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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
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Commission File No. 0-25642
COMMONWEALTH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3245741
(State of incorporation) (I.R.S. Employer Identification No.)
500 West Jefferson Street
19th Floor
Louisville, Kentucky 40202-2823
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 589-8100
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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 proceeding 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 ____
The registrant had 15,956,500 shares of common stock outstanding at October 20,
1997.
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<PAGE>
COMMONWEALTH INDUSTRIES, INC.
FORM 10-Q
For the Quarter Ended September 30, 1997
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited) Page Number
Condensed Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Income for the three
months and nine months ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition 8-10
and Results of Operations
Part II - Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Balance Sheet
(in thousands except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ 1,944
Accounts receivable, net 637 146,091
Inventories 177,373 173,911
Prepayments and other current assets 49,442 10,056
------------- -------------
Total current assets 227,452 332,002
Property, plant and equipment, net 265,866 274,095
Goodwill, net 174,681 175,146
Other noncurrent assets 10,536 13,339
------------- -------------
Total assets $ 678,535 $ 794,582
============= =============
Liabilities
Current liabilities:
Current portion of long-term debt $ - $ 6,250
Accounts payable 74,529 82,340
Accrued liabilities 30,347 36,351
------------- -------------
Total current liabilities 104,876 124,941
Long-term debt 136,100 336,000
Other long-term liabilities 11,031 14,584
Accrued pension benefits 12,109 10,610
Accrued postretirement benefits 83,579 81,224
------------- -------------
Total liabilities 347,695 567,359
------------- -------------
Commitments and contingencies - -
Stockholders' Equity
Common stock, $.01 par value, 50,000,000 shares authorized,
15,956,500 and 10,197,500 shares outstanding at
September 30, 1997 and December 31, 1996, respectively 160 102
Additional paid-in capital 399,123 301,289
Accumulated deficit (66,978) (72,188)
Unearned compensation (1,465) (1,980)
------------- -------------
Total stockholders' equity 330,840 227,223
------------- -------------
Total liabilities and stockholders' equity $ 678,535 $ 794,582
============= =============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Income
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------ -------------------------------
1997 1996 1997 1996
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 271,142 $ 170,052 $ 830,573 $ 497,268
Cost of goods sold 249,987 159,482 761,125 468,017
------------- ------------ ------------- ------------
Gross profit 21,155 10,570 69,448 29,251
Selling, general and administrative expenses 9,872 6,752 31,559 18,952
Amortization of goodwill 1,119 124 3,359 124
------------- ------------ ------------- ------------
Operating income 10,164 3,694 34,530 10,175
Other income (expense), net 82 95 579 (152)
Securitization expense (25) - (25) -
Interest expense, net (8,636) (1,346) (25,057) (2,468)
------------- ------------ ------------- ------------
Income before income taxes and extraordinary loss 1,585 2,443 10,027 7,555
Income tax expense (benefit) (5) (2,191) 2,106 (1,574)
------------- ------------ ------------- ------------
Income before extraordinary loss 1,590 4,634 7,921 9,129
Extraordinary loss on early extinguishment of debt,
net of income tax benefit (1,181) (1,355) (1,181) (1,355)
------------- ------------ ------------- ------------
Net income $ 409 $ 3,279 $ 6,740 $ 7,774
============= ============ ============= ============
Per share data:
Income before extraordinary loss $ 0.16 $ 0.45 $ 0.78 $ 0.89
Extraordinary loss (0.12) (0.13) (0.12) (0.13)
------------- ------------ ------------- ------------
Net income $ 0.04 $ 0.32 $ 0.66 $ 0.76
============= ============ ============= ============
Weighted average shares outstanding 10,333 10,195 10,249 10,195
============= ============ ============= ============
Dividends per share $ 0.05 $ 0.05 $ 0.15 $ 0.15
============= ============ ============= ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------------
1997 1996
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,740 $ 7,774
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 27,350 14,092
Extraordinary loss on early extinguishment of debt 1,495 1,505
Issuance of common stock in connection with stock awards 84 -
Proceeds from the initial sale of accounts receivable 150,000 -
Changes in assets and liabilities:
(Increase) in accounts receivable, net (46,932) (2,002)
(Increase) decrease in inventories (3,462) 22,386
Decrease (increase) in prepayments and other current assets 2,635 (6,449)
Decrease (increase) in other noncurrent assets 449 (8,513)
(Decrease) increase in accounts payable (7,811) 1,322
(Decrease) increase in accrued liabilities (6,004) 2,891
Increase (decrease) in other liabilities 301 (7,265)
------------ -------------
Net cash provided by operating activities 124,845 25,741
------------ -------------
Cash flows from investing activities:
Net cash and cash equivalents (outflow) from acquisition (2,894) (276,336)
Additions to property, plant and equipment (14,101) (8,165)
Disposals of property, plant and equipment 10 215
------------ -------------
Net cash (used in) investing activities (16,985) (284,286)
------------ -------------
Cash flows from financing activities:
Proceeds from short-term borrowings - 21,000
Repayments of short-term borrowings - (25,000)
Proceeds from long-term debt 283,450 335,000
Repayments of long-term debt (489,600) (73,590)
Proceeds from issuance of common stock 97,876 -
Cash dividends paid (1,530) (1,530)
------------ -------------
Net cash (used in) provided by financing activities (109,804) 255,880
------------ -------------
Net (decrease) in cash and cash equivalents (1,944) (2,665)
Cash and cash equivalents at beginning of period 1,944 2,665
------------ -------------
Cash and cash equivalents at end of period $ - $ -
============ =============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying condensed consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. The condensed consolidated financial statements have been prepared
in accordance with Commonwealth Industries, Inc.'s (formerly Commonwealth
Aluminum Corporation) (the "Company's") customary accounting practices and have
not been audited. In the opinion of management, all adjustments necessary to
fairly present the results of operations for the reporting interim periods have
been made and were of a normal recurring nature.
2. Acquisition
On September 20, 1996, the Company acquired CasTech Aluminum Group Inc.
("CasTech") for a purchase price of $285 million. The excess of the purchase
price over the acquired net assets of $179 million was recorded as goodwill and
is being amortized over 40 years. The acquisition was recorded under the
purchase method of accounting and accordingly, the results of operations of
CasTech prior to the date of acquisition have not been included in the
accompanying consolidated financial statements.
3. Inventories
The Company uses the first-in, first-out (FIFO) and the last-in, first-out
(LIFO) methods for valuing its inventories.
(In thousands) September 30, 1997 December 31, 1996
- -------------- ------------------ -----------------
Raw materials $ 40,223 $ 29,458
Work in process 79,816 82,205
Finished goods 46,427 46,959
Expendable parts and supplies 15,047 15,338
--------- ---------
181,513 173,960
LIFO reserve (4,140) (49)
--------- ---------
$ 177,373 $ 173,911
========= =========
Inventories of approximately $42 million and $38 million, included in the above
totals at September 30, 1997 and December 31, 1996, respectively, are accounted
for under the LIFO method of accounting.
On September 30, 1997, the Company had deferred realized gains of $2.0 million
on closed futures contracts which are recorded as a reduction of the carrying
value of inventory. The Company had deferred realized gains of $0.4 million at
December 31, 1996.
4. Provision for Income Taxes
The effective income tax rate for the nine months ended September 30, 1997 is
greater than the rate for the nine months ended September 30, 1996 as a result
of the expected increase in the Company's taxable income for the year 1997
compared to the year 1996. The income tax benefit relating to the extraordinary
loss on the early extinguishment of debt was $0.3 million for 1997 and $0.1
million for 1996.
5. Accounts Receivable Securitization
On September 26, 1997, the Company sold certain of its accounts receivables to a
100% owned subsidiary, Commonwealth Financing Corp., ("CFC"). Simultaneously,
CFC entered into a three-year accounts receivable securitization facility with a
financial institution and its affiliate whereby CFC can sell, on a revolving
basis, an undivided interest in certain of its receivables and receive up to
$150.0 million from an unrelated third party purchaser at a cost of funds linked
to commercial paper rates plus a charge for administrative and credit support
services. At September 30, 1997, the Company had received $150.0 million under
the agreement and had $46.2 million of net residual interest in the securitized
receivables which is included in other current assets in the Company's
consolidated financial statements.
The Company maintains an allowance for uncollectible accounts based upon the
expected collectibility of all consolidated trade accounts receivable, including
receivables sold by CFC.
6. Stockholders' Equity
On September 29, 1997, the Company completed a common stock offering of 5.75
million shares at a public offering price of $18 per share. The net proceeds
from the offering of approximately $97.7 million were used to repay the entire
amount outstanding under the Company's term loan agreement, totaling $95.0
million, as well as $2.7 million outstanding under the Company's revolving
credit facility.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion contains statements which are forward-looking rather
than historical fact. These forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
and involve risks and uncertainties that could render them materially different,
including, but not limited to, the effect of global economic conditions, the
impact of competitive products and pricing, product development and
commercialization, availability and cost of critical raw materials, the rate of
technological change, product demand and market acceptance risks, capacity and
supply constraints or difficulties, and other risks detailed in the Company's
various Securities and Exchange Commission filings.
Overview
The Company manufactures non-heat treat coiled aluminum sheet for the
distributors and the transportation, construction and consumer durables end use
markets and electrical flexible conduit and prewired armored cable for the
non-residential construction and renovation markets. The Company's principal raw
materials are aluminum scrap, primary aluminum, copper and steel. Trends in the
demand for the Company's aluminum sheet products in the United States and in the
prices of aluminum primary metal, aluminum scrap and copper affect the business
of the Company. The Company's operating results also are affected by factors
specific to the Company, such as the margins between selling prices for its
products and its cost of raw material ("material margins") and its unit cost of
converting raw material into its products ("conversion cost"). While changes in
aluminum and copper prices can cause the Company's net sales to change
significantly from period to period, net income is more directly impacted by the
fluctuation in material margins.
During the first nine months of 1997, shipments of the Company's products, both
aluminum sheet and electrical conduit and cable, continued to increase as demand
for those products remained strong. The sales and production throughput at all
of the Company's facilities increased from the previous year due to product mix
optimization, debottlenecking and increased electrical conduit and cable
capacity.
During the third quarter, the operating earnings of the aluminum business unit
were negatively impacted by weaker pricing in the aluminum sheet industry.
Rather than yielding to this pricing environment, the Company chose to forego
certain business the Company believed reflected unrealistic pricing
expectations. As a result, the Company's material margins and sales volumes were
down from the second quarter by $.01 per pound and 8.5%, respectively. Unplanned
equipment outages at the Uhrichsville, Ohio and Lewisport, Kentucky rolling
mills were also contributing factors to the reduced sales volumes recorded by
the Company in the third quarter.
Subsequently, during the quarter, the Company announced a price increase for
shipments beginning in the month of November. The Company believes that the
price increase stemmed the price erosion occurring in the third quarter and will
contribute to improved pricing in the future.
The Alflex business unit continued to benefit from strong demand within the
construction sector of the United States economy. Additional electrical flexible
conduit and prewired armored cable capacity has been brought on line during 1997
by the Company and coupled with customer demand has led to record shipment
levels for the Alflex business unit during 1997.
On September 20, 1996, the Company acquired CasTech Aluminum Group Inc.
("CasTech") in a transaction that was accounted for under the purchase method of
accounting. CasTech was the nation's leading manufacturer of continuous cast
aluminum sheet and a leading manufacturer of electrical flexible conduit and
prewired armored cable. Concurrent with the acquisition, the Company prepaid its
existing indebtedness and that of CasTech. The acquisition and prepayment were
financed with a new $325 million senior secured bank credit facility and the
proceeds from the issue and sale of $125 million principal amount of 10.75%
Senior Subordinated Notes Due 2006.
Results of Operations for the three months and nine months ended
September 30, 1997 and 1996
Net Sales. Net sales for the quarter ended September 30, 1997, increased 59% to
$271 million (including $32.7 million from Alflex) from $170 million (including
$3.2 million from Alflex) for the same period in 1996. Net sales for the nine
month period ended September 30, 1997, were $831 million (including $96.4
million from Alflex), a 67% increase from the first nine months of 1996. The
increase is due to the CasTech acquisition along with increased sales volumes at
all facilities. Unit sales volume of aluminum increased 43% to 240.7 million
pounds for the third quarter of 1997 from 168.0 million pounds for the third
quarter of 1996. Unit sales volume of aluminum was 764.1 million pounds for the
first nine months of 1997, an increase of 58% over the 482.6 million pounds for
the first nine months of 1996. Alflex unit sales volume was 134 million feet for
the third quarter of 1997 and 396 million feet for the first nine months of 1997
versus 130 million feet and 361million feet, respectively, for the comparable
periods in 1996 after giving pro forma effect for the 1996 CasTech acquisition.
Gross Profit. Gross profit for the quarter ended September 30, 1997, increased
to $21.2 million from $10.6 million for the same period in 1996. Gross profit
for the nine months ended September 30, 1997 was $69.4 million, a 137% increase
from the $29.3 million reported for the nine months ended September 30, 1996.
This increase was attributable to the CasTech acquisition , increased unit sales
volumes and lower manufacturing unit costs which more than offset lower material
margins . The Company's unit manufacturing costs decreased compared to the same
period in 1996 as a result of the higher unit volumes and mill optimization
practices.
Operating Income. The Company produced operating income of $10.2 million for the
third quarter of 1997 compared with $3.7 million for the third quarter of 1996.
For the nine month period ended September 30, 1997, operating income was $34.5
million, up from $10.2 million for the first nine months of 1996. Selling,
general and administrative expenses during the third quarter of 1997 were $9.9
million, compared with $6.8 million for the same period in 1996 and $31.6 for
the nine months ended September 30, 1997, compared with $19.0 million for the
same period in 1996. This increase along with the amortization of goodwill
recorded in the third quarter and first nine months of 1997 of $1.1 and $3.4
million, respectively, is due to the CasTech acquisition. Contributing to the
increase were corporate relocation, severance and other costs related to the
integration of the businesses.
Net Income. Net income was $0.4 million for the quarter ended September 30,
1997, compared with $3.3 million for the same period in 1996. Net income for the
nine months ended September 30, 1997 was $6.7 million compared with $7.8 million
for the first nine months of 1996. Interest expense was $8.6 million for the
quarter ended September 30, 1997 and $1.3 million for the comparable period in
1996 and $25.1 million for the nine months ended September 30, 1997, compared
with $2.5 million for the same period in 1996. The increase in the Company's
interest expense is due to borrowings associated with the CasTech acquisition.
These borrowings were reduced as described in the "Liquidity and Capital
Resources" section following. The Company had an income tax benefit of $5,000 in
the third quarter of 1997 compared to an income tax benefit of $2.2 million for
the same period in 1996 and income tax expense of $2.1 million for the nine
months ended September 30, 1997, compared to an income tax benefit of $1.6 for
the same period in 1996. In the third quarter of 1996, the Company had recorded
an income tax benefit of $2.2 million reflecting the impact of a pension
contribution made in the third quarter of 1996. The Company's income tax expense
for the third quarter of 1997 included a $0.3 million benefit due to a change in
the projected annual effective tax rate which, in turn, reflected the Company's
lower projected before tax income for 1997. The Company also recorded an
extraordinary loss on the early extinguishment of debt in both the third quarter
of 1997 and 1996 of $1.5 million ($1.2 million and $1.4 million net of income
tax benefit, respectively).
Liquidity and Capital Resources
The Company's sources of liquidity are cash flows from operations and borrowings
under its $225 million revolving credit facility. The Company believes these
sources will be sufficient to fund its working capital requirements, capital
expenditures, debt service and dividend payments at least through 1998.
On September 29, 1997, the Company completed a common stock offering of 5.75
million shares at a public offering price of $18 per share. The net proceeds
from the offering of approximately $97.7 million were used to repay the entire
amount outstanding under the Company's term loan agreement, totaling $95.0
million, as well as $2.7 million outstanding under the Company's revolving
credit facility.
On September 26, 1997, the Company sold certain of its accounts receivables to a
100% owned subsidiary, Commonwealth Financing Corp., ("CFC"). Simultaneously,
CFC entered into a three-year accounts receivable securitization facility with a
financial institution and its affiliate whereby CFC can sell, on a revolving
basis, an undivided interest in certain of its receivables and receive up to
$150.0 million from an unrelated third party purchaser at a cost of funds linked
to commercial paper rates plus a charge for administrative and credit support
services. At September 30, 1997, the Company had received $150.0 million under
the agreement and had $46.2 million of net residual interest in the securitized
receivables which is included in other current assets in the Company's
consolidated financial statements.
Capital expenditures were $5.2 million during the quarter ended September 30,
1997 and $14.1 million for the nine months ended September 30, 1997. At
September 30, 1997, the Company had commitments of $9.6 million for the purchase
or construction of capital assets. Total capital expenditures for the year 1997
are expected to be approximately $26 million, principally related to upgrading
the Company's manufacturing and other facilities and meeting environmental
requirements.
Risk Management
The Company offers its customers multiple pricing methods, including fixed firm
prices. Purchases of metal for forward delivery as well as hedging with futures
contracts and options are used to reduce the Company's aggregate exposure to the
risk of changes in metal prices. This is accomplished by establishing at the
time of a customer's order a fixed margin between the cost of the metal and the
Company's price of the product to the customer. Gains and losses resulting from
changes in the market value of these futures contracts and options increase or
decrease cost of sales at the time of revenue recognition. At September 30,
1997, the Company held purchase and sales commitments through 1997 totaling $69
million and $236 million, respectively. The Company held futures contracts,
marked-to-market at September 30, 1997, with a net unrealized gain of $1.7
million.
Before entering into futures contracts and options, the Company reviews the
credit rating of the counterparty and assesses any possible credit risk. While
the Company is exposed to certain losses in the event of non-performance by the
counterparties to these agreements, the Company does not anticipate
non-performance by such counterparties.
The Company has entered into interest rate swap agreements with a notional
amount of $107 million. With respect to these agreements, the Company pays a
fixed rate of interest and receives a LIBOR-based floating rate.
Recently Issued Accounting Pronouncements
During February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"). The Company will adopt SFAS No. 128 during the fourth quarter
of 1997 as required and does not expect the Statement to have a material impact
on the calculation of net income per share.
During June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS No. 131"). The Company will adopt
SFAS No. 131 during the fourth quarter of 1998 as required.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to non-environmental legal proceedings and administrative
actions all of which are of an ordinary routine nature incidental to the
operations of the Company. Although it is impossible to predict the outcome of
any legal proceeding, in the opinion of management such proceedings and actions
should not, individually or in aggregate, have a material adverse effect on the
Company's financial condition, results of operations or cash flows, although
resolution in any year or quarter could be material to the results of operation
for that period.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Receivables Purchase Agreement among Commonwealth Financing Corp., the
Company, Market Street Funding Corporation and PNC Bank, National
Association, dated as of September 29, 1997.
10.2 Amendment No. 1, dated as of July 31, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
10.3 Amendment No. 2, dated as of August 29, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
10.4 Amendment No. 3, dated as of August 29, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
11 Computation of Net Income Per Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the quarter ended
September 30, 1997:
A report on Form 8-K dated August 25, 1997 was filed with the
Securities and Exchange Commission announcing the Company anticipated lower
third quarter results.
<PAGE>
SIGNATURES
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.
COMMONWEALTH INDUSTRIES, INC.
By: /s/ Donald L. Marsh, Jr.
------------------------
Donald L. Marsh, Jr.
Executive Vice President, Chief Financial
Officer and Secretary
Date: October 29, 1997
<PAGE>
Exhibit Index
Exhibit
Number Description
10.1 Receivables Purchase Agreement among Commonwealth Financing Corp., the
Company, Market Street Funding Corporation and PNC Bank, National Association,
dated as of September 29, 1997.
10.2 Amendment No. 1, dated as of July 31, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
10.3 Amendment No. 2, dated as of August 29, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
10.4 Amendment No. 3, dated as of August 29, 1997, to Amended and Restated
Credit Agreement among the Company, subsidiaries of the Company, the several
lenders from time to time parties thereto, and National Westminister Bank
PLC, as agent, dated as of November 29, 1996.
11 Computation of Net Income Per Share.
27 Financial Data Schedule.
18300270.7 October 14,1997 11:48C 97396451
RECEIVABLES PURCHASE AGREEMENT
dated as of September 29, 1997
among
COMMONWEALTH FINANCING CORP.,
COMMONWEALTH INDUSTRIES, INC.,
MARKET STREET FUNDING CORPORATION
and
PNC BANK, NATIONAL ASSOCIATION
<PAGE>
Receivables Purchase Agreement 24
TABLE OF CONTENTS
ARTICLE I.AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility 1
Section 1.2. Making Purchases 2
Section 1.3. Purchased Interest Computation 3
Section 1.4. Settlement Procedures 3
Section 1.5. Fees 6
Section 1.6. Payments and Computations, Etc 6
Section 1.7. Dividing or Combining Portions of the Capital of the Purchased
Interest 7
Section 1.8. Increased Costs 7
Section 1.9. Requirements of Law 8
Section 1.10. Inability to Determine Eurodollar Rate 9
ARTICLE II.REPRESENTATIONS AND WARRANTIES; COVENANTS;TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants 9
Section 2.2. Termination Events 9
ARTICLE III.INDEMNIFICATION
Section 3.1. Indemnities by the Seller 10
Section 3.2. Indemnities by the Servicer 11
ARTICLE IV.ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer 12
Section 4.2. Duties of the Servicer 13
Section 4.3. Lock-Box Arrangements 14
Section 4.4. Enforcement Rights 14
Section 4.5. Responsibilities of the Seller 15
Section 4.6. Servicing Fee 15
ARTICLE V.MISCELLANEOUS
Section 5.1. Amendments, Etc. 16
Section 5.2. Notices, Etc 16
Section 5.3. Assignability 16
Section 5.4. Costs, Expenses and Taxes 17
Section 5.5. No Proceedings; Limitation on Payments 17
Section 5.6. Confidentiality 18
Section 5.7. GOVERNING LAW AND JURISDICTION 18
Section 5.8. Execution in Counterparts 19
Section 5.9. Survival of Termination 19
Section 5.10. WAIVER OF JURY TRIAL 19
Section 5.11. Entire Agreement 19
Section 5.12. Headings 19
Section 5.13. Issuer's Liabilities 19
EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Termination Events
SCHEDULE I Credit and Collection Policy
SCHEDULE II Lock-box Banks and Lock-box Accounts
SCHEDULE III Trade Names
ANNEX A Form of Lock-Box Agreement
ANNEX B Form of Information Package
<PAGE>
This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is entered into as of
September 29, 1997 among COMMONWEALTH FINANCING CORP., a Delaware corporation,
as seller (the "Seller"), COMMONWEALTH INDUSTRIES, INC., a Delaware corporation
("Commonwealth"), as initial servicer (in such capacity, together with its
successors and permitted assigns in such capacity, the "Servicer"), MARKET
STREET FUNDING CORPORATION, a Delaware corporation (together with its successors
and permitted assigns, the "Issuer"), and PNC BANK, NATIONAL ASSOCIATION, a
national banking association ("PNC"), as administrator (in such capacity,
together with its successors and assigns in such capacity, the "Administrator").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I. References in the Exhibits
hereto to "the Agreement" refer to this Agreement, as amended, supplemented or
otherwise modified from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Issuer desires to acquire
such undivided variable percentage interest, as such percentage interest shall
be adjusted from time to time based upon, in part, reinvestment payments that
are made by the Issuer and additional incremental payments made to the Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
I. ARTICLE
AMOUNTS AND TERMS OF THE PURCHASES
1. Section Purchase Facility. On the terms and conditions hereinafter
set forth, the Issuer hereby agrees to purchase, and make reinvestments of,
undivided percentage ownership interests with regard to the Purchased Interest
from the Seller from time to time from the date hereof to the Facility
Termination Date. Under no circumstances shall the Issuer make any such purchase
or reinvestment if, after giving effect to such purchase or reinvestment, the
aggregate outstanding Capital of the Purchased Interest would exceed the
Purchase Limit.
1. The Seller may, upon at least 60 days' written notice to the
Administrator, terminate the purchase facility provided in this Section in whole
or, from time to time, irrevocably reduce in part the unused portion of the
Purchase Limit; provided, that each partial reduction shall be in the amount of
at least $5,000,000, or an integral multiple of $1,000,000 in excess thereof,
and that, unless terminated in whole, the Purchase Limit shall in no event be
reduced below $20,000,000.
1. Section Making Purchases. Each purchase (but not reinvestment) of
undivided percentage ownership interests with regard to the Purchased Interest
hereunder shall be made upon the Seller's irrevocable written notice delivered
to the Administrator in accordance with Section 5.2 (which notice must be
received by the Administrator before 11:00 a.m., New York City time): (i) at
least three Business Days before the requested purchase date, in the case of a
purchase to be funded at the Alternate Rate and based upon the Eurodollar Rate,
(ii) at least two Business Days before the requested purchase date, in the case
of a purchase to be funded at the Alternate Rate and based upon the Base Rate,
and (iii) at least two Business Days before the requested purchase date, in the
case of a purchase to be funded at the CP Rate, which notice shall specify: (A)
the amount requested to be paid to the Seller (such amount, which shall not be
less than $5,000,000, being the Capital relating to the undivided percentage
ownership interest then being purchased), (B) the date of such purchase (which
shall be a Business Day) and (C) the desired funding basis for such purchase
(which shall be based upon the Eurodollar Rate, the Base Rate or the CP Rate).
If the Seller has requested that the purchase be funded at the CP Rate, the
Administrator shall promptly thereafter notify the Seller whether the Issuer has
exercised its discretion not to fund such purchase with the issuance of Notes
because such purchase with the issuance of Notes would be economically
inadvisable to the Issuer, the Administrator, the Seller or any other similarly
situated Person, or otherwise not permitted, in which case the Seller shall be
deemed to have requested that the purchase be funded at the Alternate Rate and
be based upon the Base Rate.
1. On the date of each purchase (but not reinvestment) of undivided
percentage ownership interests with regard to the Purchased Interest hereunder,
the Issuer shall, upon satisfaction of the applicable conditions set forth in
Exhibit II, make available to the Seller in same day funds, at Mellon Bank
Pittsburgh, account #170-4510, ABA #043-000-261, an amount equal to the Capital
relating to the undivided percentage ownership interest then being purchased.
1. Effective on the date of each purchase pursuant to this Section and
each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns
to the Issuer an undivided percentage ownership interest in: (i) each Pool
Receivable then existing, (ii) all Related Security with respect to such Pool
Receivables and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
1. To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Issuer a
security interest in all of the Seller's right, title and interest (including
any undivided interest of the Seller) in, to and under all of the following,
whether now or hereafter owned, existing or arising: (i) all Pool Receivables,
(ii) all Related Security with respect to such Pool Receivables, (iii) all
Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts
and all amounts on deposit therein, and all certificates and instruments, if
any, from time to time evidencing such Lock-Box Accounts and amounts on deposit
therein, (v) all rights (but none of the obligations) of the Seller under the
Sale Agreement, and (vi) all proceeds of, and all amounts received or receivable
under any or all of, the foregoing (collectively, the "Pool Assets"). The Issuer
shall have, with respect to the Pool Assets, and in addition to all the other
rights and remedies available to the Issuer, all the rights and remedies of a
secured party under the New York UCC.
A. Section Purchased Interest Computation. The Purchased Interest shall
be initially computed on the date of the initial purchase hereunder. Thereafter,
until the Termination Date, the Purchased Interest shall be automatically
recomputed (or deemed to be recomputed) on each Business Day other than a
Termination Day. The Purchased Interest as computed (or deemed recomputed) as of
the day before the Termination Date shall thereafter remain constant. The
Purchased Interest shall become zero when the Capital thereof and Discount
thereon shall have been paid in full, all the amounts owed by the Seller and the
Servicer hereunder to the Issuer, the Administrator and any other Indemnified
Party or Affected Person are paid in full, and the Servicer shall have received
the accrued Servicing Fee thereon.
1. Section Settlement Procedures. The collection of the Pool
Receivables shall be administered by the Servicer in accordance with this
Agreement. The Seller shall provide to the Servicer on a timely basis all
information needed for such administration, including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.
1. The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the
Seller or the Servicer:
a) set aside and hold in trust (and shall, at the request of
the Administrator, segregate in a separate account approved by the
Administrator) for the Issuer, out of the Issuer's Share of such
Collections, first, an amount equal to the Discount accrued through
such day for each Portion of Capital and not previously set aside,
second, an amount equal to the fees set forth in the Fee Letter accrued
and unpaid through such day, and third, to the extent funds are
available therefor, an amount equal to the Issuer's Share of the
Servicing Fee accrued through such day and not previously set aside,
a) subject to Section 1.4(f), if such day is not a Termination
Day, remit to the Seller, on behalf of the Issuer, the remainder of the
Issuer's Share of such Collections; such remainder shall be
automatically reinvested in Pool Receivables, and in the Related
Security, Collections and other proceeds with respect thereto;
provided, however, that if the Purchased Interest would exceed 100%,
then the Servicer shall not reinvest, but shall set aside and hold in
trust for the Issuer (and shall, at the request of the Administrator,
segregate in a separate account approved by the Administrator) a
portion of such Collections that, together with the other Collections
set aside pursuant to this paragraph, shall equal the amount necessary
to reduce the Purchased Interest to 100%,
a) if such day is a Termination Day, set aside, segregate and
hold in trust (and shall, at the request of the Administrator,
segregate in a separate account approved by the Administrator) for the
Issuer the entire remainder of the Issuer's Share of the Collections;
provided, that if amounts are set aside and held in trust on any
Termination Day of the type described in clause (a) of the definition
of "Termination Day" and, thereafter, the conditions set forth in
Section 2 of Exhibit II are satisfied or waived by the Administrator,
such previously set aside amounts shall be reinvested in accordance
with clause (ii) on the day of such subsequent satisfaction or waiver
of conditions, and
a) subject to the Issuer's security interest under Section
1.2(d), release to the Seller (subject to Section 1.4(f)) for its own
account any Collections in excess of: (A) amounts required to be
reinvested in accordance with clause (ii) or the proviso to clause
(iii) plus (y) the amounts that are required to be set aside pursuant
to clause (i), the proviso to clause (ii) and clause (iii) plus (z) the
Seller's Share of the Servicing Fee accrued and unpaid through such day
and all reasonable and appropriate out-of-pocket costs and expenses of
the Servicer for servicing, collecting and administering the Pool
Receivables.
1. The Servicer shall deposit into the Administration Account (or such
other account designated by the Administrator), on the last day of each
Settlement Period Collections held for the Issuer pursuant to clause (b)(i) or
(f) plus the amount of Collections then held for the Issuer pursuant to clauses
(b)(ii) and (iii) provided, that if Commonwealth is the Servicer, such day is
not a Termination Day and the Administrator has not notified Commonwealth that
such right is revoked, Commonwealth may retain the portion of the Collections
set aside pursuant to clause (b)(i) that represents the Issuer's Share of the
Servicing Fee. On the last day of each Settlement Period, the Administrator will
notify the Servicer by facsimile of the amount of Discount accrued with respect
to each Portion of Capital during such Settlement Period or portion thereof.
1. Upon receipt of funds deposited into the Administration Account
pursuant to clause (c), the Administrator shall cause such funds to be
distributed as follows:
a) if such distribution occurs on a day that is not a
Termination Day and the Purchased Interest does not exceed 100%, first
to the Issuer in payment in full of all accrued Discount and fees
(other than Servicing Fees) with respect to each Portion of Capital,
and second, if the Servicer has set aside amounts in respect of the
Servicing Fee pursuant to clause (b)(i) and has not retained such
amounts pursuant to clause (c), to the Servicer (payable in arrears on
the last day of each Settlement Period) in payment in full of the
Issuer's Share of accrued Servicing Fees so set aside, and
a) if such distribution occurs on a Termination Day or on a
day when the Purchased Interest exceeds 100%, first to the Issuer in
payment in full of all accrued Discount with respect to each Portion of
Capital, second to the Issuer in payment in full of Capital (or, if
such day is not a Termination Day, the amount necessary to reduce the
Purchased Interest to 100%), third, if Commonwealth or an Affiliate
thereof is not the Servicer, to the Servicer in payment in full of all
accrued Servicing Fees, fourth, if the Capital and accrued Discount
with respect to each Portion of Capital have been reduced to zero, and
all accrued Servicing Fees payable to the Servicer (if other than
Commonwealth or an Affiliate thereof) have been paid in full, to the
Issuer, the Administrator and any other Indemnified Party or Affected
Person in payment in full of any other amounts owed thereto by the
Seller hereunder and, fifth, unless such amount has been retained by
the Servicer pursuant to clause (c), then to the Servicer (if the
Servicer is Commonwealth or an Affiliate thereof) in payment in full of
the Issuer's Share of all accrued Servicing Fees.
After the Capital, Discount, fees payable pursuant to the Fee Letter and
Servicing Fees with respect to the Purchased Interest, and any other amounts
payable by the Seller and the Servicer to the Issuer, the Administrator or any
other Indemnified Party or Affected Person hereunder, have been paid in full,
all additional Collections with respect to the Purchased Interest shall be paid
to the Seller for its own account.
1. For the purposes of this Section 1.4:
a) if on any day the Outstanding Balance of any Pool
Receivable is reduced or adjusted as a result of any defective,
rejected, returned, repossessed or foreclosed goods or services, or any
revision, cancellation, allowance, discount or other adjustment made by
the Seller or any Affiliate of the Seller, or any setoff or dispute
between the Seller or any Affiliate of the Seller and an Obligor, or
the Seller shall have received a Deemed Collection under the Sale
Agreement, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of such reduction,
adjustment or Deemed Collection;
a) if on any day any of the representations or warranties in
Section 1(h) or (o) of Exhibit III is not true with respect to any
Pool Receivable, the Seller shall be deemed to have received on such
day a Collection of such Pool
Receivable in full;
a) except as provided in clause (i) or (ii), or as otherwise
required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivable shall be applied to the
Receivables of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, unless such
Obligor designates in writing its payment for application to specific
Receivables; and
a) if and to the extent the Administrator or the Issuer shall
be required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding)
any amount received by it hereunder, such amount shall be deemed not to
have been so received by the Administrator or the Issuer but rather to
have been retained by the Seller and, accordingly, the Administrator or
the Issuer, as the case may be, shall have a claim against the Seller
for such amount, payable when and to the extent that any distribution
from or on behalf of such Obligor is made in respect thereof.
1. If at any time the Seller shall wish to cause the reduction of
Capital (but not to commence the liquidation, or reduction to zero, of the
entire Capital of the Purchased Interest), the Seller may do so as follows:
a) the Seller shall give the Administrator and the Servicer
at least two Business Days' prior written notice thereof (including
the amount of such proposed reduction and the proposed date on which
such reduction will commence);
a) on the proposed date of commencement of such reduction and
on each day thereafter, the Servicer shall cause Collections not to be
reinvested until the amount thereof not so reinvested shall equal the
desired amount of reduction; and
a) the Servicer shall hold such Collections in trust for the
Issuer, for payment to the Administrator on the last day of the
current Settlement Period and Capital shall be deemed reduced in the
amount to be paid to the Administrator only when in fact finally so
paid;
provided, that:
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $250,000, and the
entire Capital of the Purchased Interest after giving effect to such
reduction shall be not less than $20,000,000 and shall be in an
integral multiple of $250,000 (unless Capital shall have been reduced
to zero); and
(B) the Seller shall choose a reduction amount, and the date
of commencement thereof, so that to the extent practicable such
reduction shall commence and conclude in the same Settlement Period.
A. Section Fees. The Seller shall pay to the Administrator certain
fees in the amounts and on the dates set forth in a letter, dated the date
hereof, among Commonwealth, the Seller and the Administrator (as such letter
agreement may be amended, supplemented or otherwise modified from time to time,
the "Fee Letter").
1. Section Payments and Computations, Etc. All amounts to be paid or
deposited by the Seller or the Servicer hereunder shall be made without
reduction for offset or counterclaim and shall be paid or deposited no later
than 2:00 p.m. (New York City time) on the day when due in same day funds to the
Administration Account. All amounts received after noon (New York City time)
will be deemed to have been received on the next Business Day.
1. The Seller or the Servicer, as the case may be, shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by the Seller
or the Servicer, as the case may be, when due hereunder, at an interest rate
equal to 2.0% per annum above the Base Rate, payable on demand.
1. All computations of interest under clause (b) and all computations
of Discount, fees and other amounts hereunder shall be made on the basis of a
year of 360 (or 365 or 366, as applicable, with respect to Discount or other
amounts calculated by reference to the Base Rate) days for the actual number of
days elapsed. Whenever any payment or deposit to be made hereunder shall be due
on a day other than a Business Day, such payment or deposit shall be made on the
next Business Day and such extension of time shall be included in the
computation of such payment or deposit.
A. Section Dividing or Combining Portions of the Capital of the
Purchased Interest. The Seller may, on the last day of any Settlement Period,
pursuant to written notice delivered to the Administrator in accordance with
Section 5.2: (a) at least three Business Days before such last day in the case
of a Portion of Capital to be funded based upon the Eurodollar Rate and (b) at
least two Business Days before such last day in all other cases, either: (i)
divide the Capital of the Purchased Interest into two or more portions (each a
"Portion of Capital"), which Portions of Capital may accrue Discount by
reference to different rates, equal, in aggregate, to the Capital of the
Purchased Interest; provided, that after giving effect to such division the
amount of each such Portion of Capital shall be not less than $1,000,000 and
shall be an integral multiple of $250,000, or (ii) combine any two or more
Portions of Capital outstanding on such last day and having Settlement Periods
ending on such last day into a single Portion of Capital equal to the aggregate
of the Capital of such Portions of Capital.
1. Section Increased Costs. If the Administrator, the Issuer, any
Purchaser, any other Program Support Provider or any of their respective
Affiliates (each an "Affected Person") reasonably determines that the existence
of or compliance with: (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof, or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement, affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person, and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of (or otherwise to maintain the investment in) Pool Receivables
related to this Agreement or any related liquidity facility, credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Administrator), the Seller shall promptly
pay to the Administrator, for the account of such Affected Person, from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in capital
to be allocable to the existence of any of such commitments. A certificate as to
such amounts submitted to the Seller and the Administrator by such Affected
Person shall be conclusive and binding for all purposes, absent manifest error.
1. If, due to either: (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Affected Person of agreeing to purchase or purchasing, or
maintaining the ownership of, the Purchased Interest in respect of which
Discount is computed by reference to the Eurodollar Rate, then, upon demand by
such Affected Person, the Seller shall promptly pay to such Affected Person,
from time to time as specified by such Affected Person, additional amounts
sufficient to compensate such Affected Person for such increased costs. A
certificate as to such amounts submitted to the Seller and the Administrator by
such Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
1. If such increased costs affect the related Affected Person's
portfolio of financing transactions, such Affected Person shall use reasonable
averaging and attribution methods to allocate such increased costs to the
transactions contemplated by this Agreement.
A. Section Requirements of Law. If any Affected Person reasonably
determines that the existence of or compliance with: (a) any law or regulation
or any change therein or in the interpretation or application thereof, in each
case adopted, issued or occurring after the date hereof, or (b) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(i) does or shall subject such Affected Person to any tax of
any kind whatsoever with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital relating thereto, or
does or shall change the basis of taxation of payments to such Affected
Person on account of Collections, Discount or any other amounts payable
hereunder (excluding taxes imposed on the overall pre-tax net income of
such Affected Person, and franchise taxes imposed on such Affected
Person, by the jurisdiction under the laws of which such Affected
Person is organized or a political subdivision thereof),
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, purchases, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Affected
Person that are not otherwise included in the determination of the
Eurodollar Rate or the Base Rate hereunder, or
(iii) does or shall impose on such Affected Person any other
condition,
and the result of any of the foregoing is: (A) to increase the cost to such
Affected Person of acting as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of undivided percentage ownership
interests with regard to the Purchased Interest (or interests therein) or any
Portion of Capital, or (B) to reduce any amount receivable hereunder (whether
directly or indirectly), then, in any such case, upon demand by such Affected
Person, the Seller shall promptly pay to such Affected Person additional amounts
necessary to compensate such Affected Person for such additional cost or reduced
amount receivable. All such amounts shall be payable as incurred. A certificate
from such Affected Person to the Seller and the Administrator certifying, in
reasonably specific detail, the basis for, calculation of, and amount of such
additional costs or reduced amount receivable shall be conclusive and binding
for all purposes, absent manifest error; provided, however, that no Affected
Person shall be required to disclose any confidential or tax planning
information in any such certificate.
A. Section Inability to Determine Eurodollar Rate. If the Administrator
shall have determined before the first day of any Settlement Period (which
determination shall be conclusive and binding upon the parties hereto), by
reason of circumstances affecting the interbank Eurodollar market, either that:
(a) dollar deposits in the relevant amounts and for the relevant Settlement
Period are not available, (b) adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Settlement Period or (c) the
Eurodollar Rate determined pursuant hereto does not accurately reflect the cost
to the Issuer (as conclusively determined by the Administrator) of maintaining
any Portion of Capital during such Settlement Period, the Administrator shall
promptly give telephonic notice of such determination, confirmed in writing, to
the Seller before the first day of such Settlement Period. Upon delivery of such
notice: (i) no Portion of Capital shall be funded thereafter at the Alternate
Rate determined by reference to the Eurodollar Rate unless and until the
Administrator shall have given notice to the Seller that the circumstances
giving rise to such determination no longer exist, and (ii) with respect to any
outstanding Portions of Capital then funded at the Alternate Rate determined by
reference to the Eurodollar Rate, such Alternate Rate shall automatically be
converted to the Alternate Rate determined by reference to the Base Rate at the
respective last days of the then-current Settlement Periods relating to such
Portions of Capital.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
A. Section Representations and Warranties; Covenants. Each of the
Seller, Commonwealth and the Servicer hereby makes the representations and
warranties, and hereby agrees to perform and observe the covenants, applicable
to it set forth in Exhibits III and IV, respectively.
A. Section Termination Events. If any of the Termination Events set
forth in Exhibit V shall occur, the Administrator may by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); provided, that
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (f) of Exhibit
V, the Facility Termination Date shall occur. Upon any such declaration,
occurrence or deemed occurrence of the Facility Termination Date, the Issuer and
the Administrator shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided after
default under the New York UCC and under other applicable law, which rights and
remedies shall be cumulative.
I. ARTICLE
INDEMNIFICATION
A. Section Indemnities by the Seller. Without limiting any other rights
that the Administrator, the Issuer, any Program Support Provider or any of their
respective Affiliates, employees, officers, directors, agents, counsel,
successors, transferees or assigns (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, damages, expenses, costs,
losses and liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement (whether directly or indirectly), the use of proceeds of
purchases or reinvestments, the ownership of the Purchased Interest, or any
interest therein, or in respect of any Receivable, Related Security or Contract,
excluding, however: (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or its
officers, directors, agents or counsel, (b) recourse (except as otherwise
specifically provided in this Agreement) for Receivables, or (c) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or any
political subdivision thereof. Without limiting or being limited by the
foregoing, and subject to the exclusions set forth in the preceding sentence,
the Seller shall pay on demand (which demand shall be accompanied by
documentation of the Indemnified Amounts, in reasonable detail) to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating to or resulting
from any of the following:
a) the failure of any Receivable included in the calculation
of the Net Receivables Pool Balance as an Eligible Receivable to be an
Eligible Receivable, the failure of any information contained in an
Information Package to be true and correct, or the failure of any other
information provided to the Issuer or the Administrator with respect to
Receivables or this Agreement to be true and correct,
a) the failure of any representation, warranty or statement
made or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct as of the
date made or deemed made in all respects when made,
a) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the
related Contract, or the failure of any Pool Receivable or the related
Contract to conform to any such applicable law, rule or regulation,
a) the failure to vest in the Issuer a valid and enforceable:
(A) perfected undivided percentage ownership interest, to the extent of
the Purchased Interest, in the Receivables in, or purporting to be in,
the Receivables Pool and the other Pool Assets, or (B) first priority
perfected security interest in the Pool Assets, in each case, free and
clear of any Adverse Claim,
a) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables in, or purporting to be in, the Receivables
Pool and the other Pool Assets, whether at the time of any purchase or
reinvestment or at any subsequent time,
a) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool (including
a defense based on such Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the
sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating to
collection activities with respect to such Receivable (if such
collection activities were performed by the Seller or any of its
Affiliates acting as Servicer or by any agent or independent contractor
retained by the Seller or any of its Affiliates),
a) any failure of the Seller (or any of its Affiliates acting
as the Servicer) to perform its duties or obligations in accordance
with the provisions hereof or under the Contracts,
a) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, insurance or services that are the subject of any
Contract,
a) the commingling of Collections at any time with other
funds,
a) the use of proceeds of purchases or reinvestments, or
a) any reduction in Capital as a result of the distribution of
Collections pursuant to Section 1.4(d), if all or a portion of such
distributions shall thereafter be rescinded or otherwise must be
returned for any reason.
A. Section Indemnities by the Servicer. Without limiting any other
rights that the Administrator, the Issuer or any other Indemnified Party may
have hereunder or under applicable law, the Servicer hereby agrees to indemnify
each Indemnified Party from and against any and all Indemnified Amounts arising
out of or resulting from (whether directly or indirectly): (a) the failure of
any information contained in an Information Package to be true and correct, or
the failure of any other information provided to the Issuer or the Administrator
by, or on behalf of, the Servicer to be true and correct, (b) the failure of any
representation, warranty or statement made or deemed made by the Servicer (or
any of its officers) under or in connection with this Agreement to have been
true and correct as of the date made or deemed made in all respects when made,
(c) the failure by the Servicer to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, (d) any
dispute, claim, offset or defense of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities with respect to such Receivable, or (e) any
failure of the Servicer to perform its duties or obligations in accordance with
the provisions hereof.
I. ARTICLE
ADMINISTRATION AND COLLECTIONS
1. Section Appointment of the Servicer. The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as the Servicer in accordance with this Section.
Until the Administrator gives notice to Commonwealth (in accordance with this
Section) of the designation of a new Servicer, Commonwealth is hereby designated
as, and hereby agrees to perform the duties and obligations of, the Servicer
pursuant to the terms hereof. Upon the occurrence of a Termination Event, the
Administrator may designate as Servicer any Person (including itself) to succeed
Commonwealth or any successor Servicer, on the condition in each case that any
such Person so designated shall agree to perform the duties and obligations of
the Servicer pursuant to the terms hereof.
1. Upon the designation of a successor Servicer as set forth in clause
(a), Commonwealth agrees that it will terminate its activities as Servicer
hereunder in a manner that the Administrator determines will facilitate the
transition of the performance of such activities to the new Servicer, and
Commonwealth shall cooperate with and assist such new Servicer. Such cooperation
shall include access to and transfer of related records and use by the new
Servicer of all licenses, hardware or software necessary or desirable to collect
the Pool Receivables and the Related Security.
1. Commonwealth acknowledges that, in making their decision to execute
and deliver this Agreement, the Administrator and the Issuer have relied on
Commonwealth's agreement to act as Servicer hereunder. Accordingly, Commonwealth
agrees that it will not voluntarily resign as Servicer.
1. The Servicer may delegate its duties and obligations hereunder to
any subservicer (each a "Sub-Servicer"); provided, that, in each such
delegation: (i) such Sub-Servicer shall agree in writing to perform the duties
and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable for the performance of the duties and obligations
so delegated, (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for performance and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to each such Sub-Servicer); provided,
however, that if any such delegation is to any Person other than an Originator,
the Administrator shall have consented in writing in advance to such delegation.
1. Section Duties of the Servicer. The Servicer shall take or cause to
be taken all such action as may be necessary or advisable to administer and
collect each Pool Receivable from time to time, all in accordance with this
Agreement and all applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policies. The
Servicer shall set aside for the accounts of the Seller and the Issuer the
amount of the Collections to which each is entitled in accordance with Article
II. The Servicer may, in accordance with the applicable Credit and Collection
Policy, extend the maturity of any Pool Receivable (but not beyond 30 days) and
extend the maturity or adjust the Outstanding Balance of any Defaulted
Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof; provided, however, that: (i) such extension or adjustment
shall not alter the status of such Pool Receivable as a Delinquent Receivable or
a Defaulted Receivable or limit the rights of the Issuer or the Administrator
under this Agreement and (ii) if a Termination Event has occurred and
Commonwealth or an Affiliate thereof is serving as the Servicer, Commonwealth or
such Affiliate may make such extension or adjustment only upon the prior written
approval of the Administrator. The Seller shall deliver to the Servicer and the
Servicer shall hold for the benefit of the Seller and the Administrator (for the
benefit of the Issuer and individually), in accordance with their respective
interests, all records and documents (including computer tapes or disks) with
respect to each Pool Receivable. Notwithstanding anything to the contrary
contained herein, the Administrator may direct the Servicer (whether the
Servicer is Commonwealth or any other Person) to commence or settle any legal
action to enforce collection of any Pool Receivable or to foreclose upon or
repossess any Related Security; provided, however, that no such direction may be
given unless either: (A) a Termination Event has occurred or (B) the
Administrator believes in good faith that failure to commence, settle or effect
such legal action, foreclosure or repossession could adversely affect
Receivables constituting a material portion of the Pool Receivables.
1. The Servicer shall, as soon as practicable following actual receipt
of collected funds, turn over to the Seller the collections of any indebtedness
that is not a Pool Receivable, less, if Commonwealth or an Affiliate thereof is
not the Servicer, all reasonable and appropriate out-of-pocket costs and
expenses of such Servicer of servicing, collecting and administering such
collections. The Servicer, if other than Commonwealth or an Affiliate thereof,
shall, as soon as practicable upon demand, deliver to the Seller all records in
its possession that evidence or relate to any indebtedness that is not a Pool
Receivable, and copies of records in its possession that evidence or relate to
any indebtedness that is a Pool Receivable.
1. The Servicer's obligations hereunder shall terminate on the later
of: (i) the Facility Termination Date and (ii) the date on which all amounts
required to be paid to the Issuer, the Administrator and any other Indemnified
Party or Affected Person hereunder shall have been paid in full.
After such termination, if Commonwealth or an Affiliate thereof was not
the Servicer on the date of such termination, the Servicer shall promptly
deliver to the Seller all books, records and related materials that the Seller
previously provided to the Servicer, or that have been obtained by the Servicer,
in connection with this Agreement.
A. Section Lock-Box Arrangements. Before the initial purchase
hereunder, the Seller shall enter into Lock-Box Agreements with all of the
Lock-Box Banks and deliver original counterparts thereof to the Administrator.
Upon the occurrence of a Termination Event, the Administrator may at any time
thereafter give notice to each Lock-Box Bank that the Administrator is
exercising its rights under the Lock-Box Agreements to do any or all of the
following: (a) to have the exclusive ownership and control of the Lock-Box
Accounts transferred to the Administrator and to exercise exclusive dominion and
control over the funds deposited therein, (b) to have the proceeds that are sent
to the respective Lock-Box Accounts be redirected pursuant to the
Administrator's instructions rather than deposited in the applicable Lock-Box
Account, and (c) to take any or all other actions permitted under the applicable
Lock-Box Agreement. The Seller hereby agrees that if the Administrator at any
time takes any action set forth in the preceding sentence, the Administrator
shall have exclusive control of the proceeds (including Collections) of all Pool
Receivables and the Seller hereby further agrees to take any other action that
the Administrator may reasonably request to transfer such control. Any proceeds
of Pool Receivables received by the Seller or the Servicer thereafter shall be
sent immediately to the Administrator. The parties hereto hereby acknowledge
that if at any time the Administrator takes control of any Lock-Box Account, the
Administrator shall not have any rights to the funds therein in excess of the
unpaid amounts due to the Administrator, the Issuer or any other Person
hereunder and the Administrator shall distribute or cause to be distributed such
funds in accordance with Section 4.2(b) (including the proviso thereto) and
Article II (in each case as if such funds were held by the Servicer thereunder).
1. Section Enforcement Rights. At any time following the occurrence
of a Termination Event:
a) the Administrator may direct the Obligors that payment of
all amounts payable under any Pool Receivable is to be made directly
to the Administrator or its designee,
a) the Administrator may instruct the Seller or the Servicer
to give notice of the Issuer's interest in Pool Receivables to each
Obligor, which notice shall direct that payments be made directly to
the Administrator or its designee, and the Seller or the Servicer, as
the case may be, shall give such notice at the expense of the Seller or
the Servicer, as the case may be; provided, that if the Seller or the
Servicer, as the case may be, fails to so notify each Obligor, the
Administrator (at the Seller's or the Servicer's, as the case may be,
expense) may so notify the Obligors, and
a) the Administrator may request the Servicer to, and upon
such request the Servicer shall: (A) assemble all of the records
necessary or desirable to collect the Pool Receivables and the Related
Security, and transfer or license to a successor Servicer the use of
all software necessary or desirable to collect the Pool Receivables and
the Related Security, and make the same available to the Administrator
or its designee at a place selected by the Administrator, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections in a manner acceptable to the
Administrator and, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrator or its designee.
1. The Seller hereby authorizes the Administrator, and irrevocably
appoints the Administrator as its attorney-in-fact with full power of
substitution and with full authority in the place and stead of the Seller, which
appointment is coupled with an interest, to take any and all steps in the name
of the Seller and on behalf of the Seller necessary or desirable, in the
determination of the Administrator, after the occurrence of a Termination Event,
to collect any and all amounts or portions thereof due under any and all Pool
Assets, including endorsing the name of the Seller on checks and other
instruments representing Collections and enforcing such Pool Assets.
Notwithstanding anything to the contrary contained in this subsection, none of
the powers conferred upon such attorney-in-fact pursuant to the preceding
sentence shall subject such attorney-in-fact to any liability if any action
taken by it shall prove to be inadequate or invalid, nor shall they confer any
obligations upon such attorney-in-fact in any manner whatsoever.
1. Section Responsibilities of the Seller. Anything herein to the
contrary notwithstanding, the Seller shall: (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Administrator or the Issuer of their respective rights
hereunder shall not relieve the Seller from such obligations, and (ii) pay when
due any taxes, including any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. The Administrator and the
Issuer shall not have any obligation or liability with respect to any Pool
Asset, nor shall either of them be obligated to perform any of the obligations
of the Seller, Commonwealth or the Originators thereunder.
1. Commonwealth hereby irrevocably agrees that if at any time it shall
cease to be the Servicer hereunder, it shall act (if the then-current Servicer
so requests) as the data-processing agent of the Servicer and, in such capacity,
Commonwealth shall conduct the data-processing functions of the administration
of the Receivables and the Collections thereon in substantially the same way
that Commonwealth conducted such data-processing functions while it acted as the
Servicer.
A. Section Servicing Fee. (a) Subject to clause (b), the Servicer
shall be paid a fee equal to 1% per annum of the daily average aggregate
Outstanding Balance of the Pool Receivables. The Issuer's Share of such fee
shall be paid through the distributions contemplated by Section 1.4(d), and the
Seller's Share of such fee shall be paid by the Seller.
(b) If the Servicer ceases to be Commonwealth or an Affiliate thereof,
the servicing fee shall be the greater of: (i) the amount calculated pursuant to
clause (a) and (ii) an alternative amount specified by the successor Servicer
not to exceed 110% of the aggregate reasonable costs and expenses incurred by
such successor Servicer in connection with the performance of its obligations as
Servicer.
I. ARTICLE
MISCELLANEOUS
A. Section Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Transaction Document, or consent to any departure by
the Seller or the Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, and, in the case of any amendment, by the other
parties thereto; and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such material amendment shall be effective until both
Moody's and Standard & Poor's have notified the Servicer and the Administrator
in writing that such action will not result in a reduction or withdrawal of the
rating of any Notes. No failure on the part of the Issuer or the Administrator
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
A. Section Notices, Etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and be sent or delivered to each party hereto at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and notices
and communications sent by other means shall be effective when received.
1. Section Assignability. This Agreement and the Issuer's rights and
obligations herein (including ownership of the Purchased Interest or an interest
therein) shall be assignable, in whole or in part, by the Issuer and its
successors and assigns with the prior written consent of the Seller; provided,
however, that such consent shall not be unreasonably withheld; and provided
further, that no such consent shall be required if the assignment is made to
PNC, any Affiliate of PNC, any Purchaser or other Program Support Provider or
any Person that is: (i) in the business of issuing Notes and (ii) associated
with or administered by PNC or any Affiliate of PNC. Each assignor may, in
connection with the assignment, disclose to the applicable assignee (that shall
have agreed to be bound by Section 5.6) any information relating to the
Servicer, the Seller or the Pool Receivables furnished to such assignor by or on
behalf of the Servicer, the Seller, the Issuer or the Administrator. The
Administrator shall give prior written notice of any assignment of the Issuer's
rights and obligations (including ownership of the Purchased interest to any
Person other than a Program Support Provider).
1. The Issuer may at any time grant to one or more banks or other
institutions (each a "Purchaser") party to the Liquidity Agreement, or to any
other Program Support Provider, participating interests in the Purchased
Interest. In the event of any such grant by the Issuer of a participating
interest to a Purchaser or other Program Support Provider, the Issuer shall
remain responsible for the performance of its obligations hereunder. The Seller
agrees that each Purchaser or other Program Support Provider shall be entitled
to the benefits of Sections 1.8 and 1.9.
1. This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns; provided, that, unless: (i) such assignment is to an
Affiliate of PNC, (ii) it becomes unlawful for PNC to serve as the Administrator
or (iii) a Termination Event exists, the Seller has consented to such
assignment, which consent shall not be unreasonably withheld.
1. Except as provided in Section 4.1(d), none of the Seller,
Commonwealth or the Servicer may assign its rights or delegate its obligations
hereunder or any interest herein without the prior written consent of the
Administrator.
1. Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it or by its
agents.
1. Section Costs, Expenses and Taxes. In addition to the rights of
indemnification granted under Section 3.1, the Seller agrees to pay on demand
(which demand shall be accompanied by documentation thereof in reasonable
detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by
the Administrator of Pool Receivables) of this Agreement, the other Transaction
Documents and the other documents and agreements to be delivered hereunder (and
all reasonable costs and expenses in connection with any amendment, waiver or
modification of any thereof), including: (i) Attorney Costs for the
Administrator, the Issuer and their respective Affiliates and agents with
respect thereto and with respect to advising the Administrator, the Issuer and
their respective Affiliates and agents as to their rights and remedies under
this Agreement and the other Transaction Documents, and (ii) all reasonable
costs and expenses (including Attorney Costs), if any, of the Administrator, the
Issuer and their respective Affiliates and agents in connection with the
enforcement of this Agreement and the other Transaction Documents.
1. In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
A. Section No Proceedings; Limitation on Payments. Each of the Seller,
Commonwealth, the Servicer, the Administrator, each assignee of the Purchased
Interest or any interest therein, and each Person that enters into a commitment
to purchase the Purchased Interest or interests therein, hereby covenants and
agrees that it will not institute against, or join any other Person in
instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the latest
maturing Note issued by the Issuer is paid in full. The provision of this
Section 5.5 shall survive any termination of this Agreement.
A. Section Confidentiality. Unless otherwise required by applicable
law, each of the Seller and the Servicer agrees to maintain the confidentiality
of this Agreement and the other Transaction Documents (and all drafts thereof)
in communications with third parties and otherwise; provided, that this
Agreement may be disclosed to: (a) third parties to the extent such disclosure
is made pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the Administrator and (b) the Seller's legal counsel
and auditors if they agree to hold it confidential. Unless otherwise required by
applicable law, each of the Administrator and the Issuer agrees to maintain the
confidentiality of non-public financial information regarding Commonwealth and
its Subsidiaries and other non-public information marked as confidential by the
Servicer or the Seller; provided, that such information may be disclosed to: (i)
third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
Commonwealth, (ii) legal counsel and auditors of the Issuer or the Administrator
if they agree to hold it confidential, (iii) the rating agencies rating the
Notes to the extent such information relates to the Receivables Pool or the
transactions contemplated by this Agreement, or if not so related, upon
obtaining the prior consent of Commonwealth (such consent not to be unreasonably
withheld), (iv) any Program Support Provider or potential Program Support
Provider to the extent such information relates to the Receivables Pool or the
transactions contemplated by this Agreement, or if not so related, upon
obtaining the prior consent of Commonwealth (such consent not to be unreasonably
withheld), (v) any placement agent placing the Notes and (vi) any regulatory
authorities having jurisdiction over PNC, the Issuer, any Program Support
Provider or any Purchaser.
1. Section GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
1. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY NEW YORK LAW.
A. Section Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
A. Section Survival of Termination. The provisions of Sections 1.8,
1.9, 3.1, 3.2, 4.7(b), 5.4, 5.5, 5.6, 5.7, 5.10 and 5.13 shall survive any
termination of this Agreement.
A. Section WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO
FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
A. Section Entire Agreement. This Agreement and the other Transaction
Documents embody the entire agreement and understanding between the parties
hereto, and supersede all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof, except for any prior arrangements made with respect to the payment by
the Issuer of (or any indemnification for) any fees, costs or expenses payable
to or incurred (or to be incurred) by or on behalf of the Seller, the Servicer
and the Administrator.
A. Section Headings. The captions and headings of this Agreement and
in any Exhibit, Schedule or Annex hereto are for convenience of reference only
and shall not affect the interpretation hereof or thereof.
A. Section Issuer's Liabilities. The obligations of the Issuer under
the Transaction Documents are solely the corporate obligations of the Issuer. No
recourse shall be had for any obligation or claim arising out of or based upon
any Transaction Document against any stockholder, employee, officer, director or
incorporator of the Issuer; provided, however, that this Section shall not
relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
COMMONWEALTH FINANCING CORP.
By:
Name:
Title:
Address:
Commonwealth Financing Corp.
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
Attention: Greg Givan
Telephone No.: (502) 589-8153
Facsimile No.: (502) 589-8158
COMMONWEALTH INDUSTRIES, INC.
By:
Name:
Title:
Address:
Commonwealth Industries, Inc.
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
Attention: Greg Givan
Telephone No.: (502) 589-8153
Facsimile No.: (502) 589-8158
<PAGE>
MARKET STREET FUNDING CORPORATION
By:
Name:
Title:
Address:
Market Street Funding Corporation
c/o AMACAR Group, L.L.C.
6707-D Fairview Road
Charlotte, North Carolina 28210
Attention: Douglas K. Johnson
Telephone No.: (704) 365-0569
Facsimile No.: (704) 365-1362
With a copy to:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15220-2707
Attention: Richard J. Hendrix.
Telephone No.: (412) 762-5158
Facsimile No.: (412) 762-9184
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By:
Name:
Title:
Address:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15220-2707
Attention: Richard J. Hendrix
Telephone No.: (412) 762-5158
Facsimile No.: (412) 762-9184
<PAGE>
Receivables Purchase Agreement - I-19
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits, Schedules and
Annexes), the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined). Unless otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes, Exhibits and
Schedules to the Agreement.
"Administration Account" means the account (account number 1002422076)
of the Administrator maintained at the office of PNC at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15220-2707, or such other account as may be so
designated in writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble to the
Agreement.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement; it being understood
that any thereof in favor of the Issuer or the Administrator (for the benefit of
the Issuer) shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in Section 1.8 of the
Agreement.
"Affiliate" means, as to any Person: (a) any Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (b) who is a director or officer: (i) of such Person or (ii) of
any Person described in clause (a), except that with respect to the Issuer,
Affiliate shall mean the holder(s) of its capital stock. For purposes of this
definition, control of a Person shall mean the power, direct or indirect: (x) to
vote 25% or more of the securities having ordinary voting power for the election
of directors of such Person or (y) to direct or cause the direction of the
management and policies of such Person, in either case whether by ownership of
securities, contract, proxy or otherwise.
"Agreement" has the meaning set forth in the preamble to the Agreement.
"Alternate Rate" for any Settlement Period for any Portion of Capital
of the Purchased Interest means an interest rate per annum equal to, at the
Seller's option: (a) [0.75]% per annum above the Eurodollar Rate for such
Settlement Period, or (b) the Base Rate for such Settlement Period; provided,
however, that in the case of:
a) any Settlement Period on or before the first day of which
the Administrator shall have been notified by the Issuer, a Purchaser
or any other Program Support Provider that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental Authority asserts
that it is unlawful, for the Issuer, such Purchaser or other Program
Support Provider, as applicable, to fund any Portion of Capital based
on the Eurodollar Rate (and the Issuer, such Purchaser or other Program
Support Provider shall not have subsequently notified the Administrator
that such circumstances no longer exist),
a) any Settlement Period of one to (and including) 15 days,
a) any Settlement Period as to which: (A) the Administrator
does not receive notice before noon (New York City time) on: (1) the
second Business Day preceding the first day of such Settlement Period
that the Seller desires that the related Portion of Capital be funded
at the CP Rate or (2) the third Business Day preceding the first day of
such Settlement Period that the Seller desires that the related Portion
of Capital be funded at the Alternate Rate and based on the Eurodollar
Rate, or (B) the Seller has given the notice contemplated by clause
(A)(1) and the Administrator shall have notified the Seller that
funding the related Portion of Capital at the CP Rate is (in the
Administrator's sole discretion) economically inadvisable to the
Issuer, the Administrator, the Seller or any similarly situated Person
or the Issuer is not permitted to issue Notes to fund the Purchased
Interest hereunder, or
a) any Settlement Period relating to a Portion of Capital that
is less than $5,000,000,
the "Alternate Rate" for each such Settlement Period shall be an interest rate
per annum equal to the Base Rate in effect on each day of such Settlement
Period. The "Alternate Rate" for any day while a Termination Event exists shall
be an interest rate equal to 2% per annum above the Base Rate in effect on such
day.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978
(11 U.S.C.ss. 101, et seq.), as amended from time to time.
"Base Rate" means for any day, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times equal to
the higher of:
1. the rate of interest in effect for such day as publicly
announced from time to time by PNC in Pittsburgh, Pennsylvania as its
"prime rate." Such "prime rate" is set by PNC based upon various
factors, including PNC's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such
announced rate, and
1. 0.50% per annum above the latest Federal Funds Rate.
"Benefit Plan" means any employee benefit pension plan as defined in
Section 3(2) of ERISA in respect of which the Seller, any Originator,
Commonwealth or any ERISA Affiliate is, or at any time during the immediately
preceding six years was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day (other than a Saturday or Sunday) on
which: (a) banks are not authorized or required to close in New York City, New
York or Pittsburgh, Pennsylvania, and (b) if this definition of "Business Day"
is utilized in connection with the Eurodollar Rate, dealings are carried out in
the London interbank market.
"Buyer Note" has the meaning set forth in the Sale Agreement between
the Seller and Commonwealth.
"Capital" means the amount paid to the Seller in respect of the
Purchased Interest by the Issuer pursuant to the Agreement, or such amount
divided or combined in accordance with Section 1.7 of the Agreement, in each
case reduced from time to time by Collections distributed and applied on account
of such Capital pursuant to Section 1.4(d) of the Agreement; provided, that if
such Capital shall have been reduced by any distribution and thereafter all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason, such Capital shall be increased by the amount of such rescinded or
returned distribution as though it had not been made.
"CFC" has the meaning set forth in the Sale Agreement.
"CFC Note" has the meaning set forth in Section 3.1 of the Purchase and
Sale Agreement.
"Change in Control" means that Commonwealth ceases to own, directly or
indirectly, 100% of the capital stock of the Seller free and clear of all
Adverse Claims or a majority of the capital stock of any Originator.
"Closing Date" means September 29, 1997.
"Collections" means, with respect to any Pool Receivable: (a) all funds
that are received by any Originator, Commonwealth, the Seller or the Servicer in
payment of any amounts owed in respect of such Receivable (including purchase
price, finance charges, interest and all other charges), or applied to amounts
owed in respect of such Receivable (including insurance payments and net
proceeds of the sale or other disposition of repossessed goods or other
collateral or property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Pool Receivable and available to be
applied thereon), (b) all Collections deemed to have been received pursuant to
Section 1.4(e) of the Agreement and (c) all other proceeds of such Pool
Receivable.
"Commonwealth" has the meaning set forth in the preamble to the
Agreement.
"Concentration Percentage" means: (a) for any Group A Obligor, 11%,
(b) for any Group B Obligor, 11%, (c) for any Group C
Obligor, 6% and (d) for any Group D Obligor, 3.5%.
"Contract" means, with respect to any Receivable, any and all
contracts, instruments, agreements, leases, invoices, notes or other writings
pursuant to which such Receivable arises or that evidence such Receivable or
under which an Obligor becomes or is obligated to make payment in respect of
such Receivable.
"CP Rate" for any Settlement Period for any Portion of Capital means a
rate calculated by the Administrator equal to: (a) the rate (or if more than one
rate, the weighted average of the rates) at which Notes of the Issuer on each
day during such period have been sold by any placement agent or commercial paper
dealer selected by the Administrator on behalf of the Issuer; provided, that if
such rate(s) is a discount rate(s), then the CP Rate shall be the rate (or if
more than one rate, the weighted average of the rates) resulting from converting
such discount rate(s) to an interest-bearing equivalent rate plus (b) the
commissions and charges charged by such placement agent or commercial paper
dealer with respect to such Notes, expressed as a percentage of the face amount
of such Notes and converted to an interest-bearing equivalent rate per annum.
Notwithstanding the foregoing, the "CP Rate" for any day while a Termination
Event exists shall be an interest rate equal to 2% above the Base Rate in effect
on such day.
"Credit and Collection Policy" means, as the context may require, those
receivables credit and collection policies and practices of each Originator in
effect on the date of the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the Agreement.
"Cut-off Date" has the meaning set forth in the Sale Agreement.
"Days' Sales Outstanding" means, for any Settlement Period: (a) the
Outstanding Balance of all Pool Receivables at the end of such Settlement Period
divided by (b)(i) the aggregate credit sales made by all the Originators during
the [three] calendar months ended on or before the last day of such Settlement
Period divided by (ii) the number of days in such three-month period.
"Debt" means: (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (e) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d).
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid
for more than 60 days from the original due date for such payment, or
(b) without duplication, (i) as to which the Obligor thereof
or any other Person obligated thereon or owning any Related Security in
respect of which an Event of Bankruptcy shall have occurred or (ii)
that has been written off the Seller's books as uncollectible.
"Default Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of
the last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that became Defaulted Receivables during such
month plus, without double counting, the aggregate Outstanding Balance of all
Pool Receivables as to which a payment, or part thereof, remained unpaid for
less than 61 days from the original due date for such payment and that was
written off as uncollectible during such month, by (b) the aggregate credit
sales made by all the Originators during the month that is four calendar months
before such month.
"Delinquency Ratio" means the ratio (expressed as a percentage and
rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed
as of the last day of each calendar month by dividing: (a) the aggregate
Outstanding Balance of all Pool Receivables that were Delinquent Receivables on
such day by (b) the aggregate Outstanding Balance of all Pool Receivables on
such day.
"Delinquent Receivable" means a Receivable (other than a Defaulted
Receivable) as to which any payment, or part thereof, remains unpaid for more
than 60 days from the original due date for such payment.
"Dilution Horizon" means, for any calendar month, the ratio (expressed
as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1%
rounded upward) computed as of the last day of such calendar month of: (a) the
aggregate credit sales made by all the Originators during the most recent
calendar months to (b) the aggregate Outstanding Balance of the Eligible
Receivables at the last day of such calendar month.
"Dilution Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as
of the last day of each calendar month by dividing: (a) the aggregate amount of
payments made or owed by the Seller pursuant to Section 1.4(e)(i) of the
Agreement during such calendar month by (b) the aggregate credit sales made by
all the Originators during the calendar month that is two months prior to such
calendar month.
"Dilution Reserve" means, on any day, an amount equal to: (a) the
Capital at the close of business of the Servicer on such date multiplied by
(b)(i) the Dilution Reserve Percentage on such date divided by (ii) 100% minus
the Dilution Reserve Percentage on such date.
"Dilution Reserve Percentage" means, as of any date, the greater of:
(a) 7% and (b) the Dilution Horizon multiplied by the sum of: (i) the Dilution
Reserve Factor and (ii) Spike Factor
"Dilution Reserve Factor" means a percentage equal to: (a) 2.0
multiplied by (b) the rolling average of the Dilution Ratios for the twelve
most recent calendar months.
"Discount" means:
(a) for the Portion of Capital for any Settlement Period to
the extent the Issuer will be funding such Portion of Capital on the
first day of such Settlement Period through the issuance of Notes,
CPR x C x ED/360
(b) for the Portion of Capital for any Settlement Period to
the extent the Issuer will not be funding such Portion of Capital on
the first day of such Settlement Period through the issuance of Notes:
AR x C x ED/Year + TF
where:
AR = the Alternate Rate for the Portion
of Capital for such Settlement Period,
C = the Portion of Capital during such
Settlement Period,
CPR = the CP Rate for the Portion of
Capital for such Settlement Period,
ED = the actual number of days during
such Settlement Period,
Year = if such Portion of Capital is funded
based upon: (i) the Eurodollar Rate, 360 days, and (ii) the Base Rate, 365 or
366 days, as applicable, and
TF = the Termination Fee, if any, for the
Portion of Capital for such Settlement Period;
provided, that no provision of the Agreement shall require the payment or permit
the collection of Discount in excess of the maximum permitted by applicable law;
and provided further, that Discount for the Portion of Capital shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which is: (i) a United States resident or a
Canadian Resident provided, that the Outstanding Balance of such Pool
Receivable when added to the Outstanding Balance of all other Pool
Receivables of Obligors that are Canadian Residents shall not exceed
$5,000,000, (ii) not a government or a governmental subdivision,
affiliate or agency and (iii) not subject to any action of the type
described in paragraph (f) of Exhibit V to the Agreement,
(b) that is denominated and payable only in U.S. dollars in
the United States,
(c) that has a stated maturity that is not more than 96 days
after the original invoice date of such Receivable,
(d) that arises under a duly authorized Contract for the sale
and delivery of goods and services in the ordinary course of an
Originator's business,
(e) that arises under a duly authorized Contract that is in
full force and effect and that is a legal, valid and binding obligation
of the related Obligor, enforceable against such Obligor in accordance
with its terms,
(f) that conforms in all material respects with all applicable
laws, rulings and regulations in effect,
(g) that is not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim,
(h) that satisfies all applicable requirements of the
applicable Credit and Collection Policy,
(i) that has not been modified, waived or restructured since
its creation, except as permitted pursuant to Section
4.2 of the Agreement,
(j) in which the Seller owns good and marketable title, free
and clear of any Adverse Claims, and that is freely assignable by the
Seller (including without any consent of the related Obligor),
(k) for which the Issuer shall have a valid and enforceable
undivided percentage ownership or security interest, to the extent of
the Purchased Interest, and a valid and enforceable first priority
perfected security interest therein and in the Related Security and
Collections with respect thereto, in each case free and clear of any
Adverse Claim,
(l) that constitutes an account as defined in the UCC, and
that is not evidenced by instruments or chattel paper,
(m) that is not a Defaulted Receivable,
(n) for which neither the Originator thereof, the Seller nor
the Servicer has established any offset arrangements
with the related Obligor,
(o) for which Defaulted Receivables of the related Obligor do
not exceed 25% of the Outstanding Balance of all such
Obligor's Receivables, and
(p) that represents amounts earned and payable by the Obligor
that are not subject to the performance of additional services by the
Originator thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA Affiliate" means: (a) any corporation that is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Seller, any Originator or Commonwealth, (b) a
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Seller, any
Originator or Commonwealth, (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Seller, any Originator, Commonwealth, any corporation described in clause (a) or
any trade or business described in clause (b), or (d) as to the Seller or any of
its Affiliates, Eagle Industrial Products Corporation and all other Person(s)
that are members of Eagle Industrial Products Corporation's controlled group or
under common control therewith (within the meaning of Sections 414(b) and (c) of
the Internal Revenue Code), but only until the termination of the Agreement
dated as of October 24, 1994 among the Pension Benefit Guaranty Corporation,
Commonwealth and certain of its Affiliates.
"Eurodollar Rate" means, for any Settlement Period, an interest rate
per annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to
the following formula:
LIBOR
100% - Eurodollar Rate Reserve Percentage
where "Eurodollar Rate Reserve Percentage" means, for any Settlement Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date LIBOR for such Settlement Period is
determined under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
"Eurocurrency" funding (currently referred to as "Eurocurrency liabilities")
having a term comparable to such Settlement Period.
"Event of Bankruptcy" means (a) any case, action or proceeding before
any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors or (b) any general assignment for the benefit of creditors
of a Person composition, marshalling of assets for creditors of a Person, or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each of cases (a) and (b) undertaken
under U.S. Federal, state or foreign law, including the U.S. Bankruptcy Code.
"Excess Concentration" means the sum of the amounts by which the
Outstanding Balance of Eligible Receivables of each Obligor then in the
Receivables Pool exceeds an amount equal to: (a) the Concentration Percentage
for such Obligor multiplied by (b) the Outstanding Balance of all Eligible
Receivables then in the Receivables Pool.
"Facility Termination Date" means the earliest to occur of: (a)
September 28, 2000, (b) the date determined pursuant to Section 2.2 of the
Agreement and (c) the date the Purchase Limit reduces to zero pursuant to
Section 1.1(b) of the Agreement.
"Federal Funds Rate" means, for any day, the per annum rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrator of the rates for the last
transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds transactions in
New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Fee Letter" has the meaning set forth in Section 1.5 of the Agreement.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Group A Obligor" means any Obligor with a short-term rating of: (a)
"A-1" by Standard & Poor's, or if such Obligor does not have a short-term rating
from Standard & Poor's, a rating of "A+" or better by Standard & Poor's on its
long-term senior unsecured and uncredit-enhanced debt securities, and (b) "P-1"
by Moody's, or if such Obligor does not have a short-term rating from Moody's,
"A1" or better by Moody's on its long-term senior unsecured and
uncredit-enhanced debt securities provided, that if the ratings for any Obligor
are split between the definition of "Group A Obligor" and "Group B Obligor,"
such Obligor shall be considered a Group B Obligor.
"Group B Obligor" means an Obligor, not a Group A Obligor, with a
short-term rating of at least: (a) "A-2" by Standard & Poor's, or if such
Obligor does not have a short-term rating from Standard & Poor's, a rating of
"BBB+" to "A" by Standard & Poor's on its long-term senior unsecured and
uncredit-enhanced debt securities, and (b) "P-2" by Moody's, or if such Obligor
does not have a short-term rating from Moody's, "Baa1" to "A2" by Moody's on its
long-term senior unsecured and uncredit-enhanced debt securities; provided, that
if the ratings for any Obligor are split between the definition of "Group B
Obligor" and "Group C Obligor," such Obligor shall be considered a Group C
Obligor.
"Group C Obligor" means an Obligor, not a Group A Obligor or a Group B
Obligor, with a short-term rating of at least: (a) "A-3" by Standard & Poor's,
or if such Obligor does not have a short-term rating from Standard & Poor's, a
rating of "BBB-" to "BBB" by Standard & Poor's on its long-term senior unsecured
and uncredit-enhanced debt securities, and (b) "P-3" by Moody's, or if such
Obligor does not have a short-term rating from Moody's, "Baa3" to "Baa2" by
Moody's on its long-term senior unsecured and uncredit-enhanced debt securities;
provided, that if the ratings for any Obligor are split between the definition
of "Group C Obligor" and "Group D Obligor," such Obligor shall be considered a
Group D Obligor.
"Group D Obligor" means any Obligor that is not a Group A Obligor,
Group B Obligor or Group C Obligor.
"Indemnified Amounts" has the meaning set forth in Section 3.1 of the
Agreement.
"Indemnified Party" has the meaning set forth in Section 3.1 of the
Agreement.
"Independent Director" has the meaning set forth in paragraph 3(c) of
Exhibit IV to the Agreement.
"Information Package" means a report, in substantially the form of
Annex B to the Agreement, furnished to the Administrator pursuant to the
Agreement.
"Insolvency Proceeding" means: (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, in each case undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also refer to any successor
sections.
"Issuer" has the meaning set forth in the preamble to the Agreement.
"Issuer's Share" of any amount means such amount multiplied by the
Purchased Interest at the time of determination.
"LIBOR" means the rate of interest per annum determined by the
Administrator to be the arithmetic mean (rounded upward to the nearest 1/16th of
1%) of the rates of interest per annum notified to the Administrator by each
Reference Bank as the rate of interest at which dollar deposits in the
approximate amount of the Capital associated with such Settlement Period would
be offered by major banks in the London interbank market to such Reference Bank
at its request at or about 11:00 a.m. (London time) on the second Business Day
before the commencement of such Settlement Period.
"Liquidity Agent" means PNC in its capacity as the Liquidity Agent
pursuant to the Liquidity Agreement.
"Liquidity Agreement" means the Liquidity Asset Purchase Agreement,
dated as of September 29, 1997 between the purchasers from time to time party
thereto, the Issuer and PNC, as Administrator and Liquidity Agent, as the same
may be further amended, supplemented or otherwise modified from time to time.
"Lock-Box Account" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially the form of
Annex A to the Agreement, among the Seller, the Servicer and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Loss Reserve" means, on any date, an amount equal to: (a) the Capital
at the close of business of the Servicer on such date multiplied by (b)(i) the
Loss Reserve Percentage on such date divided by (ii) 100% minus the Loss Reserve
Percentage on such date.
"Loss Reserve Percentage" means, on any date, the greater of: (a) 5% or
(b) a percentage (calculated as of the end of each calendar month) equal to 2
times the product of (i) the highest average of the Default Ratios for any three
consecutive calendar months during the twelve most recent calendar months
multiplied by (ii) the aggregate credit sales made during the four most recent
calendar months divided by the aggregate Outstanding Balance of Eligible
Receivables as of such date.
"Material Adverse Effect" means, relative to any Person with respect to
any event or circumstance, a material adverse effect on:
(a) the assets, operations, business or financial condition of
such Person,
(b) the ability of any of such Person to perform its
obligations under this or any other Transaction Document to
which it is a party,
(c) the validity or enforceability of any other Transaction
Document, or the validity, enforceability or
collectibility of a material portion of the Pool Receivables or
(d) the status, perfection, enforceability or priority of the
Issuer's or the Seller's interest in the Pool Assets.
"Monthly Settlement Date" means the tenth Business Day of each calendar
month.
"Moody's" means Moody's Investors Service, Inc.
"Net Receivables Pool Balance" means, at any time: (a) the Outstanding
Balance of Eligible Receivables then in the
Receivables Pool minus (b) the Excess Concentration.
"Notes" means short-term promissory notes issued or to be issued by the
Issuer to fund its investments in accounts receivable or other financial assets.
"Obligor" means, with respect to any Receivable, the Person obligated
to make payments pursuant to the Contract relating to such Receivable.
"Originator" has the meaning set forth in the Sale Agreement.
"Originator Assignment Certificate" means each assignment, in
substantially the form of Exhibit C to the Sale Agreement, evidencing Seller's
ownership of the Receivables generated by a particular Originator, as the same
may be amended, supplemented, amended and restated, or otherwise modified from
time to time in accordance with the Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"PNC" has the meaning set forth in the preamble to the Agreement.
"Pool Assets" has the meaning set forth in Section 1.2(d) of the
Agreement.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portion of Capital" has the meaning set forth in Section 1.7 of the
Agreement. In addition, at any time when the Capital of the Purchased Interest
is not divided into two or more such portions, "Portion of Capital" means 100%
of the Capital.
"Program Support Agreement" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider providing
for: (a) the issuance of one or more letters of credit for the account of the
Issuer, (b) the issuance of one or more surety bonds for which the Issuer is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, (c) the sale by the Issuer to any Program Support Provider of the
Purchased Interest (or portions thereof) and/or (d) the making of loans and/or
other extensions of credit to the Issuer in connection with the Issuer's
Receivables-securitization program contemplated in the Agreement, together with
any letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Administrator).
"Program Support Provider" means and includes any Purchaser and any
other Person (other than any customer of the Issuer) now or hereafter extending
credit or having a commitment to extend credit to or for the account of, or to
make purchases from, the Issuer pursuant to any Program Support Agreement.
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
Section 9.1 of the Sale Agreement.
"Purchase and Sale Indemnified Party" has the meaning set forth in
Section 9.1 of the Sale Agreement.
"Purchase and Sale Termination Date" has the meaning set forth in
Section 1.4 of the Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in
Section 8.1 of the Sale Agreement.
"Purchase Facility" has the meaning set forth in Section 1.1 of the
Sale Agreement.
"Purchase Limit" means $150,000,000, as such amount may be reduced
pursuant to Section 1.1(b) of the Agreement. References to the unused portion of
the Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Capital.
"Purchase Price" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Purchase Report" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Purchased Interest" means, at any time, the undivided percentage
ownership interest in: (a) each and every Pool Receivable now existing or
hereafter arising, other than any Pool Receivable that arises on or after the
Facility Termination Date, (b) all Related Security with respect to such Pool
Receivables and (c) all Collections with respect to, and other proceeds of, such
Pool Receivables and Related Security. Such undivided percentage interest shall
be computed as:
Capital + Total Reserves
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to Section
1.3 of the Agreement.
"Purchaser" has the meaning set forth in Section 5.3(b) of the
Agreement.
"Purchaser's Yield" means, for any Settlement Period, the Discount plus
all Fees payable under the Fee Letter accrued or to accrue during such
Settlement Period, expressed as a percentage of Capital and converted to an
interest-bearing equivalent rate per annum.
"Rating Agency Condition" means, with respect to any event of
occurrence, receipt by the Issuer of written confirmation from Standard & Poor's
and Moody's that such event or occurrence shall not cause the rating on the then
outstanding Notes to be downgraded or withdrawn.
"Receivable" means any indebtedness and other obligations owed to the
Seller or any Originator by, or any right of the Seller or any Originator to
payment from or on behalf of, an Obligor, whether constituting an account,
chattel paper, instrument or general intangible, arising in connection with the
sale of goods or the rendering of services by an Originator, and includes the
obligation to pay any finance charges, fees and other charges with respect
thereto. Indebtedness and other obligations arising from any one transaction,
including indebtedness and other obligations represented by an individual
invoice or agreement, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other obligations arising from any other
transaction.
"Receivables Pool" means, at any time, all of the then outstanding
Receivables purchased by the Seller pursuant to the Sale Agreement.
"Reference Bank" means PNC.
"Related Rights" has the meaning set forth in Section 1.1 of the Sale
Agreement.
"Related Security" means, with respect to any Receivable:
(a) all of the Seller's and the Originator thereof's interest
in any goods (including returned goods), and documentation of title
evidencing the shipment or storage of any goods (including returned
goods), relating to any sale giving rise to such Receivable,
(b) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all UCC financing statements or similar
filings relating thereto, and
(c) all of the Seller's and Originator's rights, interests and
claims under the Contracts and all guaranties, indemnities, insurance
and other agreements (including the related Contract) or arrangements
of whatever character from time to time supporting or securing payment
of such Receivable or otherwise relating to such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise.
"Sale Agreement" means any of: (a) the Purchase and Sale Agreement,
dated as of September 29, 1997, between the Seller and the Originators as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Share" of any amount means the greater of: (a) $0 and (b)
such amount minus the Issuer's Share.
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicing Fee" shall mean the fee referred to in Section 4.6 of the
Agreement.
"Servicing Fee Reserve" for the Purchased Interest at any time means
the sum of (i) the unpaid Servicing Fee accrued to such time, plus (ii) an
amount equal to (a) the Net Receivables Pool Balance at the time of computation
multiplied by (b) the product of (x) the percentage per annum at which the
Servicing Fee is accruing on such date and (y) a fraction having the sum of 2
times the Days' Sales Outstanding as its numerator and 360 as its denominator.
"Settlement Period" for each Portion of Capital means: (a) before the
Termination Date: (i) initially the period commencing on the date of a purchase
pursuant to Section 1.2 of the Agreement and ending on (but not including) the
next Monthly Settlement Date, and (ii) thereafter, each period commencing on
such Monthly Settlement Date and ending on (but not including) the next Monthly
Settlement Date, and (b) on and after the Termination Date, such period
(including a period of one day) as shall be selected from time to time by the
Administrator or, in the absence of any such selection, each period of 30 days
from the last day of the preceding Settlement Period.
"Solvent" means, with respect to any Person at any time, a condition
under which:
(i) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than
such Person's total liabilities (including contingent and unliquidated
liabilities) at such time;
(ii) the fair value and present fair saleable value of such
Person's assets is greater than the amount that will be required to pay
such Person's probable liability on its existing debts as they become
absolute and matured ("debts," for this purpose, includes all legal
liabilities, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed, or contingent);
(iii) such Person is and shall continue to be able to
pay all of its liabilities as such liabilities mature; and
(iv) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of all the
facts and circumstances then existing, represents the amount which can
reasonably be expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may
be realized within a reasonable time either through collection or sale
of such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such
asset from an interested buyer who is willing to Purchase such asset
under ordinary selling conditions; and
(D) the "present fair saleable value" of an asset means the
amount which can be obtained if such asset is sold with reasonable
promptness in an arm's-length transaction in an existing and not
theoretical market.
"Spike Factor" means, for any calendar month the positive difference,
if any, between: (a) the highest arithmetic average of the Dilution Ratios for
any three consecutive calendar months during the twelve most recent calendar
months and (b) the arithmetic average of the Dilution Ratios for such twelve
months.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
"Subsidiary" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock of each class
or other interests having ordinary voting power (other than stock or other
interests having such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of such entity are
at the time owned, or management of which is otherwise controlled: (a) by such
Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and
one or more Subsidiaries of such Person.
"Termination Date" means the earliest of: (a) the Business Day that the
Seller so designates by written notice to the Administrator pursuant to Section
1.1(b) of the Agreement, (b) the Facility Termination Date and (c) the date that
the commitments of the Purchasers terminates under the Liquidity Agreement.
"Termination Day" means: (a) each day on which the conditions set forth
in Section 2 of Exhibit II to the Agreement are not
satisfied or (b) each day that occurs on or after the Termination Date.
"Termination Event" has the meaning specified in Exhibit V to the
Agreement.
"Termination Fee" means, for any Settlement Period during which a
Termination Day occurs, the amount, if any, by which: (a) the additional
Discount (calculated without taking into account any Termination Fee or any
shortened duration of such Settlement Period pursuant to the definition thereof)
that would have accrued during such Settlement Period on the reductions of
Capital relating to such Settlement Period had such reductions not been made,
exceeds (b) the income, if any, received by the Issuer from investing the
proceeds of such reductions of Capital, as determined by the Administrator,
which determination shall be binding and conclusive for all purposes, absent
manifest error.
"Total Reserves" means, at any time the sum of : (a) the Yield Reserve
, (b) the Loss Reserve, (c) the Dilution Reserve and
(d) the Servicer's Fee Reserve.
"Transaction Documents" means the Agreement, the Lock-Box Agreements,
the Liquidity Agreement, the Fee Letter, the Sale Agreement and all other
certificates, instruments, UCC financing statements, reports, notices,
agreements and documents executed or delivered under or in connection with the
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"Unmatured Purchase and Sale Termination Event" means any event which,
with the giving of notice or lapse of time, or both, would become a Purchase and
Sale Termination Event.
"Unmatured Termination Event" means an event that, with the giving of
notice or lapse of time, or both, would constitute a Termination Event.
"Yield Reserve" means, at any time:
(BR/360 x 2(DSO) x Capital)
where:
BR = the Base Rate in effect at such time,
DSO = the most recent Days' Sales Outstanding, and
Other Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
Unless the context otherwise requires, "or" means "and/or," and "including" (and
with correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
<PAGE>
Receivables Purchase Agreement - II-4
EXHIBIT II
CONDITIONS OF PURCHASES
I. Conditions Precedent to Initial Purchase. The Initial Purchase under
this Agreement is subject to the conditions precedent that the Administrator
shall have received on or before the date of such purchase the following, each
in form and substance (including the date thereof) satisfactory to the
Administrator:
A. A counterpart of the Agreement and the other Transaction Documents
executed by the parties thereto.
A. Certified copies of: (i) the resolutions of the Board of Directors
of each of the Seller, the Originators and Commonwealth authorizing the
execution, delivery and performance by the Seller, such Originator and
Commonwealth, as the case may be, of the Agreement and the other Transaction
Documents to which it is a party, (ii) all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to the
Agreement and the other Transaction Documents and (iii) the certificate of
incorporation and by-laws of each of the Seller, each Originator and
Commonwealth.
A. A certificate of the Secretary or Assistant Secretary of each of the
Seller, the Originators and Commonwealth certifying the names and true
signatures of its officers who are authorized to sign the Agreement and the
other Transaction Documents. Until the Administrator receives a subsequent
incumbency certificate from the Seller, an Originator or Commonwealth, as the
case may be, the Administrator shall be entitled to rely on the last such
certificate delivered to it by the Seller, an Originator or Commonwealth, as the
case may be.
A. Acknowledgment copies, or time stamped receipt copies, of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Administrator may deem necessary or
desirable in order to perfect the interests of the Seller, Commonwealth and the
Issuer contemplated by the Agreement and the Sale Agreement.
A. Acknowledgment copies, or time-stamped receipt copies, of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Originators, Commonwealth or the Seller.
A. Completed UCC search reports, dated on or shortly before the date of
the initial purchase hereunder, listing the financing statements filed all
applicable the jurisdictions referred to in subsection (e) above that name the
Originators or the Seller as debtor, together with copies of such other
financing statements, and similar search reports with respect to judgment liens,
federal tax liens and liens of the Pension Benefit Guaranty Corporation in such
jurisdictions, as the Administrator may request, showing no Adverse Claims on
any Pool Assets.
A. Copies of executed Lock-Box Agreements with the Lock-Box Banks.
A. Favorable opinions, in form and substance reasonably satisfactory to
the Administrator, of: (i) Sullivan & Cromwell, counsel for the Seller, the
Originators, Commonwealth and the Servicer, and (ii) special Kentucky counsel
for Seller and the Originators.
A. Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's collection, operating
and reporting systems, the Credit and Collection Policy of each Originator,
historical receivables data and accounts, including satisfactory results of a
review of the Servicer's operating location(s) and satisfactory review and
approval of the Eligible Receivables in existence on the date of the initial
purchase under the Agreement.
A. A pro forma Information Package representing the performance of the
Receivables Pool for the calendar month before closing.
A. Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, including any such costs, fees
and expenses arising under or referenced in Section 5.4 of the Agreement and the
Fee Letter.
A. The Fee Letter duly executed by the Seller and the Servicer.
A. Good standing certificates with respect to each of the Seller, the
Originators and the Servicer issued by the Secretaries of State (or similar
official) of the states of each such Person's organization and principal place
of business.
A. Letters from each of the rating agencies then rating the Notes
confirming the rating of such Notes after giving effect to the transaction
contemplated by the Agreement.
A. The Liquidity Agreement and all other Transaction Documents duly
executed by the parties thereto.
A. A computer file containing all information with respect to the
Receivables as the Administrator or the Issuer may reasonably request.
A. Such other approvals, opinions or documents as the Administrator or
the Issuer may reasonably request.
I. Conditions Precedent to All Purchases and Reinvestments. Each
purchase (except as to clause (a), including the initial purchase) and each
reinvestment shall be subject to the further conditions precedent that:
A. in the case of each purchase, the Servicer shall have delivered to
the Administrator on or before such purchase, in form and substance satisfactory
to the Administrator, a completed pro forma Information Package to reflect the
level of Capital and related reserves after such subsequent purchase, and
A. on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
1. the representations and warranties contained in Exhibit III
to the Agreement are true and correct in all material respects on and as of the
date of such purchase or reinvestment as though made on and as of such date; and
1. no event has occurred and is continuing, or would result
from such purchase or reinvestment, that constitutes a Termination Event or an
Unmatured Termination Event.
<PAGE>
Receivables Purchase Agreement - III-6
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of the Seller. The Seller represents
and warrants as follows:
A. The Seller is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and is duly qualified
to do business, and is in good standing, as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect.
A. The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which it is a party, including
its use of the proceeds of purchases and reinvestments: (i) are within its
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) do not contravene or result in a default under or conflict with:
(A) its charter or by-laws, (B) any law, rule or regulation applicable to it,
(C) any contractual restriction binding on or affecting it or any of its
property or (D) any order, writ, judgment, award, injunction or decree binding
on or affecting it or any of its property, and (iv) do not result in or require
the creation of any Adverse Claim upon or with respect to any of its properties.
The Agreement and the other Transaction Documents to which it is a party have
been duly executed and delivered by the Seller.
A. No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for its due
execution, delivery and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the Uniform Commercial
Code filings referred to in Exhibit II to the Agreement, all of which shall have
been filed on or before the date of the first purchase hereunder.
A. Each of the Agreement and the other Transaction Documents to which
the Seller is a party constitutes its legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect 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.
A. There is no pending or, to Seller's best knowledge, threatened
action or proceeding affecting Seller or any of its properties before any
Governmental Authority or arbitrator.
A. No proceeds of any purchase or reinvestment will be used to acquire
any equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
A. The Seller is the legal and beneficial owner of the Pool Receivables
and Related Security, free and clear of any Adverse Claim. Upon each purchase or
reinvestment, the Issuer shall acquire a valid and enforceable perfected
undivided percentage ownership or security interest, to the extent of the
Purchased Interest, in each Pool Receivable then existing or thereafter arising
and in the Related Security, Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim. The Agreement creates a security
interest in favor of the Issuer in the Pool Assets, and the Issuer has a first
priority perfected security interest in the Pool Assets, free and clear of any
Adverse Claims. No effective financing statement or other instrument similar in
effect covering any Pool Asset is on file in any recording office, except those
filed in favor of the Seller pursuant to the Sale Agreement and the Issuer
relating to the Agreement.
A. Each Information Package (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement or
any other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so furnished,
A. The Seller's principal place of business and chief executive office
(as such terms are used in the UCC) and the office where it keeps its records
concerning the Receivables are located at the address referred to in Sections
1(b) and 2(b) of Exhibit IV to the Agreement.
A. The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified
in Schedule II to the Agreement (or at such other Lock-Box Banks and/or with
such other Lock-Box Accounts as have been notified to the Administrator in
accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box
Agreements.
A. The Seller is not in violation of any order of any court, arbitrator
or Governmental Authority.
B. Neither the Seller nor any of its Affiliates has any direct or
indirect ownership or other financial interest in the Issuer.
A. No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including
Regulations G or U of the Federal Reserve Board.
A. Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable.
A. No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Purchased Interest or
from the application of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.
A. The Seller has accounted for each sale of undivided percentage
ownership interests in Receivables in its books and financial statements as
sales, consistent with generally accepted accounting principles.
A. The Seller has complied in all material respects with the Credit and
Collection Policy of each Originator with regard to each Receivable originated
by such Originator.
A. The Seller has complied in all material respects with all of the
terms, covenants and agreements contained in the Agreement and the other
Transaction Documents that are applicable to it.
A. The Seller's complete corporate name is set forth in the preamble to
the Agreement, and it does not use and has not during the last six years used
any other corporate name, trade name, doing-business name or fictitious name,
except as set forth on Schedule III to the Agreement and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Administrator pursuant to Section 1(l)(v) of Exhibit IV to the Agreement.
A. The Seller is not an "investment company," or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended. In addition, the Seller is not a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
2. Representations and Warranties of Commonwealth (including in its
capacity as the Servicer). Commonwealth, individually and in its capacity as the
Servicer, represents and warrants as follows:
A. Commonwealth is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing, as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect.
A. The execution, delivery and performance by Commonwealth of the
Agreement and the other Transaction Documents to which it is a party, including
the Servicer's use of the proceeds of purchases and reinvestments: (i) are
within its corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene or result in a default under or
conflict with: (A) its charter or by-laws, (B) any law, rule or regulation
applicable to it, (C) any contractual restriction binding on or affecting it or
any of its property or (D) any order, writ, judgment, award, injunction or
decree binding on or affecting it or any of its property, and (iv) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
its properties. The Agreement and the other Transaction Documents to which
Commonwealth is a party have been duly executed and delivered by Commonwealth.
A. No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for the due
execution, delivery and performance by Commonwealth of the Agreement or any
other Transaction Document to which it is a party.
A. Each of the Agreement and the other Transaction Documents to which
Commonwealth is a party constitutes the legal, valid and binding obligation of
Commonwealth enforceable against Commonwealth in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws from time to time in effect 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.
A. The balance sheets of Commonwealth and its consolidated Subsidiaries
as at December 31, 1996, and the related statements of income and retained
earnings for the fiscal year then ended, copies of which have been furnished to
the Administrator, fairly present the financial condition of Commonwealth and
its consolidated Subsidiaries as at such date and the results of the operations
of Commonwealth and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently applied,
and since December 31, 1996 there has been no event or circumstances which have
had a Material Adverse Effect.
A. Except as disclosed in the most recent audited financial statements
of Commonwealth furnished to the Administrator, there is no pending or, to its
best knowledge, threatened action or proceeding affecting it or any of its
Subsidiaries before any Governmental Authority or arbitrator that could have a
Material Adverse Effect.
A. No proceeds of any purchase or reinvestment will be used to acquire
any equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
A. Each Information Package (if prepared by Commonwealth or one of its
Affiliates, or to the extent that information contained therein is supplied by
Commonwealth or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Servicer to the Administrator in connection with the Agreement
is or will be complete and accurate in all material respects as of its date or
(except as otherwise disclosed to the Administrator at such time) as of the date
so furnished.
A. The principal place of business and chief executive office (as such
terms are used in the UCC) of Commonwealth and the office where it keeps its
records concerning the Receivables are located at the address referred to in
Section 2(b) of Exhibit IV to the Agreement.
A. Commonwealth is not in violation of any order of any court,
arbitrator or Governmental Authority, which could have a Material Adverse
Effect.
A. Neither Commonwealth nor any of its Affiliates has any direct or
indirect ownership or other financial interest in the Issuer.
A. The Servicer has complied in all material respects with the Credit
and Collection Policy of each Originator with regard to each Receivable
originated by such Originator.
A. Commonwealth has complied in all material respects with all of the
terms, covenants and agreements contained in the Agreement and the other
Transaction Documents that are applicable to it.
A. Commonwealth is not an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended. In addition, Commonwealth is not a "holding
company," a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
<PAGE>
Receivables Purchase Agreement - IV-15
EXHIBIT IV
COVENANTS
1. Covenants of the Seller. Until the latest of the Facility
Termination Date, the date on which no Capital of or Discount in respect of the
Purchased Interest shall be outstanding or the date all other amounts owed by
the Seller under the Agreement to the Issuer, the Administrator and any other
Indemnified Party or Affected Person shall be paid in full:
A. Compliance with Laws, Etc. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such rights,
franchises, qualifications and privileges would not have a Material Adverse
Effect.
A. Offices, Records and Books of Account, Etc. The Seller: (i) shall
keep its principal place of business and chief executive office (as such terms
or similar terms are used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set forth under its name
on the signature page to the Agreement or, pursuant to clause (l)(v) below, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrator to protect and perfect the interest of the Issuer in the
Receivables and related items (including the Pool Assets) have been taken and
completed and (ii) shall provide the Administrator with at least 30 days'
written notice before making any change in the Seller's name or making any other
change in the Seller's identity or corporate structure (including a Change in
Control) that could render any UCC financing statement filed in connection with
this Agreement "seriously misleading" as such term (or similar term) is used in
the UCC; each notice to the Administrator pursuant to this sentence shall set
forth the applicable change and the effective date thereof. The Seller also will
maintain and implement (or cause the Servicer to maintain and implement)
administrative and operating procedures (including an ability to recreate
records evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain (or cause the
Servicer to keep and maintain) all documents, books, records, computer tapes and
disks and other information reasonably necessary or advisable for the collection
of all Receivables (including records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable). Notwithstanding the above, in no event shall the Seller
have or maintain, or be a partner in any partnership that has or maintains, its
jurisdiction of organization, principal place of business or principal assets in
any of the states of Colorado, Kansas, New Mexico, Oklahoma, Utah or Wyoming.
A. Performance and Compliance with Contracts and Credit and Collection
Policy. The Seller shall (and shall cause the Servicer to), at its expense,
timely and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
applicable Credit and Collection Policies with regard to each Receivable and the
related Contract.
A. Ownership Interest, Etc. The Seller shall (and shall cause the
Servicer to), at its expense, take all action necessary or desirable to
establish and maintain a valid and enforceable undivided percentage ownership or
security interest, to the extent of the Purchased Interest, in the Pool
Receivables, the Related Security and Collections with respect thereto, and a
first priority perfected security interest in the Pool Assets, in each case free
and clear of any Adverse Claim, in favor of the Issuer, including taking such
action to perfect, protect or more fully evidence the interest of the Issuer as
the Issuer, through the Administrator, may reasonably request.
A. Sales, Liens, Etc. The Seller shall not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Pool Assets (including the Seller's undivided
interest in any Receivable, Related Security or Collections, or upon or with
respect to any account to which any Collections of any Receivables are sent),
or assign any right to receive income in respect of any
items contemplated by this paragraph.
A. Extension or Amendment of Receivables. Except as provided in the
Agreement, the Seller shall not, and shall not permit the Servicer to, extend
the maturity or adjust the Outstanding Balance or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
related Contract.
A. Change in Business or Credit and Collection Policy. The Seller shall
not make (or permit any Originator to make) any material change in the character
of its business or in any Credit and Collection Policy, or any change in any
Credit and Collection Policy that would have a Material Adverse Effect with
respect to the Receivables. The Seller shall not make (or permit any Originator
to make) any other change in any Credit and Collection Policy without giving
prior written notice thereof to the Administrator.
A. Audits. The Seller shall (and shall cause each Originator to), from
time to time during regular business hours as reasonably requested in advance
(unless a Termination Event or Unmatured Termination Event exists) by the
Administrator, permit the Administrator, or its agents or representatives: (i)
to examine and make copies of and abstracts from all books, records and
documents (including computer tapes and disks) in the possession or under the
control of the Seller (or any such Originator) relating to Receivables and the
Related Security, including the related Contracts, and (ii) to visit the offices
and properties of the Seller and the Originators for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's, Commonwealth's or the
Originators' performance under the Transaction Documents or under the Contracts
with any of the officers, employees, agents or contractors of the Seller,
Commonwealth or the Originators having knowledge of such matters.
A. Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions
to Obligors. The Seller shall not, and shall not permit the Servicer or any
Originator to, add or terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in Schedule II to the Agreement, or make any
change in its instructions to Obligors regarding payments to be made to the
Seller, the Originators, the Servicer or any Lock-Box Account (or related post
office box), unless the Administrator shall have consented thereto in writing
and the Administrator shall have received copies of all agreements and documents
(including Lock-Box Agreements) that it may request in connection therewith.
A. Deposits to Lock-Box Accounts. The Seller shall (or shall cause the
Servicer to): (i) instruct all Obligors to make payments of all Receivables to
one or more Lock-Box Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis), and (ii)
deposit, or cause to be deposited, any Collections received by it, the Servicer
or any Originator into Lock-Box Accounts not later than one Business Day after
receipt thereof. Each Lock-Box Account shall at all times be subject to a
Lock-Box Agreement. The Seller will not (and will not permit the Servicer to)
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Lock-Box Account cash or cash proceeds other than Collections.
A. Marking of Records. At its expense, the Seller shall: (i) mark (or
cause the Servicer to mark) its master data processing records relating to Pool
Receivables and related Contracts, including with a legend evidencing that the
undivided percentage ownership interests with regard to the Purchased Interest
related to such Receivables and related Contracts have been sold in accordance
with the Agreement, and (ii) cause each Originator so to mark their master data
processing records pursuant to the Sale Agreement.
A. Reporting Requirements. The Seller will provide to the Administrator
(in multiple copies, if requested by the Administrator) the following:
1. as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the annual report
for such year for the Seller, containing unaudited financial statements
for such year certified as to accuracy by the Chief Financial Officer
or Treasurer of the Seller;
1. as soon as possible and in any event within five days after
the occurrence of each Termination Event or Unmatured Termination
Event, a statement of the chief financial officer of the Seller setting
forth details of such Termination Event or Unmatured Termination Event
and the action that the Seller has taken and proposes to take with
respect thereto;
1. promptly after the filing or receiving thereof, copies of
all reports and notices that the Seller or any Affiliate files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Seller or any
Affiliate receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to which the
Seller or any of its Affiliates is or was, within the preceding five
years, a contributing employer, in each case in respect of the
assessment of withdrawal liability or an event or condition that could,
in the aggregate, result in the imposition of liability on the Seller
and/or any such Affiliate;
1. at least thirty days before any change in the Seller's name
or any other change requiring the amendment of UCC financing statements, a
notice setting forth such changes and the effective date thereof;
1. promptly after the Seller obtains knowledge thereof, notice
of any: (A) litigation, investigation or proceeding that may exist at any time
between the Seller and any Person or (B) litigation or proceeding relating to
any
Transaction Document;
1. promptly after the occurrence thereof, notice of a
material adverse change in the business, operations, property or financial or
other condition of the Seller, the Servicer or any Originator; and
1. such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller or any of its
Affiliates as the Administrator may from time to time reasonably request.
A. Certain Agreements. Without the prior written consent of the
Administrator, the Seller will not (and will not permit any Originator to)
amend, modify, waive, revoke or terminate any Transaction Document to which it
is a party or any provision of Seller's certificate of incorporation or by-laws.
A. Restricted Payments. (i) Except pursuant to clause (ii) below, the
Seller will not: (A) purchase or redeem any shares of its capital stock, (B)
declare or pay any dividend or set aside any funds for any such purpose, (C)
prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay
any loans or advances to, for or from any of its Affiliates (the amounts
described in clauses (A) through (E) being referred to as "Restricted Payments")
.
(ii) Subject to the limitations set forth in clause (iii)
below, the Seller may make Restricted Payments so long as such
Restricted Payments are made only in one or more of the following ways:
(A) the Seller may make cash payments (including prepayments) on the
Buyer Note in accordance with its terms, and (B) if no amounts are then
outstanding under the Buyer Note, the Seller may declare and pay
dividends.
(iii) The Seller may make Restricted Payments only out of the
funds it receives pursuant to Sections 1.4(b)(ii) and (iv) of the
Agreement. Furthermore, the Seller shall not pay, make or declare: (A)
any dividend if, after giving effect thereto, the Seller's tangible net
worth would be less than $5,000,000, or (B) any Restricted Payment
(including any dividend) if, after giving effect thereto, any
Termination Event or Unmatured Termination Event shall have occurred
and be continuing.
A. Other Business. The Seller will not: (i) engage in any business
other than the transactions contemplated by the Transaction Documents, (ii)
create, incur or permit to exist any Debt of any kind (or cause or permit to be
issued for its account any letters of credit or bankers' acceptances) other
than pursuant to this Agreement or the Buyer Note, or (iii) form any Subsidiary
or make any investments in any other Person; provided, however, that the Seller
shall be permitted to incur minimal obligations to the extent necessary for the
day-to-day operations of the Seller (such as expenses for stationery, audits,
maintenance of legal status, etc.).
A. Use of Seller's Share of Collections. The Seller shall apply the
Seller's Share of Collections to make payments in the following order of
priority: (i) the payment of its expenses (including all obligations payable to
the Issuer and the Administrator under the Agreement and under the Fee Letter),
(ii) the payment of accrued and unpaid interest on the Buyer Note and (iii)
other legal and valid corporate purposes.
A. Tangible Net Worth. The Seller will not permit its tangible net
worth, at any time, to be less than $5,000,000.
------------------
2. Covenants of the Servicer and Commonwealth. Until the latest of the
Facility Termination Date, the date on which no Capital of or Discount in
respect of the Purchased Interest shall be outstanding or the date all other
amounts owed by the Seller under the Agreement to the Issuer, the Administrator
and any other Indemnified Party or Affected Person shall be paid in full:
A. Compliance with Laws, Etc. The Servicer and, to the extent that it
ceases to be the Servicer, Commonwealth shall comply (and shall cause each
Originator to comply) in all material respects with all applicable laws, rules,
regulations and orders, and preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges, except to the extent that the
failure so to comply with such laws, rules and regulations or the failure so to
preserve and maintain such existence, rights, franchises, qualifications and
privileges would not have a Material Adverse Effect.
A. Offices, Records and Books of Account, Etc. The Servicer and, to the
extent that it ceases to be the Servicer, Commonwealth shall keep (and shall
cause each Originator to keep) its principal place of business and chief
executive office (as such terms or similar terms are used in the New York UCC)
and the office where it keeps its records concerning the Receivables at the
address of the Servicer set forth under its name on the signature page to the
Agreement or, upon at least 30 days' prior written notice of a proposed change
to the Administrator, at any other locations in jurisdictions where all actions
reasonably requested by the Administrator to protect and perfect the interest of
the Issuer in the Receivables and related items (including the Pool Assets) have
been taken and completed. The Servicer and, to the extent that it ceases to be
the Servicer, Commonwealth also will (and will cause each Originator to)
maintain and implement administrative and operating procedures (including an
ability to recreate records evidencing Receivables and related Contracts in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other information
reasonably necessary or advisable for the collection of all Receivables
(including records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).
A. Performance and Compliance with Contracts and Credit and Collection
Policy. The Servicer and, to the extent that it ceases to be the Servicer,
Commonwealth shall (and shall cause each Originator to), at its expense, timely
and fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract.
A. Extension or Amendment of Receivables. Except as provided in the
Agreement, the Servicer and, to the extent that it ceases to be the Servicer,
Commonwealth shall not extend (and shall not permit any Originator to extend)
the maturity or adjust the Outstanding Balance or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
related Contract.
A. Change in Business or Credit and Collection Policy. The Servicer
and, to the extent that it ceases to be the Servicer, Commonwealth shall not
make (and shall not permit any Originator to make) any material change in the
character of its business or in any Credit and Collection Policy, or any change
in any Credit and Collection Policy that would have a Material Adverse Effect.
The Servicer and, to the extent that it ceases to be the Servicer, Commonwealth
shall not make (and shall not permit any Originator to make) any other change in
any Credit and Collection Policy without giving prior written notice thereof to
the Administrator.
A. Audits. The Servicer and, to the extent that it ceases to be the
Servicer, Commonwealth shall (and shall cause each Originator to), from time to
time during regular business hours as reasonably requested in advance (unless a
Termination Event or Unmatured Termination Event exists) by the Administrator,
permit the Administrator, or its agents or representatives: (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in its possession or under its control relating to
Receivables and the Related Security, including the related Contracts, and (ii)
to visit its offices and properties for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to Receivables
and the Related Security or its performance hereunder or under the Contracts
with any of its officers, employees, agents or contractors having knowledge of
such matters.
A. Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions
to Obligors. The Servicer and, to the extent that it ceases to be the Servicer,
Commonwealth shall not (and shall not permit any Originator to) add or terminate
any bank as a Lock-Box Bank or any account as a Lock-Box Account from those
listed in Schedule II to the Agreement, or make any change in its instructions
to Obligors regarding payments to be made to the Servicer or any Lock-Box
Account (or related post office box), unless the Administrator shall have
consented thereto in writing and the Administrator shall have received copies of
all agreements and documents (including Lock-Box Agreements) that it may request
in connection therewith.
A. Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct all
Obligors to make payments of all Receivables to one or more Lock-Box Accounts or
to post office boxes to which only Lock-Box Banks have access (and shall
instruct the Lock-Box Banks to cause all items and amounts relating to such
Receivables received in such post office boxes to be removed and deposited into
a Lock-Box Account on a daily basis), and (ii) deposit, or cause to be
deposited, any Collections received by it into Lock-Box Accounts not later than
one Business Day after receipt thereof. Each Lock-Box Account shall at all times
be subject to a Lock-Box Agreement. The Servicer will not deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections.
A. Marking of Records. At its expense, the Servicer shall mark its
master data processing records relating to Pool Receivables and related
Contracts, including with a legend evidencing that the undivided percentage
ownership interests with regard to the Purchased Interest related to such
Receivables and related Contracts have been sold in accordance with the
Agreement.
A. Reporting Requirements. Commonwealth shall provide to the
Administrator (in multiple copies, if requested by the Administrator) the
following:
1. as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of
Commonwealth, balance sheets of Commonwealth and its consolidated
Subsidiaries as of the end of such quarter and statements of income,
retained earnings and cash flow of Commonwealth and its consolidated
Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the
chief financial officer of such Person;
1. as soon as available and in any event within 90 days after
the end of each fiscal year of such Person, a copy of the annual report
for such year for such Person and its consolidated Subsidiaries,
containing financial statements for such year audited by independent
certified public accountants of nationally recognized standing;
1. as to the Servicer only, as soon as available and in any
event not later than the fifteenth Business Day after the last day of
each calendar month, an Information Package as of the last day of such
month, or, within six Business Days of a request by the Administrator,
an Information Package for such periods as is specified by the
Administrator (including on a semi-monthly, weekly or daily basis);
1. as soon as possible and in any event within five days after
becoming aware of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of
Commonwealth setting forth details of such Termination Event or
Unmatured Termination Event and the action that such Person has taken
and proposes to take with respect thereto;
1. promptly after the sending or filing thereof, copies of all
reports that Commonwealth sends to any of its security holders, and
copies of all reports and registration statements that Commonwealth or
any Subsidiary files with the Securities and Exchange Commission or any
national securities exchange; provided, that any filings with the
Securities and Exchange Commission that have been granted
"confidential" treatment shall be provided promptly after such filings
have become publicly available;
1. promptly after the filing or receiving thereof, copies of
all reports and notices that Commonwealth or any of its Affiliate files
under ERISA with the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or that such
Person or any of its Affiliate receives from any of the foregoing or
from any multiemployer plan (within the meaning of Section 4001(a)(3)
of ERISA) to which such Person or any of its Affiliate is or was,
within the preceding five years, a contributing employer, in each case
in respect of the assessment of withdrawal liability or an event or
condition that could, in the aggregate, result in the imposition of
liability on Commonwealth and/or any such Affiliate;
1. at least thirty days before any change in Commonwealth's or
any Originator's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the effective
date thereof;
1. promptly after Commonwealth obtains knowledge thereof,
notice of any: (A) litigation, investigation or proceeding that may
exist at any time between Commonwealth or any of its Subsidiaries and
any Governmental Authority that, if not cured or if adversely
determined, as the case may be, would have a Material Adverse Effect,
(B) litigation or proceeding adversely affecting such Person or any of
its Subsidiaries in which the amount involved is $5,000,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought, or (C) litigation or proceeding relating to any Transaction
Document;
1. promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of Commonwealth or any of its Subsidiaries;
1. such other information respecting the Receivables or the
condition or operations, financial or otherwise, of Commonwealth or any of its
Affiliates as the Administrator may from time to time reasonably request.
3. Separate Existence. Each of the Seller and Commonwealth hereby
acknowledges that the Purchasers, the Issuer and the Administrator are entering
into the transactions contemplated by this Agreement and the other Transaction
Documents in reliance upon the Seller's identity as a legal entity separate from
Commonwealth and its Affiliates. Therefore, from and after the date hereof, each
of the Seller and Commonwealth shall take all steps specifically required by the
Agreement or reasonably required by the Administrator to continue the Seller's
identity as a separate legal entity and to make it apparent to third Persons
that the Seller is an entity with assets and liabilities distinct from those of
Commonwealth and any other Person, and is not a division of Commonwealth, its
Affiliates or any other Person. Without limiting the generality of the foregoing
and in addition to and consistent with the other covenants set forth herein,
each of the Seller and Commonwealth shall take such actions as shall be required
in order that:
(a) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation
to: (i) purchasing or otherwise acquiring from the Originators, owning,
holding, granting security interests or selling interests in Pool
Assets, (ii) entering into agreements for the selling and servicing of
the Receivables Pool, and (iii) conducting such other activities as it
deems necessary or appropriate to carry out its primary activities;
(b) The Seller shall not engage in any business or activity,
or incur any indebtedness or liability, other than as expressly
permitted by the Transaction Documents;
(c) Not less than one member of the Seller's Board of
Directors (the "Independent Director") shall be an individual who is
not a direct, indirect or beneficial stockholder, officer, director,
employee, affiliate, associate or supplier of Commonwealth or any of
its Affiliates. The certificate of incorporation of the Seller shall
provide that: (i) the Seller's Board of Directors shall not approve, or
take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to the Seller unless the Independent Director
shall approve the taking of such action in writing before the taking of
such action, and (ii) such provision cannot be amended without the
prior written consent of the Independent Director;
(d) The Independent Director shall not at any time serve as a
trustee in bankruptcy for the Seller, Commonwealth or
any Affiliate thereof;
(e) Any employee, consultant or agent of the Seller will be
compensated from the Seller's funds for services provided to the
Seller. The Seller will not engage any agents other than its attorneys,
auditors and other professionals, and a servicer and any other agent
contemplated by the Transaction Documents for the Receivables Pool,
which servicer will be fully compensated for its services by payment of
the Servicing Fee, and a manager, which manager will be fully
compensated from the Seller's funds;
(f) The Seller will contract with the Servicer to perform for
the Seller all operations required on a daily basis to service the
Receivables Pool. The Seller will pay the Servicer the Servicing Fee
pursuant hereto. The Seller will not incur any material indirect or
overhead expenses for items shared with Commonwealth (or any other
Affiliate thereof) that are not reflected in the Servicing Fee. To the
extent, if any, that the Seller (or any Affiliate thereof) shares items
of expenses not reflected in the Servicing Fee or the manager's fee,
such as legal, auditing and other professional services, such expenses
will be allocated to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered; it being
understood that Commonwealth shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including legal, agency and other fees;
(g) The Seller's operating expenses will not be paid by
Commonwealth or any other Affiliate thereof;
(h) The Seller will have its own separate stationery;
<PAGE>
(i) The Seller's books and records will be maintained
separately from those of Commonwealth and any other Affiliate
thereof;
(j) All financial statements of Commonwealth or any Affiliate
thereof that are consolidated to include Seller will contain detailed
notes clearly stating that: (i) a special purpose corporation exists as
a Subsidiary of Commonwealth, and (ii) the Originators have sold
receivables and other related assets to such special purpose Subsidiary
that, in turn, has sold undivided interests therein to certain
financial institutions and other entities;
(k) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of
Commonwealth or any Affiliate thereof;
(l) The Seller will strictly observe corporate formalities in
its dealings with Commonwealth or any Affiliate thereof, and funds or
other assets of the Seller will not be commingled with those of
Commonwealth or any Affiliate thereof except as permitted by the
Agreement in connection with servicing the Pool Receivables. The Seller
shall not maintain joint bank accounts or other depository accounts to
which Commonwealth or any Affiliate thereof (other than Commonwealth in
its capacity as the Servicer) has independent access. The Seller is not
named, and has not entered into any agreement to be named, directly or
indirectly, as a direct or contingent beneficiary or loss payee on any
insurance policy with respect to any loss relating to the property of
Commonwealth or any Subsidiary or other Affiliate of Commonwealth. The
Seller will pay to the appropriate Affiliate the marginal increase or,
in the absence of such increase, the market amount of its portion of
the premium payable with respect to any insurance policy that covers
the Seller and such Affiliate; and
(m) The Seller will maintain arm's-length relationships with
Commonwealth (and any Affiliate thereof). Any Person that renders or
otherwise furnishes services to the Seller will be compensated by the
Seller at market rates for such services it renders or otherwise
furnishes to the Seller. Neither the Seller nor Commonwealth will be or
will hold itself out to be responsible for the debts of the other or
the decisions or actions respecting the daily business and affairs of
the other. The Seller and Commonwealth will immediately correct any
known misrepresentation with respect to the foregoing, and they will
not operate or purport to operate as an integrated single economic unit
with respect to each other or in their dealing with any other entity.
<PAGE>
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
A. (i) the Seller, Commonwealth, any Originator or the Servicer (if
Commonwealth or any of its Affiliates) shall fail to perform or observe any
term, covenant or agreement under the Agreement or any other Transaction
Document and, except as set forth in clause (ii) or (iii) or in clause (b) or
(d), such failure shall continue for 30 days after knowledge or notice thereof,
(ii) the Seller or the Servicer shall fail to make when due any payment or
deposit to be made by it under the Agreement and such failure shall continue
unremedied for [three] Business Days or (iii) Commonwealth shall resign as
Servicer, and no successor Servicer reasonably satisfactory to the Administrator
shall have been appointed;
A. Commonwealth (or any Affiliate thereof) shall fail to transfer to
any successor Servicer when required any rights pursuant to the Agreement that
Commonwealth (or such Affiliate) then has as Servicer;
A. any representation or warranty made or deemed made by the Seller,
Commonwealth or any Originator (or any of their respective officers) under or in
connection with the Agreement or any other Transaction Document, or any
information or report delivered by the Seller, Commonwealth or any Originator or
the Servicer pursuant to the Agreement or any other Transaction Document, shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered;
A. the Seller or the Servicer shall fail to deliver the Information
Package pursuant to the Agreement, and such failure shall remain unremedied for
five days;
A. the Agreement or any purchase or reinvestment pursuant to the
Agreement shall for any reason: (i) cease to create, or the Purchased Interest
shall for any reason cease to be, a valid and enforceable perfected undivided
percentage ownership or security interest to the extent of the Purchased
Interest in each Pool Receivable, the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim, or (ii) cease to create
with respect to the Pool Assets, or the interest of the Issuer with respect to
such Pool Assets shall cease to be, a valid and enforceable first priority
perfected security interest, free and clear of any Adverse Claim,
A. the Seller, Commonwealth or any Originator shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller,
Commonwealth or any Originator seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or any of the actions sought in such proceeding
(including the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Seller, Commonwealth or
any Originator shall take any corporate action to authorize any of the actions
set forth above in this paragraph;
A. (i) the Default Ratio shall exceed 1.80% or (ii) the average for
three consecutive calendar months of: (A) the Default Ratio shall exceed 1.5%,
(B) the Delinquency Ratio shall exceed 2.2%, or (C) the Dilution Ratio shall
exceed 3.5%,
A. a Change in Control shall occur,
A. the Purchased Interest shall exceed 100% and such circumstance
shall not have been cured within five Business Days,
(j) Commonwealth or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt that is outstanding in a
principal amount of at least $10,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement, mortgage, indenture
or instrument relating to such Debt (and shall have not been waived); or any
other event shall occur or condition shall exist under any agreement, mortgage,
indenture or instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement, mortgage,
indenture or instrument (and shall have not been waived), if, in either case:
(a) the effect of such non-payment, event or condition is to give the applicable
debtholders the right (whether acted upon or not) to accelerate the maturity of
such Debt, or (b) any such Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case before
the stated maturity thereof;
(k) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall, or shall indicate its intention in
writing to the Seller, any Originator, Commonwealth or any ERISA Affiliate to,
file a notice of lien asserting a claim or claims of $100,000 or more in the
aggregate pursuant to the Internal Revenue Code with regard to any of the assets
of Seller, any Originator, Commonwealth or any ERISA Affiliate and such lien
shall have been filed and not released within 10 days, or (iii) the Pension
Benefit Guaranty Corporation shall, or shall indicate its intention in writing
to the Seller, any Originator, Commonwealth or any ERISA Affiliate to, either
file a notice of lien asserting a claim pursuant to ERISA with regard to any
assets of the Seller, any Originator, Commonwealth or any ERISA Affiliate or
terminate any Benefit Plan that has unfunded benefit liabilities, or any steps
shall have been taken to terminate any Benefit Plan subject to Title IV of ERISA
so as to result in any liability in excess of $1,000,000 and such lien shall
have been filed and not released within 10 days.
<PAGE>
Receivables Purchase Agreement - Schedule I-
SCHEDULE I
CREDIT AND COLLECTION POLICY
<PAGE>
Receivables Purchase Agreement - Schedule II-
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank Lock-Box Accounts Lock-Box Number
Mellon Bank, N.A. 036-8892 21056 (Los Angeles)
10527 (Chicago)
360293 (Pittsburgh)
Mellon Bank, N.A. 036-8905 21118 (Los Angeles)
10526 (Chicago)
<PAGE>
Receivables Purchase Agreement - Schedule III-10
SCHEDULE III
TRADE NAMES
NONE
<PAGE>
Receivables Purchase Agreement - Annex A-
ANNEX A
to Receivables Purchase Agreement
FORM OF LOCK-BOX AGREEMENT
[Name and address of Originator]
=======================
-----------------------
Commonwealth Industries, Inc.
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
Commonwealth Financing Corp.
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
LOCK-BOX AGREEMENT
________, 199__
____________ Bank
Ladies and Gentlemen:
Reference is made to our lock-box account no. _______ maintained with
you (the "Account") pursuant to a lockbox agreement between
_______________________ (the "Originator") and you, the terms and conditions of
which are incorporated herein by reference.
Pursuant to a Receivables Sale and Servicing Agreement, dated as of
[___], 1997, as amended, supplemented or otherwise modified from time to time,
between certain corporations (including the Originator), as originators and
sub-servicers, and Commonwealth Industries, Inc. ("Commonwealth"), as buyer and
servicer, the Originator has assigned, sold or transferred, and may hereafter
assign, sell or transfer, to Commonwealth: (a) certain accounts, chattel paper,
instruments and general intangibles (the "Receivables") with respect to which
payments are or may hereafter be made to the Account and (b) all of its right,
title and interest in, to and under the Account.
Pursuant to a Contribution and Sale Agreement, dated as of September
[___], 1997, as amended, supplemented or otherwise modified from time to time,
between Commonwealth, as seller, and Commonwealth Financing Corp. ("CFC"), as
purchaser, Commonwealth has sold or contributed, and may hereafter sell or
contribute, to CFC: (a) the Receivables and (b) all of Commonwealth's right,
title and interest in, to and under the Account.
CFC has assigned, and may hereafter assign, an undivided percentage
interest in the Receivables and certain related assets with respect to which
payments are or may hereafter be made to the Account to Market Street Funding
Corporation, a Delaware corporation ("MSFC"), pursuant to an Amended and
Restated Receivables Purchase Agreement, dated as of June 17, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Receivables Purchase
Agreement"), among CFC, as seller, Commonwealth, as servicer, MSFC, as issuer,
and PNC Bank, National Association ("PNC Bank"), as administrator for MSFC. PNC
Bank, in its capacity as Administrator for MSFC under the Receivables Purchase
Agreement, is hereinafter referred to collectively as the "Lock-Box Agent."
The Originator, Commonwealth and CFC hereby transfer exclusive
ownership and control of the Account to the Lock-Box Agent, for the benefit of
MSFC, subject only to the condition subsequent that the Lock-Box Agent shall
have given you notice of its election to assume such ownership and control,
which notice shall be substantially in the form of Exhibit A (the "Agent's
Instruction").
We hereby irrevocably instruct you, at all times from and after the
date of your receipt of the Agent's Instruction, to make all payments to be made
by you out of or in connection with the Account directly to the Lock-Box Agent,
at its address set forth below its signature hereto or as the Lock-Box Agent
otherwise notifies you, for the account of MSFC, or otherwise in accordance with
the instructions of the Lock-Box Agent.
We also hereby notify you that, at all times from and after the date of
your receipt of the Agent's Instruction, the Lock-Box Agent shall be irrevocably
entitled to exercise in our place and stead any and all rights in respect of or
in connection with the Account, including, without limitation: (a) the right to
specify when payments are to be made out of or in connection with the Account,
and (b) the right to require preparation of duplicate monthly bank statements on
the Account and the mailing of such statements directly to the Lock-Box Agent at
an address specified by the Lock-Box Agent.
Notices from the Lock-Box Agent and other notices or communications
under this letter agreement may be personally served or sent by facsimile or by
certified mail, return receipt requested, or by express mail or courier, to the
address or facsimile number set forth under the signature of the relevant party
to this letter agreement (or to such other address or facsimile number as the
relevant party shall have designated by written notice to the party giving the
aforesaid notice or other communication). Notwithstanding the foregoing, any
notice delivered by you may be delivered by regular mail. If notice is given by
facsimile, it will be deemed to have been received when the notice is sent and
receipt is confirmed by telephone or other electronic means. All other notices
will be deemed to have been received when actually received or, in the case of
personal delivery, delivered.
By executing this letter agreement, you acknowledge the existence of
the Lock-Box Agent's right to ownership and control of the Account and its
ownership of the amounts from time to time on deposit therein (on behalf of MSFC
and CFC as the parties having interests in such amounts) and agree that from the
date hereof the Account and amounts from time to time on deposit therein shall
be maintained by you for the benefit of the Lock-Box Agent (on behalf of MSFC
and CFC) on the terms provided herein. Except as otherwise provided in this
letter agreement, payments to the Account are to be processed in accordance with
the standard procedures currently in effect. All service charges and fees with
respect to the Account shall continue to be payable by us as under the
arrangements currently in effect.
By executing this letter agreement, you irrevocably waive and agree not
to assert, claim or endeavor to exercise, irrevocably bar and estop yourself
from asserting, claiming or exercising, and acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other party asserting, claiming or exercising, any right of set-off, banker's
lien or other purported form of claim with respect to the Account or any funds
from time to time on deposit therein. Except for your right to payment of your
service charges and fees and to make deductions from the Account for returned
items and such service charges and fees, you shall have no rights in the Account
or funds on deposit therein. To the extent you may ever have such rights, you
hereby expressly subordinate all such rights to all rights of the Lock-Box
Agent. Such subordination shall not apply to your right to debit the Account for
returned items and for service charges and fees.
You may terminate this letter agreement by canceling the Account
maintained with you, which cancellation and termination shall become effective
only upon thirty days' prior written notice thereof from you to the Lock-Box
Agent. Incoming mail addressed to the Account received after such cancellation
shall be forwarded in accordance with the Lock-Box Agent's instructions. This
letter agreement may also be terminated upon written notice to you by the
Lock-Box Agent stating that the Receivables Purchase Agreement is no longer in
effect. Except as otherwise provided in this paragraph, this letter agreement
may not be terminated or amended without the prior written consent of the
Lock-Box Agent.
Notwithstanding any other provision of this letter agreement, it is
agreed by the parties hereto that you shall not be liable to the Originator,
Commonwealth, CFC, MSFC or the Lock-Box Agent for any action taken by you or any
of your directors, officers, agents or employees in accordance with this letter
agreement or at the request of the Lock-Box Agent, except for your or such
person's own gross negligence or willful misconduct.
This letter agreement may be executed by the signatories hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall together constitute but one and the same letter agreement. This
letter agreement shall be governed by and interpreted under the laws of the
State of New York.
(continued on following page)
<PAGE>
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing this letter agreement in the space provided below.
Very truly yours,
[Name of Originator]
By:
Name:
Title:
Address for notice:
Attention:
Facsimile No.: (___) ___-____
COMMONWEALTH INDUSTRIES, INC.
By:
Name:
Title:
Address for notice:
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
Attention:
Facsimile No.: (___) ___-____
Commonwealth Financing Corp.
By:
Name:
Title:
Address for notice:
500 West Jefferson Street
Citizens Plaza - 19th Floor
Louisville, Kentucky 40202
Attention:
Facsimile No.: (___) ___-____
Accepted and confirmed as of the date first written above:
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By:
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Lock-Box Agent
By:
Name:
Title:
Address for notice:
PNC Bank, National Association
Multi-Bank Loan Administration
One PNC Plaza, 4th Floor Annex
249 Fifth Avenue
Pittsburgh, Pennsylvania 15220-2707
Attention: Arlene Ohler
Facsimile No.: (412) 762-8672
With a copy to:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15220-2707
Attention: Robert O. Finley, Jr.
Facsimile No.: (412) 762-9184
<PAGE>
EXHIBIT A
TO LOCK-BOX AGREEMENT
FORM OF NOTICE OF ASSUMPTION OF CONTROL OF ACCOUNT
[Letterhead of PNC Bank, National Association]
_______________, 199_
___________ Bank
Re: _______________/Commonwealth Financing Corp.
Lock-Box Account No. _______
Ladies and Gentlemen:
Reference is made to the letter agreement dated _______, ____ (as
heretofore amended, the "Letter Agreement") among you, ______________________,
Commonwealth Industries, Inc., Commonwealth Financing Corp. and PNC Bank,
National Association, as Administrator, Bank Agent and Lock-Box Agent,
concerning the above-described lock-box account (the "Account").
We hereby give you notice of our assumption of ownership and control of
the Account as provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of or
in connection with the Account [directly to the undersigned, at [our address set
forth above] (account no. )].
[other instructions]
Very truly yours,
PNC BANK, NATIONAL
ASSOCIATION,
as Lock-Box Agent
By:
Name:
Title:
<PAGE>
Receivables Purchase Agreement - Annex B-
ANNEX B
to Receivables Purchase Agreement
FORM OF INFORMATION PACKAGE
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of July 31, 1997 to the Credit
Agreement referred to below, between:
(1) COMMONWEALTH INDUSTRIES, INC. (formerly known as
Commonwealth Aluminum Corporation), a corporation duly
organized and validly existing under the laws of the State
of Delaware (the "Parent");
(2) CI HOLDINGS INC. (formerly known as Commonwealth
Industries, Inc.), a corporation duly organized and validly
existing under the laws of the State of Delaware
("Holdings");
(3) COMMONWEALTH ALUMINUM CORPORATION (formerly known as
Commonwealth Aluminum Lewisport, Inc.), a corporation duly organized
and validly existing under the laws of the State of Delaware ("CALI");
(4) ALFLEX CORPORATION (formerly named CasTech Aluminum Group
Inc.), a corporation duly organized and validly existing under the laws
of the State of Delaware ("Alflex");
(5) BARMET ALUMINUM CORPORATION, a corporation duly organized
and validly existing under the laws of the State of Ohio ("Barmet");
(6) each of the Subsidiaries of the Parent identified under
the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(each, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors");
(7) each of the lenders that is a signatory hereto identified
under the caption "LENDERS" on the signature pages hereto
(individually, a "Lender" and, collectively, the "Lenders"); and
(8) NATIONAL WESTMINSTER BANK PLC, as administrative agent for
the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Parent, Holdings, CALI, Alflex, Barmet, the Subsidiary
Guarantors, the Lenders and the Administrative Agent are parties to an Amended
and Restated Credit Agreement dated as of November 29, 1996 (as heretofore
modified and supplemented and in effect on the date hereof, the "Credit
Agreement"). The Obligors wish to amend the Credit Agreement in certain
respects, and accordingly, the parties hereto hereby agree as follows:
BII/84998_1
<PAGE>
- 2 -
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Effective as of the date
hereof (subject to satisfaction of the condition set forth in
Section 4 hereof), the Credit Agreement shall be amended as
follows:
A. Section 9.10(a)(i) of the Credit Agreement shall be
amended by replacing the ratio of "2.80 to 1" set forth opposite
the fourth period listed therein with "3.25 to 1".
B. Section 9.10(a)(ii) of the Credit Agreement shall be
amended by replacing the ratio of "4.20 to 1" set forth opposite the fourth
period listed therein with "4.60 to 1".
C. Section 9.10(b)(i) of the Credit Agreement shall be
amended by replacing the ratio of "4.80 to 1" set forth opposite
the fourth period listed therein with "4.40 to 1".
D. Section 9.10(b)(ii) of the Credit Agreement shall be
amended by replacing the ratio of "2.80 to 1" set forth opposite the fourth
period listed therein with "2.50 to 1".
E. Section 9.10(c) of the Credit Agreement shall be amended by
replacing the amount of "$85,000,000" set forth opposite the fourth period
listed therein with "$82,500,000".
F. Each reference in the Credit Agreement to "this Agreement",
"the Credit Agreement" or words of similar import, or in the Notes or other
Credit Documents to "the Credit Agreement" or words of similar import, shall be
deemed to refer to the Credit Agreement as amended hereby.
Section 3. Representations and Warranties. Each of the
Obligors represents and warrants to the Lenders and the Administrative Agent
that (i) no Default has occurred and is continuing on the date hereof both
before and after giving effect to this Amendment No. 1 and (ii) the
representations and warranties set forth in Section 8 of the Credit Agreement
and in the other Credit Documents are true and complete in all material respects
on the date hereof (or, if any such representation and warranty is expressly
stated to have been made as of a specific date, as of such specific date) and as
if each reference therein to the Credit Agreement referred to each of the Credit
Agreement as amended hereby and to this Amendment No. 1. The Obligors agree that
the foregoing representation and warranty shall be a representation and warranty
made by an Obligor in a modification to the Credit Agreement for purposes of
Section 10(c) of the Credit Agreement.
BII/84998_1
<PAGE>
- 3 -
Section 4. Conditions Precedent. The amendments in Section 2
hereof shall become effective as of the date hereof upon receipt by the
Administrative Agent of one or more counterpart of this Amendment No. 1 executed
by each of the Obligors and the Lenders constituting the Majority Lenders (or
evidence satisfactory to the Administrative Agent of such execution).
Section 5. Miscellaneous. Except as expressly herein
provided, the Credit Agreement shall remain unchanged and in full
force and effect. The Parent shall reimburse the Administrative
Agent for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and disbursements) incurred by
it in connection with this Amendment No. 1. This Amendment No. 1
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument
and any of the parties hereto may execute this Amendment No. 1 by
signing any such counterpart. This Amendment No. 1 shall be
governed by, and construed in accordance with, the law of the
State of New York.
BII/84998_1
<PAGE>
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
THE PARENT
COMMONWEALTH INDUSTRIES, INC.
By
Title:
HOLDINGS
CI HOLDINGS INC.
By
Title:
THE BORROWERS
COMMONWEALTH ALUMINUM CORPORATION
By
Title:
ALFLEX CORPORATION
By
Title:
BARMET ALUMINUM CORPORATION
By
Title:
BII/84998_1
<PAGE>
- 5 -
SUBSIDIARY GUARANTOR
COMMONWEALTH ALUMINUM SALES
CORPORATION
By
Title:
BII/84998_1
<PAGE>
- 6 -
LENDERS
NATIONAL WESTMINSTER BANK PLC
By
Title:
PNC BANK, NATIONAL ASSOCIATION
By
Title:
BANK OF MONTREAL
By
Title:
MELLON BANK, N.A.
By
Title:
NBD BANK, N.A.
By
Title:
BII/84998_1
<PAGE>
- 7 -
ABN AMRO BANK N.V.
By
Title:
By
Title:
THE BANK OF NOVA SCOTIA
By
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By
Title:
THE FUJI BANK, LIMITED
CHICAGO BRANCH
By
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By
Title:
BII/84998_1
<PAGE>
- 8 -
CREDITANSTALT BANKVEREIN
By
Title:
By
Title:
THE INDUSTRIAL BANK
OF JAPAN, LIMITED
By
Title:
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By
Title:
NATIONAL CITY BANK OF KENTUCKY
By
Title:
SOCIETE GENERALE
By
Title:
BII/84998_1
<PAGE>
- 9 -
THE YASUDA TRUST AND
BANKING CO., LTD.
By
Title:
FIFTH THIRD BANK OF KENTUCKY, INC.
By
Title:
BII/84998_1
<PAGE>
- 10 -
THE ADMINISTRATIVE AGENT
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By
Title:
BII/84998_1
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of August 29, 1997 to the
Credit Agreement referred to below, between:
(1) COMMONWEALTH INDUSTRIES, INC. (formerly known as
Commonwealth Aluminum Corporation), a corporation duly
organized and validly existing under the laws of the State
of Delaware (the "Parent");
(2) CI HOLDINGS INC. (formerly known as Commonwealth
Industries, Inc.), a corporation duly organized and validly
existing under the laws of the State of Delaware
("Holdings");
(3) COMMONWEALTH ALUMINUM CORPORATION (formerly known as
Commonwealth Aluminum Lewisport, Inc.), a corporation duly organized
and validly existing under the laws of the State of Delaware ("CALI");
(4) ALFLEX CORPORATION (formerly named CasTech Aluminum Group
Inc.), a corporation duly organized and validly existing under the laws
of the State of Delaware ("Alflex");
(5) BARMET ALUMINUM CORPORATION, a corporation duly organized
and validly existing under the laws of the State of Ohio ("Barmet");
(6) each of the Subsidiaries of the Parent identified under
the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(each, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors");
(7) each of the lenders that is a signatory hereto identified
under the caption "LENDERS" on the signature pages hereto
(individually, a "Lender" and, collectively, the "Lenders"); and
(8) NATIONAL WESTMINSTER BANK PLC, as administrative agent for
the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Parent, Holdings, CALI, Alflex, Barmet, the Subsidiary
Guarantors, the Lenders and the Administrative Agent are parties to an Amended
and Restated Credit Agreement dated as of November 29, 1996 (as heretofore
modified and supplemented and in effect on the date hereof, the "Credit
Agreement"). The Obligors wish to amend the Credit Agreement in certain
respects, and accordingly, the parties hereto hereby agree as follows:
<PAGE>
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 2, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Effective as of the date
hereof (subject to satisfaction of the condition set forth in
Section 4 hereof), the Credit Agreement shall be amended as
follows:
A. The definition of "Borrowing Base" in Section 1.01 of the
Credit Agreement shall be amended by deleting at the end of the first sentence
of such definition the following words:
"; provided that not more than 50% of the Borrowing Base shall be
composed of Eligible Inventory, Eligible Product- in-Process and
Special Inventory (x) at any time prior to the Trigger Date or (y) at
any time thereafter, when less than $75,000,000 in the aggregate is
outstanding under Permitted Receivables Financings".
B. Section 9.10(a)(i) of the Credit Agreement shall be
amended by replacing the ratio of "3.25 to 1" set forth opposite
the fourth period listed therein with "3.30 to 1".
C. Section 9.10(a)(ii) of the Credit Agreement shall be
amended by replacing the ratio of "4.60 to 1" set forth opposite the fourth
period listed therein with "5.00 to 1".
D. Section 9.10(b)(i) of the Credit Agreement shall be
amended by replacing the ratio of "4.40 to 1" set forth opposite
the fourth period listed therein with "4.00 to 1".
E. Section 9.10(b)(ii) of the Credit Agreement shall be
amended by replacing the ratio of "2.50 to 1" set forth opposite the fourth
period listed therein with "2.30 to 1".
F. Section 9.10(c) of the Credit Agreement shall be amended by
replacing the amount of "$82,500,000" set forth opposite the fourth period
listed therein with "$75,000,000".
G. Each reference in the Credit Agreement to "this Agreement",
"the Credit Agreement" or words of similar import, or in the Notes or other
Credit Documents to "the Credit Agreement" or words of similar import, shall be
deemed to refer to the Credit Agreement as amended hereby.
Section 3. Representations and Warranties. Each of
the Obligors represents and warrants to the Lenders and the
Administrative Agent that (i) no Default has occurred and is
continuing on the date hereof both before and after giving effect
to this Amendment No. 2 and (ii) the representations and
<PAGE>
warranties set forth in Section 8 of the Credit Agreement and in the other
Credit Documents are true and complete in all material respects on the date
hereof (or, if any such representation and warranty is expressly stated to have
been made as of a specific date, as of such specific date) and as if each
reference therein to the Credit Agreement referred to each of the Credit
Agreement as amended hereby and to this Amendment No. 2. The Obligors agree that
the foregoing representation and warranty shall be a representation and warranty
made by an Obligor in a modification to the Credit Agreement for purposes of
Section 10(c) of the Credit Agreement.
Section 4. Conditions Precedent. The amendments in Section 2
hereof shall become effective as of the date hereof upon receipt by the
Administrative Agent of one or more counterpart of this Amendment No. 2 executed
by each of the Obligors and the Lenders constituting the Majority Lenders (or
evidence satisfactory to the Administrative Agent of such execution).
Section 5. Miscellaneous. Except as expressly herein
provided, the Credit Agreement shall remain unchanged and in full
force and effect. The Parent shall reimburse the Administrative
Agent for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and disbursements) incurred by
it in connection with this Amendment No. 2. This Amendment No. 2
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument
and any of the parties hereto may execute this Amendment No. 2 by
signing any such counterpart. This Amendment No. 2 shall be
governed by, and construed in accordance with, the law of the
State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed and delivered as of the day and year first
above written.
THE PARENT
COMMONWEALTH INDUSTRIES, INC.
By
Title:
HOLDINGS
CI HOLDINGS INC.
By
Title:
THE BORROWERS
COMMONWEALTH ALUMINUM CORPORATION
By
Title:
ALFLEX CORPORATION
By
Title:
BARMET ALUMINUM CORPORATION
By
Title:
<PAGE>
SUBSIDIARY GUARANTOR
COMMONWEALTH ALUMINUM SALES
CORPORATION
By
Title:
<PAGE>
LENDERS
NATIONAL WESTMINSTER BANK PLC
By
Title:
PNC BANK, NATIONAL ASSOCIATION
By
Title:
BANK OF MONTREAL
By
Title:
MELLON BANK, N.A.
By
Title:
NBD BANK, N.A.
By
Title:
<PAGE>
ABN AMRO BANK N.V.
By
Title:
By
Title:
THE BANK OF NOVA SCOTIA
By
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By
Title:
THE FUJI BANK, LIMITED
CHICAGO BRANCH
By
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By
Title:
<PAGE>
CREDITANSTALT BANKVEREIN
By
Title:
By
Title:
THE INDUSTRIAL BANK
OF JAPAN, LIMITED
By
Title:
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By
Title:
NATIONAL CITY BANK OF KENTUCKY
By
Title:
SOCIETE GENERALE
By
Title:
<PAGE>
THE YASUDA TRUST AND
BANKING CO., LTD.
By
Title:
FIFTH THIRD BANK OF KENTUCKY, INC.
By
Title:
<PAGE>
THE ADMINISTRATIVE AGENT
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By
Title:
AMENDMENT NO. 3
AMENDMENT NO. 3 dated as of August 29, 1997 to the
Credit Agreement referred to below, between:
(1) COMMONWEALTH INDUSTRIES, INC. (formerly known as
Commonwealth Aluminum Corporation), a corporation duly
organized and validly existing under the laws of the State
of Delaware (the "Parent");
(2) CI HOLDINGS INC. (formerly known as Commonwealth
Industries, Inc.), a corporation duly organized and validly
existing under the laws of the State of Delaware
("Holdings");
(3) COMMONWEALTH ALUMINUM CORPORATION (formerly known as
Commonwealth Aluminum Lewisport, Inc.), a corporation duly organized
and validly existing under the laws of the State of Delaware ("CALI");
(4) ALFLEX CORPORATION (formerly named CasTech Aluminum Group
Inc.), a corporation duly organized and validly existing under the laws
of the State of Delaware ("Alflex");
(5) BARMET ALUMINUM CORPORATION, a corporation duly organized
and validly existing under the laws of the State of Ohio ("Barmet");
(6) each of the Subsidiaries of the Parent identified under
the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(each, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors");
(7) each of the lenders that is a signatory hereto identified
under the caption "LENDERS" on the signature pages hereto
(individually, a "Lender" and, collectively, the "Lenders"); and
(8) NATIONAL WESTMINSTER BANK PLC, as administrative agent for
the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Parent, Holdings, CALI, Alflex, Barmet, the Subsidiary
Guarantors, the Lenders and the Administrative Agent are parties to an Amended
and Restated Credit Agreement dated as of November 29, 1996 (as heretofore
modified and supplemented and in effect on the date hereof, the "Credit
Agreement"). The Obligors wish to amend the Credit Agreement in certain
respects, and accordingly, the parties hereto hereby agree as follows:
<PAGE>
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 3, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Effective as of the date
hereof (subject to satisfaction of the condition set forth in
Section 4 hereof), the Credit Agreement shall be amended as
follows:
A. Dividend Payments. Section 9.09(a) of the Credit
Agreement shall be amended by deleting "$600,000" in
clause (ii) thereof and substituting "$850,000" therefor.
B. General. Each reference in the Credit Agreement to
"this Agreement", "the Credit Agreement" or words of similar
import, or in the Notes or other Credit Documents to "the
Credit Agreement" or words of similar import, shall be
deemed to refer to the Credit Agreement as amended hereby.
Section 3. Representations and Warranties. Each of the
Obligors represents and warrants to the Lenders and the Administrative Agent
that (i) no Default has occurred and is continuing on the date hereof both
before and after giving effect to this Amendment No. 3 and (ii) the
representations and warranties set forth in Section 8 of the Credit Agreement
and in the other Credit Documents are true and complete in all material respects
on the date hereof (or, if any such representation and warranty is expressly
stated to have been made as of a specific date, as of such specific date) and as
if each reference therein to the Credit Agreement referred to each of the Credit
Agreement as amended hereby and to this Amendment No. 3. The Obligors agree that
the foregoing representation and warranty shall be a representation and warranty
made by an Obligor in a modification to the Credit Agreement for purposes of
Section 10(c) of the Credit Agreement.
Section 4. Conditions Precedent. The amendments in Section 2
hereof shall become effective as of the date hereof upon receipt by the
Administrative Agent of one or more counterpart of this Amendment No. 3 executed
by each of the Obligors and the Lenders constituting the Majority Lenders (or
evidence satisfactory to the Administrative Agent of such execution).
Section 5. Miscellaneous. Except as expressly herein
provided, the Credit Agreement shall remain unchanged and in full
force and effect. The Parent shall reimburse the Administrative
Agent for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and disbursements) incurred by
it in connection with this Amendment No. 3. This Amendment No. 3
<PAGE>
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument
and any of the parties hereto may execute this Amendment No. 3 by
signing any such counterpart. This Amendment No. 3 shall be
governed by, and construed in accordance with, the law of the
State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 3 to be duly executed and delivered as of the day and year first
above written.
THE PARENT
COMMONWEALTH INDUSTRIES, INC.
By
Title:
HOLDINGS
CI HOLDINGS INC.
By
Title:
THE BORROWERS
COMMONWEALTH ALUMINUM CORPORATION
By
Title:
ALFLEX CORPORATION
By
Title:
BARMET ALUMINUM CORPORATION
By
Title:
<PAGE>
SUBSIDIARY GUARANTOR
COMMONWEALTH ALUMINUM SALES
CORPORATION
By
Title:
LENDERS
NATIONAL WESTMINSTER BANK PLC
By
Title:
PNC BANK, NATIONAL ASSOCIATION
By
Title:
BANK OF MONTREAL
By
Title:
MELLON BANK, N.A.
By
Title:
<PAGE>
NBD BANK, N.A.
By
Title:
ABN AMRO BANK N.V.
By
Title:
By
Title:
THE BANK OF NOVA SCOTIA
By
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By
Title:
THE FUJI BANK, LIMITED
CHICAGO BRANCH
By
Title:
<PAGE>
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By
Title:
CREDITANSTALT BANKVEREIN
By
Title:
By
Title:
THE INDUSTRIAL BANK
OF JAPAN, LIMITED
By
Title:
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By
Title:
NATIONAL CITY BANK OF KENTUCKY
By
Title:
<PAGE>
SOCIETE GENERALE
By
Title:
THE YASUDA TRUST AND
BANKING CO., LTD.
By
Title:
FIFTH THIRD BANK OF KENTUCKY, INC.
By
Title:
THE ADMINISTRATIVE AGENT
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By
Title:
Commonwealth Industries, Inc.
Computation of Net Income Per Share
(in thousands except per share data)
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended September 30, 1997 1996
Weighted average shares of common stock outstanding (a) 10,333 10,195
=========== ===========
Income before extraordinary loss $ 1,590 $ 4,634
Extraordinary loss on early extinguishment of debt, net of income tax benefit (1,181) (1,355)
----------- -----------
Net income $ 409 $ 3,279
=========== ===========
Per share data:
Income before extraordinary loss $ 0.16 $ 0.45
Extraordinary loss (0.12) (0.13)
----------- -----------
Net income $ 0.04 $ 0.32
=========== ===========
Nine months ended September 30, 1997 1996
Weighted average shares of common stock outstanding (a) 10,249 10,195
=========== ===========
Income before extraordinary loss $ 7,921 $ 9,129
Extraordinary loss on early extinguishment of debt, net of income tax benefit (1,181) (1,355)
----------- -----------
Net income $ 6,740 $ 7,774
=========== ===========
Per share data:
Income before extraordinary loss $ 0.78 $ 0.89
Extraordinary loss (0.12) (0.13)
----------- -----------
Net income $ 0.66 $ 0.76
=========== ===========
Note: (a) Common equivalent shares relating to stock options are not material.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 637
<ALLOWANCES> 0
<INVENTORY> 177,373
<CURRENT-ASSETS> 227,452
<PP&E> 509,287
<DEPRECIATION> 243,421
<TOTAL-ASSETS> 678,535
<CURRENT-LIABILITIES> 104,876
<BONDS> 136,100
0
0
<COMMON> 160
<OTHER-SE> 330,680
<TOTAL-LIABILITY-AND-EQUITY> 678,535
<SALES> 830,573
<TOTAL-REVENUES> 830,573
<CGS> 761,125
<TOTAL-COSTS> 761,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 25,082
<INCOME-PRETAX> 10,027
<INCOME-TAX> 2,106
<INCOME-CONTINUING> 7,921
<DISCONTINUED> 0
<EXTRAORDINARY> (1,181)
<CHANGES> 0
<NET-INCOME> 6,740
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
