<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 1-10863
YORK INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3473472
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
631 SOUTH RICHLAND AVENUE, YORK, PA 17403
(717) 771-7890
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 5, 1997
----- --------------------------
Common Stock, par value $.005 43,562,392 shares
<PAGE>
-2-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Form 10-Q
For the quarterly period ended March 31, 1997
INDEX
-----
<TABLE>
<CAPTION>
Page No.
Part I. Financial Information
<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Statements of Operations-(Unaudited)
Three Months Ended March 31, 1997 and 1996 3
Consolidated Condensed Balance Sheets -
March 31, 1997 (Unaudited) and December 31, 1996 4
Consolidated Condensed Statements of Cash Flows-(Unaudited)
Three Months Ended March 31, 1997 and 1996 5
Supplemental Notes to Consolidated Condensed
Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE>
-3-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 1
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Consolidated Condensed Statements of Operations (Unaudited)
-----------------------------------------------------------
(thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales $ 800,767 $ 728,165
Cost of goods sold 637,032 574,943
-------- --------
Gross profit 163,735 153,222
Selling, general and
administrative expenses 129,373 104,390
-------- --------
Income from operations before
purchase accounting amortization 34,362 48,832
Purchase accounting amortization 2,542 2,314
-------- --------
Income from operations 31,820 46,518
Interest expense, net 9,434 8,565
Equity in losses of affiliates 240 1,642
-------- --------
Income before income taxes 22,146 36,311
Provision for income taxes 7,286 12,346
-------- --------
Net income $ 14,860 $ 23,965
======== ========
Earnings per share of common stock $ 0.34 $ 0.55
-------- ========
Cash dividends per share $ 0.12 $ 0.09
======== ========
Weighted average common shares and common
equivalents outstanding (in thousands) 44,012 43,505
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-4-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Condensed Balance Sheets
- -------------------------------------
(thousands of dollars)
March 31, 1997 December 31,
(Unaudited) 1996
-------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 7,703 $ 11,470
Receivables 604,076 563,099
Inventories:
Raw materials 170,884 178,771
Work in process 137,728 118,847
Finished goods 325,340 311,724
---------- ----------
Total inventories 633,952 609,342
Prepayments and other current assets 110,352 107,344
---------- ----------
Total current assets 1,356,083 1,291,255
Deferred income taxes 15,827 19,265
Unallocated excess of cost
over net assets acquired 347,923 350,370
Investments in affiliates 21,301 22,205
Property, plant and equipment, net 358,578 360,432
Deferred charges and other assets 28,268 31,244
---------- ----------
Total assets $ 2,127,980 $ 2,074,771
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion
of long-term debt $ 70,030 $ 128,461
Accounts payable and accrued expenses 596,499 602,359
Income taxes 35,963 36,292
---------- ----------
Total current liabilities 702,492 767,112
Warranties 33,327 33,135
Long-term debt 432,622 313,641
Postretirement benefit liabilities 128,794 128,411
Other long-term liabilities 50,315 52,095
---------- ----------
Total liabilities 1,347,550 1,294,394
Stockholders' equity 780,430 780,377
---------- ----------
Total liabilities and stockholders' equity $ 2,127,980 $ 2,074,771
========== ==========
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-5-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Condensed Statements of Cash Flows (Unaudited)
- -----------------------------------------------------------
(thousands of dollars) Three Months Ended March 31,
------------------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,860 $ 23,965
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 12,416 11,479
Amortization of deferred charges 3,598 4,223
Provision for doubtful accounts
receivable 2,210 1,809
Other 1,258 3,610
Change in assets and liabilities net of
effects from purchase of other companies:
Receivables (43,489) (15,384)
Inventories (24,782) (46,353)
Prepayments and other current assets (3,029) 146
Deferred income taxes 3,462 3,003
Other assets 2,071 (409)
Accounts payable and accrued expenses (5,901) (39,106)
Income taxes (331) 7,748
Warranties 193 1,672
Postretirement benefit liabilities 383 196
Other long-term liabilities (1,691) 3,528
------- -------
Net cash used by operating activities (38,772) (39,873)
------- -------
Cash flows from investing activities:
Capital expenditures (13,639) (16,395)
Other 295 (250)
------- -------
Net cash used by investing activities (13,344) (16,645)
------- -------
Cash flows from financing activities:
Common stock issued 1,047 3,550
Treasury stock issued/(Purchased) (8,019) 28
Long term debt payments (3,133) (10,008)
Net payments on short term debt (58,431) (9,138)
Net proceeds from issuance of commercial
paper 122,114 73,255
Dividends paid (5,217) (3,888)
------- -------
Net cash provided by financing activities 48,361 53,799
------- -------
Effect of exchange rate changes on cash (12) 7
------- -------
Net decrease in cash and cash equivalents (3,767) (2,712)
------- -------
Cash and cash equivalents at beginning of
period 11,470 8,838
------- -------
Cash and cash equivalents at end of period $ 7,703 $ 6,126
======= =======
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-6-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(1) The consolidated condensed financial statements included herein have been
prepared by the registrant pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to applicable rules and regulations, although
the registrant believes that the disclosures herein are adequate to make
the information presented not misleading. In the opinion of the Company,
the accompanying consolidated condensed financial statements contain all
adjustments (consisting of only normally recurring accruals) necessary to
present fairly the financial position as of March 31, 1997 and December 31,
1996, the results of operations for the three months ended March 31, 1997
and 1996, and cash flows for the three months ended March 31, 1997 and
1996.
(2) The results of operations for interim periods are not necessarily
indicative of the results expected for the full year.
(3) The following tables summarize the capitalization of the Company at March
31, 1997 and at December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------ -------------------
Current Long Term Current Long Term
------- --------- -------- ---------
<S> <C> <C> <C> <C>
Indebtedness:
Bank loans $ 63,687 $ - $ 122,059 $ -
Commercial paper - 207,150 - 85,036
Term loans - 108,964 - 109,723
Senior notes - 100,000 - 100,000
Other 6,343 16,508 6,402 18,882
------- -------- -------- --------
Total notes payable
and long-term debt $ 70,030 $ 432,622 $ 128,461 $ 313,641
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31,
Stockholders' equity: 1997 1996
---- ----
<S> <C> <C>
Common Stock $.005 par value;
200,000,000 shares authorized;
issued 43,720,000 shares at
December 31, 1996 and 43,775,000
shares at March 31, 1997 $ 219 $ 219
Additional paid in capital 669,184 667,775
Retained earnings 155,974 146,331
Currency translation adjustment (27,132) (23,478)
Treasury stock, 280,697 shares at
March 31, 1997 and 97,628 shares
at December 31, 1996, at cost (11,899) (3,875)
Unearned compensation (5,915) (6,595)
-------- --------
Total stockholders' equity $ 780,430 $ 780,377
======== ========
</TABLE>
At March 31, 1997 and December 31, 1996, the Company maintained a $350
million revolving credit facility pursuant to an Amended and Restated
Credit Agreement (the Agreement) expiring on July 31, 2000. At March 31,
1997 and December 31, 1996, no amounts were outstanding under the facility.
The Agreement provides for borrowings under the facility at LIBOR plus .20%
or at bid rates as specified in the Agreement. At March 31, 1997 and
December 31, 1996 the LIBOR rate was 5.80% and 5.56%, respectively. A fee
of .10% is paid on the facility. The Agreement, as amended, contains
financial and operating covenants requiring the Company to maintain certain
financial ratios and restricting its ability to incur indebtedness, make
investments and create or permit to exist certain liens.
(cont'd)
<PAGE>
-7-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
The Company's non-U.S. subsidiaries maintained bank credit facilities in
various currencies that provided for borrowings of $237.9 million and
$252.5 million at March 31, 1997 and December 31, 1996, respectively, of
which $ 164.1 million and $121.1 million, respectively, were unused. In
some instances, borrowings against these credit facilities have been
guaranteed by the Company to assure availability of funds at favorable
rates.
The Company established a commercial paper facility in November, 1995.
Commercial paper borrowings are expected to be reborrowed in the ordinary
course of business. The interest rate on the commercial paper was 5.65%
and 5.43% as of March 31, 1997 and December 31, 1996, respectively.
During 1995, the Company arranged two term loans denominated in foreign
currencies. The Company borrowed $26.2 million with a final maturity on
November 15, 1998 and an interest rate of 3.98%. The loan is repayable in
four annual installments. On December 21, 1995, the Company borrowed $100
million with an interest rate of 4.87%, which matures on December 14, 2000.
All principal and interest payments for the five year term were swapped to
U.S. dollars at inception. The term loan agreements contain financial and
operating covenants that are equivalent to the covenants of the Company's
Amended and Restated Credit Agreement.
In July 1995, the Company registered $200 million in debt securities with
the Securities and Exchange Commission. Under terms of the registration
statement, the Company may offer and sell up to that amount of such
securities at prices and terms to be determined at or prior to sale. No
amounts of such debt securities are outstanding at March 31, 1997 or
December 31, 1996.
Under a receivables sales agreement entered into in 1992, the Company sold
a fractional ownership interest in a defined pool of trade accounts
receivable for $100 million in 1997 and 1996. The sold accounts receivable
are reflected as a reduction of receivables in the accompanying
consolidated balance sheets. Under an Amended and Restated Receivables
Sales Agreement entered into on March 26, 1997, the maximum amount of the
purchasers' investment is currently $120 million and is subject to decrease
based on the level of eligible accounts receivable and restrictions on
concentrations of receivables. The discount rate on the receivables sold
at March 31, 1997 and December 31, 1996 was approximately 5.40% and 5.40%,
respectively.
During May 1997, the Stockholders approved the amended and restated 1992
Omnibus Stock Plan authorizing the issuance of up to 4,380,000 shares of
the Company's common stock as stock options or restricted share awards.
The exercise price of the stock options granted under this plan are not
less than the fair market value of the shares on the date the option is
granted. The restricted shares will be granted at a price determined by
the Board of Directors. In March, 1997, key employees were awarded 737,932
stock options at an exercise price of $45.375 per share.
During May 1997, the Board of Directors authorized the Company to purchase
up to 3.8 million shares of its Common Stock over the next four years to
fund the Company's Employee Stock Purchase Plan and the Amended and
Restated 1992 Omnibus Stock Plan. The purchases are made from time to time
in the open market.
(4) Purchase accounting amortization primarily represents the amortization of
the unallocated excess of cost over net assets acquired, incurred in
connection with the acquisition of the Company in 1988.
(5) The Company's earnings per share are based on the weighted average
outstanding common shares and common share equivalents.
(6) Acquisitions
On December 31, 1996, the Company acquired certain assets of Snomax located
in Rochester, New York. Snomax develops, manufacturers and sells ice-
nucleating molecules which are catalysts in the snow making process.
(cont'd)
<PAGE>
-8-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
On December 30, 1996, the Company formed a joint venture with a partner in
Wuxi of the People's Republic of China (P.R.C.) for the manufacture of
certain commercial air conditioning products in the P.R.C.
On October 31, 1996, the Company acquired certain assets of Natkin Service
Company (NATKIN) located in Denver, Colorado. Natkin is an HVAC service
company which complements the Company's current commercial service business
in the U.S. The addition of Natkin expands the Company's service
capabilities primarily in the Southwestern U.S.
On July 31, 1996, the Company acquired the outstanding shares of Northfield
Equipment and Manufacturing Company (NEMCO), located in Northfield,
Minnesota. NEMCO designs and manufactures food processing freezing
equipment.
(7) Reference is made to Registrant's 1996 Annual Report on Form 10-K for more
detailed financial statements and footnotes.
<PAGE>
-9-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
- ---------------------
Net sales for the three months ended March 31, 1997 increased 10.0% to $800.8
million as compared to $728.2 million for the three months ended March 31, 1996.
Income from operations for the first quarter of 1997 was $31.8 million compared
to $46.5 million for the first quarter of 1996. For the first three months of
1997 as compared with the same period in 1996, revenues for the Company's
Engineered, Unitary and Refrigeration products showed an increase. The 9.0%
increase in Engineered Products revenue was due primarily to increased volume in
equipment sales and increased volume of service and repair business. Unitary
products revenue increased 13.5% primarily as a result of strong international
market growth, increased international distribution and new product
introductions. Refrigeration products revenue increased 1.3% due to favorable
market conditions worldwide.
For the first quarter, aggregate non-U.S. sales increased 7.9% from the first
quarter of 1996 to $348.0 million primarily as a result of increased market
penetration in the international residential products market, and favorable
conditions in the Asia-Pacific and Latin American engineered and unitary
products markets partially offset by weakening markets in Europe. Domestic
revenue increased 11.6% to $452.8 million primarily as a result of strong
engineered equipment sales, new unitary product introductions and, to a lesser
extent, increased volume of service and repair business.
Order backlog at March 31, 1997 was $917.0 million which is 5.5% less than one
year ago. The backlog is down from 1996 primarily due to timing of orders, and
currency impacts. However, domestic backlog is up over 15.2% from December 31,
1996 and international backlog is up 1.6% from December 31, 1996's backlog. The
increase in backlog from December 31, 1996 is primarily attributable to strong
ordering patterns for refrigeration and commercial equipment both domestically
and internationally. Domestically, the residential equipment backlog followed
the market. Internationally, the Company's backlog out performed the
marketplace as a result of continued improvement in the Company's worldwide
distribution system. However, the impact of the strengthening U.S. dollar
resulted in lower translated backlog amounts for the same equipment.
The following table sets forth first quarter revenue by product and geographic
market (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Engineered products $ 323,155 $ 296,375
Unitary products 374,815 330,326
Refrigeration products 102,797 101,464
-------- --------
Total Revenue $ 800,767 $ 728,165
======== ========
U.S. 57% 56%
International 43% 44%
----- -----
Total 100% 100%
===== =====
</TABLE>
Gross profit in the first quarter of 1997 increased 6.9% to $163.7 million or
20.4% of net sales as compared to 21.0% of net sales for the 1996 period. The
decrease in gross profit margin as a percent of sales is due to $4 million of
special charges as described below. Otherwise, sales margins, operating
efficiencies, realized price increases and the effects of cost reduction
programs somewhat offset and were consistent from 1997 to 1996.
Special charges were recorded in the first quarter of 1997 totaling
approximately $13.0 million of which $4 million was recorded as cost of sales
and $9 million was recorded under SG&A. These charges represent the costs to
close the Houston manufacturing facility and to downsize the German operations.
(cont'd)
<PAGE>
-10-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
Selling, general and administrative expenses in the first quarter of 1997 were
$129.4 million (16.2% of net sales) versus $104.4 million (14.3% of net sales)
in 1996. 1997 expenses are higher than 1996 as a percent of sales due to $9
million of restructuring charges as described above and the cost of
infrastructure investment in growing markets primarily focused on building a
solid base for long-term growth, specifically Asia (People's Republic of China)
and Latin America (Brazil and Argentina).
Interest expense during the first quarter increased to $9.4 million in 1997 from
$8.6 million in 1996. This was mainly due to higher average borrowings.
Provision for income taxes of $7.3 million in the first quarter of 1997 relates
both to U.S. and non-U.S. operations. The effective tax rate remains lower than
U.S. statutory rates primarily as a result of tax planning initiatives, the mix
of earnings between the various taxing jurisdictions, and the benefit of
increased export incentives.
Net income, as a result of the above factors, was $14.9 million in the first
quarter of 1997 as compared to net income of $24.0 million in the first quarter
of 1996.
Liquidity and Capital Resources
- -------------------------------
Working capital requirements are generally met through a combination of
internally generated funds, bank lines of credit, commercial paper issuances,
financing of trade receivables and credit terms from suppliers which approximate
receivable terms to the Company's customers. The Company believes that its bank
lines of credit under its 1995 Amended and Restated Credit Agreement will be
sufficient to meet working capital needs through 1997. Additional sources of
working capital include customer deposits and progress payments.
The Company had working capital of $653.6 million and $524.1 million as of March
31, 1997 and December 31, 1996, respectively. The increase in working capital
includes the impact of the reclassification of $60 million of debt from current
to long-term. The current ratio was 1.93 at March 31, 1997 as compared to 1.68
at December 31, 1996.
At March 31, 1997, the Company maintained a $350 million Amended and Restated
Credit Agreement (the Agreement) expiring on July 31, 2000. At March 31, 1997
the Company could borrow $350 million. The Agreement provides for borrowings
under the facility at LIBOR plus .20% or at bid rates as specified in the
agreement. At March 31, 1997 the LIBOR rate was 5.80% and a fee of .10% is paid
on the facility. The Agreement, as amended, contains financial and operating
covenants requiring the Company to maintain certain financial ratios and
restricting its ability to incur indebtedness, make investments and create or
permit to exist certain liens.
Commercial paper borrowings are expected to be reborrowed in the ordinary course
of business. The interest rate on the commercial paper was 5.65% as of March
31, 1997.
The term loans mature at various dates to December 31, 2000 and bear interest at
rates from 3.98% to 4.87%. The term loan agreements contain financial and
operating covenants that are equivalent to the covenants of the Company's
Amended and Restated Credit Agreement.
The $100 million of Senior Notes bear interest at 6.75% fixed rate and have a
maturity of ten years from the date of issue.
The Company sold a fractional ownership interest in a defined pool of trade
accounts receivable for $100 million at March 31, 1997. The discount rate on
the accounts receivable sold was approximately 5.40%.
In July 1995, the Company registered $200 million in debt securities with the
Securities and Exchange Commission. Under terms of the registration statement,
the Company may offer and sell up to that amount of such securities from time to
time at prices and terms to be determined at or prior to sale. No amounts of
such debt securities are outstanding at March 31, 1997.
(cont'd)
<PAGE>
-11-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
Because the Company's obligations under the Amended and Restated Credit
Agreement and Receivables Sales Agreement bear interest at floating rates, the
Company's interest costs are sensitive to changes in prevailing interest rates.
Based on historical cash flows, the Company believes that it will be able to
satisfy its principal and interest payment obligations and its working capital
and capital expenditure requirements from operating cash flows together with the
availability under the revolving credit facility.
In the ordinary course of business the Company enters into various types of
transactions that involve contracts and financial instruments with off-balance-
sheet risk. The Company enters into these financial instruments to manage
financial market risk, including foreign exchange, commodity price and interest
rate risk. The Company enters into these financial instruments utilizing over-
the-counter as opposed to exchange traded instruments. The Company mitigates
the risk that counterparties to these over-the-counter agreements will fail to
perform by only entering into agreements with major international financial
institutions.
Capital expenditures currently anticipated for expanded capacity, cost
reductions and the introduction of new products during the next twelve months
will be in excess of depreciation and amortization. These expenditures will be
funded from a combination of operating cash flows and availability under the
revolving credit facility and commercial paper borrowings.
Cash dividends of $0.12 per share were paid on common stock in the first quarter
of 1997. The declaration and payment of future dividends will be at the sole
discretion of the Board of Directors and will depend upon such factors as the
Company's profitability, financial condition, cash requirements and future
prospects.
New Accounting Standards
- ------------------------
In February 1997, the Financial Accounting Standards Board (FASB) issued
statement of Financial Accounting Standards No.128 (SFAS128), "Earnings per
share". SFAS128 establishes standards for computing and presenting earnings per
share and will be effective for periods ending after December 15, 1997.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No.129, "Disclosure of Information about Capital Structure" (SFAS129). SFAS129
establishes standards for disclosing information about a Company's capital
structure, including pertinent rights and privileges of various securities
outstanding and is effective for periods ending after December 15, 1997.
Adoption of these statements is not expected to have a material effect on the
Company's financial statements.
PART II - Other Information
Item 1 Legal Proceedings
Not Applicable
Item 2 Changes in Securities
Not Applicable
Item 3 Defaults Upon Senior Securities
Not Applicable
<PAGE>
-12-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II -Other Information
Item 4 Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5 Other Information
Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 4.1 Amended and Restated Receivables Sale Agreement
dated as of March 26, 1997 by and among the Registrant,
Asset Securitization Cooperative Corporation, as purchaser,
and Canadian Imperial Bank of Commerce, as servicing agent
along with the supporting exhibits (filed herewith)
Exhibit 10.1 Registrant's Amended and Restated 1992 Omnibus
Stock Plan (filed herewith)
Exhibit 27 Financial Data Schedule (EDGAR only)
(b) None
<PAGE>
-13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned unto duly authorized.
YORK INTERNATIONAL CORPORATION
------------------------------
Registrant
Date May 5, 1997 /s/ Dean T. DuCray
------------------- --------------------------------------------
Vice President and Chief Financial Officer
<PAGE>
EXHIBIT 4.1
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
among
YORK INTERNATIONAL CORPORATION
as Seller and as Collection Agent,
ASSET SECURITIZATION COOPERATIVE CORPORATION
as Purchaser
and
CANADIAN IMPERIAL BANK OF COMMERCE
as Servicing Agent
Dated as of March 26, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
ARTICLE I: DEFINITIONS.............................................................. -1-
ARTICLE II: OFFERING FACILITY....................................................... -10-
ARTICLE III: WHAT IS SOLD?.......................................................... -10-
SECTION 3.1 Determination of Ownership Interest................................ -10-
-----------------------------------
SECTION 3.2 Frequency of Determining Ownership Interest........................ -13-
-------------------------------------------
SECTION 3.3 Maximum Ownership Interest......................................... -13-
--------------------------
SECTION 3.4 Canadian Receivables............................................... -14-
--------------------
ARTICLE IV: PURCHASE PRICE.......................................................... -14-
SECTION 4.1 Determination of Cash Component of Purchase Price................... -14-
-------------------------------------------------
SECTION 4.2 Determination of Deferred Payment Component of Purchase Price
-------------------------------------------------------------
.......................................................................... -15-
ARTICLE V: FEES AND EXPENSES........................................................ -15-
SECTION 5.1 Structuring Fee..................................................... -15-
---------------
SECTION 5.2 Settlement Date Payments............................................ -15-
------------------------
SECTION 5.2.1 Purchase Discount................................................. -15-
-----------------
SECTION 5.2.2 Purchase Premium.................................................. -16-
----------------
SECTION 5.2.3 Operating Expense Fee............................................. -16-
---------------------
SECTION 5.2.4 Collection Agent Fee.............................................. -16-
--------------------
SECTION 5.3 Legal Fees and Expenses............................................. -16-
-----------------------
SECTION 5.4 Interest on Unpaid Amounts.......................................... -17-
--------------------------
SECTION 5.5 Unutilized Purchase Limit Fee....................................... -17-
-----------------------------
ARTICLE VI: PURCHASE PROCEDURES..................................................... -17-
SECTION 6.1 Type of Purchases................................................... -17-
-----------------
SECTION 6.2 Notice Requirements................................................. -17-
-------------------
SECTION 6.3 Conditions Precedent to Initial Purchases........................... -17-
-----------------------------------------
SECTION 6.3.1 Membership in the Purchaser....................................... -18-
---------------------------
SECTION 6.3.2 Structuring Fee................................................... -18-
---------------
SECTION 6.3.3 Absence of Liens.................................................. -18-
----------------
SECTION 6.3.4 Financing Statements.............................................. -18-
--------------------
SECTION 6.3.5 Receivables Activity Report....................................... -18-
---------------------------
SECTION 6.3.6 Seller Resolutions................................................ -18-
------------------
SECTION 6.3.7 Legal Opinion of Seller's Counsel................................. -18-
---------------------------------
SECTION 6.3.8 Good Standing Certificates........................................ -19-
--------------------------
</TABLE>
(i)
<PAGE>
<TABLE>
Article Page
- ------- ----
<S> <C>
SECTION 6.4 Condition Precedent to all Incremental Purchases.................... -19-
------------------------------------------------
SECTION 6.5 Conditions Precedent to All Purchases............................... -19-
-------------------------------------
SECTION 6.5.1. Representations and Covenants..................................... -19-
-----------------------------
SECTION 6.5.2. Other Documents................................................... -19-
---------------
SECTION 6.6 Conditions Subsequent............................................... -19-
---------------------
SECTION 6.7 Initial Purchase from Frick......................................... -19-
---------------------------
ARTICLE VII: SETTLEMENT PROCEDURES.................................................. -20-
SECTION 7.1 Settlement Dates.................................................... -20-
-----------------
SECTION 7.2 Application of Collections.......................................... -20-
--------------------------
SECTION 7.2.1 Application of Collections on Days That Are Not Settlement Dates.. -20-
-----------------------------------------------------------------
SECTION 7.2.2 Application of Collections on Settlement Dates.................... -21-
----------------------------------------------
SECTION 7.3 Adjustments due to Dilution, Etc.................................... -22-
--------------------------------
SECTION 7.4 Receivables Activity Reports........................................ -22-
----------------------------
ARTICLE VIII: SERVICING AGENT AND COLLECTION AGENT.................................. -22-
SECTION 8.1 Appointment of Servicing Agent...................................... -22-
------------------------------
SECTION 8.1.1 Replacement of Servicing Agent.................................... -23-
------------------------------
SECTION 8.2 Appointment of Collection Agent..................................... -23-
-------------------------------
SECTION 8.2.1 Replacement of Collection Agent; Notification of Obligors......... -23-
---------------------------------------------------------
ARTICLE IX: REPRESENTATIONS AND WARRANTIES........................................... -25-
SECTION 9.1 Representations and Warranties of the Seller and the Collection
-----------------------------------------------------------------
Agent............................................................... -25-
-----
ARTICLE X: COVENANTS................................................................ -27-
SECTION 10.1 Affirmative Covenants of the Seller and the Collection Agent....... -27-
------------------------------------------------------------
SECTION 10.2 Reporting Requirements of the Seller............................... -29-
------------------------------------
SECTION 10.3 Negative Covenants of the Seller and the Collection Agent.......... -30-
---------------------------------------------------------
ARTICLE XI: INDEMNIFICATIONS; INCREASED COSTS........................................ -32-
SECTION 11.1 Indemnification by Seller of Purchaser, etc........................ -32-
-------------------------------------------
SECTION 11.2 Indemnification Due to Failure to Consummate Purchase.............. -34-
-----------------------------------------------------
SECTION 11.3 Increased Costs under Liquidity Facilities and Credit Facilities... -34-
----------------------------------------------------------------
SECTION 11.4 Notices............................................................ -35-
-------
ARTICLE XII: MISCELLANEOUS
SECTION 12.1 Amendments, Etc.................................................... -35-
--------------
SECTION 12.2 Notices, Etc....................................................... -35-
------------
SECTION 12.3 Payments Net of Taxes.............................................. -35-
---------------------
</TABLE>
(ii)
<PAGE>
<TABLE>
Article Page
- ------- ----
<S> <C>
SECTION 12.4 No Waiver; Remedies............................................... -35-
-------------------
SECTION 12.5 Binding Effect; Assignability..................................... -36-
-----------------------------
SECTION 12.6 Governing Law..................................................... -36-
-------------
SECTION 12.7 Construction of the Agreement..................................... -36-
-----------------------------
SECTION 12.8 No Proceedings.................................................... -37-
--------------
SECTION 12.8 Confidentiality................................................... -37-
---------------
SECTION 12.10 Execution in Counterparts........................................ -37-
-------------------------
SECTION 12.11 Submission to Jurisdiction; Appointment of Agent to
---------------------------------------------------
Accept Service of Process........................................ -37-
-------------------------
SECTION 12.12 Integration Clause.............................................. -38-
-------------------
</TABLE>
EXHIBITS:
Exhibit A Special Concentration Limits
Exhibit B Form of Notice of Offer to Sell
Exhibit C Form of Notice of Election Not to Make Reinvestment Purchases
Exhibit D Form of Membership Agreement
Exhibit E Form of Concentration Account Agreement
Exhibit F Form of Receivables Activity Report
Exhibit G Form of Seller's Counsel Opinion
Exhibit H Lock Box Banks (and related account information)
Exhibit I List of Addresses where Division Office Records are maintained
Exhibit J Form of Supplemental Agreement
Exhibit K List of Accounting Periods
(iii)
<PAGE>
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT dated as of March 26, 1997
among YORK INTERNATIONAL CORPORATION, a Delaware corporation, as seller (in such
capacity the "Seller") and as initial collection agent (in such capacity the
"Collective Agent"), ASSET SECURITIZATION COOPERATIVE CORPORATION, as purchaser
(the "Purchaser"), and CANADIAN IMPERIAL BANK OF COMMERCE, as servicing agent
for the Purchaser (the "Servicing Agent").
W I T N E S S T H:
- - - - - - - - -
WHEREAS, the Seller, Purchaser, and Servicing Agent have entered into that
certain Receivables Sale Agreement, dated as of June 30, 1992 (as amended prior
to the date hereof, the "Original Sale Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original Sale
Agreement pursuant to the terms hereof; and
WHEREAS, the parties hereto intend the receivables sales transactions
contemplated hereunder for all purposes and in all respects to be true sales of
undivided ownership interests in certain receivables from the Seller to the
Purchaser (and not loans secured by receivables), providing the Purchaser with
ownership of such undivided ownership interests in such receivables;
NOW, THEREFORE, the Original Sale Agreement is hereby amended and restated
in its entirety as follows:
ARTICLE I: DEFINITIONS
"Accounting Period" means (i) with respect to the Seller's fiscal year
-----------------
ending on December 31, 1992, each monthly period described in Exhibit K, and
(ii) with respect to each fiscal year of the Seller ending thereafter, such
periods as shall be designated by the Seller to the Purchaser in accordance with
the provisions of Section 10.2(g).
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person or is a director or officer of such Person.
"Agreement" means this Receivables Sale Agreement, as it may be amended
---------
from time to time.
"Aggregate Investment" means the sum of the Investments with respect to
--------------------
each Division.
"Applied" means the Applied Systems division of the Seller.
-------
"Average Maturity" means with respect to any Receivables Pool on any day,
----------------
that period (expressed in days) equal to the weighted average maturity of the
Pool Receivables, as calculated by the Collection Agent and as set forth in the
most recent Receivables Activity Report with respect to such Receivables Pool;
provided, however, that if the Purchaser shall reasonably
- -------- -------
<PAGE>
disagree with any such calculation, the Purchaser may recalculate the Average
Maturity for such period (which calculation shall be conclusive).
"Business Day" means a day on which the Purchaser, the Servicing Agent,
------------
the Collection Agent and the Seller are open for business.
"Bristol" means the Bristol Compressors, Inc. a Delaware corporation.
-------
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collection" means, with respect to any Receivable of any Division, any
----------
amount paid by an Obligor or any other party with respect to such Receivable of
such Division.
"Collection Agent" means the Seller or any replacement thereof under
----------------
Section 8.2.1.
"Collection Agent Fee" means the percentage used to determine the fee
--------------------
payable by the Purchaser to the Collection Agent, as described in Section 5.2.4.
"Concentration Account" means any special non-interest bearing
---------------------
concentration account into which will be transferred or deposited only
Collections, which account shall be maintained by PNC Bank, National Association
(or at such successor depository institution as provided in Section 10.3(d)) at
its Pittsburgh, Pennsylvania office (or at such office as the Purchaser shall
from time to time specify in writing to the Seller) for the benefit of, and
under the sole dominion and control of, the Purchaser.
"Concentration Account Agreement" means the Concentration Account
-------------------------------
Agreement dated as of June 30, 1992 between the Seller and the Purchaser,
acknowledged and agreed to by PNC Bank, National Association, in substantially
the form of Exhibit E hereto.
"Consent and Acknowledgment" means the letter agreement dated as of August
--------------------------
30, 1994 from Bristol in favor of the Purchaser pursuant to which, among other
things, Bristol consents to, and acknowledges, the transactions contemplated
hereby, as such letter agreement may be amended, modified, extended or waived
from time to time.
"Credit Facilities" means each of the committed loan facilities, lines of
-----------------
credit, letters of credit and other forms of credit enhancement available to the
Purchaser to support the Purchaser's commercial paper notes and medium-term
notes which are not Liquidity Facilities.
"Default Ratio" means, with respect to any Division as of any date of
-------------
determination, a fraction, expressed as a percentage, (I) the numerator of which
is the sum, without duplication, of (i) the aggregate outstanding balance of all
Receivables of such Division that became Defaulted Receivables during the month
most recently completed and (ii) the aggregate outstanding balance of all
Receivables of such Division that were unpaid for more than 91 days past the
dates on which
-2-
<PAGE>
they were due as of the end of the month most recently completed, and (II) the
denominator of which is the aggregate outstanding balance of all Receivables of
such Division on the last Business Day of the month most recently completed.
"Defaulted Receivable" means any Receivable which:
--------------------
(1) has been or should have been charged-off in conformity with the
standard credit and collection practices and policies of the Division
which generated such Receivable; or
(2) is owed by an Obligor who is in bankruptcy, reorganization,
insolvency or similar proceedings.
"Dilutions" means the aggregate amount of any reductions and cancellations
---------
of Receivables which have been reduced or cancelled, respectively, for any
reason other than that (1) the Obligors have made payments thereon or (2) the
Division which generated such Receivable has charged-off such Receivables in
accordance with its standard credit and collection practices and policies.
"Dilution Percentage" means, with respect to any Division as of any date
-------------------
of determination, a fraction, expressed as a percentage, (I) the numerator of
which is the positive result, if any, of (a) the product of (1) the outstanding
balance of Eligible Receivables of such Division as at the end of the full
fiscal month most recently completed, (2) 1.5 and (3) the greatest of the
fractions determined for each full fiscal month during the period of 12 full
fiscal months preceding the date of determination obtained by dividing (A) the
aggregate amount of Dilutions of such Division for each such full fiscal month
by (B) the outstanding balance of Receivables of such Division as at the end of
the full fiscal month most recently completed, less (b) an amount equal to the
Standard Concentration Limit with respect to such Division, and (II) the
denominator of which is the outstanding balance of Eligible Receivables of such
Division as at the end of the full fiscal month most recently completed.
"Division" means each of Applied, UPG, Frick and, for the purposes of this
--------
Agreement, Bristol. Each reference in this Agreement to a Division, insofar as
such reference is to Bristol, shall, where appropriate, be deemed to be a
reference to the Seller as the owner of the Seller's Interest.
"Eligible Receivable" means any Receivable:
-------------------
(1) which is not unpaid for more than 91 days past the date on which it
was due;
(2) which is required to be paid in full (a) if such Receivable was
generated by Applied, within 30 days after the billing date, (b) if
such Receivable was generated by UPG, within 180 days after the
billing date, (c) if such Receivable was generated by Bristol, within
the earlier to occur of (x) 90 days after the billing date or (y) if
the Obligor thereof is not a U.S. resident, 60 days after the bill of
lading
-3-
<PAGE>
date, and (d) if such Receivable was generated by Frick, within 30
days after the billing date;
(3) which is payable in U.S. dollars or, with respect to a Receivable the
Obligor of which is a Canadian resident, is payable in Canadian
dollars;
(4) which is not a Defaulted Receivable;
(5) the Obligor of which has had no Defaulted Receivable at any time
during the immediately preceding 12-month period;
(6) the Obligor of which is not currently considered as being in referral
status by the collection department of the applicable Division;
(7) the Obligor of which does not have unpaid for more than 91 days past
the dates on which they were due Receivables (exclusive of
Receivables which in the reasonable, good faith opinion of the Seller
are the subject of bona fide disputes between the Seller and such
Obligor) with an aggregate outstanding balance equal to more than 10%
of the aggregate outstanding balance of all Receivables of such
Obligor;
(8) the Obligor of which is not an Affiliate of the Seller or the
Purchaser;
(9) which is not subject to any dispute, claim, defense or offset (other
than those which, in the reasonable good faith judgment of the
Seller, are the subject of bona fide disputes, or with respect to
which the Seller has made a payment or an adjustment in the amount of
such dispute, claim, defense or offset in accordance with Section
7.3(b) hereof);
(10) which arises out of a "current transaction" as defined in Section
3(a)(3) of the Securities Act of 1933, as amended;
(11) which is an "account" or "chattel paper" within the meaning of the
Uniform Commercial Code of the State in which the Seller's place of
business is located, or, if the Seller has more than one place of
business, the State in which the Seller's chief executive office is
located;
(12) which arose from a bona fide and accepted sale of merchandise or
insurance or the rendering of services accepted by the Obligor of
that Receivable and does not represent an advance billing;
(13) in which the Purchaser shall, upon the Purchase of an Ownership
Interest therein, acquire good and marketable title to an Ownership
Interest in the Receivable, free and clear of all liens, security
interests and encumbrances;
-4-
<PAGE>
(14) that is the legal, valid and binding payment obligation of the
Obligor of such Receivable;
(15) that represents the sales price of merchandise, insurance or
services, within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended;
(16) which does not contravene any applicable law, rule or regulation in
any material respect;
(17) which is not subject to any restrictions on the transfer,
assignability or sale thereof (other than the restrictions imposed by
the Federal Assignment of Claims Act, 41 U.S.C. (S) 15; 31 U.S.C.
(S) 3727, with respect to any Government Receivable);
(18) which satisfies all applicable credit collection policies of the
Division which generated such Receivable; and
(19) which was generated in the ordinary course of the business of a
Division; and
(20) which does not represent an amount due in connection with the sale of
merchandise or services or the rendering of insurance that is billed
to the Obligor on a progress billing basis.
"ERISA" means the Employee Retirement Income Security Act of 1974 and the
-----
rules and regulations thereunder, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that is treated as a single employer with the Seller under Section
414(b) or (c) of the Code.
"Foreign Concentration Limit" means, with respect to all Receivables owing
---------------------------
to the Divisions (excluding Bristol) from all Obligors which are not U.S.
residents or Canadian residents, an amount equal to $20,000,000 reduced by the
lesser of (i) the "Foreign Concentration Limit" (as defined in the Transfer
Agreement) and (ii) the outstanding balance of all Foreign Receivables in the
"Receivables Pool" (as defined in the Transfer Agreement); provided, that the
--------
Purchaser may, at any time and from time to time in its sole discretion, reduce
or increase the Foreign Concentration Limit effective immediately upon the
delivery of a notice to the Seller.
"Foreign Receivable" means a Receivable the Obligor of which is not a U.S.
------------------
resident or a Canadian resident.
"Frick" means the Frick Company division of the Seller.
-----
"Government Receivable" means a Receivable the Obligor of which is an
---------------------
agency, a department, an instrumentality or a political subdivision of the
United States or of any state or local government.
-5-
<PAGE>
"Government Concentration Limit" means, with respect to all of the
------------------------------
Government Receivables, an amount equal to $3,500,000; provided, that the
--------
Purchaser may, at any time in its discretion, reduce or increase the Government
Concentration Limit through the delivery of a notice to the Seller.
"Historical Default Ratio" means, with respect to any Division as of any
------------------------
date of determination, a percentage equal to the product of (i) 1.2 and (ii) the
greatest of the fractions determined for each full fiscal month of the Seller
during the period of 12 full fiscal months of the Seller preceding the most
recently completed Settlement Period obtained by dividing (A) the sum, without
duplication, of (x) the aggregate outstanding balance of all Receivables of such
Division that became Defaulted Receivables for each such full fiscal month of
the Seller and (y) the aggregate outstanding balance of all Receivables of such
Division that were unpaid for more than 91 days past the dates on which they
were due as at the end of each such full fiscal month of the Seller by (B) the
outstanding balance of Receivables of such Division as at the end of each such
full fiscal month of the Seller.
"Incremental Purchase" means, with respect to any Division, any Purchase
--------------------
(other than the Initial Purchase or a Reinvestment Purchase).
"Indemnified Party" has the meaning ascribed to such term in Section 11.1.
-----------------
"Initial Purchase" means, with respect to any Division, the first Purchase
----------------
under this Agreement.
"Investment" means, with respect to any Division, the sum of:
----------
(1) the aggregate amount of cash paid by the Purchaser to the Seller for
the Initial Purchase and all Incremental Purchases, less the sum of
(i) the amount of all Collections received and applied pursuant to
Section 7.2.2(b)(ii)(A) and (ii) the amount of all payments made by
the Seller and applied pursuant to Section 3.3 and Section 7.3; and
(2) any amounts owed by the Seller to the Purchaser under Article XI.
"Liquidity Facilities" means each of the committed loan facilities, lines
--------------------
of credit and other financial accommodations available to the Purchaser to
provide liquidity in support of the Purchaser's commercial paper notes and
medium-term notes.
"Lock-Box" means any lock-box(es) or account(s) to which the Obligors
--------
remit Collections.
"Lock-Box Bank" means any institution at which a Lock-Box is kept.
-------------
"Maximum Ownership Interest" means 100%.
--------------------------
-6-
<PAGE>
"Obligor" means any corporation, partnership, person or any other party
-------
which is obligated to make payment on a Receivable.
"Operating Expense Fee" means the percentage used to determine the amount
---------------------
to be distributed by the Collection Agent to the Purchaser, as described in
Section 5.2.3.
"Overextended Division" has the meaning-ascribed to such term in Section
---------------------
3.3(a).
"Ownership Interest" has the meaning ascribed to such term in Section
------------------
3.1(a).
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
----
thereto.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means each employee benefit plan (as defined in Section 3(3) of
----
ERISA) heretofore or currently sponsored, maintained or contributed to by the
Seller or any ERISA Affiliate or with respect to which the Seller or any ERISA
Affiliate has any liability.
"Pool Receivable" means a Receivable in a Receivables Pool.
---------------
"Purchase" means, with respect to any Division, any purchase by the
--------
Purchaser of an Ownership Interest from the Seller under this Agreement, and
includes the Initial Purchase, any Incremental Purchase and any Reinvestment
Purchase.
"Purchase Discount" means the percentage used to determine the amount to
-----------------
be distributed by the Collection Agent to the Purchaser, as described in Section
5.2.1.
"Purchase Limit" means, at any time of determination, for all Divisions in
--------------
the aggregate, an amount equal to $120,000,000, and for each Division
individually, the respective amount set forth below:
<TABLE>
<S> <C>
Applied $75,000,000
Bristol $75,000,000
UPG $60,000,000
Frick $10,000,000.
</TABLE>
"Purchase Premium" means the percentage used to determine the amount to be
----------------
distributed by the Collection Agent to the Purchaser, as described in Section
5.2.2.
"Purchaser" means Asset Securitization Cooperative Corporation and its
---------
successors and assigns.
-7-
<PAGE>
"Receivable" means the obligation of an Obligor to pay for merchandise
----------
sold or Services rendered by a Division, and includes the Division's rights to
payment of any interest or finance charges and in the merchandise (including
returned goods) and contracts relating to such obligation, all security
interests, guaranties and property securing or supporting payment of such
obligation and all proceeds of the foregoing; provided, however, that, with
-------- -------
respect to such obligation arising from merchandise sold or services provided by
Bristol, the Seller's Interest in such obligation has been purchased by the
Seller from Bristol.
"Receivables Activity Report" means, with respect to a Receivables Pool,
---------------------------
the report in the form of Exhibit F hereto to be provided by the Collection
Agent in accordance with Section 7.4 of this Agreement.
"Receivables Pool" means, at any time, (i) with respect to any Division
----------------
other than Bristol, the aggregation of each then outstanding Receivable of such
Division with respect to which the Purchaser has purchased an Ownership Interest
and (ii) with respect to Bristol, the aggregation of each then outstanding
Receivable of Bristol in which the Seller has purchased a Seller's Interest.
Each reference in this Agreement to a Receivables Pool, insofar as such
reference is to the Receivables Pool of Bristol, shall, where appropriate, be
deemed to be a reference to the Seller' s Interest.
"Reinvestment Purchase" means any Purchase made with Collections.
---------------------
"Reserve" means, with respect to any Division as of any date, an amount
-------
equal to the Investment with respect to such Division on such date multiplied by
the greater of (a) 10% and (b) a fraction, the numerator of which equals the sum
of the items set forth in (1) through (4) below (each expressed as a
percentage), and the denominator of which equals 100% minus the sum of the items
set forth in (1) through (4) below:
(1) the Standard Concentration Limit as of such date divided by the
Investment with respect to such Division as of such date;
(2) the product of (a) 1.5 and (b) the highest of the ratios determined
for each full fiscal month during the period of 12 full fiscal months
preceding such date of (i) the sum, without duplication, of (A)
Receivables of such Division which, as at the end of each such month,
were unpaid for more than 91 days past the date on which they were
due and (B) Receivables of such Division which have been charged-off
during each such month in conformity which the standard credit and
collection practices and policies of the Division which generated
such Receivables to (ii) the outstanding principal balance of
Receivables of such Division as at the end of each such month;
(3) 1%; and
-8-
<PAGE>
(4) the product of (a) the sum of (i) the 30-day composite commercial
paper rate for "AA"-rated issuers, as published by the Board of
Governors of the Federal Reserve System in Statistical Release
H.15(519), Selected Interest Rates" or any successor publication
under the heading "Commercial Paper" on the Business Day immediately
preceding such date and (ii) 4.42% and (b) (i) .3125 with respect to
Applied, (ii) .5139 with respect to UPG, (iii) .2833 with respect to
Bristol, and (iv) .3479 with respect to Frick.
"Sale Documents" means this Agreement, the Transfer Agreement, the
--------------
Exhibits hereto to which the Seller is a party and all other certificates,
agreements and documents executed from time to time by the Seller in connection
with the transactions contemplated in this Agreement.
"Seller" means York International Corporation, a Delaware corporation, and
------
its Permitted successors.
"Seller's Interest" means, at any time, the undivided percentage ownership
-----------------
interest in Bristol's Receivables purchased and maintained by the Seller
pursuant to the Transfer Agreement.
"Selling Division" has the meaning ascribed to such term in Section 3.3
----------------
(a).
"Servicing Agent" means Canadian Imperial Bank of Commerce and any
---------------
replacement thereof under Section 8.1.1.
"Settlement Date" means any date, as described in Section 7.1 of this
---------------
Agreement, on which the Collection Agent is required to remit specified payments
to the Purchaser.
"Settlement Period" means (a) initially, the period from (and including)
-----------------
the date of the Initial Purchase with respect to any Division to (and including)
the last day of the Accounting Period in which such Initial Purchase was made
and (b) thereafter each Accounting Period.
"Special Concentration Limit" means, with respect to any Obligor listed on
---------------------------
Exhibit A hereto (together with is Affiliates and subsidiaries), the amount
indicated opposite the name of such Obligor; provided, that the Purchaser may,
--------
at any time in its discretion, reduce or increase the Special Concentration
Limit for any such Obligor, or add the name of any other Obligor to Exhibit A,
through the delivery by the Purchaser to the Seller of an amended Exhibit A.
"Standard Concentration Limit" means, (i) with respect to all of the
----------------------------
Receivables of any Division (other than Frick) owing from a single Obligor
(except for an Obligor listed on Exhibit A) together with Receivables owing from
its Affiliates or subsidiaries, an amount equal to $3,000,000 or (ii) with
respect to all of the Receivables of Frick owing from a single Obligor (except
for an Obligor listed on Exhibit A) together with Receivables owing from its
Affiliates or subsidiaries, an amount equal to $500,000; provided, that the
--------
Purchaser may, at any time in its discretion, reduce or increase the Standard
Concentration Limit for any Obligor through the delivery of a notice to the
Seller.
-9-
<PAGE>
"Structuring Fee" has the meaning ascribed to such term in Section 5.1.
---------------
"Supplemental Agreement means an agreement supplemental to this Agreement
----------------------
pursuant to which the parties hereto set forth certain criteria with respect to
the Receivables of the Frick Division, substantially in the form of Exhibit J.
"Transfer Agreement" means the Transfer Agreement dated as of August 30,
------------------
1994 between the Seller and Bristol, as the same may be amended, modified,
extended or waived from time to time with the consent of the Purchaser.
"UPG" means the Unitary Products Group, a division of the Seller.
---
"Unutilized Purchase Limit" means, at any time of determination, the
-------------------------
positive result of (i) $100,000,000 less (ii) the Aggregate Investment at such
time of determination.
"Unutilized Purchase Limit Fee" has the meaning ascribed to such term in
-----------------------------
Section 5.5.
ARTICLE II: OFFERING FACILITY
This Agreement creates an offering facility only and does not constitute a
commitment on the part of the Seller to sell Ownership Interests in Receivables
or on the Purchaser to make any Purchases. The Seller may from time to time
sell Ownership Interests in Receivables to the Purchaser and the Purchaser may
make Purchases, at their sole discretion and on the terms described in this
Agreement.
ARTICLE III: WHAT IS SOLD?
SECTION 3.1 Determination of Ownership Interest.
-----------------------------------
(a) When the Purchaser accepts an offer from the Seller to purchase an
interest in (i) Receivables of any Division other than Bristol or (ii) the
Seller's Interest, the Purchaser shall have acquired, in exchange for the
purchase price paid, an undivided percentage ownership interest in (i) the
Receivables Pool of such Division and any Collections relating to such
Receivables Pool or (ii) the Seller's Interest, as the case may be. Each such
undivided percentage interest of the Purchaser shall be referred to in this
Agreement as an "Ownership Interest". The Ownership Interest with respect to the
Receivables Pool of any Division other than Bristol shall at any time, except as
provided in paragraphs (b) and (c) of this Section, be equal to the following
fraction (expressed as a percentage):
I + R
------------
ER x (1 - D)
-10-
<PAGE>
where:
I = the Investment in such Receivables Pool at such time;
R = the Reserve with respect to such Division at such time;
ER = the outstanding balance of all Eligible Receivables in such
Receivables Pool at such time, minus an amount equal to the sum
-----
of (i) the aggregate amount by which the outstanding balance of
Eligible Receivables of each Obligor in such Receivables Pool
exceeds the Standard Concentration Limit or Special Concentration
Limit for such Obligor, (ii) the positive result of (A) the
aggregate amount by which the outstanding balance of Foreign
Receivables in such Receivables Pool exceeds the lesser of (1)
the product of (x) a fraction, expressed as a decimal, the
numerator of which is equal to the outstanding balance of all
Foreign Receivables in such Receivables Pool and the denominator
of which is equal to the aggregate outstanding balance of all
Foreign Receivables in all of the Receivables Pools and (y) the
Foreign Concentration Limit and (2) an amount equal to the
product of (x) the weighted average at such time of the four
percentages determined pursuant to (I) clause (a) or clause (b),
as the case may be, of the definition of Reserve for each
Division (other than Bristol) and (II) clause (a) or clause (b),
as the case may be, of the definition of "Reserve" contained in
the Transfer Agreement and (y) the Investment, less (B) the
----
amount, if any, determined in clause (i) hereof with respect to
each Obligor described therein which is an Obligor of a Foreign
Receivable, (iii) the positive result of (A) the aggregate amount
by which the outstanding balance of Government Receivables in
such Receivables Pool exceeds the product of (1) a fraction,
expressed as a decimal, the numerator of which is equal to the
outstanding balance of all Government Receivables in such
Receivables Pool and the denominator of which is equal to the
aggregate outstanding balance of all Government Receivables in
all of the Receivables Pools and (2) the Government Concentration
Limit, less (B) the amount, if any, determined in clause (i)
----
hereof with respect to each Obligor described therein which is an
Obligor of a Government Receivable; (iv) with respect to the
Receivables Pool of UPG, the positive result of (A) the aggregate
amount by which the outstanding balance of all Eligible
Receivables not required to be paid in full until a date between
sixty-one days and ninety days, inclusive, after the billing date
thereof exceeds the product of (1) 30% and (2) an amount equal to
the outstanding balance of all Receivables of UPG at such time,
less (B) the amount, if any, determined in clause (i) hereof with
----
respect to each Obligor described therein which is an Obligor of
a Receivable described in this clause; and (v) with respect to
the Receivable Pool of UPG, the positive result of (A) the
aggregate amount by which the outstanding balance of all Eligible
Receivables not required to be paid in full until a date between
ninety-one days and one hundred eighty days, inclusive, after the
billing date thereof exceeds the product of (1) 10% and (2) an
amount equal to the outstanding balance of all Receivables of UPG
at such time, less (B) the amount, if any, determined in clause
----
-11-
<PAGE>
(i) hereof with respect to each Obligor described therein which
is an Obligor of a Receivable described in this clause; and
D = the Dilution Percentage with respect to such Division at such
time.
The Ownership Interest with respect to the Seller's Interest shall at any time,
except as provided in paragraphs (b) and (c) of this Section, be equal to the
following fraction (expressed as a percentage):
I/1/
------
I/2/
where:
I/1/ = the Investment in the Seller's Interest; and
I/2/ = the amount of the Seller's "Investment" (as defined in the
Transfer Agreement) in Bristol's Receivables pursuant to the
Transfer Agreement.
The Ownership Interest will change from time to time, except as provided in
paragraphs (b) and (c) of this Section, whenever there is a change in (i)
with respect to any Division other than Bristol, the value of Investment
with respect to the Receivables Pool of such Division, Reserve with respect
to such Division, Eligible Receivables (as so reduced) in such Receivables
Pool, Standard Concentration Limit or Special Concentration Limit with
respect to any Obligor, Foreign Concentration Limit, Government
Concentration Limit or Dilution Percentage with respect to such Division
and (ii) with respect to the Seller's Interest, whenever there is a change
in the value of I/1/ or I/2/.
(b) During any period when the Investment with respect to any Division is
being reduced, the Ownership Interest in both the Receivables of such Division
and the Seller's Interest will remain fixed at the percentage in effect as of
the date immediately preceding the commencement of that period and the Purchaser
shall cease acquiring an interest in any such Receivables, Seller's Interest or
Collections thereon arising during such period.
(c) The Ownership Interest in both the Receivables of each Division and the
Seller's Interest will be reduced to zero (and all Receivables and Collection
owned by the Purchaser and attributable to such Ownership Interests therein as
calculated immediately prior to its reduction to zero shall be applied as
provided in Section 4.2) when the Purchaser receives: (1) the Aggregate
Investment; (2) the amounts payable pursuant to Section 7.2.2(b)(i); and (3) all
other amounts then payable to the Purchaser under this Agreement. When the
Ownership Interest in both the Receivables of each Division and the Seller's
Interest is reduced to zero, the Purchaser shall not be entitled to receive any
additional Collections from the Receivables or Seller's Interest, as set forth
in Section 4.2. Upon written request of the Seller, the Purchaser shall
acknowledge in
-12-
<PAGE>
writing whether or not the Purchaser has received in full the amounts and
payments identified in clauses (1) through (3) of this Section 3.1(c).
(d) Subject to the Collection Agent's rights under Section 8.2(d), which
rights shall be exclusive for so long as the Seller or an Affiliate of the
Seller is the Collection Agent, upon the Purchaser's purchase of an Ownership
Interest in the Receivables Pool of any Division, the Purchaser and the
Servicing Agent shall be entitled to (i) endorse all drafts, checks and other
forms of payment on account of the Pool Receivables in such Receivables Pool and
to settle, adjust and forgive any amounts payable on such Pool Receivables and
(ii) exercise all other incidences of ownership in such Pool Receivables to the
extent of the Ownership Interest.
(e) The Seller hereby sells and assigns to the Purchaser, and the Purchaser
hereby acquires from the Seller, the Ownership Interest in all Receivables Pools
of the Divisions and the Seller's Interest (as same may change from time to time
pursuant to the terms of this Agreement, but not in excess of 100% and subject
to Article II and Section 3.1(b) hereof).
SECTION 3.2 Frequency of Determining Ownership Interest. The
-------------------------------------------
Collection Agent shall determine or be deemed to determine the Ownership
Interest in the Receivables Pool of each Division daily, and shall report it to
the Servicing Agent at the following times only:
(a) on the date of an Initial Purchase from the Seller in respect of
Receivables generated by such Division;
(b) on each Settlement Date;
(c) on the date of an Incremental Purchase from the Seller in respect of
Receivables generated by such Division;
(d) on the Business Day immediately preceding any period during which the
Investment with respect to any Division is being reduced;
(e) on the Business Day on which the Investment with respect to any
Division ceases being reduced;
(f) when the Collection Agent has reason to believe that the Maximum
Ownership Interest has been exceeded; and
(g) at the request of the Purchaser.
SECTION 3.3 Maximum Ownership Interest. (a) If, on any day (after
--------------------------
giving effect to Collections and the generation of new Receivables with respect
to the Receivables Pool of any Division on such day), the Ownership Interest in
such Receivables Pool would exceed the Maximum Ownership Interest (such Division
referred to herein as the "Overextended Division"), the Purchaser shall be
deemed to make an Incremental Purchase in the Receivables Pools of each
-13-
<PAGE>
of the other Divisions (each such Division, a "Selling Division") in, and the
Investment in the Receivables Pool of the Overextended Division shall be deemed
reduced by, the amount determined in accordance with the immediately succeeding
sentence. Subject to subsection (b) below, the Incremental Purchase deemed to
be made in the Receivables Pool of each Selling Division shall be in an amount
equal to the product of (i) the amount sufficient to reduce the Ownership
Interest in the Receivables Pool of the Overextended Division to the Maximum
Ownership Interest and (ii) a fraction, the numerator of which is equal to the
Investment with respect to such Selling Division and the denominator of which is
equal to the sum of the Investment for each Selling Division; provided, that the
--------
amount of such Incremental Purchase would not cause (and such amount shall be
reduced so as not to cause) either:
(1) the Investment with respect to such Selling Division to exceed the
Purchase Limit with respect to such Selling Division, or
(2) the Ownership Interest in the Receivables Pool of such Selling Division
to exceed the Maximum Ownership Interest.
(b) If the Incremental Purchase with respect to any Selling Division
is reduced in accordance with the proviso contained in subsection (a) above, the
amount of such reduction shall be applied as deemed Incremental Purchases in the
Receivables Pools of the remaining Selling Divisions on a pro rata basis;
provided, that the amount of such Incremental Purchases would not cause (and
- --------
such amount shall be so as not to cause) either:
(1) the Investment with respect to any such Selling Division to exceed
the Purchase Limit with respect to such Selling Division, or
(2) the Ownership Interest in the Receivables Pool of any such Selling
Division to exceed the Maximum Ownership Interest with respect to
such Selling Division.
Notwithstanding anything to the contrary contained herein, the Seller shall not
be required to deliver any written notice with respect to the sale of an
Ownership Interest arising from the Purchaser's making of Incremental Purchases
in accordance with subsection (a) above or this subsection (b).
(c) If, after giving effect to subsections (a) and (b) above, the
Ownership Interest in the Receivables Pool of the Overextended Division or
Seller's Interest exceeds the Maximum Ownership Interest, the Purchaser shall
cease making Reinvestment Purchases and the Collection Agent shall remit to the
Purchaser on a daily basis all Collections attributable to such Ownership
Interest (net of amounts distributed or to be distributed pursuant to Sections
7.2.2(a) and 7.2.(b)(i)) as a reduction to its Investment with respect to such
Overextended Division until the Purchaser has received an amount sufficient to
reduce the respective Ownership Interest to the Maximum Ownership Interest. The
Seller shall remit to the Purchaser in reduction of its Investment with respect
to an Overextended Division any payment made by the Purchaser to the
-14-
<PAGE>
Seller on account of Reinvestment Purchases with respect to such Overextended
Division to the extent the Ownership Interest with respect to such Overextended
Division exceeded the Maximum Ownership Interest at the time the Seller received
any such Reinvestment Purchase payment.
SECTION 3.4 Canadian Receivables. For all purposes of this
--------------------
Agreement, all computations with respect to Receivables which are payable in
Canadian dollars shall be based on United States dollar amounts converted from
Canadian dollars at the rate of .70 United States dollars per one Canadian
dollar.
ARTICLE IV: PURCHASE PRICE
The purchase price payable by the Purchaser for its Ownership Interest in
Receivables and any Collections shall be comprised of a cash component and a
deferred payment component.
SECTION 4.1 Determination of Cash Component of Purchase Price. When
-------------------------------------------------
the Purchaser accepts an offer from the Seller to make a Purchase, the Purchaser
will pay the following amounts in cash to the Seller:
(a) (i) for Initial and Incremental Purchases (other than Incremental
Purchases deemed made pursuant to Section 3.3(a)), the amount specified in the
notice required to be delivered by the Seller under Section 6.2(a) or (ii) for
Incremental Purchases deemed to be made pursuant to Section 3.3(a) hereof, the
amount determined in the second sentence of Section 3.3(a): or
(b) for a Reinvestment Purchase in Eligible Receivables of any Division,
the positive result of (i) the product of (A) the dollar amount of the
Collections received on account of Pool Receivables of such Division on the date
of such Purchase and (B) the Ownership Interest with respect to such Division on
that date, less (ii) any fees payable under Section 7.2.2(b)(i); that
provided, that the payment of any amount described in (a) or (b) above would not
- --------
cause (and such amount shall be reduced so as not to cause) either:
(1) the Investment to exceed the Purchase Limit with respect to the
related Division;
(2) the Aggregate Investment to exceed the Purchase Limit for all
Divisions in the aggregate; or
(3) the Ownership Interest in the Receivables Pool of such related
Division to exceed the Maximum Ownership Interest.
SECTION 4.2 Determination of Deferred Payment Component of Purchase
-------------------------------------------------------
Price. Upon and after the reduction of the Ownership Interest to zero as
- -----
described in Section 3.1(c), all Collections or other cash owned by the
Purchaser on account of its undivided interest in the Receivables purchased
hereunder (as calculated immediately prior to the reduction of the Ownership
Interest to zero under Section 3.1(c)) will be transmitted in the form received
by the
-15-
<PAGE>
Collection Agent (on behalf of the Purchaser) to the Seller as payment of the
deferred payment component of the purchase price under this Article IV.
ARTICLE V: FEES AND EXPENSES
SECTION 5.1 Structuring Fee. The Seller paid a structuring fee (the
---------------
"Structuring Fee") to the Purchaser on the date of the Original Sale Agreement
in the amount of $200,000.
SECTION 5.2 Settlement Date Payments. On each Settlement Date the
------------------------
Collection Agent will distribute to the Purchaser from Collections attributable
to its Ownership Interest the following in accordance with Section 7.2.2:
-------------
SECTION 5.2.1 Purchase Discount. A Purchase Discount equal to the
-----------------
weighted average of the following:
(i) the weighted average of the discount rates on all commercial paper
notes of the Purchaser outstanding during the related Settlement Period (other
than commercial paper notes issued for the purpose of (x) purchasing or
financing assets at a fixed interest rate or (y) conducting arbitrage operations
in connection with the anticipated funding of an investment), converted to an
annual yield equivalent rate on the basis of a 360-day year;
(ii) the weighted average of the annual interest rate payable on all
interest-bearing commercial paper notes of the Purchaser outstanding during the
related Settlement Period (other than commercial paper notes issued for the
purpose of (x) purchasing or financing assets at a fixed interest rate or (y)
conducting arbitrage operations in connection with the anticipated funding of an
investment) on the basis of a 360-day year; and
(iii) the weighted average of the annual interest rates applicable to
any Liquidity Facilities or Credit Facilities under which the Purchaser has
borrowed loans during the related Settlement Period (which loans shall be
borrowed only after a determination by the Purchaser that financing its
activities during such period by issuing commercial paper notes would not be
practicable or cost-efficient);
provided that, to the extent that the Investment with respect to any Division is
- -------------
funded by a specific issuance of commercial paper notes and/or by a specific
borrowing under a Liquidity Facility or a Credit Facility, the Purchase Discount
shall be equal to the rate or rates applicable to such issuance or borrowing;
provided, further, that if on any Settlement Date during any period in which the
- -----------------
Aggregate Investment is being reduced, the sum of (A) the aggregate amount of
Receivables that cease to be Eligible Receivables during such period and (B) all
amounts pursuant to clauses (2) and (3) of Section 3.1(c) which accrued and were
unpaid during such period is equal to or greater than 75% of the aggregate of
the Reserves with respect to the Divisions as of the last Business Day on which
the Aggregate Investment was not being reduced, then the Purchase Discount shall
equal two percent in excess of the rate of interest per annum published on such
day (or, if not then published, on the most recently preceding day) in The Wall
--------
Street Journal as the
- --------------
-16-
<PAGE>
"Prime Rate." Changes in the rate payable hereunder shall be effective on each
day on which a change in the "Prime Rate" is published.
SECTION 5.2.2 Purchase Premium. A Purchase Premium equal to .22% per
----------------
annum.
SECTION 5.2.3 Operating Expense Fee. An operating Expense Fee to
---------------------
cover routine operating expenses of the Purchaser incurred during the
immediately preceding Settlement Period, including fees payable to commercial
paper dealers, issuing and paying agents, rating agencies, printers and
auditors. The Operating Expense Fee shall be equal to .07% per annum. If the
amount of any Operating Expense Fee paid for any Settlement Period exceeds the
actual amount of the operating costs and expenses of the Purchaser incurred
during such period, then the Purchaser will periodically remit the excess to the
Collection Agent to be applied with other Collections on the Receivables as
provided hereunder.
SECTION 5.2.4 Collection Agent Fee. A Collection Agent Fee equal to
--------------------
1.0% per annum, which fee shall be remitted by the Purchaser to the Collection
Agent. If the Seller is acting as the Collection Agent, then the Collection
Agent shall retain an amount equal to the Collection Agent Fee (in full
satisfaction of the payment of such fee to the Collection Agent) out of amounts
required to be remitted by the Collection Agent in accordance with Section 7.2.2
(b)(i).
SECTION 5.3 Legal Fees and Expenses. In addition to all other
-----------------------
amounts payable by the Seller under this Agreement, the Seller agrees to pay, by
no later than 30 days after presentation of a bill, the fees and expenses of
counsel for the Purchaser in connection with the negotiation, preparation,
execution, amendment and enforcement of the Sale Documents and advice with
respect to the Purchaser's rights and remedies thereunder in connection with any
enforcement or potential enforcement of the Sale Documents.
SECTION 5.4 Interest on Unpaid Amounts. To the extent that the
--------------------------
Seller or Collection Agent fails to pay when due in accordance with the terms of
this Agreement to the Purchaser or the Servicing Agent any fee, expense or other
amount payable hereunder or under any Sale Document, interest shall be due and
payable on such unpaid amount, for each day until paid in full, at the rate of
two percent in excess of the rate of interest per annum published on such day
(or, if not then published, on the most recently preceding day) in The Wall
--------
Street Journal as the "Prime Rate." Changes in the rate payable hereunder shall
- --------------
be effective on each day on which a change in the "Prime Rate" is published.
SECTION 5.5 Unutilized Purchase Limit Fee. The Seller shall pay to
-----------------------------
the Purchaser an annual fee (the "Unutilized Purchase Limit Fee") equal to .10%
of the daily average Unutilized Purchase Limit. The Unutilized Purchase Limit
Fee shall be payable in arrears on each Settlement Date and on the date on which
the Ownership Interests are reduced to zero in accordance with Section 3.1(c).
-17-
<PAGE>
ARTICLE VI: PURCHASE PROCEDURES
SECTION 6.1 Types of Purchases. The three types of Purchases which
------------------
can be made under this Agreement are an Initial Purchase, an Incremental
Purchase and a Reinvestment Purchase. The first Purchase made by the Purchaser
under this Agreement is an Initial Purchase. Any Purchase (other than an Initial
Purchase) made by the Purchaser which causes the amount of the Aggregate
Investment to increase is an Incremental Purchase. The amount of each
Incremental Purchase, other than any Incremental Purchase made pursuant to
Section 3.3, shall be $10,000,000 or any amount in excess thereof which is an
integral multiple of $100,000. Any Purchase made by the Purchaser with
Collections is a Reinvestment Purchase.
SECTION 6.2 Notice Requirements.
-------------------
(a) In the case of the Initial Purchase or an Incremental Purchase, the
Seller will give the Purchaser three Business Days' written notice of its offer
to sell an Ownership Interest in Receivables to the Purchaser. The notice will
be in the form of Exhibit B, and will include the amount of the new Investment
requested, the Division which generated the Receivables which are the subject of
the Purchase and the Business Day on which the Purchase will be made. The
Purchaser will notify the Seller within one Business Day after the receipt of
such notice from the Seller whether it intends to accept or reject the offer.
(b) Either party hereto may elect not to make Reinvestment Purchases by
notifying the other party to such effect. Such notice shall be given by no
later than 1:00 P.M., New York time, on the third Business Day preceding the
date on which the Reinvestment Purchase was contemplated to be made. The notice
will be in the form of Exhibit C, and will specify (i) the date on which
Reinvestment Purchases shall cease (ii) the Division with respect to which
Reinvestment Purchases shall cease and (iii) the amount to which the Investment
with respect to such Division shall be reduced before Reinvestment Purchases
will recommence.
SECTION 6.3 Conditions Precedent to Initial Purchases. The
-----------------------------------------
following conditions must be satisfied before the Purchaser will consider making
an Initial Purchase:
SECTION 6.3.1 Membership in the Purchaser. The Seller will have
---------------------------
joined the Purchaser as a member by delivering to the Seller an executed
Membership Agreement in the form of Exhibit D, together with the sum of $10,000
as an investment in the Purchaser. Such investment will be refunded by the
Purchaser to the Seller when the Ownership interest is reduced to zero in
accordance with Section 3.1(c) and no further Purchases are to be made.
SECTION 6.3.2 Structuring Fee. The Purchaser will have received the
---------------
Structuring Fee.
SECTION 6.3.3 Absence of Liens. The Servicing Agent will have
----------------
received evidence acceptable to it (including Uniform Commercial Code search
reports) that all Receivables and all proceeds thereof are free and clear of
liens, security interests, claims and encumbrances.
-18-
<PAGE>
SECTION 6.3.4 Financing Statements. The Servicing Agent will have
--------------------
received original UCC-1 financing statements, executed by the Seller, and
original UCC termination statements with respect to all effective UCC-1
financing statements covering an interest in Receivables, executed by the
secured parties with respect thereto, all such financing statements and
termination statements to be in proper form to be filed in all jurisdictions
that the Purchaser and the Servicing Agent may deem necessary or desirable in
order to perfect, and establish the priority of, the Purchaser's Ownership
Interest in the Receivables of each Division.
SECTION 6.3.5 Receivables Activity Report. The Servicing Agent will
---------------------------
have received a Receivables Activity Report in the form of Exhibit F with
respect to each Division covering the monthly period ending on the date nearest
to the date of execution of this Agreement for which relevant data of the Seller
are available.
SECTION 6.3.6 Seller Resolutions. The Servicing Agent will have
------------------
received a certificate of the Seller's Secretary or Assistant Secretary
attesting to:
(a) the resolutions of the Seller's Board of Directors authorizing the
execution by the Seller of the Sale Documents to be executed by the Seller;
(b) the names and signatures of the officers of the Seller authorized to
execute the Sale Documents to be executed by the Seller; and
(c) the completeness and correctness of the attached articles of
incorporation (certified by the appropriate Secretary of State) and by-laws of
the Seller.
SECTION 6.3.7 Legal Opinion of Seller's Counsel. The Servicing
---------------------------------
Agent will have received an opinion from Seller's counsel substantially in the
form attached hereto as Exhibit G and as to such other matters as the Servicing
Agent or the Purchaser may reasonably request.
SECTION 6.3.8 Good Standing Certificates. The Servicing Agent will
--------------------------
have received a certificate of recent date issued by the Secretary of State of
the State of Delaware, as to the legal existence and good standing of the
Seller.
SECTION 6.4 Condition Precedent to all Incremental Purchases.
------------------------------------------------
Before the Purchaser will consider making an Incremental Purchase in the
Receivables Pool of any Division, the Servicing Agent shall have received, on or
prior to the date of such Incremental Purchase, all Receivables Activity Reports
with respect to such Receivables Pool required to be delivered at or prior to
such date.
SECTION 6.5 Conditions Precedent to All Purchases. The following
-------------------------------------
conditions must be satisfied before the Purchaser will consider making any
Purchase:
SECTION 6.5.1. Representations and Covenants. On and as of the date
-----------------------------
of such Purchase (i) the representations and warranties of the Seller in Article
IX hereof and the representations and
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<PAGE>
warranties of Bristol in the Consent and Acknowledgment shall be true and
correct with the same effect as if made on such date and (ii) the Seller shall
be in compliance with the covenants set forth in this Agreement and the Transfer
Agreement and Bristol shall be in compliance with the covenants set forth in
each of the Transfer Agreement and the Consent and Acknowledgment.
SECTION 6.5.2. Other Documents. The Servicing Agent and the
---------------
Purchaser will have received all other documents that either of them have
reasonably requested from the Seller.
SECTION 6.6 Conditions Subsequent. The Seller shall, within 30
---------------------
Business Days of the date of this Agreement, deliver to the Purchaser and the
Servicing Agent:
(a) Acknowledgment copies of the UCC-1 financing statements and the UCC
termination statements referred to in Section 6.3.4.
(b) Completed requests for information, dated a date subsequent to the
date of the filings made pursuant to subsection (a), listing the financing
statements referred to in subsection (a) above and all other effective financing
statements filed in the jurisdictions referred to in subsection (a) above that
name the Seller or a Division as debtor, together with copies of such other
financing statements (none of which shall cover any Receivables) or any interest
therein.
(c) An executed Concentration Account Agreement and an acknowledgment
letter in the form attached as Attachment 3 to the Concentration Account
Agreement (duly completed and executed) from each Lock-Box Bank.
SECTION 6.7 Initial Purchase from Frick. Before the Purchaser will
---------------------------
consider making an Initial Purchase in the Receivables Pool of Frick, in
addition to the conditions precedent contained in Sections 6.2(a) and 6.5, the
Servicing Agent shall have received an executed copy of the Supplemental
Agreement, a Receivables Activity Report and an opinion of the Seller's counsel
in the form required by Section 6.3.7, with respect to Frick.
ARTICLE VII: SETTLEMENT PROCEDURES
SECTION 7.1 Settlement Dates. Each of the following shall
----------------
constitute a Settlement Date:
(a) the first Business Day following the end of each Settlement Period;
(b) each day designated as a Settlement Date by the Purchaser;
(c) each Business Day on which the Investment with respect to any Division
is reduced in accordance with Section 6.2;
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<PAGE>
(d) any date on which a reduction in the Investment with respect to any
Division is required to prevent the Ownership Interest from exceeding the
Maximum Ownership Interest; and
(e) each date on which any payment due to the Purchaser from the Seller
under Article XI has not been made.
SECTION 7.2 Application of Collections. The Collection Agent will
--------------------------
apply the Collections from Receivables in which the Purchaser has acquired an
Ownership Interest in the manner provided in Sections 7.2.1 and 7.2.2, as
-------------- -----
applicable. All other Collections shall be remitted to the Seller.
SECTION 7.2.1 Application of Collections on Days That Are Not
-----------------------------------------------
Settlement Dates. When Collections of Pool Receivables of any Division are
- ----------------
received by the Collection Agent on any day other than a Settlement Date, the
Collection Agent will:
(a) first, pay to the Seller for its share of ownership in such
Collections an amount equal to the product of (i) 1 minus the Ownership Interest
with respect to the related Receivables Pool and (ii) the total amount of such
Collections received on such day; and
(b) second, subject to subsection (c) below, pay to the Seller for a
Reinvestment Purchase in Receivables generated by such Division an amount equal
to the product of (i) the Ownership Interest with respect to the related
Receivables Pool and (ii) the total amount of such Collections received on such
day less the amounts described in Section 7.2.2(b)(i).
(c) Notwithstanding subsection (b) above, if Reinvestment Purchases have
ceased in accordance with Section 6.2(b), the Collection Agent will set aside
and hold in trust for the benefit of the Purchaser prior to application as
provided in Section 7.2.2 the amount which would otherwise have been paid to the
Seller pursuant to subsection (b) above.
SECTION 7.2.2 Application of Collections on Settlement Dates. On
----------------------------------------------
each Settlement Date, the Collection Agent will, by 3:00 P.M., New York time,
from total Collections of Pool Receivables of any Division received by the
Collection Agent during the related Settlement Period:
(a) first, pay to the Seller for its share of ownership in such
Collections an amount equal to the product of (i) 1 minus the Ownership Interest
with respect to the related Receivables Pool and (ii) such total Collections;
and
(b) second, from the Purchaser's share of such total Collections, equal to
the product of (i) the Ownership Interest with respect to such related
Receivables Pool and (ii) such total Collections, pay:
(i) first, to the Servicing Agent for the account of the Purchaser an
amount equal to:
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<PAGE>
(PD + PP + OEF + CAF) X DSP X AI
---
360
where:
PD = Purchase Discount
PP = Purchase Premium
OEF = Operating Expense Fee
CAF = Collection Agent Fee
DSP = the number of days in the Settlement Period preceding
such Settlement Date
AI = the average daily Investment in such related Receivables
Pool for the Settlement Period preceding such Settlement
Date
(ii) second,
(A) if Reinvestment Purchases with respect to such related Division
have been suspended, all remaining Collections will be paid to the
Purchaser (i) first, as a return of its Investment in such related
Receivables Pool and (ii) second, to the extent there shall be any
remaining Collections and at the discretion of the Purchaser, as a
return of its Investment in the Receivables Pool of another
Division; or
(B) if Reinvestment Purchases with respect to such related Division
have not been suspended, all remaining Collections will be paid to
the Seller for a Reinvestment Purchase in Receivables generated by
such Division.
SECTION 7.3 Adjustments due to Dilution, Etc.
---------------------------------
(a) The Seller shall immediately notify the Purchaser if (i) the
representation or warranty contained in Section 9.1(f) is no longer true with
respect to a Receivable in which the Purchaser has an Ownership Interest or (ii)
the Seller proposes to reduce or cancel the outstanding balance of a Receivable
in which the Purchaser has an Ownership Interest as a result of defective,
rejected or returned merchandise or services or in connection with a claim,
dispute or offset asserted against such Receivable by an Obligor, or otherwise
amend, modify or waive any term or condition of such Receivable.
-22-
<PAGE>
(b) On the date any notice is given, in the case of clause (i) above, and
prior to taking any of the actions described in clause (ii) above, in the case
of clause (ii) above, the Seller shall either:
(i) pay cash to the Collection Agent on behalf of the Purchaser in
an amount equal to (x) the face amount of the affected
Receivable, in the case of clause (i) above, or (y) the amount
of the reduction or cancellation of the outstanding balance of
such affected Receivable, in the case of clause (ii) above, in
all cases to be applied in accordance with Section 7.2; or
(ii) adjust the Ownership Interest in the related Receivables Pool in
effect at such time by decreasing "ER" in the denominator of the
fraction described in Section 3.1(a) by (x) the face amount of
the affected Receivable in the case of clause (i) in subsection
(a) above or (y) the amount of the reduction or cancellation of
the outstanding balance of such affected Receivable in the case
of clause (ii) of subsection (a) above, in all cases so long as
the Ownership Interest in the related Receivables Pool would
not, as a result, exceed the Maximum Ownership Interest.
SECTION 7.4 Receivables Activity Reports. The Collection Agent will
----------------------------
provide the Purchaser with a Receivables Activity Report with respect to each
Receivables Pool no later than 15 days following each Accounting Period. The
Receivables Activity Reports will be in the form of Exhibit F and will cover the
most recently completed Settlement Period.
ARTICLE VIII: SERVICING AGENT AND COLLECTION AGENT
SECTION 8.1 Appointment of Servicing Agent. The Purchaser has
------------------------------
appointed Canadian Imperial Bank of Commerce as its Servicing Agent. The
Servicing Agent is responsible for administering and enforcing this Agreement
and fulfilling all other duties expressly assigned to it in this Agreement. The
Purchaser has granted the Servicing Agent the authority to take all actions
necessary to assure the Seller's compliance with the terms of this Agreement and
to take all actions required or permitted to be performed by the Purchaser under
this Agreement.
SECTION 8.1.1 Replacement of Servicing Agent. The Purchaser may, at
------------------------------
any time in its discretion, with the reasonable consent of the Seller (which
shall not be unreasonably withheld or delayed), remove a Servicing Agent and
appoint a new Servicing Agent, which shall have the duties described in Section
8.1.
SECTION 8.2 Appointment of Collection Agent.
-------------------------------
(a) The Purchaser appoints the Seller as its Collection Agent and the
Collection Agent accepts such appointment. The Collection Agent shall be
responsible for collecting the Receivables, tracking, holding and remitting the
Collections and fulfilling all other duties
-23-
<PAGE>
expressly assigned to it in this Agreement. The Purchaser and the Servicing
Agent hereby acknowledge that for so long as the Seller is the Collection Agent,
each Division will be responsible for collecting the Receivables generated by
such Division, tracking, holding and remitting the Collections of such
Receivables, and fulfilling all other duties expressly assigned to the
Collection Agent in this Agreement with respect to such Receivables.
(b) The Collection Agent shall, on each day on which Collections are
received by it, set aside and hold in trust for the Purchaser the Purchaser's
share of such Collections.
(c) The Purchaser grants the Collection Agent the authority necessary to
carry out its duties under this Agreement for so long as it is acting as
Collection Agent.
(d) The Purchaser grants to the Collection Agent, for so long as it is
acting in that capacity, an irrevocable power of attorney to endorse all drafts,
checks and other forms of payment made out in the Seller's or a Division's name
and to settle, adjust and forgive any Receivable, subject to the provisions of
Section 10.3(b) hereof. Upon any replacement of the Collection Agent, such
power of attorney in favor of the replaced Collection Agent will terminate and
have no further force or effect.
(e) The Collection Agent shall exercise reasonable care in the performance
of its duties under this Agreement and shall use the same degree of care and
skill with respect to such performance as it applies to its own property.
SECTION 8.2.1 Replacement of Collection Agent; Notification of
------------------------------------------------
Obligors.
--------
(a) Upon the occurrence of any of the following events, the Purchaser may
remove the Seller as its Collection Agent, appoint a new Collection Agent (which
new Collection Agent shall be a nationally recognized and financially sound
entity with experience in the collection of receivables which are similar to the
Receivables), take control of the Concentration Account, notify Obligors of its
Ownership Interest in the Receivables and exercise all other incidences of
ownership in the Receivables:
(i) the Seller's long-term unsecured debt rating falls below BBB by
Standard & Poor's Corporation;
(ii) the Seller or the Collection Agent (if the Seller or an Affiliate
thereof) shall (x) fail to pay on a Settlement Date an amount due
on such Settlement Date, (y) fail to pay when due any other amount
payable under this Agreement, which failure continues for 5 days
after the due date thereof, or (z) materially breach any
representation or warranty, or fail to perform or observe any term,
covenant or agreement, contained in the Sale Documents on its part
to be performed or observed (other than as set forth in clauses (x)
and (y) above), which breach or failure shall, provided that such
breach or failure is capable of being remedied, remain unremedied
for 30 days after the occurrence thereof;
-24-
<PAGE>
(iii) the Seller, Bristol or the Collection Agent (if the Seller or an
Affiliate thereof) shall (a) default in any payment of principal
of or interest of any debt or obligation (provided that the
principal amount of such debt or obligation exceeds, individually
or in the aggregate, $5,000,000), beyond the period of grace, if
any, provided in the instrument or agreement under which such debt
or obligation was created; or (b) default in the observance or
performance of any other agreement or condition relating to any
such debt or obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition shall exist, the effect of which is
to cause, or to permit the holder or holders of such debt
obligation (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, such
debt or obligation to become due prior to the stated maturity
thereof;
(iv) the Seller, Bristol or the Collection Agent (if the Seller or an
Affiliate thereof) is in bankruptcy, reorganization, insolvency or
similar proceedings;
(v) on any Settlement Date the Default Ratio with respect to any
Division is greater than the Historical Default Ratio with respect
to such Division;
(vi) on any Settlement Date the Average Maturity with respect to any
Division exceeds the number of days set forth below:
<TABLE>
<CAPTION>
<S> <C>
Applied 80 days
UPG 95 days
Bristol 80 days
Frick 75 days;
</TABLE>
(vii) the Seller shall not own, directly or indirectly, 100% of the
outstanding voting securities of Bristol; or
(viii) Bristol shall materially breach any representation or warranty, or
fail to perform or observe any term, covenant or agreement on its
part to be performed or observed, contained in the Transfer
Agreement or the Consent and Acknowledgment, which breach or
failure shall, provided that such breach or failure is capable of
being remedied, remain unremedied for 30 days after the occurrence
thereof.
Notwithstanding anything contained in this Agreement to the contrary, upon the
occurrence of the event described in clauses (v) through (viii) above, the
Purchaser may take the actions described above only with respect to the Division
with respect to which such event has occurred
(b) The Purchaser shall have the right to remove any successor Collection
Agent and to take the other actions described in (a) above at any time in its
sole discretion.
(c) if the Seller is removed as Collection Agent, the Seller shall
transfer to the Purchaser or any successor servicer designated by the Purchaser
all records, correspondence and
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<PAGE>
documents requested by the Purchaser or such successor and to permit such
persons to have access to all software used by the Seller in the collection,
administration or monitoring of the Receivables.
ARTICLE IX: REPRESENTATIONS AND WARRANTIES
SECTION 9.1 Representations and Warranties of the Seller and the
----------------------------------------------------
Collection Agent. Each of the Seller and the Collection Agent makes, with
- ----------------
respect to itself, the following representations and warranties to the
Purchaser:
(a) It is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to be so qualified could materially adversely affect its ability to
perform its obligations hereunder.
(b) The execution, delivery and performance by the Seller and the
Collection Agent of the Sale Documents to which either of them are party, and
the Seller's use of the proceeds of the Purchases, are within the Seller's and
the Collection Agent's respective corporate powers, have been duly authorized by
all necessary corporate action, do not contravene (i) the Seller's or the
Collection Agent's respective charters or by-laws or (ii) law or any contractual
restriction binding on or affecting the Seller or the Collection Agent, and do
not result in or require the creation of any lien (other than pursuant hereto)
upon or with respect to any of its properties; and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
(c) Other than (i) the filing of financing statements and the termination
statements under the Uniform Commercial Code to perfect the Ownership Interest
in the Receivables, and (ii) such filings, registrations and notices as may be
required under applicable law with respect to the assignment of Foreign
Receivables and Government Receivables (which filings are not required to be
made hereunder), no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Seller or the Collection
Agent of the Sale Documents to which either of them are party, or for the
perfection of or the exercise by the Purchaser of its rights and remedies under
the Sale Documents.
(d) The Sale Documents, when executed and delivered by the Seller and the
Collection Agent, will be the legal, valid and binding obligation of the Seller
and the Collection Agent, respectively, enforceable in accordance with their
terms.
(e) There is no pending or threatened action or proceeding affecting the
Seller or the Collection Agent or any of its respective subsidiaries before any
court, governmental agency or arbitrator which may materially adversely affect
(i) its financial condition or operations or (ii) its ability to perform its
obligations under the Sale Documents, or which could affect the
-26-
<PAGE>
legality, validity or enforceability of any Sale Document or the Ownership
Interest in the Receivables of each Division.
(f) The Seller is the legal and beneficial owner of the Receivables free
and clear of any lien, security interest, claim or encumbrance, except as
created by this Agreement; upon each Purchase and the filings of the financing
statements and termination statements referred to in Section 6.3.4, the
Purchaser will acquire a valid and perfected first priority ownership interest
in the Receivables then existing or thereafter arising and in the Collections
with respect thereto, free and clear of any lien, security interest claim or
encumbrance, except as created by this Agreement.
(g) The information provided by the Seller to the Collection Agent for use
in each Receivables Activity Report prepared under Section 7.4 and all
information and Sale Documents furnished or to be furnished at any time by the
Seller to the Servicing Agent in connection with this Agreement is or will be
accurate in all material respects as of its date, and no such document will
contain any untrue statement of a material fact or will omit to state a material
fact.
(h) Each Receivables Activity Report prepared by the Collection Agent
under section 7.4 will be accurate in all material respects as of its date, and
no such document will contain any untrue statement of a material fact or will
omit to state a material fact.
(i) The chief place of business and chief executive office of the Seller
is specified below its signature to this Agreement. The offices where each
Division keeps its records concerning its Receivables are located at the
addresses specified in Exhibit I.
(j) The names and addresses of the Lock-Box Banks, together with the
account numbers of the Lock-Boxes, are specified in Exhibit H hereto (or at such
other Lock-Box Banks and/or with such other Lock-Boxes as have been notified to
the Servicing Agent).
(k) (i) The consolidated condensed balance sheet of the Seller and its
subsidiaries as at September 30, 1996, and the related consolidated condensed
statements of operations and cash flows of the Seller and its subsidiaries for
the fiscal period then ended, copies of which have been furnished to the
Servicing Agent, fairly present the financial condition of the Seller and its
subsidiaries as at such date and the results of the operations of the Seller and
its subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and (ii) since
September 30, 1996, there has been no material adverse change in such condition
or operations.
(l) The Seller is treating the conveyance of the Ownership Interest in the
Receivables and the Collections under this Agreement as a sale for purposes of
generally accepted accounting principles.
(m) Each Plan is in compliance with all of the applicable material
provisions of ERISA and each Plan intended to be qualified under Section 401(a)
of the Code is so qualified. No Plan has incurred an "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA
-27-
<PAGE>
or Section 412 of the Code), whether or not waived. Neither the Seller nor any
ERISA Affiliate (i) has incurred or expects to incur any liability under Title
IV of ERISA, with respect to any Plan, which could give rise to a lien in favor
of the PBGC, other than liability for the payment of premiums, all of which have
been timely paid when due in accordance with Section 4007 of ERISA, (ii) has
incurred or expects to incur any withdrawal liability, within the meaning of
Section 4201 of ERISA, (iii) is subject to any lien under Section 412(n) of the
Code or Sections 302(f) or 4068 of ERISA or arising out of any action brought
under Sections 4070 or 4301 of ERISA, or (iv) is required to provide security to
a Plan under Section 401(a)(29) of the Code. The PBGC has not instituted
proceedings to terminate any Plan or to appoint a trustee or administrator of
any such Plan and no circumstances exist that constitute grounds under Section
4042 of ERISA to commence any such proceedings.
(n) The net proceeds of each Initial Purchase (other than the Initial
Purchase in the Receivables Pool of Frick) was used by the Seller to repay the
Tranche A Term Loans under the Amended and Restated Credit Agreement, dated as
of September 27, 1991, as amended, among the Seller, the financial institutions
parties thereto (the "Lenders"), CIBC acting through its New York Agency ("CIBC-
NYA"), as administrative agent for the Lenders, and CIBC-NYA and Chemical Bank,
as co-agents for the Lenders.
(o) The Seller is the record owner of 100% of the issued and outstanding
shares of capital stock of Bristol.
(p) Upon each purchase of an ownership interest in Bristol's Receivables
by the Seller pursuant to the Transfer Agreement, the Seller will acquire a
valid and perfected first priority ownership interest in such Receivables and in
the Collections with respect thereto, free and clear of any lien, security
interest, claim or encumbrance, except as created by this Agreement and the
Transfer Agreement.
ARTICLE X: COVENANTS
SECTION 10.1 Affirmative Covenants of the Seller and the Collection
------------------------------------------------------
Agent. Until each Ownership Interest is reduced to zero in accordance with
- -----
Section 3.1(c) and no further Purchases are to be made, each of the Seller and
the Collection Agent (with respect to itself) will, unless the Purchaser has
otherwise consented in writing:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders with respect to it, its business and properties and all
Receivables and Collections, except where the failure to so comply could not
materially adversely affect its ability to perform its obligations hereunder.
(b) Maintain its corporate existence in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to be so qualified could
materially adversely affect its ability to perform its obligations hereunder.
-28-
<PAGE>
(c) At any reasonable time, permit the Purchaser or its agents or
representatives to visit and inspect any of its properties, to examine its books
of account and other records and files relating to Receivables (including,
without limitation, computer tapes and disks) and to discuss its affairs,
business, finances and accounts with its officers and employees.
(d) Maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain all records and other information, reasonably necessary or
advisable for the collection of Receivables (including, without limitation,
records adequate to permit the daily identification of Receivables and all
Collections and adjustments to Receivables).
(e) At its expense timely and fully perform and comply with all material
provisions and covenants required to be observed by the Seller under the
contracts related to the Receivables, except where the failure to so perform and
comply could not materially adversely affect its financial condition or
operations or its ability to perform its obligations hereunder.
(f) Keep (i) the Seller's place of business or chief executive office (if
the Seller has more than one place of business) at the address of the Seller
listed on the signature page hereto and (ii) the offices where each Division
keeps the originals of its records concerning the Receivables at the addresses
specified in Exhibit I, or, upon 30 days' prior written notice to the Purchaser,
at any other location in a jurisdiction where all Uniform Commercial Code
financing statements required by the Purchaser have been filed.
(g) Comply in all material respects with the credit and collection policy
of each Division in regard to each Receivable of such Division and to any
contract related to such Receivable.
(h) Instruct all Obligors to remit their payment in respect of Receivables
directly into a Lock-Box or the Concentration Account. The Seller shall, within
one Business Day of receipt, deposit, or cause to be deposited, all Collections
received by it into a Lock-Box or the Concentration Account.
(i) File and maintain in effect all filings, and take all such other
actions, as may be necessary to protect the validity and perfection of the
Ownership Interests in the Receivables of each of the Divisions and Seller's
Interest.
(j) Cause each Plan to comply in all material respects with all applicable
provisions of ERISA.
(k) Treat the conveyance of the Ownership Interest in the Receivables of
each Division and the Collections under this Agreement as a sale for purposes of
generally accepted accounting principles.
-29-
<PAGE>
(l) If any amount payable under or in connection with any Pool Receivable
shall be or become evidenced by any promissory note, chattel paper or other
instrument, such promissory note, chattel paper or instrument shall be marked in
a manner satisfactory to the Purchaser to indicate the Ownership Interest of the
Purchaser therein.
(m) With respect to each ownership interest in Bristol's Receivables sold
by Bristol to the Seller pursuant to the Transfer Agreement, pay or agree to pay
to Bristol not less than reasonably equivalent value in consideration thereof.
(n) Assign to the Purchaser, consistent with the Consent and
Acknowledgment, all rights of the Seller against Bristol under the Transfer
Agreement and agree that (i) the Purchaser shall be a third-party beneficiary of
the Seller's rights under the Transfer Agreement, (ii) the Seller will enforce
its rights under the Transfer Agreement on behalf of the Purchaser and (iii) the
Purchaser shall be entitled to enforce such rights against Bristol as if the
Purchaser had been party to such Transfer Agreement.
(o) Upon receipt of notice from the Purchaser reducing or increasing the
Foreign Concentration Limit or the Standard Concentration Limit, or upon receipt
of an amended Exhibit A from the Purchaser reducing or increasing the Special
Concentration Limit for any Obligor, or adding the name of any other Obligor to
Exhibit A, deliver to Bristol a notice or an amended Schedule 1 to the Transfer
Agreement, as the case may be, to the same effect.
SECTION 10.2 Reporting Requirements of the Seller. Until each
------------------------------------
Ownership Interest is reduced to zero in.accordance with Section 3.1(c) and no
further Purchases are to be made, the Seller will, unless the Purchaser shall
otherwise consent in writing, furnish to the Purchaser (or, in the case of (f)
below, assist the Collection Agent in the furnishing to the Purchaser):
(a) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Seller, consolidated
condensed balance sheets of the Seller and its subsidiaries as of the end of
such quarter and consolidated condensed statements of operations and cash flows
of the Seller and its subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified by the
Chief Financial Officer of the Seller;
(b) as soon as available and in any event within 90 days after the end of
each fiscal year of the Seller, a copy of the annual report for such year for
the Seller and its subsidiaries, containing consolidated financial statements
for such year certified in a manner acceptable to the Purchaser by KPMG Peat
Marwick or other independent public accountants acceptable to the Purchaser;
(c) promptly after the sending or filing thereof, copies of all reports
which the Seller sends to the holders of any of its securities or its creditors,
and copies of all reports and registration statements which the Seller or any
subsidiary files with the Securities and Exchange Commission or any national
securities exchange;
-30-
<PAGE>
(d) (i) promptly and in any event within 10 Business Days after the Seller
or any ERISA Affiliate knows or has reason to know that a "reportable event" (as
defined in Section 4043 of ERISA, but without regard to any such reportable
event as to which the thirty-day notice period is waived under subsections .13,
.14, .15, .16, .18, .19 or .20 of PBGC Reg. (S) 2615) has occurred with respect
to any Plan, a statement of the chief financial officer of the Seller setting
forth details as to such reportable event and the action that the Seller or an
ERISA Affiliate proposes to take with respect thereto, together with a copy of
the notice of such reportable event, if any, given to the PBGC, the Internal
Revenue Service or the Department of Labor; (ii) promptly and in any event
within 5 Business Days after receipt thereof, a copy of any notice the Seller or
any ERISA Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or to appoint a trustee to administer any such plan;
(iii) promptly and in any event within 5 Business Days after a filing with the
PBGC pursuant to Section 412 (n) of the Code of a notice of failure to make a
required installment or other payment with respect to a Plan, a statement of the
chief financial officer of the Seller setting forth details as to such failure
and the action that the Seller or an ERISA Affiliate proposes to take with
respect thereto, together with a copy of such notice given to the PBGC; and (iv)
promptly and in any event within 10 Business Days after receipt thereof by the
Seller or any ERISA Affiliate from the sponsor of a multiemployer plan (as
defined in Section 3 (37) of ERISA), a copy of each notice received by the
Seller or any ERISA Affiliate concerning the imposition of withdrawal liability
or a determination that a multiemployer plan is, or is expected to be,
terminated or reorganized;
(e) such other information, documents, records or reports relating to the
Receivables or the condition or operations, financial or otherwise, of the
Seller or any of its subsidiaries as the Purchaser may from time to time
reasonably request;
(f) the Receivables Activity Reports as required under Section 7.4;
(g) as soon as available and in any event no later than 45 days prior to
the commencement of each fiscal year of the Seller, a schedule of the Seller's
Accounting Periods for such fiscal year; and
(h) promptly after the sending or receipt thereof, copies of any notice
sent to or received from Bristol under the Transfer Agreement.
SECTION 10.3 Negative Covenants of the Seller and the Collection
---------------------------------------------------
Agent. Until each Ownership Interest is reduced to zero in accordance with
- -----
Section 3.1(c) and no further Purchases are to be made, neither the Seller nor
the Collection Agent will, unless the Purchaser has otherwise consented in
writing:
(a) Except as provided herein, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any security
interest, lien or encumbrance upon or with respect to Receivables, Collections,
any Lock-Box, the Concentration Account or proceeds of its inventory or assign
any right to receive income in respect thereof.
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<PAGE>
(b) Amend or otherwise modify the terms of any Receivable, or amend,
modify or waive any term or condition of any contract related thereto, in each
case so as to extend the maturity of such Receivable.
(c) Make any change in the character of its business or in the credit and
collection policy of any Division which would, in either case, be reasonably
likely to impair the collectibility of any Receivable.
(d) Add or terminate any bank as a Lock-Box Bank from those listed on
Exhibit H hereto, or make any changes in its instructions to Lock-Box Banks
regarding transfers of funds held by them from time to time in the Lock-Boxes,
or make any changes in the arrangements with respect to the Concentration
Account or the Concentration Account Agreement (except as contemplated thereby),
or make any change in its instructions to Obligors regarding payments to be made
to the Seller or a Division or payments to be made to any Lock-Box Bank, unless
the Purchaser shall have received notice of such addition, termination or change
and (i) with respect to the addition of any Lock-Box Bank, an acknowledgment
letter in the form attached as Attachment 3 to the Concentration Account
Agreement executed by the Lock-Box Bank shall have been delivered to the
Servicing Agent, and (ii) with respect to the replacement of PNC Bank, National
Association as the depository institution maintaining the Concentration Account,
an agreement substantially in the form of the Concentration Account Agreement
shall have been executed by the Seller and the successor to PNC Bank, National
Association and delivered to the Servicing Agent.
(e) Deposit or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box cash or cash proceeds other than Collections.
(f) (i) permit any accumulated funding deficiency (as defined in Section
302 of ERISA or Section 412 of the Code) to exist with respect to any Plan,
whether or not waived, (ii) fail, or permit any ERISA Affiliate to fail, to pay
any required installment or any other payment required under Section 412 of the
Code with respect to any Plan on or before the due date for such installment or
other payment, (iii) terminate, or permit any ERISA Affiliate to terminate, any
Plan which would result in any liability of the Seller or any ERISA Affiliate
under Title IV of ERISA, (iv) take any action or fail to take any action, or
permit any ERISA Affiliate to take any action or fail to take any action, with
respect to any multiemployer plan (as defined in Section 3 (37) of ERISA) that
will result in withdrawal liability of the Seller or any ERISA Affiliate, or (v)
amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase
in liabilities such that the Seller or any ERISA Affiliate is required to
provide security to such Plan under Section 401 (a) (29) of the Code; provided,
--------
that in each case in clause (i) through (v) above, such event or condition,
either individually or together with any other such event or condition, may have
a material adverse affect on (i) its financial condition or operations or (ii)
its ability to perform its obligations under the Sale Documents, or which could
affect the legality, validity or enforceability of any Sale Document or the
Ownership Interest in the Receivables of a Division.
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<PAGE>
(g) Amend, modify or waive any term or condition of the Transfer Agreement
or give notice to Bristol of its election (x) to terminate the Transfer
Agreement or (y) not to purchase ownership interests in Bristol's Receivables;
provided, however, that the Seller may modify the "Foreign Concentration Limit"
- -------- -------
(as defined in the Transfer Agreement) in accordance with the Transfer
Agreement, which modification shall be effective upon receipt by the Purchaser
of a notice from the Seller to such effect; provided further, that as a result
-------- -------
of such modification the "Foreign Concentration Limit" (as defined in the
Transfer Agreement) does not exceed $20,000,000.
ARTICLE XI: INDEMNIFICATIONS; INCREASED COSTS
SECTION 11.1 Indemnification by Seller of Purchaser, etc. Without
--------------------------------------------
limiting any other rights which the Purchaser, the Servicing Agent and their
respective officers, directors, employees, agents and Affiliates (each an
"Indemnified Party") may have hereunder or under applicable law, the Seller
hereby indemnities the Indemnified Parties and holds them harmless from and
against any and all damages, losses, claims, liabilities and related costs and
expenses (including attorneys' fees and disbursements) incurred by any of them
arising out of or resulting from this Agreement or the purchase by the Purchaser
of any Ownership Interest in Receivables, including, without limitation:
(a) the reliance by any Indemnified Party on any representation or
warranty made by the Seller or Bristol (or any of its officers) under
or in connection with this Agreement, any Sale Document, the Consent
and Acknowledgment or any report or certificate delivered in
connection herewith or therewith, which was incorrect in any material
respect when made;
(b) the failure by the Seller to comply with any covenant set forth in
this Agreement, whether as Seller, Collection Agent or otherwise or
the failure by Bristol to comply with any covenant set forth in the
Transfer Agreement or the Consent and Acknowledgment;
(c) the failure to vest and maintain in the Purchaser, or to transfer to
the Purchaser, legal and equitable title to, and ownership of, an
undivided percentage ownership interest (to the extent of each
Ownership Interest) in the Receivables (including, without limitation,
Foreign Receivables and Government Receivables) or the Seller's
Interest, free and clear of any security interest, lien, claim or
encumbrance;
(d) the transfer by the Seller of an undivided percentage ownership
interest in any Receivables other than an Ownership Interest with
respect thereto;
(e) the Seller's use of proceeds of the Purchases;
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<PAGE>
(f) the failure timely to file financing statements or other similar
instruments or documents under the Uniform Commercial Code of any
applicable jurisdiction, under applicable law with respect to the
assignment of Government Receivables or other applicable laws with
respect to any Receivables or the Seller's Interest, whether at the
time of a Purchase or otherwise;
(g) the return or transfer by the Purchaser of any amount of Collections
received pursuant to this Agreement to the Seller (and not otherwise
payable to the Seller under the express terms of this Agreement) or
any other Person for any reason whatsoever;
(h) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of any Obligor to the payment of any Receivable (including
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 sale, use, operation or ownership of or
defects in or breaches of warranties with respect to, the merchandise
or services relating to such Receivable or the furnishing or failure
to furnish such merchandise or services;
(i) the Seller's or Bristol's failure to pay when due any taxes (including
sales, excise or personal property taxes) payable in connection with
the Receivables;
(j) the commingling of Collections with other funds of the Seller, Bristol
or any Affiliate of either; or
(k) the failure by the Seller or Bristol to comply with any applicable
law, rule or regulation with respect to any Receivable, or the
nonconformity of any Receivable with any such applicable law, rule or
applicable law, any Receivable, Receivable with regulation; or
(l) [intentionally omitted]; or
(m) any inability to litigate any claim against any Obligor in respect of
any Government Receivable or Foreign Receivable as a result of such
Obligor being immune from civil and commercial law and suit on the
grounds of sovereignty or otherwise from any legal action, suit or
proceeding; or
(n) any inability to enforce any judgment rendered in the United States
against the Obligor of any Foreign Receivable in such Obligor's
country of domicile in respect of any Pool Receivable without
reexamination or relitigation of the matters adjudicated upon; or
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<PAGE>
(o) any loss incurred by the Purchaser on any Pool Receivable denominated
and payable in a currency other than United States dollars as a result
of such Receivable not being payable when due in the full amount of
United States dollars determined hereunder; or
(p) the failure to vest and maintain in the Seller, or to transfer to the
Seller, legal and equitable title to, and ownership of, the Seller's
Interest free and clear of any security interest, lien, claim or
encumbrance; or
(q) any failure of the Seller to give reasonably equivalent value to
Bristol in consideration of the purchase of the Seller's Interest.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Seller hereby agrees to make the maximum contribution to the payment
of the amounts indemnified against in this Section which is permissible under
applicable law.
Notwithstanding anything herein to the contrary, the Purchaser shall not be
entitled to indemnification hereunder which has the effect of recourse to the
Seller or Bristol for non-payment or delayed payment of Receivables due to the
creditworthiness of the Obligors.
SECTION 11.2 Indemnification Due to Failure to Consummate Purchase.
-----------------------------------------------------
The Seller will indemnify the Purchaser on demand and hold it harmless against
all costs (including, without limitation, breakage costs) and expenses resulting
from any failure by the Seller (i) to consummate a Purchase after the Purchaser
has accepted an offer from the Seller to make such Purchase or (ii) to fulfill
its obligations pursuant to Section 6.2. The Purchaser will indemnify the Seller
on demand and hold it harmless against all costs (including, without limitation,
breakage costs) and expenses resulting from any failure by the Purchaser to pay
the required purchase price after it has accepted an offer to Purchase from the
Seller.
SECTION 11.3 Increased Costs under Liquidity Facilities and Credit
-----------------------------------------------------
Facilities. If the Purchaser becomes obligated to compensate the lenders under
- ----------
any of its Liquidity Facilities or Credit Facilities for a reduction in the rate
of return on their capital due to a change in law or regulation, as more
specifically provided in the documents relating to such facilities, then the
Seller shall, on demand, reimburse the Purchaser for the amount of any such
compensation; provided, that the Seller shall not be liable for more than its
--------
ratable portion of any such compensation determined in light of the usage by the
Seller and other sellers of receivables or interests therein with respect to
such Liquidity Facilities and Credit Facilities; provided, further, that (i) if
-------- -------
the amount of any such compensation is attributable to the Seller and not
attributable in any way to any other persons who from time to time sell
receivables or interests therein to the Purchaser, the Seller shall be solely
liable for the amount of any such compensation and (ii) if the amount of any
such compensation is attributable solely to any other person or persons who from
time to time sell receivables or interests therein to the Purchaser and not
attributable to the Seller in any way, the Seller shall not be liable for the
amount of any such compensation.
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<PAGE>
SECTION 11.4 Notices. The Purchaser agrees to notify the Seller
-------
upon its knowledge of a claim for which it intends to seek indemnification under
section 11.1 or reimbursement under Section 11.3 from the Seller. The Seller
agrees to assist the Indemnified Parties under Section 11.1, to the extent
requested by them, in any action, suit or proceeding brought by or against them
in connection with the indemnification granted herein.
ARTICLE XII: MISCELLANEOUS
SECTION 12.1 Amendments, Etc. No amendment or waiver of, or consent
----------------
to the Seller's departure from, any provision of this Agreement shall be
effective unless it is in writing and signed by the parties hereto and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given.
SECTION 12.2 Notices, Etc. All notices and other communications
-------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile, telegraphic, telex or cable communication) and sent, as to
each party hereto, at its address set forth under its name on the signature
pages hereto, or at such other address as shall be designated by such party in a
written notice to the other parties hereto in accordance herewith. All such
notices and communications shall be effective when sent except that notices and
communications to the Purchaser pursuant to Section 6.2 shall be effective when
received by the Purchaser.
SECTION 12.3 Payments Net of Taxes. All payments by the Seller
---------------------
payable under this Agreement shall be made free and clear of, and without
deduction for, any present or future income, stamp or other taxes, fees, duties,
withholdings or other charges imposed by any taxing authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Purchaser as a result of a present or former connection between the
jurisdiction of the taxing authority imposing such tax and the Purchaser
(excluding a connection arising solely from the Purchaser having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement) or any political subdivision or taxing authority thereof or
therein. If any withholding or deduction from any payment by the Seller is
required to be made, then the Seller will:
(a) pay to the relevant authority the full amount required to be withheld
or deducted;
(b) promptly forward to the Purchaser an official receipt or other
satisfactory documentation evidencing such payment to such authority;
and
(c) pay to the Purchaser any additional amounts necessary to ensure that
the net amount actually received by the Purchaser will equal the full
amount it would have received had no such withholding or deduction
been required.
SECTION 12.4 No Waiver; Remedies. No failure on the part of the
-------------------
Purchaser to exercise, and no delay in exercising, any right hereunder or under
any Sale Document shall
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<PAGE>
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. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 12.5 Binding Effect; Assignability.
-----------------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
Seller, the Purchaser and their respective successors and assigns, except that
(i) the Seller shall not have the right to assign any interest herein without
the prior written consent of the Purchaser and (ii) the Purchaser shall not have
the right to assign its interest in the Receivables except in accordance with
paragraph (b) below and as otherwise provided herein. This Agreement shall
create and constitute the continuing obligation of the parties hereto in
accordance with its terms, and shall remain in full force and effect until such
time as the Ownership Interest is reduced to zero in accordance with Section
3.1(c) and no further Purchases are to be made; provided, however, that rights
-----------------
and remedies of the Purchaser under Article XI and Section 5.3 and the
provisions of Section 12.11 shall survive any termination of this Agreement.
(b) The Purchaser may assign its Ownership Interest in the Receivables (i)
without the consent of the Seller, to Canadian Imperial Bank of Commerce, any
Affiliate of Canadian Imperial Bank of Commerce or any financial institution
providing a Liquidity Facility or a Credit Facility, provided that such
--------
assignment is in connection with the utilization of such Liquidity Facility or
Credit Facility, or (ii) with the prior consent (which consent shall not be
unreasonably withheld or delayed) of the Seller, to any other entity. Upon any
assignment of the Ownership Interest in the Receivables, (i) the assignee shall
become the owner of the Ownership Interest for all purposes of this Agreement
and (ii) the Purchaser shall relinquish its rights with respect to the
Receivables for all purposes of this Agreement. Upon any assignment, the
assignee thereof shall have all the rights and obligations of the Purchaser
under this Agreement, and shall be subject to the terms and conditions of this
Agreement. The Servicing Agent shall provide notice to the Seller of any
assignment under this Agreement.
(c) Any assignment hereunder shall be upon such terms and conditions as
the Purchaser and the assignee may mutually agree. The Purchaser shall furnish
to the Seller copies of all instruments and documents entered into between the
Purchaser and the assignee in connection with such assignment.
SECTION 12.6 Governing Law. This Agreement and the Sale Documents
-------------
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 12.7 Construction of the Agreement. The parties hereto and
-----------------------------
the parties to the Transfer Agreement intend that the conveyance of Ownership
Interests in Receivables by the Seller to the Purchaser and the transfer of the
Seller's Interest under the Transfer Agreement shall be treated as sales. If,
despite such intention, a determination is made that either of such transactions
shall not be treated as sales, then this Agreement and/or the Transfer
Agreement, as the case may be, shall be interpreted to constitute security
agreements and the transactions effected
-37-
<PAGE>
hereby and/or thereby shall be deemed to constitute secured financing by the
Purchaser to the Seller and/or by the Seller to Bristol, respectively, under
applicable law. For such purpose, the Seller hereby grants to the Purchaser a
continuing security interest in (i) the Receivables and Collections and/or (ii)
the security interests acquired by the Seller from Bristol under the Transfer
Agreement, in each case to secure the obligations of the Seller to the Purchaser
hereunder.
SECTION 12.8 No Proceedings. The Seller, the Collection Agent and
--------------
the Servicing Agent each hereby agrees that it will not institute against the
Purchaser any bankruptcy, reorganization, insolvency or similar proceeding so
long as any commercial paper notes or medium-term notes issued by the Purchaser
shall be outstanding or there shall not have elapsed at least one hundred
twenty-three days since the last day on which any such commercial paper notes or
medium-term notes issued by the Purchaser shall have matured.
SECTION 12.9 Confidentiality.
---------------
(a) The Purchaser agrees to maintain the confidentiality of the identity
of the Seller and of any information regarding the Seller obtained in accordance
with the terms of this Agreement which is not publicly available, but the
Purchaser may reveal such information (i) to applicable rating agencies and
liquidity providers and credit providers, (ii) as necessary or appropriate in
connection with the administration or enforcement of this Agreement or its
funding of Purchases under this Agreement, (iii) as required by law, government
regulation, court proceeding or subpoena or (iv) to bank regulatory agencies and
examiners.
(b) Unless otherwise required by applicable law, rule or regulation or by
court order or process, and the Seller agrees to, and will cause Bristol to
maintain the confidentiality of this Agreement, all drafts hereof and all
information regarding the structure of the Purchaser's receivables purchase
program in communications with third parties and otherwise; provided that this
--------
Agreement, all drafts hereof and any information regarding the structure of the
Purchaser's receivables purchase program may be disclosed to the Seller's legal
counsel and auditors if they agree to hold it confidential.
SECTION 12.10 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 12.11 Submission to Jurisdiction; Appointment of Agent to
---------------------------------------------------
Accept Service of Process.
- -------------------------
(a) Each of the Seller and the Collection Agent hereby submits to the non-
exclusive jurisdiction of the Courts of the State of New York and of any Federal
Court located in such State in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. Each of the
Seller and the Collection Agent irrevocably waives any
-38-
<PAGE>
objection which it may have to the laying of venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
(b) Each of the Seller and the Collection Agent has irrevocably appointed
CT Corporation System, Inc., with an office on the date hereof at 1633 Broadway,
New York, New York 10019 as its agent to receive, accept and acknowledge for and
on its behalf, service of any and all legal process, summons, notices and
documents which may be served in any such proceeding brought in any such court
which may be made on such agent. If for any reason such agent shall cease to be
available to act as such, each of the Seller and the Collection Agent agrees to
designate a new agent in The City of New York on the terms and for the purposes
of this Section 12.11 satisfactory to the Purchaser.
SECTION 12.12 Integration Clause. This Agreement integrates all the
------------------
terms and conditions mentioned herein or incidental hereto, and supersede all
oral negotiations and prior writings in respect of the subject matter hereof.
Without limiting the generality of the foregoing, this Agreement amends and
restates the Original Sale Agreement, the Original Sale Agreement is superceded
hereby (except for existing indemnities of the Seller under the Original Sale
Agreement which shall continue notwithstanding the effectiveness of this
Agreement) and all references to the Original Sale Agreement in any other
document, instrument or agreement executed or delivered in connection therewith
shall mean and be a reference to this Agreement.
-39-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized officers as of the date set forth on the cover page of
this Agreement.
YORK INTERNATIONAL CORPORATION,
as Seller and as Collection Agent
/s/ James P. Corcoran
--------------------------------------
Title: Treasurer
--------------------------------
Address: 631 South Richland Avenue
York, Pennsylvania 17403
Attention: Treasurer
ASSET SECURITIZATION COOPERATIVE
CORPORATION, as Purchaser
/s/ Marcia Scheiner
--------------------------------------
Title: President
--------------------------------
Address: 425 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
CANADIAN IMPERIAL BANK OF
COMMERCE, as Servicing Agent
/s/ Anthony Coniglio
--------------------------------------
Title: Director
--------------------------------
Address: 425 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
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<PAGE>
EXHIBIT A
Special Concentration Limits
----------------------------
Name of Obligor Amount Division
E.I. Du Pont $1,000,000 Frick
(Added by the Supplemental Agreement dated 8/31/92.)
<PAGE>
EXHIBIT B
Form of Notice For Initial
And Incremental Purchases
-------------------------
Asset Securitization Cooperative Corporation,
as Purchaser
425 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
Canadian Imperial Bank of Commerce,
as Servicing Agent
425 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
Re: Receivables Sale Agreement dated as of June 30, 1992 among York
International Corporation, as Seller and as Collection Agent, Asset
Securitization Cooperative Corporation, as Purchaser, and Canadian
Imperial Bank of Commerce, as Servicing Agent (the "Agreement")
Gentlemen:
This Notice is delivered to you pursuant to Section 6.2(a) of the
Agreement. Unless otherwise defined herein or the context otherwise requires,
all capitalized terms used herein will have the respective meanings assigned to
them in the Agreement.
The Seller hereby requests that [the Initial] [an Incremental] Purchase
be made by the Purchaser on 19 in the amount of $ . The
Receivables which are the subject of the requested Purchase were generated by
the division of the Seller.
The Seller hereby certifies and warrants that on the date on which the
Purchase requested hereby is made (and the Seller, by accepting the payment of
the purchase price relating to such Purchase, will be deemed to have certified
that), (i) the representations and warranties of the Seller contained in
Article IX of the Agreement are correct on and as of the date of such Purchase
as though made on and as of such date and (ii) the Seller is in compliance with
the covenants set forth in the Agreement.
1990 Asset Securitization Cooperative Corporation
<PAGE>
The Seller agrees that if, prior to the time that the Purchase requested-
hereby is made, any matter certified to herein will not be true and correct at
such time as if then made, it will immediately so notify the Purchaser and the
Servicing Agent.
Please wire transfer the proceeds of the requested Purchase to the
account(s) of the following persons at the bank(s) indicated below,
respectively:
Amount to be Person to be Paid Name, Address,
etc. -----------------
Transferred- Name Account No. of Transferee Bank
---- ------- -- ------------------
Attention:
The Seller has caused this notice to be executed and delivered, and the
certifications and warranties contained herein to be made, by its duly
authorized officer this __ day
of 19-.
YORK INTERNATIONAL CORPORATION
By:
Title:
2
C) 1990 Asset Securitization Cooperative Corporation
<PAGE>
EXHIBIT C
Form of Notice of Election
Not To Make Reinvestment Purchase
---------------------------------
(For Notice Given by Seller:)
Asset Securitization Cooperative Corporation,
as Purchaser
425 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
Canadian Imperial Bank of Commerce,
as Servicing Agent
45 Lexington Avenue
New York, New York 10017
Attention: Asset Securitization Group
[For Notice Given by Purchaser:]
York International Corporation, as Seller
and Collection Agent
631 South Richland Avenue
York, Pennsylvania 17403
Re: Receivables Sale Agreement dated as of June 30, 1992 among York
International Corporation, as Seller and Collection Agent, Asset
Securitization Cooperative Corporation, as Purchaser, and Canadian
Imperial Bank of Commerce, as Servicing Agent (the "Agreement")
Gentlemen:
This notice is delivered to you pursuant to Section 6.2(b) of the
Agreement. Unless otherwise defined herein or the context otherwise requires,
all capitalized terms used herein will have the respective meanings assigned to
them in the Agreement.
The undersigned hereby notifies you that it has elected not to apply
Collections of Pool Receivables generated by the division of the Seller toward
the making of a Reinvestment Purchase in the related Receivables Pool
commencing on 19 The amount to which the
1990 Asset Securitization Cooperative corporation
<PAGE>
Aggregate Investment shall be reduced before Reinvestment Purchases in the
related Receivables Pool will recommence is
This notice has been executed and delivered by a duly authorized officer of
the undersigned this day of 19
YORK INTERNATIONAL CORPORATION,
as Seller
By:
Title:
or
[ASSET SECURITIZATION
COOPERATIVE CORPORATION,
as purchaser
By:
Title:
2
1990 Asset Securitization Cooperative Corporation
<PAGE>
EXHIBIT D
Form of Membership Agreement
MEMBERSHIP AGREEMENT
THIS MEMBERSHIP AGREEMENT, dated as of June, 1992
("Agreement"), between Asset Securitization Cooperative Corporation, a
cooperative corporation organized under the Consumer Cooperative Corporation Law
of the State of California ("ASCC"),and York International Corporation, a
Delaware corporation (the "Applicant").
R E C I T A L S
WHEREAS, ASCC was organized to be, and is, engaged in the business of
purchasing, securitizing, and providing financings (including loans and other
extensions of credit) secured by whole or partial interests in, or interests in
pools of, accounts and notes receivable and other similar obligations, on a
cooperative basis, pursuant to agreements with its members, their affiliates and
other persons; and
WHEREAS, the Applicant desires to enter into a Receivables Sale
Agreement (as hereinafter defined) and become a Member of ASCC in order to
improve its liquidity and management of working capital;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein and not otherwise
-----------
defined shall have the meanings given to those terms in the by-laws of ASCC (as
amended or modified from time to time, the "By-laws"), a copy of which is
attached hereto as Exhibit A.
The term "membership" (as defined in the By-laws) includes the
Membership (as defined in Section 5 below) unless the context requires
otherwise.
2. Application for Membership. The Applicant hereby applies for
--------------------------
membership as a Member in ASCC, and enters into this Agreement with ASCC in
consideration of ASCC's entering into a receivables sale agreement with the
Applicant dated as of the date hereof (as amended from time to time, the
"Receivables Sale Agreement").
3. Incorporation of By-Laws. The By-laws shall constitute a part of
------------------------
this Agreement and are hereby incorporated herein by reference. By the
execution of this Agreement, the Applicant approves and consents to the By-laws
and agrees to be bound thereby.
<PAGE>
4. Rules and Regulations. The Applicant shall comply with the rules
---------------------
and regulations regarding membership adopted from time to time by the Board of
Directors of ASCC.
5. Membership Investment; Membership Certificates. The Applicant
----------------------------------------------
agrees that, upon the effective date of its membership in ASCC as designated
herein, it shall purchase a proprietary interest in ASCC (the "Membership") in
an amount and in the manner set forth in clause (a) of Section 2.4 and Section
2.7 of the By-laws. The Membership shall be evidenced by a Membership
Certificate in the form attached hereto as Exhibit B.
6. Fees. The Applicant acknowledges that fees shall be provided for
----
in the Receivables Sale Agreement and that such fees may vary from Member to
Member in accordance with the nature and quality of Asset Interests sold. Such
fees are expected to be used by ASCC to pay third parties (including the
Servicing Agent) for services and/or financial accommodations rendered to ASCC.
7. Term of Agreement. The term of this Agreement shall commence on
-----------------
the effective date of the Membership (set forth on the signature pages hereto),
and shall end on the Germination of the Membership, as provided in the By-laws.
8. Representations and Acknowledgments. Notwithstanding the
--------------- ---------------
representations and acknowledgments set forth below, nothing in this Section 8
or in this Agreement shall be understood or construed as an acknowledgment or
recognition by either ASCC or by the Applicant that any membership (including
the Membership) constitutes a "Security" within the meaning of Section 2(l) of
the Securities Act of 1933, as amended (the "Securities Act"), Section 3(a)(10)
of the Securities Exchange Act of 1934, as amended, or any state Blue Sky or
securities law. Nonetheless, the Applicant represents that and acknowledges the
following:
(a) The Applicant acknowledges that it is aware of ASCC's business, affairs and
operations and has acquired
2
<PAGE>
sufficient information about ASCC to reach an informed and knowledgeable
decision to acquire the Membership.
(b) The Applicant acknowledges that memberships in ASCC have not been
registered under the Securities Act or registered or qualified under the
securities laws of any states; that no securities administrator of any state or
the Federal government has made any finding or determination relating to the
fairness of a purchase of a proprietary interest in ASCC; and that no
securities administrator of any state or the Federal government has recommended
or endorsed any issuance or grant of memberships.
(c) Without limiting the generality of the provisions of Section 12
hereof, neither the offer nor sale of such memberships has been registered
under the Securities Act or the securities laws of any states and the
memberships may not be sold, assigned, pledged or otherwise disposed of unless
they are so registered or an exemption from such registration is available.
(d) The Applicant represents that it is acquiring the Membership for
its own account, as principal, for purposes of engaging in sales or transfers
of its receivables or interests in receivables or borrowings secured thereby,
pursuant to a Receivables Sale Agreement, and not with a view' to the resale of
such membership or any interest therein.
(e) The Applicant represents that it is neither an "investment
company" nor a "company controlled by an investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "1940 Act of").
(f) The Applicant represents that it is an accredited investor" as
defined in Regulation D of the Securities and Exchange Commission, 12 C.F.R.
230.501- 2 3 0 . 5 0 8.
(g) The Applicant represents that as of the date hereof and as of the
date its membership becomes effective, the value of all securities owned by the
Applicant of all issuers (as defined in Section 2(a)(22) of the 1940 Act) which
are or would, but for the exception set forth in Section 3(c)(1)(A) of the 1940
Act, be excluded from the definition of investment company (as defined in the
1940 Act) solely by Section 3(c)(1) of the 1940 Act, does not exceed 10% of the
value of the Applicant's total assets.
3
<PAGE>
9. Membership Acknowledgment. The Applicant shall, on the date of its
-------------------------
execution hereof, deliver to ASCC a duly executed acknowledgment substantially
in the form attached hereto as Exhibit C.
10. Counterparts. This Agreement may be executed in duplicate
------------
counterparts, each of which is deemed to be an; original.
11. Modifications. No modification or amendment hereof, except a
-------------
modification or amendment resulting from an amendment to the By-laws or the
adoption of rules and regulations as referred-to in Section 4 hereof, shall be
valid unless in writing and executed by the Applicant and by ASCC.
12. Assignment. This Agreement and the rights and obligations
----------
hereunder shall not be transferred or assigned by the Applicant without the
prior written consent of ASCC, except as provided in, and all as more
particularly provided in Section 2.6 of, the By-laws.
13. Binding Effect. Subject to Section 12 above, this Agreement shall
--------------
be binding upon and shall inure to the benefit of the respective successors and
assigns of the parties hereto.'
14. Notice. Any notice required or provided for by this Agreement, or
by any provision of the By-laws, law or regulation, shall be deemed duly given
forty-eight hours after mailing if such notice is mailed first-class postage
prepaid, and deposited in the mail addressed, to the address of the parties set
forth under their names on the signature pages hereto. Such addresses may be
changed from time to time by means of a notice given in the manner provided for
in this Section 14.
15. Governing Law. THIS AGREEMENT, AND THE RIGHTS, DUTIES AND
-------------
OBLIGATIONS OF THE APPLICANT AND ASCC WITH RESPECT HERETO, SHALL BE GOVERNED BY
THE CONSUMER COOPERATIVE CORPORATION LAW OF THE STATE OF CALIFORNIA AND THE LAWS
OF THE STATE OF CALIFORNIA GENERALLY, AS APPLIED TO AGREEMENTS ENTERED INTO AND
ENTIRELY TO BE PERFORMED WITHIN THAT STATE.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
YORK INTERNATIONAL CORPORATION
By:
Vice President
Address for Notices:
ASSET SECURITIZATION COOPERATIVE
CORPORATION
By:
Address for Notices:
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention: President
Accepted for membership as a Member by
action of the Board of Directors of ASCC
on , 1992 .
Effective Date of membership: 1992.
Secretary
Dated: ,1992
5
<PAGE>
EXHIBIT A to Membership Agreement
Copy of By-laws
<PAGE>
EXHIBIT B to Membership Agreement
CERTIFICATE OF MEMBERSHIP
No.
ASSET SECURITIZATION COOPERATIVE CORPORATION
Incorporated under the California Consumer Cooperative Corporation Law
September 26, 1988
THIS CERTIFIES THAT York International Corporation is the record holder of a
membership in
ASSET SECURITIZATION COOPERATIVE CORPORATION ("ASCC")
with all rights and privileges of a Member and subject to all conditions and
limitations applicable to a Member set forth in the Articles of Incorporation
and the By-laws. ASCC is a California Consumer Cooperative Corporation. Upon
written request to ASCC's principal office at 425 Lexington Avenue, 7th Floor,
New York, New York 10017, Attention: President, ASCC will furnish, without
charge, the Articles of Incorporation, By-laws, and information concerning the
restrictions on the transfer of a membership, the conditions of levying fees,
dues and assessments, the amount and nature of services to be contributed by
members, the conditions under which memberships are redeemable, and the rules by
which the voting p6wer and proprietary rights of members are to be determined.
Neither this Certificate of Membership nor the interests represented hereby (i)
have been registered under the Securities Act of 1933, as amended, or any state
securities laws or (ii) may be sold, assigned or transferred unless registered
thereunder or unless exemptions from such registration shall be available.
WITNESS the signatures of ASCC's duly authorized officers:
Secretary
President
Dated: 19-
<PAGE>
EXHIBIT C to Membership Agreement
ASSET SECURITIZATION COOPERATIVE CORPORATION
MEMBER ACKNOWLEDGEMENT
The undersigned is the duly elected and qualified Vice President of
York International Corporation (the "Member"), a Member in Asset Receivables
Sale Cooperative Corporation, a California consumer cooperative corporation
("ASCC"), and acknowledges the following:
1. The Member has received a copy of the Articles of Incorporation and
the By-laws of ASCC.
2. The Member acknowledges that by the terms of the Membership
Agreement, dated as of the date hereof, between the Member and ASCC, ASCC's By-
laws and any amendments thereto constitute a part of such Membership Agreement.
3. The Member hereby consents to include in income, at its stated
dollar amount as provided in Section 13 5(a) of the Internal Revenue Code of
1986, as amended (the "Code"), any distributions with respect to its patronage
which are made in the form of a qualified written notice of allocation as
defined in Section 1388(c) of the Code and any qualified per-unit retain
certificates as defined in Section 1388(h) of the Code which are made in the
form of written notices. The Member shall include in income the stated amount
of such written notices of allocation or of per-unit retain certificates in the
taxable year that such written notice is received by the Member.
YORK INTERNATIONAL CORPORATION
By:
Vice President
Dated: 1992
<PAGE>
EXHIBIT E
Form of Concentration Account Agreement
CONCENTRATION ACCOUNT AGREEMENT
-------------------------------
CONCENTRATION ACCOUNT AGREEMENT dated as of
June 30, 1992 (the "Agreement") between YORK INTERNATIONAL CORPORATION, a
------------
Delaware corporation ("YORK"), ASSET SEGURITIZATION COOPERATIVE CORPORATION
--------
("ASCCII"), and acknowledged and agreed to. by PITTSBURGH NATIONAL BANK ("PNB")
--------- -------
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
-------------
underscored) when used in this Agreement shall have the following meanings
(such definitions to be equally applicable to the singular and plural forms
thereof):
"Acknowledgment Letter" means a letter, substantially in the form of
--------------
Attachment 3, from a Lock-Box Bank to ASCC.
"Agreement" means this Concentration Account Agreement, as the same
-----------
may be amended, supplemented, amended and restated or otherwise modified from
time to time.
"ASCC" means Asset Securitization Cooperative Corporation.
"Cash Collateral" means the Deposited Funds and all funds deposited
-----------------
into the Concentration Account pursuant to Section 3.3.
"Concentration Account" means any special non-interest bearing
-----------------------
concentration account into which will be transferred or deposited only
Deposited Funds, which account shall be maintained by PNB (or such successor
depository as provided in Section 10.3(d) of the Receivables Sale Agreement) at
its Pittsburgh office (or at such office
<PAGE>
as ASCC shall from time to time specify in writing to York)in the name
of, and under the sole dominion and control of, ASCC.
"Deposited Funds" means all cash and cash equivalents deposited into
-----------------
the Concentration Account from time to time by any Lock-Box Bank or any amount
paid into the Concentration Account by an Obligor or any other party with
respect to a Receivable.
"Division" means each of the Applied Systems division of York, the
----------
Bristol Compressors division of York, the Central Environmental Systems division
of York and, upon satisfaction of the conditions precedent set forth in Section
6.7 of the Receivables Sale Agreement, the Frick Company division of York .
"Lock-Box Account" means any lock-box(es) or account(s) to which the
------------------
Obligors or York remit Collections.
"Lock-Box Bank" means each commercial banking or other depository
---------------
financial institution listed on Attachment 1, as such list may be modified from
time to time pursuant to Section 10.3(d) of the Receivables Sale Agreement.
"Notice of Trigger Event" means a notice, substantially in the form of
-------------------------
Attachment 2, from ASCC to PNB.
"Obligations" means all obligations of York now or hereafter existing
------------
under this Agreement, the Receivables Sale Agreement and the other Sale
Documents, whether for principal, interest, fees, expenses or otherwise.
"Person" means any individual, partnership, corporation, trust,
--------
unincorporated association or joint venture, a government or any department or
agency thereof, of any other entity.
"PNB" means Pittsburgh National Bank.
---
"Process Agent" has the meaning ascribed to such term in Section 6.5.
---------------
"Receivables Sale Agreement" means the Receivables Sale Agreement dated
----------------------------
as of June 30, 1992 among York, ASCC and Canadian Imperial Bank of Commerce, as
the same may be
2
<PAGE>
amended, supplemented, amended and restated or otherwise modified from time to
time.
"Sale Documents" means this Agreement, the Attachments hereto, the
----------------
Receivables Sales Agreement and the Exhibits thereto to which York is a party,
and all other certificates, agreements and documents executed from time to time
by York in connection with the transactions contemplated hereby and thereby.
"Trigger Event" has the meaning ascribed to such term in Section 3.2.
--------------
"U.C.C." means the Uniform Commercial Code as in effect in the State of
--------
New York.
"York" means York International Corporation.
-----
SECTION 1.2. Receivables Sale Agreement Definitions. Unless
--------------------------------------
otherwise defined herein or the context otherwise requires, terms used in this
Agreement have the meanings provided in the Receivables Sale Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
------------------
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Agreement with such meanings.
ARTICLE II
LOCK-BOX ARRANGEMENTS
SECTION 2.1. Establishment of Lock-Box Accounts. York hereby
----------------------------------
acknowledges and agrees that all Lock-Box Accounts hereafter maintained at any
Lock-Box Bank will be subject to the sole dominion, control and discretion of
ASCC, and neither York nor any other Person claiming on behalf of or through
York shall have the right, whether express or implied, or authority to make use
of or withdraw any funds from any such Lock-Box Account, except as expressly
provided for herein.
SECTION 2.2. Deposit of Funds into Lock-Box Accounts. York hereby
---------------------------------------
agrees that it will instruct all Obligors (other than the Obligors with respect
to the Pool Receivables generated by Central) to remit their payments in respect
of Receivables directly into a Lock-Box Account.
3
<PAGE>
York further hereby agrees that it will, within one Business Day of receipt,
deposit all Collections received by it into a Lock-Box Account or the
Concentration Account.
SECTION 2.3. Transfer of Funds to Concentration Account. York hereby
------------------------------------------
confirms that it has instructed each Lock-Box Bank to immediately transfer all
of the funds held by it from time to time in any Lock-Box Account maintained
with it to the Concentration Account.
ARTICLE III
CUSTODIAL ARRANGEMENTS
SECTION 3.1. Establishment of Concentration Account. York and PNB
--------------------------------------
hereby agree that PNB shall maintain a Concentration Account, and such
Concentration Account shall be subject to the sole dominion and control of ASCC.
SECTION 3.2. Notice of Trigger Event. If any of the events referred to
-----------------
in Section 8.2.1(a) of the Receivables Sale Agreement (any such event
hereinafter referred to as a "Trigger Event") shall occur, ASCC may, by
telephonic notice (confirmed in writing by the delivery to PNB of a Notice of
Trigger Event (with a copy thereof to York)), notify PNB of the occurrence of
such Trigger Event. Upon receipt of such telephonic notice, and until the
receipt by PNB of a written notice rescinding such telephonic notice, PNB shall
immediately discontinue transferring any and all funds from the Concentration
Account except in the manner specified by ASCC from time to time and neither
York nor any other Person claiming on behalf of or through York shall have any
right, whether express or implied, or authority to make use of, or withdraw any
funds from, the Concentration Account, except as expressly provided for herein.
SECTION 3.3. Deposit of Additional Amounts. If at any time ASCC
-----------------------------
determines, after any Trigger Event has occurred and PNB has received notice
from ASCC as set forth in Section 3.2, and until PNB shall have received a
notice in writing rescinding such notice, that any funds held in the
Concentration Account are subject to any right or claim of any Person other than
ASCC, York will, forthwith upon demand by ASCC, pay to ASCC, as additional funds
to be deposited and held in the Concentration Account, an amount equal to the
aggregate amount of such funds subject to
4
<PAGE>
rights or claims at such time of such Person other than ASM
SECTION 3.4. Release of Funds from the -7
-------------------------
Concentration Account.
- ----------------------
(a) Until a Trigger Event has occurred and PNB has received a notice
from ASCC as set forth in Section 3.2, PNB shall transfer all Deposited
Funds from time to time in the Concentration Account to York or to such
other Persons as York shall designate.
(b) If any Trigger Event has occurred and PNB has received notice
from-ASCC as set forth in Section 3.2, and until PNB shall have received a
notice in writing rescinding such notice, PNB shall transfer all Deposited
Funds from time to time in the Concentration Account to ASCC, to be applied
by ASCC in accordance with the Receivables Sale Agreement.
(c) Upon the reduction of the Ownership Interest with respect to the
Receivables of each Division to zero as described in Section 3.1(c) of the
Receivables Sale Agreement and the payment in full of all Obligations in
accordance with the terms of the Sale Documents, any funds remaining in the
Concentration Account shall be transferred to York or to such other Person
as York shall designate to PNB.
(d) Notwithstanding anything contained herein to the contrary, ASCC
may, after the occurrence of a Trigger Event, direct PNB to transfer all or
any portion of the funds held in the Concentration Account maintained at PNB
to a Concentration Account maintained at any office of ASCC to be applied in
accordance with the terms of the Sale Documents against the then outstanding
Obligations.
ARTICLE IV
COVENANTS
SECTION 4.1. Further Assurances Generally. York agrees that it will,
----------------------------
from time to time at its own expense, promptly execute and deliver all further
instruments, and take all further action, that may be necessary or desirable,
or that ASCC may reasonably request, in order to perfect and
5
<PAGE>
protect any security interest granted or purported to be granted hereby or to
enable ASCC to exercise and enforce its rights and remedies hereunder with
respect to any Cash Collateral.
SECTION 4.2. Transfers and Other Liens.
-------------------------
(a) York shall not:
(i) sell, assign (by operation of law or otherwise) or
otherwise dispose of its interest, if any, in any Lock-Box Account, the
Concentration Account or the Deposited Funds, or
(ii) create or suffer to exist any lien or other encumbrance
upon or with respect to any Lock-Box Account, the Concentration Account
or the Deposited Funds to secure any obligation of any Person, or
(iii) make any changes in its instructions to Lock-Box Banks
regarding transfers of funds held by them from time to time in the
Lock-Box Accounts.
(b) York will, within one Business Day of receipt, deposit, or cause
to be deposited, all . funds and cash received from each Obligor into any
Lock-Box Account or the Concentration Account and will maintain all
deposits and receipts in such Lock-Box Accounts and the Concentration
Account unless otherwise specified in Article II or Article III herein.
(c) York will defend the right, title and interest of ASCC in and to
any of York's rights under the Lock-Box Accounts, the Concentration Account
or the Deposited Funds against the claims and demands of all Persons
whomsoever.
ARTICLE V
REMEDIES
SECTION 5.1. Exercise. If any Trigger Event shall have occurred, ASCC
--------
may take all or any of the following actions:
6
<PAGE>
(a) withdraw the Cash Collateral from the Concentration Account and
apply the same to the reduction of the Investment in the ownership Interest
with respect to the Receivables of each Division in accordance with the
Receivables Sale Agreement and the payment of all Obligations then due and
owing;
(b) execute (in the name, place and stead of York) any endorsements,
assignments or other instruments of conveyance which may be required for
such withdrawal of the Cash Collateral; and
(c) collect, receive, appropriate and realize upon the Cash Collateral
or any part thereof without demand of performance or other demand,
advertisement or notice of any kind to or upon York or any other Person (all
demands, advertisements and/or notices being hereby expressly waived).
No failure or delay on the part of ASCC in exercising any power or right under
this Agreement or any other Sale Document 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 York in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by
ASCC shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 5.2. Application of Proceeds. All cash proceeds received by
-----------------------
ASCC in respect of any realization upon all or any part of the Cash Collateral
shall be applied in the manner specified in Section 5.1(a).
SECTION 5.3. Indemnity and Expenses. York hereby indemnities and
----------------------
holds harmless ASCC from and against any and all claims, losses, and
liabilities growing out of or resulting from this Agreement (including
enforcement of this Agreement), except claims, losses, or liabilities resulting
from ASCC's gross negligence or willful misconduct. York will upon demand pay
to ASCC the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which ASCC
may incur in connection with:
7
<PAGE>
(a) the custody, preservation, use or operation of, collection from,
or other realization upon, any Cash Collateral;
(b) the exercise or enforcement of any of the rights or remedies of
ASCC hereunder; or
(c) the failure by York to perform or observe any of the provisions
hereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Sale Document, etc., This Agreement is a Sale Document
-------------
executed pursuant to the Receivables Sale Agreement, and shall (unless
otherwise expressly indicated herein) be construed, administered, and applied
in accordance with the terms and provisions of the Receivables Sale Agreement.
SECTION 6.2. Amendments, etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by York herefrom
shall in any event be effective unless the same shall be in writing signed by
ASCC, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION 6.3. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be in writing or by facsimile
transmission, and if to any party, mailed or given by facsimile transmission
or delivered to it at the address set forth below its signature hereto, or as
to either party at such other address as shall be designated by such party in
a written notice to each other party complying as to delivery with the terms
of this Section. All such notices and other communications Shall, when mailed
or given by facsimile transmission or delivered, respectively, be effective
when received.
SECTION 6.4. Subrogation. York will not exercise, and hereby waives,
-----------
any rights which it may acquire by way of rights of subrogation under this
Agreement, by any payment made hereunder or otherwise. If for any reason any
amount should be paid to York on account of any "subrogation"
8
<PAGE>
rights or otherwise in connection with payments made under this Agreement prior
to the reduction of the Ownership Interest to zero with respect to the
Receivables of each Division as described in Section 3.1(c) of the Receivables
Sale Agreement and the payment in full of all the Obligations, such amount
shall be held in trust for the benefit of the ASCC and shall immediately be
paid to ASCC and credited and applied to the reduction of the Ownership
Interest with respect to the Receivables of each Division and against the
Obligations, whether matured or unmatured, in accordance with the terms of the
Receivables Sale Agreement or any other Sale Documents.
In furtherance of the foregoing, for so long as ASCC shall have an
Ownership Interest with respect to the Receivables of any Division or any
Obligations remain outstanding, York shall refrain from taking any action or
commencing any proceeding against ASCC (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in respect of payments made under this Agreement.
SECTION 6.5. Consent to Jurisdiction; waiver of Immunities. YORK
---------------------------------------------
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF ANY
NEW YORK STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. YORK HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
PROCEEDING AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. YORK HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM,
INC. (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 1633 BROADWAY,
----------------
NEW YORK, NEW YORK 10019, AS ITS AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR
AND ON BEHALF OF YORK SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT WHICH MAY BE MADE ON SUCH PROCESS AGENT. IF FOR ANY REASON SUCH
PROCESS AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, YORK AGREES TO
DESIGNATE A NEW PROCESS AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE
PURPOSES OF THIS SECTION 6.5 SATISFACTORY TO ASCC.
SECTION 6.6. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws .of the State of New York.
9
<PAGE>
SECTION 6.7. Counterparts; Remedies Cumulative. This Agreement 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. No delay, act or omission on the part of ASCC of any of its
rights hereunder shall be deemed a waiver of any rights hereunder unless also
contained in a writing signed by ASCC, nor shall any single or partial; exercise
of, or any failure to exercise, any right, power or privilege preclude any other
or further or initial exercise thereof of any other right, power or privilege.
The rights and remedies provided herein are cumulative, and not exclusive of
rights and remedies which may be granted or provided by law.
SECTION 6.8. No Proceedings. Each of PNB and York hereby agrees that
--------------
it will not institute against ASCC any bankruptcy, reorganization, insolvency or
similar proceeding so long as any commercial paper notes or medium term notes
issued by ASCC shall be outstanding or there shall not have elapsed at least one
hundred twenty-three days since the last day on which any such commercial paper
notes or such medium-term notes issued by ASCC have matured.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
YORK INTERNATIONAL CORPORATION
By
Title:
Address: 631 South Richland Avenue
York, Pennsylvania 17403
Telecopy No.: (717) 771-6212
Attention: Treasurer
ASSET SECURITIZATION COOPERATIVE
CORPORATION
By
Authorized Signatory
Address: 425 Lexington Avenue
New York, New York 10017
Telecopy No.: (212) 856-3763
Attention: Asset Securitization Group
ACKNOWLEDGED AND
AGREED TO:
PITTSBURGH NATIONAL BANK
By:
Title:
Address: Fifth Avenue at Wood Street
Pittsburgh, Pennsylvania 15265
Telecopy No.:
Attention:
11
<PAGE>
Attachment I (to the
Concentration Agreement)
LIST OF LOCK-BOX BANKS
<TABLE>
<CAPTION>
Name of Lock-
Box Bank Address Account No. Lock-Box No. Attention
<S> <C> <C> <C> <C>
Bank of America 335 Madison Ave. 78-21069 91286 Robert Hearne Jr.
(Chicago) New York, N.Y. 10017 91760
Bank of America 335 Madison Ave. 12357-05222 54516 Robert Hearne Jr.
(California) New York,N.Y. 10017 54521
Bank of Elmhurst 990 North York Rd. 40-6326-9 N/A Dan Almassey
Elmhurst, IL. 60126
Citizens National 35 North Carlisle St. 02-02045 N/A Frank Klink
Bank of Southern Greencastle, PA 17225
First National 25 S. Charles Street 159-9696-3 N/A Kellie Matthews
Bank of Maryland Baltimore, MD 21201
Nations Bank of 101 S. Tryon Street 3750682319 N/A Stuart Wardlaw
Texas, N.A. 28th Floor
Charlotte, N.C. 28255 3750203390 100561
198247
84186
PNC Bank 249 Fifth Avenue 2285978 64 Robin Zacheral
PNC Plaza 840
Pittsburgh, PA 5092
15222-2707
Signet Bank of 245 State Street 9538033656 N/A Judy Boyle
Virginia Bristol, VA 24201
</TABLE>
<PAGE>
Attachment 2
(to Concentration
Agreement)
[Form of Notice of Trigger Event]
,19
Pittsburgh National Bank
Fifth Avenue at-Wood Street
Pittsburgh, Pennsylvania 15265
Attention:
Re: York International Corporation
------------------------------
Gentlemen and Ladies:
We refer to the Concentration Account Agreement, dated as of June 30,
1992 (the "Agreement"), between York International Corporation and the
------------
undersigned which was acknowledged by you as of such date.
We hereby notify you of the occurrence of a Trigger
Event (as defined in the Agreement).
Until you receive a written notice from us to the contrary, we hereby
prohibit you from making any payments out of or in connection with such
Concentration Account to York International Corporation or any account
maintained by York International Corporation and instruct you to act only upon
our orders with respect to such Concentration Account.
Very truly yours,
ASSET SECURITIZATION
COOPERATIVE CORPORATION
By
Title:
<PAGE>
Attachment 3
(to Concentration
Agreement)
(Form of Acknowledgment Letter]
As of June 30, 1992
Asset Securitization Cooperative
Corporation
425 Lexington Avenue
New York, New York 10017
Attention:
Re: York International Corporation
------------------------------
Gentlemen and Ladies:
We hereby acknowledge that we agree to the terms of the Concentration
Account Agreement, dated as of June 30, 1992, between York International
Corporation, Asset Securitization Cooperative Corporation and the Pittsburgh
National Bank, a copy of which is attached hereto. Without limiting the
foregoing, we hereby agree and acknowledge that each and every special non-
interest bearing account maintained by us in the name of York International
Corporation, is, as of June 30, 1992, subject to the sole dominion, control and
discretion of Asset Securitization Cooperative Corporation.
Very truly yours,
[NAME OF LOCK-BOX BANK]
By
Title:
<PAGE>
EXHIBIT F
Form of Receivables Activity Report
- -----------------------------------
1990 Asset Securitization Cooperative Corporation
<PAGE>
EXHIBIT G
(FORM OF LEGAL OPINION OF SELLER'S COUNSEL]
,19-
Asset Securitization Cooperative Corporation 425 Lexington Avenue
New York, New York 10017
Canadian Imperial Bank of Commerce 425 Lexington Avenue
New York, New York 10017
Dear Sirs:
We represent York International Corporation, a
corporation (the "Company") in connection with the Receivables
Sale Agreement dated as of June 30, 1992 among each of you and the Company (the
"Agreement"), and the other Sale Documents (as such term is defined in the
Agreement) (the Agreement and the Sale Documents are herein collectively called
the "Sale Agreement"), which we have reviewed for the purpose of rendering this
opinion.
We have also reviewed the corporate organization and existence of the
Company and the corporate proceedings of the Company in relation to the Sale
Agreements and such other matters as we have deemed necessary or relevant as a
basis for this opinion.
All capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
Based upon the foregoing, it is our opinion that:
1. The Company is a duly organized and @validly existing corporation in
good standing under the laws of the State of , with perpetual corporate
existence, and has the
corporate power and authority to own its properties and to transact the business
in which it is engaged. The Company is duly qualified to do business in each
jurisdiction where the failure to be so qualified could adversely affect the
Ownership
1990 Asset Securitization cooperative Corporation
Interests of the Purchaser or the ability of the Company to
perform its obligations under the Sale Agreements.
2. The Company has the corporate power to execute, deliver and carry out
the terms and provisions of the Sale-Agreements and the Company has duly taken
or caused to be taken all necessary corporate action (including but not limited
to the obtaining of any consent of stockholders required by law or by the
Certificate of Incorporation or By-laws of the Company) to
<PAGE>
authorize the execution, delivery and performance of the Sale Agreements.
3. Neither the execution and delivery of the Sale Agreements, nor the
compliance with the provisions thereof, will violate any law or regulation or
any order or decree of any court or governmental instrumentality, or will
conflict with, or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, agreement or other instrument to which the
Company is a party or by which it might be bound, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property of the
Company thereunder (except in your favor), or violate any provision of the
Certificate of Incorporation, By-laws or any preferred stock provisions of the
Company. In this connection, we have made a reasonable investigation with
respect to the existence of any such indenture, mortgage, deed of trust,
agreement or other instrument.
4. There are no actions, suits or proceedings pending or (to our
knowledge) threatened against or affecting the Company before any court,
arbitrator or governmental or administrative body or agency which might result
in any material adverse change in the business, operations, properties or
assets, or in the condition, financial or otherwise, of the Company or the
Ownership Interests of the Purchaser.
5. No action of, or filing with, any governmental or public body or
authority (except for the filings referred to in paragraphs 7 and 8 hereof) is
required to authorize, or is otherwise required in connection with, the
execution, delivery and performance of the Sale Agreements.
6. The Sale Agreements (other than the Supplemental Agreement) have been
duly executed and delivered by the Company and constitute valid and binding
obligations of the Company enforceable in accordance with their respective
terms.
2
1990 Asset Securitization Cooperative Corporation
<PAGE>
7. If the Agreement creates the sale of Ownership Interests in Receivables
to you, then upon the execution and delivery of the Agreement, you shall have
acquired all right, title and interest of the Company in and to such Ownership
Interests (including the proceeds thereof) and such right, title and interest
acquired by you will be free and clear of any lien, claim, encumbrance or
interest of any third party. If the Agreement does not create the sale of
Ownership Interests in Receivables, then the Agreement creates a valid and
enforceable security interest in your favor in the Ownership Interests and the
proceeds thereof.' Upon the filing of the financing statements attached hereto
as Exhibit A in the filing offices indicated, such security interest will
constitute a perfected
<PAGE>
security interest in the Ownership Interests and the proceeds thereof and will
rank prior to the liens, claims, encumbrances and interests of any third party.
8. Each Purchase will constitute a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations representing
part or all of the-sales price of merchandise, insurance or services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as amended.
Very truly yours,
3
1990 Asset Securitization Cooperative Corporation
<PAGE>
EXHIBIT H
LIST OF LOCK-BOX BANKS
<TABLE>
<CAPTION>
Name of Lock- Account Lock-Box
Box Bank Address No. No. Attention
<S> <C> <C> <C> <C>
Bank of America 335 Madison Ave. 78-21069 91286 Robert Hearne Jr.
(Chicago) New York, N.Y. 10017 91760
Bank of America 335 Madison Ave. 12357-05222 54516 Robert Hearne Jr.
(California) New York, N.Y. 10017 54521
Bank of Elmhurst 990 North York Rd. 40-6326-9 N/A Dan Almassey
Elmhurst, IL. 60126
Citizens National 35 North Carlisle St. 02-02045 N/A Frank Klink
Bank of Southern Greencastle, PA 17225
Pennsylvania
First National 25 S. Charles Street 159-9696-3 N/A Kellie Matthews
Bank of Maryland Baltimore, MD 21201
Nations Bank of 1O1 S. Tryon Street 3750682319 N/A Stuart Wardlaw
Texas, N.A. 28th Floor
Charlotte, N.C. 28255 3750203390 100561
198247
84186
PNC Bank 249 Fifth Avenue 2285978 64 Robin Zacheral
I PNC Plaza 840
Pittsburgh, PA 5092
15222-2707
Signet Bank of 245 State Street 9538033656 N/A Judy Boyle
Virginia Bristol, VA 24201
</TABLE>
<PAGE>
EXHIBIT I
List of Offices Where Receivables
Records are Kept
Applied Systems: 631 South Richland Avenue
York, Pennsylvania 17403
Bristol Compressors:- 649 Industrial Park Drive
Bristol, Virginia 24210
Unitary Products Group: 631 South Richland Avenue
(Formerly Central York, Pennsylvania 17403
Environmental Systems)
Frick Company: 345 West Main Street
Waynesboro, Pennsylvania 17268
<PAGE>
EXHIBIT J
[Form of Supplemental Agreement]
ASSET SECURITIZATION COOPERATIVE CORPORATION
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
19-
York International Corporation
631 South Richland Avenue
York, Pennsylvania 17403
Receivables Sale Agreement
--------------------------
Gentlemen:
This supplemental agreement is delivered in connection with the Receivables
Sale Agreement dated as of June 30, 1992, (as the same may from time to time be
amended, the "Agreement"), among York International Corporation, Asset
Securitization Cooperative Corporation ("ASCC") and Canadian Imperial Bank of
Commerce. Capitalized terms used herein an not defined herein shall have the
meanings assigned to them in the Agreement.
We have agreed to purchase from you an Ownership Interest in the Receivables
generated by Frick on the terms, and subject to the conditions, set forth in the
Agreement. The information set forth below shall be incorporated in the
Agreement as if set forth therein:
1. Article I: Definitions.
(a) Eligible Receivable: (i) for purposes of clause (d) of the
second paragraph of the definition, such Receivable is required to be
paid in full within days after the billing date.
(ii) [Add any other applicable eligibility requirements.]
(b) Purchase Limit: the Purchase Limit for Frick shall equal
(c) Reserve: for purposes of calculating the Reserve for Frick, the amount
in clause (b)(iv) of paragraph (4) shall be
2. Section 8.2.1(a): For purposes of
paragraph (vi), the Average Maturity of Frick shall be days.
<PAGE>
3. [Add any other provisions applicable to the purchase of an Ownership
Interest in the Receivables generated by Frick.]-
2
1990 Asset securitization Cooperative Corporation
<PAGE>
by
Please indicate your agreement with the foregoing executing this
supplemental agreement where indicated below and returning it to us, whereby it
will become a binding agreement between us.
Very truly yours,
ASSET SECURITIZATION
COOPERATIVE CORPORATION
By
Authorized Signatory
Acknowledged and Agreed as
of this - day of , 1992.
YORK INTERNATIONAL CORPORATION
By
Authoritory
3
1990 Asset Securitization Cooperative Corporation
<PAGE>
EXHIBIT K
YORK INTERNATIONAL CORP
LIST OF ACCOUNTING PERIODS
--------------------------
January 1, 1997 through February 2, 1997
February 3, 1997 through March 2, 1997
March 3, 1997 through April 6, 1997
April 7, 1997 through May 4, 1997
May 5, 1997 through June 1, 1997
June 2, 1997 through July 6, 1997
July 7, 1997 through August 3, 1997
August 4, 1997 through August 31, 1997
September 1, 1997 through October 5, 1997
October 6, 1997 through November 2, 1997
November 3, 1997 through November 30, 1997
December 1, 1997 through December 31, 1997
<PAGE>
EXHIBIT 10.1
YORK INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1992 OMNIBUS STOCK PLAN
1. Establishment and Purpose
York International Corporation hereby establishes the YORK INTERNATIONAL
CORPORATION 1992 OMNIBUS STOCK PLAN (the "Plan"). The Plan permits the grant of
stock options or restricted share awards or any combination of the foregoing.
The purpose of the Plan is to promote the growth and profitability of York
International Corporation (the "Company") by (i) providing directors, certain
officers and other employees of the Company and its subsidiaries with incentives
to improve stockholder value and contribute to the success of the Company, and
(ii) enabling the Company to attract, retain and reward the best available
persons for positions of substantial responsibility.
2. Definitions
"Cause" means the termination of employment of an employee for
(i) providing the Company with materially false representations relied upon by
the Company in furnishing information to stockholders, a stock exchange or the
Securities and Exchange Commission, (ii) maintaining an undisclosed,
unauthorized and material conflict of interest in the discharge of duties owed
to the Company, (iii) misconduct causing a serious violation by the Company of
state or federal laws, (iv) theft of Company funds or assets, or (v) conviction
of a crime involving moral turpitude.
"Change in Control" shall mean
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A) and (B) of subsection (c) hereof; or
(b) Individuals who, as of the date of the most recent amendment hereof,
constitute the Board of Directors (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date of the most recent
amendment hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then
<PAGE>
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person or entity other than the Board; or
(c) Consummation of a reorganization, merger or consolidation involving
the Company or any subsidiary of the Company or sale or other disposition of all
or substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, either (A)(i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transactions owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock or (ii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or at the
time of the action of the Board, providing for such Business Combination and
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination; or
(d) A complete liquidation or dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statue.
"Disability" means the inability to perform the duties assigned by the
Company the participant by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve months.
"Fair Market Value" of a share of the Company's Common Stock for any
purpose shall mean the sale price of the Common Stock on the exchange where the
Common Stock is principally traded. If the Common Stock is not traded on an
exchange, but is traded in the over-the-counter market, Fair Market Value on the
relevant date shall mean the last sale price reported by the National
Association of Securities Dealers Automated Quotation Systems ("NASDAQ"), if the
Common Stock is included in the National Market System or the average of the
closing bid and asked prices reported on the preceding day on which such prices
were reported. If the
-2-
<PAGE>
Common Stock is not traded on an exchange or reported by NASDAQ, the Board of
Directors shall determine Fair Market Value. In the case of incentive stock
options, the Board's determination shall conform to the Treasury Regulations
under Section 422 of the Code.
"Retirement" means retirement as defined under the Company's Thrift and
Savings Plan or any successor plan thereto, or termination of employment on
retirement with the approval of the Board of Directors.
"Subsidiary" and "subsidiaries" mean only a corporation or corporations
within the meaning of the definition of "subsidiary corporation" provided in
Section 424(f) of the Code, or any successor thereto of similar import.
3. Administration
The Plan shall be administered by a Committee appointed by the Board of
Directors of not less than two directors of the Company who are both "non-
employee directors" and "outside directors." "Non-employee directors" shall
have the meaning set forth in Rule 16b-3 of the Securities and Exchange
Commission and "outside directors" shall have the meaning set forth in Treasury
Regulation Section 1.162-27(e)(3) or any successor rule.
The Committee shall, consistent with the provisions of the Plan, be
authorized to (i) select persons to participate in the Plan, (ii) determine all
terms, conditions and restrictions of grants made under the Plan to each
participant, and the conditions and restrictions, if any, subject to which such
grants will be made, (iii) modify, extend or renew outstanding grants, accept
the surrender of outstanding grants and substitute new grants, provided that no
such action shall be taken with respect to any outstanding grant which would
adversely affect the participant without his consent, (iv) interpret the Plan
and (v) adopt, amend, or rescind such rules and regulations for carrying out the
Plan as it may deem appropriate. Decisions of the Committee on all matters
relating to the Plan shall be in the Committee's sole discretion and shall be
conclusive and binding on all parties, including the Company, its stockholders
and the participants in the Plan. The Committee shall have no authority to
administer, modify or interpret Section 7 of the Plan, except as to any
adjustments pursuant to Section 14. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with applicable federal and state laws and rules and regulations
promulgated pursuant thereto.
Notwithstanding anything to the contrary herein, the Board of Directors
may, in its sole discretion, at any time and from time to time resolve to
administer the Plan. In such event, the term "Committee" used herein shall be
deemed to mean the Board of Directors.
4. Shares Available for the Plan; Annual Limit on Grants
Subject to adjustments as provided in Section 14 as of any date the total
number of shares of Common Stock with respect to which awards may be granted
under the Plan shall be equal to 4,380,000 shares, provided that the number of
restricted shares awarded under the Plan may not exceed 3% of the total number
of shares of Common Stock outstanding at the time of any such
-3-
<PAGE>
award. Subject to adjustments as contemplated by Section 14, no person may be
granted more than 200,000 restricted shares, or options to purchase more than
200,000 shares, during any one calendar year. If any grant under the Plan
expires or terminates unexercised, becomes unexercisable or is forfeited or
otherwise terminated or canceled as to any shares, the shares subject to such
grants shall thereafter be available for further grants under the Plan unless
such shares would not be deemed available for future grants pursuant to
Rule 16b-3 of the Securities Exchange Act of 1934, as from time to time amended.
5. Participation
Participation in the Plan shall be limited to those officers including
directors who are officers of the Company, and other employees of the Company
and its subsidiaries who have made or are expected to make a significant
contribution to the Company and its subsidiaries, selected by the Committee.
Only directors who are not officers or employees of the Company shall be
eligible to participate in Section 7 of the Plan. Nothing in the Plan or in any
grant thereunder shall confer any right on an employee to continue in the employ
of the Company or shall interfere in any way with the right of the Company to
terminate an employee at any time.
Directors who are officers of the Company shall be eligible to participate
in the Plan. No director who is not an officer of the Company shall be eligible
to participate, except pursuant to Section 7.
Stock options, restricted share awards or any combination thereof may be
granted to such persons and for such number of shares as the Committee shall
determine, subject to the limitations in Section 4. A grant of any type made in
any one year to an eligible employee shall neither guarantee nor preclude a
further grant of that or any other type to such employee in that year or
subsequent years.
6. Stock Options
Subject to the other applicable provisions of the Plan, the Committee may
from time to time grant to eligible participants nonqualified stock options or
incentive stock options as that term is defined in Section 422 of the Code. The
options granted shall be subject to the following terms and conditions:
(a) Price. The price per share payable upon the exercise of each option
("exercise price") shall not be less than 100% of the Fair Market Value of the
shares on the date the option is granted.
(b) Payment. Options may be exercised in whole or in part by payment of
the exercise price of the shares to be acquired. Payment may be made in cash or,
unless otherwise, determined by the Company, in shares of Common Stock or a
combination of cash and shares of Common Stock. The Fair Market Value of shares
of Common Stock delivered on exercise of options shall be determined on the date
of exercise. Shares or Common Stock delivered in payment of the exercise price
may be previously owned shares or, if approved by the Company, shares acquired
-4-
<PAGE>
upon exercise of the option. Any fractional share will be paid in cash. The
Company may make or guarantee loans to participants to assist them in exercising
options. Unless otherwise determined by the Company, a participant may also
deliver Common Stock of the Company, including shares acquired upon exercise of
the option, in satisfaction of any amount the Company is required to withhold
for taxes in connection with the exercise of an option subject, if the optionee
is subject to Section 16(b) of the Securities Exchange Act of 1934, to such
restrictions as may be imposed from time to time by the Securities and Exchange
Commission to comply with Section 16(b).
An election to deliver Common Stock to pay withholding taxes must be made
on or before the date the amount of tax to be withheld is determined and once
made will be irrevocable. The withholding tax obligation that may be paid by the
withholding or delivery of shares may not exceed the participant's estimated
federal, state and local income tax obligations in connection with the exercise
of the option or the sale of shares received upon exercise of the option. The
Fair Market Value of the shares to be withheld or delivered will be the Fair
Market Value on the date as of which the amount of tax to be withheld is
determined.
(c) Terms of Options. The term during which each option may be exercised
shall be determined by the Committee, provided that upon a Change in Control,
all outstanding options shall automatically become immediately exercisable. In
no event shall an option be exercisable more than ten years from the date it is
granted. Prior to the exercise of the option and delivery of the stock
represented thereby, the optionee shall not have any rights to receive any
dividends or be entitled to any voting rights on any stock represented by
outstanding options.
(d) Restrictions on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the grant date) of shares of Common Stock with respect
to which all incentive stock options first become exercisable by any participant
in any calendar year under this or any other plan of the Company or any related
or predecessor corporation of the Company or any related corporation (as defined
in the applicable regulations under the Code) may not exceed $100,000 or such
higher amount as may be permitted from time to time under Section 422 of the
Code. To the extent that such aggregate fair market value shall exceed
$100,000, or applicable higher amount, such options shall be treated as options
which are not incentive stock options.
The exercise price of any incentive stock option granted to a participant
who owns (within the meaning of Section 422(b)(6) of the Code, after the
application of the attribution rules in Section 424(d) of the Code) more than
10% of the combined voting power of all classes of shares of the Company or any
related corporation shall be not less than 110% of the Fair Market Value of the
Common Stock on the grant date and the term of such option shall not exceed five
years.
Incentive stock options can only be issued to employees of the Company.
-5-
<PAGE>
7. Director Stock Options
Each person who is a director of the Company and who is not an officer or
employee of the Company (a "non-employee director") as of immediately following
the election of directors at the Company's annual stockholder meeting, or who
became a non-employee at any time within six months thereafter, shall be granted
as of such date (or on the next day the New York Stock Exchange is open for
trading) an option exercisable for 2,000 shares of Common Stock (which number of
shares is subject to adjustment in accordance with Section 14).
Each option shall terminate, and cease to be exercisable, on the earliest
of the occurrence of: (i) the tenth anniversary of the date of grant of the
option, or (ii) 90 days following the date on which the grantee is no longer a
director eligible to receive options under this Section (including, but not
limited to, such date as the director resigns or dies).
The exercise price of each option granted pursuant to this Section shall be
the Fair Market Value of the shares on the date the option is granted.
Each option granted pursuant to this Section shall be exercisable as
follows:
(a) On or before the first anniversary of the date the option is granted,
the option will not be exercisable with respect to any of the shares subject to
the option, and
(b) On the first anniversary of the grant date, the option will become
exercisable to the extent of 25% of the shares subject to the option, and to the
extent of an additional 25% of such shares on each subsequent anniversary of the
date of grant, provided that upon a Change in Control any outstanding option
shall automatically become immediately exercisable in full, in accordance with
Section 14.
Options may be exercised in whole or in part by payment of the exercise
price of the shares to be acquired. Payment shall be in cash.
8. Restricted Share Awards
Subject to the other applicable provisions of the Plan, the Committee may
at any time and from time to time award shares to such participants and in such
amounts and for such consideration, as it determines. Each award of shares shall
specify the applicable restrictions on such shares, if any, the duration of such
restrictions, and the time or times at which such restrictions shall lapse with
respect to all or a specified number of shares that are part of the award.
Notwithstanding the foregoing, the Committee may reduce or shorten the duration
of any restriction applicable to any shares awarded to any participant under the
Plan.
Restricted shares may be issued at the time of award, subject to forfeiture
if the restrictions do not lapse, or upon lapse of the restrictions. If shares
are issued at the time of the award, the participant may be required to deposit
the certificates with the Company during the period of any restriction thereon
and to execute a blank stock power therefor. Except as otherwise provided by
-6-
<PAGE>
the Committee, during such period of restriction the participant shall have all
of the rights of a holder of Common Stock, including but not limited to the
rights to receive dividends (or amounts equivalent to dividends) and to vote.
If shares are issued upon lapse of restrictions, the Committee may provide that
the participant will be entitled to receive any amounts per share pursuant to
any dividend or distribution paid by the Company on its Common Stock to
stockholders of record after the award and prior to the issuance of the shares.
During any period of restriction, upon a Change in Control, and except as
otherwise provided by the Committee, upon termination of a grantee's employment
due to death or Disability, during any period of restriction, all restrictions
on shares awarded to such grantee shall lapse. Except as otherwise provided by
the Committee, on termination of a grantee's employment for any other reason
(including Retirement), all restricted shares subject to awards made to such
grantee shall be forfeited to the Company.
9. Withholding of Taxes
The Company may permit or require, as a condition to any grant under the
Plan or to the delivery of certificates for shares issued hereunder, that the
grantee pay to the Company, in cash or, unless otherwise determined by the
Company, in shares of Company Common Stock valued at Fair Market Value on the
date as of which the withholding tax liability is determined, any federal, state
or local taxes of any kind required by law to be withheld with respect to any
grant or any delivery of shares. The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee any federal, state or
local taxes of any kind required by law to be withheld with respect to any grant
or to the delivery of shares under the Plan, or to retain or sell without notice
a sufficient number of the shares to be issued to such grantee to cover any such
taxes. In the event of a transfer of an option pursuant to Section 11, the
grantee shall remain liable for any tax required to be withheld.
10. Written Agreement
Each person to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions,
consistent with the provisions of the Plan, as may be established by the
Committee.
11. Transferability
To the extent required to comply with Rule 16b-3 and in any event in the
case of an incentive stock option, no option or restricted share award granted
under the Plan shall be transferable by a participant otherwise than by will or
the laws of descent and distribution, or as permitted by this Section 11. The
Committee may, in its discretion, authorize all or a portion of the options
granted to a participant to be transferred to:
(a) a member of the participant's family;
-7-
<PAGE>
(b) a trust or trusts for the exclusive benefit of members of the
participant's family;
(c) a family partnership, family limited partnership, or family limited
liability partnership or company;
(d) a charitable or non-profit organization, trust or foundation under
Section 501(c)(3) of the Code; or
(e) such other person or entity as the Committee may in its discretion
permit.
An option may be exercised only by the optionee or grantee thereof, his
permitted transferee or his or her guardian or legal representative. Subsequent
transfers of options transferred pursuant to this Section 11 shall be prohibited
except those by will or the laws of descent and distribution. Following any
permitted transfer, any transferred options shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer and
such options shall be exercisable by the transferee only to the extent and for
the periods that they would have been exercisable by the participant.
12. Listing and Registration
If the Company determines that the listing registration or qualification
upon any securities exchange or under any law of shares subject to any option or
restricted share award is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of shares
thereunder, no such option may be exercised in whole or in part and no
restrictions on such restricted share award shall lapse, unless such listing,
registration or qualification is effected free of any conditions not acceptable
to the Company.
13. Transfer of Employee
Transfer of an employee from the Company to a subsidiary, from a subsidiary
to the Company, and from one subsidiary to another shall not be considered a
termination of employment. Nor shall it be considered a termination of
employment if an employee is placed on military or sick leave or such other
leave of absence which is considered as continuing intact the employment
relationship; in such a case, the employment relationship shall be continued
until the date when an employee's right to reemployment shall no longer be
guaranteed either by law or contract.
14. Adjustments; Business Combinations
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, share exchange, consolidation,
distribution of assets, or any other change in the corporate structure or shares
of the Company, the Committee shall make such adjustments as it deems
appropriate in the number and kind of shares reserved for issuance under the
Plan, in the number and kind of shares covered by, outstanding options and
restricted share awards made under the Plan, and in the exercise price of
outstanding options.
-8-
<PAGE>
In the event of any merger, share exchange, consolidation or other
reorganization in which the Company is not the surviving or continuing
corporation, or in which the Company's stockholders become entitled to receive
cash, securities of the Company other than voting Common Stock or securities of
another issuer, or any Change of Control, all outstanding options and share
restricted awards shall be exercisable and shall vest notwithstanding any
restriction on exercise or vesting at a date to be determined by the Committee
not later than the effective date of the transaction.
15. Termination and Modification of the Plan
The Board of Directors, without further approval of stockholders may modify
or terminate the Plan, except that no modification shall become effective
without prior approval of the stockholders of the Company if stockholder
approval would be required for continued compliance with Rule 16b-3 of the
Securities and Exchange Commission. No amendment to Section 7 of the Plan shall
be made more than once every six months other than to conform with changes in
the Code or the rules thereunder.
The Committee may amend or modify the grant of any outstanding option or
restricted share award in any manner to the extent that the Committee would have
had the authority to make such grant as so modified or amended, including
without limitation to change the date or dates on which (i) an option becomes
exercisable or (ii) restrictions on shares are to be removed. No modification
may be made that would materially adversely affect any grant previously made
under the Plan without the approval of the grantee. The Committee shall be
authorized to make minor or administrative modifications to the Plan as well as
modifications to the Plan that may be dictated by requirements of federal or
state laws applicable to the Company or that may be authorized or made desirable
by such laws.
16. Limitation on Benefits
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under such Act. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
17. Effective Date; Termination Date
The Plan is effective as of August 20, 1992, the date on which the Plan was
adopted by the Board of Directors. The Plan was amended by the Board of
Directors on March 4, 1993, amended and restated on March 13, 1995, and amended
and restated on March 12, 1997 subject to approval of the stockholders at the
1997 meeting of stockholders. Unless previously terminated, the Plan shall
terminate the close of business on August 20, 2002, ten years from the effective
date.
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Three Months Ended
March 31, 1997 (Unaudited), the Consolidated Condensed Balance Sheets at
March 31, 1997 (Unaudited) and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,703
<SECURITIES> 0
<RECEIVABLES> 570,176
<ALLOWANCES> 21,896
<INVENTORY> 633,952
<CURRENT-ASSETS> 1,356,083
<PP&E> 644,003
<DEPRECIATION> 285,425
<TOTAL-ASSETS> 2,127,980
<CURRENT-LIABILITIES> 702,492
<BONDS> 432,622
0
0
<COMMON> 219
<OTHER-SE> 780,211
<TOTAL-LIABILITY-AND-EQUITY> 2,127,980
<SALES> 800,767
<TOTAL-REVENUES> 800,767
<CGS> 637,032
<TOTAL-COSTS> 637,032
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,210
<INTEREST-EXPENSE> 9,434
<INCOME-PRETAX> 22,146
<INCOME-TAX> 7,286
<INCOME-CONTINUING> 14,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,860
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
