTAL-REVENUES> 49200
<CGS> 0
<TOTAL-COSTS> 47748
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66
<INCOME-PRETAX> 2587
<INCOME-TAX> 518
<INCOME-CONTINUING> 2069
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2069
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
Exhibit 10(b)(i)
RECEIVABLES PURCHASE AGREEMENT
Dated as of July 16, 1993
Among
AGENCY PREMIUM RESOURCE, INC.
as Seller
and
SEAFIELD CAPITAL CORPORATION
as Parent
and
CONTINENTAL BANK N.A.
as Purchaser
</PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
THE COMMITMENT
1.01 Commitment 1
1.02 Purchase and Reinvestment Limits 2
1.03 Investment Multiples; Number of Undivided Interest 2
1.04 Procedures for Making Purchases from Seller 2
1.05 Commitment Termination Date 3
1.06 Voluntary Termination of Commitment or
Reduction of Purchase Limit 3
1.07 Limitation of Ownership Interest 3
ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE
2.01 Undivided Interest 4
2.02 Purchaser's Share 4
2.03 Frequency of Computation of Undivided Interest 6
2.04 Purchaser's Investment 6
2.05 Earned Discount 7
2.06 Certain Definitions Related to Earned Discount 7
2.07 Servicer's Fee 11
ARTICLE III
SETTLEMENTS
3.01 Settlement Procedures for Collections
of Principal Receivables 11
3.02 Settlement Procedures for Collections
of Finance Charge Receivables 12
3.03 General Settlement Procedures; Reduction of
Purchaser's Investment 13
3.04 Reporting 16
3.05 Payments and Computations, Etc 16
3.06 Dividing or Combining Undivided Interests 17
3.07 Treatment of Collections and Deemed Collections 17
3.08 Repurchases 18
ARTICLE IV
FEES AND YIELD PROTECTION
4.02 Yield Protection 20
ARTICLE V
CONDITIONS OF PURCHASES
5.01 Conditions Precedent to Effectiveness 22
5.02 Conditions Precedent to All Purchases and
Reinvestments 23
ARTICLE VI
PRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of Seller 24
6.02 Representations and Warranties of Parent 28
ARTICLE VII
GENERAL COVENANTS
7.01 Affirmative Covenants of Seller 30
7.02 Reporting Requirements of Seller 31
7.03 Negative Covenants of Seller 33
7.04 Grant of Security Interest 35
7.05 Reporting Requirements of Parent 35
7.06 Affirmative Covenants of Parent 35
ARTICLE VIII
ADMINISTRATION AND COLLECTION
8.01 Designation of Servicer 36
8.02 Duties of Servicer 37
8.03 Rights of the Purchaser 38
8.04 Responsibilities of Seller 39
8.05 Further Action Evidencing Purchases 40
8.06 Application of Collections 40
ARTICLE IX
TERMINATION EVENTS
9.01 Termination Events 41
9.02 Remedies 43
ARTICLE X
ASSIGNMENT OF UNDIVIDED INTERESTS
10.01 Restrictions on Assignments 43
10.02 Rights of Assignee 43
10.03 Allocation of Payments 44
10.04 Notice of Assignment 44
10.05 Evidence of Assignment 44
ARTICLE XI
INDEMNIFICATION
11.01 Indemnities by Seller and Parent 44
ARTICLE XII
MISCELLANEOUS
12.01 Amendments, Etc. 47
12.02 Notices, Etc 47
12.03 No Waiver; Remedies 47
12.04 Binding Effect; Assignability 48
12.05 Governing Law 48
12.06 Costs, Expenses and Taxes 48
12.07 Captions and Cross References 49
12.08 Execution in Counterparts 49
12.09 Waiver of Jury Trial 49
12.10 Consent to Jurisdiction; Waiver of Immunities 49
</PAGE>
LIST OF EXHIBITS
EXHIBIT IA Form of Assignment
EXHIBIT IB Form of Certificate of Assignments
EXHIBIT IC Forms of Contracts
EXHIBIT ID Description of Credit and Collection Policy
EXHIBIT IE Form of Lock-Box Agreement
EXHIBIT IF-1 Form of Periodic Report
EXHIBIT IF-2 Form of Run Off Statement
EXHIBIT IG Form of Concentration Exceptions Certificate
EXHIBIT 5.01(i) Form of Opinion of Counsel for Seller
EXHIBIT 5.01(j) Form of Opinion of Counsel for the Purchaser
EXHIBIT 5.01(m) Form of Accountant's Letter
EXHIBIT 5.01(o) Form of Pay-Off Letter
EXHIBIT 6.01(i) Description of Material Adverse Changes of
Seller
EXHIBIT 6.01(j) Description of Litigation of Seller
EXHIBIT 6.01(n) List of Offices of Seller where Records are
Kept
EXHIBIT 6.01(o) List of Lock-Box Banks
EXHIBIT 6.02(h) Description of Material Adverse Changes of
Parent
EXHIBIT 6.02(i) Description of Litigation of Parent
</PAGE>
RECEIVABLES PURCHASE AGREEMENT
Dates as of July 16, 1993
THIS IS A RECEIVABLES PURCHASE AGREEMENT ("Agreement") among
AGENCY PREMIUM RESOURCE, INC., a Kansas corporation having its
principal office at 6310 Lamar Avenue, Suite 210, Overland Park,
Kansas 66202 ("Seller"), SEAFIELD CAPITAL CORPORATION, a Missouri
corporation having its principal office at 2600 Grand Avenue,
Suite 500, P.O. Box 410949, Kansas City, Missouri 64141
("Parent"), and CONTINENTAL BANK N.A., a national banking
association having its principal office at 231 South LaSalle
Street, Chicago, Illinois 60697 ("Continental Bank"), as
Purchaser (in such capacity, the "Purchaser"). Unless otherwise
indicated, certain terms that are capitalized and used throughout
this Agreement are defined in Schedule I.
Background
1. Seller has, and expects to have, Pool Receivables in
which Seller intends to sell Undivided Interests. Purchaser,
subject to the terms and conditions hereof, desires to purchase
such Undivided Interests from Seller.
2. Seller and Purchaser also desire that subject to the
terms and conditions of this Agreement, certain of the daily
Collections in respect of such Undivided Interests be reinvested
in Pool Receivables through the sale by Seller to the Purchaser
of additional undivided interests in the Pool Receivables, such
daily reinvestment of Collections to be effected by an automatic
daily adjustment to Purchaser's Undivided Interests, and to be
intended to permit Purchaser to maintain its Purchaser's
Investments fully invested in uncollected Pool Receivables.
3. In order to induce the Purchaser to enter into this
Agreement and to purchase Undivided Interests hereunder, Parent
has agreed to provide to Purchaser certain limited
indemnification, as further described herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
THE COMMITMENT
SECTION 1.01 Commitment. On the terms and subject to the
conditions set forth in this Agreement (including Article V):
(a) Purchases. Purchaser shall purchase from Seller
undivided, percentage interests in Pool Receivables by making
Purchases of Undivided Interests (as defined in Section 2.01)
from time to time during the period from the date hereof to the
Commitment Termination Date. Each such purchase and, as the
context may require, the purchase price paid by Purchaser to
Seller in respect thereof (determined pursuant to Section
1.04(b)), is herein called a "Purchase".
(b) Reinvestments. Pursuant to Section 3.01, Purchaser
shall make Reinvestments by permitting Servicer to cause certain
of the Collections in respect of the Undivided Interests then
owned by Purchaser to be applied to the purchase of additional
undivided percentage interests in the Pool Receivables, thereby
resulting in an appropriate readjustment of Purchaser's Undivided
Interests. Each such purchase of an additional Undivided
Interest in Principal Receivables pursuant to Section 3.01 is
herein called a "Reinvestment".
The Purchaser's obligation to make such Purchases and
Reinvestments is herein called the "Commitment".
SECTION 1.02 Purchase and Reinvestment Limits. Under no
circumstances shall Purchaser make any Purchase or Reinvestment
to the extent that, after giving effect to such Purchase or
Reinvestment, as the case may be,
(i) the Aggregate Purchaser's Investments under this
Agreement (as defined in Section 2.04) would exceed an
amount may be reduced pursuant to Section 1.06, or
(ii) the Aggregate Purchaser's Investments (as defined
in Section 2.04) would exceed the Purchase Limit.
SECTION 1.03 Investment Multiples: Number of Undivided
Interests. Each Undivided Interest created by purchase pursuant
to Section 1.04 shall have an initial related Purchaser's
Investment in an amount that is not less than $500,000. Undivided
Interests created by combination or division pursuant to Section
3.06 shall have an initial Purchaser's Investment in an amount
that is not less than $500,000. The number of Undivided
Interests owned by Purchaser having different Yield Periods
hereunder at any one time, after giving effect to any Purchase,
division or combination, shall not exceed 5.
SECTION 1.04 Procedures for Making Purchases from Seller.
(a) Notice of Purchase. Each Purchase of an Undivided
Interest from Seller by Purchaser shall be made on notice from
Seller to Purchaser received by Purchaser not later than 10:00
a.m. (Chicago time) two Business Days preceding the date of such
proposed Purchase. Each such notice of a proposed Purchase shall
specify the desired amount, date, and duration of the initial
Yield Period(s) for the resulting Undivided Interest. Purchaser
shall select the duration of such initial, and each subsequent,
Yield Period in its discretion; provided that, it shall use
reasonable efforts, taking into account market conditions, to
accommodate Seller's preferences.
(b) Amount of Purchase. The amount of each Purchase shall
be equal to the lesser of (x) the amount proposed by Seller
pursuant to Section 1.04(a) and (y) the maximum amount permitted
under Section 1.02.
(c) Funding of Purchase. On the date of each Purchase,
Purchaser shall, upon satisfaction of the applicable conditions
set forth in Article V, make available to the Seller at its
office at 231 South LaSalle Street in Chicago, Illinois the
amount of its Purchase (determined pursuant to Section 1.04(b))
in same day funds.
SECTION 1.05 Commitment Termination Date.
(a) The "Commitment Termination Date" shall be the earlier
to occur of (i) July 16, 1995 (herein, as the same may be
extended, called the "Scheduled Commitment Termination Date"),
and (ii) the date of termination of the Commitment pursuant to
Section 1.06 or 9.02.
(b) On July 16, 1994, the original Scheduled Commitment
Termination Date may be extended to July 16, 1996, and on each
July 16, occurring after July 16, 1994 the Scheduled Commitment
year (to the July 16, following the then scheduled Commitment
Termination Date), in each case, by written notice of request
given by Seller to Purchaser at least 45 days prior to such July
16, and written notice of acceptance given by the Purchaser to
Seller not later than 15 days prior to such July 16.
SECTION 1.06 Voluntary Termination of Commitment or
Reduction of Purchase Limit. Seller may, upon at least 30
Business Days' notice to Purchaser, terminate the Commitment in
whole or reduce in part the unused portion of the Purchase Limit;
provided, however, that (i) each partial reduction shall be in an
amount equal to $5,000,000 or an integral multiple thereof, and
(ii) after giving effect to such reduction, the remaining
Purchase Limit will not be less than $12,000,000.
SECTION 1.07 Limitation of Ownership Interest. Nothing in
this Agreement shall be interpreted as providing Purchaser with
an ownership interest or security interest in any Receivables
that are not Pool Receivables.
ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE
SECTION 2.01 Undivided Interest. For purposes of this
Agreement, "Undivided Interest" means, at any time, an undivided
percentage ownership interest at such time in (i) all then
outstanding Pool Receivables, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables. The
amount of such Undivided Interest shall mean, with respect to
Principal Receivables and Finance Charge Receivables, the
respective Purchaser's Shares determined pursuant to Section
2.02.
SECTION 2.02 Purchaser's Share.
(a)(i) As to any Undivided Interest, "Purchaser's Share"
shall mean, with respect to Principal Receivables, the percentage
calculated by dividing (x) the sum of (A) the Purchaser's
Investment plus (B) the Default Reserve (as determined pursuant
to paragraph (a)(iii) below), in each case as to such Undivided
Interest at the time of such computation, by (y) the Net Pool
Balance; provided that, Purchaser's Share with respect to
Principal Receivables shall not exceed 100%; and provided,
further, that on any day that is a Run Off Day, Purchaser's Share
with respect to Principal Receivables shall be deemed to be
Purchaser's Share with respect to Principal Receivables as of the
day immediately preceding the first Run Off Day to have occurred
during the then current Run Off Period.
On each day, subject to clause (a)(ii) next succeeding, as
to any Undivided Interest, "Purchaser's Share of Collections" on
account of Principal Receivables shall be equal to the product of
Receivables on such day and (y) the amount of the Collections on
account of Principal Receivables on such day.
(ii) On each day that is a Run Off Day after the occurrence
of the Commitment Termination Date, Seller shall deposit its
share of Collections on account of Principal Receivables in the
Run Off Collection Account. If the amount of Purchaser's Share
of Collections on account of Principal Receivables received or
deemed received on or prior to the date that each and every Pool
Receivable is scheduled to have amortized in accordance with the
related Contract shall be insufficient to reduce Aggregate
Purchaser's Investments to zero, then on such date Purchaser
shall withdraw funds from the Run Off Collections Account in the
amount of the lesser of (x) the amount of such deficiency
attributable to Purchaser's Share of Defaulted Receivables and
(y) 100% of the Collections then on deposit in the Run Off
Collection Account. The amount withdrawn from the Run Off
Collection Account shall be allocated among the Undivided
Interests pro rata according to their respective Purchaser's
Investments.
(iii) (A) The "Default Reserve" of any Undivided Interest on
any day means an amount determined as follows:
DR = (RP x PI)
where:
DR = the Default Reserve of such Undivided Interest on such
day;
RP = the Reserve Percentage at the close of business of
Purchaser on such day, as determined pursuant to
paragraph (iii)(B);
PI = the related Purchaser's Investment of such Undivided
Interest at the opening of business of Purchaser on
such day, as determined pursuant to Section 2.04;
B. The "Reserve Percentage" means, with respect to any
Settlement Date the greater of (i) 12% and (ii) 5 times the
highest Default Ratio on the last day of any of the 6 calendar
months preceding or ending on such day plus the Yield Deficiency;
where "Yield Deficiency" means, for any Settlement Period, the
product of (x) 2 and (y) the amount if any, by which (I) the sum
of, for such Settlement Period, (a) the weighted average rate
used to calculate the Program Fee plus (B) the weighted average
rate used to calculate the Servicer's Fee plus (C) the weighted
average Purchaser Rate, exceeds (II) the effective annual yield
rate on the Net Pool Balance (calculated by using Collections on
account of all Finance Charge Receivables during such Settlement
Period and the Net Pool Balance as of the beginning of such
Settlement Period, all expressed as a percentage). mean, on any
day with respect to Finance Charge Receivables, the
percentage calculated by dividing (x) the then unpaid Earned
Discount and Program Fee accrued with respect to such Undivided
Interest by (y) the then aggregate unpaid Earned Discount and
Program Fee accrued with respect to all Undivided Interests;
subject, however, to the applications to Earned Discount, Program
Fee, Servicer's Fee, Defaulted Receivables, and Designated
Obligations as provided for in Section 3.02.
On each day, as to any Undivided Interest, "Purchaser's
Share of Collections" on account of Finance Charge Receivables
shall be equal to the product of (x) the related Purchaser's
Share with respect to Finance Charge Receivables and (y) the
amount of the Collections on account of Finance Charge
Receivables received or deemed received on such day.
(c) As to any Undivided Interest (i) at such time as the
Purchaser's Investment equals zero, then the related Purchaser's
Share with respect to Principal Receivables shall equal zero, and
(ii) at such time as the related unpaid Earned Discount equals
zero, and no amounts are owing in respect of the related Program
Fee, Servicer's Fee or other amounts under this Agreement, then
the related Purchaser's Share with respect to Finance Charge
Receivables shall also equal zero.
The "related" Undivided Interest with respect to any of the
foregoing items shall mean the Undivided Interest as to which
such item is calculated.
SECTION 2.03 Frequency of Computation of Undivided
Interest. The respective Purchaser's Shares with respect to each
Undivided Interest shall be initially computed as of the opening
of business of Servicer on the date of Purchase of such Undivided
Interest from Seller. Thereafter until such Undivided Interest
shall be reduced to zero, such Purchaser's Shares shall be deemed
to be automatically recomputed as of the close of business of
Servicer on each day, and such Purchaser's Shares shall
constitute the percentage ownership interest in Pool Receivables
on such date held by the holder of the Certificate evidencing
such Undivided Interest. Such Purchaser's Shares shall remain
constant from the time as of which any such computation or
recomputation is made or deemed to be made until the time as of
which the next such recomputation, if any, shall be made or
deemed to be made.
SECTION 2.04 Purchaser's Investment. "Purchaser's
Investment" as to an Undivided Interest means, except to the
extent otherwise specified in the proviso to Section 2.05, an
amount equal to the original amount paid to Seller for such
Undivided Interest at the time of its acquisition by Purchaser
pursuant to Sections 1.01 and 1.04 and by Reinvestments pursuant
to Section 3.01, reduced from time to time by Collections
received and distributed on account of such Purchaser's
Investment pursuant to Sections 3.01 and 3.02.
(b) Purchaser's Investment shall not be considered reduced
by any distribution of any portion of Collections if at any time
such distribution is rescinded or must otherwise be returned for
any reason.
(d) The "related" Purchaser's Investment with regard to a
Yield Period or Undivided Interest means the Purchaser's
Investment calculated with regard to such Yield Period or
Undivided Interest, as the case may be.
SECTION 2.05 Earned Discount. Earned Discount shall accrue
on Purchaser's Investment of each Undivided Interest for each day
of each Yield Period. The "Earned Discount" for any Undivided
Interest for each day in a related Yield Period means an amount
determined as follows:
ED = [PI x PR x 1/360] + NSF (if any);
where:
ED = Earned Discount of such Undivided Interest at the
time of computation;
PI = the Purchaser's Investment of such Undivided
Interest on such day;
PR = the Purchaser Rate for such Undivided Interest on
such day during such Yield Period, as determined
pursuant to Section 2.06;
NSF = the Negative Spread Fee, if any, for such day, as
determined per Section 2.06.
provided, however, that if, pursuant to the definition of
"Purchaser Rate" in Section 2.06, different Purchaser Rates would
apply to different portions of such Undivided Interest, then
Earned Discount shall be calculated separately with respect to
each such portion, and the Earned Discount for such Undivided
Interest shall be the sum of the Earned Discounts so calculated
for such portions.
No provision of this Agreement or the Certificates shall require
the payment or permit the collection of Earned Discount in excess
of the maximum permitted by applicable law. Earned Discount for
any Undivided Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or
must otherwise be returned for any reason.
SECTION 2.06 Certain Definitions Related to Earned
Discount. For purposes hereof, the following terms shall have
the meanings as indicated:
"Purchaser Rate" for any Yield Period for any related
Undivided Interest (or portion thereof) means:
(a) in the case of an Undivided Interest other than
one referred to in clause (b) of this definition, the Bank
Rate for such Undivided Interest for such Yield Period; or
(b) in the case of an Undivided Interest on any day
when any Termination Event or Unmatured Termination Event
shall have occurred and be continuing, a rate per annum
equal for each day during such Yield Period to the Alternate
Reference Rate in effect on such day plus 2% per annum.
"Bank Rate" for any Yield Period for the related Undivided
Interest means an interest rate per annum equal to the Eurodollar
Rate (Reserve Adjusted) for such Yield Period (provided, however,
that if (x) it shall become unlawful for such Purchaser to obtain
funds in the interbank eurodollar market in order to make, fund
or maintain any Purchase hereunder, or if such funds shall not be
reasonably available to such Purchaser or (y) there shall not be
time prior to the commencement of an applicable Yield Period to
determine a Eurodollar Rate in accordance with its terms, then
the "Bank Rate" for any Yield Period for such Undivided Interest
shall be equal to a rate ("Alternate Bank Rate") of .10% per
annum, plus the Domestic CD Rate (Adjusted) for such Yield
Period; provided, further, however, that if such Alternate Bank
Rate shall not then be available or upon request of Seller and
consent by Purchaser, the "Bank Rate" for any Yield Period for
such Undivided Interest, shall be a rate equal to the Alternate
Reference Rate).
"Eurodollar Rate (Reserve Adjusted)" means, with respect to
any Undivided Interest, for any Yield Period, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where: "Eurodollar Rate" means, with respect to any Undivided
Interest for any Yield Period, the rate per annum at which Dollar
deposits in immediately available funds are offered to the
Eurodollar Office of Purchaser two Eurodollar Business Days prior
to the beginning of such Yield Period by major banks in the
interbank eurodollar market as at or about 10:00 a.m., Chicago
time for delivery on the first day of such Yield Period, for the
number of days comprised therein and in an amount equal or
comparable to the amount of the related Purchaser's Investment of
such Undivided Interest for such Yield Period. "Eurodollar
Business Day" means a Business Day of the year on which dealings
are carried on in the interbank eurodollar market. "Eurodollar
Reserve Percentage" means, with respect to each Yield Period, the
then applicable percentage (expressed as a decimal) prescribed by
the Board of Governors of the Federal Reserve System (or any
successor) for determining reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D or any other
then applicable regulation of the Board of Governors (or any
successor) that prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
"Domestic CD Rate (Adjusted)" means, with respect to any
Undivided Interest, for any Yield Period, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
Domestic CD Rate = Domestic CD Rate + Assessment
(Adjusted) 1-Reserve Rate
Requirement
where:
"Domestic CD Rate" means, with respect to any Undivided
Interest, for any Yield Period, a rate of interest equal to
the average of the secondary market morning offering rates
in the United States for time certificates of deposit of
major United States money market banks for a period
approximately equal to such Yield Period in an amount
substantially equal to the Purchaser's Investment of the
related Undivided Interest, as such offering rate is quoted
to Purchaser by the Federal Reserve Bank of New York during
the morning of the first day of such Yield Period; provided,
however, that if Purchaser shall not receive any such quote
by the Federal Reserve Bank of New York by 10:00 a.m.,
Chicago time, on the morning of the first day of any Yield
Period, then Domestic CD Rate shall mean, with respect to
such Yield Period, the rate of interest determined by
Purchaser to be the average (rounded upwards, if necessary,
to the nearest 1/100 of 1%) of the bid rates quoted to
Purchaser in the secondary market at approximately 10:00
a.m., Chicago time (or as soon thereafter as practicable) on
the first day of the applicable Yield Period by two
certificate of deposit dealers in New York or Chicago of
recognized standing selected by Purchaser in its sole
discretion for the purchase from Purchaser at face value of
certificates of deposit issued by Purchaser in an amount
approximately equal or comparable to the amount of the
related Purchaser's Investment and having a maturity equal
to the applicable Yield Period.
"Assessment Rate" for any Yield Period means the annual
assessment rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) applicable to Purchaser on its
insured deposits, on the Business Day immediately preceding
the first day of such Yield Period, under the Federal
Deposit Insurance Act, determined by annualizing the most
recent assessment levied on Purchaser by the Federal Deposit
Insurance Corporation (or any successor, the "FDIC") with
respect to such deposits after giving effect to the most
recent rebate granted to Purchaser by the FDIC with respect
to deposit insurance as well as the loss to Purchaser
(determined in the good faith judgment of Purchaser) of the
use of such rebate prior to the date a credit is taken by
Purchaser with respect to such rebate.
"Reserve Requirement" means, with respect to any Yield
Period, a percentage (expressed as a decimal) equal to the
daily average during such Yield Period of the aggregate
reserve requirement (including all basic, supplemental,
marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in
reserve requirements during such Yield Period) specified
under Regulation D of the Board of Governors of the Federal
Reserve System, or any other regulation of the Board of
Governors that prescribes reserve requirements applicable to
nonpersonal time deposits as presently defined in Regulation
D, as then in effect, as applicable to the class of banks of
which Purchaser is a member, on deposits of the types used
as a reference in determining the Domestic CD Rate and
having a maturity approximately equal to such Yield Period.
"Alternate Reference Rate" means, on any date, a fluctuating
rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced by
Continental Bank at its principal office in Chicago,
Illinois as its reference rate; and
(b) the Federal Funds Rate (as defined below) most
recently determined by Continental Bank plus 1.0%.
For purposes of this definition, "Federal Funds Rate" means, for
any period, a fluctuating interest rate per annum equal (for each
day during such period) to
(i) 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
(ii) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such
day on such transactions received by Continental Bank from
three federal funds brokers of recognized standing selected
by it.
The Alternate Reference Rate is not necessarily intended to be
the lowest rate of interest determined by Continental Bank in
connection with extensions of credit.
Negative Spread Fee means, for each Undivided Interst for
each day in any Yield Period (computed without regard to clause
(III) of the proviso clause of the definition of "Yield Period")
during which any Run Off Day or Termination Date for such
Undivided Interest occurs, the amount, if any, by which (i) the
additional Earned Discount (calculated without taking into
account any Negative Spread Fee) which would have accrued on the
reductions of related Purchaser's Investment of such Undivided
Interest during such Yield Period (as so computed) if such
reductions had remained as Purchaser's Investment exceeds (ii)
the income, if any, received by the owner of such Undivided
Interest from such owner's investing the proceeds of such
reductions of Purchaser's Investment.
SECTION 2.07 Servicer's Fee. With respect to each
Undivided Interest, "Servicer's Fee" shall accrue for each day in
an amount equal to (i) the product of .50% per annum times the
amount of the related Purchaser's Investment at the close of
business on such day, times 1/360; or (ii) on Servicer's
reasonable request from and after any time that Seller shall no
longer be Servicer, an alternative amount specified by Servicer
and acceptable to Purchaser. The Servicer's Fee accrued for each
Yield Period shall be payable at the end of such Yield Period.
In addition, Servicer (if Seller) shall be entitled to the
amounts payable under Section 3.02(b)(i).
ARTICLE III
SETTLEMENTS
SECTION 3.01 Settlement Procedures for Collections of
Principal Receivables. On each day with regard to each Yield
Period for each Undivided Interest, Servicer shall deem an amount
equal to Purchaser's Share of Collections on account of Principal
Receivables received or deemed received on such day to be
received in respect of such Undivided Interest; and
(a) if such day is not a Run Off Day, except to the extent
otherwise set forth in Section 3.03(b), Servicer on behalf of the
Purchaser shall apply the full amount of Purchaser's Share of
such Collections to reduce the Purchaser's Investment in such
Undivided Interest and after such reduction apply such amount to
the Reinvestment, for the benefit of the Certificate holder, in
additional undivided interests in Pool Receivables. Any such
application shall automatically increase the related Purchaser's
Investment. The recomputed Purchaser's Share with respect to
Principal Receivables of such Undivided Interest, after giving
effect to the reduction and increase of such Purchaser's
Investment shall constitute the percentage ownership interest in
Principal Receivables on such day held by such Certificate holder
with regard to such undivided Interest; and
(b) if such day is a Run Off Day, and Purchaser shall so
request Servicer, Servicer on behalf of Purchaser shall apply the
full amount of Purchaser's Share of such Collections to reduce
Purchaser's Investment. Servicer shall effect such application
and reduction by depositing to Purchaser's account, as described
in Section 3.05, an amount equal to the amount of such reduction.
Upon receipt of such deposit, Purchaser shall distribute the
amount thereof to the holder of the Certificate evidencing such
Undivided Interest at such time as such holder shall direct.
SECTION 3.02 Settlement Procedures for Collections of
Finance Charge Receivables.
(a) Daily Set Aside. On each day of each Yield Period for
each Undivided Interest, Servicer shall set aside and hold in
trust for the holder of the Certificate evidencing such Undivided
Interest, Purchaser's Share of Collections on account of Finance
Charge Receivables in respect of such Undivided Interest for such
day.
(b) Deposit to Purchaser's Account.
(i) On each day of each Yield Period for each
Undivided Interest, Servicer shall calculate the excess, if
any, of (x) the Collections on account of Finance Charge
Receivables set aside in respect of each such Undivided
Interest on and prior to such day pursuant to Section
3.02(a), over (y) the aggregate unpaid amount of Earned
Discount, Program Fee, Servicer's Fee and any other
Designated Obligations, accrued in respect of each such
Undivided Interest; and (A) if such day is not a Run Off
Day, such excess, if any, shall be paid to the Seller or (B)
if such day is a Run Off Day, such excess if any, shall be
deposited to the Run Off Collection Account for application
in accordance with Sections 3.02(c) and (d).
(ii) On the last day of each Yield Period for each such
Undivided Interest, Servicer shall deposit (to the extent
not already deposited pursuant to the next sentence) to
Purchaser's account, as described in Section 3.05, from the
funds set aside pursuant to Section 3.02(a) and not paid
over to the Servicer pursuant to Section 3.02(b)(i), an
amount which shall, when added to amounts previously
deposited to such account with regard to such Undivided
Interest in respect of such Yield Period, equal the unpaid
Earned Discount, Program Fee and Servicer's Fee for such
Undivided Interest, then accrued to the date of such
deposit, plus any other Designated Obligations. With
respect to any Undivided Interest, the related Yield Period
of which is six months, Servicer shall on behalf of Seller
deposit to Purchaser's Account, as described in Section
3.05, on the last day of the third month (or, if such day is
not a Business Day, on the next succeeding Business Day)
Purchaser's Share of Finance Charge Collections received in
respect of such Undivided Interest during such three month
period.
(c) Application of Funds to Earned Discount, etc. Subject
to receipt of funds deposited to Purchaser's account (including
funds on deposit in the Run Off Collections Account during a Run
Off Period) pursuant to Section 3.02(b), Purchaser shall, on the
last day of such Yield Period, distribute them in the following
order: (i) first, to the holder of the Certificate evidencing
such Undivided Interest for the payment of accrued and unpaid
Earned Discount for such Yield Period, (ii) second, to Purchaser
for the payment of accrued and unpaid Program Fee for such Yield
Period, (iii) third, if Seller is not Servicer, to Servicer for
the payment of the accrued and unpaid Servicer's Fee for such
Yield Period, (iv) fourth, to such holder, the Purchaser, or
Servicer hereunder, as the case may be, in payment of any
Designated Obligations, owing to such Person hereunder in respect
of such Undivided Interest and (v) if Seller is Servicer, to
Servicer for the payment of the accrued and unpaid Servicer's Fee
for such Yield Period.
(d) Application to Defaulted Receivables and Delinquent
Receivables on Run Off Days. For each such Undivided Interest, on
the last day of the related Yield Period, after the occurrence of
the Commitment Termination Date, Servicer shall, after giving
effect to the applications or allocations pursuant to Sections
3.02(b) and 3.02(c), distribute and apply any remaining amounts
then held on deposit in the Run Off Collection Account as
follows: (i) first, to Purchaser (to hold in trust until the
respective Yield Period and dates) for payment pro rata, to the
holders of the Certificates evidencing such Undivided Interest
toward payment of Purchaser's Share of Defaulted Receivables and
Delinquent Receivables, which payment shall be deemed a
Collection on account of Principal Receivables, and (ii) second,
to the account of Seller; provided that, with regard to clause
(ii) above, if Aggregate Purchaser's Investments shall not then
have been reduced to zero, such balance shall remain in the Run
Off Collection Account until the date on which Aggregate
Purchaser's Investments shall have been reduced to zero.
SECTION 3.03 General Settlement Procedures; Reduction of
Purchaser's Investment.
(a) Deemed Collections. If on any day the Unpaid Balance
of any Pool Receivable is (i) reduced as a result of any dispute
or complaint, any cash discount, or any adjustment by Seller or
any Affiliate of Seller or (ii) reduced or canceled as a result
of a setoff in respect of any claim by the Obligor thereof
against Seller or any Affiliate of Seller (whether such claim
arises out of the same or a related or an unrelated transaction),
or (iii) reduced on account of the obligation of Seller to pay to
the related Obligor any rebate or refund, Seller shall be deemed
to have received on such day a Collection of the related
Principal Receivable in the amount of such reduction or
cancellation. If on any day any of the representations or
warranties of Seller set forth in Section 6.01(l) or (p) is no
longer true with respect to a Pool Receivable, Seller shall be
deemedt o have received on such day a Collection of such Pool
Receivable in full (and deposit to Purchaser's account or
application, as applicable, of such Collections pursuant to
Sections 3.01 and 3.02 shall automatically be deemed to cure any
breach of such representations or warranties).
(b) Unreinvested or Run Off Collections. Collections on
account of Principal Receivables that may not be reinvested by
means of Reinvestments in an Undivided Interest on account of the
application of the Purchase Limit pursuant to Section 1.03 shall
be so reinvested as soon as practicable without violating such
Purchase Limit. To the extent and so long as such Collections
may not be so reinvested, Servicer shall hold such Collections in
trust for the benefit of the holder of the Certificate evidencing
such Undivided Interest, for payment to Purchaser on the last day
of the Yield Period in which such Collections are accumulated,
and the related Purchaser's Investment as to such Undivided
Interest shall be deemed reduced in the amount to be paid to
Purchaser only when in fact so paid. During any Run Off Period,
upon one Business Day's written notice given by Purchaser to
Seller, Servicer shall pay in immediately available funds such
Collections on account of Principal Receivables and all
Collections on account of Finance Charge Receivables to Purchaser
within one Business Day of receipt thereof by Servicer.
(c) Seller's Reduction of Purchaser's Investment and
Aggregate Purchaser's Investments. If at any time Seller shall
wish to cause the reduction of the Purchaser's Investment in one
or more Undivided Interests (but not to commence the liquidation
of all Undivided Interests) and to reduce Aggregate Purchaser's
Investments, Seller may do so as follows:
(i) Seller shall give Purchaser at least two Business
Days' prior written notice thereof (including the proposed
Undivided Interests to be reduced, the amount of the
proposed reduction of the related Purchaser's Investment of
each such Undivided Interest, the amount of reduction in
Aggregate Purchaser' s Investment and the proposed date on
which such reduction will commence),
(ii) on the proposed date of commencement of such
reduction and on each day thereafter, Servicer shall refrain
from investing Collections on account of Principal
Receivables until the amount thereof not so reinvested shall
equal the desired amount of reduction, and
(iii) Servicer shall hold such Collections for the
benefit of the holder of the Certificates evidencing each
such Undivided Interest, for payment to Purchaser on the
last day of the Yield Period of each related Undivided
Interest with regard to which such Collections are
accumulated and the related Purchaser's Investment as to
each such Undivided Interest shall be deemed reduced in the
amounts paid to Purchaser in respect of each thereof only
when in fact so paid;
provided that,
(A) if the related Purchaser's Investment of any
Undivided Interest then owned by Purchaser after giving
effect to such reduction is greater than zero, such
Purchaser's Investment shall not be less than $500,000
unless Purchaser shall approve a lower amount (it being
understood that, any Undivided Interest then owned by
Purchaser the related Purchaser's Investment in which, prior
to giving effect to such reduction, is less than $500,000
will be reduced to zero),
(B) if Aggregate Purchaser's Investments after giving
effect to such reduction is greater than zero, such
Aggregate Purchaser's Investments shall not be less than
$12,000,000.
(C) Seller shall use reasonable efforts to attempt to,
with regard to each Undivided Interest affected by such
reduction, choose a reduction amount and the date of the
commencement thereof, so that such reduction shall commence
and conclude, for each such Undivided Interest, within one
Yield Period,
(D) if more than one Undivided Interest of Purchaser
shall be outstanding at the time of any proposed reduction,
Seller shall use reasonable efforts to minimize the number
of such Purchaser's Undivided Interests affected, and
(E) if more than one Undivided Interest owned by
Purchaser shall be outstanding at the time of any proposed
reduction, such proposed reduction shall be applied, unless
Purchaser shall otherwise consent, to the Undivided
Interests with the shortest remaining Yield Periods.
(d) Allocations of Obligor's Payments. Except as provided
in Section 3.03(a) or as otherwise required by law or the
underlying Contract, all Collections received from an Obligor of
any Receivable shall be applied to Receivables then outstanding
of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, except if payment is
designated by such Obligor for application to specific
Receivables or can be readily identified to specific Receivables,
in which case it shall be applied to such specified Receivables.
For each Settlement Period Collections will be allocated so that
all Collections up to the amount of Finance Charge Receivables
billed in respect of the immediately preceding Settlement Period
will be deemed Collections of Finance Charge Receivables and the
remaining amount of such Collections will be deemed Collections
of Principal Receivables.
SECTION 3.04 Reporting.
(a) Prior to the tenth day following a Settlement Date
("the related Reporting Date"), Servicer shall prepare and
forward to Purchaser for each holder of a Certificate (i) a
Periodic Report, relating to the Purchaser's Investment, as of
the close of business of Servicer on such Settlement Date,
together with an aging of all Receivables, and (ii) upon request
of Purchaser and on the date of the initial Purchase hereunder, a
listing by Obligor of all Pool Receivables.
(b) On or prior to the last day of each Settlement Period
containing a Run Off Day, Servicer shall prepare and forward to
Purchaser a Run Off Statement, relating to the Purchaser's
Investment, as of the close of business of Servicer on such last
day.
(c) At or prior to the day Servicer is required to make a
deposit with respect to a Settlement Period pursuant to Section
3.01 or 3.02, Seller will advise Purchaser of each Run Off Day
occurring during such Settlement Period; provided, however, that
if Seller is not Servicer, Seller shall advise Servicer of the
occurrence of each such Run Off Day occurring during such
Settlement Period at or prior to such Day; and provided that,
Purchaser shall determine the allocation of the amount of such
deposit ratably to each outstanding Undivided Interest.
SECTION 3.05 Payments and Computations, Etc. All amounts
to be paid or deposited by Seller hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00
a.m. (Chicago time) on the day when due in lawful money of the
United States of America in same day funds to the attention of
the Loan Division, Reference: RC 1159 for Agency Premium
Resource, Inc., account no. 6627451. Seller or Servicer, as
applicable, shall, to the extent permitted by law, pay to
Purchaser interest on all amounts not paid or deposited when due
hereunder at 2% per annum above the Alternate Reference Rate,
payable on demand, provided, however, that such interest rate
shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest and all
computations of Earned Discount, Negative Spread Fee and other
fees hereunder shall be made on the basis of a year of 360 days
for the actual number of days (including the first but excluding
the last day) elapsed.
SECTION 3.06 Dividing or Combining Undivided Interests.
(a) Division of Undivided Interests. Seller may, on notice
received by, and with the consent of, Purchaser not later than
10:00 a.m. (Chicago time) two Eurodollar Business Days, as
applicable, before the last day of any Yield Period for any then
existing Undivided Interest, divide such existing Undivided
Interest on such last day into two or more new Undivided
Interests, each such new Undivided Interests having a Purchaser's
Investment as designated in such notice and all such new
Undivided Interests collectively having aggregate Purchaser's
Investments equal to the Purchaser's Invetsment of such existing
Undivided Interest.
(b) Combination of Undivided Interests. Seller may, on
notice received by, and with the consent of, Purchaser not later
than 10:00 a.m. (Chicago time) two Eurodollar Business Days (as
defined in the definition of "Eurodollar Rate (Reserve Adjusted)"
if during the immediately following Yield Period Earned Discount
with respect to such Undivided Interest will be calculated on the
basis of the Eurodollar Rate (Reserve Adjusted) before the last
day of any Yield Period for two or more existing Undivided
Interests (owned by the same holder of a Certificate), or before
the date of any proposed Purchase of an Undivided Interest
pursuant to Sections 1.01 and 1.04 by such holder, on such last
day or such date of Purchase, as the case may be, combine into
one new Undivided Interest such existing and/or proposed
Undivided Interests or any combination thereof, such new
Undivided Interest having a Purchaser's Investment equal to the
aggregate Purchaser's Investments of such Undivided Interests so
combined.
(c) Effect of Division or Combination. On and after any
division or combination of Undivided Interests as described
above, each of the new Undivided Interests resulting from such
division, or the new Undivided Interest resulting from such
combination, as the case may be, shall be a separate Undivided
Interest having a Purchaser's Investment as set forth above, and
shall take the place of such existing Undivided Interest or
Undivided Interests or proposed Undivided Interest, as the case
may be, in each case under and for all purposes of this
Agreement.
SECTION 3.07 Treatment of Collections and Deemed
Collections. Seller shall forthwith deliver to Servicer all
Collections deemed received by Seller pursuant to Section 3.03(a)
and Seller shall hold or distribute such Collections as Earned
Discount, Program Fee, accrued Servicer's Fee, repayment of
Purchaser's Investment, etc. to the same extent as if such
Collections had actually been received on such date. If
Collections are then being paid to Purchaser, or lock boxes or
accounts directly or indirectly owned or controlled by Purchaser,
Servicer shall forthwith cause such deemed Collections to be paid
to Purchaser or such lock boxes or accounts. So long as Seller
shall hold any Collections or deemed Collections required to be
paid to Servicer or Purchaser, 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. Notwithstanding any
provisions of this Agreement that shall require that funds be
held in trust for the Purchaser or any Certificate holder so long
as Seller and Servicer (if Seller) shall promptly fulfill all of
its obligations to pay or turn over funds, Seller shall not be
obligated to account for or turn over any interest earned on such
funds so held in trust.
SECTION 3.08 Repurchases
(a) If on the last day of a Yield Period with respect to
any Undivided Interest the Purchaser's Investment of such
Undivided Interest shall equal or be less than 5% of the greatest
amount of Purchaser's Investment of such Undivided Interest at
any time prior to such last day, Seller shall be entitled on the
last day of such Yield Period to repurchase such Undivided
Interest from the holder of the Certificate representing such
Undivided Interest. Seller shall give Purchaser at least five
Business Days' prior written notice of such repurchase and upon
payment of the repurchase price therefor, as hereinafter
provided, the holder of the Certificate representing such
Undivided Interest shall be obligated to reconvey its entire
interest in such Undivided Interest to Seller pursuant to an
assignment acceptable to the parties, but without representation
or warranty except that the interest assigned is free of offset,
liens and other encumbrances created by the assignor. Seller
shall pay such repurchase price in cash to Purchaser in an amount
equal to, for each Undivided Interest, the sum of (i) Earned
Discount for such Undivided Interest, (ii) the related
Purchaser's Investment therefor, (iii) the aggregate of other
amounts then owed hereunder by Seller to the holder of the
Certificate evidencing such Undivided Interest and (iv) the
accrued Servicer's Fee payable with respect to such Undivided
Interest. Upon receipt of the aforesaid repurchase price with
regard to each Undivided Interest, Purchaser shall distribute it
(i) to the holder of the Certificate evidencing such Undivided
Interest (a) in payment of the Earned Discount for such Undivided
Interest, (b) in reduction of the related Purchaser's Investment
and (c) in payment of any other amounts owed by Seller hereunder
to such holder, in each case until reduced to zero, and (ii) to
Servicer in payment of the accrued Servicer's Fee payable with
respect to such Undivided Interest, also until reduced to zero.
(b) If at any time an Adverse Determination occurs Seller
shall within three Business Days of Seller's knowledge thereof
notify Purchaser of such Adverse Determination, and Seller shall,
if Purchaser in its sole discretion so demands, (i) within five
Business Days after notice has been given to the Purchaser,
repurchase Purchaser's ownership interest in the Adverse
Determination Receivables, or (ii) at the end of the related
applicable Yield Periods, repurchase Purchaser's ownership
interest in the Adverse Determination Receivables. In the case
of a repurchase under clause (i) or (ii) above, upon payment by
Seller of the repurchase price therefor, as hereinafter provided,
each holder of a Certificate evidencing in whole or in part
ownership of such Adverse Determination Receivables shall be
obligated to reconvey its entire interest in such Adverse
Determination Receivables to Seller pursuant to an assignment
acceptable to the parties, but without representation or warranty
except as to the assignor's good title, free of offset, liens and
other encumbrances as to the interest assigned. To the extent
required above, Seller shall pay such repurchase price in cash to
Purchaser in an amount equal to the product of (x) the sum of
all of the Undivided Interests then outstanding multiplied by (y)
the then Unpaid Balance of such Adverse Determination
Receivables. Upon receipt of such repurchase price Purchaser
shall apply such repurchase price ratably in accordance with the
then Purchaser's Investment of each Undivided Interest then
outstanding. A repurchase of Purchaser's ownership interest in
Adverse Determination Receivables shall not substitute for or
limit the applicable indemnification obligations under Article
XI. In the event that any Indemnified Party shall incur or
expects to incur any loss or expense as a result of the
redeployment of amounts received pursuant to clause (i) above,
then, within five Business Days after written notice from
Purchaser to Seller, Seller shall pay to Purchaser such
additional amounts as will (in the reasonable determination of
the Indemnified Parties) reimburse the Indemnified Parties for
such loss or expense. Such written notice shall, in the absence
of demonstrable error, be conclusive and binding on Seller.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01 Fees.
(a) Arrangement Fee. Seller shall on the date hereof pay
an arrangement fee ("Arrangement Fee") to Purchaser equal to
$137,500 (it being understood that $45,800 of such Arrangement
Fee has been paid in advance).
(b) Commitment Fee. From the date hereof until the
Commitment Termination Date, Seller shall pay to Purchaser a
commitment fee ("Commitment Fee") for each day in such period
equal to (x) .35 of 1% times (y) the excess, if any, of the
Purchase Limit over Purchaser's Investments on such day divided
by (z) 360. Such Commitment Fee shall be paid quarterly in
arrears, on or before the last day of each quarter (or, if such
day is not a Business Day, the next succeeding Business Day) and
on the Commitment Termination Date, in the amount of such
Commitment Fee that shall have accrued during the quarterly or
other period then ending for which no such fee shall have been
paid.
(c) Program Fee. From the date hereof until the date,
following the Commitment Termination Date, on which Aggregate
Purchaser's Investments shall be reduced to zero, Seller shall
pay to Purchaser a program fee ("Program Fee") for each day in
each Yield Period for each Undivided Interest for the benefit of
the Purchaser, equal to the amount of the related Purchaser's
Investment on such day, times .625 of 1%, times 1/360. Such
Program Fee shall be paid in arrears, on the last day of each
Yield Period and on the day following the Commitment Termination
Date when Aggregate Purchaser's Investments shall be reduced to
zero, in the amount of such Program Fee that shall have accrued
during the monthly or other period then ending for which no such
fee shall have theretofore been paid, and shall be for the
account of the Purchaser.
SECTION 4.02 Yield Protection. (a) If (i) Regulation
D of the Board of Governors of the Federal Reserve System or (ii)
any Regulatory Change occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty
or other charge with respect to any Undivided Interest or
Interests owned by or funded by it, its Certificate, if any,
or any obligations or right to make Purchases or
Reinvestments or to provide funding therefor, or shall
change the basis of taxation of payments to the Affected
Party under or in connection with this Agreement of any
Purchaser's Investments or Earned Discount made by or owed
to or funded by it or any other amounts due under this
Agreement in respect of any Undivided Interests owned by or
funded by it or its obligations or rights, if any, to make
Purchases or Reinvestments or to provide funding therefor
(except for changes in the rate of tax on the overall net
income of such Affected Party imposed by the United States
of America or the jurisdiction in which such Affected
Party's principal executive office is located); or
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
Earned Discount), special deposit or similar requirement
against assets of, deposits or obligations with or for the
account of (or with or for the account of any affiliate of),
or credit extended by, any Affected Party; or
(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by such
Affected party; or
(D) shall impose any other condition affecting any
Undivided Interests owned or funded by any Affected Party,
its Certificates, if any, or its obligations or rights, if
any, to make Purchases or Reinvestments or to provide
funding therefor;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of
Regulation D referred to above, to impose a cost on) (I) an
Affected Party funding or making or maintaining any
Purchases or Reinvestments, or any commitment of such
Affected Party with respect to any of the foregoing, or (II)
Purchaser for continuing their, or Seller's, relationship
with Purchaser,
(y) to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement, under
its Certificates with respect thereto, or
(z) in the sole determination of such Affected Party,
to reduce the rate or return on the capital of an Affected
Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which
any such Affected Party could otherwise have achieved,
then within thirty days after demand by such Affected Party
(which demand shall be accompanied by a reasonably detailed
statement setting forth the basis of such demand), Seller shall
pay directly to such Affected Party its pro rata share of such
additional amount or amounts as will compensate such Affected
Party for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify Seller and
Purchaser of any event of which it has knowledge occurring after
the date hereof which will entitle such Affected Party to
compensation pursuant to this Section 4.02; provided, however, no
failure to give or delay in giving such notification shall
adversely affect the rights of any Affected Party to such
compensation.
(c) In determining any amount provided for in this Section
4.02, the Affected Party may use any reasonable averaging and
attribution methods that it (in its sole discretion) shall deem
applicable. Any Affected Party when making a claim under this
Section 4.02 shall submit to Seller a statement as to such
increased cost or reduced return (including calculation thereof
in reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon the Seller.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01 Conditions Precedent to Effectiveness. The
initial Purchase hereunder is subject to the condition precedent
that Purchaser shall have received, on or before the date of such
Purchase, the following, each (unless otherwise indicated) dated
such date and in form and substance satisfactory to Purchaser:
(a) A Certificate of Assignments for Purchaser;
(b) A copy of the resolutions of the Board of Directors of
Seller and Parent approving this Agreement, the Certificates and
the other Agreement Documents, as applicable, to be delivered by
them hereunder and the transactions contemplated hereby,
certified in each case by its Secretary or Assistant Secretary;
(c) Good standing certificates (i) for Seller issued by the
Secretaries of State of Missouri, Kansas, Iowa and Nebraska and
(ii) for Parent issued by the Secretaries of State of Missouri
and Kansas.
(d) A certificate of the Secretary or Assistant Secretary
of Seller and Parent certifying the names and true signatures of
the officers authorized on their behalf to sign, as applicable,
this Agreement, the Certificates and the other Agreement
Documents to be delivered by them hereunder (on which certificate
Purchaser may conclusively rely until such time as Purchaser
shall receive from Seller or Parent, as applicable, a revised
certificate meeting the requirements of this subsection (d));
(e) The Articles of Incorporation of Seller and Parent,
duly certified by the Secretary of State of Kansas and Missouri,
respectively, as of a recent date acceptable to Purchaser,
together with a copy of the By-laws of Seller and Parent, duly
certified by the Secretary or an Assistant Secretary of Seller;
(f) Copies of acknowledgment copies of (i) proper Financing
Statements (Form UCC-1), naming Seller as the assignor of
Receivables or an undivided interest therein and Purchaser as
assignee and (ii) proper terminations of Financing Statements
(Form UCC-3), terminating any and all Financing Statements which
cover any Receivable or Contract;
(g) A search report provided in writing to Purchaser by
LEXIS Document Services, listing all effective financing
statements that name Seller as debtor and that are filed in the
jurisdictions in which filings were made pursuant to subsection
(f) above, together with copies of such financing statements
(none of which shall cover any Receivables or Contracts);
(h) Duly executed copies of Lock-Box Agreements with the
Lock-Box Banks;
(i) An opinion of Polsinelli, White, Vardeman & Shalton,
counsel to Seller, in substantially the form of Exhibit 5.01(i);
(j) An opinion of Faegre & Benson, counsel for Purchaser,
in substantially in the form of Exhibit 5.01(j);
(k) Such sublicenses as Purchaser shall require with regard
to all programs leased by Seller and used in the servicing of the
Receivables Pool;
(l) Such powers of attorney as Purchaser shall reasonably
request to enable Purchaser to collect all amounts due under any
and all Pool Receivables;
(m) Accountant's Letter provided by KPMG Peat Marwick,
certified public accountants, substantially in the form of
Exhibit 5.01(m);
(n) A Periodic Report as of the most recent Month End Date;
(o) A Pay-Off Letter executed by Mercantile Bank of Kansas
City, substantially in the form of Exhibit 5.01(o);
(p) Evidence of regulatory compliance by Seller in the
states of Missouri, Kansas, Iowa and Nebraska; and
(q) An executed copy of the Tax Sharing Agreement among
Parent and its "affiliated group of companies" (including
Seller).
SECTION 5.02 Conditions Precedent to All Purchases and
Reinvestments. Each Purchase (including the initial Purchase)
hereunder and each Reinvestment shall be subject to the further
conditions precedent ("Conditions Precedent") that on the date of
such Purchase or Reinvestment the following statements shall be
true (and Seller by executing this Agreement, accepting the
amount of such Purchase or by receiving the proceeds of such
Reinvestment shall be deemed to have certified that):
(i) The representations and warranties contained in
Section 6.01 and 6.02 are correct on and as of such day as
though made on and as of such day and shall be deemed to
have been made on such day,
(ii) No event has occurred and is continuing, or would
result from the occurrence of the Effective Date or such
Purchase or Reinvestment, which constitutes a Termination
Event or Unmatured Termination Event,
(iii) After giving effect to the occurrence of the
Effective Date or such proposed Purchase or Reinvestment,
the limits set forth in Section 1.02 will not have been
exceeded, and
(iv) The Commitment Termination Date shall not have
occurred;
provided, however, that the absence of the occurrence and
continuance of an Unmatured Termination Event shall not be a
Condition Precedent to (i) any Reinvestment being made with the
proceeds of Collections that were, on the same day, applied in
reduction of the Aggregate Purchaser's Investments, or (ii) any
other Reinvestment or any Purchase on any day which does not
cause the Aggregate Purchaser's Investments, after giving effect
to such Reinvestment or Purchase (and any Reinvestment referred
to in clause (i) next above) to exceed the Aggregate Purchaser's
Investments as of the opening of business on such day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of Seller.
Seller represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Kansas, with power and
authority to own its properties and to conduct its business as
such properties are presently owned and such business is
presently conducted, and had at all relevant times, and now has,
all necessary power, authority, and legal right to acquire and
own the Pool Receivables.
(b) Due Qualification. Seller is duly qualified to do
business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including, without limitation, such
business as a "premium finance company") requires such
qualification, licenses or approvals and where the failure to be
so qualified or to obtain such licenses or approvals would have a
material adverse effect upon Seller's financial condition,
results of operations, business or prospects.
(c) Power and Authority: Due Authorization. Seller has
duly authorized by all necessary action, and has all necessary
power, authority and legal right to (A) execute and deliver this
Agreement and the documents to be executed and delivered in
connection herewith (together, the "Agreement Documents"), (B)
carry out the terms of the Agreement Documents, (C) sell and
assign Undivided Interests on the terms and conditions herein
provided.
(d) Valid Sale: Binding Obligations. This Agreement
constitutes a valid sale, transfer, and assignment of the
Purchaser's Investments to the Purchaser, enforceable against
creditors of, and purchasers from, Seller; and this Agreement
constitutes, and each other Agreement Document to be signed by
Seller when duly executed and delivered will constitute, a legal,
valid and binding obligation of Seller enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Agreement Documents
and the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or by-laws of Seller, or any
indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which Seller is a party or by which it
is bound, or result in the creation or imposition of any Adverse
Claim upon any of its properties pursuant to the terms of any
such indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument, other than this Agreement, or violate
any law or any order, rule, or regulation applicable to Seller
(or, except for Adverse Determinations disclosed in writing to
Purchaser as assignee of Seller) of any court or of any federal
Exhibit 10(b)(ii)
Agency Premium Resource, Inc.
Receivables Purchase Facility
FIRST AMENDMENT
This is the first amendment ("First Amendment") dated as of
September 15, 1993 to that certain Receivables Purchase Agreement
("Purchase Agreement") dated as of July 16, 1993 among Agency
Premium Resource, Inc. ("Seller"), Seafield Capital Corporation
("Parent") and Continental Bank N.A. ("Purchaser"). Capitalized
terms used herein and not otherwise defined are used as defined
in the Purchase Agreement.
I. AMENDMENTS. Seller, Parent and Purchaser hereby agree to
amend the Purchase Agreement as set forth below.
1.01. Section 7.03(h) of the Purchase Agreement is hereby
amended by inserting at the end thereof the following proviso:
"provided, further, that Seller may at any time purchase or
redeem subordinated indebtedness owed to Parent as permitted
by Section 7.03(i)(iii) if at such time each of the
following shall obtain (w) the Liabilities to Net Worth
ratio set forth in Section 7.03(f) is less than 6:1, (x)
Seller shall have had a positive net income for each of the
three preceding months, (y) no Termination Event or
Unmatured Termination Event shall have occurred and be
continuing and (z) sufficient Collections on Receivables
financed with such subordinated indebtedness shall have been
received by Servicer to make such purchase or redemption (it
being understood that Collections received in respect of any
other Receivables shall not be used to make any such
purchase or redemption)".
1.02. Section 7.03(i) of the Purchase Agreement is hereby
amended (x) by deleting the word "and" in the seventh line
thereof and inserting in its place "," and (y) by inserting the
following new clause (iii) at the end of the eighth line thereof:
"and (iii) subordinated indebtedness of the Seller to the
Parent in an aggregate amount at any time outstanding of not
more than $5,000,000 (provided that no such subordinated
indebtedness shall be incurred unless the proceeds of such
indebtedness are used by Seller to finance Receivables that
do not meet the requirements of the definition of Eligible
Receivable hereunder and provided, further, that Seller
shall have notified (as to Obligor and amount and stating
that the proceeds thereof will be used to finance
Receivables of the type described in the preceding proviso)
Purchaser as to which Receivables will be excluded from the
Receivables Pool for such purpose)".
1.03. Clause (i)(w) of the definition of the term Eligible
Receivable set forth in Schedule I to the Purchase Agreement is
hereby amended and restated in its entirety as follows:
"(i)(w) which arose from a loan with a maturity of nine
months or less (provided, that, a Receivable ("Provisional
Receivable") arising from a loan having a maturity in excess
of nine months but not exceeding twelve months shall also be
an Eligible Receivable, but the "Unpaid Principal Balance"
thereof at any time will be deemed equal to the Unpaid
Principal Balance of the loan less the aggregate amount of
all loan payments falling due more than nine months after
the date of the loan),".
1.04. The definition of the term Receivables Pool set forth in
Schedule I to the Purchase Agreement is hereby amended by (x)
deleting the word "and" at the end of the third line thereof and
substituting therefor "," and (y) by inserting the following at
the end thereof:
"and (iii) the Receivables permitted by Purchaser to be
financed by Seller pursuant to Section 7.03(i)(iii) through
the incurrence of subordinated indebtedness by Seller owed
to the Parent".
II. MISCELLANEOUS.
2.01. Effectiveness. This First Amendment shall become
effective upon receipt by the Purchaser of signed counterparts
from each of the parties hereto.
2.02. Documentation for Subordinated Indebtedness. All
subordinated indebtedness incurred by Seller pursuant to Section
7.03(i)(iii) of the Purchase Agreement shall be incurred by
Seller pursuant to one (and only one) subordinated note, which
subordinated note shall be substantially in the form of the
subordinated note attached hereto as Exhibit A.
2.03. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS.
2.04 Captions. The various captions in this First Amendment
are included for convenience only and shall not affect the
meaning and interpretation of any provision of this First
Amendment.
2.05. Execution in Counterparts. This First Amendment may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken
together shall constitute one and the same First Amendment.
IN WITNESS WHEREOF, the parties have caused this First
Amendment to be executed by their respective officers hereunto
duly authorized, as of the date first written above.
AGENCY PREMIUM RESOURCE, INC.
By:
Title: President
SEAFIELD CAPITAL CORPORATION
By:
Title: Chief Financial Officer
CONTINENTAL BANK N.A.
By:
Title: Vice President
</PAGE>
EXHIBIT A
[Form of Subordinated Intercompany Note]
NON-NEGOTIABLE
SUBORDINATED TERM NOTE
_____________, 1993
$5,000,000
FOR VALUE RECEIVED, the undersigned, AGENCY PREMIUM
RESOURCE, INC., a Kansas corporation ("Seller"), promises to pay
to SEAFIELD CAPITAL CORPORATION, a Missouri corporation
("Parent"), ON DEMAND (provided that such demand may be made by
Parent only on the terms and subject to the conditions set forth
herein and in the Purchase Agreement referred to below), the
lesser of $5,000,000 and the aggregate unpaid principal amount at
any time advanced by Parent and outstanding hereunder, as such
unpaid principal amount is shown in the records of the Servicer.
Parent shall not make any advance hereunder unless Parent shall
have received copies of Seller's notification of Purchaser as
required by Section 7.03(i)(iii) of the Purchase Agreement, which
notification shall include the name of the Obligor(s), the amount
of the requested advance and shall state that the proceeds of
such advance will be used by Seller to finance Receivables that
do not meet the definition of Eligible Receivable under the
Purchase Agreement.
1. Definitions. Unless otherwise indicated, capitalized terms
used but not defined herein have the meanings assigned thereto in
Schedule I to that certain Receivables Purchase Agreement dated
as of July 16, 1993 (as the same may be amended, supplemented,
amended and restated or otherwise modified in accordance with its
terms, the "Purchase Agreement"), among Seller, Parent and
Continental Bank N.A., as Purchaser. In addition, as used
herein, the following terms have the following meanings:
"Bankruptcy Proceedings" has the meaning set forth
in clause (b) of paragraph 7 hereof.
"Final Maturity Date" means the Settlement Date
immediately following the date that falls one hundred
and twenty one (121) days after the Purchase
Termination Date.
"Note Rate" means the rate of interest publicly
announced from time to time by Continental Bank as its
"reference rate" minus one-half of one percent (0.5%).
"Senior Interests" means, collectively, (i)
Purchaser's Investment, (ii) all fees referred to in
Section 4.01 of the Purchase Agreement, (iii) all
amounts payable pursuant to Sections 4.02 and 11.01 of
the Purchase Agreement, and (iv) all other amounts
payable by Seller under the Purchase Agreement,
together with any and all interest accruing on any such
amount notwithstanding any provision or rule of law
that might restrict the rights of any Senior Interest
Holder and their successors, assigns and transferees,
as against Seller or anyone else, to collect such
interest.
"Senior Interest Holders" means, collectively, the
Purchaser, the Affected Parties and the Indemnified
Parties and their successors, assigns and transferees.
"Senior Security Interest" means the security
interest granted to Purchaser pursuant to Section 7.04
of the Purchase Agreement.
"Subordination Provisions" means, collectively,
clauses (a) through (l) of paragraph 7 hereof.
2. Interest Subject to the Subordination Provisions set forth
below, Seller promises to pay interest on the aggregate unpaid
principal balance hereunder that is outstanding from time to time
from (and including) the date hereof to (but excluding) the date
on which the entire aggregate unpaid principal balance hereunder
is fully paid at a rate per annum equal to the Note Rate.
3. Interest Payment. Subject to the Subordination Provisions
set forth in paragraph 7 below, payments of accrued and unpaid
interest on this Subordinated Term Note shall be made by Seller
on each Settlement Date unless on such Settlement Date Seller
would not be permitted to make any payments that reduce the
unpaid principal balance of this Subordinated Term Note pursuant
to paragraph 5 hereof on such day.
4. Basis of Computation. Interest accrued hereunder shall be
computed from the actual number of days elapsed on the basis of a
year consisting of 360 days.
5. Principal Payment. Subject to the Subordination Provisions
set forth in paragraph 7 below, payments of the principal amount
of this Subordinated Term Note may be made on any Business Day
only as follows:
(a) Payments of principal of this Subordinated Term Note
shall be made only if at the time of such payment each of the
following shall obtain (w) the Liabilities to Net Worth ratio set
forth in Section 7.03(f) of the Purchase Agreement is less than
6:1, (x) Seller shall have had a positive net income for each of
the three preceding months, (y) no Termination Event or Unmatured
Termination Event shall have occurred and be continuing under the
Purchase Agreement and (z) sufficient Collections on Receivables
financed with such subordinated indebtedness shall have been
received by Servicer to make such purchase or redemption (it
being understood that Collections received in respect of any
other Receivables and any other funds shall not be used to make
any such purchase or redemption).
(b) The entire remaining unpaid principal balance hereunder
outstanding shall be paid on the Final Maturity Date.
6. Cash Payment Mechanics. All cash payments of principal and
interest hereunder are to be made in lawful money of the United
States of America in the manner specified in Section 8.4 of the
Purchase Agreement.
7. Subordination Provisions. Seller covenants and agrees, and
the Parent, by its acceptance of this Subordinated Term Note,
likewise covenants and agrees on behalf of itself and any holder
of this Subordinated Term Note, that the payment of the principal
amount of and the interest on this Subordinated Term Note is
hereby expressly subordinated in right of payment to the payment
and performance of the Senior Interests to the extent and in the
manner set forth in the following clauses of this paragraph 7.
(a) No payment or other distribution of Seller's assets of
any kind or character, whether in cash, securities, or other
rights or property, shall be made on account of this Subordinated
Term Note except to the extent such payment or other distribution
is made pursuant to paragraph 3 or clause (a) or (b) of paragraph
5 of this Subordinated Term Note;
(b) In the event of any dissolution, winding up,
liquidation, readjustment, reorganization or other similar event
relating to Seller whether voluntary or involuntary, partial or
complete, and whether in bankruptcy, insolvency or receivership
proceedings, or upon any assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of Seller
other than as permitted by the Purchase Agreement (such
proceedings being herein collectively called "Bankruptcy
Proceedings"), the Senior Interests shall first be paid and
performed in full and in cash before the Parent shall be entitled
to receive or to retain any payment or distribution in respect of
this Subordinated Term Note. In order to implement the
foregoing: (i) all payments and distributions of any kind or
character in respect of this Subordinated Term Note to which the
Parent would be entitled except for this paragraph (b) shall be
made directly to the Purchaser (for the benefit of the Senior
Interest Holders); (ii) the Parent shall promptly file a claim or
claims, in the form required in any Bankruptcy Proceedings, for
the full outstanding amount of this Subordinated Term Note, and
shall cause said claim or claims to be approved and all payments
and other distributions in respect thereof to be made directly to
Purchaser (for the benefit of the Senior Interest Holders) until
the Senior Interests shall have been paid and performed in full
and in cash; and (iii) the Parent hereby irrevocably agrees that
Purchaser may in the name of the Parent or otherwise, demand, sue
for, collect, receive and receipt for any and all such payments
or distributions, and file, prove and vote or consent in any
Bankruptcy Proceedings with respect to any and all of the claims
of the Parent relating to this Subordinated Term Note, in each
case until the Senior Interest shall have been paid and performed
in full and in cash and, to facilitate the performance or
observance by the Purchaser of the terms of this subparagraph
(iii), the Parent hereby irrevocably appoints the Purchaser, or
the delegate of the Purchaser as the attorney-in-fact of the
Parent (which appointment is coupled with an interest) with the
right (but not the duty) from time to time to take such actions
as the Purchaser may deem necessary or advisable to accomplish
the foregoing;
(c) In the event that the Parent receives any payment or
other distribution of any kind or character from Seller or from
any other source whatsoever, in respect of this Subordinated Term
Note, other than as expressly permitted by the terms of this
Subordinated Term Note, such payment or other distribution shall
be received in trust for the Senior Interest Holders and shall be
turned over by the Parent to Purchaser (for the benefit of the
Senior Interest Holders) forthwith. The Parent will mark its
books and records so as clearly to indicate that this
Subordinated Term Note is subordinated in accordance with the
terms hereof. All payments and distributions received by
Purchaser in respect of this Subordinated Term Note, to the
extent received in or converted into cash, may be applied by
Purchaser (for the benefit of the Senior Interest Holders) first
to the payment of any and all expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by the
Senior Interest Holders in enforcing these Subordination
Provisions, or in endeavoring to collect or realize upon this
Subordinated Term Note or any security therefor, and any balance
thereof shall, solely as between the Parent and the Senior
Interest Holders, be applied by Purchaser (in the order of
application set forth in Section 3.02(c) of the Purchase
Agreement) toward the payment of the Senior Interests; but as
between Seller and its creditors, no such payments or
distributions of any kind or character shall be deemed to be
payments or distributions in respect of the Senior Interests;
(d) Notwithstanding any payments or distributions received
by the Senior Interest Holders in respect of this Subordinated
Term Note, the Parent shall not be subrogated to the then
existing rights of the Senior Interest Holders in respect of the
Senior Interest until the Senior Interests have been paid and
performed in full and in cash;
(e) These Subordination Provisions are intended solely for
the purpose of defining the relative rights of the Parent, on the
one hand, and the Senior Interest Holders on the other hand.
Nothing contained in these Subordination Provisions or elsewhere
in this Subordinated Term Note is intended to or shall impair, as
between Seller, its creditors (other than the Senior Interest
Holders) and the Parent, Seller's obligation, which is
unconditional and absolute, to pay the Parent the principal of
and interest on this Subordinated Term Note as and when the same
shall become due and payable in accordance with the terms hereof
or to affect the relative rights of the Parent and creditors of
Seller (other than the Senior Interest Holders);
(f) The Parent shall not, until the Senior Interests have
been paid and performed in full and in cash, (i) cancel, waive,
forgive, transfer or assign, or attempt to enforce or collect, or
subordinate to any obligation of Seller, howsoever created,
arising or evidenced, whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due or to become
due, other than the Senior Interests, this Subordinated Term Note
or any rights in respect hereof or (ii) convert this Subordinated
Term Note into an equity interest in Seller unless the Parent
shall have received the prior written consent of Purchaser in
each case;
(g) The Parent shall not, without the advance written
consent of Purchaser, commence, or join with any other Person in
commencing, any Bankruptcy Proceedings with respect to Seller
until at least one year and one day shall have passed following
the date on which the Senior Interests shall have been paid and
performed in full and in cash;
(h) If, at any time, any payment (in whole or in part) of
any Senior Interest is rescinded or must be restored or returned
by a Senior Interest Holder (whether in connection with
Bankruptcy Proceedings or otherwise), these Subordination
Provisions shall continue to be effective or shall be reinstated,
as the case may be, as though such payment had not been made;
(i) Each of the Senior Interest Holders may, from time to
time, at its sole discretion, without notice to the Parent, and
without waiving any of its rights under these Subordination
Provisions, take any or all of the following actions (assuming
that such Senior Interest Holder is entitled to take any of the
following actions pursuant to the Agreement Documents (other than
this Subordinated Term Note) or pursuant to applicable law): (i)
retain or obtain an interest in any property to secure any of the
Senior Interests; (ii) retain or obtain the primary or secondary
obligations of any other obligor or obligors with respect to any
of the Senior Interests; (iii) extend or renew for one or more
periods (whether or not longer than the original period), alter
or exchange any of the Senior Interests, or release or compromise
any obligation of any nature with respect to any of the Senior
Interests; (iv) amend, supplement, amend and restate, or
otherwise modify any Agreement Document; and (v) release its
security interest in, or surrender, release or permit any
substitution or exchange for all or any part of any rights or
property securing any of the Senior Interests, or extend or renew
for one or more periods (whether or not longer than the original
period), or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such
rights or property;
(j) The Parent waives any and all defenses, claims and
discharges of Seller, or any other obligor, pertaining to the
Senior Interests, except the defense of discharge by payment in
full. Without limiting the generality of the foregoing, the
Parent will not assert, plead or enforce against the Senior
Interest Holders any defense of waiver, release, disallowance or
discharge in bankruptcy, the statute of limitations, res
judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which
may be available to Seller or any other person liable in respect
of any of the Senior Interests, or any setoff available against
the Senior Interest Holders to Seller or any such other person,
whether or not on account of a related transaction;
(k) The Parent hereby waives: (i) notice of acceptance of
these Subordination Provisions by any of the Senior Interest
Holders; (ii) presentment, demand for payment, notice of dishonor
or nonpayment, and protest of any instrument evidencing the
Senior Interests; and (iii) all diligence in enforcement,
collection or protection of, or realization upon the Senior
Interests, or any thereof, or any security therefor;
(l) Each of the Senior Interest Holders may, from time to
time, without notice to the Parent, assign or transfer any or all
of the Senior Interests, or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Senior Interests shall be
and remain Senior Interests for the purposes of these
Subordination Provisions, and every immediate and successive
assignee or transferee of any of the Senior Interests or of any
interest of such assignee or transferee in the Senior Interests
shall be entitled to the benefits of these Subordination
Provisions to the same extent as if such assignee or transferee
were the assignor or transferor; and
(m) These Subordination Provisions constitute a continuing
offer from the holder of this Subordinated Term Note to all
Persons who become the holders of, or who continue to hold,
Senior Interests; and these Subordination Provisions are made for
the benefit of the Senior Interest Holders, and Purchaser may
proceed to enforce such provisions on behalf of each of such
Persons and the Senior Interest Holders may rely on these
Subordination Provisions during all periods in which Purchases or
Reinvestments are made under the Purchase Agreement.
8. General. No delay on the part of the Parent in the exercise
of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right,
power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Subordinated Term
Note shall in any event be effective unless (i) the same shall be
in writing and signed and delivered by Seller and the Parent and
(ii) all consents required for such actions under the Agreement
Documents shall have been received by the appropriate Persons.
9. No Negotiation. This Subordinated Term Note is not
negotiable.
10. Governing Law. THIS SUBORDINATED TERM NOTE HAS BEEN
DELIVERED IN CHICAGO, ILLINOIS, AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.
11. Captions. Paragraph captions used in this Subordinated Term
Note are for convenience only and shall not affect the meaning or
interpretation of any provision of this Subordinated Term Note.
AGENCY PREMIUM RESOURCE, INC.
By:
Name:
Title:
Schedule attached to Non-Negotiable Subordinated Term Note dated
_______________, 1993 of Agency Premium Resource, Inc. payable to
the order of Seafield Capital Corporation.
Date and Date and Unpaid
Amount Amount Principal Notation
of Loan of Repayment Balance Made By
</PAGE>
Exhibit 10(b)(iii)
Agency Premium Resource, Inc.
Receivables Purchase Facility
SECOND AMENDMENT
This is the second amendment ("Second Amendment") dated as
of August 29, 1994 to that certain Receivables Purchase Agreement
(as heretofore amended or otherwise modified, the "Purchase
Agreement") dated as of July 16, 1993 among Agency Premium
Resource, Inc. ("Seller"), Seafield Capital Corporation
("Parent") and Continental Bank N.A. ("Purchaser"). Capitalized
terms used herein and not otherwise defined are used as defined
in the Purchase Agreement.
SECTION I. AMENDMENTS. Seller, Parent and Purchaser hereby
agree to amend the Purchase Agreement as set forth below.
Section 1.1 Increase in Purchase Limit. Section 1.02(i) of the
Purchase Agreement is hereby amended by deleting "$22,000,000" in
the third line thereof and substituting therefor "$30,000,000".
Section 1.2 Purchase and Reinvestment Limits. Section 1.02(ii)
of the Purchase Agreement is hereby amended amended and restated
in its entirety as follows:
"(ii) the Aggregate Purchaser's Investments (as defined in
Section 2.04) plus the aggregate Default Reserve would
exceed the Net Pool Balance".
Section 1.3 Extension of Scheduled Commitment Termination Date.
Section 1.05(a)(i) of the Purchase Agreement is hereby amended by
deleting "July 16, 1995" in the first line thereof and
substituting therefor "July 16, 1996".
Section 1.4 Termination Events/Default Ratio. Section 9.01(i)
of the Purchase Agreement is hereby amended and restated in its
entirety as follows:
"(i) The Default Ratio at any time exceeds 3.0%; or".
Section 1.5 Changes to Definition of Default Ratio. Clause (i)
of the definition of the term "Default Ratio" set forth in
Schedule I to the Purchase Agreement is hereby amended and
restated in its entirety as follows:
"(i) the numerator of which is the Unpaid Principal Balance
of Receivables that became Defaulted Receivables (net of
recoveries and Insured Defaulted Receivables) during the
three month period then ending and".
Section 1.6 Addition of Newly Defined Term. Schedule I to the
Purchase Agreement is hereby amended by adding thereto the
following newly defined term in the correct alphabetical place
therefor:
"Insured Defaulted Receivable" means, a Defaulted
Receivable, with regard to which a payment or any part
thereof is not more than the earlier of (x) 30 days past its
scheduled cancellation date and (y) 60 days past due and
with regard to which the related insurance agent is
providing a guaranty based on which the related Insurance
Obligor has not cancelled the related insurance policy.
SECTION II. MISCELLANEOUS.
Section 2.1 Effectiveness. This Second Amendment shall become
effective upon receipt by the Purchaser of (i) fully executed
counterparts hereto, (ii) a resolution of Seller's and Parent's
Board of Directors, (iii) an opinion of counsel, each in form and
substance satisfactory to the Purchaser and (iv) payment of a
renewal and increase fee to the Purchaser in the amount of
$65,000.
Section 2.2 Governing Law. THIS SECOND AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF ILLINOIS.
Section 2.3 Captions. The various captions in this Second
Amendment are included for convenience only and shall not affect
the meaning or interpretation of any provision of this Second
Amendment.
Section 2.4 Execution in Counterparts. This Second Amendment
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 Second
Amendment.
IN WITNESS WHEREOF, the parties have caused this Second
Amendment to be executed by their respective officers hereunto
duly authorized, as of the date first written above.
AGENCY PREMIUM RESOURCE, INC.,
as Seller
By
Title
SEAFIELD CAPITAL CORPORATION,
as Parent
By
Title
CONTINENTAL BANK N.A.,
as Purchaser
By
Title
</PAGE>
Exhibit 10(b)(iv)
THIRD AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
AND ASSUMPTION AGREEMENT
This Third Amendment, dated as of May 31, 1995, is made by
and among Agency Premium Resource, Inc. ("Seller"), Seafield
Capital Corporation ("Parent"), Anuhco, Inc., a Delaware
corporation ("New Parent"), and Bank of America Illinois,
successor in interest to Continental Bank N.A. ("Purchaser").
Recitals
A. Seller, Parent and Purchaser are parties to that
certain Receivables Purchase Agreement dated as of July 16, 1993
as amended by that certain First Amendment dated as of September
15, 1993, and that certain Second Amendment dated as of August
29, 1994 (as so amended, the "Purchase Agreement"), Capitalized
terms used herein and not otherwise defined have the meanings
given to them in the Purchase Agreement.
B. New Parent desires to purchase from Parent and Parent
desires to sell to New Parent all of the issued and outstanding
capital stock of Seller owned by Parent pursuant to that certain
Stock Purchase Agreement (the "Stock Purchase Agreement") dated
as of May 23, 1995 by and between Parent and New Parent. Parent
and New Parent have requested that Purchaser consent to such
sale.
C. Purchaser is willing to grant the request of Parent and
New Parent subject to the terms of this Third Amendment.
Accordingly, Seller, Parent, New Parent and Purchaser
hereby agree as follows:
1. Definitions. Capitalized terms used in this Third
Amendment and not otherwise defined herein shall have the
meanings given to them in the recitals hereto and the Purchase
Agreement. In addition, the following new definitions are added
to Schedule I in alphabetical order:
"Collateral Agent" means Bank of America Illinois Corporate
Trust Division, in its capacity as collateral agent under the
Collateral Agent Agreement.
"Collateral Agent Agreement" means that certain Collateral
Agent Agreement dated as of the date of the Third Amendment, by
and among New Parent, Purchaser, and Collateral Agent.
"New Parent" means Anuhco, Inc. a Delaware corporation.
"New Parent Obligations" has the meaning given in Section 5
of the Third Amendment.
"New Parent Pledge" means that certain Collateral Pledge
Agreement dated as of the date of the Third Amendment, by New
Parent in favor of Purchaser.
"Third Amendment" means that certain Third Amendment to
Receivables Purchase Agreement and Assumption Agreement, dated as
of May 31, 1995, by and among Parent, New Parent, Seller and
Purchaser.
2. Termination of Facility. Section 1.05 of the Purchase
Agreement (including both subsections (a) and (b)) is amended to
read as follows:
"SECTION 1.05 Commitment Termination Date. The "Commitment
Termination Date" shall be the earlier to occur of (i) the 120th
day after the date of the Third Amendment (the "Scheduled
Commitment Termination Date"), and (ii) the date of termination
of the Commitment pursuant to Section 1.06 or 9.02.
3. Conditions Precedent to Purchases. Section 5.02 of the
Purchase Agreement is amended (1) by deleting the word "and" at
the end of clause (iii) of said Section, (2) by deleting the
semicolon at the end of clause (iv) of said Section and inserting
", and" in its place, and (3) inserting the following new clause
(v) immediately thereafter:
"(v) the fair market value of all cash and securities
pledged to Purchaser pursuant to the New Parent Pledge is
not less than the sum, after giving effect to such Purchase,
of (A) Purchaser's Investment and (B) the Earned Discount.
4. Termination Events. Section 9.01 of the Purchase
Agreement is amended by replacing the period at the end of
Subsection (n) with a semicolon and inserting the following new
Subsection (o):
"(o) An Event of Default, as defined in the New Parent
Pledge, shall occur."
5. Assumption of Obligations. New Parent hereby assumes
all of Parent's duties and obligations under the Purchase
Agreement, including without limitation all obligations as set
forth in Article XI of the Purchase Agreement) and any other
obligations of Parent under any agreement executed in connection
with the Purchase Agreement as if New Parent had originally
executed and delivered the Purchase Agreement and all other
Agreement Documents in Parent's place (collectively, the "New
Parent Obligations").
6. Security for New Parent Obligations. To secure the New
Parent Obligations, New Parent shall assign, pledge and grant the
Purchaser a security interest in certain United States treasury
securities and an account to be maintained with Collateral Agent
pursuant to the New Parent Pledge and the Collateral Agent
Agreement. Such securities shall be held in a safekeeping
account maintained at Collateral Agent entitled "Bank of America
Illinois, as pledgee of Anuhco, Inc."
7. Release of Parent. Purchaser hereby releases Parent
from all obligations under the Purchase Agreement, any Agreement
Document, and any other agreement executed in connection
therewith.
8. New Parent's Representations & Warranties. New Parent
represents and warrants as follows:
(a) Organization and Good Standing. New Parent has been
duly organized and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its
business as such properties are presently owned and such
business is presently conducted.
(b) Due Qualification. New Parent is duly qualified to do
business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualification,
licenses or approvals and where the failure to be so
qualified or to obtain such licenses or approvals would have
a material adverse effect upon New Parent's financial
condition, results of operations, business or prospects.
(c) Power and Authority: Due Authorization. New Parent has
duly authorized by all necessary action, and has all
necessary power, authority and legal right to (A) execute
and deliver this Third Amendment and all other documents to
be executed and delivered by it in connection with this
Third Amendment and the purchase of the capital stock of the
Seller and (B) carry out the terms of the Agreement
Documents.
(d) Binding Obligations. This Third Amendment and the
Agreement Documents constitute, the legal, valid and binding
obligations of New Parent enforceable in accordance with
their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Third Amendment, the purchase of the
stock of the Seller and the other Agreement Documents, and
the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of
New Parent, or any indenture, loan agreement, mortgage, deed
of trust, or other agreement or instrument to which New
Parent is a party or by which it is bound, or result in the
creation or imposition of any Adverse Claim upon any of its
properties pursuant to the terms of any such indenture, loan
agreement, mortgage, deed of trust, or other agreement or
instrument, other than this Third Amendment, or violate any
law or any order, rule, or regulation applicable to New
Parent of any court or of any federal or state regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over New Parent or any
of its properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or threatened, against New Parent or
its Affiliates, or any other Person, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality (A) asserting the invalidity of
this Third Amendment or any other Agreement Document, (B)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this
or any other Agreement Document, or (C) seeking any
determination or ruling that might adversely affect (i) the
performance by New Parent, Seller or Servicer of its
obligations under the Purchase Agreement, or (ii) the
validity or enforceability of this Third Amendment, the
Purchase Agreement, the Certificates, any other Agreement
Document, the Receivables or the Contracts.
(g) Government Approvals. 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 New Parent of
this Third Amendment.
(h) Financial Condition. (x) The consolidated balance sheet
of New Parent and its consolidated subsidiaries as at
December 31, 1994, and the related statements of income and
cash flow of New Parent and its consolidated subsidiaries
for the year then ended certified by Arthur Anderson & Co.
L.L.P., independent accountants, and the unaudited
consolidated interim balance sheet of New Parent and its
consolidated subsidiaries as at March 31, 1995, and the
related interim statement of income, copies of each of which
have been furnished to Purchaser, each fairly present the
consolidated financial position of New Parent and its
consolidated subsidiaries as at such date and the
consolidated results of the operations of New Parent and its
consolidated subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting
principles consistently applied, subject to normal year-end
audit adjustments, and (y) since March 31, 1995, there has
been no material adverse change in any such condition,
business, business prospects or operations.
(i) Solvency. Upon consummation of the transactions
contemplated by this Third Amendment and the Stock Purchase
Agreement, based upon certain valuations and the financial
statement described in Paragraph 8(h) hereof, and upon New
Parent's knowledge of the business, operations, prospects,
assets and conditions (financial or otherwise of New Parent)
New Parent hereby warrants, represents and agrees that:
(1) the present fair saleable value of the assets of
New Parent will exceed the amount that will be required
to pay the probable liability on existing debts
(whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent) of New
Parent as they become absolute and matured;
(2) the sum of the debts (whether matured or
unmatured, liquidated or unliquidated, absolute, fixed
or contingent) of New Parent will not exceed all of the
property of New Parent at a fair valuation;
(3) the capital of New Parent will not be unreasonably
small for New Parent to carry on its business; and
(4) New Parent does not intend to, or believe it will,
by virtue of consummating the transactions contemplated
hereby, incur debts that will be beyond its ability to
pay as they mature.
(j) Litigation. No injunction, decree or other decision
has been issued or made by any court, government or agency
or instrumentality thereof that has, and no threat by any
person has been made to attempt to obtain any such decision
that would have, a material adverse effect on a significant
part of its business operations.
(k) Office: FIN. The chief place of business and chief
executive office of New Parent are located at:
Anuhco, Inc.
9393 West 110th Street, Suite 100
Overland Park, Kansas 66210
New Parent's federal identification number is 46-0278762.
9. New Parent's Affirmative Covenants. From the date
hereof until the first day following the Commitment Termination
Date on which all Undivided Interests shall be reduced to zero,
New Parent will, unless Purchaser shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and
orders with respect to its business operations except where
non-compliance would not have a material adverse effect on
such business operations.
(b) Preservation of Corporate Existence. Preserve and
maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely
affect the ability of New Parent, Seller or Servicer to
perform their respective obligations hereunder.
(c) Financial Statements. As soon as available and in any
event within 100 days after each fiscal year of New Parent,
and within 55 days after each fiscal quarter of New Parent,
copies of the financial statements of New Parent and its
Subsidiaries prepared on a consolidated basis, in each case
in conformity with generally accepted accounting principles,
subject to normal year-end audit adjustments in the case of
quarterly statements, duly certified by the chief financial
officer of New Parent or, in the case of the annual
consolidated financial statements, by Arthur Anderson & Co.
L.L.P. or other independent certified public accountants of
recognized standing selected by New Parent and acceptable to
Purchaser.
(d) ERISA. Promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA which New
Parent files under ERISA with the Internal Revenue Service
or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which New Parent receives from such
Corporation.
(e) Litigation and Other Proceedings. As soon as possible
and in any event within three Business Days of New Parent's
knowledge thereof, notice of (i) any litigation,
investigation, inquiry or proceeding which may exist at any
time which could have a material adverse effect on the
business, operations, property or financial condition of New
Parent or impair the ability of New Parent to perform its
obligations under this Third Amendment and the Agreement
Documents and (ii) any material adverse development in any
previously disclosed litigation, investigation, inquiry or
proceeding.
(f) Other Information. Promptly, from time to time, such
other information, documents, records or reports respecting
the Receivables or the conditions or operations, financial
or otherwise, of New Parent as Purchaser may from time to
time reasonably request in order to protect the interests of
Purchaser or of any holder of a Certificate under or as
contemplated by this Third Amendment.
(g) Collateral Securing Parent Obligations. New Parent
shall at all times maintain the fair market value of all
cash and securities pledged to Purchaser pursuant to the New
Parent Pledge at not less than the sum of (A) Purchaser's
Investment and (B) the Earned Discount.
10. Consent to Stock Sale and Waiver of Termination Event.
Purchaser hereby consents to the sale of all of the stock of the
Seller owned by Parent to New Parent pursuant to the terms of the
Stock Purchase Agreement and waives the Termination Event that
such sale would otherwise cause pursuant to Section 9.01(l) of
the Purchase Agreement.
11. Conditions Precedent. This Third Amendment, shall be
effective when the Purchaser shall have received an executed
original hereof, together with each of the following, each in
substance and form acceptable to the Purchaser:
(a) The New Parent Pledge, duly executed on behalf of New
Parent.
(b) The Collateral Agent Agreement, duly executed on behalf
of New Parent and the Collateral Agent.
(c) Evidence that the fair market value of all cash and
securities pledged to Purchaser pursuant to the New Parent
Pledge is not less than the sum of (A) Purchaser's
Investment and (B) the Earned Discount.
(d) The following items, certified by New Parent's
secretary or assistant secretary as being true and correct
copies or specimens thereof: (i) the resolutions of New
Parent's directors and, if required, shareholders,
authorizing the execution, delivery and performance of this
Third Amendment and the New Parent Pledge, and the
assumption of the New Parent Obligations; (ii) New Parent's
articles of incorporation and bylaws; and (iii) the
signatures of New Parent's officers or agents authorized to
execute and deliver this Third Amendment, the New Parent
Pledge and other instruments, agreements and certificates on
New Parent's behalf.
(e) A Certificate of the Secretary of Seller certifying as
to (1) the resolutions of the board of directors of the
Seller approving the execution and delivery of this Third
Amendment and all other documents to be executed in
connection with this Third Amendment; (2) the fact that the
articles of incorporation and bylaws of Seller, which were
certified and delivered to the Purchaser pursuant to the
Certificate of the Seller's Secretary dated as of July 16,
1993 continue in full force and effect and have not been
amended or otherwise modified except as set forth in the
Certificate to be delivered, and (3) certifying that the
officers and agents of the Seller who have been certified to
the Purchaser, pursuant to the Certificate of the Seller's
Secretary dated as of July 16, 1993, as being authorized to
sign and to act on behalf of the Seller continue to be so
authorized or setting forth the sample signatures of each of
the officers and agents of the Seller authorized to execute
and deliver this Third Amendment and all other documents,
agreements and certificates on behalf of the Seller.
(f) A Certificate of the Secretary of Parent certifying as
to (1) the resolutions of the board of directors of the
Parent approving the execution and delivery of this Third
Amendment and all other documents to be executed in
connection with this Third Amendment; and (2) certifying
that the officers and agents of the Parent who have been
certified to the Purchaser, pursuant to the Certificate of
the Parent's Secretary dated as of July 16, 1993, as being
authorized to sign and to act on behalf of the Parent
continue to be so authorized or setting forth the sample
signatures of each of the officers and agents of the Parent
authorized to execute and deliver this Third Amendment and
all other documents, agreements and certificates on behalf
of the Parent.
(g) Copies of the Stock Purchase Agreement and all other
documents to be executed in connection with the Stock
Purchase Agreement, all of which shall be in form and
substance satisfactory to the Purchaser.
(h) Evidence that the transactions contemplated by the
Stock Purchase Agreement and related documents have been
consummated substantially according to the terms thereof.
(i) An opinion of New Parent's counsel.
(j) Such other matters as the Purchaser may require.
12. Representations and Warranties. The Seller hereby
represents and warrants to the Purchaser as follows:
(a) The Seller has all requisite power and authority to
execute this Third Amendment and to perform all of its
obligations hereunder, and this Third Amendment has been
duly executed and delivered by the Seller and constitutes
the legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Seller
of this Third Amendment have been duly authorized by all
necessary corporate action and do not (1) require any
authorization, consent or approval by any governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (2) violate any
provision of any law, rule or regulation or of any order,
writ, injunction or decree presently in effect, having
applicability to the Seller, or the articles of
incorporation or by-laws of the Seller, or (3) result in a
breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or
instrument to which the Seller is a party or by which it or
its properties may be bound or affected.
(c) All of the representations and warranties of the Seller
contained in Section 6.01 of the Purchase Agreement are
correct on and as of the date hereof as though made on and
as of such date, except to the extent that such
representations and warranties relate solely to an earlier
date.
(d) No Termination Event or Unmatured Termination Event
exists or will be caused by the consummation of the Stock
Purchase Agreement and this Third Amendment not waived
pursuant to Section 10 hereof.
13. References. All references in the Purchase Agreement
to "this Agreement" shall be deemed to refer to the Purchase
Agreement as amended hereby; and any and all references in the
Agreement Documents to the Purchase Agreement shall be deemed to
refer to the Purchase Agreement as amended hereby. All
references in the Agreement Documents to "Parent" shall be deemed
to be references to New Parent. All references in the Agreement
Documents to "Purchaser" shall be deemed to refer to Bank of
America Illinois, successor in interest to Continental Bank N.A.
14. No Waiver. Except as set forth in Section 10 hereof,
the execution of this Third Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of
any Termination Event under the Purchase Agreement or breach or
default under any Agreement Document or other document held by
the Purchaser, whether or not known to the Purchaser and whether
or not existing on the date of this Third Amendment.
15. Release. The Parent hereby absolutely and
unconditionally releases and forever discharges the Purchaser,
and any and all participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of
the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law
or equity or upon contract or tort or under any state or federal
law or otherwise, which the Parent has had, now has or has made
claim to have against any such person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the
beginning of time to and including the date of this Third
Amendment, whether such claims, demands and causes of action are
matured or unmatured or known or unknown.
16. Costs and Expenses. The Seller hereby reaffirms its
agreement under the Purchase Agreement to pay or reimburse the
Purchaser on demand for all costs and expenses incurred by the
Purchaser in connection with the preparation, execution, delivery
and administration (including periodic auditing) of the Purchase
Agreement, the Certificates and the other documents to be
delivered thereunder, including without limitation all reasonable
fees and disbursements of legal counsel. Without limiting the
generality of the foregoing, the Seller specifically agrees to
pay all fees and disbursements of counsel to the Purchaser for
the services performed by such counsel in connection with the
preparation of this Third Amendment and the documents and
instruments incidental hereto.
17. Miscellaneous. This Third Amendment may be executed in
any number of counterparts, each of which when so executed and
delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same
instrument. No amendment or waiver of any provision of this
Third Amendment nor consent to any departure by Seller or New
Parent therefrom shall be effective unless the same shall be in
writing and signed by Purchaser. Neither Seller nor New Parent
may assign their rights or obligations under or interest in this
Third Amendment or the Purchase Agreement without Purchaser's
prior written consent.
18. Consent to Jurisdiction: Waiver of Immunities. NEW
PARENT HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST,
OF ANY ILLINOIS FEDERAL COURT, AND, SECOND, IF FEDERAL
JURISDICTION IS NOT AVAILABLE, OF ANY ILLINOIS STATE COURT,
IN EITHER CASE SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS THIRD
AMENDMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN
SUCH ILLINOIS STATE OR FEDERAL COURT AND NOT IN ANY OTHER
COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM, TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER OR IN CONNECTION WITH THIS THIRD
AMENDMENT.
19. Governing Law. This Third Amendment shall be governed
by, and construed in accordance with, the internal laws of the
State of Illinois.
20. Waiver of Jury Trial. NEW PARENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS THIRD AMENDMENT, ANY
AGREEMENT DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP
EXISTING IN CONNECTION WITH THIS THIRD AMENDMENT OR ANY AGREEMENT
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be duly executed as of the day and year first
above written.
AGENCY PREMIUM RESOURCE, SEAFIELD CAPITAL CORPORATION,
INC., as Seller and Initial as Parent
Servicer
By: By:
Title: President Title: Chief Financial Officer
BANK OF AMERICA ILLINOIS, ANUHCO, INC., as New Parent
successor in interest to
Continental Bank N.A., as
Purchaser
By:
Its
By:
Vice President Address for Notices:
Facsimile No.
Attention:
ANUHCO, INC.
REPORT TO SHAREHOLDERS
SECOND QUARTER 1995
Second quarter 1995 consolidated net income from continuing
operations was $790,000 or $0.10 per share on revenue of $24.6
million, as compared with second quarter 1994 consolidated net
income from continuing operations of $1,875,000 or $0.25 per share
on revenue of $25.2 million. The second quarter of 1994 also
included income from discontinued operations of $1.25 million or
$0.16 per share for a total net income of $3,125,000 or $0.41 per
share.
As anticipated in the first quarter 1995 report to you, the
second quarter 1995 was a difficult one for the trucking industry
and for Crouse Cartage Company, Anuhco's general commodities motor
carrier. Crouse Cartage had second quarter operating income of
$1.0 million on revenue of $24.2 million; compared to 1994
operating income of $1.9 million on revenue of $25.2 million. The
decline in second quarter 1995 operating income is primarily due to
Crouse Cartages' extraordinary results achieved during the
teamsters union strike against certain competitors in April 1994,
when the company's freight volumes increased nearly 30% with
minimal discount pressure due to a lack of capacity within the
industry at the time. While Crouse Cartage has maintained much of
the additional freight volumes after the strike, a softening
economy and competitive market pressures on freight rates, as well
as a contractual increase in labor costs, effective April 1, 1995,
adversely impacted second quarter 1995 operating results.
On May 31, 1995, Anuhco completed the acquisition of Agency
Premium Resource, Inc. ("APR"), an insurance premium finance
company headquartered in Overland Park, Kansas. The acquisition of
APR initiated Anuhco's entry into the financial services market.
Expansion of the financial services operation is expected to
include growth of APR and possibly the acquisition of units which
would complement the operation of APR. The operations of APR,
which were included in consolidated results beginning June 1, 1995,
were not significant to the second quarter. Anuhco's consolidated
operating income was adversely impacted by certain one time charges
related to the acquisition of APR. Anuhco recorded a significant
increase in interest income in the second quarter 1995 on the
company's strong cash and investment position of approximately $34
million at June 30, 1995. Such additional income was partially
offset by a 20% provision for income taxes. No provision for taxes
was required in 1994.
In other news, all members of the Board of Directors were
reelected at the 1995 Annual Meeting of Shareholders. The
selection of Arthur Andersen LLP as independent public accountants
was ratified at the same meeting with over 75% of outstanding
Anuhco shares voting. On May 23, 1995, the Board of Directors
elected Timothy P. O'Neil (Tim) as President of Anuhco to replace
John P. Bigger who retired as President on that date. Tim joined
the company as Treasurer in 1989 and served as Senior Vice
President and Treasurer prior to his election as President and
continues to serve as Treasurer and Chief Financial Officer. Mr.
Bigger was elected as Vice Chairman of the Board of Directors
during the same meeting.
/s/ Timothy P. O'Neil /s/ Roy R. Laborde
Timothy P. O'Neil, Roy R. Laborde,
President & Chief Financial Officer Chairman
August 10, 1995
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UNAUDITED SUMMARY FINANCIAL STATEMENTS
(in thousands, except per share data)
CONSOLIDATED STATEMENTS OF INCOME
Second Quarter and Six Months Ended June 30
<CAPTION>
Second Quarter Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenue............ $24,569 $25,174 $49,200 $46,357
Operating Expenses........... 24,086 23,330 47,748 43,778
Operating Income............. 483 1,844 1,452 2,579
Non-Operating Income......... 505 31 1,135 48
Income Before Income Taxes... 988 1,875 2,587 2,627
Income Tax Provision......... 198 -0- 518 -0-
Income from Continuing
Operations............... 790 1,875 2,069 2,627
Income from Discontinued
Operations............... -0- 1,250 -0- 1,250
Net Income................... $ 790 $ 3,125 $ 2,069 $ 3,877
Income Per Share-
Continuing Operations...... $ 0.10 $ 0.25 $ 0.27 $ 0.35
Discontinued Operations.... 0.00 0.16 0.00 0.16
Total.................... $ 0.10 $ 0.41 $ 0.27 $ 0.51
Average Common Shares
Outstanding.............. 7,555 7,543 7,554 7,543
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<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
06/30/95 12/31/94
ASSETS
<S> <C> <C>
Current Assets..................... $ 67,342 $ 69,011
Operating Property (net)........... 17,057 14,417
Intangibles and Other Assets....... 3,391 1,344
$ 87,790 $ 84,772
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities................ $ 8,284 $ 7,353
Shareholders' Equity............... 79,506 77,419
$ 87,790 $ 84,772
9393 West 110th Street Suite 100 Overland Park, KS 66210
913-451-2800
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