SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended May 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission File No. 1-8399
OHIO 31-1189815 ------------------------------------------------------------------------- --------------------------------- (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 1205 Dearborn Drive, Columbus, Ohio 43085 ------------------------------------------------------------------------- --------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (614) 438-3210 ------------------------------------------------- |
Securities Registered Pursuant to Section 12(b) of the Act:
Common Shares, Without Par Value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Based upon the closing price of the Common Shares on August 8, 2001, as reported on the New York Stock Exchange composite tape (as reported by the Wall Street Journal), the aggregate market value of the Common Shares held by non-affiliates of the Registrant as of such date was approximately $959,497,562.
The number of Common Shares issued and outstanding as of August 8, 2001, was 85,379,425.
Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended May 31, 2001 are incorporated by reference into Part I and Part II of this Form 10-K. Portions of the definitive proxy statement to be furnished to shareholders of the Registrant in connection with the Annual Meeting of Shareholders to be held on September 27, 2001 are incorporated by reference into Part III of this Form 10-K.
SAFE HARBOR STATEMENT
Statements contained in this FORM 10-K, including, without limitation, the statements incorporated by reference into "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations", that are not historical facts constitute "forward-looking statements" that are based on management's beliefs, estimates, assumptions and currently available information. These forward-looking statements include, without limitation, statements relating to future sales and operating results, growth, stock appreciation, projected capacity levels, pricing trends, anticipated capital expenditures, plant start-ups, capabilities, new products and markets and other non-historical information. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; financial difficulties of customers and suppliers; inherent risks of international development, including foreign currency risks; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; general economic conditions, business environment and the impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the Securities and Exchange Commission.
PART I
ITEM 1. - BUSINESS
Worthington Industries, Inc. is referred to herein individually as the "Registrant" or "Worthington Industries" or, together with its subsidiaries, as "Worthington". Founded in 1955, Worthington is a diversified steel processor that focuses on steel processing and metals-related businesses. We operate 43 facilities worldwide and our corporate headquarters are located at 1205 Dearborn Drive, Columbus, Ohio 43085. Worthington also holds equity positions in eight joint ventures, which operate 16 facilities worldwide.
For the fiscal year ended May 31, 2001 ("fiscal 2001"), Worthington's operations are reported principally in three business segments: Processed Steel Products, Metal Framing and Pressure Cylinders. The Processed Steel Products segment includes The Worthington Steel Company ("Worthington Steel") and The Gerstenslager Company ("Gerstenslager"). The Metal Framing segment is made up of Dietrich Industries, Inc. ("Dietrich") and the Pressure Cylinders segment consists of Worthington Cylinder Corporation ("Worthington Cylinders"). In addition, we hold an equity position in eight joint ventures as described below. During the fiscal year ended May 31, 1999 ("fiscal 1999"), in keeping with our strategy to focus on steel processing and metals-related businesses, we divested our Worthington Custom Plastics, Inc., Worthington Precision Metals, Inc. and Buckeye Steel Castings Company operations. The divested operations, which
previously made up our Custom Products and Cast Products segments, have been reported as discontinued operations for fiscal 1999 and prior.
During fiscal 1999, Worthington reincorporated from the State of Delaware into the State of Ohio. On October 13, 1998, Worthington Industries, Inc., a Delaware corporation ("Worthington Delaware"), was merged (the "Merger") with and into Worthington Industries, an Ohio corporation and, at the time, a wholly-owned subsidiary of Worthington Delaware. Each share of common stock, par value $0.01 per share, of Worthington Delaware was converted into one common share, without par value, of Worthington Industries. By virtue of the Merger, Worthington Industries succeeded to all the business, properties, assets and liabilities of Worthington Delaware and the directors, officers and employees of Worthington Delaware became directors, officers and employees of Worthington Industries.
PROCESSED STEEL PRODUCTS
Our Processed Steel Products segment consists of two business units, Worthington Steel and Gerstenslager. For fiscal 2001, the fiscal year ended May 31, 2000 ("fiscal 2000") and fiscal 1999, the percentage of sales from continuing operations generated by our Processed Steel Products segment was 64.9%, 65.6% and 63.2%, respectively.
Both Worthington Steel and Gerstenslager are intermediate processors of flat-rolled steel. Worthington Steel occupies a niche in the steel industry by focusing on specialized products requiring exact specifications, which typically cannot be supplied as efficiently by steel mills, metal service centers or steel end users. We believe that Worthington Steel is the largest independent flat-rolled steel processor in the United States. Gerstenslager is a leading independent supplier of automotive quality exterior body panels to the North American automotive original equipment and service part markets. During fiscal 2001 Worthington expanded its Processed Steel Products segment operations by constructing a new Gerstenslager facility in Clyde, Ohio.
Our Processed Steel Products segment operates 13 processing facilities as well as Spartan Steel Coating, L.L.C., our consolidated joint venture with Rouge Steel Company. These facilities are concentrated in the Michigan, Ohio and Indiana market, the largest flat-rolled steel consuming market in the United States. The segment serves over 1,000 customers, principally in the automotive, lawn and garden, construction, hardware, furniture, office equipment, electrical control, leisure and recreation, appliance, farm implement, HVAC and aerospace markets.
Worthington Steel buys coils of wide, open-tolerance steel from major integrated steel mills and mini-mills and processes it to the precise type, thickness, length, width, shape, temper and surface quality required by customer specifications. Our computer-aided processing capabilities include, among others:
- pickling, a chemical process using an acidic solution to remove surface oxide which develops on hot-rolled steel;
- slitting, which cuts steel to specific widths;
- cutting-to-length, which flattens the steel and cuts it to exact lengths;
- roller leveling, a method of applying pressure to achieve precise flatness tolerances for steel which is cut into exact lengths;
- cold reduction, which achieves close tolerances of thickness and temper by rolling;
- edge rolling, which conditions the edges of the steel by imparting round, smooth or knurled edges;
- configured blanking, through which steel is cut into specific shapes;
- painting;
- hot dipped galvanizing, which coats the steel with zinc and zinc alloys through a hot dipped process;
- nickel and zinc/nickel plating, which coats the steel with zinc or zinc and nickel using an electronic process; and
- annealing, a thermal process that changes the hardness and certain metallurgical characteristics of steel.
Gerstenslager stamps, assembles, primes and packages exterior automotive body panels. In addition, we "toll process" steel for steel mills and large end users. Toll processing is similar to our normal steel processing, except the mill or end user retains the title to the steel and has the responsibility for selling the end product. Toll processing enables Worthington to participate in the market for wide sheet steel and large standard orders, which is a market generally served by steel mills rather than by intermediate steel processors.
The Processed Steel Products industry is fragmented and highly competitive. Worthington competes with many other independent intermediate processors and, with respect to automotive stamping, captive processors owned by the automotive companies, independent tier one suppliers of current model components and a number of smaller competitors. We believe Worthington is unique in its ability to handle a very large number of low volume aftermarket automotive body parts, managing over 3,000 die sets for component parts on past and current automobile and truck production models. Despite the competitive nature of the Processed Steel Products industry, we know of no other intermediate processor that can match Worthington's level of technical service support for material testing and customer-specific applications. See "Item 1 - Business - Technical Services." We are unable to gauge, however, the extent to which our technical service capability has improved our competitive position.
METAL FRAMING
Our Metal Framing segment consists of one business unit, Dietrich, which produces metal framing products for the commercial and residential construction markets in the United States. For fiscal 2001, fiscal 2000 and fiscal 1999, the percentage of sales
from continuing operations generated by Dietrich was 18.9%, 17.9%, and 19.1%, respectively. Dietrich's products include steel studs and track, floor and wall system components, roof tresses and other metal framing accessories. Dietrich has over 2,000 customers, primarily consisting of wholesale distributors and commercial and residential building contractors. During fiscal 2001, we expanded our metal framing segment by acquiring the assets of Studco of Hawaii, Inc. located in Kapolei, Hawaii in January 2001, and with a plant start-up in Benton, Washington.
We believe that Dietrich is the only supplier on a national basis of metal framing products and supplies approximately 36% of the metal framing products sold in the United States. Dietrich has five large regional competitors and numerous small, more localized competitors. Dietrich operates 19 facilities in fifteen states.
PRESSURE CYLINDERS
Our Pressure Cylinders segment consists of one business unit, Worthington Cylinders. For fiscal 2001, fiscal 2000 and fiscal 1999, the percentage of sales from continuing operations generated by Worthington Cylinders was 15.8%, 16.2%, and 17.3%, respectively.
During fiscal 1999, we expanded our Pressure Cylinders segment by acquiring the cylinder operations of Jos. Heiser vormals J. Winter's Sohn, GmbH ("Worthington Austria"), based in Kienberg, Austria, in June 1998; a majority interest in Gastec spol. s.r.o. ("Worthington Czech"), based in Hustopece, Czech Republic, in February 1999; and certain cylinder manufacturing assets of Metalurgica Progresso de Vale de Cambra, Lda. ("Worthington Portugal"), based in Vale de Cambra, Portugal, in May 1999.
Worthington Cylinders produces a diversified line of pressure cylinders, including portable low pressure liquefied petroleum gas ("LPG") and refrigerant gas cylinders, and high pressure industrial/specialty gas cylinders. Our LPG cylinders are sold to manufacturers, distributors and/or mass merchandisers and are used for gas barbecue grills, camping equipment, residential heating systems, industrial forklifts, and commercial/residential cooking (outside North America). Refrigerant cylinders are sold primarily to major refrigerant gas producers and are used to hold refrigerant gases for commercial and residential air conditioning and refrigeration systems and for automotive air conditioning systems. Industrial/specialty gas high pressure cylinders are sold primarily to gas suppliers and fillers and are used as containers for gases for: cutting and welding metals, breathing (medical, diving and firefighting), semiconductor production, beverage delivery, and compressed natural gas systems. Worthington Cylinders also produces recycle and recovery tanks for refrigerant gases and non-refillable cylinders for helium balloon kits.
Worthington Cylinders' primary low-pressure cylinder products are steel cylinders with refrigerant gas capacities of 15 to 1,000 lbs. and steel and aluminum cylinders with liquid propane gas capacities of 4-1/4 to 420 lbs. Our low-pressure cylinders are manufactured in accordance with U. S. Department of Transportation safety requirements as well as various international requirements and standards. These low-pressure cylinders are produced by precision stamping, drawing and welding component parts to
customer specifications. They are then tested, painted and packaged as required. Our high-pressure cylinders are manufactured by several processes, including deep drawing, billet piercing and spinning.
While a large percentage of our cylinder sales are made to major accounts, Worthington Cylinders has over 3,000 customers. Worthington Cylinders operates eight wholly-owned manufacturing operations throughout the United States, Austria, Canada and Portugal; and three joint venture facilities, Worthington S.A. and Worthington Tank both in Itu, Brazil and Worthington Gastec, A.S. in Czech Republic.
Worthington Cylinders has two principal domestic competitors in its major low-pressure cylinder markets, and we believe that we have the largest domestic market share. Worthington Cylinders also has two principal domestic competitors in its high-pressure cylinder markets, both of which have a larger domestic market share than ours. We believe that Worthington Austria has the largest share of the European industrial gas cylinder market. Otherwise we have no reliable information with respect to the size of any of Worthington Cylinders' various product markets or our relative position therein.
SEGMENT DATA
For financial information about our segments, see "Note H - Industry Segment Data" of Worthington's Notes to Consolidated Financial Statements included in our 2001 Annual Report to Shareholders ("2001 Annual Report"), which is incorporated herein by reference.
CUSTOMERS
During fiscal 2001, our Processed Steel Products, Metal Framing and Pressure Cylinders segments served over 1,000, 2,000 and 3,000 customers, respectively. Worthington's customers are located primarily in the United States, Canada and Europe and operate in a variety of industries, including without limitation, the automotive, lawn and garden, construction, appliance, electrical control, wholesale building products distribution, furniture, office equipment and leisure and recreation industries. See "Item 1 - Business - Processed Steel Products," "--Metal Framing," and "--Pressure Cylinders" for a discussion regarding customers within our segments. No single customer accounts for over 10% of our consolidated net sales.
SUPPLIERS
In fiscal 2001, Worthington purchased in excess of three million tons of steel for use as raw material for our Processed Steel Products, Pressure Cylinders and Metal Framing segments. We purchase steel in large quantities at regular intervals from major primary producers, both domestically and globally. We primarily purchase and process steel based on the specific orders of customers and do not typically purchase steel for inventory. Worthington purchases the majority of our raw materials in the open market at prevailing market prices, but, occasionally, will enter into long-term fixed-price contracts. During fiscal 2001, Worthington's major suppliers of steel were Bethlehem Steel Corporation, Inland Steel Company, LTV Steel Corporation, NorthStar BHP Steel, Rouge
Industries, Inc., TRICO Steel, USX Corporation and WCI Steel, Inc. In addition, Worthington's primary aluminum suppliers in fiscal 2001 for the Pressure Cylinders segment were Alcoa, Inc. and Specialty Blanks Incorporated. We believe that our supplier relationships are good.
MARKETING AND COMPETITION
We believe that Worthington has established and maintains its customer relationships primarily because of our tradition of leadership in value-added steel processing and metals-related industries. Our products and services are sold primarily by Worthington sales personnel, who receive orders both on an order-by-order basis and through long-term program commitments. Foreign operations and exports represent less than 10% of our production, sales and assets.
Worthington competes primarily on the basis of quality of product, ability to meet delivery requirements and price. Geographic proximity to customers has a significant effect upon relative ability to meet customer delivery schedules and impacts the freight charge portion of overall product price.
See "Item 1 - Business - Processed Steel Products," "--Metal Framing," and "--Pressure Cylinders" for a discussion regarding marketing and competition within our segments.
TECHNICAL SERVICES
Worthington employs a staff of engineers and other technical personnel and maintains fully-equipped, modern laboratories to support our operations. The facilities enable us to verify, analyze and document the physical, chemical, metallurgical and mechanical properties of our raw materials and products. Technical service personnel also work in conjunction with our sales force to determine the types of flat-rolled steel required for our customer's particular needs. In order to provide these services, we maintain a continuing program of developmental engineering with respect to the characteristics and performance of our products under varying conditions. Laboratory facilities are also used to perform the quality control and extensive testing of all low pressure cylinders required by the regulations of the U. S. Department of Transportation and associated agencies, as well as various customer requirements.
EMPLOYEES
As of May 31, 2001, Worthington employed approximately 6,800 employees in its operations, excluding unconsolidated joint ventures. Approximately 20% of the Company's labor force is covered by collective bargaining agreements. We believe that we have good relationships with our employees.
JOINT VENTURES
As part of our strategy to selectively develop new products, markets and technological capabilities, and to expand our international presence while mitigating the
risks and costs associated with those activities, Worthington participates in four consolidated and four unconsolidated joint ventures.
CONSOLIDATED
- Spartan Steel Coating, L.L.C., a 52%-owned consolidated joint venture with Rouge Steel, operates a cold rolled hot-dipped galvanizing facility in Monroe, Michigan.
- Worthington S.A., a 52%-owned consolidated joint venture with three Brazilian propane producers, operates a cylinder manufacturing facility in Itu, Brazil.
- Worthington Tank, Ltda., a 65%-owned consolidated joint venture with a Portuguese manufacturer of liquefied petroleum gas tanks, operates a cylinder manufacturing facility in Itu, Brazil.
- Worthington Gastec, a.s., a 51%-owned consolidated joint venture with a local Czech Republic entrepreneur, operates a pressure cylinder manufacturing facility in Hustopece, Czech Republic.
UNCONSOLIDATED
- Worthington Armstrong Venture ("WAVE"), a 50%-owned joint venture with Armstrong World Industries, is one of the three leading global manufacturers of suspended ceiling systems for concealed and lay-in panel ceilings. WAVE operates facilities in Sparrows Point, Maryland; Benton Harbor, Michigan; North Las Vegas, Nevada; Malvern, Pennsylvania; Shanghai, China; Team Valley, United Kingdom; Valenciennes, France; and Madrid, Spain.
- TWB Company, L.L.C. ("TWB"), a 33%-owned joint venture with Thyssen Krupp, Rouge Steel, LTV Steel and Bethlehem Steel, produces laser welded blanks for use in the auto industry for products such as inner door frames. TWB operates facilities in Monroe, Michigan and Ramos Arizpe, Mexico.
- Acerex S.A. de C.V., a 50%-owned joint venture with Hylsa S.A. de C.V., is a steel processing company located in Monterrey, Mexico.
- Worthington Specialty Processing, a 50%-owned joint venture with USX Corporation in Jackson, Michigan, operates primarily as a toll processor for USX Corporation.
See "Note J - Investment in Unconsolidated Affiliates" of the Worthington's Notes to Consolidated Financial Statements included in the 2001 Annual Report for additional information on our unconsolidated joint ventures.
ENVIRONMENTAL REGULATION
Worthington's manufacturing facilities, generally in common with those of similar industries making similar products, are subject to many federal, state and local requirements relating to the protection of the environment. We continually examine ways to reduce emissions and waste and to effect cost savings related to environmental compliance. We do not anticipate that capital expenditures for environmental control facilities required in order to meet environmental requirements will be material when compared with our overall capital expenditures and, accordingly, will not be material to our financial position or results of operations.
ITEM 2. - PROPERTIES
Worthington's corporate offices are located in Columbus, Ohio. Our principal properties consist of 44 manufacturing facilities, totaling in excess of 8,000,000 sq. ft., excluding joint ventures. Worthington leases eleven of these facilities, which account for in excess of 650,000 sq. ft. Our facilities are well maintained, in good operating condition and are adequate to meet our present needs.
The locations of these facilities, as well as our joint ventures, are set forth on page 31 of the 2001 Annual Report, which information is incorporated herein by reference.
See "Item 1 - Business - Processed Steel Products," "- Metal Framing," and "- Pressure Cylinders" for further discussion on properties owned within particular segments.
ITEM 3. - LEGAL PROCEEDINGS
Various legal actions arising in the ordinary course of business are pending against Worthington. None of this pending litigation, individually or collectively, is expected to have a material adverse effect on Worthington.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF WORTHINGTON INDUSTRIES
The following table lists the names, positions held, and ages of all of Worthington Industries' executive officers:
PRESENT OFFICE NAME AGE POSITIONS WITH THE REGISTRANT HELD SINCE ---- --- ----------------------------- ---------- John H. McConnell 78 Chairman Emeritus & Founder 1996 John P. McConnell 47 Chairman & Chief Executive Officer 1996 John S. Christie 51 President & Chief Operating Officer 1999 John T. Baldwin 44 Vice President & Chief Financial Officer 1998 Edward A. Ferkany 64 President - The Worthington Steel Company 2001 Dale T. Brinkman 48 Vice President-Administration, General Counsel & 2000 Secretary Ralph V. Roberts 54 Sr. Vice President - Marketing 2001 Virgil L. Winland 53 Sr. Vice President - Manufacturing 2001 Richard G. Welch 43 Controller 2000 |
John H. McConnell founded Worthington in 1955 and served as its Chief Executive Officer until he retired in May 1993. Mr. McConnell also served as Chairman of the Board of Directors from 1955 until September 1996, when he assumed the role of Chairman Emeritus and Founder.
John P. McConnell has served as Worthington Industries' Chief Executive Officer since June 1993. Mr. McConnell has served as a Director continuously since 1990 and Chairman of the Board of Directors since September 1996.
John S. Christie has served as President and Chief Operating Officer and Director of Worthington Industries since June 1999. Prior to that time, Mr. Christie served as President of JMAC, Inc., a private investment company, from 1995 through 1999.
John T. Baldwin has served as Vice President and Chief Financial Officer of Worthington Industries since December 1998 and, prior to that time, from September 1997 through December 1998, Mr. Baldwin served as its Treasurer. Before joining Worthington Industries, Mr. Baldwin served as Assistant Treasurer of Tenneco, Inc. from 1994 through September 1997.
Edward A. Ferkany has served as President, The Worthington Steel Company since January 2001. From June 1998 to January 2001, Mr. Ferkany served as Executive Vice President of Worthington Industries, and prior to that time, from 1985 through 1998 Mr. Ferkany served as Group President-Processed Steel for Worthington Industries.
Dale T. Brinkman has served as Vice President-Administration, General Counsel and Secretary of Worthington Industries since September 2000. From December 1998 through September 2000, he served as Vice President-Administration, General Counsel and Assistant Secretary for the Registrant. Prior to that time, Mr. Brinkman served as Worthington Industries' General Counsel and Assistant Secretary from 1982 through 1998.
Ralph V. Roberts has served as Senior Vice President-Marketing of Worthington Industries since January 2001 and from June 1998 through January 2001, as President, The Worthington Steel Company. Prior to that time, Mr. Roberts served as Worthington Industries' Vice President-Corporate Development from June 1997 through May 1998, and as President of WAVE from its formation in June 1992 through June 1997.
Virgil L. Winland has served as Senior Vice President-Manufacturing of Worthington Industries since January 2001 and prior to that time from June 1996 through January 2001 as President, Worthington Cylinder Corporation.
Richard G. Welch has served as Controller of Worthington Industries since March 2000 and, prior thereto, as Assistant Controller since September 1999. Before joining Worthington Industries, Mr. Welch served in various accounting and financial reporting capacities with Time Warner Cable, a distributor of cable programming, including as Assistant Controller from March 1999 through September 1999 and as an accounting director from September 1990 through March 1999.
Executive officers serve at the pleasure of the directors. John H. McConnell is the father of John P. McConnell. There are no other family relationships among the Registrant's executive officers or directors. No arrangements or understandings exist pursuant to which any individual has been, or is to be, selected as an executive officer.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information called for by this Item 5 is incorporated herein by reference to the information set forth under the caption "Stock Trading, Price and Dividend Information" on page 3 of the 2001 Annual Report.
ITEM 6. - SELECTED FINANCIAL DATA
The information called for by this Item 6 is incorporated herein by reference to the information set forth under the caption "Six Year Selected Financial Data" on page 4 of the 2001 Annual Report.
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information called for by this Item 7 is incorporated herein by reference to the information set forth under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 5 through 11 of the 2001 Annual Report and should be read in conjunction with the information incorporated by reference into Item 8 of this Form 10-K.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this Item 7A is incorporated herein by reference to the information set forth under the caption "Quantitative and Qualitative Disclosures About Market Risk" on page 10 of the 2001 Annual Report.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of Worthington Industries, Inc. and Subsidiaries, Notes to Consolidated Financial Statements and Report of Independent Auditors, set forth on pages 12 through 15, 16 through 28 and 30, respectively, of the 2001 Annual Report are incorporated herein by reference:
Consolidated Balance Sheets--May 31, 2001 and 2000
Consolidated Statements of Earnings--Years ended May 31, 2001, 2000, and 1999
Consolidated Statements of Shareholders' Equity--Years ended May 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows--Years ended May 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Report of Independent Auditors
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
At a meeting held on August 23, 2001, the Board of Directors of Worthington Industries approved the engagement of KPMG LLP as its independent auditors for the fiscal year ending May 31, 2002 to replace the firm of Ernst & Young LLP, who were dismissed as auditors of Worthington effective August 23, 2001. The audit committee of the Board of Directors approved the change in auditors at a meeting held on August 22, 2001.
The reports of Ernst & Young LLP on Worthington's financial statements for the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of Worthington's financial statements for the two fiscal years in the period ended May 31, 2001, and in the subsequent interim period, there were no disagreements with Ernst & Young LLP on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make reference to the matter in their report. Worthington
Industries has requested Ernst & Young LLP to furnish it a letter addressed to the Commission stating whether it agrees with the above statements. A copy of that letter, dated August 29, 2001 is filed as Exhibit 16 to this Form 10-K.
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 10 with respect to the identification of directors is incorporated herein by reference to the material under the heading "PROPOSAL 1: ELECTION OF DIRECTORS" contained on pages 4 through 7 of the Worthington Industries' definitive Proxy Statement for the 2001 Annual Meeting of Shareholders ("Proxy Statement"). The information regarding executive officers required by Item 401 of Regulation S-K is included in Part I hereof under the heading "Executive Officers of Worthington Industries." No disclosure is required to be made under Item 405 of Regulation S-K.
ITEM 11. - EXECUTIVE COMPENSATION
In accordance with General Instruction G(3) of Form 10-K, the
information required by this Item 11 is incorporated herein by reference to the
information contained in the Proxy Statement under the headings "PROPOSAL 1:
ELECTION OF DIRECTORS --Compensation of Directors" on page 6, and "EXECUTIVE
COMPENSATION" on pages 9 through 12.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 12 is incorporated herein by reference to the material contained in the Proxy Statement under the headings "VOTING SECURITIES AND PRINCIPAL HOLDERS - Security Ownership of Certain Beneficial Owners and Management" on pages 2 and 3.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with General Instruction G(3) of Form 10-K, the information required by this Item 13 is incorporated herein by reference to the biographical information for John H. McConnell and John P. McConnell under the heading "PROPOSAL 1: ELECTION OF DIRECTORS" contained on pages 4 and 5 of the Proxy Statement, and by reference to the material set forth under the caption "RELATED PARTY TRANSACTIONS" on page 17 of the Proxy Statement.
PART IV
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report--See "List of Financial Statements and Financial Statement Schedules" on page F-1 of this report.
(3) Listing of Exhibits--See "Index to Exhibits" beginning on page E-1 of this report. The index to exhibits specifically identifies each management contract or compensatory plan required to be filed as an Exhibit to this Form 10-K.
(b) No reports on Form 8-K were filed during the last quarter of fiscal 2001.
(c) Exhibits filed with this report are attached hereto.
(d) Financial Statement Schedules--The response to this portion of Item 14 is submitted as a separate section of this report--See "List of Financial Statements and Financial Statement Schedules" on Page F-1.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WORTHINGTON INDUSTRIES, INC.
Date: August 29, 2001 By: /s/John P. McConnell ------------------------------------- John P. McConnell Chairman & Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
SIGNATURE DATE TITLE --------- ---- ----- /s/John P. McConnell August 29, 2001 Director, Chairman & ------------------------------------ Chief Executive Officer John P. McConnell * * Director, Chairman Emeritus ------------------------------------ & Founder John H. McConnell * * Director, President & ------------------------------------ Chief Operating Officer John S. Christie /s/John T. Baldwin August 29, 2001 Vice President & Chief ------------------------------------ Financial Officer** John T. Baldwin * * Vice President - ------------------------------------ Administration, General Dale T. Brinkman Counsel and Secretary * * Director ------------------------------------ John B. Blystone * * Director ------------------------------------ William S. Dietrich, II |
** Dual capacity as principal accounting and principal financial officer.
* * Director ------------------------------------ Michael J. Endres * * Director ------------------------------------ Peter Karmanos, Jr. * * Director ------------------------------------ John R. Kasich * * Director ------------------------------------ Robert B. McCurry * * Director ------------------------------------ Sidney A. Ribeau * * Director ------------------------------------ Mary Fackler Schiavo *By: /s/John P. McConnell Date: August 29, 2001 -------------------------------------------- ----------------- John P. McConnell Attorney-In-Fact |
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) AND (2) AND ITEM 14 (d)
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following Consolidated Financial Statements of Worthington Industries, Inc., and Subsidiaries, Notes to Consolidated Financial Statements and Report of Independent Auditors, set forth on pages 12 through 15, 16 through 28 and page 30, respectively, of Worthington Industries, Inc.'s 2001 Annual Report to Shareholders, are incorporated by reference in Item 8:
Consolidated Balance Sheets -- May 31, 2001 and 2000
Consolidated Statements of Earnings -- Years ended May 31, 2001, 2000 and 1999
Consolidated Statements of Shareholders' Equity -- Years ended May 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows -- Years ended May 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Report of Independent Auditors
The following consolidated financial statement schedules of Worthington Industries, Inc. and Subsidiaries are included in Item 14 (d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted, or the required information is provided in the Consolidated Financial Statements of Worthington Industries, Inc. and Subsidiaries or the Notes thereto.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------ COL. A COL.B COL.C COL.D COL.E ------------------------------------------------------------------------------------------------------------------------------------ Additions ----------------------------------------- Balance Balance at DESCRIPTION at Beginning Charged to Costs Charged to Other Deductions End of of Period and Expenses Accounts - Describe -Describe Period ----------------------------------------------------------------------------------------------------------------------------------- Year Ended May 31, 2001: Deducted from asset accounts: Allowance for possible losses on trade accounts receivable $3,879,000 $5,431,000 $ 795,000 (A) $939,000 (B) $9,166,000 ================ ==================== ================== ================= ================= Year Ended May 31, 2000: Deducted from asset accounts: Allowance for possible losses on trade accounts receivable $4,209,000 $1,842,000 $ (409,000)(A) $1,763,000 (B) $3,879,000 ================ ==================== ================== ================= ================= Year Ended May 31, 1999: $ 141,000 (C) Deducted from asset accounts: (269,000)(D) Allowance for possible 307,000 (A) losses on trade accounts ------------------ receivable $4,130,000 $291,000 $ 179,000 $391,000 (B) $4,209,000 ================ ==================== ================== ================= ================= |
Note A - Miscellaneous amounts.
Note B - Uncollectible accounts charged to the allowance.
Note C - Amount from Heiser acquisition.
Note D - Amount from discontinued operations.
INDEX TO EXHIBITS
Exhibit Description Location ---------------- ---------------------------------------- --------------------------------------------------- 2 Agreement of Merger, dated as of Incorporated herein by reference to Exhibit 2 of August 20, 1998, between Worthington the Registrant's Quarterly Report on Form 10-Q Industries, Inc., the Delaware for the quarter ended August 31, 1998 corporation, and Worthington Industries, Inc., the Ohio corporation 3(a) Amended Articles of Incorporation of Incorporated herein by reference to Exhibit 3(a) Worthington Industries, Inc. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31, 1998 3(b) Code of Regulations of Worthington Incorporated by reference to Exhibit 3(b) of the Industries, Inc. Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31, 2000 4(a) Form of Indenture dated as of May 15, Incorporated herein by reference to Exhibit 4(a) 1996 between Worthington Industries, of the Registrant's Annual Report on Form 10-K Inc. and PNC Bank, Ohio, National for fiscal year ended May 31, 1997 Association, as Trustee, relating to up to $450,000,000 of debt securities 4(b) Form of 7-1/8% Notes due May 15, 2006 Incorporated herein by reference to Exhibit 4(b) of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 1997 4(c) First Supplemental Indenture, dated as Incorporated herein by reference to Exhibit 4(c) of February 27, 1997 between of the Registrant's Annual Report on Form 10-K Worthington Industries, Inc. and PNC for fiscal year ended May 31, 1997 Bank, Ohio, National Association, as Trustee |
4(d) Form of 7-1/4% Exchangeable Note Due Incorporated herein by reference to Exhibit 4(d) March 1, 2000 of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 1997 4(e)(i) Second Amended and Restated Loan Incorporated herein by referenced to Exhibit 4(e) Agreement, dated as of October 14, of the Registrant's Annual Report on Form 10-K 1998, between Worthington Industries, for fiscal year ended May 31, 1999 Inc., The Bank of Nova Scotia, PNC Bank, National Association, NationsBank, N.A., Wachovia Bank of Georgia, N.A., NBD Bank, Bank One, N.A. and National City Bank 4(e)(ii) Amendment to Second Amended and Incorporated herein by reference to Exhibit (4) Restated Loan Agreement, dated as of of the Registrant's Quarterly Report on Form 10-Q August 13, 1999 between Worthington for fiscal quarter ended August 31, 2000 Industries, Inc., The Bank of Nova Scotia, PNC Bank, National Association Bank of America, N.A., Wachovia Bank, N.A., Bank One, Michigan, Bank One, N.A. and National City Bank 4(f) Form of 6.7% Notes due December 1, 2009 Incorporated herein by reference to Exhibit 4(f) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1998. 4(g) Second Supplemental Indenture, dated Incorporated herein by reference to Exhibit 4(g) as of December 12,1997, between of the Registrant's Annual Report on Form 10-K Worthington Industries, Inc. and PNC for the fiscal year ended May 31, 1998 Bank, Ohio, National Association, as Trustee |
4(h) Third Supplemental Indenture, dated as Incorporated herein by reference to Exhibit 4(h) of October 13, 1998, between of the Registrant's Annual Report on Form 10-K Worthington Industries, Inc., a for fiscal year ended May 31, 1999 Delaware corporation, Worthington Industries, Inc., an Ohio corporation, and PNC Bank, National Association 4(i) Assignment and Assumption Agreement, Incorporated herein by referenced to Exhibit 4(i) dated as of October 14, 1998, between of the Registrant's Annual Report on Form 10-K Worthington Industries, Inc., a for fiscal year ended May 31, 1999 Delaware corporation, Worthington Industries, Inc., an Ohio corporation, The Bank of Nova Scotia and PNC Bank, Ohio, National Association, as Agents. 4(j) Agreement to furnish instruments Filed herewith defining rights of holders of long-term debt 10(b) 1990 Stock Option Plan, as Amended* Incorporated herein by reference to Exhibit 10(b) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1999 10(c) Executive Deferred Compensation Plan, Incorporated hereby by reference to Exhibit 10(c) as Amended and Restated* of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 2000 10(d) Deferred Compensation Plan for Incorporated hereby by reference to Exhibit 10(d) Directors, As Amended and Restated* of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 2000 10(e) 1997 Long-Term Incentive Plan* Incorporated herein by reference to Exhibit 10(e) of the Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 |
10(f) Non-Qualified Deferred Compensation Incorporated hereby by reference to Exhibit 10(f) Plan* of the Registrant's Annual Report on Form 10-K for fiscal year ended May 31, 2000 10(g) 2000 Stock Option Plan for Incorporated by reference to Exhibit 10(g) of the Non-Employee Directors* Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2001. 10(h)(i) Receivables Purchase Agreement dated Filed herewith as of November 30, 2000 among Worthington Receivables Corporation, Worthington Industries, Inc., members of various purchaser groups from time to time party thereto and PNC Bank, National Association 10(h)(ii) Amendment No. 1 to Receivables Filed herewith Purchase Agreement dated May 18, 2001 among Worthington Receivables Corporation, Worthington Industries, Inc., members of various purchaser groups from time to time party thereto and PNC Bank, National Association 10(h)(iii) Purchase and Sale Agreement dated Filed herewith November 30, 2000 between the various originators listed therein and Worthington Receivables Corporation 10(h)(iv) Amendment No. 1 to Purchase and Sale Filed herewith Agreement dated May 18, 2001 between the various originators listed therein and Worthington Receivables Corporation |
13 2001 Annual Report to Shareholders Not deemed to be filed except for portions of which are specifically incorporated by reference in this Annual Report on Form 10-K 16 Letter from Ernst & Young LLP Filed herewith regarding Change in Certifying Accountant 21 Subsidiaries of the Registrant Filed herewith 23 Consent of Ernst & Young LLP Filed herewith 24 Powers of Attorney Filed herewith *Management Compensation Plan |
Exhibit-4(j)
[LOGO]
WORTHINGTON
INDUSTRIES
August 29, 2001
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Worthington Industries, Inc. - Form 10-K for the fiscal year ended May 31, 2001
Ladies and Gentlemen:
Worthington Industries, Inc., an Ohio corporation, is today executing and filing a Form 10-K, Annual Report for the fiscal year ended May 31, 2001 (the "Form 10-K").
Pursuant to the instructions relating to the Exhibits in Item 601 of Regulation S-K, Worthington Industries, Inc. hereby agrees to furnish to the Commission, upon request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-K. Such long-term debt does not exceed 10% of the total assets of Worthington Industries, Inc. and its subsidiaries on a consolidated basis.
Very truly yours,
WORTHINGTON INDUSTRIES, INC.
/s/ John T. Baldwin John T. Baldwin Vice President & Chief Financial Officer |
Exhibit - 10(h)(i)
RECEIVABLES PURCHASE AGREEMENT
dated as of November 30, 2000
among
WORTHINGTON RECEIVABLES CORPORATION,
WORTHINGTON INDUSTRIES, INC.,
as Servicer
THE MEMBERS OF VARIOUS PURCHASER GROUPS
FROM TIME TO TIME PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this "AGREEMENT") is entered into as of November 30, 2000, among WORTHINGTON RECEIVABLES CORPORATION, a Delaware corporation, as seller (the "SELLER"), WORTHINGTON INDUSTRIES, INC., an Ohio corporation ("WORTHINGTON"), as initial servicer (in such capacity, together with its successors and permitted assigns in such capacity, the "SERVICER"), MARKET STREET FUNDING CORPORATION ("MARKET STREET"), a Delaware corporation, as a Conduit Purchaser, PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Market Street, and as Administrator for each Purchaser Group (in such capacity, the "ADMINISTRATOR"), and each of the other members of each Purchaser Group party hereto or that become parties hereto by executing an Assumption Agreement or a Transfer Supplement.
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 Purchasers desire 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 such Purchasers.
In consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY.
(a) On the terms and subject to the conditions hereof, the Seller may, from time to time before the Facility Termination Date, request that the Conduit Purchasers, or, only if a Conduit Purchaser denies such request or is unable to fund (and provides notice of such denial or inability to the Seller, the Administrator and its Purchaser Agent), ratably request that the Related Committed Purchasers, make purchases of and reinvestments in 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. Subject to SECTION 1.4(b), concerning reinvestments, at no time will a Conduit Purchaser have any obligation to make a purchase. Each Related Committed Purchaser severally hereby agrees, on the terms and subject to the conditions hereof, to make Purchases before the Facility Termination Date, based on the applicable Purchaser Group's Ratable Share of each purchase requested pursuant to SECTION 1.2(a) (each a "PURCHASE") (and, in the case of each Related Committed Purchaser, its Commitment Percentage of its Purchaser Group's Ratable Share of such Purchase) to the extent its Investment would not thereby exceed its Commitment and the Aggregate Investment would not (after giving effect to all Purchases on such date) exceed the Purchase Limit.
(b) The Seller may, upon at least 60 days' written notice to the Administrator and each Purchaser Agent terminate the purchase facility provided for in this Section in whole or, upon 30 days' written notice to the Administrator and each Purchaser Agent, from time to time, irrevocably reduce in part the unfunded portion of the Purchase Limit (but not below the amount which would cause the Group Investment of any Purchaser Group to exceed its Group Commitment (after giving effect to such reduction)); provided that each partial reduction shall be in the amount of at least $3,000,000, or an integral multiple of $1,000,000 in excess thereof and unless terminated in whole, the Purchase Limit shall in no event be reduced below $50,000,000. Such reduction shall at the option of the Seller be applied either (i) ratably to reduce the Group Commitment of each Purchaser Group or (ii) to terminate the Group Commitment of any one Purchaser Group.
Section 1.2. MAKING PURCHASES.
(a) 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 in the form of Annex B
delivered to the Administrator and each Purchaser Agent in accordance with
SECTION 6.2 (which notice must be received by the Administrator and each
Purchaser Agent before 11:00 a.m., New York City time) at least three Business
Days before the requested Purchase Date, which notice shall specify: (A) the
amount requested to be paid to the Seller (such amount, which shall not be less
than $3,000,000, with respect to each Purchaser Group, being the aggregate of
the Investments of each Purchaser within such Purchaser Group, relating to the
undivided percentage ownership interest then being purchased), (B) the date of
such purchase (which shall be a Business Day), and (C) a pro forma calculation
of the Purchased Interest after giving effect to the increase in the Aggregate
Investment. If the Purchase is requested from a Conduit Purchaser and such
Conduit Purchaser determines, in its sole discretion, to make the requested
Purchase, such Conduit Purchaser shall transfer to the account of the Seller
described in SECTION 1.2(b), below (the "DISBURSEMENT ACCOUNT"), an amount equal
to such Conduit Purchaser's Purchaser Group Ratable Share of such Purchase on
the requested Purchase Date. If the Purchase is requested from the Related
Committed Purchasers for a Purchaser Group (in the case where the related
Conduit Purchaser determined not to or was unable to make such Purchase),
subject to the terms and conditions hereof, such Related Committed Purchasers
for a Purchaser Group shall use its reasonable best efforts to transfer the
applicable Purchaser Group's Ratable Share of each Purchase (and, in the case of
each Related Committed Purchaser, its Commitment Percentage of its Purchaser
Group's Ratable Share of such Purchase) into the Disbursement Account by no
later than 4:00 p.m. (New York time) on the Purchase Date.
(b) On the date of each Purchase, each Purchaser (or the related Purchaser Agent on its behalf), shall make available to the Seller in same day funds, at Bank One, N.A., Columbus Ohio, account number 981237763, ABA 044000037, an amount equal to the proceeds of such Purchase.
(c) Effective on the date of each Purchase pursuant to this SECTION 1.2 and each reinvestment pursuant to SECTION 1.4, the Seller hereby sells and assigns to the Administrator for the benefit of the Purchasers (ratably, according to each such
Purchaser's Investment) 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.
(d) 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 Administrator, for the benefit of the Purchasers, 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 books and records of each Receivable, and all Transaction Documents to which the Seller is a party, together with all rights (but none of the obligations) of the Seller thereunder and (vi) all proceeds and products of, and all amounts received or receivable under any or all of, the foregoing (collectively, the "POOL ASSETS"). The Administrator, for the benefit of the Purchasers, shall have, with respect to the Pool Assets, and in addition to all the other rights and remedies available to the Administrator and the Purchasers, all the rights and remedies of a secured party under any applicable UCC.
(e) The Seller may, with the written consent of the Administrator and each Purchaser, add additional Persons as Purchasers (either to an existing Purchaser Group or by creating new Purchaser Groups) or cause an existing Purchaser to increase its Commitment in connection with a corresponding increase in the Purchase Limit; PROVIDED, HOWEVER, that the Commitment of any Purchaser may only be increased with the consent of such Purchaser. Each new Purchaser (or Purchaser Group) and each Purchaser increasing its Commitment shall become a party hereto or increase its Commitment, as the case may be, by executing and delivering to the Administrator and the Seller an Assumption Agreement in the form of Annex C hereto (which Assumption Agreement shall, in the case of any new Purchaser or Purchasers be executed by each Person in such new Purchaser's Purchaser Group).
(f) Each Related Committed Purchaser's obligation hereunder shall be several, such that the failure of any Related Committed Purchaser to make a payment in connection with any purchase hereunder shall not relieve any other Related Committed Purchaser of its obligation hereunder to make payment for any Purchase. Further, in the event any Related Committed Purchaser fails to satisfy its obligation to make a purchase as required hereunder, upon receipt of notice of such failure from the Administrator (or any relevant Purchaser Agent), subject to the limitations set forth herein, the non-defaulting Related Committed Purchasers in such defaulting Related Committed Purchaser's Purchaser Group shall purchase the defaulting Related Committed Purchaser's Commitment Percentage of the related Purchase PRO RATA in proportion to their relative Commitment Percentages (determined without regard to the Commitment
Percentage of the defaulting Related Committed Purchaser; it being understood that a defaulting Related Committed Purchaser's Commitment Percentage of any Purchase shall be first put to the Related Committed Purchasers in such defaulting Related Committed Purchaser's Purchaser Group and thereafter if there are no other Related Committed Purchasers in such Purchaser Group or if such other Related Committed Purchasers are also defaulting Related Committed Purchasers, then such defaulting Related Committed Purchaser's Commitment Percentage of such Purchase shall be put to each other Purchaser Group ratably and applied in accordance with this paragraph (f)). Notwithstanding anything in this paragraph (f) to the contrary, no Related Committed Purchaser shall be required to make a Purchase pursuant to this paragraph for an amount which would cause (i) the aggregate Investment of such Related Committed Purchaser (after giving effect to such Purchase) to exceed its Commitment or (ii) the sum of the aggregate Investments of all Purchasers in the Purchaser Group of such Related Committed Purchaser (after giving effect to such Purchase) to exceed the sum of the Commitments of all of the Purchasers in such Purchaser Group.
Section 1.3. PURCHASED INTEREST COMPUTATION. The Purchased Interest shall be initially computed on the date of the initial Purchase hereunder. Thereafter, until the Facility Termination Date, such Purchased Interest shall be automatically recomputed (or deemed to be recomputed) on each Business Day other than a Termination Day. From and after the occurrence of any Termination Day, the Purchased Interest shall (until the event(s) giving rise to such Termination Day are satisfied or are waived by the Administrator and a Simple Majority of the Purchasers) be deemed to be 100%. The Purchased Interest shall become zero when the Aggregate Investment thereof and Aggregate Discount thereon shall have been paid in full, all the amounts owed by the Seller and the Servicer hereunder to each Purchaser, 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.
Section 1.4. SETTLEMENT PROCEDURES.
(a) 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.
(b) The Servicer shall, on each day on which Collections of Pool Receivables are received (or deemed received) by the Seller or the Servicer:
(i) set aside and hold in trust (and shall, at the request of the Administrator (with the consent or at the direction of the Majority Purchasers), segregate in a separate account approved by the Administrator if, at the time of such request, there exists an Unmatured Termination Event or a Termination Event or if the failure to so segregate reasonably could be expected to cause a Material Adverse Effect) for the benefit of each Purchaser Group, out of the Purchasers' Share of such Collections, first, an amount equal to the Aggregate Discount accrued through such day for each Portion of Investment and not previously set aside, second, an amount equal to the fees set forth in each
Purchaser Group Fee Letter accrued and unpaid through such day, and third, to the extent funds are available therefor, an amount equal to the aggregate of each Purchaser Group's Ratable Share of the Purchasers' Share of the Servicing Fee accrued through such day and not previously set aside,
(ii) subject to SECTION 1.4(f), if such day is not a Termination Day, remit to the Seller, ratably, on behalf of each Purchaser Group, the remainder of the Purchasers' Share of such Collections. Such remainder shall, to the extent representing a return on the Aggregate Investment, ratably, according to each Purchaser's Investment, 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 benefit of the Purchasers (and shall, at the request of the Administrator (with the consent or at the direction of the Majority Purchasers), segregate in a separate account approved by the Administrator if, at the time of such request, there exists an Unmatured Termination Event or a Termination Event or if the failure to so segregate reasonably could be expected to cause a Material Adverse Effect) 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%; PROVIDED, FURTHER, that in the case of any Purchaser that has provided notice (an "EXITING NOTICE") to its Purchaser Agent of its refusal, pursuant to SECTION 1.10, to extend its Commitment hereunder (an "EXITING PURCHASER"), then such Purchaser's ratable share of such Collections based on its Investment shall not be reinvested and shall instead be held in trust for the benefit of such Purchaser and applied in accordance with CLAUSE (iii) below,
(iii) if such day is a Termination Day (or any day
following the provision of an Exiting Notice), set aside,
segregate and hold in trust (and shall, at the request of the
Administrator (with the consent or at the direction of a
Simple Majority of the Purchasers), segregate in a separate
account approved by the Administrator) for the benefit of each
Purchaser Group the entire remainder of the Purchasers' Share
of the Collections (or in the case of an Exiting Purchaser an
amount equal to such Purchaser's ratable share of such
Collections based on its Investment; provided, that solely for
the purpose of determining such Purchaser's ratable share of
such Collections, such Purchaser's Investment shall be deemed
to remain constant from the date of the provision of an
Exiting Notice until the date such Purchaser's Investment has
been paid in full; it being understood that if such day is
also a Termination Day, such Exiting Purchaser's Investment
shall be recalculated taking into account amounts received by
such Purchaser in respect of this parenthetical and thereafter
Collections shall be set aside for such Purchaser ratably in
respect of its Investment (as recalculated)); 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" (or any day following the provision of an
Exiting Notice) and, thereafter, the conditions set forth in
SECTION 2 of EXHIBIT II are satisfied or waived by the
Administrator and a Simple Majority
of the Purchasers (or in the case of an Exiting Notice, such Exiting Notice has been revoked by the related Exiting Purchaser, and written notice thereof has been provided to the Administrator, the related Purchaser Agent and the Servicer), such previously set-aside amounts shall, to the extent representing a return on Aggregate Investment (or the Investment of the Exiting Purchaser) and ratably in accordance with each Purchaser's Investment, be reinvested in accordance with CLAUSE (ii) on the day of such subsequent satisfaction or waiver of conditions or revocation of Exiting Notice, and
(iv) release to the Seller (subject to SECTION
1.4(f)) for its own account any Collections in excess of: (x)
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.
(c) The Servicer shall, in accordance with the priorities set
forth in SECTION 1.4(d), below, deposit into each applicable
Purchaser's account (or such other account designated by such
applicable Purchaser or its Purchaser Agent), on each Settlement Date,
Collections held for each Purchaser with respect to such Purchaser's
Portion(s) of Investment pursuant to CLAUSE (b)(i) or (f) plus the
amount of Collections then held for such Purchaser pursuant to CLAUSES
(b)(ii) and (iii) of SECTION 1.4; PROVIDED, that if Worthington or an
Affiliate thereof is the Servicer, such day is not a Termination Day
and the Administrator has not notified Worthington (or such Affiliate)
that such right is revoked, (or such Affiliate) Worthington may retain
the portion of the Collections set aside pursuant to CLAUSE (b)(i) that
represents the aggregate of each Purchaser Group's Ratable Share of the
Purchasers' Share of the Servicing Fee. On or before the last day of
each Yield Period with respect to any Portion of Investment, the
applicable Purchaser Agent will notify the Servicer by facsimile of the
amount of the Discount accrued with respect to each such Portion of
Investment during the related Yield Period then ending.
(d) The Servicer shall distribute the amounts described (and at the times set forth) in SECTION 1.4(c), as follows:
(i) if such distribution occurs on a day that is not a Termination Day and the Purchased Interest does not exceed 100%, first to each Purchaser Agent ratably according to the Discount accrued during such Yield Period (for the benefit of the relevant Purchasers within such Purchaser Agent's Purchaser Group) in payment in full of all accrued Discount and fees (other than Servicing Fees) with respect to each Portion of Investment maintained by such Purchasers; it being understood that each Purchaser Agent shall distribute such amounts to the Purchasers within its Purchaser Group ratably according to Discount, 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's own account (payable in arrears on each Settlement Date) in payment
in full of the aggregate of each Purchaser Group's Ratable Share of the Purchasers' Share of accrued Servicing Fees so set aside, and
(ii) if such distribution occurs on a Termination Day or on a day when the Purchased Interest exceeds 100%, FIRST if Worthington or an Affiliate thereof is not the Servicer, to the Servicer's own account in payment in full of all accrued Servicing Fees, SECOND to each Purchaser Agent ratably according to Discount (for the benefit of the relevant Purchasers within such Purchaser Agent's Purchaser Group) in payment in full of all accrued Discount with respect to each Portion of Investment funded or maintained by the Purchasers within such Purchaser Agent's Purchaser Group, THIRD to each Purchaser Agent ratably according to the aggregate of the Investment of each Purchaser in each such Purchaser Agent's Purchaser Group (for the benefit of the relevant Purchasers within such Purchaser Agent's Purchaser Group) in payment in full of each Purchaser's Investment (or, if such day is not a Termination Day, the amount necessary to reduce the Purchased Interest to 100%); it being understood that each Purchaser Agent shall distribute the amounts described in the first and second clauses of this SECTION 1.4(d)(ii) to the Purchasers within its Purchaser Group ratably according to Discount and Investment, respectively, FOURTH, if the Aggregate Investment and accrued Aggregate Discount with respect to each Portion of Investment for all Purchaser Groups have been reduced to zero, and all accrued Servicing Fees payable to the Servicer (if other than Worthington or an Affiliate thereof) have been paid in full, to each Purchaser Group ratably (for the benefit of the Purchasers within such Purchaser Group) in accordance with its Ratable Share, the Administrator and any other Indemnified Party or Affected Person in payment in full of any other amounts owed thereto by the Seller or Servicer hereunder and, FIFTH, to the Servicer's own account (if the Servicer is Worthington or an Affiliate thereof) in payment in full of the Aggregate of each Purchaser Group's Ratable Share of all accrued Servicing Fees.
After the Aggregate Investment, Aggregate Discount, fees payable pursuant to each Purchaser Group Fee Letter and Servicing Fees with respect to the Purchased Interest, and any other amounts payable by the Seller and the Servicer to each Purchaser Group, 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.
(e) For the purposes of this SECTION 1.4:
(i) 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 the Servicer or any Affiliate of the Servicer, or any setoff or dispute between the Seller or any Affiliate of the Seller, or the Servicer or any Affiliate of the Servicer and an Obligor, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
SECTION 1(g) or (h) 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;
(iii) 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
(iv) if and to the extent the Administrator, any Purchaser Agent or any Purchaser 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 such Person but rather to have been retained by the Seller and, accordingly, such Person 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.
(f) If at any time the Seller shall wish to cause the reduction of Aggregate Investment (but not to commence the liquidation, or reduction to zero, of the entire Aggregate Investment), the Seller may do so as follows:
(i) the Seller shall give the Administrator, each Purchaser Agent and the Servicer (A) at least two Business Days' prior written notice thereof for any reduction of Aggregate Investment less than or equal to $10,000,000 and (B) at least ten Business Days' prior written notice thereof for any reduction of Aggregate Investment greater than $10,000,000 (in each case such notice shall include the amount of such proposed reduction and the proposed date on which such reduction will commence);
(ii) on the proposed date of commencement of such reduction and on each day thereafter, the Servicer shall cause Collections not to be reinvested until the amount thereof not so reinvested shall equal the desired amount of reduction; and
(iii) the Servicer shall hold such Collections in trust for the benefit of each Purchaser ratably according to its Investment, for payment to each such Purchaser (or its related Purchaser Agent for the benefit of such Purchaser) on the (i) next Settlement Date with respect to any Portions of Investment maintained by such Purchaser immediately following the related current Yield Period or (ii) such other date approved by the Administrator with at least five Business Days prior written notice to the Administrator of such payment, and the Aggregate Investment (together with the Investment of any related Purchaser) shall be deemed reduced in the amount to be paid to such Purchaser (or its related
Purchaser Agent for the benefit of such Purchaser) only when in fact finally so paid;
PROVIDED, that:
(A) the amount of any such reduction shall be not less than $1,000,000 for each Purchaser Group and shall be an integral multiple of $500,000, and the entire Aggregate Investment after giving effect to such reduction shall be not less than $50,000,000 and shall be in an integral multiple of $1,000,000 (unless the Aggregate Investment shall have been reduced to zero); and
(B) with respect to any Portion of Investment, 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 Yield Period.
Section 1.5. FEES. The Seller shall pay to each Purchaser Agent for the benefit of the related Purchasers certain fees in the amounts and on the dates set forth in letters, dated the date hereof, each such letter (as amended, supplemented, or otherwise modified from time to time, a "PURCHASER GROUP FEE LETTER") in each case among the Seller, the Servicer, the Administrator and the related Purchaser Agent.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC.
(a) 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 noon (New York City time) on the day when due in same day funds to the applicable Purchaser's account (as such account is identified in the related Purchaser Group Fee Letter). All amounts received after noon (New York City time) will be deemed to have been received on the next Business Day.
(b) 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 the Base Rate, payable on demand.
(c) 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.
(d) Each Affected Person will notify Seller and the applicable Purchaser Agent promptly after it has received official notice of any event which will entitle such Affected Person to such additional amounts as compensation pursuant to this SECTION 1.7. Such additional amounts shall accrue from the date as to which such Affected Person becomes subject to such additional costs as a result of such event (or if such notice of
such event is not given to Seller by such Affected Person within 90 days after such Affected Person received such official notice of such event, from the date which is 90 days prior to the date such notice is given to Seller by such Affected Person).
Section 1.7. INCREASED COSTS.
(a) If any Purchaser Agent, Purchaser, Liquidity Provider, the Administrator or 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 or 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.
(b) 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 or any portion thereof in respect of which Discount is computed by reference to the Euro-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.
(c) 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.
Section 1.8. 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 any portion thereof or in the amount of such Person's Investment 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 Euro-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 as a Purchaser Agent, 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 Investment, 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.
Section 1.9. INABILITY TO DETERMINE EURO-RATE. (a) If the Administrator (or any Purchaser Agent) determines before the first day of any Yield Period (which determination shall be final and conclusive) that, by reason of circumstances affecting the interbank eurodollar market generally, deposits in dollars (in the relevant amounts for such Yield Period) are not being offered to banks in the interbank eurodollar market for such Yield Period, or adequate means do not exist for ascertaining the Euro-Rate for such Yield Period, then the Administrator shall give notice thereof to the Seller. Thereafter, until the Administrator or such Purchaser
Agent notifies the Seller that the circumstances giving rise to such suspension no longer exist, (a) no Portion of Investment shall be funded at the Yield Rate determined by reference to the Euro-Rate and (b) the Discount for any outstanding Portions of Investment then funded at the Yield Rate determined by reference to the Euro-Rate shall, on the last day of the then current Yield Period, be converted to the Yield Rate determined by reference to the Base Rate.
(b) If, on or before the first day of any Yield Period, the Administrator shall have been notified by any Purchaser, Purchaser Agent or Liquidity Provider that, such Person has determined (which determination shall be final and conclusive) that, any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Person with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for such Person to fund or maintain any Portion of Investment at the Yield Rate and based upon the Euro-Rate, the Administrator shall notify the Seller thereof. Upon receipt of such notice, until the Administrator notifies the Seller that the circumstances giving rise to such determination no longer apply, (a) no Portion of Investment shall be funded at the Yield Rate determined by reference to the Euro-Rate and (b) the Discount for any outstanding Portions of Investment then funded at the Yield Rate determined by reference to the Euro-Rate shall be converted to the Yield Rate determined by reference to the Base Rate either (i) on the last day of the then current Yield Period if such Person may lawfully continue to maintain such Portion of Investment at the Yield Rate determined by reference to the Euro-Rate to such day, or (ii) immediately, if such Person may not lawfully continue to maintain such Portion of Investment at the Yield Rate determined by reference to the Euro-Rate to such day.
Section 1.10. EXTENSION OF TERMINATION DATE. The Seller may advise the Administrator and each Purchaser Agent in writing of its desire to extend the Facility Termination Date for an additional 364 days, provided such request is made not more than 90 days prior to, and not less than 60 days prior to, the then current Facility Termination Date. In the event that the Purchaser Agents are all agreeable to such extension, the Administrator shall so notify the Seller in writing (it being understood that the Purchaser Agents may accept or decline such a request in their sole discretion and on such terms as they may elect) not less than 30 days prior to the then current Facility Termination Date and the Seller, the Administrator, the Purchaser Agents and the Purchasers shall enter into such documents as the Purchasers may deem necessary or appropriate to reflect such extension, and all reasonable costs and expenses incurred by the Purchasers, the Administrator and the Purchaser Agents in connection therewith (including reasonable Attorneys' Costs) shall be paid by the Seller. In the event the Purchaser Agents decline the request for such extension, the Administrator shall so notify the Seller of such determination; provided, however, that the failure of the Administrator to notify the Seller of the determination to decline such extension shall not affect the understanding and agreement that the Purchaser Agents shall be deemed to have refused to grant the requested extension in the event the Administrator fails to affirmatively notify the Seller, in writing, of their agreement to accept the requested extension.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the Seller, Worthington 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.
Section 2.2. TERMINATION EVENTS. If any of the Termination Events set forth in EXHIBIT V shall occur, the Administrator may (with the consent of a Simple Majority of the Purchasers) or shall (at the direction of a Simple Majority of the Purchasers), 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 Administrator, each Purchaser Agent and each Purchaser 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.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights that the any Purchaser Agent, Purchaser, Liquidity Provider, the Administrator or 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 with respect to any Receivable to the extent that such Receivable is uncollectible on account of the insolvency, bankruptcy or lack of credit worthiness of the related Obligor, 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:
(i) 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 such Indemnified Party by the Seller or Servicer with respect to Receivables or this Agreement to be true and correct,
(ii) 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,
(iii) 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,
(iv) the failure to vest in the Administrator (for the benefit of the Purchasers) 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,
(v) 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,
(vi) 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,
(vii) any failure of the Seller, any Affiliate of the Seller or the Servicer to perform its duties or obligations in accordance with the provisions hereof or under the Contracts,
(viii) 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,
(ix) the commingling of Collections at any time with other funds,
(x) the use of proceeds of purchases or reinvestments, or
(xi) any reduction in the Aggregate Investment 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.
Section 3.2. INDEMNITIES BY THE SERVICER. Without limiting any other rights that any 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 such Indemnified Party 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 or any other Transaction Document to which it is a party 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, (e) any failure of the Servicer to perform its duties or obligations in accordance with the provisions hereof or any other Transaction Document to which it is a party, (f) 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, or (g) any commingling by the Servicer of Collections at any time with other funds.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF THE SERVICER.
(a) 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 Worthington (in accordance with this
SECTION 4.1) of the designation of a new Servicer, Worthington 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 (with the
consent of the Majority Purchasers) or shall (at the direction of the
Majority Purchasers) designate as Servicer any Person (including
itself) to succeed Worthington 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.
(b) Upon the designation of a successor Servicer as set forth in CLAUSE (a), Worthington 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 Worthington shall cooperate with and assist such new Servicer. Such cooperation shall include access to and transfer of related records (including all Contracts) and use by the new Servicer of all licenses, hardware or software necessary or desirable to collect the Pool Receivables and the Related Security.
(c) Worthington acknowledges that, in making their decision to execute and deliver this Agreement, the Administrator and each Purchaser Group have relied on Worthington's agreement to act as Servicer hereunder. Accordingly, Worthington agrees that it will not voluntarily resign as Servicer without the consent of the Majority Purchasers.
(d) 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 each Purchaser Group 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 or an Affiliate thereof, the Administrator and the Majority Purchasers shall have consented in writing in advance to such delegation.
Section 4.2. DUTIES OF THE SERVICER.
(a) 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 account of each Purchaser Group, the amount of the Collections to which each such Purchaser Group is entitled in accordance with ARTICLE I. 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 shall not change the number of days such Pool Receivable has remained unpaid from the date of the original due date related to such Pool Receivable, (ii) 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 Administrator or any Purchaser Group under this Agreement and (iii) if a Termination Event has occurred and Worthington or an Affiliate thereof is serving as the Servicer, Worthington or such Affiliate may make such extension or adjustment only upon the prior approval of the Administrator (with the consent of the Majority Purchasers). The Seller shall deliver to the Servicer and the Servicer shall hold for the benefit of the Seller and the Administrator
(individually and for the benefit of each Purchaser Group), 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 Worthington 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.
(b) 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 Worthington 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 Worthington 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.
(c) 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 Purchaser Agents, each Purchaser, the Administrator and any other Indemnified Party or Affected Person hereunder shall have been paid in full.
After such termination, if Worthington 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.
Section 4.3. LOCK-BOX ACCOUNT ARRANGEMENTS. Within 30 days from the initial purchase hereunder, the Seller shall have entered into Lock-Box Agreements with all of the Lock-Box Banks and delivered original counterparts of each to the Administrator and each Purchaser Agent. Upon the occurrence of a Termination Event, the Administrator may (with the consent of a Simple Majority of the Purchasers) or shall (upon the direction of a Simple Majority of the Purchasers) 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 (for the benefit of the Purchasers) 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 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 (for the benefit of the Purchasers) of the proceeds (including Collections) of all Pool Receivables and the Seller hereby further agrees to take any other action that the Administrator
or any Purchaser Agent 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 Purchaser Groups, any Indemnified Party or any other Person hereunder, and the Administrator shall distribute or cause to be distributed such funds in accordance with SECTION 4.2(b) and ARTICLE I (in each case as if such funds were held by the Servicer thereunder).
Section 4.4. ENFORCEMENT RIGHTS.
(a) At any time following the occurrence of a Termination Event:
(i) the Administrator may (with the consent or at the direction of the Majority Purchasers) direct the Obligors that payment of all amounts payable under any Pool Receivable is to be made directly to the Administrator or its designee,
(ii) the Administrator may (with the consent or at the direction of the Majority Purchasers) instruct the Seller or the Servicer to give notice of the Purchaser Groups' interest in Pool Receivables to each Obligor, which notice shall direct that payments be made directly to the Administrator or its designee (on behalf of such Purchaser Groups), 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
(iii) the Administrator may (with the consent or at the direction of the Majority Purchasers) 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 (for the benefit of the Purchasers) 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.
(b) The Seller hereby authorizes the Administrator (on behalf of each Purchaser Group), 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.
Section 4.5. RESPONSIBILITIES OF THE SELLER.
(a) 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, the Purchaser Agents or the Purchasers 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, the Purchaser Agents or any of the Purchasers shall not have any obligation or liability with respect to any Pool Asset, nor shall any of them be obligated to perform any of the obligations of the Seller, Servicer, Worthington or the Originators thereunder.
(b) Worthington 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, Worthington shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that Worthington conducted such data-processing functions while it acted as the Servicer.
Section 4.6. SERVICING FEE. (a) Subject to CLAUSE (b), the Servicer shall be paid a fee (the "SERVICING FEE") equal to 1.00% PER ANNUM of the daily average aggregate Outstanding Balance of the Pool Receivables. The Aggregate of each Purchaser Group's Ratable Share of such fee shall be paid through the distributions contemplated by SECTION 1.4(d), and the Seller's Share of the Purchasers' Share of such fee shall be paid by the Seller.
(b) If the Servicer ceases to be Worthington 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.
ARTICLE V
THE AGENTS
Section 5.1. APPOINTMENT AND AUTHORIZATION. (a) Each Purchaser and Purchaser Agent hereby irrevocably designates and appoints PNC as the "Administrator" hereunder and authorizes the Administrator to take such actions and to exercise such powers as are delegated to the Administrator hereby and to exercise such other powers as are reasonably incidental thereto.
The Administrator shall hold, in its name, for the benefit of each Purchaser, ratably, the Purchased Interest. The Administrator shall not have any duties other than those expressly set forth herein or any fiduciary relationship with any Purchaser or Purchaser Agent, and no implied obligations or liabilities shall be read into this Agreement, or otherwise exist, against the Administrator. The Administrator does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Seller or Servicer. Notwithstanding any provision of this Agreement or any other Transaction Document to the contrary, in no event shall the Administrator ever be required to take any action which exposes the Administrator to personal liability or which is contrary to the provision of any Transaction Document or applicable law.
(b) Each Purchaser hereby irrevocably designates and appoints the respective institution identified as the Purchaser Agent for such Purchaser's Purchaser Group on the signature pages hereto or in the Assumption Agreement or Transfer Supplement pursuant to which such Purchaser becomes a party hereto, and each authorizes such Purchaser Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to such Purchaser Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Purchaser Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Purchaser or other Purchaser Agent or the Administrator, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Purchaser Agent shall be read into this Agreement or otherwise exist against such Purchaser Agent.
(c) Except as otherwise specifically provided in this Agreement, the provisions of this Article V are solely for the benefit of the Purchaser Agents, the Administrator and the Purchasers, and none of the Seller or Servicer shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this ARTICLE V, except that this ARTICLE V shall not affect any obligations which any Purchaser Agent, the Administrator or any Purchaser may have to the Seller or the Servicer under the other provisions of this Agreement. Furthermore, no Purchaser shall have any rights as a third-party beneficiary or otherwise under any of the provisions hereof in respect of a Purchaser Agent which is not the Purchaser Agent for such Purchaser.
(d) In performing its functions and duties hereunder, the Administrator shall act solely as the agent of the Purchasers and the Purchaser Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller or Servicer or any of their successors and assigns. In performing its functions and duties hereunder, each Purchaser Agent shall act solely as the agent of its respective Purchaser and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller, the Servicer, any other Purchaser, any other Purchaser Agent or the Administrator, or any of their respective successors and assigns.
Section 5.2. DELEGATION OF DUTIES. The Administrator may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrator shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 5.3. EXCULPATORY PROVISIONS. None of the Purchaser Agents, the
Administrator or any of their directors, officers, agents or employees shall be
liable for any action taken or omitted (i) with the consent or at the direction
of the Majority Purchasers (or in the case of any Purchaser Agent, the
Purchasers within its Purchaser Group that have a majority of the aggregate
Commitment of such Purchaser Group) or (ii) in the absence of such Person's
gross negligence or willful misconduct. The Administrator shall not be
responsible to any Purchaser, Purchaser Agent or other Person for (i) any
recitals, representations, warranties or other statements made by the Seller,
Servicer, or any of their Affiliates, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Transaction Document, (iii)
any failure of the Seller, any Originator or any of their Affiliates to perform
any obligation or (iv) the satisfaction of any condition specified in EXHIBIT
II. The Administrator shall not have any obligation to any Purchaser or
Purchaser Agent to ascertain or inquire about the observance or performance of
any agreement contained in any Transaction Document or to inspect the
properties, books or records of the Seller, Servicer, Originator or any of their
Affiliates.
Section 5.4. RELIANCE BY AGENTS. (a) Each Purchaser Agent and the Administrator shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or other writing or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person and upon advice and statements of legal counsel (including counsel to the Seller), independent accountants and other experts selected by the Administrator. Each Purchaser Agent and the Administrator shall in all cases be fully justified in failing or refusing to take any action under any Transaction Document unless it shall first receive such advice or concurrence of the Majority Purchasers (or in the case of any Purchaser Agent, the Purchasers within its Purchaser Group that have a majority of the aggregate Commitment of such Purchaser Group), and assurance of its indemnification, as it deems appropriate.
(b) The Administrator shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Majority Purchasers or the Purchaser Agents, and such request and any action taken or failure to act pursuant thereto shall be binding upon all Purchasers, the Administrator and Purchaser Agents.
(c) The Purchasers within each Purchaser Group with a majority of the Commitment of such Purchaser Group shall be entitled to request or direct the related Purchaser Agent to take action, or refrain from taking action, under this Agreement on behalf of such Purchasers. Such Purchaser Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of such majority Purchasers, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Purchaser Agent's Purchasers.
(d) Unless otherwise advised in writing by a Purchaser Agent or by any Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party to this Agreement may assume that (i) such Purchaser Agent is acting for the benefit of each of the Purchasers in respect of which such Purchaser Agent is identified as being the
"Purchaser Agent" in the definition of "Purchaser Agent" hereto, as well as for the benefit of each assignee or other transferee from any such Person, and (ii) each action taken by such Purchaser Agent has been duly authorized and approved by all necessary action on the part of the Purchasers on whose behalf it is purportedly acting. Each Purchaser Agent and its Purchaser(s) shall agree amongst themselves as to the circumstances and procedures for removal, resignation and replacement of such Purchaser Agent.
Section 5.5. NOTICE OF TERMINATION EVENTS. Neither any Purchaser Agent nor the Administrator shall be deemed to have knowledge or notice of the occurrence of any Termination Event or Unmatured Termination Event unless such Administrator has received notice from any Purchaser, Purchaser Agent, the Servicer or the Seller stating that a Termination Event or Unmatured Termination Event has occurred hereunder and describing such Termination Event or Unmatured Termination Event. In the event that the Administrator receives such a notice, it shall promptly give notice thereof to each Purchaser Agent whereupon each such Purchaser Agent shall promptly give notice thereof to its Purchasers. In the event that a Purchaser Agent receives such a notice (other than from the Administrator), it shall promptly give notice thereof to the Administrator. The Administrator shall take such action concerning a Termination Event or Unmatured Termination Event as may be directed by the Majority Purchasers unless such action otherwise requires the consent of all Purchasers), but until the Administrator receives such directions, the Administrator may (but shall not be obligated to) take such action, or refrain from taking such action, as the Administrator deems advisable and in the best interests of the Purchasers and Purchaser Agents.
Section 5.6. NON-RELIANCE ON ADMINISTRATOR, PURCHASER AGENTS AND OTHER PURCHASERS. Each Purchaser expressly acknowledges that none of the Administrator, the Purchaser Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrator, or any Purchaser Agent hereafter taken, including any review of the affairs of the Seller, Worthington, Servicer or any Originator, shall be deemed to constitute any representation or warranty by the Administrator or such Purchaser Agent, as applicable. Each Purchaser represents and warrants to the Administrator and the Purchaser Agents that, independently and without reliance upon the Administrator, Purchaser Agents or any other Purchaser and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, Worthington, Servicer or the Originators, and the Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items specifically required to be delivered hereunder, the Administrator shall not have any duty or responsibility to provide any Purchaser Agent with any information concerning the Seller, Worthington, Servicer or the Originators or any of their Affiliates that comes into the possession of the Administrator or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 5.7. ADMINISTRATORS AND AFFILIATES. Each of the Purchasers and the Administrator and their Affiliates may extend credit to, accept deposits from and generally engage in any kind of banking, trust, debt, equity or other business with the Seller, Worthington, Servicer or any Originator or any of their Affiliates and PNC may exercise or refrain from
exercising its rights and powers as if it were not the Administrator. With respect to the acquisition of the Eligible Receivables pursuant to this Agreement, each of the Purchaser Agents and the Administrator shall have the same rights and powers under this Agreement as any Purchaser and may exercise the same as though it were not such an agent, and the terms "Purchaser" and "Purchasers" shall include each of the Purchaser Agents and the Administrator in their individual capacities.
Section 5.8. INDEMNIFICATION. Each Purchaser Group shall indemnify and hold harmless the Administrator (but solely in its capacity as Administrator) and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Seller, Worthington or Servicer and without limiting the obligation of the Seller, Worthington or Servicer to do so), ratably in accordance with its Ratable Share from and against any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Administrator or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Administrator or such Person as a result of, or related to, any of the transactions contemplated by the Transaction Documents or the execution, delivery or performance of the Transaction Documents or any other document furnished in connection therewith (but excluding any such liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Administrator or such Person as finally determined by a court of competent jurisdiction); PROVIDED, that in the case of each Purchaser that is a commercial paper conduit, such indemnity shall be provided solely to the extent of amounts received by such Purchaser under this Agreement which exceed the amounts required to repay such Purchaser's outstanding Notes. Notwithstanding anything in this SECTION 5.8 to the contrary, each of the Administrator, each Purchaser Agent and each Purchaser hereby covenants and agrees that it shall not institute against, or join any other Person in instituting against, any Conduit Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law, for one year and a day after the latest maturing Note issued by such Conduit Purchaser is paid in full.
Section 5.9. SUCCESSOR ADMINISTRATOR. The Administrator may, upon at least five (5) days notice to the Seller and each Purchaser and Purchaser Agent, resign as Administrator. Such resignation shall not become effective until a successor agent is appointed by the Majority Purchasers and has accepted such appointment. Upon such acceptance of its appointment as Administrator hereunder by a successor Administrator, such successor Administrator shall succeed to and become vested with all the rights and duties of the retiring Administrator, and the retiring Administrator shall be discharged from its duties and obligations under the Transaction Documents. After any retiring Administrator's resignation hereunder, the provisions of SECTIONS 3.1 and 3.2 and this Article V shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrator.
ARTICLE VI
MISCELLANEOUS
Section 6.1. 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 each of the Majority Purchasers, 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, if required by any Conduit Purchaser, no such material amendment shall be effective until both Moody's and Standard & Poor's have notified the related Purchaser Agent in writing that such action will not result in a reduction or withdrawal of the rating of any Notes; PROVIDED, FURTHER that no such amendment or waiver shall, without the consent of each affected Purchaser, (A) extend the date of any payment or deposit of Collections by the Seller or the Servicer, (B) reduce the rate or extend the time of payment of Yield, (C) reduce any fees payable to the Administrator, any Purchaser Agent or any Purchaser pursuant to the applicable Purchaser Group Fee Letter, (D) change the amount of Investment of any Purchaser, any Purchaser's pro rata share of the Purchased Interest or any Related Committed Purchaser's Commitment, (E) amend, modify or waive any provision of the definition of "Majority Purchaser" or this SECTION 6.1, (F) consent to or permit the assignment or transfer by the Seller of any of its rights and obligations under this Agreement, (G) change the definition of "Concentration Percentage," "Concentration Reserve," "Concentration Reserve Percentage," "Eligible Receivable," "Loss Reserve," "Loss Reserve Percentage," "Dilution Reserve," "Dilution Reserve Percentage," "Termination Event," "Total Reserve," "Yield Reserve," or "Yield Reserve Percentage", (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses, or (I) otherwise materially and adversely affect the rights of any such Purchaser hereunder. No failure on the part of the Purchasers 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.
Section 6.2. 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 in any Assumption Agreement pursuant to which it became a party hereto) 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.
Section 6.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise provided herein, the Seller may not assign or transfer any of its rights or delegate any of its duties hereunder or under any Transaction Document without the prior consent of the Administrator, the Purchaser Agents and the Purchasers.
(b) PARTICIPATIONS. Any Purchaser may sell to one or more Persons (each a "PARTICIPANT") participating interests in the interests of such Purchaser hereunder; provided, however, that no Purchaser shall grant any participation under which the Participant shall have rights to approve any amendment to or waiver of this Agreement or
any other Transaction Document. Such Purchaser shall remain solely responsible for performing its obligations hereunder, and the Seller, each Purchaser Agent and the Administrator shall continue to deal solely and directly with such Purchaser in connection with such Purchaser's rights and obligations hereunder. A Purchaser shall not agree with a Participant to restrict such Purchaser's right to agree to any amendment hereto, except amendments that require the consent of all Purchasers.
(c) ASSIGNMENTS BY CERTAIN RELATED COMMITTED PURCHASERS. Any Related Committed Purchaser may assign to one or more Persons (each a "PURCHASING RELATED COMMITTED PURCHASER"), reasonably acceptable to the related Purchaser Agent in its sole discretion, any portion of its Commitment pursuant to a supplement hereto, substantially in the form of ANNEX D with any changes as have been approved by the parties thereto (a "TRANSFER SUPPLEMENT"), executed by each such Purchasing Related Committed Purchaser, such selling Related Committed Purchaser, such related Purchaser Agent. Any such assignment by Related Committed Purchaser cannot be for an amount less than $10,000,000. Upon (i) the execution of the Transfer Supplement, (ii) delivery of an executed copy thereof to the Seller, such related Purchaser Agent and the Administrator and (iii) payment by the Purchasing Related Committed Purchaser to the selling Related Committed Purchaser of the agreed purchase price, such selling Related Committed Purchaser shall be released from its obligations hereunder to the extent of such assignment and such Purchasing Related Committed Purchaser shall for all purposes be a Related Committed Purchaser party hereto and shall have all the rights and obligations of a Related Committed Purchaser hereunder to the same extent as if it were an original party hereto. The amount of the Commitment of the selling Related Committed Purchaser allocable to such Purchasing Related Committed Purchaser shall be equal to the amount of the Commitment of the selling Related Committed Purchaser transferred regardless of the purchase price paid therefor. The Transfer Supplement shall be an amendment hereof only to the extent necessary to reflect the addition of such Purchasing Related Committed Purchaser as a "Related Committed Purchaser" and any resulting adjustment of the selling Related Committed Purchaser's Commitment.
(d) REPLACEABLE RELATED COMMITTED PURCHASER. If any Related
Committed Purchaser (a "REPLACEABLE RELATED COMMITTED PURCHASER") shall
(i) petition the Seller for any amounts under SECTION 1.7 or 1.8 or
(ii) cease to have a short-term debt rating of "A-1" by Standard &
Poor's and "P-1" by Moody's (if such a rating is required by the
related Purchaser's securitization program), the related Purchaser
Agent or the Administrator may designate a replacement financial
institution (a "REPLACEMENT RELATED COMMITTED PURCHASER"), to which
such Replaceable Related Committed Purchaser shall, subject to its
receipt of an amount equal to the aggregate outstanding principal
balance of its Investment and accrued and unpaid Discount thereon (and,
if applicable, its receipt (unless a later date for the remittance
thereof shall be agreed upon by the Seller and such Replaceable Related
Committed Purchaser) of all amounts claimed under SECTION 1.7 and/or
1.8) promptly assign all of its rights, obligations and Commitment
hereunder, together with all of its right, title and interest in, to
and under the Purchased Interest allocable to it, to the Replacement
Related Committed Purchaser in accordance with SECTION 6.3(c), above.
Once such assignment becomes effective, the Replacement Related
Committed Purchaser shall be deemed to be a "Related Committed
Purchaser"
for all purposes hereof and such Replaceable Related Committed Purchaser shall cease to be "Related Committed Purchaser" for all purposes hereof and shall have no further rights or obligations hereunder.
(e) ASSIGNMENT BY CONDUIT PURCHASERS. Each party hereto agrees and consents (i) to any Conduit Purchaser's assignment, participation, grant of security interests in or other transfers of any portion of, or any of its beneficial interest in, the Purchased Interest (or portion thereof), including without limitation to any collateral agent in connection with its commercial paper program and (ii) to the complete assignment by any Conduit Purchaser of all of its rights and obligations hereunder to any other Person, and upon such assignment such Conduit Purchaser shall be released from all obligations and duties, if any, hereunder; provided, however, that such Conduit Purchaser may not, without the prior consent of its Related Committed Purchasers, make any such transfer of its rights hereunder unless the assignee (i) is principally engaged in the purchase of assets similar to the assets being purchased hereunder, (ii) has as its Purchaser Agent the Purchaser Agent of the assigning Conduit Purchaser and (iii) issues commercial paper or other Notes with credit ratings substantially comparable to the ratings of the assigning Conduit Purchaser. Any assigning Conduit Purchaser shall deliver to any assignee a supplement hereto, substantially in the form of ANNEX D with any changes as have been approved by the parties thereto (also, a "TRANSFER SUPPLEMENT"), duly executed by such Conduit Purchaser, assigning any portion of its interest in the Purchased Interest to its assignee. Such Conduit Purchaser shall promptly (i) notify each of the other parties hereto of such assignment and (ii) take all further action that the assignee reasonably requests in order to evidence the assignee's right, title and interest in such interest in the Purchased Interest and to enable the assignee to exercise or enforce any rights of such Conduit Purchaser hereunder. Upon the assignment of any portion of its interest in the Purchased Interest, the assignee shall have all of the rights hereunder with respect to such interest (except that the Discount therefor shall thereafter accrue at the rate, determined with respect to the assigning Conduit Purchaser unless the Seller, the related Purchaser Agent and the assignee shall have agreed upon a different Discount).
(f) OPINIONS OF COUNSEL. If required by the Administrator or the applicable Purchaser Agent or to maintain the ratings of any Conduit Purchaser, each Transfer Supplement must be accompanied by an opinion of counsel of the assignee as to such matters as the Administrator or such Purchaser Agent may reasonably request.
Section 6.4. 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, each Purchaser Group and their respective Affiliates and agents with respect thereto and with respect to advising the Administrator, each Purchaser Group 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, each Purchaser Group and their respective Affiliates and agents in connection with the enforcement of this Agreement and the other Transaction Documents.
(a) 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.
Section 6.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. Each of the
Seller, Worthington, the Servicer, the Administrator, the Purchaser Agents, the
Purchasers, 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, any Conduit Purchaser
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 such
Conduit Purchaser is paid in full. The provision of this SECTION 6.5 shall
survive any termination of this Agreement.
Section 6.6. GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) 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.
Section 6.7. 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.
Section 6.8. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.7, 1.8, 3.1, 3.2, 6.4, 6.5, 6.6, 6.9 and 6.14 shall survive any termination of this Agreement.
Section 6.9. 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.
Section 6.10. SHARING OF RECOVERIES. Each Purchaser agrees that if it receives any recovery, through set-off, judicial action or otherwise, on any amount payable or recoverable hereunder in a greater proportion than should have been received hereunder or otherwise inconsistent with the provisions hereof, then the recipient of such recovery shall purchase for cash an interest in amounts owing to the other Purchasers (as return of Investment or otherwise), without representation or warranty except for the representation and warranty that such interest is being sold by each such other Purchaser free and clear of any Adverse Claim created or granted by such other Purchaser, in the amount necessary to create proportional participation by the Purchaser in such recovery. If all or any portion of such amount is thereafter recovered from the recipient, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 6.11. RIGHT OF SETOFF. During a Termination Event, each Purchaser is hereby authorized (in addition to any other rights it may have) to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Purchaser (including by any branches or agencies of such Purchaser) to, or for the account of, the Seller against amounts owing by the Seller hereunder (even if contingent or unmatured).
Section 6.12. 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.
Section 6.13. HEADINGS. The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for convenience of reference only and shall not affect the interpretation hereof or thereof.
Section 6.14. PURCHASER GROUPS' LIABILITIES. The obligations of each Purchaser Agent and each Purchaser under the Transaction Documents are solely the corporate obligations of such Person. Except with respect to any claim arising out of the willful misconduct or gross negligence of the Administrator, any Purchaser Agent or any Purchaser, no claim may be made by the Seller or the Servicer or any other Person against the Administrator, any Purchaser Agent or any Purchaser or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by the Agreement or any other Transaction Document, or any act, omission or event occurring in connection therewith; and each of Seller and Servicer hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
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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.
WORTHINGTON RECEIVABLES CORPORATION
By: /s/ John T. Baldwin --------------------------------------- Name: John T. Baldwin --------------------------------- Title: Vice President -------------------------------- |
Address:
Worthington Receivables Corporation
1205 Dearborn Drive
Columbus, Ohio 43085
Attention: Randal I. Rombeiro
Telephone: (614) 840-3574
Facsimile: (614) 438-7508
WORTHINGTON INDUSTRIES, INC., as Servicer
By: /s/ John T. Baldwin --------------------------------------- Name: John T. Baldwin --------------------------------- Title: Vice President -------------------------------- |
Address:
Worthington Industries, Inc.
1205 Dearborn Drive
Columbus, Ohio 43085
Attention: Randal I. Rombeiro
Telephone: (614) 840-3574
Facsimile: (614) 438-7508
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By: /s/ John Smathers ----------------------------------------- Name: John Smathers ----------------------------------- Title: Vice President ---------------------------------- |
Address:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: John Smathers
Telephone No.: (412) 762-6440
Facsimile No.: (412) 762-9184
PURCHASERS:
MARKET STREET FUNDING CORPORATION
By: /s/ Douglas K. Johnson ------------------------------------------ Name: Douglas K. Johnson ------------------------------------ Title: President ----------------------------------- |
Address:
Market Street Funding Corporation
c/o AMACAR Group, L.L.C.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
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 15222-2707
Attention: John Smathers
Telephone No.: (412) 762-6440
Facsimile No.: (412) 762-9184
Commitment $_____________________
PNC BANK, NATIONAL ASSOCIATION,
as a Purchaser Agent
By: /s/ David B. Gookin --------------------------------------- Name: --------------------------------- Title: -------------------------------- |
Address:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: John Smathers
Telephone No.: (412) 762-6440
Facsimile No.: (412) 762-9184
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.
"ADMINISTRATOR" has the meaning set forth in the preamble to the Agreement.
"ADMINISTRATOR'S ACCOUNT" means the account (account number 1002422076 ABA 043000096) of the Administrator maintained at the office of PNC at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, or such other account as may be so designated in writing by the Administrator to the Servicer.
"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 Administrator (for the benefit of the Purchasers ) shall not constitute an Adverse Claim.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.7 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, in the case of each Conduit
Purchaser, Affiliate shall mean the holder 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.
"AGGREGATE DISCOUNT" at any time, means the sum of the aggregate for each Purchaser of the accrued and unpaid Discount with respect to each such Purchaser's Investment at such time.
"AGGREGATE INVESTMENT" means the amount paid to the Seller in respect of the Purchased Interest or portion thereof by each Purchaser pursuant to the Agreement, as reduced from time to time by Collections distributed and applied on account of such Aggregate Investment pursuant to SECTION 1.4(d) of the Agreement; PROVIDED, that if such Aggregate Investment 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 Aggregate Investment shall be increased by the amount of such rescinded or returned distribution as though it had not been made.
"AGREEMENT" has the meaning set forth in the preamble to the Agreement.
"ASSUMPTION AGREEMENT" means an agreement substantially in the form set forth in Annex C to the Agreement.
"ATTORNEY COSTS" means and includes all reasonable fees and disbursements of any law firm or other external 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, (i) in the case of the Purchaser Group including Market Street, the Market Street Base Rate and (ii) in the case of each other Purchaser Group, shall mean the rate set forth as the Base Rate for such Purchaser Group in the related Purchaser Group Fee Letter.
"BBA" means the British Bankers' Association.
"BENEFIT PLAN" means any employee benefit pension plan as defined in
SECTION 3(2) of ERISA in respect of which the Seller, any Originator,
Worthington 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 Euro-Rate, dealings are carried out in the London interbank market.
"CHANGE IN CONTROL" means (i) with respect to Seller, that at any time Worthington shall fail to own, directly or indirectly through one or more wholly-owned Subsidiaries free and clear of any Adverse Claim, 100% of the shares of outstanding voting stock of the Seller on a fully diluted basis, (ii) with respect to any Originator, that at any time Worthington shall fail to own, directly or indirectly through one or more wholly-owned Subsidiaries free and clear of any Adverse Claim, 100% of the share of outstanding voting stock of such Originator on a fully diluted basis, and (iii) with respect to Worthington, the acquisition by any Person or its Affiliates (other than John H. McConnell, John P. McConnell, their Affiliates or a group in which the foregoing are a principal participant) of 20% or more of the stock (or equivalent ownership or controlling interest) having by the terms thereof ordinary voting power to elect a majority of the directors of Worthington (irrespective of whether or not at the time the stock of any class or classes of Worthington will have or might have voting power by reason of the happening or any contingency).
"CLOSING DATE" means November 30, 2000.
"COLLECTIONS" means, with respect to any Pool Receivable: (a) all funds
that are received by any Originator, Worthington, 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 that are 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 amounts deemed to have been received pursuant to
SECTION 1.4(e) of the Agreement and (c) all other proceeds of such Pool
Receivable.
"COMMITMENT" means, with respect to each Related Committed Purchaser, the maximum amount which such Purchaser is obligated to pay hereunder on account of any Purchase, as set forth below its signature to this Agreement or in the Assumption Agreement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment pursuant to SECTION 6.3(c) or in connection with a change in the Purchase Limit pursuant to SECTION 1.1(b).
"COMMITMENT PERCENTAGE" means, for each Related Committed Purchaser in a Purchaser Group, such Related Committed Purchaser's Commitment divided by the total of all Commitments of all Related Committed Purchasers in such Purchaser Group.
"COMPANY NOTE" has the meaning set forth in SECTION 3.1 of the Sale Agreement.
"CONCENTRATION PERCENTAGE" means any Obligor which is (i) a Group A
Obligor, 16.0%, (ii) a Group B Obligor, 16.0%, (iii) a Group C Obligor, 8.0%, or
(iv) a Group D Obligor, 4.0%.
"CONCENTRATION RESERVE" means, on any day, an amount equal to: (a) the Aggregate Investment at the close of business of the Servicer on such date MULTIPLIED BY (b) (i) the Concentration Reserve Percentage on such date, DIVIDED by (ii) 100% minus the Concentration Reserve Percentage on such date.
"CONCENTRATION RESERVE PERCENTAGE" means, on any date, the quotient of
(i) the greatest of (a) the largest aggregate Outstanding Balance of the
Receivables of any single Group A Obligor or Group B Obligor, (b) the sum of the
largest aggregate Outstanding Balances of the Receivables of any two Group C
Obligors or (c) the sum of the largest aggregate Outstanding Balances of the
Receivables of any four Group D Obligors, DIVIDED by (ii) the aggregate
Outstanding Balance of all Eligible Receivables, on such date.
"CONDUIT PURCHASERS" means each commercial paper conduit that is a party to the Agreement, as a purchaser, or that becomes a party to the Agreement, as a purchaser pursuant to an Assumption Agreement.
"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 Yield Period for any Portion of Investment (i) in the case of the Purchaser Group including Market Street, means the Market Street CP Rate, and (ii) in the case of each other Purchaser Group, shall mean the rate set forth as the CP Rate for such Purchaser Group in the related Purchaser Group Fee Letter.
"CREDIT AND COLLECTION POLICY" means, as the context may require, those receivables credit and collection policies and practices of each Originator and of Worthington in effect on the date of the Agreement and described in SCHEDULE I to the Agreement, as modified in compliance with the Agreement.
"CURRENT DAYS' SALES OUTSTANDING" means, for any calendar month, an amount computed as of the last day of such calendar month equal to: (a) the average of the Outstanding Balance of all Pool Receivables that are not passed their respective due date as of the last day of most recent three calendar months divided by (b)(i) the average of the aggregate credit sales made by the Originators during most recent three calendar months divided by (ii) 90.
"CUT-OFF DATE" has the meaning set forth in the Sale Agreement.
"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).
"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 excluding Ineligible Elimination Amounts, by (b)(i) at all times during which the Current Days' Sales Outstanding is less than or equal to 40, the aggregate credit sales made by the Originators during the month that is five months before such month and (ii) at all other times, the aggregate credit sales made by the Originators during the month that is six months before such month.
"DEFAULTED RECEIVABLE" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for more than 120 days, in each case from the due date for such payment, or
(b) without duplication (i) as to which an Insolvency
Proceeding shall have occurred with respect to the Obligor thereof or
any other Person obligated thereon or owning any Related Security with
respect thereto, (ii) that has been charged-off as uncollectible or
(iii) that should have been charged-off as uncollectible pursuant to
the Credit and Collection Policy.
"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 (a) as to which any payment, or part thereof, remains unpaid for more than 90 days from the due date for such payment or (b) without duplication, which has been (or consistent with the Credit and Collection Policy, would be) classified as a Delinquent Receivable by the applicable Originator.
"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 excluding Ineligible Elimination Amounts, by (b) the aggregate credit sales made by 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
Aggregate Investment 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, on any date, the greater of (a) 8.0%, or (b) the percentage determined by the following formula:
[(2.0 x ED) + (0.25% x CS) + ((DS-ED) x DS/ED))] x DHR
ED = the "Expected Dilution," which shall be equal to the 12-month rolling average Dilution Ratio, expressed as a percentage; DS = the "Dilution Spike," which shall be equal to the highest one month Dilution Ratio over the immediately preceding 12 months, expressed as a percentage; and CS = the aggregate credit sales made by the Originators during the most recent calendar month divided by the Outstanding Balance of all Eligible Receivables for such calendar month. DHR = the "Dilution Horizon Ratio," which shall be equal to the aggregate credit sales made by the Originators during the three preceding calendar months divided by the Outstanding Balance of all Eligible Receivables as of the last day of most recent calendar month. |
"DISCOUNT" means with respect to any Purchaser:
(a) for any Portion of Investment for any Yield Period with respect to any Purchaser to the extent such Portion of Investment will be funded by such Purchaser during such Yield Period through the issuance of Notes:
CPR x I x ED/360
(b) for any Portion of Investment for any Yield Period with respect to any Purchaser to the extent such Portion of Investment will not be funded by such Purchaser during such Yield Period through the issuance of Notes:
YR x I x ED/Year + TF
where:
YR = the Yield Rate, as applicable, for such Portion of Investment for such Yield Period with respect to such Purchaser, I = the Investment with respect to such Portion of Investment during such Yield Period with respect to such Purchaser, CPR = the CP Rate for the Portion of Investment for such Yield Period with respect to such Purchaser, ED = the actual number of days during such Yield Period, Year = if such Portion of Investment is funded based upon: (i) the Euro-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 Investment for such Yield Period with respect to such Purchaser; |
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 any Portion of Investment 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; PROVIDED, HOWEVER, if the Obligor of such Receivable is a resident of the Province of Ontario, Canada, such Receivable shall satisfy the requirements of this CLAUSE (a)(i) if the sum of the Outstanding Balance of such Receivable and the aggregate Outstanding Balance of all other Eligible Receivables (that are included in the calculation of the Net Receivables Pool Balance at such time) of Obligors who are residents of the Province of Ontario, Canada does not exceed $2,000,000, (ii) not a government or a governmental subdivision, affiliate or agency, (iii) not subject to any action of the type described in PARAGRAPH (f) of Exhibit V to the Agreement and (iv) not an Affiliate of Worthington,
(b) that is denominated and payable only in U.S. dollars in the United States,
(c) that does not have a stated maturity which is more than 60 days after the original invoice date of such Receivable;, PROVIDED, HOWEVER, that up to 35% of the aggregate Outstanding Balance of all Receivables may have a stated maturity which is more than 60 days but not more than 90 days from 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 Administrator (for the benefit of each Purchaser) 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 or a Delinquent Receivable,
(n) for which none of the Originator thereof, the Seller and the Servicer has established any offset arrangements with the related Obligor,
(o) for which Defaulted Receivables of the related Obligor do not exceed 35% 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 or Servicer 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 Worthington, (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 Worthington, or (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, any corporation described in CLAUSE (a) or any trade or business described in CLAUSE (b).
"EURO-RATE" means with respect to any Yield Period, the interest rate per annum determined by the Administrator by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the applicable Purchaser Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank market offered rates for U.S. dollars quoted by the BBA as set forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate successor or, if BBA or its successor ceases to provide display page 3750 (or such other display page on the Dow Jones Markets Service system as may replace display page 3750) at or about 11:00 a.m. (London time) on the Business Day which is two (2) Business Days prior to the first day of such Yield Period for an amount comparable to the Portion of Investment to be funded at the Yield Rate and based upon the Euro-Rate during such Yield Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula:
1.00 - Euro-Rate Reserve Percentage
where "EURO-RATE RESERVE PERCENTAGE" means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "EUROCURRENCY LIABILITIES"). The Euro-Rate shall be adjusted with respect to any Portion of Investment funded at the Yield Rate and based upon the Euro-Rate that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The applicable Purchaser Agent shall give prompt notice to the Seller of the Euro-Rate as determined or adjusted in accordance herewith (which determination shall be conclusive absent manifest error).
"EXCESS CONCENTRATION" means, on any date, 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 applicable Concentration Percentage for such Obligor multiplied by (b) the Outstanding Balance of all Eligible Receivables, on such date.
"EXITING PURCHASER" has the meaning set forth in Section 1.4(b)(ii).
"FACILITY TERMINATION DATE" means the earliest to occur of: (a) with respect to each Purchaser November 29, 2001, subject to any extension pursuant to SECTION 1.10 of the Agreement (it being understood that if any such Purchaser does not extend its Commitment hereunder then the Purchase Limit shall be reduced ratably with respect to the Purchasers in each Purchaser Group by an amount equal to the Commitment of such Exiting Purchaser and the Commitment Percentages and Group Commitments of the Purchasers within each Purchaser Group shall be appropriately adjusted), (b) the date determined pursuant to SECTION 2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant to SECTION 1.1(b) of the Agreement, (d) with respect to each Purchaser Group, the date that the commitments of all of the Liquidity Providers terminate under the related Liquidity Agreements and (e) with respect to each Purchaser Group, the date that the commitment, of all of the Related Committed Purchasers of such Purchaser Group terminate pursuant to SECTION 1.10.
"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 applicable Purchaser Agent 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 such Purchaser Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.
"FEES" means the fees payable by the Seller to each Purchaser Group pursuant to the applicable Purchaser Group Fee Letter.
"GAAP" means the generally accepted accounting principles and practices in the United States, consistently applied.
"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 an Obligor with a short-term senior unsecured indebtedness rating (or, if such Obligor does not have such a short-term rating, a long-term senior unsecured indebtedness rating) of at least "A-1" (or "A+") by Standard & Poor's and "P-1" (or "A1") by Moody's.
"GROUP B OBLIGOR" means an Obligor with a short-term senior unsecured indebtedness rating (or, if such Obligor does not have such a short-term rating, a long-term senior unsecured indebtedness rating) of at least "A-2" (or "BBB+") by Standard & Poor's and "P-2" (or "Baa1") by Moody's, that is not a Group A Obligor.
"GROUP C OBLIGOR" means an Obligor with a short-term senior unsecured indebtedness rating (or, if such Obligor does not have such a short-term rating, a long-term senior unsecured indebtedness rating) of at least "A-3" (or "BBB-") by Standard & Poor's and "P-3" (or "Baa3") by Moody's, that is not a Group A Obligor or a Group B Obligor.
"GROUP COMMITMENT" means with respect to any Purchaser Group the aggregate of the Commitments of each Purchaser within such Purchaser Group.
"GROUP D OBLIGOR" means an Obligor which is not a Group A Obligor, a Group B Obligor or a Group C Obligor.
"GROUP INVESTMENT" means with respect to any Purchaser Group, an amount equal to the aggregate of all Investments of the Purchasers within such Purchaser Group.
"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.
"INELIGIBLE ELIMINATION AMOUNTS" means amounts which are reported by the Servicer as inputs to the Information Package as credit memos or aged invoices which relate to Receivables which are not Eligible Receivables, including without limitation, Receivables (a) the Obligor of which is not United States resident, (b) the Obligor of which is an Affiliate of Worthington or (c) related to the resale program.
"INFORMATION PACKAGE" means a report, in substantially the form of ANNEX A 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, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors of a Person or, composition, marshaling 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 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.
"INVESTMENT" means with respect to any Purchaser the amount paid to the Seller by such Purchaser pursuant to the Agreement, or such amount divided or combined in accordance with the Agreement, in each case reduced from time to time by Collections distributed and applied on account of such Investment pursuant to SECTION 1.4(d) of the Agreement; provided, that if such Investment 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 Investment shall be increased by the amount of such rescinded or returned distribution as though it had not been made.
"LIQUIDITY AGENT" means each of the banks acting as agent for the various Liquidity Banks under each Liquidity Agreement.
"LIQUIDITY AGREEMENT" means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser's Purchases.
"LIQUIDITY PROVIDER" means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.
"LOCK-BOX ACCOUNT" means an account maintained at a bank or other financial institution for the purpose of, directly or indirectly, receiving Collections.
"LOCK-BOX AGREEMENT" means an 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 the greater of
(a) 3.0%, MULTIPLIED by the Aggregate Investment at the close of business of the
Servicer on such date and (b) (i) the Aggregate Investment at the close of
business of the Servicer on such date MULTIPLIED by (ii) (1) the Loss Reserve
Percentage on such date DIVIDED by (2) 100% minus the Loss Reserve Percentage on
such date.
"LOSS RESERVE PERCENTAGE" means, on any date, the product of (a) 2
TIMES (b) the highest average of the Default Ratios for any three consecutive
calendar months during the twelve most recent calendar months MULTIPLIED by (c)
(i) (1) at all times during which the Current Days' Sales Outstanding is less
than or equal to 40, the aggregate credit sales made by the Originators during
the five most recent calendar months, and (2) at all other times, the aggregate
credit sales made by the Originators during the six most recent calendar months
DIVIDED by (ii) the aggregate Outstanding Balance of Eligible Receivables as of
such date.
"MAJORITY PURCHASERS" means, at any time, Purchasers whose Commitments aggregate 2/3rds or more of the aggregate of the Commitments of all Purchasers; provided, however, that so long as any Purchaser's Commitment is greater than 50% of the aggregate Commitments, then "Majority Purchasers" shall mean a minimum of two Purchasers whose Commitments aggregate more than 50% of the aggregate Commitments.
"MARKET STREET" has the meaning set forth in the preamble to the Agreement.
"MARKET STREET BASE RATE" means, in the case of Market Street or any Purchaser in its Purchaser Group, 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:
(a) 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
(b) 0.50% per annum above the latest Federal Funds Rate.
"MARKET STREET CP RATE" means, with respect to Market Street for any Yield Period with respect to any Portion of Investment, the per annum rate equivalent to the "weighted average cost" (as defined below) related to the issuance of Market Street's Notes that are allocated, in whole or in part, by Market Street (or by its Purchaser Agent) to fund or maintain such Portion of Investment (and which may also be allocated in part to the funding of other Portions of Investment hereunder or of other assets of Market Street); PROVIDED, HOWEVER, that if any component of such rate is a discount rate, in calculating the "MARKET STREET CP RATE" for such Portion of Investment for such Yield Period, Market Street shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum. As used in this definition, Market Street's "WEIGHTED AVERAGE COST" shall consist of (x) the actual interest rate (or discount) paid to purchasers of Market Street's Notes, together with the commissions of placement agents and dealers in respect of such Notes, to the extent such commissions are allocated, in whole or in part, to such Notes by Market Street (or by its Purchaser Agent) and (y) any incremental carrying costs incurred with respect to Market Street's Notes maturing on dates other than those on which corresponding funds are received by Market Street. Notwithstanding the foregoing, the "Market Street 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.
"MARKET STREET YIELD RATE" for any Yield Period for any Portion of Investment of the Purchased Interest in the case of Market Street or any Purchaser in its Purchaser Group, means an interest rate per annum equal to, at Seller's option: (a) the rate set forth as the "Applicable Margin" in the Purchaser Group Fee Letter relating to Market Street above the Euro-Rate for such Yield Period, or (b) the Base Rate for such Yield Period; PROVIDED, HOWEVER, that in the case of:
(i) any Yield Period on or before the first day of which the Administrator shall have been notified by any Purchaser or 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 such Person, to fund any Euro-Rate Portion of Investment (and such Person shall not have subsequently notified the Administrator that such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 29 days,
(iii) any Yield Period as to which the Administrator does not receive notice before noon (New York City time) on the third Business Day preceding the first day of such Yield Period that the Seller desires that the related Portion of Investment be a Euro-Rate Portion of Investment, or
(iv) any Yield Period relating to a Portion of Investment that is less than $5,000,000,
the "Yield Rate" for each such Yield Period shall be an interest rate per annum equal to the Base Rate in effect on each day of such Yield Period. The "Yield Rate" for any day while a Termination Event exists shall be an interest rate equal to 2% per annum above the applicable Base Rate in effect on such day.
"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 the Seller, the Servicer or Worthington Industries, Inc. on a consolidated basis,
(b) the ability of any of such Person to perform its obligations under the Agreement 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 any Purchaser's or the Seller's interest in the Pool Assets.
"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 each Conduit Purchaser 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 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.
"PERMITTED LOCK-BOX BANK means any of the following Bank of America, Bank of Nova Scotia, Bank of Tokyo-Mitsubishi, Bank One, Chase Manhattan, Citibank, Comerica Bank, First Union Bank, Firstar Bank, Fleet Bank, Huntington Bank, Key Bank, Mellon Bank, National City Bank, PNC Bank, Wachovia Bank, or such other bank as may be consented to by the Administrator and the Majority Purchasers.
"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 INVESTMENT" means, with respect to any Purchaser and its related Investment, the portion of such Investment being funded or maintained by such Purchaser by reference to a particular interest rate basis.
"PROGRAM SUPPORT AGREEMENT" means and includes any 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 any Conduit Purchaser, (b) the issuance of one or more surety bonds for which the such Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by such Conduit Purchaser to any Program Support Provider of the Purchased Interest (or portions thereof) maintained by such Conduit Purchaser and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser's 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 with respect to each Conduit Purchaser any Liquidity Provider and any other Person (other than any customer of such Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, such Conduit Purchaser pursuant to any Program Support Agreement.
"PURCHASE" is defined in Section 1.1(a).
"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 DATE" means the date of which a Purchase or a reinvestment is made pursuant to the Agreement.
"PURCHASE FACILITY" has the meaning set forth in SECTION 1.1 of the Sale Agreement.
"PURCHASE LIMIT" means $120,000,000, 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 Aggregate Investment.
"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, (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:
The Purchased Interest shall be determined from time to time pursuant to SECTION 1.3 of the Agreement.
"PURCHASER" means each Conduit Purchaser and/or each Related Committed Purchaser, as applicable.
"PURCHASER AGENT" means each Person acting as agent on behalf of a Purchaser Group and designated as a Purchaser Agent for such Purchaser Group on the signature pages to the Agreement or any other Person who becomes a party to this Agreement as a Purchaser Agent pursuant to an Assumption Agreement or a Transfer Supplement.
"PURCHASER GROUP" means, for each Conduit Purchaser, such Conduit Purchaser, its Related Committed Purchasers and its related Purchaser Agent.
"PURCHASER GROUP FEE LETTER" has the meaning set forth in SECTION 1.5 of the Agreement.
"PURCHASERS' SHARE" of any amount means such amount multiplied by the Purchased Interest at the time of determination.
"RATABLE SHARE" means, for each Purchaser Group, such Purchaser Group's aggregate Commitments divided by the aggregate Commitments of all Purchaser Groups.
"RATING AGENCY CONDITION" means, with respect to any material event or occurrence, receipt by the Administrator (or the applicable Purchaser Agent) of written confirmation from each of Standard & Poor's and Moody's that such event or occurrence shall not cause the rating on the then outstanding Notes of any applicable Purchaser 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; PROVIDED HOWEVER, that "Receivable" shall not include any such indebtedness and such other obligations or any such right to payment arising in connection with the sale of goods or the rendering of services by the Taylor Division of Worthington Steel of Michigan, Inc. or the Worthington Machine Technology Division of The Worthington Steel Company, an Ohio corporation. 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 prior to the Facility Termination Date.
"RELATED COMMITTED PURCHASER" means each Person listed as such (and its respective Commitment) for each Conduit Purchaser as set forth on the signature pages of the Agreement or in any Assumption Agreement or Transfer Supplement.
"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 instruments and chattel paper that may evidence such Receivable,
(c) 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
(d) all of the Seller's and the Originator thereof'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 the Purchase and Sale Agreement, dated as of November 30, 2000, among the Seller, the Originators and the Servicer as amended through the date of the Agreement and 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 product of (i) such amount multiplied by (ii) the Purchased Interest.
"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.
"SETTLEMENT DATE" means the 18th Business Day of each calendar month which Business Day is set forth on SCHEDULE IV or such other Business Day as otherwise consented to by the Administrator, the Purchasers, the Seller and the Servicer. The Administrator shall update SCHEDULE IV to list the 18th Business Day of each calendar month beyond November 2001 by no later than October 31, 2001.
"SIMPLE MAJORITY" means, at any time, Purchasers whose Commitments aggregate 51% or more of the aggregate of the Commitments of all Purchasers.
"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.
"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.
"TANGIBLE NET WORTH" means, with respect to any Person, the tangible net worth of such Person as determined in accordance with GAAP.
"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 Facility Termination Date.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V to the Agreement.
"TERMINATION FEE" means, for any Yield Period, with respect to any Purchaser, the amount, if any, by which: (a) the additional Discount related to such Purchaser's Investment (calculated without taking into account any Termination Fee or any shortened duration of such Yield Period) that would have accrued during such Yield Period on the reductions of Investment relating to such Yield Period had such reductions not been made, exceeds (b) the income, if any, received by such Purchaser from investing the proceeds of such reductions of Investment, as determined by the such Purchaser's Purchaser Agent, which determination shall be binding and conclusive for all purposes, absent manifest error.
"TOTAL RESERVES" means, at any time, the sum of the Yield Reserve and the greater of (a) the sum of the Loss Reserve and the Dilution Reserve, or (b) the Concentration Reserve.
"TRANSACTION DOCUMENTS" means the Agreement, the Lock-Box Agreements, each Purchaser Group 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 any of the foregoing, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with the Agreement.
"TRANSFER SUPPLEMENT" has the respective meanings set forth in SECTIONS 6.3(c) and 6.3(e).
"TURNOVER RATE" means, for any calendar month, an amount computed as of the last day of such calendar month equal to: (a) the average of the Outstanding Balance of all Pool Receivables as of the last day of such calendar month, divided by (b) the quotient of (i) the aggregate credit sales made by the Originators during the three calendar months ended on the last day of such calendar month, divided by (ii) 3.
"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.
"WORTHINGTON" has the meaning set forth in the preamble to the Agreement.
"YIELD PERIOD" means, with respect to each Portion of Investment: (a) before the Facility Termination Date: (i) initially the period commencing on the date of the initial Purchase pursuant to SECTION 1.2 of the Agreement (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Settlement Date, and (ii) thereafter, each period commencing on such Settlement Date and ending on (but not including) the next Settlement Date, and (b) on and after the Facility 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 Yield Period.
"YIELD RATE" for any Yield Period for any Portion of Investment of the Purchased Interest (i) in the case of the Purchaser Group including Market Street, means the Market Street Yield Rate, and (ii) in the case of each other Purchaser Group, shall mean the rate set forth as the Yield Rate for such Purchaser Group in the related Purchaser Group Fee Letter.
"YIELD RESERVE" shall be equal to the Aggregate Investment multiplied by a percentage equal to (i) the Yield Reserve Percentage divided by (ii) 100% minus the Yield Reserve Percentage.
"YIELD RESERVE PERCENTAGE" means, on any date, an amount equal to (i) the sum of the weighted average Base Rate for the most recent period plus 1.0%, multiplied by (ii) the product of 1.5 times the Turnover Rate, divided by (iii) 12.
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.
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial Purchase under this Agreement is subject to the following conditions precedent that the Administrator and each Purchaser Agent shall have received on or before the date of such Purchase (other than with respect to the condition set forth in PARAGRAPH (g), which such condition must be satisfied within 30 days of such Purchase), each in form and substance (including the date thereof) satisfactory to the Administrator and each Purchaser Agent:
(a) A counterpart of the Agreement and the other Transaction Documents executed by the parties thereto.
(b) Certified copies of: (i) the resolutions of the Board of Directors of each of the Seller, the Originators and Worthington authorizing the execution, delivery and performance by the Seller, such Originator and Worthington, 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 organizational 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 or certificate of formation and limited liability company agreement or any other organizational document, as applicable, of the Seller, each Originator and Worthington.
(c) A certificate of the Secretary or Assistant Secretary of the Seller, the Originators and Worthington certifying the names and true signatures of its officers who are authorized to sign the Agreement and the other Transaction Documents. Until the Administrator and each Purchaser Agent receives a subsequent incumbency certificate from the Seller, an Originator or Worthington, as the case may be, the Administrator and each Purchaser Agent shall be entitled to rely on the last such certificate delivered to it by the Seller, such Originator or Worthington, as the case may be.
(d) 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, Worthington and the Administrator (on behalf of each Purchaser) contemplated by the Agreement and the Sale Agreement.
(e) 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, Worthington or the Seller.
(f) Completed UCC search reports, dated on or shortly before the date of the initial purchase hereunder, listing the financing statements filed in all applicable 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
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Corporation in such jurisdictions, as the Administrator or any Purchaser Agent may request, showing no Adverse Claims on any Pool Assets.
(g) Copies of executed Lock-Box Agreements with each Lock-Box Bank.
(h) Favorable opinions, in form and substance reasonably satisfactory to the Administrator and each Purchaser Agent, of: (i) Jones Day Reavis & Pogue, counsel for the Seller, the Originators, Worthington and the Servicer, and (ii) Dale T. Brinkman, counsel for Seller, Worthington and the Originators.
(i) Satisfactory results of a review and audit (performed by representatives of each Purchaser Agent) 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).
(j) A pro forma Information Package representing the performance of the Receivables Pool for the calendar month before closing.
(k) Evidence of payment by the Seller of all accrued and unpaid fees (including those contemplated by each Purchaser Group 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 6.4 of the Agreement and the Fee Letter.
(l) Each Purchaser Group Fee Letter (received only by the related Purchaser Group Agent) duly executed by the Seller and the Servicer.
(m) Good standing certificates with respect to each of the Seller, the Originators and the Servicer issued by the Secretary of State (or similar official) of the state of each such Person's organization and principal place of business.
(n) To the extent required by each Conduit Purchaser's commercial paper program, 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.
(o) Each Liquidity Agreement (received only by the related Purchaser Group Agent) and all other Transaction Documents duly executed by the parties thereto.
(p) A computer file containing all information with respect to the Receivables as the Administrator or any Purchaser Agent may reasonably request.
(q) Such other approvals, opinions or documents as the Administrator or any Purchaser Agent may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each Purchase (including the initial Purchase) and each reinvestment shall be subject to the further conditions precedent that:
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(a) in the case of each purchase, the Servicer shall have delivered to the Administrator and each Purchaser Agent on or before such purchase, in form and substance satisfactory to the Administrator and such Purchaser Agent, a completed pro forma Information Package to reflect the level of Investment with respect to each Purchaser Group and related reserves and the calculation of the Purchased Interest after such subsequent purchase and a completed purchase notice in the form of Annex B; and
(b) 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):
(i) 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 (except to the extent that such representations and warranties relate expressly to an earlier date, and in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); and
(ii) 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.
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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.
(b) 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 indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which it is a party or by which it
is bound, 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
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(g) 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, Administrator (for the benefit of each Purchaser) 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 Administrator (for the benefit of each Purchaser) in the Pool Assets, and the Administrator (for the benefit of each Purchaser) 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 Administrator (for the benefit of each Purchaser) relating to the Agreement, or in respect of which the Administrator has received evidence satisfactory to the Administrator of acknowledgment copies, or time-stamped receipt copies, of proper financing statements releasing or terminating, as applicable, all security interests and other rights of any Person in such Pool Asset.
(h) 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 or any Purchaser Agent 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 as of the date so furnished, and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.
(i) [RESERVED].
(j) 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 (except as otherwise agreed to in writing by the Administrator and each Purchaser Agent or as provided in SECTION 4.3). Seller has not granted to any Person, other than the Administrator as contemplated by the Agreement, dominion and control of any Lock-Box Account, or the right to take dominion and control of any such account at a future time or upon the occurrence of a future event.
(k) The Seller is not in violation of any order of any court, arbitrator or Governmental Authority.
(l) Neither the Seller nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Purchaser.
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(m) No proceeds of any purchase or reinvestment will be used for any purpose that violates any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board.
(n) Each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable.
(o) No event has occurred and is continuing that constitutes a Termination Event or an Unmatured Termination Event and no event 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.
(p) 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.
(q) The Seller has complied in all material respects with the Credit and Collection Policy of each Originator with regard to the Receivables originated by such Originator, unless such Receivables were not Eligible Receivables as of the date of the sale or conveyance of such Receivables by such Originator to the Seller under the Sale Agreement and the aggregate Outstanding Balance of all such Receivables does not exceed $1,000,000.
(r) 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 and all laws, rules, regulations and orders that are applicable to it.
(s) 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(k)(iv) of EXHIBIT IV to the Agreement.
(t) 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.
(u) With respect to each Receivable transferred to the Seller under the Sale Agreement, Seller has given reasonably equivalent value to the Originator thereof in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by any Originator of any Receivable under the Sale Agreement is or may be voidable under any section of the Bankruptcy Code.
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(v) Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(w) Since its most recent fiscal year end, there has been no change in the business, operations, financial condition, properties or assets of the Seller which would have a Material Adverse Effect on its ability to perform its obligations under the Agreement or any other Transaction Document to which it is a party or materially and adversely affect the transactions contemplated under the Agreement or such other Transaction Documents.
2. REPRESENTATIONS AND WARRANTIES OF WORTHINGTON (INCLUDING IN ITS CAPACITY AS THE SERVICER). Worthington, individually and in its capacity as the Servicer, represents and warrants as follows:
(a) Worthington is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Ohio, 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.
(b) The execution, delivery and performance by Worthington,
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 material indenture, loan agreement, mortgage, deed of trust or
other material agreement or instrument to which it is a party or by
which it is bound, 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 Worthington is a party have been duly
executed and delivered by Worthington.
(c) 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 Worthington of the Agreement or any other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to which Worthington is a party constitutes the legal, valid and binding obligation of Worthington enforceable against Worthington in accordance with its terms, except as enforceability
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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.
(e) The balance sheets of Worthington and its consolidated Subsidiaries as at May 31, 2000, and the related statements of income and retained earnings for the fiscal year then ended, copies of which have been furnished to the Administrator and each Purchaser Agent, fairly present the financial condition of Worthington and its consolidated Subsidiaries as at such date and the results of the operations of Worthington and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied, and since May 31, 2000, there has been no event or circumstances which have had a Material Adverse Effect.
(f) Except as disclosed in the most recent audited financial statements of Worthington furnished to the Administrator and each Purchaser Agent, 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 reasonably be expected to have a Material Adverse Effect.
(g) 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.
(h) Each Information Package (if prepared by Worthington or one of its Affiliates, or to the extent that information contained therein is supplied by Worthington 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, any Purchaser or any Purchaser Agent in connection with the Agreement is or will be complete and accurate in all material respects as of its date or as of the date so furnished and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading.
(i) The principal place of business and chief executive office (as such terms are used in the UCC) of Worthington 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.
(j) Worthington is not in violation of any order of any court, arbitrator or Governmental Authority, which could have a Material Adverse Effect.
(k) Neither Worthington nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Purchaser.
(l) The Servicer has complied in all material respects with the Credit and Collection Policy of each Originator with regard to the Receivables originated by such Originator, unless such Receivables were not Eligible Receivables as of the date of the
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sale or conveyance of such Receivables by such Originator to the Seller under the Sale Agreement and the aggregate Outstanding Balance of all such Receivables does not exceed $1,000,000.
(m) Worthington 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.
(n) Worthington 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, Worthington 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.
(o) Since its most recent fiscal year end, there has been no change in the business, operations, financial condition, properties or assets of the Servicer which would have a Material Adverse Effect on its ability to perform its obligations under the Agreement or any other Transaction Document to which it is a party or materially and adversely affect the transactions contemplated under the Agreement or such other Transaction Documents.
(p) No license or approval is required for the Administrator or any successor Servicer to use any program used by the Servicer in the servicing of the Receivables, other than such licenses and approvals that have been obtained and are in full force and effect.
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EXHIBIT IV
COVENANTS
1. COVENANTS OF THE SELLER. Until the latest of the Facility Termination Date, the date on which no Investment 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 any Purchaser, Purchaser Agent, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. The Seller shall comply 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.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller:
(i) shall not move 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 to an
address other than the address of the Seller set forth under its name
on the signature page to the Agreement or, pursuant to CLAUSE (k)(iv)
below, at any other locations in jurisdictions where all actions
reasonably requested by the Administrator to protect and perfect the
interest of the Administrator (for the benefit of the Purchasers) 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). The Seller will (and will
cause each Originator to) on or prior to the date of the Agreement,
mark its master data processing records and other books and records
relating to the Purchased Interest (and at all times thereafter (until
the latest of the Facility Termination Date or the date all other
amounts owed by the Seller under the Agreement shall be paid in full)
continue to maintain such records) with a legend, acceptable to the
Administrator, describing the Purchased Interest.
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. The Seller shall (and shall cause the Servicer to), at its expense, (i) timely
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perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables unless the failure to so perform or comply does not involve a material portion of such Receivables, and the Seller shall have complied with its obligations with respect to such Receivables set forth in SECTION 1.4(e), and (ii) timely comply in all material respects with the applicable Credit and Collection Policies with regard to each Receivable.
(d) 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 which shall not be greater than 100%, 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 Administrator (for the benefit of the Purchasers), including taking such action to perfect, protect or more fully evidence the interest of the Administrator (for the benefit of the Purchasers) as the Administrator, may reasonably request.
(e) 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.
(f) 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.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Seller shall not make (or permit any Originator to make) any 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 and each Purchaser Agent.
(h) AUDITS. The Seller shall (and shall cause each Originator to), from time to time during regular business hours, but no more frequently than annually unless (x) a Termination Event or Unmatured Termination Event has occurred and is continuing or (y) in the opinion of the Administrator (with the consent or at the direction of the Majority Purchasers) reasonable grounds for insecurity exist with respect to the collectibility of a material portion of the Pool Receivables or with respect to the Seller's performance or ability to perform in any material respect its obligations under the Agreement, as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event exists) by the Administrator or any Purchaser, permit the
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Administrator or any Purchaser, or agent or representatives of the Administration or any Purchaser: (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, Worthington's or the Originator's performance under the Transaction Documents or under the Contracts with any of the officers, employees, agents or contractors of the Seller, Worthington or the Originator having knowledge of such matters and (iii) without limiting CLAUSES (i) and (ii) above, to engage certified public accountants or other auditors acceptable to the Seller and the Administrator to conduct, at the Seller's expense, a review of the Seller's books and records with respect to such Receivables.
(i) 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 and the Majority Purchasers 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. Notwithstanding anything contained in this PARAGRAPH (i) to the contrary, the Seller may add a Permitted Lock-Box Bank as a Lock-Box Bank upon the consent of the Administrator and the Majority Purchasers, which consent shall not be unreasonably withheld.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall (or shall cause the Servicer to): (i) 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, and (ii) 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). Except as otherwise agreed to in writing by the Administrator and the Majority Purchasers or as provided in SECTION 4.3, 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.
(k) REPORTING REQUIREMENTS. The Seller will provide to the Administrator (in multiple copies, if requested by the Administrator) and each Purchaser Agent the following:
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(i) as soon as available and in any event within 90 days after the end of each fiscal year of the Seller, unaudited financial statements for such year certified as to accuracy by the chief financial officer or treasurer of the Seller;
(ii) 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;
(iii) 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 material liability on the Seller and/or any such Affiliate;
(iv) at least 30 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;
(v) promptly after the Seller obtains knowledge thereof, notice of any: (A) material adverse litigation, investigation or proceeding that may exist at any time between the Seller and any Person or (B) material litigation or proceeding relating to any Transaction Document;
(vi) promptly after the occurrence thereof, notice of a Material Adverse Effect in the business, operations, property or financial or other condition of the Seller, the Servicer or Worthington Industries, Inc. on a consolidated basis; and
(vii) 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 or any Purchaser Agent may from time to time reasonably request.
(l) CERTAIN AGREEMENTS. Without the prior written consent of the Administrator and the Majority Purchasers, 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.
(m) 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
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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 Company Note in accordance with its terms, and (B) if no amounts are then outstanding under the Company 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 $10,000,000 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.
(n) 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 Company 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.).
(o) 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 Purchaser Groups and the Administrator under the Agreement and under each Purchaser Group Fee Letter); (ii) the payment of accrued and unpaid interest on the Company Note; and (iii) other legal and valid corporate purposes.
(p) TANGIBLE NET WORTH. The Seller will not permit its tangible net worth, at any time, to be less than $10,000,000.
2. COVENANTS OF THE SERVICER AND WORTHINGTON. Until the latest of the Facility Termination Date, the date on which no Investment 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 Purchaser Agents, the Purchasers, 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, Worthington 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
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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.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Servicer and, to the extent that it ceases to be the Servicer, Worthington, 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 applicable 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 Administrator (for the benefit of each Purchaser) 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, Worthington, 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).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. The Servicer and, to the extent that it ceases to be the Servicer, Worthington, shall (and shall cause each Originator to), at its expense, (i) timely perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables unless the failure to so perform or comply does not involve a material portion of such Receivables, and the Seller shall have complied with its obligations with respect to such Receivables set forth in SECTION 1.4(e), and (ii) timely comply in all material respects with the applicable Credit and Collection Policies with regard to each Receivable.
(d) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the Agreement, the Servicer and, to the extent that it ceases to be the Servicer, Worthington, 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.
(e) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Servicer and, to the extent that it ceases to be the Servicer, Worthington, shall not make (and shall not permit any Originator to make) any change in the character of its business or 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, Worthington, 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 and each Purchaser Agent.
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(f) AUDITS. The Servicer and, to the extent that it ceases to be the
Servicer, Worthington, shall (and shall cause each Originator to), from time to
time during regular business hours, but no more frequently than annual unless
(x) a Termination Event or Unmatured Termination Event has occurred and is
continuing or (y) in the opinion of the Administrator (with the consent or at
the direction of the Majority Purchasers) reasonable grounds for insecurity
exist with respect to the collectibility of a material portion of the Pool
Receivables or with respect to the Servicer's performance or ability to perform
in any material respect its obligations under the Agreement, as reasonably
requested in advance (unless a Termination Event or Unmatured Termination Event
exists) by the Administrator or a Purchaser, permit the Administrator or a
Purchaser, or of the Administrator or any Purchaser agent or representative: (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 and (iii) without limiting CLAUSES (i) and (ii)
above, to engage certified public accountants or other auditors acceptable to
the Servicer and the Administrator to conduct, at the Servicer's expense, a
review of the Servicer's books and records with respect to such Receivables.
(g) 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, Worthington, 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 and the Majority Purchasers 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. Notwithstanding anything contained in this PARAGRAPH (g) to the contrary, the Servicer may add a Permitted Lock-Box Bank as a Lock-Box Bank upon the consent of the Administrator and the Majority Purchasers, which consent shall not be unreasonably withheld.
(h) DEPOSITS TO LOCK-BOX ACCOUNTS. The Servicer shall: (i) deposit, or cause to be deposited, any Collections received by it into Lock-Box Accounts not later than one Business Day after receipt thereof, and (ii) 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). Except as otherwise agreed to in writing by the Administrator and the Majority Purchasers or as provided in SECTION 4.3, 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
IV-7
deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections.
(i) REPORTING REQUIREMENTS. Worthington shall provide to the Administrator (in multiple copies, if requested by the Administrator) and each Purchaser Agent the following:
(i) as soon as available and in any event within 45 days after the end of the first three quarters of each fiscal year of Worthington, balance sheets of Worthington and its consolidated Subsidiaries and of Seller as of the end of such quarter and statements of income, retained earnings and cash flow of Worthington 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;
(ii) as soon as available and in any event within 90 days after the end of each fiscal year of Worthington and of Seller, a copy of the annual report for such year for Worthington and its consolidated Subsidiaries, containing financial statements for such year audited by independent certified public accountants of nationally recognized standing;
(iii) as to the Servicer only, as soon as available and in any event not later than two Business Days prior to the Settlement Date, an Information Package as of the last day of such month or, within 10 Business Days of a request by the Administrator or any Purchaser Agent, an Information Package for such periods as is specified by the Administrator or such Purchaser Agent (including on a semi-monthly, weekly or daily basis);
(iv) 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 Worthington 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;
(v) promptly after the sending or filing thereof, copies of all reports that Worthington sends to any of its security holders, and copies of all reports and registration statements that Worthington 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;
(vi) promptly after the filing or receiving thereof, copies of all reports and notices that Worthington 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 Affiliates receives from any
IV-8
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 a material liability on Worthington and/or
any such Affiliate;
(vii) at least thirty days before any change in Worthington'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;
(viii) promptly after Worthington obtains knowledge thereof, notice of any: (A) litigation, investigation or proceeding that may exist at any time between Worthington or any of its Subsidiaries and any Governmental Authority that, if not cured or if adversely determined, as the case may be, would reasonably be expected to result in a Material Adverse Effect; (B) litigation or proceeding adversely affecting such Person or any of its Subsidiaries in which the amount involved is more than $2,000,000 and not covered by insurance or in which injunctive or similar relief is sought and which would reasonably be expected to result in a Material Adverse Effect; or (C) litigation or proceeding relating to any Transaction Document;
(ix) promptly after the occurrence thereof, notice of a Material Adverse Effect in the business, operations, property or financial or other condition of the Servicer, the Seller or Worthington Industries, Inc. on a consolidated basis;
(x) promptly after the occurrence thereof, notice of any downgrade of Worthington;
(xi) such other information respecting the Receivables or the condition or operations, financial or otherwise, of Worthington or any of its Affiliates as the Administrator or any Purchaser Agent may from time to time reasonably request; and
(xii) promptly after the occurrence thereof, notice of any material acquisition or investment by Worthington of or in any Person, business or operation.
3. SEPARATE EXISTENCE. Each of the Seller and Worthington hereby acknowledges that the Purchasers, the Purchaser Agents, the Administrator and the Liquidity Providers 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 Worthington and its Affiliates. Therefore, from and after the date hereof, each of the Seller and Worthington 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 Worthington and any other
IV-9
Person, and is not a division of Worthington, 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 Worthington 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 Worthington 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, Worthington 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 to the Agreement. The Seller will not incur any material indirect or overhead expenses for items shared with Worthington (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 Worthington shall pay all expenses
IV-10
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 Worthington or any other Affiliate thereof;
(h) All of the Seller's business correspondence and other communications shall be conducted in the Seller's own name and on its own separate stationery;
(i) The Seller's books and records will be maintained separately from those of Worthington and any other Affiliate thereof;
(j) All financial statements of Worthington 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 Worthington, 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 Worthington or any Affiliate thereof;
(l) The Seller will strictly observe corporate formalities in its dealings with Worthington or any Affiliate thereof, and funds or other assets of the Seller will not be commingled with those of Worthington 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 Worthington or any Affiliate thereof (other than Worthington 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 Worthington or any Subsidiary or other Affiliate of Worthington. 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 Worthington (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 Worthington 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 Worthington 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.
(n) Worthington shall not pay the salaries of Seller's employees, if any.
IV-11
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "TERMINATION EVENT":
(a) (i) the Seller, Worthington, any Originator or the Servicer shall fail to perform or observe any term, covenant or agreement under the Agreement or any other Transaction Document and, except as otherwise provided herein, such failure shall continue for more than five Business 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 one Business Day or (iii) Worthington shall resign as Servicer, and no successor Servicer reasonably satisfactory to the Administrator and the Majority Purchasers shall have been appointed;
(b) Worthington (or any Affiliate thereof) shall fail to transfer to any successor Servicer when required any rights pursuant to the Agreement that Worthington (or such Affiliate) then has as Servicer;
(c) any representation or warranty made or deemed made by the Seller, Worthington 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, Worthington 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; PROVIDED HOWEVER, that if the representation and warranty contained in SECTIONS 1(g), 1(n) or 1(v) of EXHIBIT III shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered, such breach shall not constitute a Termination Event if the Seller shall have complied with its obligations with respect to such Receivable set forth in SECTION 1.4(e);
(d) the Seller or the Servicer shall fail to deliver the Information Package pursuant to the Agreement, and such failure shall remain unremedied for two Business Days;
(e) 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 Administrator (for the benefit of the Purchasers) 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;
(f) the Seller, Worthington 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, Worthington 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, Worthington or any Originator shall take any organizational action to authorize any of the actions set forth above in this paragraph;
(g) (i) (A) the Default Ratio shall exceed 1.50%, or (B) the Delinquency Ratio shall exceed 5.50% or (ii) the average for three consecutive calendar months of (A) the Default Ratio shall exceed 1.00%, (B) the Delinquency Ratio shall exceed 4.50%, or (C) the Dilution Ratio shall exceed 2.50%;
(h) a Change in Control shall occur with respect to Seller, any Originator or Worthington;
(i) at any time (i) the sum of (A) the Aggregate Investment plus (B) the Total Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus (B) the Purchasers' Share of the amount of Collections then on deposit in the Lock-Box Accounts (other than amounts set aside therein representing Discount and Fees), and such circumstance shall not have been cured within two Business Days;
(j) (i) Worthington 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 $5,000,000 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 (ii) 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 file a notice of lien asserting a claim
or claims of $250,000 or more in the aggregate pursuant to the Internal Revenue
Code with regard to any of the assets of Seller, any Originator, Worthington 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, Worthington 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, Worthington 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;
(l) one or more final judgments for the payment of money shall be entered against the Seller or (ii) one or more final judgments for the payment of money in an amount in excess of $20,000,000, individually or in the aggregate, shall be entered against the Servicer on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for sixty (60) consecutive days without a stay of execution;
(m) the "Purchase and Sale Termination Date" under and as defined in the Sale Agreement shall occur under the Sale Agreement or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to the Seller under the Sale Agreement; or
(n) Moody's or Standard & Poor's shall request any amendment, supplement or other modification of the Agreement or any other Transaction Document which is not made within 10 Business Days after the applicable Purchaser Agent has provided notice thereof to the parties hereto.
SCHEDULE I
CREDIT AND COLLECTION POLICY
Schedule I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank Lock-Box Account ------------- -------- ------- Bank of America, N.A. 99050 8188-3-03227 Bank One, Columbus 710969 630778041 711713 Bank One, Michigan 77301 6734-23 78254 771033 Wachovia Bank, N.A. 75188 1860-146125 75333 75864 751052 751617 |
Schedule II-1
SCHEDULE III
TRADE NAMES
Organizational Name Trade Names / Fictitious Names ------------------- ------------------------------ Worthington Receivables Corporation None |
Schedule III-1
SCHEDULE IV
SETTLEMENT DATES
Settlement Date Information Package (18th Business Day) due dates (16th Business Day) 12/27/2000 12/22/2000 01/26/2001 01/24/2001 02/27/2001 02/23/2001 03/26/2001 03/22/2001 04/25/2001 04/23/2001 05/24/2001 05/22/2001 06/26/2001 06/22/2001 07/26/2001 07/24/2001 08/24/2001 08/22/2001 09/27/2001 09/25/2001 10/25/2001 10/23/2001 11/28/2001 11/26/2001 |
Schedule IV-1
ANNEX A
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF INFORMATION PACKAGE
Annex A-1
ANNEX B
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF PURCHASE NOTICE
Annex B-1
ANNEX C
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF ASSUMPTION AGREEMENT
Annex C-1
ANNEX D
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF TRANSFER SUPPLEMENT
Annex D-1
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 SCHEDULE IV Settlement Dates ANNEX A Form of Information Package ANNEX B Form of Purchase Notice ANNEX C Form of Assumption Agreement ANNEX D Form of Transfer Supplement Annex D-2 |
TABLE OF CONTENTS
PAGE ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES.........................................................1 Section 1.1. Purchase Facility.................................................................1 Section 1.2. Making Purchases..................................................................2 Section 1.3. Purchased Interest Computation....................................................4 Section 1.4. Settlement Procedures.............................................................4 Section 1.5. Fees..............................................................................9 Section 1.6. Payments and Computations, Etc....................................................9 Section 1.7. Increased Costs..................................................................10 Section 1.8. Requirements of Law..............................................................11 Section 1.9. Inability to Determine Euro-Rate.................................................12 Section 1.10. Extension of Termination Date....................................................13 ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS.............................13 Section 2.1. Representations and Warranties; Covenants........................................13 Section 2.2. Termination Events...............................................................13 ARTICLE III INDEMNIFICATION...........................................................................14 Section 3.1. Indemnities by the Seller........................................................14 Section 3.2. Indemnities by the Servicer......................................................16 ARTICLE IV ADMINISTRATION AND COLLECTIONS............................................................16 Section 4.1. Appointment of the Servicer......................................................16 Section 4.2. Duties of the Servicer...........................................................17 Section 4.3. Lock-Box Account Arrangements....................................................18 Section 4.4. Enforcement Rights...............................................................19 Section 4.5. Responsibilities of the Seller...................................................20 Section 4.6. Servicing Fee....................................................................20 ARTICLE V THE AGENTS................................................................................21 Section 5.1. Appointment and Authorization....................................................21 Section 5.2. Delegation of Duties.............................................................22 Section 5.3. Exculpatory Provisions...........................................................22 Section 5.4. Reliance by Agents...............................................................22 Section 5.5. Notice of Termination Events.....................................................23 |
TABLE OF CONTENTS
(continued)
PAGE Section 5.6. Non-Reliance on Administrator, Purchaser Agents and Other Purchasers.............23 Section 5.7. Administrators and Affiliates....................................................24 Section 5.8. Indemnification..................................................................24 Section 5.9. Successor Administrator..........................................................25 ARTICLE VI MISCELLANEOUS.............................................................................25 Section 6.1. Amendments, Etc..................................................................25 Section 6.2. Notices, Etc.....................................................................26 Section 6.3. Successors and Assigns; Participations; Assignments..............................26 Section 6.4. Costs, Expenses and Taxes........................................................28 Section 6.5. No Proceedings; Limitation on Payments...........................................28 Section 6.6. GOVERNING LAW AND JURISDICTION...................................................29 Section 6.7. Execution in Counterparts........................................................29 Section 6.8. Survival of Termination..........................................................29 Section 6.9. WAIVER OF JURY TRIAL.............................................................30 Section 6.10. Sharing of Recoveries............................................................30 Section 6.11. Right of Setoff..................................................................30 Section 6.12. Entire Agreement.................................................................30 Section 6.13. Headings.........................................................................31 Section 6.14. Purchaser Groups' Liabilities....................................................31 |
Exhibit-10(h)(ii)
AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT (this
"AMENDMENT") dated as of May 18, 2001, is entered into among WORTHINGTON
RECEIVABLES CORPORATION (the "SELLER"), WORTHINGTON INDUSTRIES, INC. (the
"SERVICER"), THE MEMBERS OF THE VARIOUS PURCHASER GROUPS FROM TIME TO TIME PARTY
THERETO (the "PURCHASER GROUPS"), and PNC BANK, NATIONAL ASSOCIATION, as
Administrator (the "ADMINISTRATOR").
RECITALS
The Seller, the Servicer, the Purchaser Groups and Administrator are parties to the Receivables Purchase Agreement dated as of November 30, 2000 (the "AGREEMENT"); and
The parties hereto desire to amend the Agreement as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINED TERMS. Capitalized terms that are used herein without definition and that are defined in EXHIBIT I to the Agreement shall have the same meanings herein as therein defined.
2. AMENDMENTS TO AGREEMENT.
2.1 SECTION 1.2(a) of the Agreement is hereby amended by replacing the amount "$3,000,000" with the following: "$1,000,000 or such lesser amount as may be consented to by the Administrator" therein.
2.2 EXHIBIT I of the Agreement is hereby amended by adding the following definition, as alphabetically appropriate:
"SPECIFICALLY RESERVED DILUTION AMOUNT' means, for any calendar month, the sum of the amounts reserved in the balance sheet of each Originator for volume rebates."
2.3 The definition of "Dilution Reserve Percentage" set forth in EXHIBIT I to the Agreement is hereby amended in its entirety as follows:
"DILUTION RESERVE PERCENTAGE" means, on any date, the greater of (a) 7.0%, or (b) the percentage determined by the following formula:
[[(2.0 x ED) + ((DS-ED) x DS/ED))] x DHR] + (0.50% x CS)
ED = the "Expected Dilution," which shall be equal to the 12-month rolling average Dilution Ratio, expressed as a percentage;
DS = the "Dilution Spike," which shall be equal to the highest one month Dilution Ratio over the immediately preceding 12 months, expressed as a percentage; and CS = the aggregate credit sales made by the Originators during the most recent calendar month divided by the Net Receivables Pool Balance for such calendar month. DHR = the "Dilution Horizon Ratio," which shall be equal to the aggregate credit sales made by the Originators during the three preceding calendar months divided by the Net Receivables Pool Balance as of the last day of the most recent calendar month. 2.4 CLAUSE (c) of the definition of "Eligible Receivable" set |
forth in EXHIBIT I to the Agreement is hereby amended by replacing the percentage "35%" with the percentage "20.0%" therein.
2.5 The definition of "Loss Reserve" set forth in EXHIBIT I to the Agreement is hereby amended in its entirety as follows:
"LOSS RESERVE' means, on any date, an amount equal to (a) the Aggregate Investment 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."
2.6 The definition of "Loss Reserve Percentage" set forth in EXHIBIT I to the Agreement is hereby amended in its entirety as follows:
"LOSS RESERVE PERCENTAGE' means, on any date, the greater of,
(a) 6.0% and (b) the product of (i) 2 TIMES (ii) the highest average of
the Default Ratios for any three consecutive calendar months during the
twelve most recent calendar months MULTIPLIED by (iii) (1) (A) at all
times during which the Current Days' Sales Outstanding is less than or
equal to 40, the aggregate credit sales made by the Originators during
the five most recent calendar months, and (B) at all other times, the
aggregate credit sales made by the Originators during the six most
recent calendar months DIVIDED by (2) the Net Receivables Pool Balance
as of such date."
2.7 The definition of "Net Receivables Pool Balance" set forth in EXHIBIT I to the Agreement is hereby amended to add the following at end thereof:
"minus (c) the Specifically Reserved Dilution Amount."
2.8 The definition of "Purchaser Limit" set forth in EXHIBIT I to the Agreement is hereby amended by replacing the amount "$120,000,000" with the amount "$190,000,000" therein.
2.9 PARAGRAPH (i) of SECTION 1 of EXHIBIT III to the Agreement is hereby amended in it entirety as follows:
"(i) The Seller has filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books."
2.10 SECTION 2 of EXHIBIT III to the Agreement is hereby amended to add the following at the end thereof:
"(q) United States Federal income tax returns of Worthington and its consolidated Subsidiaries have been examined and closed through fiscal year ended May 31, 2000. Worthington and its consolidated Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by Worthington or any consolidated Subsidiary. The charges, accruals and reserves on the books of Worthington and its consolidated Subsidiaries in respect of taxes or other governmental charges are, in the opinion of Worthington, adequate."
2.11 CLAUSE (iii) of PARAGRAPH (m) of SECTION 1 of EXHIBIT IV to the Agreement is hereby amended by replacing the amount "$10,000,000" with the amount "$16,000,000" therein.
2.12 PARAGRAPH (p) of SECTION 1 of EXHIBIT IV to the Agreement is hereby amended by replacing the amount "$10,000,000" with the amount "$16,000,000" therein.
2.13 CLAUSE (i)(B) of PARAGRAPH (g) of EXHIBIT V to the Agreement is hereby amended by replacing the percentage "5.50%" with the percentage "8.00%" therein.
2.14 CLAUSE (ii)(A) of PARAGRAPH (g) of EXHIBIT V to the Agreement is hereby amended by replacing the percentage "1.00%" with the percentage "1.25%" therein.
2.15 CLAUSE (ii)(B) of PARAGRAPH (g) of EXHIBIT V to the Agreement is hereby amended by replacing the percentage "4.50%" with the percentage "7.00%" therein.
2.16 SCHEDULE II to the Agreement is hereby amended to add the following:
"Lock-box Bank Lock-Box Account -------------- -------- ------- Mellon Bank, N.A. 40087 1930736 360943 National City Bank 510 840819190 Wachovia Bank, N.A. 751621 8739069463" |
3. REPRESENTATIONS AND WARRANTIES. The Seller hereby represents and warrants to the Administrator and each member of the various Purchaser Groups from time to time party thereto as follows:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Exhibit III of the Agreement are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).
(b) ENFORCEABILITY. The execution and delivery by each of the Seller and the Servicer of this Amendment, and the performance of each of its obligations under this Amendment and the Agreement, as amended hereby, are within each of its corporate powers and have been duly authorized by all necessary corporate action on each of its parts. This Amendment and the Agreement, as amended hereby, are each of the Seller's and the Servicer's valid and legally binding obligations, enforceable in accordance with its terms.
(c) NO DEFAULT. Both before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Termination Event or Unmatured Termination Event exists or shall exist.
4. EFFECT OF AMENDMENT. All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to "this Agreement", "hereof", "herein" or words of similar effect referring to the Agreement shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Agreement other than as set forth herein.
5. EFFECTIVENESS. This Amendment shall become effective as of the date hereof upon receipt by the Administrator of counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the other parties hereto, in form and substance satisfactory to the Administrator in its sole discretion.
6. COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.
7. GOVERNING LAW. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York (without regard to any otherwise applicable principles of conflicts of law).
8. SECTION HEADINGS. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.
WORTHINGTON RECEIVABLES
CORPORATION, as Seller
By /s/ John T. Baldwin --------------------------------------------------- Name: John T. Baldwin ---------------------------------------------- Title: Vice President --------------------------------------------- |
WORTHINGTON INDUSTRIES, INC.,
as Servicer
By /s/ John T. Baldwin --------------------------------------------------- Name: John T. Baldwin ---------------------------------------------- Title: Vice President and Chief Financial Officer --------------------------------------------- |
MARKET STREET FUNDING CORPORATION,
as a Purchaser
By /s/ Evelyn Echevarria --------------------------------------------------- Name: Evelyn Echevarria ---------------------------------------------- Title: Vice President --------------------------------------------- |
PNC BANK, NATIONAL ASSOCIATION,
as Administrator and as a Purchaser Agent
By: /s/ John T. Smathers -------------------------------------------------- Name: John T. Smathers ---------------------------------------------- Title: Vice President --------------------------------------------- |
Exhibit-10(h)(iii)
PURCHASE AND SALE AGREEMENT
Dated as of November 30, 2000
between
VARIOUS ENTITIES LISTED ON SCHEDULE I,
as the Originators
and
WORTHINGTON RECEIVABLES CORPORATION
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT"), dated as of November 30, 2000, is entered into between VARIOUS ENTITIES LISTED ON SCHEDULE I (each, an "Originator"; and collectively, "ORIGINATORS"), and WORTHINGTON RECEIVABLES CORPORATION, a Delaware corporation (the "COMPANY").
DEFINITIONS
Unless otherwise indicated herein, capitalized terms used in this Agreement are defined in Exhibit A to the Receivables Purchase Agreement of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the "RECEIVABLES PURCHASE AGREEMENT") among the Company, as the Seller; Worthington Industries, Inc. (individually, "WORTHINGTON"), as the initial Servicer; Market Street Funding Corporation, and the members of the various other Purchaser Groups from time to time a party thereto; and PNC Bank, National Association, as the Administrator. All references herein to months are to calendar months unless otherwise expressly indicated.
1. The Company is a special purpose corporation, all of the issued and outstanding shares of which are owned by The Worthington Steel Company, an Ohio corporation;
2. The Originators generate Receivables in the ordinary course of their businesses;
3. The Originators, in order to finance their respective businesses, wish to sell Receivables to the Company, and the Company is willing to purchase Receivables from the Originators, on the terms and subject to the conditions set forth herein;
4. The Originators and the Company intend this transaction to be a true sale of Receivables by each Originator to the Company, providing the Company with the full benefits of ownership of the Receivables, and the Originators and the Company do not intend the transactions hereunder to be characterized as a loan from the Company to any Originator;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the conditions set forth in this Agreement, each Originator, severally and for itself, agrees to sell to the Company, and the Company agrees to purchase from such Originator, from time to time on or after the Closing Date, but before the Purchase and Sale Termination Date, all of such Originator's right, title and interest in and to:
(a) each Receivable of such Originator that existed and was owing to such Originator at the closing of such Originator's business on October 31, 2000 (the "Cut-off Date") other than Receivables contributed pursuant to SECTION 1.6 (the "Contributed Receivables");
(b) each Receivable generated by such Originator from and including the Cut-off Date to and including the Purchase and Sale Termination Date;
(c) all rights to, but not the obligations of such Originator under all Related Security;
(d) all monies due or to become due to such Originator with respect to any of the foregoing;
(e) all books and records of such Originator related to any of the foregoing, and all Transaction Documents to which such Originator is a party, together with all rights (but not obligations) of such Originator thereunder; and
(f) all collections and other proceeds and products of any of the foregoing (as defined in the applicable UCC) that are or were received by such Originator on or after the Cut-off Date, including, without limitation, all funds which either are received by such Originator, the Company or the Servicer from or on behalf of the Obligors in payment of any amounts owed (including, without limitation, invoice price, finance charges, interest and all other charges) in respect of Receivables, or are applied to such, amounts owed by the Obligors (including, without limitation, any insurance payments that such Originator or the Servicer applies in the ordinary course of its business to amounts owed in respect of any Receivable, and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligors in respect of Receivables or any other parties directly or indirectly liable for payment of such Receivables).
All purchases and contributions hereunder shall be made without recourse, but shall be made pursuant to, and in reliance upon, the representations, warranties and covenants of the Originators set forth in this Agreement and each other Transaction Document. No obligation or liability to any Obligor on any Receivable is intended to be assumed by the Company hereunder, and any such assumption is expressly disclaimed. The Company's foregoing commitment to purchase Receivables and the proceeds and rights described in CLAUSES (c) through (f) (collectively, the "RELATED RIGHTS") is herein called the "PURCHASE FACILITY."
SECTION 1.2 TIMING OF PURCHASES.
(a) CLOSING DATE PURCHASES. Each Originator's entire right, title and in (i) each Receivable that existed and was owing to such Originator at the Cut-off Date (other than Contributed Receivables), (ii) all Receivables created by such Originator from and including the Cut-off Date, to and including the Closing Date (other than Contributed Receivables), and (iii) all Related Rights with respect thereto automatically shall be deemed to have been sold by such Originator to the Company on the Closing Date.
(b) SUBSEQUENT PURCHASES. After the Closing Date, until the Purchase and Sale Termination Date, each Receivable and the Related Rights generated by each Originator shall be deemed to have been sold by such Originator to the Company immediately (and without further action) upon the creation of such Receivable.
SECTION 1.3 CONSIDERATION FOR PURCHASES. On the terms and subject to the conditions set forth in this Agreement, the Company agrees to make Purchase Price payments to the Originators in accordance with Article III and to reflect all contributions in accordance with SECTION 1.6.
SECTION 1.4 PURCHASE AND SALE TERMINATION DATE. The "Purchase and Sale Termination Date" shall be the earliest to occur of (a) the date the Purchase Facility is terminated pursuant to SECTION 8.2 and (b) the Payment Date immediately following the day on which Originators shall have given written notice to the Company at or prior to 10:00 a.m. (New York City time) that the Originators desire to terminate this Agreement.
SECTION 1.5 INTENTION OF THE PARTIES. It is the express intent of the parties hereto that the transfers of the Receivables and Related Rights by the Originators to the Company, as contemplated by this Agreement be, shall be treated as sales or contributions, as applicable (without recourse except as provided herein), of all of the Originators' right, title and interest in, to and under the Receivables or the Contributed Receivables, as applicable, and Related Rights, and not as loans secured by the Receivables and Related Rights. If, however, notwithstanding the intent of the parties, such transactions are deemed to be loans, each Originator hereby grants to the Company a first priority security interest in all of such Originator's right, title and interest in and to: (i) the Receivables and the Related Rights now existing and hereafter created by such Originator, (ii) the related Company Note; (iii) all monies due or to become due and all amounts received with respect thereto, (iv) all books and records of such Originator related to any of the foregoing, and all Transaction Documents to which such Originator is a party, together with all rights (but not obligations) of such Originator thereunder; and (v) all proceeds and products of any of the foregoing to secure all of such Originator's obligations hereunder.
SECTION 1.6 CONTRIBUTION OF RECEIVABLES. On the Closing Date, The Worthington Steel Company, an Ohio corporation shall, and hereby does, contribute to the capital of the Company Receivables and Related Rights consisting of each Receivable of The Worthington Steel Company, an Ohio corporation that existed and was owing to The Worthington Steel Company, an Ohio corporation on the Closing Date beginning with the oldest of such Receivables and continuing chronologically thereafter such that the aggregate Outstanding Balance of all such Contributed Receivables shall be equal to $10,000,000.
SECTION 1.7 ADDITIONAL ORIGINATORS. Additional Persons may be added as Originators hereunder, with the consent of the Company and the Administrator, PROVIDED that following conditions are satisfied on or before the date of such addition:
(a) The Servicer shall have given the Administrator and the Company at least thirty days prior written notice of such proposed addition and the identity of the proposed additional Originator and shall have provided such other information with respect to such proposed additional Originator as the Administrator may reasonably request;
(b) such proposed additional Originator has executed and delivered to the Company and the Administrator an agreement substantially in the form attached hereto as EXHIBIT C (a "JOINDER AGREEMENT");
(c) such proposed additional Originator has delivered to the Company and the Administrator each of the documents with respect to such Originator described in SECTIONS 4.1 and 4.2;
(d) the receivables intended to be sold by such additional Originator to the Company hereunder shall be Receivables; and
(e) no Purchase and Sale Termination Date shall have occurred.
ARTICLE II
PURCHASE REPORT; CALCULATION OF PURCHASE PRICE
SECTION 2.1 PURCHASE REPORT. On the Closing Date and on each Settlement Date, the Servicer shall deliver to the Company and each Originator a report in substantially the form of EXHIBIT A (each such report being herein called a "PURCHASE REPORT") setting forth, among other things:
(a) Receivables purchased by the Company from each Originator on the Closing Date (in the case of the Purchase Report to be delivered on the Closing Date);
(b) Receivables purchased by the Company from each Originator during the period commencing on the Settlement Date immediately preceding such Settlement Date to (but not including) such Settlement Date (in the case of each subsequent Purchase Report); and
(c) the calculations of reductions of the Purchase Price for any Receivables as provided in SECTION 3.3 (a) and (b).
SECTION 2.2 CALCULATION OF PURCHASE PRICE. The "PURCHASE PRICE" to be paid to each Originator for the Receivables that are purchased hereunder from such Originator shall be determined in accordance with the following formula:
PP = OB x FMVD where: PP = Purchase Price for each Receivable as calculated on the relevant Payment Date. OB = The Outstanding Balance of such Receivable on the relevant Payment Date. FMVD = Fair Market Value Discount, as measured on such Payment Date, which is equal to the quotient (expressed as percentage) of (a) one divided by (b) the sum of (i) one, plus (ii) the product of (A) the Prime Rate on such Payment Date plus 0.25% and (B) a fraction, the numerator of which is the Turnover Rate (calculated as of the last day of the Settlement Period next preceding such Payment Date) and the denominator of which is 365. |
"Payment Date" means (i) the Closing Date and (ii) each Business Day thereafter that Originators are open for business.
"Prime Rate" means a PER ANNUM rate equal to the "Prime Rate" as published in the "Money Rates" section of The Wall Street Journal or if such information ceases to be published in The Wall Street Journal, such other publication as determined by the Administrator in its reasonable discretion.
ARTICLE III
PAYMENT OF PURCHASE PRICE
SECTION 3.1 INITIAL PURCHASE PRICE PAYMENT. On the terms and subject to the conditions set forth in this Agreement, the Company agrees to pay to each Originator the Purchase Price for the purchase to be made from such Originator on the Closing Date partially in cash (in an amount to be agreed between the Company and such Originator and set forth in the initial Purchase Report) and partially by issuing a promissory note in the form of Exhibit B to such Originator with an initial principal balance equal to the remaining Purchase Price (each such promissory note, as it may be amended, supplemented, endorsed or otherwise modified from time to time, together with all promissory notes issued from time to time in substitution therefor or renewal thereof in accordance with the Transaction Documents, each being herein called a "Company Note").
SECTION 3.2 SUBSEQUENT PURCHASE PRICE PAYMENTS. On each Payment Date subsequent to the Closing Date, on the terms and subject to the conditions set forth in this Agreement, the Company shall pay to each Originator the Purchase Price for the Receivables generated by such Originator on such Payment Date:
(a) FIRST, in cash to the extent the Company has cash available therefor; and
(b) SECOND, to the extent any portion of the Purchase Price remains unpaid, the principal amount outstanding under the applicable Company Note shall be increased by an amount equal to such remaining Purchase Price.
The Servicer shall make all appropriate record keeping entries with respect to each of the Company Notes to reflect the foregoing payments and reductions made pursuant to SECTION 3.3, and the Servicer's books and records shall constitute rebuttable presumptive evidence of the principal amount of, and accrued interest on, each of the Company Notes at any time. Furthermore, the Servicer shall hold the Company Notes for the benefit of the applicable Originator. Each Originator hereby irrevocably authorizes the Servicer to mark the Company Notes "CANCELED" and to return such Company Notes to the Company upon the final payment thereof after the occurrence of the Purchase and Sale Termination Date.
SECTION 3.3 SETTLEMENT AS TO SPECIFIC RECEIVABLES AND DILUTION.
(a) If, on the day of purchase or contribution of any Receivable from an Originator hereunder, any of the representations or warranties set forth in SECTIONS 5.4 and 5.12 are not true with respect to such Receivable or as a result of any action or inaction of such Originator, on any subsequent day, any of such representations or warranties set forth in SECTIONS 5.4 and 5.12 is no longer true with respect to such Receivable, then the Purchase Price (or in the case of a Contributed Receivable the
Outstanding Balance of such Receivable (the "Contributed Value")), with respect to such Receivable shall be reduced by an amount equal to the Outstanding Balance of such Receivable and shall be accounted to such Originator as provided in CLAUSE (c) below; PROVIDED, that if the Company thereafter receives payment on account of Collections due with respect to such Receivable, the Company promptly shall deliver such funds to such Originator.
(b) If, on any day, the Outstanding Balance of any Receivable (including any Contributed Receivable) purchased or contributed hereunder is reduced or adjusted as a result of any defective, rejected, returned goods or services, or any discount or other adjustment made by any Originator, the Company or the Servicer or any setoff or dispute between any Originator or the Servicer and an Obligor as indicated on the books of the Company (or, for periods prior to the Closing Date, the books of Originator), then the Purchase Price or Contributed Value, as the case may be, with respect to such Receivable shall be reduced by the amount of such net reduction and shall be accounted to Originator as provided in clause (c) below.
(c) Any reduction in the Purchase Price or Contributed Value of any Receivable pursuant to clause (a) or (b) above shall be applied as a credit for the account of the Company against the Purchase Price of Receivables subsequently purchased by the Company from such Originator hereunder; provided, however if there have been no purchases of Receivables from such Originator (or insufficiently large purchases of Receivables) to create a Purchase Price sufficient to so apply such credit against, the amount of such credit:
(i) shall be paid in cash to the Company by such Originator in the manner and for application as described in the following proviso, or
(ii) shall be deemed to be a payment under, and shall be deducted from the principal amount outstanding under, the Company Note payable to such Originator;
provided, further, that at any time (y) when a Termination Event or Unmatured Termination Event exists under the Receivables Purchase Agreement or (z) on or after the Purchase and Sale Termination Date, the amount of any such credit shall be paid by such Originator to the Company by deposit in immediately available funds into the relevant Lock-Box Account for application by the Servicer to the same extent as if Collections of the applicable Receivable in such amount had actually been received on such date.
SECTION 3.4 RECONVEYANCE OF RECEIVABLES. In the event that an Originator has paid to the Company the full Outstanding Balance of any Receivable pursuant to SECTION 3.3, the Company shall reconvey such Receivable to such Originator, without representation or warranty, but free and clear of all liens, security interests, charges, and encumbrances created by the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
SECTION 4.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase hereunder is subject to the condition precedent that the Servicer (on the Company's behalf) shall have received, on or before the Closing Date, the following, each (unless otherwise indicated) dated the Closing Date, and each in form and substance satisfactory to the Servicer (acting on the Company's behalf):
(a) An Originator Assignment Certificate in the form of Exhibit D from each Originator, duly completed, executed and delivered by each Originator;
(b) A copy of the resolutions of the Board of Directors of each Originator approving the Transaction Documents to be delivered by it and the transactions contemplated hereby and thereby, certified by the Secretary or Assistant Secretary of such Originator;
(c) Good standing certificates for each Originator issued as of a recent date acceptable to the Servicer by the Secretary of State of the jurisdiction of such Originator's organization and each jurisdiction where such Originator is qualified to transact business;
(d) A certificate of the Secretary or Assistant Secretary of each Originator certifying the names and true signatures of the officers authorized on such Person's behalf to sign the Transaction Documents to be delivered by it (on which certificate the Servicer and the Company may conclusively rely until such time as the Servicer shall receive from such Person a revised certificate meeting the requirements of this CLAUSE (d));
(e) The certificate or articles of incorporation or other organizational document of each Originator duly certified by the Secretary of State of the jurisdiction of such Originator's organization as of a recent date, together with a copy of the by-laws of such Originator, each duly certified by the Secretary or an Assistant Secretary of such Originator;
(f) Originals of the proper financing statements (Form UCC-1) that have been duly executed and name each Originator as the debtor/seller and the Company as the secured party/purchaser (and the Administrator, as assignee of the Company) of the Receivables generated by such Originator as may be necessary or, in the Servicer's or the Administrator's opinion, desirable under the UCC of all appropriate jurisdictions to perfect the Company's ownership interest in all Receivables and such other rights, accounts, instruments and moneys (including, without limitation, Related Security) in which an ownership or security interest may be assigned to it hereunder;
(g) A written search report from a Person satisfactory to the Servicer listing all effective financing statements that name the Originators as debtors or sellers and that are filed in the jurisdictions in which filings were made pursuant to the foregoing CLAUSE (f), together with copies of such financing statements (none of which, except for those described in the foregoing CLAUSE (F), shall cover any Receivable or any Related Rights which are to be sold to the Company hereunder), and tax and judgment lien search reports from a Person satisfactory to the Servicer showing no evidence of such liens filed against any Originator;
(h) A favorable opinion of Jones, Day, Reavis & Pogue, counsel to the Originators, in form and substance satisfactory to the Servicer and the Administrator;
(i) A Company Note in favor of each Originator, duly executed by the Company; and
(j) A certificate from an officer of each Originator to the effect that the Servicer and such Originator have placed on the most recent, and have taken all steps reasonably necessary to ensure that there shall be placed on each subsequent, data processing report that it
generates which are of the type that a proposed purchaser or lender would use to evaluate the Receivables, the following legend (or the substantive equivalent thereof): "THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF NOVEMBER 30, 2000, AS THE SAME MAY FROM TO TIME TO TIME BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED, BETWEEN CERTAIN ENTITIES LISTED ON SCHEDULE I THERETO, AS ORIGINATORS, AND WORTHINGTON RECEIVABLES CORPORATION, AS PURCHASER, AND AN UNDIVIDED, FRACTIONAL OWNERSHIP INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN SOLD TO THE ADMINISTRATOR ON BEHALF OF THE PURCHASERS PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF NOVEMBER 30, 2000 AS THE SAME MAY FROM TO TIME TO TIME BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED, AMONG WORTHINGTON RECEIVABLES CORPORATION, AS SELLER, WORTHINGTON INDUSTRIES, INC., AS SERVICER, MARKET STREET FUNDING CORPORATION AND THE MEMBERS OF THE VARIOUS OTHER PURCHASER GROUPS FROM TIME TO TIME A PARTY THERETO, AND PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATOR."
SECTION 4.2 CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. Each Originator, by accepting the Purchase Price related to each purchase of Receivables generated by such Originator, shall be deemed to have certified that the representations and warranties contained in Article V are true and correct on and as of such day, with the same effect as though made on and as of such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
In order to induce the Company to enter into this Agreement and to make purchases hereunder, each Originator hereby makes, with respect to itself, the representations and warranties set forth in this ARTICLE V.
SECTION 5.1 ORGANIZATION AND GOOD STANDING. Such Originator has been duly incorporated or formed and is validly existing as a corporation, limited liability company or partnership, as applicable, in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted.
SECTION 5.2 DUE QUALIFICATION. Such Originator is located and is qualified to transact business as a foreign corporation, limited liability company or partnership, as applicable, in good standing in all jurisdictions in which (a) the ownership or lease of its property or the conduct of its business requires such licensing or qualification and (b) the failure to be so licensed or qualified would be reasonably likely to have a Material Adverse Effect.
SECTION 5.3 POWER AND AUTHORITY; DUE AUTHORIZATION. Such Originator has
(a) all necessary power, authority and legal right (i) to execute and deliver,
and perform its obligations under, each Transaction Document to which it is a
party and (ii) to generate, own, sell, contribute and assign Receivables on the
terms and subject to the conditions herein and therein provided;
and (b) duly authorized such execution and delivery and such sale, contribution and assignment and the performance of such obligations by all necessary corporate action.
SECTION 5.4 VALID SALE; BINDING OBLIGATIONS. Each sale or contribution, as the case may be, of Receivables made by such Originator pursuant to this Agreement shall constitute a valid sale or contribution, as the case may be, transfer, and assignment of Receivables to the Company, enforceable against creditors of, and purchasers from, such Originator; and this Agreement constitutes, and each other Transaction Document to be signed by such Originator, when duly executed and delivered, will constitute, a legal, valid, and binding obligation of such Originator, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
SECTION 5.5 NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the other Transaction Documents, and the fulfillment of the terms hereof or thereof, will not (a) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under (i) such Originator's certificate or articles of incorporation or bylaws, limited partnership agreements, articles of organization or limited liability company agreements, as applicable or (ii) any material indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument to which it is a party or by which it is bound, (b) result in the creation or imposition of any Adverse Claim upon any of its properties pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument, other than the Transaction Documents, or (c) violate any law or any order, rule or regulation applicable to it of any court or of any state or foreign regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over it or any of its properties.
SECTION 5.6 PROCEEDINGS. Except as set forth in SCHEDULE 5.6, there is no action, suit, proceeding or investigation pending before any court, regulatory body, arbitrator, administrative agency, or other tribunal or governmental instrumentality (a) asserting the invalidity of any Transaction Document, (b) seeking to prevent such Originator from transferring any Receivable hereunder (or in the case such transfer does not constitute a sale under any applicable law, from granting or maintaining the security interest in any Receivable) to the Purchaser or the consummation of any of the transactions contemplated by any Transaction Document or (c) seeking any determination or ruling that is reasonably likely to have a Material Adverse Effect. SECTION 5.7 BULK SALES ACTS. No transaction contemplated hereby requires compliance with, or will be subject to avoidance under, any bulk sales act or similar law.
SECTION 5.8 GOVERNMENT APPROVALS. Except for the filing of the UCC financing statements referred to in ARTICLE IV, all of which, at the time required in ARTICLE IV, shall have been duly made and shall be in full force and effect, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for Originator's due execution, delivery and performance of any Transaction Document to which it is a party.
SECTION 5.9 FINANCIAL CONDITION.
(a) MATERIAL ADVERSE EFFECT. Since May 31, 2000, no event has occurred that has had, or is reasonably likely to have, a Material Adverse Effect.
(b) SOLVENT. On the date hereof, and on the date of each purchase hereunder (both before and after giving effect to such purchase), such Originator shall be Solvent.
SECTION 5.10 LICENSES, CONTINGENT LIABILITIES, AND LABOR CONTROVERSIES.
(a) Such Originator has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, which violation or failure to obtain would be reasonably likely to have a Material Adverse Effect.
(b) There are no labor controversies pending against such Originator that have had (or are reasonably likely to have) a Material Adverse Effect.
SECTION 5.11 MARGIN REGULATIONS. No use of any funds acquired by any Originator under this Agreement will conflict with or contravene any of Regulations, T, U and X promulgated by the Federal Reserve Board from time to time.
SECTION 5.12 QUALITY OF TITLE.
(a) Each Receivable of such Originator (together with the Related Rights with respect to such Receivable) which is to be sold to the Company hereunder is or shall be owned by such Originator, free and clear of any Adverse Claim, except as provided herein and in the Receivables Purchase Agreement. Whenever the Company makes a purchase or accepts a contribution hereunder, it shall have acquired and shall continue to have maintained a valid and perfected ownership interest (free and clear of any Adverse Claim) in all Receivables generated by such Originator and all Collections related thereto, and in Originator's entire right, title and interest in and to the Related Rights with respect thereto.
(b) No effective financing statement or other instrument similar in effect covering any Receivable generated by such Originator or any Related Rights is on file in any recording office except such as may be filed in favor of the Company or the Originators, as the case may be, in accordance with this Agreement or in favor of the Administrator, on behalf of the Purchasers in accordance with the Receivables Purchase Agreement.
(c) Unless otherwise identified to the Company on the date of the purchase or contribution hereunder, each Receivable purchased hereunder is on the date of purchase or contribution an Eligible Receivable.
SECTION 5.13 ACCURACY OF INFORMATION. All factual written information heretofore or contemporaneously furnished (and prepared) by such Originator to the Company or the Administrator for purposes of or in connection with any Transaction Document or any transaction contemplated hereby or thereby is, and all other such factual written information hereafter furnished (and prepared) by such Originator to the Company or the Administrator
pursuant to or in connection with any Transaction Document will be, true and accurate in all material respects on the date as of which such information is dated or certified.
SECTION 5.14 [RESERVED].
SECTION 5.15 TRADE NAMES. Such Originator does not use any trade name
other than its actual corporate name and the trade names set forth in SCHEDULE
5.15 (which trade names are the trade names that such Originator sets forth on
such Originator's invoice to Obligors). From and after the date that fell five
(5) years before the date hereof, except as set forth in SCHEDULE 5.15, such
Originator has not been known by any legal name other than its corporate name as
of the date hereof, nor has such Originator been the subject of any merger or
other corporate reorganization.
SECTION 5.16 TAXES. Such Originator has filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.
SECTION 5.17 COMPLIANCE WITH APPLICABLE LAWS. Such Originator is in compliance with the requirements of all applicable laws, rules, regulations and orders of all governmental authorities, a breach of any of which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect.
SECTION 5.18 RELIANCE ON SEPARATE LEGAL IDENTITY. Such Originator acknowledges that the Purchasers, the Purchaser Agents and the Administrator are entering into the Receivables Purchase Agreement in reliance upon the Company's identity as a legal entity separate from such Originator.
SECTION 5.19 INVESTMENT COMPANY. Such Originator 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, such Originator 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.
ARTICLE VI
COVENANTS OF THE ORIGINATORS
SECTION 6.1 AFFIRMATIVE COVENANTS. From the date hereof until the first day following the Purchase and Sale Termination Date, each Originator will, unless the Administrator and the Company shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders with respect to the Receivables generated by it and the Contracts and other agreements related thereto except where the failure to so comply would not materially and adversely affect the collectibility of such Receivables or the rights of the Company hereunder.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its existence as a corporation, partnership or limited liability company, as applicable, and all rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation, partnership or limited liability company, as applicable, in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would be reasonably likely to have a Material Adverse Effect.
(c) RECEIVABLES REVIEWS. (i) At any time and from time to time
during regular business hours, and upon reasonable prior notice, permit the
Company or the Administrator, or their respective agents or representatives, (A)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in
possession or under the control of each Originator relating to Receivables,
including, without limitation, the related Contracts and purchase orders and
other agreements related thereto, and (B) to visit the offices and properties of
such Originator for the purpose of examining such materials described in clause
(i)(A) next above and to discuss matters relating to Receivables originated by
it or the performance hereunder with any of the officers or employees of each
Originator having knowledge of such matters, and (ii) without limiting the
foregoing clause (i) above, from time to time on reasonable request of the
Administrator, permit certified public accountants or other auditors acceptable
to the Company and Administrator to conduct, at the Company's expense, a review
of such Originator's books and records with respect to such Receivables.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and implement administrative and operating procedures (including, without limitation, an ability to re-create records evidencing Receivables it generates in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of such Receivables (including, without limitation, records adequate to permit the daily identification of each new Receivable and all Collections of and adjustments to each existing Receivable).
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. Timely perform and comply, in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts and all other agreements related to the Receivables that it generates unless the failure to so perform or comply does not involve a material portion of such Receivables, and such Originator of such Receivables shall have complied with its obligations with respect to such Receivables set forth in SECTION 3.3.
(f) [RESERVED].
(g) CREDIT AND COLLECTION POLICIES. Comply in all material respects with its Credit and Collection Policy in connection with the Receivables that it generates.
(h) POST OFFICE BOXES. On or prior to the date hereof, deliver to the Servicer (on behalf of the Company) a certificate from an authorized officer of such Originator to the effect that (i) the name of the renter of all post office boxes into which Collections may from time to time be mailed have been changed to the name of the Company (unless such post office boxes are in the name of the relevant Lock-Box Banks) and (ii) all relevant postmasters have
been notified that each of the Servicer and the Administrator are authorized to collect mail delivered to such post office boxes (unless such post office boxes are in the name of the relevant Lock-Box Banks).
(i) TRANSACTION DOCUMENTS. Comply in all material respects with the Transaction Documents to which it is a party.
SECTION 6.2 REPORTING REQUIREMENTS. From the date hereof until the first day following the Purchase and Sale Termination Date, each Originator will, unless the Servicer (on behalf of the Company) shall otherwise consent in writing, furnish to the Company and the Administrator:
(a) PURCHASE AND SALE TERMINATION EVENTS. As soon as possible after the Originator has knowledge of the occurrence of, and in any event within three Business Days after the Originator has knowledge of the occurrence of each Purchase and Sale Termination Event or each Unmatured Purchase and Sale Termination Event in respect of such Originator, the statement of the chief financial officer or chief accounting officer of such Originator describing such Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination Event and the action that such Originator proposes to take with respect thereto, in each case in reasonable detail;
(b) PROCEEDINGS. As soon as possible and in any event within three
Business Days after Originator otherwise has knowledge thereof, written notice
of (i) material litigation, investigation or proceeding of the type described in
SECTION 5.6 not previously disclosed to the Company and (ii) all material
adverse developments that have occurred with respect to any previously disclosed
litigation, proceedings and investigations; and
(c) OTHER. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables or the conditions or operations, financial or otherwise, of such Originator as the Company, the Purchasers, the Purchaser Agents or the Administrator may from time to time reasonably request in order to protect the interests of the Company, the Purchasers, the Purchaser Agents or the Administrator under or as contemplated by the Transaction Documents.
SECTION 6.3 NEGATIVE COVENANTS. From the date hereof until the date following the Purchase and Sale Termination Date, each Originator agrees that, unless the Servicer (on behalf of the Company) and the Administrator shall otherwise consent in writing, it shall not:
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in any other Transaction Document, 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 Receivable or related Contract or Related Security, or any interest therein, or any Collections thereon, or assign any right to receive income in respect thereof.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise permitted in SECTION 4.2(a) of the Receivables Purchase Agreement, extend, amend or otherwise modify the terms of any Receivable in any material respect generated by it, or amend, modify or waive, in
any material respect, any Contract related thereto (which term or condition relates to payments under, or the enforcement of, such Contract).
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make any change in the character of its business or materially alter its Credit and Collection Policy, which change or alteration would, in either case, materially adversely change the credit standing required of particular Obligors or potential Obligors or impair, in any material respect, the collectibility of the Receivables generated by it.
(d) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES OR CHATTEL PAPER. Take any action to cause or permit any Receivable after the generation thereof to become evidenced by any "instrument" or "chattel paper" (as defined in the applicable UCC).
(e) MERGERS, ACQUISITIONS, SALES, ETC. (i) Be a party to any merger or consolidation, except a merger or consolidation where such Originator is the surviving entity or is merged or consolidated with another Originator, or (ii) directly or indirectly sell, transfer, assign, convey or lease (other than to another Originator or wholly-owned Subsidiary thereof) (A) whether in one or a series of transactions, all or substantially all of its assets or (B) any Receivables or any interest therein (other than pursuant to this Agreement).
(f) LOCATION OF CHIEF EXECUTIVE OFFICES AND RECORDS. Move its principal place of business and chief executive office (as such terms are used in the UCC) and the offices where it keeps its records concerning or related to the Receivables, to an address other than the addresses set forth on SCHEDULE 6.1(f) or, upon 30 days' prior written notice to the Company and the Administrator, at such other locations in jurisdictions where all action required by SECTION 7.3 shall have been taken and completed.
SECTION 6.4 LOCK-BOX BANKS. Make any changes in its instructions to Obligors regarding Collections or add or terminate any bank as a Lock-Box Bank unless the requirements of PARAGRAPH 2(g) of EXHIBIT IV to the Receivables Purchase Agreement have been met.
SECTION 6.5 ACCOUNTING FOR PURCHASES. Account for or treat (whether in financial statements or otherwise) the transactions contemplated hereby in any manner other than as sales of the Receivables and Related Rights by such Originator to the Company.
SECTION 6.6 TRANSACTION DOCUMENTS. Enter into, execute, deliver or otherwise become bound by any agreement, instrument, document or other arrangement that restricts the right of such Originator to amend, supplement, amend and restate or otherwise modify, or to extend or renew, or to waive any right under, this Agreement or any other Transaction Document.
SECTION 6.7 SUBSTANTIVE CONSOLIDATION. Each Originator hereby acknowledges that this Agreement and the other Transaction Documents are being entered into in reliance upon the Company's identity as a legal entity separate from such Originator and its Affiliates. Therefore, from and after the date hereof, each Originator shall take all reasonable steps necessary to make it apparent to third Persons that the Company is an entity with assets and liabilities distinct from those of such Originator and any other Person, and is not a division of such Originator, 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, such Originator shall take such actions as shall be required in order that:
(a) such Originator shall not be involved in the day to day management of the Company;
(b) such Originator shall maintain separate corporate records and books of account from the Company and otherwise will observe corporate formalities and have a separate area from the Company for its business;
(c) the financial statements and books and records of such Originator shall be prepared after the date of creation of the Company to reflect and shall reflect the separate existence of the Company; PROVIDED, that the Company's assets and liabilities may be included in a consolidated financial statement issued by an affiliate of the Company; PROVIDED, HOWEVER, that any such consolidated financial statement or the notes thereto shall make clear that the Company's assets are not available to satisfy the obligations of such affiliate;
(d) except as permitted by the Receivables Purchase Agreement, (i) such Originator shall maintain its assets separately from the assets of the Company, (ii) and the Company's assets, and records relating thereto, have not been, are not, and shall not be, commingled with those of the Company;
(e) all of the Company's business correspondence and other communications shall be conducted in the Company's own name and on its own stationery;
(f) such Originator shall not act as an agent for the Company;
(g) such Originator shall not conduct any of the business of the Company in its own name;
(h) such Originator shall not pay any liabilities of the Company out of its own funds or assets;
(i) such Originator shall maintain an arm's-length relationship with the Company;
(j) such Originator shall not assume or guarantee or become obligated for the debts of the Company or hold out its credit as being available to satisfy the obligations of the Company;
(k) such Originator shall not acquire obligations of the Company;
(l) such Originator shall allocate fairly and reasonably overhead or other expenses that are properly shared with the Company, including, without limitation, shared office space;
(m) such Originator shall identify and hold itself out as a separate and distinct entity from the Company;
(n) such Originator shall correct any known misunderstanding respecting its separate identity from the Company;
(o) such Originator shall not enter into, or be a party to, any transaction with the Company, except in the ordinary course of its business and on terms which are intrinsically fair and not less favorable to it than would be obtained in a comparable arm's-length transaction with an unrelated third party; and
(p) such Originator shall not pay the salaries of the Company's employees, if any.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF RECEIVABLES
SECTION 7.1 RIGHTS OF THE COMPANY. Each Originator hereby authorizes the Company, the Servicer or their respective designees to take any and all steps in such Originator's name necessary or desirable, in their respective determination, to collect all amounts due under any and all Receivables, including, without limitation, indorsing the name of such Originator on checks and other instruments representing Collections and enforcing such Receivables and the provisions of the related Contracts that concern payment and/or enforcement of rights to payment.
SECTION 7.2 RESPONSIBILITIES OF THE ORIGINATORS. Anything herein to the contrary notwithstanding:
(a) COLLECTION PROCEDURES. Each Originator agrees to direct its respective Obligors to make payments of Receivables directly to a post office box related to the relevant Lock-Box Account at a Lock-Box Bank. Each Originator further agrees to transfer any Collections that it receives directly to the Servicer (for the Company's account) within one (1) Business Day of receipt thereof, and agrees that all such Collections shall be deemed to be received in trust for the Company and shall be maintained and segregated separate and apart from all other funds and monies of Originator until transfer of such Collections to the Servicer.
(b) Each Originator shall perform its obligations hereunder, and the exercise by the Company or its designee of its rights hereunder shall not relieve such Originator from such obligations.
(c) None of the Company, the Servicer or the Administrator shall have any obligation or liability to any Obligor or any other third Person with respect to any Receivables, Contracts related thereto or any other related agreements, nor shall the Company, the Servicer, the Purchasers, the Purchaser Agents or the Administrator be obligated to perform any of the obligations of such Originator thereunder.
(d) Each Originator hereby grants to the Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of such Originator all steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by such Originator or transmitted or
received by the Company (whether or not from such Originator) in connection with any Receivable.
SECTION 7.3 FURTHER ACTION EVIDENCING PURCHASES. Each Originator agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action that the Servicer may reasonably request in order to perfect, protect or more fully evidence the Receivables and Related Rights purchased or contributed by the Company hereunder, or to enable the Company to exercise or enforce any of its rights hereunder or under any other Transaction Document. Without limiting the generality of the foregoing, upon the request of the Servicer, such Originator will:
(a) execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate; and
(b) mark the master data processing records that evidence or list
(i) such Receivables and (ii) related Contracts with the legend set forth in
SECTION 4.1(j).
Each Originator hereby authorizes the Company or its designee to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Receivables and Related Rights now existing or hereafter generated by Originator. If any Originator fails to perform any of its agreements or obligations under this Agreement, the Company or its designee may (but shall not be required to) itself perform, or cause the performance of, such agreement or obligation, and the expenses of the Company or its designee incurred in connection therewith shall be payable by Originator as provided in SECTION 9.1.
SECTION 7.4 APPLICATION OF COLLECTIONS. Any payment by an Obligor in respect of any indebtedness owed by it to any Originator shall, except as otherwise specified by such Obligor or required by applicable law and unless otherwise instructed by the Servicer (with the prior written consent of the Administrator) or the Administrator, be applied as a Collection of any Receivable or Receivables of such Obligor to the extent of any amounts then due and payable thereunder before being applied to any other indebtedness of such Obligor.
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
SECTION 8.1 PURCHASE AND SALE TERMINATION EVENTS. Each of the following events or occurrences described in this SECTION 8.1 shall constitute a "PURCHASE AND SALE TERMINATION EVENT":
(a) A Termination Event (as defined in the Receivables Purchase Agreement) shall have occurred and, in the case of a Termination Event (other than one described in PARAGRAPH (F) of EXHIBIT V of the Receivables Purchase Agreement), the Administrator, shall have declared the Facility Termination Date to have occurred; or
(b) Any Originator shall fail to make any payment or deposit to be
made by it hereunder when due and such failure shall remain unremedied for one
(1) Business Day; or
(c) Any representation or warranty made or deemed to be made by any Originator (or any of its officers) under or in connection with this Agreement, any other Transaction Documents, or any other information or report delivered pursuant hereto or thereto shall prove to have been false or incorrect in any material respect when made or deemed made; or
(d) Any Originator shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed and such failure shall remain unremedied for 5 Business Days after written notice thereof shall have been given by the Servicer to such Originator.
SECTION 8.2 REMEDIES.
(a) OPTIONAL TERMINATION. Upon the occurrence of a Purchase and Sale Termination Event, the Company (and not the Servicer) shall have the option, by notice to the Originators (with a copy to the Administrator), to declare the Purchase Facility as terminated.
(b) REMEDIES CUMULATIVE. Upon any termination of the Purchase Facility pursuant to SECTION 8.2(a), the Company shall have, in addition to all other rights and remedies under this Agreement, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY THE ORIGINATORS. Without limiting any other rights which the Company may have hereunder or under applicable law, each Originator, severally and for itself alone hereby agrees to indemnify the Company and each of its officers, directors, employees and agents (each of the foregoing Persons being individually called a "PURCHASE AND SALE INDEMNIFIED PARTY"), forthwith on demand, from and against any and all damages, losses, claims, judgments, liabilities and related costs and expenses, including reasonable attorneys' fees and disbursements (all of the foregoing being collectively called "PURCHASE AND SALE INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of or as a result of the failure of such Originator to perform its obligations under this Agreement or any other Transaction Document, or arising out of the claims asserted against a Purchase and Sale Indemnified Party relating to the transactions contemplated herein or therein or the use of proceeds thereof or therefrom, EXCLUDING, HOWEVER, (i) Purchase and Sale Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Purchase and Sale Indemnified Party, (ii) any indemnification which has the effect of recourse for non-payment of the Receivables to any indemnitor (except as otherwise specifically provided under this SECTION 9.1) and (iii) any tax based upon or measured by net income property, or gross receipts. Without limiting the foregoing, each Originator, severally for itself alone, shall indemnify each Purchase and Sale Indemnified Party for Purchase and Sale Indemnified Amounts relating to or resulting from:
(a) the transfer by such Originator of an interest in any Receivable to any Person other than the Company;
(b) the breach of any representation or warranty made by such Originator (or any of its officers) under or in connection with this Agreement or any other Transaction Document, or any information or report delivered by Originator pursuant hereto or thereto, which shall have been false or incorrect in any material respect when made or deemed made;
(c) the failure by such Originator to comply with any applicable law, rule or regulation with respect to any Receivable generated by such Originator or the related Contract, or the nonconformity of any Receivable generated by such Originator or the related Contract with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an ownership interest in the Receivables generated by such Originator free and clear of any Adverse Claim, other than an Adverse Claim arising solely as a result of an act of the Company, the Purchaser or the Administrator whether existing at the time of the purchase or contribution of such Receivables or at any time thereafter;
(e) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivables or purported Receivables generated by such Originator, whether at the time of any purchase or contribution or at any subsequent time;
(f) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the Obligor to the payment of any Receivable or purported Receivable generated by such Originator (including, without limitation, a defense based on such Receivable's or the related Contract's 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 services related to any such Receivable or the furnishing of or failure to furnish such services;
(g) any product liability claim arising out of or in connection with services that are the subject of any Receivable generated by such Originator; and
(h) any tax or governmental fee or charge (other than any tax excluded pursuant to CLAUSE (iii) in the proviso to the preceding sentence), all interest and penalties thereon or with respect thereto, and all out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel in defending against the same, which may arise by reason of the purchase or ownership of the Receivables generated by such Originator or any Related Security connected with any such Receivables.
If for any reason the indemnification provided above in this SECTION 9.1 is unavailable to a Purchase and Sale Indemnified Party or is insufficient to hold such Purchase and Sale Indemnified Party harmless, then each of the Originators, severally and for itself, shall contribute to the amount paid or payable by such Purchase and Sale Indemnified Party to the maximum extent permitted under applicable law.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 AMENDMENTS, ETC.
(a) The provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and executed by the Company and each Originator (with the prior written consent of the Administrator).
(b) No failure or delay on the part of the Company, the Servicer, any Originator or any third party beneficiary in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Company, the Servicer or any Originator in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Company or the Servicer under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
(c) The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings.
SECTION 10.2 NOTICES, ETC. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication) and shall be personally delivered or sent by certified mail, postage prepaid, or by facsimile, to the intended party at the mailing address or facsimile number of such party set forth under its name on the signature pages hereof or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective (i) if personally delivered, when received, (ii) if sent by certified mail three (3) Business Days after having been deposited in the mail, postage prepaid, and (iii) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means.
SECTION 10.3 NO WAIVER; CUMULATIVE REMEDIES. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Without limiting the foregoing, each Originator hereby authorizes the Company, at any time and from time to time, to the fullest extent permitted by law, to set off, against any obligations of such Originator to the Company arising in connection with the Transaction Documents (including, without limitation, amounts payable pursuant to SECTION 9.1) that are then due and payable or that are not then due and payable but are accruing in respect of the then current Settlement Period, any and all indebtedness at any time owing by the Company to or for the credit or the account of such Originator.
SECTION 10.4 BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon and inure to the benefit of the Company and each Originator and their respective successors and
permitted assigns. No Originator may assign any of its rights hereunder or any interest herein without the prior written consent of the Company, except as otherwise herein specifically provided. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree. The rights and remedies with respect to any breach of any representation and warranty made by any Originator pursuant to ARTICLE V and the indemnification and payment provisions of ARTICLE IX and SECTION 10.6 shall be continuing and shall survive any termination of this Agreement.
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.6 COSTS, EXPENSES AND TAXES. In addition to the obligations of the Originators under ARTICLE IX, each Originator, severally and for itself alone, agrees to pay on demand:
(a) to the Company (and any successor and permitted assigns thereof) all reasonable costs and expenses incurred by such Person in connection with the enforcement of this Agreement and the other Transaction Documents; and
(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or the other Transaction Documents to be delivered hereunder, and agrees to indemnify each Purchase and Sale Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 10.7 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF STATE OF NEW YORK OR THE FEDERAL COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 10.2; AND (e) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION 10.7 SHALL AFFECT THE COMPANY'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST ANY ORIGINATOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.
SECTION 10.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT (a) ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND (b) ANY PARTY HERETO (OR ANY ASSIGNEE OR THIRD PARTY BENEFICIARY OF THIS AGREEMENT) MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
SECTION 10.9 CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE. The various captions (including, without limitation, the table of contents) in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. References in this Agreement to any underscored Section or Exhibit are to such Section or Exhibit of this Agreement, as the case may be. The Exhibits hereto are hereby incorporated by reference into and made a part of this Agreement.
SECTION 10.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.
SECTION 10.11 ACKNOWLEDGMENT AND AGREEMENT. By execution below, each Originator expressly acknowledges and agrees that all of the Company's rights, title, and interests in, to, and under this Agreement (but not its obligations), shall be assigned by the Company pursuant to the Receivables Purchase Agreement, and each Originator consents to such assignment. Each of the parties hereto acknowledges and agrees that the Administrator, the Purchaser Agents and the Purchasers are third party beneficiaries of the rights of the Company arising hereunder and under the other Transaction Documents to which any Originator is a party.
SECTION 10.12 NO PROCEEDING. Each Originator hereby agrees that it will not institute, or join any other Person in instituting, against the Company any Insolvency Proceeding so long as any of the Company Notes remains outstanding and for at least one year and one day following the day on which the aggregate outstanding principal amount of each Company Note is paid in full.
SECTION 10.13 LIMITED RECOURSE. Except as explicitly set forth herein, the obligations of the Company under this Agreement or any other Transaction Documents to which it is a party are solely the obligations of the Company. No recourse under any Transaction Document shall be had against, and no liability shall attach to, any officer, employee, director, or beneficiary, whether directly or indirectly, of the Company.
[SIGNATURE PAGES FOLLOW]
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.
WORTHINGTON RECEIVABLES CORPORATION
By: /s/ John T. Baldwin -------------------------------------------- Name: John T. Baldwin -------------------------------------- Title: Vice President ------------------------------------ |
Address: Worthington Receivables Corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
ORIGINATORS:
THE WORTHINGTON STEEL COMPANY, a
Delaware corporation
By: /s/ John T. Baldwin ------------------------------------- Name: John T. Baldwin ------------------------------- Title: Vice President ----------------------------- |
Address: Worthington Steel Company, a Delaware corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
THE WORTHINGTON STEEL COMPANY, a
North Carolina corporation
By: /s/ John T. Baldwin ------------------------------------- Name: John T. Baldwin ------------------------------- Title: Vice President ----------------------------- |
Address: Worthington Steel Company, a North Carolina corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
THE WORTHINGTON STEEL COMPANY, an
Ohio corporation
By: /s/ John T. Baldwin -------------------------------------- Name: John T. Baldwin -------------------------------- Title: Vice President ------------------------------ |
Address: Worthington Steel Company an Ohio corporation 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
WORTHINGTON STEEL COMPANY OF KENTUCKY, LLC
By: /s/ John T. Baldwin -------------------------------------- Name: John T. Baldwin -------------------------------- Title: Vice President ------------------------------ |
Address: Worthington Steel Company of Kentucky, LLC 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
WORTHINGTON STEEL COMPANY OF
DECATUR, L.L.C.
By: /s/ John T. Baldwin -------------------------------------------- Name: John T. Baldwin -------------------------------------- Title: Vice President ------------------------------------ |
Address: Worthington Steel Company of Decatur, LLC 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 |
WORTHINGTON STEEL OF MICHIGAN, INC.
By: /s/ John T. Baldwin -------------------------------------------- Name: John T. Baldwin -------------------------------------- Title: Vice President ------------------------------------ |
Address: Worthington Steel of Michigan, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 Attention: Randal I. Rombeiro Telephone: (614) 840-3574 Facsimile: (614) 438-7508 S-4 |
SCHEDULE I |
The Worthington Steel Company, a Delaware corporation
The Worthington Steel Company, a North Carolina corporation
The Worthington Steel Company, an Ohio corporation
Worthington Steel Company of Kentucky, LLC, a Kentucky limited liability company
Worthington Steel Company of Decatur, L.L.C., an Alabama limited liability company
Worthington Steel of Michigan, Inc., a Michigan corporation
Schedule I-1
SCHEDULE 5.6
NONE.
SCHEDULE 5.15
Legal Name Trade Names ---------- ----------- The Worthington Steel Company, a Delaware corporation Worthington Steel - Malvern Worthington Steel Company The Worthington Steel Company, a North Carolina corporation Worthington Steel - Rock Hill Worthington Steel Company The Worthington Steel Company, an Ohio corporation Worthington Steel - Baltimore Worthington Steel - Columbus Worthington Steel - Delta Worthington Steel - Monroe Worthington Steel - Porter Worthington Steel Company Worthington Steel Company of Kentucky, LLC Worthington Steel - Louisville Worthington Steel Company The Worthington Steel Company Worthington Steel Company of Decatur, L.L.C. Worthington Steel - Decatur Worthington Steel Company The Worthington Steel Company Worthington Steel of Michigan, Inc. Worthington Steel - Jackson Worthington Steel Company The Worthington Steel Company |
THE WORTHINGTON STEEL COMPANY, a Delaware corporation, was originally incorporated as Worthington Ventures, Inc., a Delaware corporation, in March 1992. The Worthington Steel Company, a Pennsylvania corporation, which held the Malvern, PA facility, merged with an into Worthington Ventures, Inc. on November 26, 1996 as part of a corporate reorganization. Worthington Ventures, Inc., a Delaware corporation, was the surviving entity and changed its name to The Worthington Steel Company.
THE WORTHINGTON STEEL COMPANY, an Ohio corporation, was originally incorporated on February 10, 1998 as The Worthington Steel Company of Ohio, Inc. On May 22, 1998, as part of a corporate reorganization, its name was changed to the current name, The Worthington Steel Company.
SCHEDULE 6.1(f)
Originator Location ---------- -------- The Worthington Steel Company, a Delaware corporation 1205 Dearborn Drive Columbus, Ohio 43085 P.O. Box 3045 45 Morehall Road Malvern, Pennsylvania The Worthington Steel Company, a North Carolina corporation 1205 Dearborn Drive Columbus, Ohio 43085 1345 Hall Road Rock Hill, South Carolina 29730 The Worthington Steel Company, an Ohio corporation 1205 Dearborn Drive Columbus, Ohio 43085 8911 Kelso Drive Baltimore, Maryland 21221 1127 Dearborn Drive Columbus, Ohio 43085 6303 County Road 10 Delta, Ohio 43515 100 Worthington Drive Porter, Indiana 46304 350 Lawton Avenue Monroe, Ohio 45050 Worthington Steel Company of Kentucky, LLC 1205 Dearborn Drive Columbus, Ohio 43085 1152 Industrial Boulevard Louisville, Kentucky 40219 Worthington Steel Company of Decatur, L.L.C. 1205 Dearborn Drive Columbus, Ohio 43085 1400 Red Hat Road, N.W. Decatur, Alabama 35601 |
Worthington Steel of Michigan, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 1150 S. Elm Street Jackson, Michigan 49204 LOCATION OF BOOKS AND RECORDS OF ORIGINATORS -------------------------------------------- Originator Location ---------- -------- The Worthington Steel Company, a Delaware corporation 1205 Dearborn Drive Columbus, Ohio 43085 P.O. Box 3045 45 Morehall Road Malvern, Pennsylvania The Worthington Steel Company, a North Carolina corporation 1205 Dearborn Drive Columbus, Ohio 43085 1345 Hall Road Rock Hill, South Carolina 29730 The Worthington Steel Company, an Ohio corporation 1205 Dearborn Drive Columbus, Ohio 43085 8911 Kelso Drive Baltimore, Maryland 21221 1127 Dearborn Drive Columbus, Ohio 43085 6303 County Road 10 Delta, Ohio 43515 100 Worthington Drive Porter, Indiana 46304 350 Lawton Avenue Monroe, Ohio 45050 Worthington Steel Company of Kentucky, LLC 1205 Dearborn Drive Columbus, Ohio 43085 1152 Industrial Boulevard Louisville, Kentucky 40219 Worthington Steel Company of Decatur, L.L.C. 1205 Dearborn Drive Columbus, Ohio 43085 1400 Red Hat Road, N.W. Decatur, Alabama 35601 |
Worthington Steel of Michigan, Inc. 1205 Dearborn Drive Columbus, Ohio 43085 1150 S. Elm Street Jackson, Michigan 49204 |
EXHIBIT A
Originator:
Purchaser: Worthington Receivables Corporation
Payment Date:
1. Outstanding Balance of Receivables Purchased:
2. Fair Market Value Discount:
1/{1 + [(Prime Rate + 0.25%) x Turnover Rate]}
Where: Prime Rate = _______ Days' Sales Outstanding = _______ 3. Purchase Price (1 x 2) = $_______ |
EXHIBIT B
FOR VALUE RECEIVED, the undersigned, Worthington Receivables
Corporation, a Delaware limited liability company ("COMPANY"), promises to pay
to [NAME OF THE ORIGINATOR], a [CORPORATION] [LIMITED LIABILITY COMPANY]
[LIMITED PARTNERSHIP] (the "Originator"), on the terms and subject to the
conditions set forth herein and in the Purchase and Sale Agreement referred to
below, the aggregate unpaid Purchase Price of all Receivables purchased by the
Company from the Originator pursuant to such Purchase and Sale Agreement, as
such unpaid Purchase Price is shown in the records of the Servicer.
1. PURCHASE AND SALE AGREEMENT. This Company Note is one of the Company Notes described in, and is subject to the terms and conditions set forth in, that certain Purchase and Sale Agreement of even date herewith (as the same may be amended, supplemented, amended and restated or otherwise modified in accordance with its terms, the "PURCHASE AND SALE AGREEMENT"), between the Company and the various entities listed on Schedule I thereto, including the Originator. Reference is hereby made to the Purchase and Sale Agreement for a statement of certain other rights and obligations of the Company and the Originator.
2. DEFINITIONS. Capitalized terms used (but not defined) herein have the meanings assigned thereto in Exhibit I to the Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement). In addition, as used herein, the following terms have the following meanings:
"BANKRUPTCY PROCEEDINGS" has the meaning set forth in CLAUSE (b) of PARAGRAPH 9 hereof.
FINAL MATURITY DATE" means the Payment Date immediately following the date that falls one hundred twenty one (121) days after the Purchase and Sale Termination Date.
"INTEREST PERIOD" means the period from and including a Settlement Date (or, in the case of the first Interest Period, the date hereof) to but excluding the next Settlement Date.
"PRIME RATE" has the meaning assigned thereto in the Purchase and Sale Agreement.
"RECEIVABLES PURCHASE AGREEMENT" means the Receivables Purchase Agreement, dated as of November 30, 2000, entered into among the Worthington Receivables Corporation, Worthington Industries, Inc., Market Street Funding Corporation, the members of the various other Purchaser Groups from time to time a party thereto and PNC Bank, National Association.
"SENIOR INTERESTS" means, collectively, (i) all accrued and unpaid Discount, (ii) all fees payable by the Company to the Senior Interest Holders pursuant to the Receivables Purchase Agreement, (iii) all amounts payable pursuant to SECTION 1.7 and 1.8 of the Receivables Purchase Agreement, (iv) the Aggregate Investment and (v) all other obligations owed by the Company to
the Senior Interest Holders under the Receivables Purchase Agreement and other Transaction Documents that are due and payable, together with any and all interest and Discount accruing on any such amount after the commencement of any Bankruptcy Proceedings, notwithstanding any provision or rule of law that might restrict the rights of any Senior Interest Holder, as against the Company or anyone else, to collect such interest.
"SENIOR INTEREST HOLDERS" means, collectively, the Purchasers, the Administrator and the Indemnified Parties.
"Subordination Provisions" means, collectively, clauses (a) through (l) of paragraph 9 hereof.
"TELERATE SCREEN RATE" means, for any Interest Period, the rate for thirty day commercial paper denominated in dollars which appears on Page 1250 of the Dow Jones Telerate Service (or such other page as may replace that page on that service for the purpose of displaying dollar commercial paper rates) at approximately 9:00 a.m., New York City time, on the first day of such Interest Period.
3. INTEREST. Subject to the Subordination Provisions set forth below, the Company promises to pay interest on this Company Note as follows:
(a) Prior to the Final Maturity Date, the aggregate unpaid Purchase Price from time to time outstanding during any Interest Period shall bear interest at a rate per annum equal to the Telerate Screen Rate for such Interest Period as determined by the Servicer; and
(b) From (and including) the Final Maturity Date to (but excluding) the date on which the entire aggregate unpaid Purchase Price payable to the Originator is fully paid, such aggregate unpaid Purchase Price from time to time outstanding shall bear interest at a rate per annum equal to the Prime Rate.
4. INTEREST PAYMENT DATES. Subject to the Subordination Provisions set forth below, the Company shall pay accrued interest on this Company Note on each Settlement Date, and shall pay accrued interest on the amount of each principal payment made in cash on a date other than a Settlement Date at the time of such principal payment.
5. BASIS OF COMPUTATION. Interest accrued hereunder that is computed by reference to the Telerate Screen Rate shall be computed for the actual number of days elapsed on the basis of a 360-day year, and interest accrued hereunder that is computed by reference to the rate described in PARAGRAPH 3(B) of this Company Note shall be computed for the actual number of days elapsed on the basis of a 365- or 366-day year.
6. PRINCIPAL PAYMENT DATES. Subject to the Subordination Provisions set forth below, payments of the principal amount of this Company Note shall be made as follows:
(a) The principal amount of this Company Note shall be reduced by an amount equal to each payment deemed made pursuant to SECTION 3.3 of the Purchase and Sale Agreement; and
(b) The entire remaining unpaid Purchase Price of all Receivables purchased by the Company from the Originator pursuant to the Purchase and Sale Agreement shall be due and payable on the Final Maturity Date.
Subject to the Subordination Provisions set forth below, the principal amount of and accrued interest on this Company Note may be prepaid on any Business Day without premium or penalty.
7. PAYMENT MECHANICS. All payments of principal and interest hereunder are to be made in lawful money of the United States of America.
8. ENFORCEMENT EXPENSES. In addition to and not in limitation of the foregoing, but subject to the Subordination Provisions set forth below and to any limitation imposed by applicable law, the Company agrees to pay all expenses, including reasonable attorneys' fees and legal expenses, incurred by the Originator in seeking to collect any amounts payable hereunder which are not paid when due.
9. SUBORDINATION PROVISIONS. The Company covenants and agrees, and the Originator and any other holder of this Company Note (collectively, the Originator and any such other holder are called the "HOLDER"), by its acceptance of this Company Note, likewise covenants and agrees on behalf of itself and any holder of this Company Note, that the payment of the principal amount of and interest on this Company Note is hereby expressly subordinated in right of payment to the payment and performance of the Senior Interests to the extent and in the manner set forth in the following clauses of this PARAGRAPH 9:
(a) No payment or other distribution of the Company's assets of any kind or character, whether in cash, securities, or other rights or property, shall be made on account of this Company Note except to the extent such payment or other distribution is (i) permitted under PARAGRAPH 1(M) of EXHIBIT IV of the Receivables Purchase Agreement or (ii) made pursuant to CLAUSE (A) or (B) of PARAGRAPH 6 of this Company Note;
(b) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the Company,
whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of the assets and liabilities
of the Company or any sale of all or substantially all of the assets of the
Company other than as permitted by the Purchase and Sale Agreement (such
proceedings being herein collectively called "BANKRUPTCY PROCEEDINGS"), the
Senior Interests shall first be paid and performed in full and in cash before
the Originator shall be entitled to receive and to retain any payment or
distribution in respect of this Company Note. In order to implement the
foregoing during any Bankruptcy Proceeding: (i) all payments and distributions
of any kind or character in respect of this Company Note to which Holder would
be entitled except for this clause (b) shall be made directly to the
Administrator (for the benefit of the Senior Interest Holders); (ii) Holder
shall promptly file a claim or claims, in the form required in any Bankruptcy
Proceedings, for the full outstanding amount of this Company Note, and shall use
commercially reasonable efforts to cause said claim or claims to be approved and
all payments and other distributions in respect thereof to be made directly to
the Administrator (for the benefit of the Senior Interest Holders) until the
Senior Interests shall have been paid and performed in full and in cash; and
(iii) Holder
hereby irrevocably agrees that the Purchasers (or the Administrator acting on the Purchasers' behalf), in the name of Holder or otherwise, may demand, sue for, collect, receive and receipt for any and all such payments or distributions, and file, prove and vote or consent in any such Bankruptcy Proceedings with respect to any and all claims of Holder relating to this Company Note, in each case until the Senior Interests shall have been paid and performed in full and in cash;
(c) In the event that Holder receives any payment or other distribution of any kind or character from the Company or from any other source whatsoever, in respect of this Company Note, other than as expressly permitted by the terms of this Company Note, such payment or other distribution shall be received in trust for the Senior Interest Holders and shall be turned over by Holder to the Administrator (for the benefit of the Senior Interest Holders) forthwith. Holder will mark its books and records so as clearly to indicate that this Company Note is subordinated in accordance with the terms hereof. All payments and distributions received by the Administrator in respect of this Company Note, to the extent received in or converted into cash, may be applied by the Administrator (for the benefit of the Senior Interest Holders) first to the payment of any and all expenses (including reasonable attorneys' fees and legal expenses) paid or incurred by the Senior Interest Holders in enforcing these Subordination Provisions, or in endeavoring to collect or realize upon this Company Note, and any balance thereof shall, solely as between the Originator and the Senior Interest Holders, be applied by the Administrator (in the order of application set forth in SECTION 1.4(D)(II) of the Receivables Purchase Agreement) toward the payment of the Senior Interests; but as between the Company and its creditors, no such payments or distributions of any kind or character shall be deemed to be payments or distributions in respect of the Senior Interests;
(d) Notwithstanding any payments or distributions received by the Senior Interest Holders in respect of this Company Note, while any Bankruptcy Proceedings are pending Holder shall not be subrogated to the then existing rights of the Senior Interest Holders in respect of the Senior Interests until the Senior Interests have been paid and performed in full and in cash. If no Bankruptcy Proceedings are pending, Holder shall only be entitled to exercise any subrogation rights that it may acquire (by reason of a payment or distribution to the Senior Interest Holders in respect of this Company Note) to the extent that any payment arising out of the exercise of such rights would be permitted under PARAGRAPH 1(m) of EXHIBIT IV of the Receivables Purchase Agreement;
(e) These Subordination Provisions are intended solely for the purpose of defining the relative rights of Holder, on the one hand, and the Senior Interest Holders on the other hand. Nothing contained in these Subordination Provisions or elsewhere in this Company Note is intended to or shall impair, as between the Company, its creditors (other than the Senior Interest Holders) and Holder, the Company's obligation, which is unconditional and absolute, to pay Holder the principal of and interest on this Company Note as and when the same shall become due and payable in accordance with the terms hereof or to affect the relative rights of Holder and creditors of the Company (other than the Senior Interest Holders);
(f) Holder shall not, until the Senior Interests have been paid and performed in full and in cash, (i) cancel, waive, forgive, transfer or assign, or commence legal proceedings to enforce or collect, or subordinate to any obligation of the Company, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due, other than the Senior Interests, this Company Note or any rights in respect hereof or (ii) convert this Company Note into an equity interest in the Company, unless Holder shall have received the prior written consent of the Administrator and the Purchasers in each case;
(g) Holder shall not, without the advance written consent of the Administrator and the Purchasers, commence, or join with any other Person in commencing, any Bankruptcy Proceedings with respect to the Company until at least one year and one day shall have passed since the Senior Interests shall have been paid and performed in full and in cash;
(h) If, at any time, any payment (in whole or in part) of any Senior Interest is rescinded or must be restored or returned by a Senior Interest Holder (whether in connection with Bankruptcy Proceedings or otherwise), these Subordination Provisions shall continue to be effective or shall be reinstated, as the case may be, as though such payment had not been made;
(i) Each of the Senior Interest Holders may, from time to time, at its sole discretion, without notice to Holder, and without waiving any of its rights under these Subordination Provisions, take any or all of the following actions: (i) retain or obtain an interest in any property to secure any of the Senior Interests; (ii) retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to any of the Senior Interests; (iii) extend or renew for one or more periods (whether or not longer than the original period), alter or exchange any of the Senior Interests, or release or compromise any obligation of any nature with respect to any of the Senior Interests; (iv) amend, supplement, amend and restate, or otherwise modify any Transaction Document; and (v) release its security interest in, or surrender, release or permit any substitution or exchange for all or any part of any rights or property securing any of the Senior Interests, or extend or renew for one or more periods (whether or not longer than the original period), or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such rights or property;
(j) Holder hereby waives: (i) notice of acceptance of these Subordination Provisions by any of the Senior Interest Holders; (ii) notice of the existence, creation, non-payment or non-performance of all or any of the Senior Interests; and (iii) all diligence in enforcement, collection or protection of, or realization upon, the Senior Interests, or any thereof, or any security therefor;
(k) Each of the Senior Interest Holders may, from time to time, on the terms and subject to the conditions set forth in the Transaction Documents to which such Persons are party, but without notice to Holder, assign or transfer any or all of the Senior Interests, or any interest therein; and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, such Senior Interests shall be and remain Senior Interests for the purposes of these Subordination Provisions, and every immediate and successive assignee or transferee of any of the Senior Interests or of any interest of such assignee or transferee in the Senior Interests shall be entitled to the benefits of these Subordination Provisions to the same extent as if such assignee or transferee were the assignor or transferor; and
(l) These Subordination Provisions constitute a continuing offer from the holder of this Company Note to all Persons who become the holders of, or who continue to hold, Senior Interests; and these Subordination Provisions are made for the benefit of the Senior Interest Holders, and the Administrator may proceed to enforce such provisions on behalf of each of such Persons.
10. GENERAL. No failure or delay on the part of the Originator in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Company Note shall in any event be effective unless (i) the
same shall be in writing and signed and delivered by the Company and Holder and
(ii) all consents required for such actions under the Transaction Documents
shall have been received by the appropriate Persons.
11. MAXIMUM INTEREST. Notwithstanding anything in this Company Note to the contrary, the Company shall never be required to pay unearned interest on any amount outstanding hereunder and shall never be required to pay interest on the principal amount outstanding hereunder at a rate in excess of the maximum interest rate that may be contracted for, charged or received under applicable federal or state law (such maximum rate being herein called the "HIGHEST LAWFUL RATE"). If the effective rate of interest which would otherwise by payable under this Company Note would exceed the Highest Lawful Rate, or if the holder of this Company Note shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable by the Company under this Company Note to a rate in excess of the Highest Lawful Rate, then (i) the amount of interest which would otherwise by payable by the Company under this Company Note shall be reduced to the amount allowed by applicable law, and (ii) any unearned interest paid by the Company or any interest paid by the Company in excess of the Highest Lawful Rate shall be refunded to the Company. Without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by the Originator under this Company Note that are made for the purpose of determining whether such rate exceeds the Highest Lawful Rate applicable to the Originator (such Highest Lawful Rate being herein called the "ORIGINATOR'S MAXIMUM PERMISSIBLE RATE") shall be made, to the extent permitted by usury laws applicable to the Originator (now or hereafter enacted), by amortizing, prorating and spreading in equal parts during the actual period during which any amount has been outstanding hereunder all interest at any time contracted for, charged or received by the Originator in connection herewith. If at any time and from time to time (i) the amount of interest payable to the Originator on any date shall be computed at the Originator's Maximum Permissible Rate pursuant to the provisions of the foregoing sentence and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Originator would be less than the amount of interest payable to the Originator computed at the Originator's Maximum Permissible Rate, then the amount of interest payable to the Originator in respect of such subsequent interest computation period shall continue to be computed at the Originator's Maximum Permissible Rate until the total amount of interest payable to the Originator shall equal the total amount of interest which would have been payable to the Originator if the total amount of interest had been computed without giving effect to the provisions of the foregoing sentence.
12. NO NEGOTIATION. This Company Note is not negotiable except that is may be assigned to any Affiliate of the Originator.
13. GOVERNING LAW. THIS COMPANY NOTE HAS BEEN DELIVERED IN THE STATE OF ____________, AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ____________.
14. CAPTIONS. Paragraph captions used in this Company Note are for convenience only and shall not affect the meaning or interpretation of any provision of this Company Note.
WORTHINGTON RECEIVABLES
CORPORATION
By:_______________________________
Name:__________________________
Title:_________________________
EXHIBIT C
THIS JOINDER AGREEMENT, dated as of , 20 (this "Agreement") is executed by , a corporation organized under the laws of (the "Additional Seller"), with its principal place of business located at .
BACKGROUND:
A. Worthington Receivables Corporation (the "Buyer") and each entity listed on Schedule I thereto (collectively, the "Sellers"), have entered into that certain Purchase and Sale Agreement, dated as of November 30, 2000 (as amended through the date hereof, and as it may be further amended from time to time, the "PURCHASE AND SALE AGREEMENT").
B. The Additional Seller desires to become a Seller pursuant to SECTION 1.7 of the Purchase and Sale Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Additional Seller hereby agrees as follows:
SECTION 11. DEFINITIONS. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned thereto in the Purchase and Sale Agreement or in the Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement).
SECTION 12. TRANSACTION DOCUMENTS. The Additional Seller hereby agrees that it shall be bound by all of the terms, conditions and provisions of, and shall be deemed to be a party to (as if it were an original signatory to), the Purchase and Sale Agreement and each of the other relevant Specified Documents. From and after the later of the date hereof and the date that the Additional Seller has complied with all of the requirements of SECTION 1.7 of the Purchase and Sale Agreement, the Additional Seller shall be a Seller for all purposes of the Purchase and Sale Agreement and all other Transaction Documents. The Additional Seller hereby acknowledges that it has received copies of the Purchase and Sale Agreement and the other Transaction Documents.
SECTION 13. REPRESENTATIONS AND WARRANTIES. The Additional Seller hereby makes all of the representations and warranties set forth in ARTICLE V (to the extent applicable) of the Purchase and Sale Agreement as of the date hereof (unless such representations or warranties relate to an earlier date, in which as of such earlier date), as if such representations and warranties were fully set forth herein. The Additional Seller hereby represents and warrants that the chief place of business and chief executive office of the Additional Seller, and the offices where the Additional Seller keeps all of its Records and Related Security is as follows:
SECTION 14. MISCELLANEOUS. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. This Agreement is executed by the Additional Seller for the benefit of the Buyer, and its assigns, and each of the foregoing parties may rely hereon. This Agreement shall be binding upon, and shall inure to the benefit of, the Additional Seller and its successors and permitted assigns.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by its duly authorized officer as of the date and year first above written.
[NAME OF ADDITIONAL SELLER]
By: _______________________________
Name:_________________________
Title:________________________
Consented to:
WORTHINGTON RECEIVABLES CORPORATION
By: _______________________________
Name:_________________________
Title:________________________
Acknowledged by:
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By: _______________________________
Name:_________________________
Title:________________________
EXHIBIT D
ORIGINATOR ASSIGNMENT CERTIFICATE
Reference is made to the Purchase and Sale Agreement of even date herewith (as the same may be amended, supplemented, amended and restated or otherwise modified from time to time, the "PURCHASE AND SALE AGREEMENT") between the undersigned, the various entities listed on Schedule I, as Originators, and Worthington Receivables Corporation (the "COMPANY"). Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Purchase and Sale Agreement or in EXHIBIT I to the Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement), as applicable.
The undersigned hereby sells, assigns and transfers unto the Company and its successors and assigns all right, title and interest of the undersigned in and to:
(a) each Receivable of the undersigned that existed and was owing to the undersigned as of the Cut-off Date other than Receivables contributed pursuant to SECTION 1.6 of the Purchase and Sale Agreement;
(b) each Receivable generated by the undersigned from and including the Cut-off Date to and including the Purchase and Sale Termination Date;
(c) all rights to, but not the obligations under, all Related Security;
(d) all monies due or to become due with respect to any of the foregoing;
(e) all books and records of the undersigned related to any of the foregoing, and all Transaction Documents to which the undersigned is a party, together with all rights (but not obligations) of the undersigned; and
(f) all collections and other proceeds and products of any of the foregoing (as defined in the applicable UCC) that are or were received by the undersigned on or after the Cut-off Date, including, without limitation, all funds which either are received by the undersigned, the Company or the Servicer from or on behalf of the Obligors in payment of any amounts owed (including, without limitation, invoice price, finance charges, interest and all other charges) in respect of Receivables, or are applied to such amounts owed by the Obligors (including, without limitation, insurance payments that the undersigned or the Servicer applies in the ordinary course of its business to amounts owed in respect of any Receivable and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligors in respect of Receivables or any other parties directly or indirectly liable for payment of such Receivables).
This Originator Assignment Certificate is made without recourse but on the terms and subject to the conditions set forth in the Transaction Documents to which the undersigned is a
party. The undersigned acknowledges and agrees that the Company and its successors and assigns are accepting this Originator Assignment Certificate in reliance on the representations, warranties and covenants of the undersigned contained in the Transaction Documents to which the undersigned is a party.
THIS ORIGINATOR ASSIGNMENT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE PURCHASE AND SALE AGREEMENT AND THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Originator Assignment Certificate to be duly executed and delivered by its duly authorized officer this day of , 2000.
[ORIGINATOR]
By:___________________________________________ Name:_________________________________________ Title:________________________________________
TABLE OF CONTENTS
PAGE ARTICLE I AGREEMENT TO PURCHASE AND SELL SECTION 1.1 Agreement To Purchase and Sell.............................................................1 SECTION 1.2 Timing of Purchases........................................................................2 SECTION 1.3 Consideration for Purchases................................................................3 SECTION 1.4 Purchase and Sale Termination Date.........................................................3 SECTION 1.5 Intention of the Parties...................................................................3 SECTION 1.6 Contribution of Receivables................................................................3 SECTION 1.7 Additional Originators.....................................................................3 ARTICLE II PURCHASE REPORT; CALCULATION OF PURCHASE PRICE SECTION 2.1 Purchase Report............................................................................4 SECTION 2.2 Calculation of Purchase Price..............................................................4 ARTICLE III PAYMENT OF PURCHASE PRICE SECTION 3.1 Initial Purchase Price Payment.............................................................5 SECTION 3.2 Subsequent Purchase Price Payments.........................................................5 SECTION 3.3 Settlement as to Specific Receivables and Dilution.........................................6 SECTION 3.4 Reconveyance of Receivables................................................................7 ARTICLE IV CONDITIONS OF PURCHASES SECTION 4.1 Conditions Precedent to Initial Purchase...................................................7 SECTION 4.2 Certification as to Representations and Warranties.........................................9 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR SECTION 5.1 Organization and Good Standing.............................................................9 SECTION 5.2 Due Qualification..........................................................................9 SECTION 5.3 Power and Authority; Due Authorization.....................................................9 SECTION 5.4 Valid Sale; Binding Obligations...........................................................10 SECTION 5.5 No Violation..............................................................................10 SECTION 5.6 Proceedings...............................................................................10 SECTION 5.7 Bulk Sales Acts...........................................................................10 SECTION 5.8 Government Approvals......................................................................10 SECTION 5.9 Financial Condition.......................................................................11 SECTION 5.10 Licenses, Contingent Liabilities, and Labor Controversies.................................11 SECTION 5.11 Margin Regulations........................................................................11 SECTION 5.12 Quality of Title..........................................................................11 |
TABLE OF CONTENTS
(continued)
PAGE SECTION 5.13 Accuracy of Information...................................................................12 SECTION 5.14 [RESERVED]................................................................................12 SECTION 5.15 Trade Names...............................................................................12 SECTION 5.16 Taxes.....................................................................................12 SECTION 5.17 Compliance with Applicable Laws...........................................................12 SECTION 5.18 Reliance on Separate Legal Identity.......................................................12 SECTION 5.19 Investment Company........................................................................12 ARTICLE VI COVENANTS OF THE ORIGINATORS SECTION 6.1 Affirmative Covenants.....................................................................13 SECTION 6.2 Reporting Requirements....................................................................14 SECTION 6.3 Negative Covenants........................................................................15 SECTION 6.4 Lock-Box Banks............................................................................16 SECTION 6.5 Accounting for Purchases..................................................................16 SECTION 6.6 Transaction Documents.....................................................................16 SECTION 6.7 Substantive Consolidation.................................................................16 ARTICLE VII ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF RECEIVABLES SECTION 7.1 Rights of the Company.....................................................................18 SECTION 7.2 Responsibilities of the Originators.......................................................18 SECTION 7.3 Further Action Evidencing Purchases.......................................................18 SECTION 7.4 Application of Collections................................................................19 ARTICLE VIII PURCHASE AND SALE TERMINATION EVENTS SECTION 8.1 Purchase and Sale Termination Events......................................................19 SECTION 8.2 Remedies..................................................................................20 ARTICLE IX INDEMNIFICATION SECTION 9.1 Indemnities by the Originators............................................................20 ARTICLE X MISCELLANEOUS SECTION 10.1 Amendments, etc...........................................................................22 SECTION 10.2 Notices, etc..............................................................................22 SECTION 10.3 No Waiver; Cumulative Remedies............................................................22 SECTION 10.4 Binding Effect; Assignability.............................................................23 SECTION 10.5 GOVERNING LAW.............................................................................23 SECTION 10.6 Costs, Expenses and Taxes.................................................................23 |
TABLE OF CONTENTS
(continued)
PAGE SECTION 10.7 SUBMISSION TO JURISDICTION................................................................23 SECTION 10.8 WAIVER OF JURY TRIAL......................................................................24 SECTION 10.9 Captions and Cross References; Incorporation by Reference.................................24 SECTION 10.10 Execution in Counterparts.................................................................24 SECTION 10.11 Acknowledgment and Agreement..............................................................24 SECTION 10.12 No Proceeding.............................................................................25 SECTION 10.13 Limited Recourse..........................................................................25 |
SCHEDULES
Schedule I List of Originators Schedule 5.6 Proceedings Schedule 5.15 Trade Names Schedule 6.1(f) Filing Office Locations and Records Locations EXHIBITS Exhibit A Form of Purchase Report Exhibit B Form of Company Note Exhibit C Form of Joinder Agreement Exhibit D Form of Originator Assignment Certificate |
Exhibit-10(h)(iv)
AMENDMENT NO. 1
DATED AS OF MAY 18, 2001
TO
PURCHASE AND SALE AGREEMENT
DATED AS OF NOVEMBER 30, 2000
This AMENDMENT NO. 1 (this "AMENDMENT") dated as of May 18, 2001 is
entered into between VARIOUS ENTITIES LISTED ON SCHEDULE I HERETO AS AN
ORIGINATOR (each, an "Originator"; and collectively, "ORIGINATORS"), and
WORTHINGTON RECEIVABLES CORPORATION, a Delaware corporation (the "COMPANY").
WHEREAS, the parties hereto have entered into a certain Purchase and Sale Agreement dated as of November 30, 2000 (the "AGREEMENT");
WHEREAS, the parties hereto wish to make certain changes to the Agreement as herein provided;
NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein and in the Agreement, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined herein are used as defined in the Agreement.
SECTION 2. AMENDMENTS TO AGREEMENT. The Agreement is hereby amended as follows:
2.1 SECTION 1.6 of the Agreement is hereby amended to add the following at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, no Originator shall be prevented from contributing Receivables to the Company from time to time; PROVIDED, HOWEVER that such Originator shall provide the Administrator with prior written notice of the date and amount of each such contribution. Contributions made in connection with the immediately preceding sentence (i) shall have no effect on the aggregate Purchase Price of any Receivables sold by any Originator to the Company on the date of such contribution and (ii) shall not effect the aggregate outstanding balance of any Company Note."
2.2 SECTION 1.7 of the Agreement is hereby amended to add "and each Purchaser Agent" after the term "Administrator" everywhere such term appears in such Section.
SECTION 3. MISCELLANEOUS.
3.1 REPRESENTATIONS AND WARRANTIES. Each Originator and the Company hereby makes, with respect to itself, the representations and warranties as follows:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in ARTICLE V of the Agreement of such Originators are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations and warranties were true and correct as of such earlier date).
(b) ENFORCEABILITY. The execution and delivery by such Person of this Amendment, and the performance of its obligations under this Amendment and the Agreement, as amended hereby, are within its organizational powers and have been duly authorized by all necessary organizational action on its part. This Amendment and the Agreement, as amended hereby, are its valid and legally binding obligations, enforceable in accordance with its terms.
(c) TERMINATION EVENT. No Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination Event has occurred and is continuing.
3.2 REFERENCES TO AGREEMENT. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of like import shall mean and be a reference to the Agreement as amended hereby, and each reference to the Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Agreement shall mean and be a reference to the Agreement as amended hereby.
3.3 EFFECT ON THE AGREEMENT. Except as specifically amended above, the Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
3.4 NO WAIVER. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any party under the Agreement or any other document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein, except as specifically set forth herein.
3.5 GOVERNING LAW. This Amendment, including the rights and duties of the parties hereto, shall be governed by, and construed in accordance with, the laws of the State of New York (without giving effect to the conflict of laws principles thereof).
3.6 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
3.7 HEADINGS. The Section headings in this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provision hereof.
3.8 COUNTERPARTS. This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
WORTHINGTON RECEIVABLES CORPORATION
By: /S/ John T. Baldwin ----------------------------------- Name: John T. Baldwin ----------------------------- Title: Vice President --------------------------- |
ORIGINATORS:
THE WORTHINGTON STEEL COMPANY,
a Delaware corporation
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
THE WORTHINGTON STEEL COMPANY,
a North Carolina corporation
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
THE WORTHINGTON STEEL COMPANY,
an Ohio corporation
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
WORTHINGTON STEEL COMPANY OF
KENTUCKY, LLC
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
WORTHINGTON STEEL COMPANY OF
DECATUR, L.L.C.
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
WORTHINGTON STEEL OF MICHIGAN, INC.
By: /s/ John T. Baldwin ------------------------------- Name: John T. Baldwin ------------------------- Title: Vice President ----------------------- |
SCHEDULE I
The Worthington Steel Company, a Delaware corporation
The Worthington Steel Company, a North Carolina corporation
The Worthington Steel Company, an Ohio corporation
Worthington Steel Company of Kentucky, LLC, a Kentucky limited liability company
Worthington Steel Company of Decatur, L.L.C., an Alabama limited liability company
Worthington Steel of Michigan, Inc., a Michigan corporation
Exhibit-13
[WORTHINGTON INDUSTRIES LOGO]
2001 ANNUAL REPORT TO
SHAREHOLDERS
WORTHINGTON INDUSTRIES, INC.
2001 ANNUAL REPORT
CONTENTS
PAGE ---- A Message to Our Shareholders............................... 1 The Company................................................. 1 Stock Trading, Price and Dividend Information............... 3 Six Year Selected Financial Data............................ 4 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 5 Consolidated Financial Statements Consolidated Balance Sheets -- May 31, 2001 and 2000...... 12 Consolidated Statements of Earnings -- Years ended May 31, 2001, 2000 and 1999.................................... 13 Consolidated Statements of Shareholders' Equity -- Years ended May 31, 2001, 2000 and 1999...................... 14 Consolidated Statements of Cash Flows -- Years ended May 31, 2001, 2000 and 1999................................ 15 Notes to Consolidated Financial Statements.................. 16 Report of Management........................................ 29 Report of Independent Auditors.............................. 30 Company Locations........................................... 31 Officers & Directors........................................ 32 |
A MESSAGE TO OUR SHAREHOLDERS
This 2001 Annual Report to Shareholders contains the Worthington Industries, Inc. audited consolidated financial statements and all of the information that the regulations of the Securities and Exchange Commission (the "SEC") require be presented in an Annual Report to Shareholders. For legal purposes, this is the Worthington Industries, Inc. 2001 Annual Report to Shareholders. This Annual Report is not part of the Proxy Statement and is not deemed to be soliciting material or to be filed with the SEC except to the extent that it is expressly incorporated by reference in a document filed with the SEC for the fiscal year ended May 31, 2001 ("fiscal 2001").
We invite our shareholders also to consider our 2001 Summary Annual Report, which presents information concerning our business and financial results in a format and level of detail that we believe most of our shareholders will find useful and informative. Shareholders who would like to receive more detailed information may request a copy of our Annual Report on Form 10-K.
THE WORTHINGTON INDUSTRIES, INC. ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SEC, WILL BE PROVIDED TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE WORTHINGTON INDUSTRIES, INC. INVESTOR RELATIONS DEPARTMENT, 1205 DEARBORN DRIVE, COLUMBUS, OHIO 43085.
THE COMPANY
Worthington Industries, Inc., together with its subsidiaries, is referred to herein as "Worthington". Worthington's corporate headquarters are located at 1205 Dearborn Drive, Columbus, Ohio 43085.
Our operations are reported principally in three business segments:
Processed Steel Products, Metal Framing and Pressure Cylinders. The Processed
Steel Products segment includes The Worthington Steel Company ("Worthington
Steel") and The Gerstenslager Company ("Gerstenslager"). The Metal Framing
segment is made up of Dietrich Industries, Inc. ("Dietrich"), and the Pressure
Cylinders segment consists of Worthington Cylinder Corporation ("Worthington
Cylinders"). In addition, we hold an equity position in eight joint ventures as
described below. During the fiscal year ended May 31, 1999 ("fiscal 1999"), in
keeping with our strategy to focus on steel processing and metals-related
businesses, we divested our Worthington Custom Plastics, Inc. ("Worthington
Custom Plastics"), Worthington Precision Metals, Inc. ("Worthington Precision
Metals") and Buckeye Steel Castings Company ("Buckeye Steel Castings")
operations. The divested operations, which previously made up our Custom
Products and Cast Products segments, have been reported as discontinued
operations for fiscal 1999 and prior.
PROCESSED STEEL PRODUCTS
Our Processed Steel Products segment consists of two business units, Worthington Steel and Gerstenslager. For fiscal 2001, the fiscal year ended May 31, 2000 ("fiscal 2000") and fiscal 1999, the percentage of sales from continuing operations generated by our Processed Steel Products segment was 64.9%, 65.6% and 63.2%, respectively.
Both Worthington Steel and Gerstenslager are intermediate processors of flat-rolled steel. This segment's processing capabilities include blanking, cold-rolling, dry lubricating, configured blanking, cutting-to-length, edging, hot-dipped galvanizing, hydrogen annealing, nickel plating, painting, pickling, slitting, stamping, tension leveling and zinc/nickel coating. Worthington Steel has over 1,000 customers, principally in the automotive, lawn and garden, construction, hardware, furniture, office equipment, electrical control, leisure and recreation, appliance, farm implement, HVAC and aerospace markets. Gerstenslager supplies automotive aftermarket body panels within the United States primarily to domestic and transplant automotive and heavy duty truck manufacturers.
METAL FRAMING
Our Metal Framing segment consists of one business unit, Dietrich, which produces metal framing products for the commercial and residential construction markets in the United States. For fiscal 2001, fiscal 2000 and
fiscal 1999, the percentage of sales from continuing operations generated by Dietrich was 18.9%, 17.9% and 19.1%, respectively. Dietrich's products include steel studs and track, TradeReady(R) Floor Systems, SureSpan(R) trusses, TradeReady(R) Spazzer(TM) Bars and other metal framing accessories. Dietrich has over 2,000 customers, primarily consisting of wholesale distributors and commercial and residential building contractors.
PRESSURE CYLINDERS
Our Pressure Cylinders segment consists of one business unit, Worthington Cylinders. For fiscal 2001, fiscal 2000 and fiscal 1999, the percentage of sales from continuing operations generated by Worthington Cylinders was 15.8%, 16.2% and 17.3%, respectively.
Worthington Cylinders produces a complete line of pressure cylinder vessels, including liquefied petroleum gas ("LPG") cylinders, refrigerant cylinders and industrial/specialty gas cylinders. LPG cylinders are used for gas barbecue grills, camping equipment, residential heating systems, industrial forklifts, and commercial/residential cooking (outside North America). Refrigerant cylinders are used to hold refrigerant gases for commercial and residential air conditioning and refrigeration systems and for automotive air conditioning systems. Industrial/specialty gas cylinders are used as containers for gases for the following: cutting and welding metals; breathing (medical, diving and firefighting); semiconductor production; beverage delivery; and compressed natural gas systems. Worthington Cylinders also produces recycle and recovery tanks for refrigerant gases and non-refillable cylinders for helium balloon kits. Worthington Cylinders has over 3,000 customers.
During fiscal 1999, we expanded our Pressure Cylinders segment by acquiring the cylinder operations of Jos. Heiser vormals J. Winter's Sohn, GmbH, based in Kienberg, Austria, in June 1998; a majority interest in Gastec spol. s.r.o., based in Hustopece, Czech Republic, in February 1999; and certain assets of Metalurgica Progresso de Vale de Cambra, Lda., based in Vale de Cambra, Portugal, in May 1999.
JOINT VENTURES
As part of our strategy to selectively develop new products, markets and technological capabilities, and to expand our international presence while mitigating the risks and costs associated with those activities, we participate in four consolidated and four unconsolidated joint ventures.
Consolidated
- Spartan Steel Coating, L.L.C. ("Spartan Steel"), a 52%-owned consolidated joint venture with Rouge Steel, operates a cold-rolled hot-dipped galvanizing facility in Monroe, Michigan.
- Worthington S.A., a 52%-owned consolidated joint venture with three Brazilian propane producers, operates a cylinder manufacturing facility in Itu, Brazil.
- Worthington Tank, Ltda., a 65%-owned consolidated joint venture with a Portuguese manufacturer of liquefied petroleum gas tanks, operates a cylinder manufacturing facility in Itu, Brazil.
- Worthington Gastec, a.s., a 51%-owned consolidated joint venture with a local Czech Republic entrepreneur, operates a pressure cylinder manufacturing facility in Hustopece, Czech Republic.
Unconsolidated
- Worthington Armstrong Venture ("WAVE"), a 50%-owned joint venture with Armstrong World Industries, is one of the three leading global manufacturers of suspended ceiling systems for concealed and lay-in panel ceilings. WAVE operates facilities in Sparrows Point, Maryland; Benton Harbor, Michigan; North Las Vegas, Nevada; Malvern, Pennsylvania; Shanghai, China; Team Valley, United Kingdom; Valenciennes, France; and Madrid, Spain.
- TWB Company, L.L.C. ("TWB"), a 33%-owned joint venture with Thyssen Krupp, Rouge Steel, LTV Steel and Bethlehem Steel, produces laser welded blanks for use in the auto industry for products such as inner door frames. TWB operates facilities in Monroe, Michigan and Ramos Arizpe, Mexico.
- Acerex S.A. de C.V. ("Acerex"), a 50%-owned joint venture with Hylsa S.A. de C.V., is a steel processing company located in Monterrey, Mexico.
- Worthington Specialty Processing ("WSP"), a 50%-owned joint venture with USX Corporation in Jackson, Michigan, operates primarily as a toll processor for USX Corporation.
DISCONTINUED OPERATIONS
Custom Products. We completed the divestiture of our Worthington Custom Plastics businesses in the fourth quarter of fiscal 1999. While operated by Worthington, Worthington Custom Plastics manufactured and supplied injection molded plastic parts to automobile manufacturers and their suppliers and to manufacturers of appliances, lawn and garden products, recreational products, business equipment, audio equipment, furniture and other items. We completed the divestiture of our Worthington Precision Metals operations in the second quarter of fiscal 1999. While operated by Worthington, Worthington Precision Metals produced extremely close tolerance metal components for use by automobile manufacturers and their suppliers in power steering, transmission, anti-lock brake and other automotive mechanical systems.
Cast Products. We completed the divestiture of our Buckeye Steel Castings operations in the third quarter of fiscal 1999. While operated by Worthington, Buckeye Steel Castings designed, produced and machined a broad line of railcar and industrial steel castings. Buckeye Steel Castings was also a leading designer and producer of undercarriages for mass transit cars.
STOCK TRADING, PRICE AND DIVIDEND INFORMATION
The common shares of Worthington Industries, Inc. ("Worthington Industries") trade on the New York Stock Exchange ("NYSE") under the symbol "WOR" and are listed in most newspapers as "WorthgtnInd". Prior to April 19, 2000, the Worthington Industries' common shares were traded on the Nasdaq National Market ("Nasdaq") under the symbol "WTHG". As of June 30, 2001, Worthington Industries had approximately 10,848 shareholders of record. The following table sets forth (i) the low, high and closing bid prices for Worthington Industries' common shares (as quoted on Nasdaq) for the first three quarters of fiscal 2000, (ii) the low, high and closing sale prices for Worthington Industries' common shares (as traded on NYSE) for the quarter ended May 31, 2000 and each quarter of fiscal 2001, and (iii) the cash dividends per share paid on Worthington Industries' common shares for each quarter of fiscal 2000 and fiscal 2001.
MARKET PRICE FISCAL 2000 --------------------------- CASH QUARTER ENDED LOW HIGH CLOSING DIVIDENDS ------------- ------ ------ ------- --------- August 31, 1999............................... $12.31 $16.44 $15.00 $0.15 November 30, 1999............................. $14.38 $17.63 $16.00 $0.15 February 29, 2000............................. $12.88 $17.00 $13.25 $0.15 May 31, 2000.................................. $11.38 $13.63 $12.13 $0.16 |
FISCAL 2001 QUARTER ENDED ------------- August 31, 2000............................... $10.00 $12.75 $10.46 $0.16 November 30, 2000............................. $ 8.44 $10.50 $ 9.19 $0.16 February 28, 2001............................. $ 6.44 $10.45 $ 9.85 $0.16 May 31, 2001.................................. $ 9.00 $12.85 $11.50 $0.16 |
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
SIX YEAR SELECTED FINANCIAL DATA
FISCAL YEAR ENDED MAY 31 --------------------------------------------------------------------------- 2001 2000 1999 1998 1997 1996 IN THOUSANDS, EXCEPT PER SHARE ---------- ---------- ---------- ---------- ---------- ---------- FINANCIAL RESULTS Net Sales................................. $1,826,100 $1,962,606 $1,763,072 $1,624,449 $1,428,346 $1,126,492 Cost of Goods Sold........................ 1,581,178 1,629,455 1,468,886 1,371,841 1,221,078 948,505 ---------- ---------- ---------- ---------- ---------- ---------- Gross Margin.............................. 244,922 333,151 294,186 252,608 207,268 177,987 Selling, General & Administrative Expense................................. 173,264 163,662 147,990 117,101 96,252 78,852 Restructuring Expense..................... 6,474 -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Operating Income.......................... 65,184 169,489 146,196 135,507 111,016 99,135 Miscellaneous Income (Expense)............ (928) 2,653 5,210 1,396 906 1,013 Loss on Investment in Rouge............... -- (8,553) -- -- -- -- Interest Expense.......................... (33,449) (39,779) (43,126) (25,577) (18,427) (8,687) Equity in Net Income of Unconsolidated Affiliates -- Joint Ventures........... 25,201 26,832 24,471 19,316 13,959 6,981 Equity in Net Income of Unconsolidated Affiliate -- Rouge...................... -- -- -- -- -- 21,729 ---------- ---------- ---------- ---------- ---------- ---------- Earnings from Continuing Operations Before Income Taxes............................ 56,008 150,642 132,751 130,642 107,454 120,171 Income Taxes.............................. 20,443 56,491 49,118 48,338 40,844 46,130 ---------- ---------- ---------- ---------- ---------- ---------- Earnings from Continuing Operations....... 35,565 94,151 83,633 82,304 66,610 74,041 Discontinued Operations, Net of Taxes..... -- -- (20,885) 17,337 26,708 26,932 Extraordinary Item, Net of Taxes.......... -- -- -- 18,771 -- -- Cumulative Effect of Accounting Change, Net of Taxes............................ -- -- (7,836) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net Earnings.............................. 35,565 94,151 54,912 118,412 93,318 100,973 Earnings Per Share (Diluted) -- Continuing Operations................... 0.42 1.06 0.90 0.85 0.69 0.76 Discontinued Operations, Net of Taxes... -- -- (0.23) 0.18 0.27 0.28 Extraordinary Item, Net of Taxes........ -- -- -- 0.19 -- -- Cumulative Effect of Accounting Change, Net of Taxes.......................... -- -- (0.08) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net Earnings............................ 0.42 1.06 0.59 1.22 0.96 1.04 Continuing Operations (Excluding Restructuring Expense and Rouge)*..... 0.46 1.12 0.90 0.85 0.69 0.62 Continuing Operations: Depreciation and Amortization........... 70,582 70,997 64,087 41,602 34,150 26,931 Earnings Before Interest, Taxes, Depreciation and Amortization......... 160,039 261,418 239,964 197,821 160,031 155,789 Capital Expenditures (Including Acquisitions)**....................... 64,943 72,649 132,458 297,516 287,658 275,052 Cash Dividends Declared................... 54,762 53,391 52,343 51,271 45,965 40,872 Per Share............................... $ 0.64 $ 0.61 $ 0.57 $ 0.53 $ 0.49 $ 0.45 Average Shares Outstanding (Diluted)...... 85,623 88,598 93,106 96,949 96,841 96,822 FINANCIAL POSITION Current Assets............................ $ 449,719 $ 624,229 $ 624,255 $ 642,995 $ 594,128 $ 505,104 Current Liabilities....................... 306,619 433,270 427,725 410,031 246,794 167,585 ---------- ---------- ---------- ---------- ---------- ---------- Working Capital........................... 143,100 190,959 196,530 232,964 347,334 337,519 Net Fixed Assets.......................... 836,749 862,512 871,347 933,158 691,027 544,052 Total Assets.............................. 1,475,862 1,673,873 1,686,951 1,842,342 1,561,186 1,282,424 Total Debt***............................. 324,750 525,072 493,313 501,950 417,883 317,997 Shareholders' Equity...................... 649,665 673,354 689,649 780,273 715,518 667,318 Per Share............................... 7.61 7.85 7.67 8.07 7.40 6.91 Total Committed Capital***................ $ 974,415 $1,198,426 $1,182,962 $1,282,223 $1,133,401 $ 985,315 Shares Outstanding........................ 85,375 85,755 89,949 96,657 96,711 96,505 |
All financial data include the results of The Gerstenslager Company, which was acquired in February 1997 through a pooling of interests.
* Excludes the impact of the "Restructuring Expense" for the fiscal year ended May 31, 2001, the "Loss on Investment in Rouge" for the fiscal year ended May 31, 2000 and the "Equity in Net Income of Unconsolidated Affiliate -- Rouge" for the fiscal year ended May 31, 1996.
** Includes $113,000 of Worthington Industries, Inc. common shares exchanged for The Gerstenslager Company during the fiscal year ended May 31, 1997.
*** Excludes Debt Exchangeable for Common Stock of $52,497, $75,745 and $88,494 at May 31, 1999, 1998 and 1997, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements contained in this 2001 Annual Report to Shareholders, including, without limitation, the Management's Discussion and Analysis that follows, that are not historical fact constitute "forward-looking statements" that are based on management's beliefs, estimates, assumptions and currently available information. These forward-looking statements include, without limitation, statements relating to future sales and operating results, growth, stock appreciation, projected capacity levels, pricing trends, anticipated capital expenditures, plant start-ups, capabilities, new products and markets and other non-historical information. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; financial difficulties of customers and suppliers; inherent risks of international development, including foreign currency risks; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; general economic conditions, business environment and the impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the Securities and Exchange Commission.
OVERVIEW
Worthington Industries, Inc. is a diversified steel processor that focuses on steel processing and metals-related businesses. We operate 43 facilities worldwide, principally in three reportable business segments: Processed Steel Products, Metal Framing and Pressure Cylinders. We also hold equity positions in eight joint ventures, which operate 16 facilities worldwide.
On February 1, 2001, we announced the shutdown of a portion of our Malvern, Pennsylvania, facility, which is included in our Processed Steel Products segment. Selected assets, including two rolling mills, a cleaning line, a tension leveler, a pickle line and a slitter, were idled. As a result, 160 hourly and salaried positions were to be eliminated through retirement, normal attrition and termination. The business affected by the shutdown was transferred to other facilities. During the quarter ended February 28, 2001, we recorded a pre-tax restructuring expense of $6.5 million ($0.04 per share, net of tax). The restructuring expense consists of $2.0 million for severance and employee related costs and $4.5 million for the write-down of the idled assets to net realizable value.
In March 2000, we recorded an $8.6 million pre-tax loss ($0.06 per share, net of tax) relating to our investment in the common stock of Rouge Industries, Inc. ("Rouge"). This previously unrealized loss had been reported as a reduction in shareholders' equity. On March 1, 1997, we issued debt exchangeable for common stock ("DECS"), payable in Rouge stock. We realized the loss on the Rouge investment when we used the Rouge stock to satisfy the DECS at maturity on March 1, 2000.
During fiscal 1999, we divested our non-core businesses: Worthington Custom Plastics, Inc., Worthington Precision Metals, Inc. and Buckeye Steel Castings Company, which had previously comprised our Custom Products and Cast Products segments. The divested operations are reflected in our financial statements as discontinued operations. The divestitures provided aggregate proceeds of $224.0 million, which included $194.0 million in cash and $30.0 million in preferred stock and notes receivable issued by the acquirers. We used the cash proceeds to finance capital projects, fund acquisitions, repurchase common shares and reduce debt. The divestitures resulted in an aggregate $24.6 million after-tax loss.
In fiscal 1999, we adopted the American Institute of Certified Public Accountants' Statement of Position 98-5, Reporting on the Costs of Start-Up Activities, which requires that we expense as incurred any costs related to commencing operations at new plants and facilities. We recorded an after-tax charge of $7.8 million, or $0.08 per share, for the accounting policy change, to expense the costs that had been capitalized prior to fiscal 1999. The impact of the change on earnings from continuing operations for fiscal 1999 as reported was not material.
During fiscal 1999, we completed three European acquisitions within the Pressure Cylinders segment. In June 1998, we acquired the stock of Jos. Heiser vormals J. Winter's Sohn, GmbH ("Worthington Heiser"). Based in Kienberg, Austria, Worthington Heiser produces high-pressure cylinders. We acquired a 51% majority interest in Gastec spol. s.r.o., based in Hustopece, Czech Republic, in February 1999 and purchased the cylinder manufacturing assets of Metalurgica Progresso de Vale de Cambra, Lda., based in Vale de Cambra, Portugal, in May 1999. Both of these operations manufacture various low-pressure cylinders. These acquisitions offer growth opportunities for us, given the full product offering and geographic coverage throughout Europe. See Note K to the Consolidated Financial Statements.
RESULTS FROM OPERATIONS
The following table sets forth, for the fiscal years indicated, consolidated sales and operating income by segment and other financial information:
2001 2000 1999 ------------------------- ------------------------- ---------------- % OF % % OF % % OF ACTUAL SALES CHANGE ACTUAL SALES CHANGE ACTUAL SALES IN MILLIONS, EXCEPT PER SHARE -------- ----- ------ -------- ----- ------ -------- ----- Net Sales: Processed Steel Products.............. $1,184.9 64.9% -8% $1,287.9 65.6% 16% $1,114.9 63.2% Metal Framing......................... 346.0 18.9% -1% 350.6 17.9% 4% 337.2 19.1% Pressure Cylinders.................... 289.1 15.8% -9% 318.8 16.2% 4% 305.8 17.3% Other................................. 6.1 0.4% 5.3 0.3% 5.2 0.4% -------- -------- -------- Total Net Sales................... 1,826.1 100.0% -7% 1,962.6 100.0% 11% 1,763.1 100.0% Cost of Goods Sold........................ 1,581.2 86.6% -3% 1,629.4 83.0% 11% 1,468.9 83.3% -------- -------- -------- Gross Margin...................... 244.9 13.4% -27% 333.2 17.0% 13% 294.2 16.7% Selling, General & Administrative Expense................................. 173.2 9.5% 6% 163.7 8.4% 11% 148.0 8.4% Restructuring Expense..................... 6.5 0.4% -- -- -- -- Operating Income: Processed Steel Products.............. 29.3 2.5% -70% 96.8 7.5% 17% 82.6 7.4% Metal Framing......................... 23.7 6.9% -45% 43.2 12.3% 70% 25.4 7.5% Pressure Cylinders.................... 19.3 6.7% -44% 34.2 10.7% -7% 36.7 12.0% Other................................. (7.1) (4.7) 1.5 -------- -------- -------- Total Operating Income............ 65.2 3.5% -62% 169.5 8.6% 16% 146.2 8.3% Other Income (Expense): Misc. Income (Expense)................ (0.9) 2.7 5.1 Loss on Investment in Rouge........... -- (8.6) -- Interest Expense...................... (33.5) -1.8% -16% (39.8) -2.0% -8% (43.1) -2.4% Equity in Net Income of Unconsolidated Affiliates.......................... 25.2 1.4% -6% 26.8 1.4% 9% 24.5 1.4% -------- -------- -------- Earnings Before Taxes............... 56.0 3.0% -63% 150.6 7.7% 13% 132.7 7.5% Income Taxes.............................. 20.4 1.1% -64% 56.4 2.9% 15% 49.1 2.8% -------- -------- -------- Earnings from Continuing Operations....... 35.6 1.9% -62% 94.2 4.8% 13% 83.6 4.7% Discontinued Operations, Net of Taxes..... -- -- (20.9) Cumulative Effect of Accounting Change, Net of Taxes............................ -- -- (7.8) -------- -------- -------- Net Earnings.............................. $ 35.6 1.9% -62% $ 94.2 4.8% 71% $ 54.9 3.1% ======== ======== ======== Average Common Shares Outstanding -- Diluted................................. 85.6 88.6 93.1 Earnings Per Share -- Diluted: Earnings from Continuing Operations........................ $ 0.42 $ 1.06 $ 0.90 Discontinued Operations, Net of Taxes............................. -- -- (0.23) Cumulative Effect of Accounting Change, Net of Taxes.............. -- -- (0.08) -------- -------- -------- Net Earnings........................ $ 0.42 $ 1.06 $ 0.59 ======== ======== ======== |
FISCAL 2001 COMPARED TO FISCAL 2000
Net sales decreased 7% to $1.8 billion from $2.0 billion in fiscal 2000 due to lower demand within our Processed Steel Products and Pressure Cylinders segments and reduced selling prices in Processed Steel Products and Metal Framing. Higher volumes in Metal Framing partially offset these factors. The following provides further information on net sales by segment:
- Processed Steel Products. Net sales decreased 8% to $1.2 billion from $1.3 billion in fiscal 2000 primarily due to the general economic slowdown, especially in the domestic automotive industry. The decrease in net sales was principally attributable to declining direct shipments from most plants and a decrease in toll processing volume. However, our Monroe, Ohio ("Monroe") and Decatur, Alabama ("Decatur") plants continued to increase direct volumes due to the new dry lube line and market penetration, respectively. Direct shipments include sales of material with a value-added processing charge, while toll shipments contain only a value-added processing charge on customer-owned material.
- Metal Framing. Net sales decreased 1% to $346.0 million from $350.6 million in fiscal 2000 due to erosion of selling prices throughout the year brought on by intense competition. Nevertheless, strong demand for building products led to higher volumes, thus offsetting much of the negative impact due to pricing.
- Pressure Cylinders. Net sales decreased 9% to $289.1 million from $318.8 million in fiscal 2000. The primary reason for the decrease was the weakening demand in all product lines due to the slowing economy and stiff competition in the European market. A strong United States dollar also resulted in lower reported sales from our international operations.
Gross margin as a percentage of net sales decreased to 13.4% in fiscal 2001 from 17.0% in fiscal 2000. The majority of the decline occurred in our Processed Steel Products segment due to lower volumes and the smaller spread between direct average selling prices and raw material costs. Selling, general and administrative costs ("SG&A") increased to 9.5% of net sales in fiscal 2001 from 8.4% of net sales in fiscal 2000 due to lower sales and higher salary, bad debt and health care expenses.
Operating income decreased 62% to $65.2 million from $169.5 million in fiscal 2000. The decrease was due to lower volumes in our Processed Steel Products and Pressure Cylinders segments and higher average raw material costs in our Processed Steel Products and Metal Framing segments. Operating income as a percentage of net sales was 3.5% in fiscal 2001 compared to 8.6% in fiscal 2000. The following provides further information on operating income by segment:
- Processed Steel Products. Operating income decreased 70% to $29.3 million in fiscal 2001 from $96.8 million in fiscal 2000 due to higher average raw material prices, changes in sales mix to lower margin products, and declining direct and toll processing volumes. The previously mentioned restructuring expense of $6.5 million and higher manufacturing expenses and SG&A costs as a percentage of net sales resulted in a 2.5% operating margin for the year.
- Metal Framing. Operating income decreased 45% to $23.7 million in fiscal 2001 from $43.2 million in fiscal 2000. Sales volume increases were overshadowed by price competition and higher raw material costs, decreasing the operating margin to 6.9%.
- Pressure Cylinders. Operating income decreased 44% to $19.3 million in fiscal 2001 from $34.2 million in fiscal 2000. Reductions in sales volumes and the start-up of a new non-refillable refrigerant production line in Portugal were the major factors leading to the decrease in the current year operating margin to 6.7%.
Interest expense decreased 16% to $33.5 million in fiscal 2001 from $39.8
million in fiscal 2000. Since we paid off the DECS liability during the fourth
quarter of fiscal 2000, there was no comparable interest expense during fiscal
2001. In addition, we reduced short-term debt (see description in "Liquidity and
Capital Resources"). However, higher average short-term interest rates partially
offset these factors. Our average interest rate on short-term unsecured notes
payable was 6.69% for fiscal 2001 compared to 5.82% for fiscal 2000. At May 31,
2001, approximately 96% of our $324.8 million of total debt was at fixed rates
of interest.
Equity in net income of unconsolidated affiliates decreased 6% to $25.2 million in fiscal 2001 from $26.8 million in fiscal 2000. Higher raw material costs at TWB and lower sales at WSP led to lower margins at those joint ventures. Increases in sales and operating income at the Acerex and WAVE joint ventures partly negated the overall decline.
Our effective tax rate decreased to 36.5% in fiscal 2001 from 37.5% in fiscal 2000 primarily due to ongoing state and local tax planning initiatives.
FISCAL 2000 COMPARED TO FISCAL 1999
Net sales increased 11% to $2.0 billion from $1.8 billion in fiscal 1999. The increase was primarily due to the start-up of two Processed Steel Products facilities: our Decatur facility and Spartan Steel. A strong construction market and increased demand for steel portable cylinders provided for the increased sales in our Metal Framing and Pressure Cylinders segments, respectively. These volume increases were partially offset by lower selling prices in our Processed Steel Products and Pressure Cylinders segments. The following provides further information on net sales by segment:
- Processed Steel Products. Net sales increased 16% to $1.3 billion from $1.1 billion in fiscal 1999. This increase was mainly volume driven as the start-up facilities in Decatur and at Spartan continued to ramp up their operations throughout fiscal 2000. However, the effect of the volume increases was partially offset by lower selling prices during fiscal 2000.
- Metal Framing. Net sales increased 4% to $350.6 million from $337.2 million in fiscal 1999. The building products market remained strong throughout fiscal 2000. That combined with the volume and price increases in the stainless products were the main reasons for the increase in sales. Lower fiscal 2000 selling prices for building products and the sale of the garage door product line in the second quarter of fiscal 1999 partially offset this increase.
- Pressure Cylinders. Net sales increased 4% to $318.8 million from $305.8 million in fiscal 1999. Increased demand for steel portables, system tanks and high-pressure steel cylinders, partially offset by lower selling prices, was the main reason for the increase in sales. Sales in the European operations were flat compared to fiscal 1999 due to competitive pricing pressures in that market.
Gross margin as a percentage of net sales increased to 17.0% in fiscal 2000 from 16.7% in fiscal 1999. The improvement in our gross margin was primarily due to favorable raw material costs, particularly in our Metal Framing and Pressure Cylinders segments. This favorability occurred earlier in the year as prices for raw materials continued to increase across all segments throughout the year. Higher manufacturing expenses partially offset some of this favorable price impact. SG&A costs remained at 8.4% of sales for both fiscal 2000 and fiscal 1999 and were higher than normal due to Year 2000 expenses in both years.
Operating income increased 16% to $169.5 million from $146.2 million in fiscal 1999. This increase mainly was due to the previously mentioned increases in sales volume and favorable raw material pricing partially offset by lower selling prices and increased manufacturing expenses in our European cylinder operations. Operating income as a percentage of net sales was 8.6% in fiscal 2000 compared to 8.3% in fiscal 1999. The following provides further information on operating income by segment:
- Processed Steel Products. Operating income increased 17% to $96.8 million in fiscal 2000 from $82.6 million in fiscal 1999. This was primarily due to higher sales volumes in our start-up operations. Favorability due to lower raw material costs occurred earlier in the year but was offset by raw material price increases in the third and fourth quarters of fiscal 2000. Direct labor, manufacturing expenses and SG&A costs as a percentage of net sales remained consistent with fiscal 1999 resulting in an operating margin for the year of 7.5%.
- Metal Framing. Operating income for Metal Framing increased 70% to $43.2 million in fiscal 2000 from $25.4 million in fiscal 1999. Higher sales volumes in our building products line driven by the favorable construction market more than offset the impact of lower selling prices. Favorable raw material prices and operating efficiencies also contributed, increasing the operating margin to 12.3%.
- Pressure Cylinders. Operating income decreased 7% to $34.2 million in fiscal 2000 from $36.7 million in fiscal 1999. Lower selling prices kept sales in the European market flat compared to the prior year. In addition, higher labor, manufacturing and SG&A expenses in those operations lowered operating income. Higher sales volumes in the steel portables product line were partially offset by fewer sales of the refrigerant cylinders. All of these factors combined produced an operating margin of 10.7%.
Interest expense decreased 8% to $39.8 million in fiscal 2000 from $43.1 million in fiscal 1999. Capitalized interest in fiscal 2000 was $0.8 million compared to $4.0 million in fiscal 1999 as our major construction projects (Decatur and rebuilding Monroe) were completed in the first part of fiscal 1999. The decrease in interest expense was due to lower weighted average debt levels and the extinguishment of the DECS notes in fiscal 2000. At May 31, 2000, approximately 70% of our $525.1 million of total debt was at fixed rates of interest.
Equity in net income of unconsolidated affiliates increased 9% to $26.8 million in fiscal 2000 from $24.5 million in fiscal 1999. Our WAVE, TWB and Acerex joint ventures posted increases in sales and earnings for fiscal 2000. Profits for WSP declined slightly in fiscal 2000 due to lower sales.
Our effective tax rate was 37.5% in fiscal 2000 up from 37.0% in fiscal 1999 due to increased business in higher-taxed foreign and domestic locations, the result of divestiture and acquisition activity concluded in fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 2001, we generated $321.5 million in cash from operating activities, representing a $182.6 million increase from fiscal 2000. The increase primarily was due to $110.0 million in proceeds from the sale of accounts receivable and a $63.9 million reduction in inventories. Lower net income and a $31.0 million tax payment relating to the tax gain from the disposition of our investment in the common stock of Rouge (which occurred in the fourth quarter of fiscal 2000) partially offset these factors.
In November 2000, we entered into a $120.0 million revolving trade receivables securitization ("TRS") facility with a commercial bank which was expanded to $190.0 million in May 2001. Under the TRS facility, certain of our subsidiaries sell their accounts receivable, on a revolving basis, to Worthington Receivables Corporation ("WRC"), a wholly-owned, bankruptcy-remote subsidiary. WRC then sells undivided ownership interests in those accounts receivable to independent third parties. As of May 31, 2001, $110.0 million of accounts receivable had been sold. The proceeds from these sales have been used to reduce short-term borrowings.
Our significant investing and financing activities during fiscal 2001 included repaying $146.4 million in short-term debt, investing $62.9 million in capital projects (excluding acquisitions), retiring $50.6 million in long-term debt and disbursing $54.8 million in dividends to shareholders. These transactions were funded by the cash flows from our operations.
Capital spending during fiscal 2001 included continued construction on Gerstenslager's Clyde facility, the completion of the expansion of our annealing capacity at Decatur and the addition of a dry film lubricant line at Monroe, all within our Processed Steel Products segment. Expenditures were made in our Metal Framing segment for a plant start-up in Seattle, in our Pressure Cylinders segment for a new low-pressure cylinder line in Portugal, and for additional weld cells for our steel pallet business.
Consolidated net working capital decreased $47.9 million from May 31, 2000 to $143.1 million at May 31, 2001. The decrease was due to the following: a reduction in inventory levels reflecting lower levels of business and an increased focus on inventory reduction; an increase in accounts payable; and the aforementioned tax payment.
We repurchased 379,100 common shares ($2.7 million) and 4.6 million common shares ($63.7 million) during fiscal 2001 and fiscal 2000, respectively. As of May 31, 2001, approximately 2.5 million common shares remain available for repurchase under programs authorized by our Board of Directors. The timing and amount of any future repurchases will be at our discretion and will depend upon market conditions and our operating
performance and liquidity. Any repurchase will also be subject to the covenants contained in our credit facilities and other debt instruments.
We maintain a $190.0 million revolving credit facility (the "Revolver") with a group of commercial banks, which expires in May 2003, to finance the cash requirements of our business operations. We also have short-term uncommitted lines of credit extended by various commercial banks available as needed. We had no outstanding borrowings under the Revolver and $13.8 million was outstanding under the uncommitted lines at May 31, 2001.
At May 31, 2001, our total debt was $324.8 million compared to $525.1 million at the end of fiscal 2000. This reduction was due to the previously mentioned use of proceeds from the TRS and lower working capital requirements. As a result, our debt to capital ratio decreased to 33.3% from 43.8% at the end of fiscal 2000.
From time to time, we engage in discussions with respect to selected acquisitions, and we expect to continue to assess acquisition opportunities as they arise. Additional financing may be required if we decide to make additional acquisitions. There can be no assurance, however, that any such opportunities will arise, that any such acquisitions will be consummated or that any needed additional financing will be available on satisfactory terms when required. Absent any acquisitions, we anticipate that cash flows from operations, working capital and unused short-term borrowing capacity should be more than sufficient to fund expected normal operating costs, dividends and capital expenditures for our existing businesses.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are exposed to various market risks. We continually monitor these risks and regularly develop appropriate strategies to manage them. Accordingly, from time to time, we may enter into certain derivative financial and commodity instruments. These instruments are used to mitigate market exposure and are not used for trading or speculative purposes.
Interest Rate Risk: At May 31, 2001, our long-term debt was comprised primarily of fixed-rate instruments. Therefore, the fair value of this debt is sensitive to fluctuations in interest rates. Assuming a 1% increase in interest rates, the fair value of our long-term debt would not be materially affected. We would not expect that this fluctuation would materially impact our results of operations and cash flows absent an election to repurchase or retire all or a portion of the fixed-rate debt at prices above carrying value.
Foreign Currency Risk: The translation of our foreign operations from their local currencies to the U.S. dollar subjects us to exposure related to fluctuating exchange rates. We do not use derivative instruments to manage this risk. However, we do make limited use of forward contracts to manage our exposure to certain intercompany loans with our foreign affiliates. We do not expect that a 10% change in the exchange rate to the U.S. dollar forward rate would materially impact our results of operations or cash flows.
Commodity Price Risk: We are exposed to market risk for price fluctuations on purchases of steel, natural gas, zinc, nickel and other raw materials and utility requirements. To limit this exposure we negotiate the best prices for our commodities and competitively price our products and services to reflect the fluctuations in commodity market prices. To a limited extent, we have entered into commodity derivative instruments to hedge purchases of steel and zinc. At May 31, 2001, these positions were not material to our financial position, results of operations or cash flows.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which we are required to adopt in fiscal 2002. The Statement requires derivatives to be carried on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The change in a derivative's fair value
related to the ineffective portion of a hedge, if any, will be immediately recognized in earnings. The adoption of this Statement will not have a material impact on our results of operations or financial position.
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 on Revenue Recognition, which we adopted the beginning of the fourth quarter of fiscal 2001. Adoption of the Bulletin did not have a significant effect on our results of operations or financial position.
In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires the use of the purchase method of accounting for any business combinations initiated after June 30, 2001 and further clarifies the criteria to recognize intangible assets separately from goodwill. Under SFAS No. 142, goodwill and indefinite-lived intangible assets will no longer be amortized but will be reviewed for impairment. Separable intangible assets with a definite life will continue to be amortized over their useful lives. We adopted SFAS No. 142 effective June 1, 2001. The adoption of this Statement will not have a material effect on our results of operations. During fiscal 2002, we will perform the first of the required impairment tests of goodwill and indefinite-lived intangible assets. The impact of these impairment tests has not yet been determined.
ENVIRONMENTAL
We believe environmental issues will not have a material effect on capital expenditures, future results of operations or financial position.
INFLATION
The effects of inflation on our operations were not significant during the periods presented in the Consolidated Financial Statements.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 31 ------------------------ 2001 2000 DOLLARS IN THOUSANDS ---------- ---------- ASSETS Current Assets: Cash and cash equivalents................................. $ 194 $ 538 Accounts receivable, less allowances of $9,166 and $3,879 at May 31, 2001 and 2000................................ 169,330 301,175 Inventories Raw materials........................................... 102,051 144,903 Work in process......................................... 59,735 81,632 Finished products....................................... 65,720 64,669 ---------- ---------- 227,506 291,204 Prepaid expenses and other current assets................. 52,689 31,312 ---------- ---------- Total Current Assets............................... 449,719 624,229 Investments in Unconsolidated Affiliates.................... 58,638 50,197 Intangible Assets........................................... 80,377 80,213 Other Assets................................................ 50,379 56,722 Property, Plant and Equipment Land...................................................... 25,085 27,654 Buildings and improvements................................ 244,834 244,187 Machinery and equipment................................... 883,160 861,600 Construction in progress.................................. 48,111 47,181 ---------- ---------- 1,201,190 1,180,622 Less accumulated depreciation............................. 364,441 318,110 ---------- ---------- 836,749 862,512 ---------- ---------- Total Assets....................................... $1,475,862 $1,673,873 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable.......................................... $ 207,568 $ 157,998 Notes payable............................................. 13,794 160,194 Accrued compensation, contributions to employee benefit plans and related taxes................................. 39,329 36,888 Dividends payable......................................... 13,660 13,721 Other accrued items....................................... 28,560 30,082 Income taxes.............................................. 1,960 31,699 Current maturities of long-term debt...................... 1,748 2,688 ---------- ---------- Total Current Liabilities.......................... 306,619 433,270 Other Liabilities........................................... 19,860 25,531 Long-Term Debt.............................................. 309,208 362,190 Deferred Income Taxes....................................... 140,974 125,942 Contingent Liabilities -- Note G............................ -- -- Minority Interest........................................... 49,536 53,586 Shareholders' Equity: Preferred shares, without par value; authorized -- 1,000,000 shares; issued and outstanding -- none..................................... -- -- Common shares, without par value; authorized -- 150,000,000 shares; issued and outstanding, 2001 -- 85,375,425 shares, 2000 -- 85,754,525 shares............................... -- -- Additional paid-in capital................................ 109,685 109,776 Cumulative other comprehensive loss, net of taxes of $4,349 and $3,046 at May 31, 2001 and 2000.............. (8,024) (5,806) Retained earnings......................................... 548,004 569,384 ---------- ---------- 649,665 673,354 ---------- ---------- Total Liabilities and Shareholders' Equity......... $1,475,862 $1,673,873 ========== ========== |
See notes to consolidated financial statements.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEAR ENDED MAY 31 -------------------------------------- 2001 2000 1999 IN THOUSANDS, EXCEPT PER SHARE ---------- ---------- ---------- Net sales............................................. $1,826,100 $1,962,606 $1,763,072 Cost of goods sold.................................... 1,581,178 1,629,455 1,468,886 ---------- ---------- ---------- Gross Margin................................... 244,922 333,151 294,186 Selling, general and administrative expense........... 173,264 163,662 147,990 Restructuring expense................................. 6,474 -- -- ---------- ---------- ---------- Operating Income............................... 65,184 169,489 146,196 Other income (expense): Miscellaneous income (expense)...................... (928) 2,653 5,210 Loss on investment in Rouge......................... -- (8,553) -- Interest expense.................................... (33,449) (39,779) (43,126) Equity in net income of unconsolidated affiliates -- joint ventures..................... 25,201 26,832 24,471 ---------- ---------- ---------- Earnings Before Income Taxes................... 56,008 150,642 132,751 Income taxes.......................................... 20,443 56,491 49,118 ---------- ---------- ---------- Earnings from Continuing Operations............ 35,565 94,151 83,633 Discontinued operations, net of taxes................. -- -- (20,885) Cumulative effect of accounting change, net of taxes............................................... -- -- (7,836) ---------- ---------- ---------- Net Earnings................................... $ 35,565 $ 94,151 $ 54,912 ========== ========== ========== Average Common Shares Outstanding (Basic)............. 85,590 88,411 93,016 Earnings Per Share (Basic): Continuing operations.......................... $ 0.42 $ 1.06 $ 0.90 Discontinued operations, net of taxes.......... -- -- (0.23) Cumulative effect of accounting change, net of taxes....................................... -- -- (0.08) ---------- ---------- ---------- Net Earnings................................... $ 0.42 $ 1.06 $ 0.59 ========== ========== ========== Average Common Shares Outstanding (Diluted)........... 85,623 88,598 93,106 Earnings Per Share (Diluted): Continuing operations.......................... $ 0.42 $ 1.06 $ 0.90 Discontinued operations, net of taxes.......... -- -- (0.23) Cumulative effect of accounting change, net of taxes....................................... -- -- (0.08) ---------- ---------- ---------- Net Earnings................................... $ 0.42 $ 1.06 $ 0.59 ========== ========== ========== |
See notes to consolidated financial statements.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE YEARS ENDED MAY 31
CUMULATIVE COMMON STOCK ADDITIONAL OTHER -------------------- PAID-IN COMPREHENSIVE RETAINED SHARES AMOUNT CAPITAL LOSS, NET OF TAX EARNINGS TOTAL DOLLARS IN THOUSANDS, EXCEPT PER SHARE ---------- ------ ---------- ---------------- -------- -------- Balance at June 1, 1998.......................... 96,656,759 $968 $116,696 $(8,375) $670,984 $780,273 Comprehensive income: Net income..................................... -- -- -- -- 54,912 54,912 Foreign currency translation................... -- -- -- (109) -- (109) -------- Total comprehensive income............... 54,803 -------- Common shares issued............................. 139,982 -- 1,362 -- -- 1,362 Reincorporation to Ohio.......................... -- (926) 926 -- -- -- Purchase and retirement of common shares......... (6,847,467) (42) (7,497) -- (86,893) (94,432) Cash dividends declared ($0.57 per share)........ -- -- -- -- (52,342) (52,342) Other............................................ -- -- (13) -- (2) (15) ---------- ---- -------- ------- -------- -------- Balance at May 31, 1999.......................... 89,949,274 -- 111,474 (8,484) 586,659 689,649 Comprehensive income: Net income..................................... -- -- -- -- 94,151 94,151 Unrealized gain on investment.................. -- -- -- 5,616 -- 5,616 Foreign currency translation................... -- -- -- (2,938) -- (2,938) -------- Total comprehensive income............... 96,829 -------- Common shares issued............................. 358,203 -- 4,018 -- -- 4,018 Purchase and retirement of common shares......... (4,552,952) -- (5,720) -- (58,020) (63,740) Cash dividends declared ($0.61 per share)........ -- -- -- -- (53,391) (53,391) Other............................................ -- -- 4 -- (15) (11) ---------- ---- -------- ------- -------- -------- Balance at May 31, 2000.......................... 85,754,525 -- 109,776 (5,806) 569,384 673,354 Comprehensive income: Net income..................................... -- -- -- -- 35,565 35,565 Unrealized gain on investment.................. -- -- -- 1 -- 1 Foreign currency translation................... -- -- -- (2,219) -- (2,219) -------- Total comprehensive income............... 33,347 -------- Purchase and retirement of common shares......... (379,100) -- (485) -- (2,184) (2,669) Cash dividends declared ($0.64 per share)........ -- -- -- -- (54,762) (54,762) Other............................................ -- -- 394 -- 1 395 ---------- ---- -------- ------- -------- -------- Balance at May 31, 2001.......................... 85,375,425 $ -- $109,685 $(8,024) $548,004 $649,665 ========== ==== ======== ======= ======== ======== |
See notes to consolidated financial statements.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MAY 31 ---------------------------------- 2001 2000 1999 DOLLARS IN THOUSANDS --------- -------- --------- OPERATING ACTIVITIES: Net earnings........................................... $ 35,565 $ 94,151 $ 54,912 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization....................... 70,582 70,997 78,490 Restructuring expense............................... 6,474 -- -- Provision for deferred income taxes................. 9,077 (16,345) (18,087) Loss on investment in Rouge......................... -- 8,553 -- Equity in undistributed net income of unconsolidated affiliates........................................ (10,119) 13,262 (10,848) Minority interest in net income (loss) of consolidated subsidiaries......................... 1,464 2,699 (2,664) Net loss on sale of assets.......................... 84 -- 29,237 Cumulative effect of accounting change.............. -- -- 12,292 Changes in assets and liabilities: Accounts receivable............................... 132,497 (17,413) (27,078) Inventories....................................... 63,886 (29,106) (4,980) Prepaid expenses and other current assets......... 4,314 1,264 (2,965) Other assets...................................... (449) (15,957) (366) Accounts payable and accrued expenses............. 14,804 30,631 (665) Other liabilities................................. (6,725) (3,826) (3,554) --------- -------- --------- Net Cash Provided By Operating Activities...... 321,454 138,910 103,724 INVESTING ACTIVITIES: Investment in property, plant and equipment, net....... (62,900) (71,541) (107,759) Acquisitions, net of cash acquired..................... (2,043) (1,108) (34,054) Proceeds from sale of assets........................... 1,030 2,672 198,995 --------- -------- --------- Net Cash Provided (Used) By Investing Activities................................... (63,913) (69,977) 57,182 FINANCING ACTIVITIES: Proceeds from (payments on) short-term borrowings...... (146,401) 37,917 (14,491) Proceeds from long-term debt........................... 2,064 -- 390 Principal payments on long-term debt................... (50,643) (5,597) (4,983) Proceeds from issuance of common shares................ -- 4,018 1,349 Proceeds from (payments to) minority interest.......... (4,677) 3,790 7,497 Repurchase of common shares............................ (3,406) (63,003) (94,432) Dividends paid......................................... (54,822) (53,161) (52,383) --------- -------- --------- Net Cash Used By Financing Activities.......... (257,885) (76,036) (157,053) --------- -------- --------- Increase (decrease) in cash and cash equivalents....... (344) (7,103) 3,853 Cash and cash equivalents at beginning of year......... 538 7,641 3,788 --------- -------- --------- Cash and Cash Equivalents at End of Year....... $ 194 $ 538 $ 7,641 ========= ======== ========= |
See notes to consolidated financial statements.
WORTHINGTON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts of Worthington Industries, Inc. and subsidiaries (the "Company"). Spartan Steel Coating, L.L.C. (owned 52%), Worthington S.A. (owned 52%), Worthington Tank, Ltda. (owned 65%), and Worthington Gastec, a.s. (owned 51%) are fully consolidated with the equity owned by the respective partners shown as minority interest on the balance sheet and their portion of net income or loss included in miscellaneous income or expense. Investments in unconsolidated affiliates are accounted for using the equity method. Significant intercompany accounts and transactions are eliminated. Certain reclassifications were made to prior year amounts to conform to the 2001 presentation.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
Inventories: Inventories are valued at the lower of cost or market. Cost is determined using the specific identification method for steel coils and the first-in, first-out method for all other inventories.
Derivative Financial Instruments: The Company does not engage in currency or commodity speculation and generally enters into forward contracts and swaps only to hedge specific foreign currency or commodity transactions. Gains or losses from these contracts offset gains or losses of the assets, liabilities or transactions being hedged. The amount of these contracts outstanding and the adjustments marked-to-market are not material.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which the Company is required to adopt in fiscal 2002. The Statement requires derivatives to be carried on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The change in a derivative's fair value related to the ineffective portion of a hedge, if any, will be immediately recognized in earnings. The adoption of this Statement will not have a material impact on the Company's results of operations or financial position.
Fair Value of Financial Instruments: The non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, other assets and payables approximate fair values. The fair value of long-term debt based upon quoted market prices was $280,543,000 and $335,420,000 at May 31, 2001 and 2000, respectively.
Risks and Uncertainties: The Company, including unconsolidated affiliates, operates 59 production facilities in 22 states and 11 countries. The Company's largest markets are the automotive and automotive supply markets which comprise approximately one-third of the Company's sales. Foreign operations and exports represent less than 10% of the Company's production and sales. Approximately 19% of the Company's labor force is covered by collective bargaining agreements. All significant labor contracts expire over one year from May 31, 2001. The concentration of credit risks from financial instruments related to the markets served by the Company is not expected to have a material adverse effect on the Company's consolidated financial position, cash flow or future results of operations.
Intangible Assets: Intangible assets primarily include goodwill, which is being amortized on the straight-line method generally over 40 years. Intangible assets were $80,377,000 at May 31, 2001 and $80,213,000 at May 31, 2000 net of accumulated amortization of $9,678,000 and $7,841,000, respectively. Amortization expense was $4,196,000 in fiscal 2001, $4,150,000 in fiscal 2000 and $2,996,000 in fiscal 1999. The Company's policy is
to periodically review its intangible assets based upon the evaluation of such factors as the occurrence of a significant adverse event or change in the environment in which the business operates or if the expected future net cash flows (undiscounted and without interest) would become less than the carrying amount of the assets. An impairment loss would be recorded in the period such determination is made based on the fair value of the related businesses.
Property and Depreciation: Property, plant and equipment are carried at cost and depreciated using the straight-line and units-of-production methods. Depreciation expense was $66,386,000 in fiscal 2001, $66,847,000 in fiscal 2000 and $75,494,000 in fiscal 1999. Accelerated depreciation methods are used for income tax purposes.
Capitalized Interest: Interest is capitalized in connection with construction of qualified assets. Under this policy, the Company capitalized interest of $1,905,000 in fiscal 2001, $750,000 in fiscal 2000 and $3,972,000 in fiscal 1999.
Stock-Based Compensation: The Company has elected to follow the accounting provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, for stock-based compensation and to furnish the pro forma disclosures required under SFAS No. 123, Accounting for Stock-Based Compensation. See Note F for pro forma disclosures required by SFAS No. 123 and for additional information on the Company's stock options.
Revenue Recognition: The Company generally recognizes revenue upon the transfer of title. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 on Revenue Recognition, which the Company adopted the beginning of the fourth quarter of fiscal 2001. Adoption of the Bulletin did not have a significant effect on the Company's results of operations or financial position.
Advertising Expense: The Company expenses advertising costs as incurred. Advertising expense was $2,314,000, $2,059,000 and $1,413,000 for fiscal 2001, fiscal 2000 and fiscal 1999, respectively.
Environmental Costs: Environmental costs are capitalized if the costs extend the life of the property, increase its capacity, and/or mitigate or prevent contamination from future operations. Costs related to environmental contamination treatment and clean-up are charged to expense.
Statements of Cash Flows: Supplemental cash flow information for the years ended May 31 is as follows:
2001 2000 1999 IN THOUSANDS ------- ------- ------- Interest paid........................................ $34,887 $41,634 $45,251 Income taxes paid, net of refunds.................... 42,069 22,821 52,459 |
Loss on Investment in Rouge: During March 1997, the Company issued $92,994,000 of three-year notes exchangeable into Class A Common Stock of Rouge (the "DECS"). On March 1, 2000, the Company retired the DECS notes in exchange for the Rouge shares held by the Company. Prior to the exchange, the Company's investment in Rouge Industries, Inc. ("Rouge") was classified as an "available-for-sale" security with adjustments to market value being recorded, net of tax, to shareholders' equity. While it was outstanding, the DECS liability fluctuated in proportion to the market value of the Rouge shares. Because it was the Company's intention to settle the DECS using the Rouge shares, a net of tax adjustment to shareholder's equity was made for the net change both in stock value and the carrying amount of the DECS liability while it was outstanding. The previously unrealized loss on the investment in Rouge was realized when the Company exchanged the Rouge shares for the DECS, resulting in an $8,553,000 pre-tax loss in fiscal 2000.
Deferred Start-up Costs: In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5 (SOP 98-5), Reporting on the Costs of Start-Up Activities, which requires that costs related to start-up activities be expensed as incurred. Prior to 1999, the Company capitalized the cost of starting up new plants and facilities. The Company adopted the provisions of SOP 98-5 in its financial statements for fiscal 1999. The effect of the adoption of SOP 98-5 was to record a charge for the cumulative effect of an accounting change of $7,836,000, net of taxes of $4,456,000, to expense costs that had been capitalized prior to 1999. The impact of the change on earnings from continuing operations for fiscal 1999 was immaterial.
Recently Issued Accounting Standards: In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires the use of the purchase method of accounting for any business combinations initiated after June 30, 2001 and further clarifies the criteria to recognize intangible assets separately from goodwill. Under SFAS No. 142, goodwill and indefinite-lived intangible assets will no longer be amortized but will be reviewed for impairment. Separable intangible assets with a definite life will continue to be amortized over their useful lives. The Company adopted SFAS No. 142 effective June 1, 2001. The adoption of this Statement will not have a material effect on our results of operations. During fiscal 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite-lived intangible assets. The impact of these impairment tests has not yet been determined.
NOTE B -- SHAREHOLDERS' EQUITY
Preferred Shares: The Company's Articles of Incorporation contemplate two classes of preferred shares and their relative voting rights. The Board of Directors is empowered to determine the issue prices, dividend rates, amounts payable upon liquidation, and other terms of the preferred shares when issued.
Reincorporation to Ohio: On October 13, 1998, Worthington Industries, Inc., a Delaware corporation ("Worthington Delaware") was merged with and into the Company, an Ohio corporation and a wholly-owned subsidiary of Worthington Delaware. Each share of common stock, par value $.01 per share, of Worthington Delaware was converted into one common share, without par value, of the Company.
Comprehensive Income: The components of other comprehensive income (loss) and related tax effects for the years ended May 31 were as follows:
2001 2000 1999 IN THOUSANDS ------- ------- ----- Other comprehensive income (loss): Unrealized gain on investment, net of tax of $0, $(3,024) and $0 in 2001, 2000 and 1999............ $ 1 $ 5,616 $ -- Foreign currency translation, net of tax of $1,195, $1,582 and $57 in 2001, 2000 and 1999............. (2,219) (2,938) (109) ------- ------- ----- Other comprehensive income (loss).................... $(2,218) $ 2,678 $(109) ======= ======= ===== |
The components of cumulative other comprehensive loss, net of tax at May 31 were as follows:
2001 2000 IN THOUSANDS ------- ------- Unrealized gain (loss) on investment........................ $ 54 $ 53 Foreign currency translation................................ (8,078) (5,859) ------- ------- Cumulative other comprehensive loss......................... $(8,024) $(5,806) ======= ======= |
NOTE C -- DEBT
Debt at May 31 is summarized as follows:
2001 2000 IN THOUSANDS -------- -------- Short-term unsecured notes payable.......................... $ 13,794 $160,194 Revolver -- unsecured....................................... -- -- 7.125% unsecured senior notes due May 15, 2006.............. 158,500 200,000 6.700% unsecured senior notes due December 1, 2009.......... 145,000 150,000 Other....................................................... 7,456 14,878 -------- -------- Total debt............................................. 324,750 525,072 Less current maturities and short-term notes payable........ 15,542 162,882 -------- -------- Total long-term debt................................... $309,208 $362,190 ======== ======== |
The short-term unsecured notes payable represent borrowings under uncommitted bank lines of credit. The weighted average interest rate for these short-term notes was 6.69% and 5.82% for fiscal 2001 and 2000, respectively. In addition, the Company maintains a $190,000,000 unsecured revolving credit facility maturing May 30, 2003. The Company pays a commitment fee on the unused credit amount. Interest rates are determined at the time of borrowing based upon alternatives specified in the credit agreement. To remain in compliance with the credit agreement, the Company must maintain net worth of not less than $450,000,000 and a ratio of debt to total capitalization, as defined, of less than 50%. At May 31, 2001, this ratio was 33.9%.
During May 2001, the Company entered into open-market transactions to repurchase portions of the 7.125% Notes due 2006 and the 6.700% Notes due 2009. The total amounts repurchased through May 31, 2001 were $41,500,000 and $5,000,000, respectively.
The Company's "Other" debt includes an industrial development revenue bond with an interest rate of 2.00% and debt from foreign operations with a weighted average interest rate of 4.41%. During fiscal 2001, the Company prepaid $7,305,000 of floating rate notes due 2011. In conjunction with the prepayment, the Company terminated certain interest rate swap agreements that effectively converted the interest rate on the floating rate notes to a 5.91% fixed rate. The Company recorded a $392,000 loss on the termination of the interest rate swap agreements.
Principal payments due on long-term debt in the next five fiscal years are as follows: 2002 -- $1,748,000; 2003 -- $1,199,000; 2004 -- $1,281,000; 2005 -- $1,241,000; 2006 -- $159,682,000; and thereafter -- $145,805,000.
The Company guaranteed obligations totaling $2,349,000 at May 31, 2001, with varying maturities. The Company believes the guarantees will not significantly affect its consolidated financial position or future results of operations.
NOTE D -- INCOME TAXES
Income taxes for the years ended May 31 were as follows:
2001 2000 1999 IN THOUSANDS ------- -------- ------- Current: Federal........................................... $ 6,740 $ 66,070 $33,665 State and local................................... 1,126 4,078 3,808 Foreign........................................... 3,500 2,688 3,938 Deferred: Federal........................................... 8,998 (16,514) 7,891 State............................................. 79 169 (184) ------- -------- ------- 20,443 56,491 49,118 Discontinued Operations............................. -- -- (4,481) ------- -------- ------- $20,443 $ 56,491 $44,637 ======= ======== ======= |
Under SFAS No. 109, Accounting for Income Taxes, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The components of the Company's deferred tax assets and liabilities as of May 31 are as follows:
2001 2000 IN THOUSANDS -------- -------- Deferred tax assets: Allowance for doubtful accounts........................... $ 4,078 $ 2,094 Inventory................................................. 4,551 1,913 Accrued expenses.......................................... 8,337 5,172 Income taxes.............................................. 4,094 4,122 Other..................................................... 347 413 -------- -------- 21,407 13,714 Deferred tax liabilities: Property, plant and equipment............................. 129,688 115,529 Undistributed earnings of unconsolidated affiliates....... 13,512 11,830 Other..................................................... (2,226) (1,417) -------- -------- 140,974 125,942 -------- -------- Net deferred tax liability................................ $119,567 $112,228 ======== ======== |
The reasons for the difference between the effective income tax rate and the statutory federal income tax rate were as follows:
2001 2000 1999 ---- ---- ---- Federal statutory rate...................................... 35.0% 35.0% 35.0% State and local income taxes, net of federal tax benefit.... 1.4 1.8 1.9 Foreign and other........................................... 0.1 0.7 0.1 ---- ---- ---- Effective tax rate.......................................... 36.5% 37.5% 37.0% ==== ==== ==== |
NOTE E -- EMPLOYEE BENEFIT PLANS
Certain employees of the Company participate in a current cash profit sharing plan and a deferred profit sharing plan. Company contributions to and costs for these plans are determined as a percentage of the Company's pre-tax income before profit sharing.
Certain operations have non-contributory defined benefit pension plans covering a majority of their employees qualified by age and service. Company contributions to these plans comply with ERISA's minimum funding requirements.
At May 31, 1999, all pension plans of discontinued operations were disposed.
A summary of the components of net periodic pension cost for the defined benefit plans in fiscal 2001, fiscal 2000 and fiscal 1999, and the contributions charged to pension expense for the defined contribution plans follows:
2001 2000 1999 IN THOUSANDS ------- ------- ------- Defined benefit plans: Service cost (benefits earned during the period)..... $ 922 $ 827 $ 1,214 Interest cost on projected benefit obligation........ 1,242 1,051 1,236 Actual (return) loss on plan assets.................. 1,092 (1,109) (2,050) Net amortization and deferral........................ (2,135) 177 1,587 ------- ------- ------- Net pension cost on defined benefit plans............ 1,121 946 1,987 Defined contribution plans............................. 5,676 6,418 6,247 ------- ------- ------- Total pension expense -- Continuing Operations................................. 6,797 7,364 8,234 Discontinued Operations................................ -- -- (1,048) ------- ------- ------- Total pension expense........................ $ 6,797 $ 7,364 $ 7,186 ======= ======= ======= |
Pension expense was calculated assuming a weighted average discount rate of between 7.00% and 7.75% with a weighted average expected long-term rate of return of between 7.75% and 9.00%. Plan assets consist principally of listed equity securities and fixed income instruments. The following table sets forth the funded status and amounts recognized in the Company's consolidated balance sheets for defined benefit pension plans at May 31:
2001 2000 IN THOUSANDS ------- ------- Change in Benefit Obligation Benefit obligation -- beginning of year................... $14,891 $14,520 Service cost.............................................. 922 827 Interest cost............................................. 1,242 1,069 Amendments................................................ 1,108 -- Actuarial (gain) loss..................................... 114 (706) Benefits paid............................................. (672) (819) ------- ------- Benefit obligation -- end of year......................... 17,605 14,891 ------- ------- Change in Plan Assets Fair value of plan assets -- beginning of year............ 14,767 13,932 Actual return (loss) on plan assets....................... (1,092) 796 Employer contributions.................................... 1,425 781 Benefits paid............................................. (580) (742) ------- ------- Fair value of plan assets -- end of year.................. 14,520 14,767 ------- ------- Funded Status............................................... (3,085) (124) Unrecognized Net Actuarial Loss............................. (1,385) (3,928) Unrecognized Prior Service Cost............................. 1,369 2,967 ------- ------- Accrued Benefit Cost........................................ $(3,101) $(1,085) ======= ======= Plans With Benefit Obligations in Excess of Fair Value of Plan Assets: Projected Benefit Obligation.............................. $16,816 $14,073 Fair Value of Plan Assets................................. 13,469 13,563 ------- ------- Funded Status............................................. $(3,347) $ (510) ======= ======= |
NOTE F -- STOCK OPTIONS
Under its employee and non-employee director stock option plans, the Company may grant incentive stock options to purchase common shares at not less than 100% of market value at date of grant or non-qualified stock options at a price determined by the Compensation and Stock Option Committee. Generally, options vest and become exercisable at the rate of 20% per year beginning one year from date of grant and expire ten years thereafter. The following table summarizes the option plans' activities for the years ended May 31:
2001 2000 1999 ------------------ ------------------ ------------------ WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE IN THOUSANDS, EXCEPT PER SHARE ------- -------- ------- -------- ------- -------- Outstanding -- beginning of year.......... 4,336 $14.90 3,907 $15.04 2,440 $17.39 Granted................................... 1,851 9.30 1,006 12.75 2,153 13.00 Exercised................................. -- -- (358) 9.25 (140) 9.31 Forfeited................................. (348) 15.77 (219) 17.29 (546) 18.90 ----- ----- ----- Outstanding -- end of year................ 5,839 13.07 4,336 14.90 3,907 15.04 ===== ===== ===== Exercisable at end of year................ 2,005 16.34 1,474 17.68 1,227 16.52 ===== ===== ===== |
The following table summarizes information for options outstanding and exercisable at May 31, 2001:
OUTSTANDING EXERCISABLE ------------------------------------------ ----------------------- WEIGHTED WEIGHTED AVERAGE WEIGHTED AVERAGE REMAINING AVERAGE NUMBER EXERCISE PRICE CONTRACTUAL LIFE NUMBER EXERCISE PRICE IN THOUSANDS, EXCEPT PER SHARE ------ -------------- ---------------- ------ -------------- Exercise prices between $9.00 and $13.00............... 4,487 $11.33 8.7 943 $12.84 $14.38 and $21.38.............. 1,352 18.87 5.0 1,062 19.44 |
Under APB 25, the Company does not recognize compensation expense related to employee stock options, as no options are granted at a price below the market price on the day of grant.
Pro Forma Information: Pro forma information regarding net income and earnings per share is required by SFAS No. 123. This information is required to be determined as if the Company had accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method prescribed by that statement. The weighted average fair value of options granted in fiscal 2001, 2000 and 1999 was $2.27, $2.84 and $2.19, respectively, based on the Black-Scholes option-pricing model with the following weighted average assumptions:
2001 2000 1999 Assumptions used: ----- ----- ----- Dividend yield............................................ 6.38% 4.25% 4.25% Expected volatility....................................... 23.00% 23.00% 23.00% Risk-free interest rate................................... 3.61% 5.96% 4.79% Expected lives (years).................................... 5 5 5 |
Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards in 2001, 2000 and 1999 consistent with the provisions of SFAS No. 123, the Company's net earnings and earnings per share would have been as presented in the following table:
2001 2000 1999 IN THOUSANDS, EXCEPT PER SHARE ------- ------- ------- Pro forma net earnings................................ $34,199 $92,708 $53,830 Pro forma earnings per share (basic).................. 0.40 1.05 0.58 Pro forma earnings per share (diluted)................ 0.40 1.05 0.58 |
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the above weighted average assumptions used for grants. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in the Company's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
NOTE G -- CONTINGENT LIABILITIES AND COMMITMENTS
The Company is a defendant in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect the Company's consolidated financial position or future results of operations. The Company believes that environmental issues will not have a material effect on capital expenditures, consolidated financial position or future results of operations.
To secure access to facilities used to regenerate acid used in certain steel processing locations, the Company has entered into unconditional purchase obligations with a third party which require the Company to deliver certain quantities of acid for processing annually through the year 2019. In addition, the Company is required to pay for freight and utilities used in processing its acid. The aggregate amount of required payments at May 31, 2001 is as follows (in thousands):
2002............................................. $ 4,395 2003............................................. 4,395 2004............................................. 4,395 2005............................................. 4,395 2006............................................. 4,395 Thereafter....................................... 57,140 ------- Total............................................ $79,115 ======= |
The Company may not terminate the unconditional purchase obligations without assuming or otherwise repaying certain debt of the supplier, based on the fair market value of the facility. At May 31, 2001, $34,235,000 of such debt was outstanding.
NOTE H -- INDUSTRY SEGMENT DATA
The Company's continuing operations include three reportable segments (Processed Steel Products, Metal Framing and Pressure Cylinders). Factors used to identify these segments include the products and services provided by each segment as well as the management reporting structure used by the Company. A discussion of each segment is outlined below.
Processed Steel Products: This segment consists of two business units, The Worthington Steel Company ("Worthington Steel") and The Gerstenslager Company ("Gerstenslager"). Both are intermediate processors of flat-rolled steel. This segment's processing capabilities include blanking, cold-rolling, dry lubricating, configured blanking, cutting-to-length, edging, hot-dipped galvanizing, hydrogen annealing, nickel plating, painting, pickling, slitting, stamping, tension leveling and zinc/nickel coating. Worthington Steel sells to customers principally in the automotive, lawn and garden, construction, hardware, furniture, office equipment, electrical control, leisure and recreation, appliance, farm implement, HVAC and aerospace markets. Gerstenslager supplies automotive aftermarket body panels within the United States primarily to domestic and transplant automotive and heavy duty truck manufacturers.
Metal Framing: This segment consists of one business unit, Dietrich Industries, Inc. ("Dietrich"), which produces metal framing products for the commercial and residential construction markets in the United States. Dietrich's customers primarily consist of wholesale distributors and commercial and residential building contractors.
Pressure Cylinders: This segment consists of one business unit, Worthington Cylinder Corporation ("Worthington Cylinders"). Worthington Cylinders produces a complete line of pressure cylinder vessels, including liquefied petroleum gas ("LPG") cylinders, refrigerant cylinders and industrial/specialty gas cylinders. LPG cylinders are used for gas barbecue grills, camping equipment, residential heating systems, industrial forklifts, and commercial/residential cooking (outside North America). Refrigerant cylinders are used to hold refrigerant gases for commercial and residential air conditioning and refrigeration systems and for automotive air conditioning systems. Industrial/specialty gas cylinders are used as containers for gases for the following: cutting and welding metals; breathing (medical, diving and firefighting); semiconductor production; beverage delivery; and compressed natural gas systems. Worthington Cylinders also produces recycle and recovery tanks for refrigerant gases and non-refillable cylinders for helium balloon kits.
The accounting policies of the operating segments are described in Note A. The Company evaluates segment performance based on operating income. Inter-segment sales are not material.
Summarized financial information concerning the Company's reportable segments is shown in the following table. The "Other" category includes corporate related items, results of immaterial operations, and income and expense not allocated to the reportable segments. See Note M for results of the discontinued operations' segments.
2001 2000 1999 IN MILLIONS -------- -------- -------- NET SALES Processed Steel Products........................... $1,184.9 $1,287.9 $1,114.9 Metal Framing...................................... 346.0 350.6 337.2 Pressure Cylinders................................. 289.1 318.8 305.8 Other.............................................. 6.1 5.3 5.2 -------- -------- -------- Continuing Operations.............................. $1,826.1 $1,962.6 $1,763.1 ======== ======== ======== OPERATING INCOME Processed Steel Products........................... $ 29.3 $ 96.8 $ 82.6 Metal Framing...................................... 23.7 43.2 25.4 Pressure Cylinders................................. 19.3 34.2 36.7 Other.............................................. (7.1) (4.7) 1.5 -------- -------- -------- Continuing Operations.............................. $ 65.2 $ 169.5 $ 146.2 ======== ======== ======== DEPRECIATION AND AMORTIZATION Processed Steel Products........................... $ 46.2 $ 48.0 $ 43.2 Metal Framing...................................... 10.6 9.4 8.6 Pressure Cylinders................................. 10.1 10.4 9.4 Other.............................................. 3.7 3.2 2.9 -------- -------- -------- Continuing Operations.............................. $ 70.6 $ 71.0 $ 64.1 ======== ======== ======== TOTAL ASSETS Processed Steel Products........................... $ 908.1 $1,049.6 $1,000.0 Metal Framing...................................... 239.9 256.5 250.7 Pressure Cylinders................................. 178.9 215.9 223.9 Other.............................................. 149.0 151.9 212.4 -------- -------- -------- Continuing Operations.............................. $1,475.9 $1,673.9 $1,687.0 ======== ======== ======== CAPITAL EXPENDITURES Processed Steel Products........................... $ 31.0 $ 31.2 $ 79.0 Metal Framing...................................... 15.1 11.0 7.8 Pressure Cylinders................................. 9.8 12.4 8.0 Other.............................................. 7.0 16.9 3.6 -------- -------- -------- Continuing Operations.............................. $ 62.9 $ 71.5 $ 98.4 ======== ======== ======== |
NOTE I -- RELATED PARTY TRANSACTIONS
The Company purchases from and sells to affiliated companies certain raw materials and services at prevailing market prices. Sales to affiliated companies for fiscal 2001, 2000 and 1999 totaled $36,063,000, $31,359,000 and $33,325,000, respectively. Accounts receivable related to these transactions were $3,671,000 and $1,304,000 at May 31, 2001 and 2000, respectively. Accounts payable to related parties were $23,427,000 and $19,212,000 at May 31, 2001 and 2000, respectively.
NOTE J -- INVESTMENT IN UNCONSOLIDATED AFFILIATES
The Company's investments in affiliated companies which are not "majority-owned" and controlled are accounted for using the equity method. Investments carried at equity and the percentage interest owned consist of Worthington Armstrong Venture (50%), TWB Company, L.L.C. (33%), Acerex S.A. de C.V. (50%) and Worthington Specialty Processing (50%).
The Company received dividends from unconsolidated affiliates totaling $15,082,000 and $40,094,000 in 2001 and 2000, respectively.
Financial information for affiliated companies accounted for by the equity method as of and for the years ended May 31 is as follows:
2001 2000 1999 IN THOUSANDS -------- -------- -------- Current assets.................................... $125,938 $120,619 $107,461 Noncurrent assets................................. 124,263 129,699 130,822 Current liabilities............................... 54,772 55,220 41,697 Noncurrent liabilities............................ 66,165 85,568 57,350 Net sales......................................... 416,532 377,630 324,306 Gross margin...................................... 84,825 89,931 87,365 Net income........................................ 51,335 55,921 51,448 |
The Company's share of undistributed earnings of unconsolidated affiliates included in consolidated retained earnings was $18,286,000 at May 31, 2001.
NOTE K -- ACQUISITIONS
The Company acquired a 51% majority interest in Gastec spol. s.r.o. ("Worthington Gastec") in February 1999 and purchased the cylinder manufacturing assets of Metalurgica Progresso de Vale de Cambra, Lda. ("Worthington Portugal") in May 1999. Worthington Gastec, based in Hustopece, Czech Republic, and Worthington Portugal, based in Vale de Cambra, Portugal, produce small- and medium-sized low-pressure gas cylinders used in heating and industrial applications. The Worthington Gastec and Worthington Portugal acquisitions were business combinations accounted for as purchases. The results of operations for these acquisitions are included in the financial statements of the Company since the respective dates of acquisition. Goodwill in the amount of $1,146,000 relating to Worthington Gastec and $3,158,000 relating to Worthington Portugal resulting from these purchases was amortized using the straight-line method over 40 years.
During June 1998, the Company acquired the stock of Jos. Heiser vormals J. Winter's Sohn, GmbH ("Worthington Heiser") for $26,718,000 (net of cash acquired) plus $7,327,000 of debt assumed in a business combination accounted for as a purchase. Based in Kienberg, Austria, Worthington Heiser produces high- pressure industrial gas cylinders. The results of operations for Worthington Heiser are included in the financial statements of the Company since the date of acquisition. Goodwill in the amount of $12,872,000 resulting from the purchase was amortized using the straight-line method over 40 years.
Pro forma results including the acquired companies since the beginning of the earliest period presented would not be materially different than actual results.
NOTE L -- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share from continuing operations:
YEAR ENDED MAY 31 ----------------------------------------- 2001 2000 1999 DOLLARS IN THOUSANDS, EXCEPT PER SHARE ----------- ----------- ----------- Numerator (Basic & Diluted): Earnings from Continuing Operations -- income available to common shareholders......................... $ 35,565 $ 94,151 $ 83,633 Denominator: Denominator for basic earnings per share -- weighted average shares..... 85,590,089 88,410,804 93,015,707 Effect of dilutive securities -- employee stock options.............................. 33,288 187,009 90,347 ----------- ----------- ----------- Denominator for diluted earnings per share -- adjusted weighted average shares.................................. 85,623,377 88,597,813 93,106,054 =========== =========== =========== Basic earnings from continuing operations per share............................... $ 0.42 $ 1.06 $ 0.90 Diluted earnings from continuing operations per share.................... 0.42 1.06 0.90 |
Stock options of 4,143,873, 1,559,315 and 2,876,429 for fiscal 2001, fiscal 2000 and fiscal 1999 have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive for those periods.
NOTE M -- DISCONTINUED OPERATIONS
As a result of a fiscal 1998 strategic review, the Company adopted a plan and subsequently sold its Custom Products and Cast Products segments consisting of subsidiaries Worthington Custom Plastics, Inc., Worthington Precision Metals, Inc. and Buckeye Steel Castings Company. Accordingly, the Company has reported the results of these entities as discontinued operations.
The Company completed the sale of the components of its Custom Products and Cast Products segments for aggregate proceeds of approximately $139,000,000 and $85,000,000, respectively, in fiscal 1999. The aggregate proceeds included $30,000,000 in preferred stock and notes receivable issued by the acquirers, the ultimate realization of which is dependent on the financial performance of the acquirers. The Company periodically monitors its credit risk exposure for evaluation of impairment indicators and potential write-down in value of its investment in the preferred stock and notes receivable.
At May 31, 1999, all components of discontinued operations were disposed. Summarized results of discontinued operations and other information for fiscal 1999 follow:
CUSTOM CAST PRODUCTS PRODUCTS TOTAL IN THOUSANDS -------- -------- -------- Net Sales.......................................... $275,996 $95,593 $371,589 Earnings (Loss) Before Income Taxes................ (6,515) 12,192 5,677 Income Taxes (Benefit)............................. (2,241) 4,207 1,966 -------- ------- -------- Net Earnings (Loss) from Operations................ (4,274) 7,985 3,711 Gain (Loss) on Sales............................... (59,960) 28,917 (31,043) Income Taxes (Benefit)............................. (21,281) 14,834 (6,447) -------- ------- -------- Net Gain (Loss) on Sales........................... (38,679) 14,083 (24,596) -------- ------- -------- Net Income (Loss) from Discontinued Operations..... $(42,953) $22,068 $(20,885) ======== ======= ======== Depreciation and Amortization Expense.............. $ 10,915 $ 3,488 $ 14,403 Capital Expenditures............................... 3,572 5,783 9,355 |
NOTE N -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for the years ended May 31:
THREE MONTHS ENDED -------------------------------------------- AUGUST NOVEMBER FEBRUARY MAY IN THOUSANDS, EXCEPT PER SHARE -------- -------- -------- -------- 2001 Net sales....................................... $484,224 $457,369 $418,717 $465,790 Gross margin.................................... 63,878 56,621 53,583 70,840 Net Earnings.................................... 12,477 6,880 1,778 14,430 Earnings per share (Diluted).................... $ 0.15 $ 0.08 $ 0.02 $ 0.17 2000 Net sales....................................... $462,911 $473,331 $486,535 $539,829 Gross margin.................................... 83,175 85,042 79,641 85,293 Net Earnings.................................... 24,258 24,726 23,212 21,955 Earnings per share (Diluted).................... $ 0.27 $ 0.28 $ 0.26 $ 0.25 |
Results for the quarter ended February 28, 2001 include a pre-tax restructuring expense of $6,474,000 ($0.04 per share, net of tax). Results for the quarter ended May 31, 2000 include a pre-tax loss of $8,553,000 ($0.06 per share, net of tax) relating to the Company's investment in the common stock of Rouge.
NOTE O -- OPERATING LEASES
The Company leases certain property and equipment from third parties under non-cancelable operating lease agreements. Rent expense under non-cancelable operating leases was $4,969,000 in fiscal 2001, $3,210,000 in fiscal 2000 and $2,534,000 in fiscal 1999. Future minimum lease payments under these agreements at May 31, 2001 are as follows (in thousands):
2002................................................ $ 3,766 2003................................................ 3,261 2004................................................ 2,739 2005................................................ 2,107 2006................................................ 826 Thereafter.......................................... 2,441 ------- Total............................................... $15,140 ======= |
NOTE P -- SALE OF ACCOUNTS RECEIVABLE
On November 30, 2000, the Company and certain of its subsidiaries entered into a $120,000,000 revolving trade receivables securitization facility. In May 2001, this facility was expanded to include other subsidiaries and was increased to $190,000,000. Pursuant to the terms of the facility, these subsidiaries sell their accounts receivable, on a revolving basis, to a wholly-owned, bankruptcy-remote subsidiary of the Company, Worthington Receivables Corporation ("WRC"). In turn, WRC sells, on a revolving basis, up to $190,000,000 undivided ownership interest in the purchased accounts receivable to independent third parties. The Company continues to service the accounts receivable. No servicing asset or liability has been recognized, as the Company's cost to service the accounts receivable is expected to approximate the servicing income.
As of May 31, 2001, WRC had sold $110,000,000 of undivided ownership interest in accounts receivable. The proceeds from the sale were reflected as a reduction of accounts receivable on the consolidated balance sheets and as operating cash flows in the consolidated statements of cash flows. The sale proceeds were used to pay down short-term debt.
NOTE Q -- RESTRUCTURING
On February 1, 2001, the Company announced the shutdown of a portion of its Malvern, Pennsylvania, facility, which is included in the Processed Steel Products segment. Selected assets, including two rolling mills, a cleaning line, a tension leveler, a pickle line and a slitter, were idled. As a result, 160 hourly and salaried positions were to be eliminated, 146 through termination and 14 through retirement and normal attrition. The business affected by the shutdown would be transferred to other Company facilities and the idled assets would be sold.
During the quarter ended February 28, 2001, the Company recorded a restructuring expense of $6,474,000, comprised of $2,000,000 for severance and employee related costs and $4,474,000 for the write-down of the idled assets to net realizable value. As of May 31, 2001, 110 employees had been terminated, and cash payments totaling $479,000 had been made against the severance reserve. The estimated net realizable value of the equipment being idled of $2,600,000 was reclassified to other current assets as equipment held for sale. The Company anticipates that the termination of employees and the sale of the idled equipment will be completed by the end of the 2001 calendar year.
REPORT OF MANAGEMENT
The management of Worthington Industries, Inc. ("Worthington") is responsible for the preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles appropriate in the circumstances. Management is also responsible for the determination of estimates and judgments used in the financial statements and the preparation of other financial information included in this Annual Report to Shareholders. The financial statements have been audited by Ernst & Young LLP, independent auditors.
The management of Worthington has established and maintains an accounting system and related internal controls that it believes are sufficient to provide reasonable assurance that assets are safeguarded against unauthorized acquisition, use or disposition, that transactions are executed and recorded in accordance with management's authorization and that the financial records are reliable for preparing financial statements. The concept of reasonable assurance is based on the recognition that the cost of a system of internal control must be related to the benefits derived and that the balancing of the factors requires estimates and judgments. Management considers the recommendations of the independent certified public accountants concerning Worthington's system of internal control and takes appropriate actions which are cost effective in the circumstances.
The Board of Directors of Worthington has an Audit Committee of directors who are not members of management. The Audit Committee meets periodically with Worthington's management and independent certified public accountants to review matters relating to financial reporting, auditing and internal control. To ensure auditor independence, the independent certified public accountants have full and free access to the Audit Committee.
/s/ JOHN P. MCCONNELL ----------------------------------------- John P. McConnell, Chairman & Chief Executive Officer /s/ JOHN T. BALDWIN ----------------------------------------- John T. Baldwin, Vice President & Chief Financial Officer |
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Worthington Industries, Inc.
We have audited the accompanying consolidated balance sheets of Worthington Industries, Inc. and subsidiaries as of May 31, 2001 and 2000, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended May 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Worthington Industries, Inc. and subsidiaries at May 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2001 in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP ------------------------------------ Ernst & Young LLP Columbus, Ohio June 15, 2001 |
COMPANY LOCATIONS
PROCESSED STEEL PRODUCTS
WORTHINGTON STEEL
Decatur, Alabama
Porter, Indiana
Louisville, Kentucky
Baltimore, Maryland
Jackson & Taylor, Michigan
Columbus, Delta & Monroe, Ohio
Malvern, Pennsylvania
Rock Hill, South Carolina
THE GERSTENSLAGER COMPANY
Clyde, Ohio
Wooster, Ohio
METAL FRAMING
DIETRICH METAL FRAMING
Phoenix, Arizona
Colton & Stockton, California
Denver, Colorado
Miami & Wildwood, Florida
Atlanta, Georgia
Kapolei, Hawaii
Hammond & LaPorte, Indiana
Lenexa, Kansas
Baltimore, Maryland
Lunenburg, Massachusetts
East Brunswick, New Jersey
Hicksville & Warren, Ohio
Hutchins, Texas
Fredericksburg, Virginia
Renton, Washington
PRESSURE CYLINDERS
WORTHINGTON CYLINDER CORPORATION
Citronelle, Alabama
Columbus, Jefferson & Westerville, Ohio
Claremore, Oklahoma
Kienberg, Austria
Tilbury, Ontario, Canada
Vale De Cambra, Portugal
OTHER
WORTHINGTON BEAMALLOY CORPORATION
Dublin, Ohio
WORTHINGTON MACHINE TECHNOLOGY
Columbus, Ohio
WORTHINGTON STEELPAC SYSTEMS
York, Pennsylvania
JOINT VENTURES
ACEREX S.A. DE C.V.
Steel Processing
Monterrey, Mexico
SPARTAN STEEL COATING, L.L.C.
Steel Processing
Monroe, Michigan
TWB COMPANY, L.L.C.
Laser Welded Blanks
Monroe, Michigan
Ramos Arizpe, Mexico
WORTHINGTON ARMSTRONG VENTURE (WAVE)
Suspended Ceilings
Sparrows Point, Maryland
Benton Harbor, Michigan
North Las Vegas, Nevada
Malvern, Pennsylvania
Shanghai, China
Team Valley, United Kingdom
Valenciennes, France
Madrid, Spain
WORTHINGTON GASTEC, A.S.
Pressure Cylinders
Hustopece, Czech Republic
WORTHINGTON S.A.
Pressure Cylinders
Itu, Brazil
WORTHINGTON SPECIALTY PROCESSING (WSP)
Steel Processing
Jackson, Michigan
WORTHINGTON TANK, LTDA.
Pressure Cylinders
Itu, Brazil
OFFICERS & DIRECTORS
CORPORATE OFFICERS
John H. McConnell
Chairman Emeritus & Founder
Director, 1955
Member of the Executive Committee
John P. McConnell
Chairman & Chief Executive Officer
Director, 1975
Member of the Executive and
Nominating Committees
John S. Christie
President & Chief Operating Officer
Director, 1999
John T. Baldwin
Vice President & Chief Financial
Officer, 1997
Ralph V. Roberts
Senior Vice President-Marketing,
1973
Virgil L. Winland
Senior Vice President-Manufacturing,
1971
Dale T. Brinkman
Vice President-Administration,
General Counsel & Secretary, 1982
Jonathan B. Dove
Chief Information Officer, 1998
Harry A. Goussetis
Vice President-Human Resources,
1983
Cathy Mayne Lyttle
Vice President-Communications,
1999
Bruce Ruhl
Vice President-Purchasing, 1978
Richard G. Welch
Controller, 1999
SUBSIDIARY OFFICERS
Edward A. Ferkany
President, 1974
The Worthington Steel Company
John G. Lamprinakos
President, 1979
Worthington Cylinder Corporation
Edmund L. Ponko, Jr.
President, 1981
Dietrich Industries, Inc.
Kenneth L. Vagnini
President, 1978
The Gerstenslager Company
OUTSIDE DIRECTORS
John B. Blystone
Chairman, President & CEO
SPX Corporation
Director, 1997
Member of the Executive,
Compensation and Stock Option and
Nominating Committees
William S. Dietrich, II
Chairman, Dietrich Industries, Inc.
Director, 1996
Michael J. Endres
Partner
Stonehenge Financial Holdings, Inc.
Director, 1999
Member of the Executive, Audit and
Compensation and Stock Option
Committees
OUTSIDE DIRECTORS (Cont'd.)
Mary Fackler Schiavo
Professor, The Ohio State University
and Consultant, NBC News
Director, 1998
Member of the Nominating and Audit
Committees
Peter Karmanos, Jr.
Chairman, CEO & Co-Founder
Compuware Corporation
Director, 1997
Member of the Audit and
Compensation and Stock Option
Committees
John R. Kasich
Managing Director
Lehman Brothers
Director, 2001
Member of the Audit Committee
Robert B. McCurry
Retired Senior Advisor to President
Toyota Motor Sales, U.S.A., Inc.
Director, 1972
Member of the Nominating and
Compensation and Stock Option
Committees
Sidney A. Ribeau
President
Bowling Green State University
Director, 2000
Member of the Nominating
Committee
Note: Year listed indicates initial year of affiliation with Worthington Industries and its Subsidiaries.
[LETTERHEAD]
[LOGO]
August 29, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We have read Item 9 of Form 10-K dated August 29, 2001 of Worthington Industries, Inc. and are in agreement with the statements contained in the second and third paragraphs of Item 9 on page 11 therein. We have no basis to agree or disagree with other statements of the registrant contained therein.
/s/ Ernst & Young LLP |
EXHIBIT 21
SUBSIDIARIES OF
WORTHINGTON INDUSTRIES, INC.
AN OHIO CORPORATION
The following is a list of subsidiaries owned, directly or indirectly, by Worthington Industries, Inc., an Ohio corporation, together with their respective jurisdictions of organization.
Worthington Foreign Sales Corporation Barbados Worthington Industries Incorporated Ohio Worthington Industries Medical Center, Inc. Ohio Enterprise Protection Insurance Company Vermont Worthington Steel of Michigan, Inc. (d/b/a The Worthington Steel Company) Michigan Dietrich Industries, Inc. Pennsylvania Dietrich Design Group, Inc. Pennsylvania Worthington Techs I, Inc. Delaware Worthington Techs, L.P. Pennsylvania The Gerstenslager Company Michigan Gerstenslager Co. Ohio Worthington-Buckeye, Inc. Ohio Buckeye Energy Company, Inc. Ohio Buckeye International Development, Inc. Ohio WI Products, Inc. Ohio Worthington Cylinder Corporation Ohio Industrias Worthington do Brasil Ltda. Brazil Worthington Acetylene Cylinders, Inc. (d/b/a North American Cylinders, Inc.) Alabama Worthington Industries of Canada, Inc. Worthington Cylinders of Canada Corp. (d/b/a Steel Canada Cylinder Manufacturing) Canada Worthington Cylinders GmbH Worthington Cylinders-Embalagens Industriais de Gas, S.A. Austria Portugal Worthington Industries of Mexico, S.A. de C.V. Mexico |
The Worthington Steel Company Delaware Worthington Steelpac Systems, L.L.C. Delaware Worthington Techs II, Inc. Delaware The Worthington Steel Company North Carolina The Worthington Steel Company Ohio Kentucky Worthington Steel Company of Kentucky, L.L.C. Delaware BeamAlloy Corporation Newman Crosby Steel, Incorporated Ohio Worthington Steel Company of Decatur, L.L.C. Alabama Worthington OEG Company Michigan Worthington Steel Company of Alabama, Inc. & Co. OEG Austria The Worthington Steel Company of Decatur, Inc. Michigan Worthington Receivables Corporation Delaware Joint Ventures -------------- Spartan Steel Coating, L.L.C. (1) Michigan TWB Company, L.L.C. (2) Michigan TWB of Ohio, Inc. Ohio TWB de Mexico, S.A. de C.V. Mexico Worthington Armstrong Venture (WAVE) (3) Delaware Worthington Specialty Processing (WSP) (4) Michigan Acerex, S.A. de C.V. (5) Mexico Worthington S.A. (6) Brazil Worthington Cylinders a.s. (7) Czech Republic Worthington Tank Ltda (8) Brazil Minor/inactive Subsidiaries of the Company ------------------------------------------ ACT International Ohio BI Plastics, Inc. Ohio Dietrich Rolling Mills, Inc. Canada Little Pal, Inc. Ohio MowSafe Products, Inc. Ohio NRM Trucking Company Delaware Rapport Insurance, Ltd. Bermuda ------------------- |
(1) Consolidated joint venture with 52% owned by Worthington Steel of Michigan, Inc. and 48% by QS Steel Inc.
(2) Unconsolidated joint venture with 33.33% owned by Worthington Steel of Michigan, Inc. and the remaining interests owned by Thyssen Inc., Bethlehem Blank Welding, Inc., LTV Steel and Rouge Steel.
(3) Unconsolidated joint venture with 50% owned by The Worthington Steel Company (Delaware) and 50% owned by Armstrong Ventures, Inc.
(4) Unconsolidated joint venture with 50% owned by Worthington Steel of Michigan, Inc. and 50% owned by USX Corporation.
(5) Unconsolidated joint venture with 50% owned by Worthington Industries Mexico, S.A. de C.V. and 50% owned by Hylsa S.A. de C.V.
(6) Consolidated joint venture with 52% owned by Industrias Worthington do Brasil Ltda. and the remaining interests owned by three Brazilian propane producers.
(7) Consolidated joint venture with 51% owned by Worthington Heiser Cylinders GmbH with a local Czech Republic entrepreneur in Hustopece, Czech Republic.
(8) Consolidated joint venture with 65% owned by Industrias Worthington do Brasil Ltda. with a Portuguese manufacturer in Itu, Brazil.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Worthington Industries, Inc. of our report dated June 15, 2001, included in the 2001 Annual Report to Shareholders of Worthington Industries, Inc.
Our audits also included the financial statement schedule of Worthington Industries, Inc. listed in Item 14(a)(2) and 14(d). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-57981) pertaining to the Worthington Industries, Inc. Deferred Profit Sharing Plan; (Form S-8 No. 2-80094) pertaining to the Worthington Industries, Inc. Amended 1980 Stock Option Plan; (Form S-3 No. 33-46470 and Form S-3 No. 333-48627) pertaining to the Worthington Industries, Inc. Dividend Reinvestment and Stock Purchase Plan; (Form S-8 No. 33-38486) pertaining to the Worthington Industries, Inc. 1990 Stock Option Plan (Form S-8 No. 333-18099) pertaining to the Worthington Steel Company (Malvern) Union Retirement Savings Plan; (Form S-8 No. 333-42849) pertaining to the Worthington Industries, Inc. 1997 Long-Term Incentive Plan; and (Form S-8 No. 333-52628) pertaining to the Worthington Industries, Inc. 2000 Stock Option Plan for Non-Employee Directors, of our report dated June 15, 2001, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Worthington Industries, Inc.
/s/ Ernst & Young LLP Columbus, Ohio August 27, 2001 |
EXHIBIT - 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John P. Mcconnell ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John H. Mcconnell ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John S. Christie ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John T. Baldwin ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Dale T. Brinkman ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John B. Blystone ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ William S. Dietrich, II ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Michael J. Endres ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Peter Karmanos, Jr. ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ John R. Kasich ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Robert B. Mccurry -------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Sidney A. Ribeau ---------------------------------------------- |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Worthington Industries, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended May 31, 2001 constitutes and appoints John P. McConnell, John T. Baldwin and Dale T. Brinkman, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place and stead, in any and all capacities, to sign such Annual Report on Form 10-K and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day of May, 2001.
/s/ Mary Fackler Schiavo ---------------------------------------------- |