RECEIVABLE PURCHASE PROGRAM AGREEMENT
This Receivable Purchase Program Agreement (hereinafter the
"Agreement") is made as of the 31st day of January, 1997 by and between General
Electric Capital Corporation, a New York corporation ("GE Capital") with offices
at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 and Plastic Specialties and
Technologies, Inc., a Delaware corporation with its chief executive office at
000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("PST").
W I T N E S S E T H:
WHEREAS, PST is in the business of manufacturing and selling
garden hose and related products to retailers for sale by retailers to
consumers; and
WHEREAS, GE Capital will purchase certain Receivables (as
defined herein) that result from credit extensions made by PST in connection
with PST's sale of garden hose and related products to certain retailers, during
the term of this Agreement;
NOW THEREFORE, in consideration of the terms and conditions
stated herein, and for good and valuable consideration, the receipt of which is
hereby acknowledged, GE Capital and PST agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms.
As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the stock
having ordinary voting power in the election of directors of such Person, (ii)
each Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.
"Amendment" shall mean that certain Amendment No. 4, to the Senior Loan
Agreement.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as now
constituted or as hereafter amended, or any successor law.
"Business Day" shall mean any day, except Saturday, Sunday, or a day on
which banks are required or permitted to be closed in the State of New York.
"Commercial Paper Rate" shall mean the interest rate for thirty (30)
day (or the range of days that includes thirty (30) days) paper placed daily by
GE Capital as such interest rate is published in The Wall Street Journal in its
"Money Rates" section (or if such publication is discontinued, such other
publication of similar type designated by GE Capital). The applicable Commercial
Paper Rate on any given day shall be the Commercial Paper Rate as reported on
the first Business Day immediately preceding the day as of which such rate is
applied.
"Default" shall mean any event the occurrence of which, with the
passage of time or the giving of notice or both, would constitute an Event of
Default.
"Eligible Receivables" shall have the meaning assigned to it in
Section 3.07.
"Event of Default" shall have the meaning assigned to it in
Section 9.01.
"Ineligible Receivable" shall mean any Receivable that does not satisfy
the criteria for an Eligible Receivable.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest
(including, without limitation, any interest of a buyer of accounts or chattel
paper which is subject to Article 9 of the UCC), easement or encumbrance,
preference, priority, or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the
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foregoing, and the filing of, or agreement to file, any financing statement
pursuant to the UCC).
"Lock Box Account" shall have the meaning assigned to it in the Senior
Loan Agreement.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, properties, operations, prospects, financial or other
condition of PST or on the Receivables purchased by GE Capital under this
Agreement.
"Merchandise" shall mean goods and services sold by PST relating to
garden hoses or PVC medical grade compound.
"Obligations" shall mean, on any day, any and all liabilities or
obligations owing by PST to GE Capital pursuant to this Agreement. The term
includes, without limitation, any fee, charge, expense, attorney's fee or other
sum chargeable to PST pursuant to this Agreement.
"Obligor" shall mean the Person responsible for paying the debt created
by purchases of Merchandise from PST.
"Person" shall mean and include any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or any
department or agency thereof.
"Program" shall mean the receivable purchase program established in
connection with this Agreement. The term "Program" includes the purchase of
Receivables by GE Capital, xxxxxxxx, collections, accounting between the
parties, and all aspects of the transactions contemplated herein.
"Purchase Date" shall mean the date on which a particular Receivable is
purchased by GE Capital from PST.
"Purchase Price" shall have the meaning assigned to it in Section 3.02.
"Purchase Price Adjustment" shall have the meaning assigned to it in
Section 3.05.
"Purchaser Discount" shall have the meaning assigned to it in
Section 3.03.
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"Receivables" shall mean any and all amounts that are due from an
Obligor with respect to purchases of Merchandise from PST, including all rights
under the sale arrangement with respect thereto and all documentation relating
to or otherwise affecting such purchase, including but not limited to, the
purchase order, invoice and xxxx of lading with respect thereto, and including
without limitation any charges for Merchandise, sales tax (if any), and all
other charges in respect of such transaction and all monies due or to become due
with respect to the foregoing and all proceeds of the foregoing, including
without limitation, insurance proceeds relating thereto. The term shall include,
but not be limited to: (i) whether now existing or hereafter arising and
wherever located, all of the accounts, receivables, indebtedness, chattel paper,
choses in action, general intangibles, documents, instruments, notes,
obligations, and contract rights (as each of the foregoing terms which is
defined in the applicable UCC is so defined) related to, comprising, securing or
evidencing the obligation, the receivables therefrom and the proceeds thereof,
arising in connection with the purchase from PST of Merchandise, (ii) all rights
as to any goods or other property which is represented thereby or is security or
collateral therefor, and (iii) all guarantees, claims, security interests, or
other security held by or granted to secure payment by any Obligor with respect
to a purchase from PST.
"Reserve Account" shall have the meaning assigned to it
in Section 4.01.
"Reserve Balance" shall mean, at any time, the amount reflected as the
balance after reflecting all debits and credits to the Reserve Account at such
time.
"Senior Loan Agreement" shall mean that certain Amended and Restated
Senior Loan Agreement, dated as of November 8, 1993, as amended, supplemented,
restated, replaced, or modified from time to time, between PST, the Lenders
party thereto and GE Capital, as Agent for the Lenders.
"Settlement Date" shall have the meaning assigned to it
in Section 4.02.
"Solvent" as to a Person, shall mean (a) the present fair salable value
of such Person's assets is in excess of the total amount of its liabilities, (b)
such Person is presently able generally to pay its debts as they become
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due, and (c) such Person does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all business in which such
Person is about to engage. The phrase "present fair salable value" of a Person's
assets is intended to mean that value which can be obtained if the assets are
sold within a reasonable time in arm's-length transactions in an existing and
not theoretical market.
"UCC" shall mean the Uniform Commercial Code (or similar law) of the
jurisdiction with respect to which such term is used, as in effect from time to
time.
"Write-Off Criterion" shall mean the criterion utilized in determining
when a Receivable purchased by GE Capital shall be written-off for non-payment
which such criterion is as follows: any Receivable purchased by GE Capital
pursuant to this Agreement shall be written-off by GE Capital if it remains
unpaid 180 days past the due date of such Receivable (i.e. if a Receivable is
payable sixty (60) days after the invoice date, it shall be written-off two
hundred and forty (240) days after the invoice date).
"Written-Off Receivable" shall mean a Receivable that is owned by GE
Capital and is written-off by GE Capital in conformity with the Write-Off
Criterion.
The terms defined in this Agreement shall mean and include the
plural as well as the singular. Pronouns of the masculine gender shall mean and
include correlative words of the feminine and neuter genders.
ARTICLE II
ESTABLISHMENT OF PROGRAM
Section 2.01. GE Capital to Purchase Receivables.
GE Capital shall purchase, without recourse, Eligible
Receivables from PST, in accordance with the terms of this Agreement. Under no
circumstances shall GE Capital be required to purchase Receivables if after such
purchase of Receivables the aggregate outstanding amount owed by Obligors with
respect to Receivables purchased by GE Capital, including Written-Off
Receivables, but not including those Receivables repurchased by PST, will exceed
Twelve Million Dollars ($12,000,000).
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Section 2.02. PST to Service Receivables.
(a) PST shall service the Receivables sold to GE Capital under
this Agreement. Service shall include all of the kinds of services provided by
PST with respect to Receivables in the six (6) months prior to the date hereof,
as well as any additional services provided by PST with respect to Receivables
not purchased by GE Capital. Service shall include, but not be limited to,
billing, collecting, xxxxxxx, processing payments and credits, taking returns,
making adjustments, and resolving complaints. Service shall be provided with the
same diligence and frequency of service provided by PST in connection with
Receivables not purchased by GE Capital, but having the same Obligors as
Receivables purchased by GE Capital. In no event shall the diligence and
frequency of service provided by PST be less than that performed in connection
with other Obligors of Receivables or less than that performed with respect to
Receivables in the six (6) months prior to the date hereof. For the avoidance of
doubt, service by PST shall in no way affect GE Capital's right to xxx Obligor's
for delinquent payments with respect to Receivables purchased by GE Capital and
not repurchased by PST.
(b) As part of service, PST shall cause to be deposited all
payments received with respect to Receivables purchased by GE Capital into the
Lock Box Account utilized in connection with the Senior Loan Agreement, which
such funds shall be transmitted daily by wire transfer to an account designated
by GE Capital.
(c) PST shall provide GE Capital daily with a report that
includes (i) a daily cash journal detailing collections for the prior day on
Receivables purchased by GE Capital and (ii) a daily credit memo register
containing a detailed breakdown of the collections that pay down the Senior Loan
Agreement and those that pay down the Receivables purchased by GE Capital. GE
Capital shall apply payments made by PST to GE Capital which are allocable to
Receivables purchased by GE Capital to the outstanding balance of such
Receivables.
(d) PST shall provide GE Capital by Friday of each week with a
detailed aged trial balance, aged by the due date of each invoice, of the
Receivables purchased by GE Capital which remain unpaid. In addition, PST shall
provide GE Capital with calculations of the Purchase Price Adjustments specified
in Section 3.05.
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(e) PST expressly acknowledges that GE Capital reserves the
right, in its sole discretion, to replace PST as the servicer of the Receivables
sold to GE Capital. If GE Capital chooses to replace PST as the servicer of the
Receivable sold to GE Capital, PST shall provide GE Capital with all
documentation and information (including print and electronic) reasonably
necessary, in the opinion of GE Capital, to service such Receivables.
Section 2.03. Transfer of Receivables
By sale of a Receivable to GE Capital, PST shall be deemed to
have transferred, assigned and otherwise conveyed to GE Capital, without
recourse, all right, title and interest of PST in and to such Receivable, and
all monies to be paid thereon, free and clear of all liens, subordinations,
security interests and encumbrances. Upon the sale of a Receivable to GE
Capital, PST shall deliver to GE Capital copies of each invoice and signed bills
of lading with respect to each purchased Receivable, together with a certificate
from an officer of PST confirming the continued accuracy of all representations
and warranties contained in Section 6.01 hereof, as well as all other documents
reasonably requested by GE Capital with respect to each purchased Receivable.
Section 2.04. Structuring Fee.
PST hereby agrees to pay GE Capital a non-refundable
structuring fee for the Program of Eighty Thousand Dollars ($80,000) upon
satisfaction of the conditions in Section 5.01.
ARTICLE III
ADMINISTRATION OF THE PROGRAM
Section 3.01 Purchase Period.
(a) Notwithstanding any other provisions in this Agreement, GE
Capital's obligation to purchase Eligible Receivables is limited to Eligible
Receivables offered for sale to GE Capital by PST under this Program during the
months of January, February, March, April and May of each year so long as this
Agreement is in effect.
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(b) Notwithstanding any other provisions in this Agreement, GE
Capital's obligation to purchase Eligible Receivables shall be limited to making
purchases once per calendar week during the applicable purchase period
identified in subsection (a) above, it being understood that title to a
Receivable shall pass to GE Capital when payment is made by GE Capital pursuant
to Section 3.04 hereof.
Section 3.02 Purchase Price.
The purchase price of each Eligible Receivable sold to GE
Capital under this Agreement shall be the amount owed by the Obligor with
respect to the purchase of Merchandise reflected by such Receivable, less the
product obtained by multiplying such amount by the Purchaser Discount ("Purchase
Price").
Section 3.03 Purchaser Discount.
The discount applicable to purchases ("Purchaser Discount")
shall be calculated as follows:
(a) For Receivables with respect to which payment in full is
due thirty (30) days or less from the Purchase Date, the Purchaser Discount
shall be the result obtained by adding three percent (3%) to the Commercial
Paper Rate, multiplying that sum by thirty (30), multiplying that result by
eighty five percent (85%), and dividing that result by three hundred and sixty
(360).
(b) For Receivables with respect to which payment in full is
due sixty (60) days or less, but more than thirty (30) days, from the Purchase
Date, the Purchaser Discount shall be the result obtained by adding three
percent (3%) to the Commercial Paper Rate, multiplying that sum by sixty (60),
multiplying that result by eighty five percent (85%), and dividing that result
by three hundred and sixty (360).
(c) For Receivables with respect to which payment in full is
due ninety (90) days or less, but more than sixty (60) days, from the Purchase
Date, the Purchaser Discount shall be the result obtained by adding three
percent (3%) to the Commercial Paper Rate, multiplying that sum by ninety (90),
multiplying that result by eighty-five percent (85%), and dividing that result
by three hundred and sixty (360).
Section 3.04 Purchase and Payment.
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Within two (2) Business Days after PST proposes a sale of
Receivables to GE Capital, which such proposal shall be made upon providing GE
Capital with all documentation reasonably required by GE Capital in order for GE
Capital to determine whether the Receivables proposed for sale by PST are
Eligible Receivables, which such determination by GE Capital shall not be deemed
to waive or otherwise affect a subsequent finding pursuant to Section 3.08
hereof that such Receivables are Ineligible Receivables, GE Capital shall
purchase such Eligible Receivables and GE Capital shall pay to PST an amount
equal to eighty-five percent (85%) of the amount of the purchased Eligible
Receivables in immediately available funds by crediting an account in the name
of PST, account number 2070167394865 at First Union Bank located in New Jersey,
provided, however, that GE Capital may deduct from such payment any and all
amounts then due and payable to GE Capital by PST pursuant to this Agreement.
The remaining balance of the Purchase Price shall be credited on GE Capital's
books to the Reserve Account as specified in Section 4.03.
Section 3.05 Purchase Price Adjustment.
If the Obligor of any Receivable purchased by GE Capital does
not pay the full amount owing with respect to such Receivable on or before the
payment due date for such Receivable, PST shall pay GE Capital on each
Settlement Date a Purchase Price Adjustment for each such Receivable during the
period of time that transpires from the payment due date until the earliest of
(i) the date on which payment in full with respect to such Receivable is
actually made, (ii) the date on which such Receivable becomes a Written-Off
Receivable, or (iii) the date on which such Receivable is repurchased by PST if
repurchase is required by this Agreement. The adjustment to the Purchase Price
paid by PST to GE Capital ("Purchase Price Adjustment") shall equal the result
obtained by multiplying (i) the unpaid balance on such Receivable after the due
date by (ii) the result obtained by adding three percent (3%) to the Commercial
Paper Rate, multiplying that sum by the number of days in which payment is past
the due date (less the number of days, if any, for which a Purchase Price
Adjustment has already been paid), multiplying that result by eighty-five
percent (85%), and dividing that result by three hundred and sixty (360). Within
three (3) Business Days following the earlier of (i) the date on which payment
with respect to such Receivable is actually made or (ii) the date on which such
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Receivable becomes a Written-Off Receivable, PST shall pay to GE Capital any
remaining Purchase Price Adjustment.
Section 3.06 Returns, Credits, Allowances or
Chargebacks.
(a) PST may in the normal course of its business take returns,
give credits or grant other allowances to Obligors with respect to Receivables
purchased by GE Capital. In such events PST shall pay GE Capital the sum of (i)
the amount of such return, credit or allowance less the Purchaser Discount
applied to the portion of the Receivable associated with the Merchandise
constituting the return, credit or allowance, plus (ii) an amount equal to the
result obtained by multiplying (x) the amount specified in (i) by (y) the result
obtained by adding three percent (3%) to the Commercial Paper Rate, multiplying
that sum by the number of days since the Receivable associated with the
applicable return, credit or allowance was purchased by GE Capital, multiplying
that result by eighty-five percent (85%), and dividing that result by three
hundred and sixty (360). GE Capital shall also decrease the Reserve Balance by
the amount credited to the Reserve Account allocable to the amount of such
return, credit or allowance.
(b) GE Capital may charge PST for all amounts where the
Obligor with respect to a Receivable purchased by GE Capital asserts any claim,
defense or offset to payment, including but not limited to where the Obligor
asserts that PST failed to provide the Obligor with the agreed upon Merchandise.
GE Capital may also charge PST where there is a claim by the Obligor that
payment is excused by PST's actions or failure to act, where PST had a legal or
contractual obligation to act, including but not limited to where there has been
a failure to service a Receivable in accordance with Section 2.02. If GE Capital
charges PST for any of the above events in this subsection, PST shall pay GE
Capital the sum of (i) the amount of the unpaid obligation less the Purchaser
Discount on the portion of the Receivable associated with the Merchandise for
which there is a non-payment, plus (ii) an amount equal to the result obtained
by multiplying (x) the amount specified in (i) by (y) the result obtained by
adding three percent (3%) to the Commercial Paper Rate, multiplying that sum by
the number of days since the Receivable associated with the applicable claim,
defense, offset or non-payment was purchased by GE Capital, multiplying that
result by eighty-five percent (85%), and dividing that result by three hundred
and sixty
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(360). GE Capital shall also decrease the Reserve Balance by the amount credited
to the Reserve Account allocable to the amount of such claim, defense, offset or
non-payment.
(c) If adjustments to the Reserve Account under subsections
(a) and (b) above reduce the Reserve Balance to less than fifteen percent (15%)
of the total balance outstanding on Receivables purchased by GE Capital
excluding the amount of Written-Off Receivables and the amount of Receivables
repurchased by PST, GE Capital may at its option: (i) deduct the amount of such
deficiency from the cash payment portion of future purchases of Receivables from
PST, and credit the Reserve Account with the amount so deducted, provided,
however, that GE Capital shall limit such cash payment deduction to the extent
that such deduction would reduce the cash payment portion of Receivables
purchased by GE Capital to less than eighty percent (80%) of their face amount,
and/or (ii) make a written request for payment from PST for such deficiency in
which event PST shall pay GE Capital the amount of such deficiency within three
(3) Business Days after receipt of such notice, which amount shall be credited
to the Reserve Balance upon receipt of good funds.
(d) Upon GE Capital's receipt of good funds from PST under
subsections (a) and (b) above, title to such portion of the Receivable for which
payment was made by PST to GE Capital shall be transferred, assigned and
otherwise conveyed to PST and GE Capital shall have no lien on that portion of
the Receivable, all proceeds of such portion of the Receivable and any returned
Merchandise with respect to such portion of the Receivable and all proceeds of
any of the foregoing.
Section 3.07 Eligible Receivables.
GE Capital shall be obligated to purchase only those
Receivables meeting all the following criteria at the time the Receivable is
tendered to GE Capital for purchase, which criteria may be modified by GE
Capital in its sole discretion upon notice to PST ("Eligible Receivables"):
(a) The Obligor of the Receivable must be one of
Servistar Corporation, The Home Depot, Inc., Walmart
Stores, Ace Hardware, Xxxxxx International or Orchard
Supply, or successors thereto if approved in writing
by GE Capital; provided, however, that
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notwithstanding anything otherwise provided herein,
GE Capital shall not be obligated and PST shall not
tender to GE Capital any Receivable with respect to
which Walmart Stores is the Obligor unless and until
the Chief Executive Officer or Chief Financial
Officer of PST certifies in writing to GE Capital
that Walmart Stores has been notified of the
contemplated sales to GE Capital of Receivables
relating to Walmart Stores and that such sales of
Receivables to GE Captial will not violate, conflict
with or result in a breach or default under any
agreement or other document with respect to Walmart
Stores to which PST is a party or by which it or any
of its property is bound;
(b) The Obligor must have a debt rating for
senior unsecured debt of at least BBB as
determined by Standard & Poors or at least
Baa as determined by Xxxxx'x Investors
Service, provided, however that, if Ace
Hardware and Servistar Corporation shall not
be rated by Standard & Poors or Moodys then
Receivables associated with such Obligors
shall be eligible for purchase by GE Capital
so long as no more than two million dollars
($2,000,000) in the aggregate of such
Receivables purchased by GE Capital remain
outstanding at any time;
(c) The sale of the Merchandise giving rise to the
Receivable must have occurred no more than ten (10)
days prior to the purchase of the Receivable by GE
Capital and payment by the Obligor must be due in
full in ninety (90) days or less from the date of the
sale of the Merchandise;
(d) The Receivable must have been generated
solely by PST's garden hose and/or PVC
medical grade compound business;
(e) The Receivable must (i) be wholly owned by PST, (ii)
be sold to GE Capital free of any claims, security
interests or other encumbrances except as provided in
the Amendment, (iii) be subject to no defenses,
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claims or offsets that have been asserted prior to
the sale of such Receivable, and (iv) not be related
to Merchandise that PST knows to be defective;
(f) The Receivable must satisfy all applicable
requirements of PST's credit and collection
policies which such policies must be
reasonably acceptable to GE Capital and PST
would make the sale on credit giving rise to
the Receivable even if the Receivable were
not being tendered to GE Capital for
purchase;
(g) The Obligor must not owe to PST and/or GE Capital
(with respect to Receivables purchased from PST) more
than twenty-five percent (25%) of the total
outstanding amount associated with purchases from PST
that is more than sixty (60) days past the due date;
(h) The Obligor on the Receivable may not be the
United States, any federal, state or local
governmental entity or agency, or any public
agency;
(i) The amount owing on the Receivable must be
payable in United States dollars and the
Obligor must be domiciled in the United
States;
(j) The Receivable may not represent sales for
xxxx and hold or progress billed and the
Merchandise must be delivered to and accepted
without any exceptions by the Obligor;
(k) The sale associated with the Receivable must
have been accepted by the Obligor and there
is a signed xxxx of lading; and
(l) The Obligor of the Receivable must not be an
Affiliate of PST.
(m) The Obligor of the Receivable generally pays
according to specific invoices, identifying
which invoices are being paid (i.e. not lump
sum payments), and generally pays the oldest
invoice first.
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Section 3.08 Ineligible Receivables.
(a) If after a Receivable is purchased by GE Capital it is
discovered that the Receivable was an Ineligible Receivable on the date of
purchase, PST shall repurchase such Ineligible Receivable from GE Capital for
the sum of (i) the Purchase Price of such Receivable plus (ii) an amount equal
to the result obtained by multiplying (x) the amount of such Ineligible
Receivable by (y) the result obtained by adding three percent (3%) to the
Commercial Paper Rate, multiplying that sum by the number of days since the
Ineligible Receivable was purchased by GE Capital, multiplying that result by
eighty-five percent (85%), and dividing that result by three hundred and sixty
(360). GE Capital shall also decrease the Reserve Balance by the amount credited
to the Reserve Account allocable to the amount of such Ineligible Receivable. If
such adjustment to the Reserve Account reduces the Reserve Balance to less than
fifteen percent (15%) of the of the total balance outstanding on Receivables
purchased by GE Capital excluding the amount of Written-Off Receivables and the
amount of Receivables repurchased by PST, GE Capital may at its option: (a)
deduct the amount of such deficiency from the cash payment portion of future
purchases of Receivables from PST and credit the Reserve Account with the amount
so deducted, provided, however, that GE Capital shall limit such cash payment
deduction to the extent that such deduction would reduce the cash payment
portion of Receivables purchased by GE Capital to less than eighty percent (80%)
of their face amount, and/or (b) make a written request for payment from PST for
such deficiency in which event PST shall pay GE Capital the amount of such
deficiency within three (3) Business Days after receipt of such notice of such
deficiency, which amount shall be credited to the Reserve Balance upon receipt
of good funds.
(b) Upon GE Capital's receipt of good funds from PST under
subsection (a) above, title to such portion of the Ineligible Receivable for
which payment was made by PST to GE Capital shall be transferred, assigned and
otherwise conveyed to PST and GE Capital shall have no lien on that portion of
the Ineligible Receivable, all proceeds of such portion of the Ineligible
Receivable and any returned Merchandise with respect to such portion of the
Ineligible Receivable and all proceeds of any of the foregoing.
Section 3.09 Payment Period.
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With respect to any provision in this Agreement for which a
payment is owed from one party hereto to the other and for which this Agreement
does not specify when such payment is to be made, the parties hereto agree that
such payment shall be made by the owing party to the other party hereto within
three (3) Business Days following written demand for such payment.
Section 3.10 Minimum Purchase Requirement.
Notwithstanding any other provisions in this Agreement, GE
Capital's obligation to purchase Eligible Receivables is limited to batches of
such Eligible Receivables with an invoice face amount of Two Hundred and Fifty
Thousand Dollars ($250,000) or more.
Section 3.11 Obligor Notification.
GE Capital shall have the right to notify Obligors with
respect to Receivables purchased by GE Capital that it has purchased such
Receivables if either (i) an Event of Default has occurred, (ii) PST is no
longer the servicer of the Receivables, (iii) GE Capital is legally required to
do so to protect its interest in the Receivables as determined by GE Capital, or
(iv) such Receivables are Written-Off Receivables.
ARTICLE IV
RESERVE ACCOUNT
Section 4.01 Establishment.
GE Capital shall create, on its books, a record known as the
"Reserve Account". PST has, and shall have, no right, title, or interest in or
to the Reserve Account or the Reserve Balance (which Reserve Balance shall be
nonsegregated and mingled with the funds of GE Capital) except those rights
pursuant to Section 4.06 hereunder. PST is not and shall not be entitled to any
interest or profit on the Reserve Balance.
Section 4.02 Settlement.
As of the last Business Day of every month ("Settlement
Date"), GE Capital shall review the Reserve
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Balance and adjust the Reserve Balance in accordance with this Article.
Section 4.03 Credits.
GE Capital shall credit the Reserve Account as follows: (a)
the amount specified in Section 3.04 to be credited to the Reserve Account, (b)
the amount specified in Section 3.06(c) to be credited to the Reserve Account,
(c) the amounts specified in Section 4.05 to be credited to the Reserve Account
and (d) any other amounts received by GE Capital from or in respect of PST
pursuant to this Agreement with respect to the Reserve Account.
Section 4.04 Debits.
GE Capital may decrease the Reserve Balance by (a) any amounts
due from PST pursuant to this Agreement, including but not limited to any
Purchase Price Adjustments, any amounts due from returns, credits or allowances
of any nature issued, owing or claimed by Obligors of Receivables purchased by
GE Capital as specified in Sections 3.06(a) and 3.06(b), and any amounts due on
Ineligible Receivables as specified in Section 3.08 and (b) any amounts paid by
GE Capital to PST when the Reserve Balance is in excess of fifteen percent (15%)
of the total balance outstanding on Receivables purchased by GE Capital
excluding the amount of Written-Off Receivables and the amount of Receivables
repurchased by PST, as further set forth in Section 4.06 hereof.
Section 4.05 Amounts Due GE Capital.
If, on any Settlement Date the Reserve Balance is less than
fifteen percent (15%) of the total balance outstanding on Receivables purchased
by GE Capital excluding the amount of Written-Off Receivables and the amount of
Receivables repurchased by PST, GE Capital may at its option: (a) deduct the
amount of such deficiency from the cash payment portion of future purchases of
Receivables from PST and credit the Reserve Account with the amount so deducted,
provided, however, that GE Capital shall limit such cash payment deduction to
the extent that such deduction would reduce the cash payment portion of
Receivables purchased by GE Capital to less than eighty percent (80%) of their
face amount, and/or (b) make a written request for payment from PST for such
deficiency in which event PST shall pay GE Capital the amount of such
16
deficiency within three (3) Business Days after receipt of such notice of such
deficiency, which amount shall be credited to the Reserve Balance upon receipt
of good funds.
Section 4.06 Amounts Due PST.
(a) If, on any Settlement Date on which (a) the Reserve
Balance is greater than fifteen percent (15%) of the total balance outstanding
on Receivables purchased by GE Capital excluding the amount of Written-Off
Receivables and the amount of Receivables repurchased by PST, and (b) there is
not a Default or an Event of Default, GE Capital shall pay PST within three (3)
Business Days of such Settlement Date the amount by which the Reserve Balance is
greater than fifteen percent (15%) of the total balance outstanding on
Receivables purchased by GE Capital excluding the amount of Written-Off
Receivables and the amount of Receivables repurchased by PST, and GE Capital
shall deduct such amount from the Reserve Balance. Within three (3) Business
Days after May 31 of each calendar year that this Agreement is in effect and
within three (3) Business Days after termination of this Agreement, GE Capital
shall pay PST the Reserve Balance if there is no balance outstanding with
respect to Receivables purchased by GE Capital excluding Written-Off Receivables
and Receivables repurchased by PST, and no amount is due and payable to GE
Capital by PST pursuant to the terms hereof; and provided, further, that GE
Capital may retain, with respect to any pending claims or matters, if any, in
connection with which it is reasonably likely that PST will become obligated to
GE Capital, such portion of the Reserve Balance as GE Capital finds to be a
reasonable approximation of such claim or matter. Any retained amount that
remains after the resolution of such claim or matter shall be returned to PST
within five (5) Business Days following such resolution.
Section 4.07 Statements.
As of each Settlement Date, GE Capital shall provide PST with
a statement setting forth all transactions with respect to the Reserve Account
during the period since the prior Settlement Date, or in the event there is no
prior Settlement Date, during the period since the inception of this Agreement.
Any such monthly statement shall be deemed final, binding, and conclusive upon
PST in all respects as to all matters reflected therein, except as to manifest
error, unless PST, within thirty (30) days after receipt of the statement
notifies GE Capital in writing of any
17
objections which PST may have to any such statement. In that event, only those
items expressly objected to in such notice shall be deemed to be disputed by
PST.
ARTICLE V
CONDITIONS
Section 5.01 Conditions to Obligations of GE Capital.
Notwithstanding any other provision of this Agreement, GE
Capital shall have no obligation or liability hereunder unless and until GE
Capital shall have waived or received, in form and substance reasonably
satisfactory to GE Capital the following items; provided, however, that if the
following items have not be satisfied or waived on or before February 28, 1997,
this Agreement shall terminate on February 28, 1997:
(a) A favorable opinion of counsel substantially
in the form of Exhibit A, including but not
limited to, an opinion that the
implementation of this Program does not
result in a default of the Senior Loan
Agreement or the Indenture dated as of
November 8, 1993 between PST and First
Fidelity Bank, N.A. Pennsylvania, as trustee;
(b) The Amendment in form and substance
satisfactory to GE Capital;
(c) Resolutions of PST's board of directors,
certified by the secretary or assistant
secretary of PST, as of the date hereof, to
have been duly adopted and be in full force
and effect on such date, authorizing (i) the
execution, delivery and performance of this
Agreement and all documents executed and to
be executed pursuant hereto, (ii) the
purchase of Receivables by GE Capital and the
granting of the Liens herein provided for,
and (iii) specific officers to execute and
deliver this Agreement and all other related
documents and instruments;
(d) Certificates of the secretary or assistant
secretary of PST, dated as of the date
hereof, as to the incumbency and signatures
18
of the officers of PST, together with
evidence of the incumbency of such secretary
or assistant secretary;
(e) Evidence in form and substance satisfactory to GE
Capital that financing statements (form UCC-1 or
others) have been filed with all filing officers
desired by GE Capital; and
(f) The accountant's letter referred to in the opinion of
counsel attached hereto as Exhibit A must be
satisfactory to GE Capital.
Section 5.02 Conditions to Purchase by GE Capital.
GE Capital shall have no obligation to continue to purchase
Eligible Receivables under this Agreement, which obligation to purchase shall
have no effect on PST's obligation to perform under this Agreement, if:
(a) an Event of Default or a Default has occurred
and is continuing;
(b) an Event of Default or a Default, each as
defined in the Senior Loan Agreement, has
occurred and is continuing; or
(c) any Representation or Warranty of PST contained in
Section 6.01 of this Agreement is not true and
correct as of the date of the proposed sale of
Receivables to GE Capital.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Warranties of PST.
PST hereby makes the following representations and warranties
to GE Capital as of the date hereof, which representations and warranties shall
be deemed to be restated and remade on the date of each proposed sale of
Receivables to GE Capital pursuant to this Agreement:
(a) Due Organization; Authorization, Etc. PST is
a corporation duly organized, validly
existing and in good standing under the laws
of the jurisdiction of its incorporation,
19
and, at all relevant times, has all necessary power
and authority to originate and/or acquire the
Receivables. The execution, delivery and performance
by PST of this Agreement and the transactions
contemplated hereby are within its corporate powers
and have been duly authorized by all necessary
corporate action. This Agreement has been duly
executed and delivered by PST and constitutes the
legal, valid and binding obligation of PST,
enforceable against PST in accordance with its terms,
except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency,
moratorium and other similar laws and general
equitable principles.
(b) No Conflict. The execution, delivery and
performance by PST of this Agreement and the
transactions contemplated hereby do not and
will not violate, conflict with or result in
a breach or default under the certificate of
incorporation or bylaws of PST, any state or
federal law or regulation applicable to PST
or any agreement or other document to which
PST is a party or by which it or any of its
property is bound.
(c) Consents. Except with respect to GE Capital
in connection with the Senior Loan Agreement
and the UCC filings contemplated by
subsection (h) below, no authorization,
approval, consent or other action by, and no
notice to or filing with, any governmental
authority or regulatory body or other person
is or will be required to be obtained or made
by PST for the due execution, delivery and
performance of this Agreement and the
transactions contemplated hereby.
(d) Title to the Receivables. PST is the lawful
owner of or has the right to sell the
Receivables being sold on each date of sale
hereunder. The debt represented by each
Receivable sold to GE Capital was, at the
time of its origination, the legal, valid and
binding obligation of the Obligor thereon in
accordance with its terms subject to the
20
effect of bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of
creditors' rights generally. Upon the purchase by GE
Capital of Receivables hereunder, GE Capital shall
acquire free, clear and unencumbered title in and to
such Receivables, subject to the Amendment. PST has
performed all of its obligations with respect to such
Receivables and there is no requirement for future
advances or performance by PST with respect to the
Merchandise relating to the Receivable.
(e) Documentation and Compliance with Law. The
copies of each invoice and signed bills of
lading with respect to each purchased
Receivable delivered to GE Capital, as well
as all other documents and reports required
to be delivered or provided to GE Capital
hereunder, shall be true and correct in all
material respects. The origination,
administration and collection of each of the
Receivables sold to GE Capital, including
without limitation, all documentation and/or
promotional materials relating thereto,
complied with all applicable laws and
regulations in all material respects.
(f) No Defenses. To the best of PST's knowledge,
each Receivable sold to GE Capital is at the
time of sale to GE Capital an Eligible
Receivable.
(g) Lawful Assignment. No Receivable sold to GE Capital
has been originated in, or shall be subject to the
laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable under this
Agreement are unlawful, void or voidable.
(h) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any
jurisdiction to give GE Capital a first priority
perfected ownership interest in the Receivables sold
to GE Capital have been made.
21
(i) Chattel Paper. No Receivable constitutes
"chattel paper" as defined in the UCC.
(j) Bankruptcy. No Obligor with respect to a Receivable
sold to GE Capital was the subject of a bankruptcy
proceeding as of the date such Receivable was sold to
GE Capital.
(k) Solvency. PST is Solvent.
(l) No Litigation. No action, claim or
proceeding before any court, board,
commission, agency, or instrumentality of any
federal, state, or local government or of any
agency or subdivision thereof or before any
arbitrator or panel of arbitrators, is now
pending or, to the knowledge of PST,
threatened against PST, at law, in equity, or
otherwise, which, if determined adversely,
could have a Material Adverse Effect, nor to
the knowledge of PST does a state of facts
exist which is reasonably likely to give rise
to any such proceedings. No action, claim or
proceeding before any court, board,
commission, agency, or instrumentality of any
federal, state, or local government or of any
agency or subdivision thereof or before any
arbitrator or panel of arbitrators questions
the validity of this Agreement or any action
taken or to be taken pursuant hereto or any
of the conditions precedent thereto.
(m) Executive Office and Return Locations. (a)
The chief executive office of PST is at 000
Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, (b) the chief executive office of PST
will during the term of this Agreement be
located at such location or at such other
location as PST shall, from time to time,
specify upon at least sixty (60) days prior
written notice to GE Capital, (c) all records
relating to Receivables purchased by GE
Capital and maintained by PST are maintained
at PST's chief executive office, or at such
other locations as are set forth on Exhibit B
annexed hereto, as such Exhibit may be
amended by PST from time to time upon sixty
(60) days prior written notice to GE Xxxxxxx,
00
(x) PST takes returns of Merchandise sold in
connection with Receivables owned by GE Capital only
in Ridgefield, New Jersey, Waco, Texas and Sparks,
Nevada; provided, however, that PST may take returns
at additional locations from time to time upon sixty
(60) days prior written notice to GE Capital.
ARTICLE VII
AFFIRMATIVE COVENANTS
To induce GE Capital to purchase Receivables, PST makes the following
covenants to GE Capital, each and all of which shall survive the execution and
delivery of this Agreement until this Agreement terminates pursuant to Article
VIII and there are no amounts owing on Receivables purchased by GE Capital that
were not repurchased by PST, with the exception of Written-Off Receivables:
Section 7.01 Compliance with Law. PST's actions, including, without
limitation, the provision of services under Section 2.02 and the actions of
Persons on PST's behalf (or failures to act where any of the foregoing has a
duty to act under this Agreement) shall comply with all federal, state, and
local laws, statutes, ordinances, rules, regulations, orders and rulings,
including, without limitation, court and FTC orders, ERISA, those regarding the
collection, payment and deposit of employees' income, unemployment, and social
security taxes, and those relating to environmental matters where failure to
comply may have a Material Adverse Effect. Without limiting the generality of
the foregoing, PST shall additionally be obligated to cause all forms utilized
by PST to comply with those laws, statutes, ordinances, rules, regulation,
orders and rulings during the term of this Agreement, which obligation shall
include from time to time providing revisions of such forms so that they so
comply where failure to comply may have a Material Adverse Effect.
Section 7.02 Maintenance of Existence and Conduct of Business. PST
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
Section 7.03 Books and Records. PST shall keep adequate records and
books of account with respect to its
23
business activities, in which proper entries, reflecting all of PST's financial
transactions, are made in all material respects in accordance with generally
accepted accounting principles.
Section 7.04 Litigation. PST shall notify GE Capital in writing,
promptly upon learning thereof, of any litigation that (a) affects the
Receivables owned by GE Capital or (b) if adversely determined, would have a
material adverse effect on PST's ability to perform fully its obligations under
this Agreement.
Section 7.05 Agreements. PST shall perform all of its material
obligations and enforce all of its material rights pursuant to each agreement to
which it is a party.
Section 7.06 Adverse Transactions. Except in the ordinary course of
business and in accordance with PST's previous practices, PST shall not permit
or agree as servicer to any extension, compromise, or settlement, or make any
changes or modification of any kind or nature with respect to any Receivable
sold to GE Capital, including any of the terms relating thereto. PST shall not
enter into any agreement, which at the time such agreement is entered into, has
a material adverse effect on PST's ability to perform its obligations under this
Agreement.
Section 7.07 Liens. Except as contemplated by the Amendment, PST shall
not create or permit any Lien in and to the Receivables which are sold to GE
Capital, or the Reserve Account except presently existing or hereafter created
Liens in favor of GE Capital and Liens created by or through GE Capital.
Section 7.08 Events of Default. PST shall not take or omit to take any
action, which act or omission would constitute an Event of Default pursuant
hereto.
Section 7.09 Services. PST shall provide and maintain reasonable
services with respect to the Merchandise reflected in Receivables sold to GE
Capital and shall comply with all of its warranties and other obligations with
respect to such Merchandise.
Section 7.10 Insurance. PST shall maintain insurance policies with
insurers in such amounts and insuring it against such types of loss or damage as
are
24
customarily maintained by corporations engaged in similar businesses with
respect to its property.
Section 7.11 Other Agreements. PST shall promptly provide to GE Capital
all public filings or publicly available information (e.g., press releases)
concerning any new debt agreements or security agreements, amendments or
modifications of any existing debt agreements, security agreements, as well as
all other contracts in the amount of $3,000,000 or more to which PST is a party
or by which it is bound (other than agreements for the purchase of raw
materials, inventory or merchandise sold by PST in the ordinary course of PST's
business) with the exclusion of leases on facilities entered into prior to the
date of this Agreement and amendments, extensions and renewals thereto. If GE
Capital so requests, PST shall provide to GE Capital copies of said agreements,
amendments, modifications or contracts.
ARTICLE VIII
TERMINATION
Section 8.01 Term.
(a) Except as otherwise provided herein, the Program
contemplated by this Agreement shall commence on the date hereof and shall
continue until the earlier of (i) the date on which the Senior Loan Agreement
terminates or (ii) May 31, 2000.
(b) Notwithstanding Section 8.01(a) hereof, this Agreement
shall terminate automatically, without further action by either party, upon the
occurrence of an Event of Default under Section 9.01(e) and, upon any such
termination, GE Capital shall be relieved of further obligations to continue to
purchase Receivables hereunder, and all Obligations automatically shall be
deemed forthwith due and payable.
Section 8.02 Effect of Termination.
No termination (regardless of cause or procedure) of this
Agreement shall in any way affect or impair the powers, obligations, duties,
rights, indemnities, liabilities, undertakings, covenants, warranties and/or
representations (individually and collectively, "Provisions") of PST or GE
Capital as specified in this
25
Agreement, except that GE Capital shall have no obligation to continue to
purchase Receivables. Except as specifically provided herein to the contrary,
upon such termination GE Capital, including its assignees, shall continue to own
Receivables which they owned prior to such termination and PST shall continue to
perform its servicing obligations under Section 2.02 with respect to such
Receivables.
ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
(a) PST shall fail to make any payment of any amount due
pursuant to this Agreement when due and payable.
(b) PST shall fail or neglect to perform, keep, or observe any
of the terms, provisions, conditions, or covenants contained in this Agreement,
and such failure or neglect shall remain unremedied for a period of ten (10)
days after notice thereof by GE Capital to PST.
(c) Any (i) representation or warranty by PST or (ii) written
statement, report, financial statement, or certificate made or delivered by PST
or any of its officers to GE Capital under this Agreement shall not be true and
correct in all material respects as of the date when made or reaffirmed, and as
to (i) and (ii) remain unremedied for a period of ten (10) days after notice
thereof by GE Capital to PST.
(d) (i) Any of the Receivables sold to GE Capital shall be
lost, stolen, damaged, destroyed, sold, encumbered, attached, seized, levied
upon, or subjected to a writ or distress warrant, other than as provided in the
Amendment or by or through GE Capital; (ii) any of the Receivables sold to GE
Capital shall come within the possession of any receiver, trustee, custodian, or
assignee for the benefit of creditors of PST; (iii) PST shall have concealed,
removed, or permitted to be concealed or removed, any part of its property, with
intent to hinder, delay, or defraud its creditors or made or suffered a transfer
of any of its material property which is fraudulent under applicable
26
bankruptcy, fraudulent conveyance, or other similar law; or (iv) any
dissolution, termination of existence, or lack of Solvency shall occur with
respect to PST.
(e) PST shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against PST seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
custodian, receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceedings
instituted against PST (but not instituted by it), either such proceedings shall
remain undismissed or unstayed for a period of sixty (60) days or any such
adjudication or relief sought occurs; or PST shall take any corporate action to
authorize any of the actions set forth in this subsection.
(f) Final judgment or judgments (after expiration of all times
to appeal therefrom) for the payment of money in excess of $500,000 in the
aggregate shall be rendered against PST and the same shall not be, either (i)
covered by insurance or the insurer shall not have accepted liability therefor
or (ii) vacated, stayed, bonded, paid, or discharged for a period of thirty (30)
days.
(g) Any events shall arise which result in the acceleration of
the maturity or the failure to pay when due of any indebtedness in a principal
amount in excess of $500,000 of PST.
(h) PST is no longer Solvent.
(i) An Event of Default as defined in the Senior Loan
Agreement shall have occurred thereunder and be continuing.
Section 9.03 Remedies For Default.
If any Event of Default shall have occurred and be continuing:
(a) GE Capital, in its discretion, without notice, may
terminate this Agreement.
27
(b) In addition to (1) above, GE Capital may exercise any
other rights or remedies available to it at law or in equity, subject to the
terms of this Agreement.
ARTICLE X
INDEMNIFICATION
Section 10.01 Indemnification
PST shall indemnify and hold harmless GE Capital, GE Capital's
Affiliates and any of their respective officers, directors, agents, employees,
representatives or assignees from and against any claim, loss, cost, liability,
damage or expense (including, without limitation, reasonable attorney's fees)
that arise from, are connected with, or result from (a) any breach by PST of the
representations, warranties, covenants or other responsibilities set forth in
this Agreement, each to be read without regard to any materiality or knowledge
requirement in order for there to be a breach or (b) any other act or omission
by PST or any of its respective officers, directors, agents, employees,
representatives or assignees with respect to the Program, except to the extent
attributable solely to the gross negligence or willful misconduct of any such
indemnified Person, provided that with respect to attorney's fees PST shall be
obligated to indemnify only the reasonable attorney's fees of a single law firm
acting as special counsel and any single law firm acting as local counsel to the
indemnified Persons collectively, and provided further that PST shall not be
obligated to indemnify any release or settlement entered into by any indemnified
Person without PST's prior written consent, which such consent shall not be
unreasonably withheld or delayed.
ARTICLE XI
TRANSFER OF RECEIVABLES AND ACCESS TO DATA
Section 11.01 Nature of Program; Security Interest.
(i) The parties hereto intend and agree that PST shall have no
right, title or interest in or to Receivables purchased by GE Capital or any of
the proceeds of such Receivables. Against the possibility that, despite such
agreement and intentions of the parties, PST is found to have some right, title
or interest in or to the Receivables sold to GE Capital or any of the proceeds
of such
28
Receivables, and to provide GE Capital with further assurance, secure GE
Capital's rights under the Program (including its right to collect Receivables
hereunder), and secure payment and/or performance of all of PST's Obligations,
PST hereby grants to GE Capital a present and continuing security interest
(subject to no other Liens other than as specified in the Amendment) in and to
all Receivables that GE Capital has purchased or with respect to which GE
Capital has given consideration pursuant to this Agreement, whether such
Receivables are now existing or hereafter created or acquired and all proceeds
of such Receivables.
(ii) The parties hereto intend and agree that PST shall have
no title to, or ownership of, deposits, credit balances and/or reserves on the
books of GE Capital, including the Reserve Account established pursuant to
Article IV, relative to the Program or this Agreement and/or any of the proceeds
of any of the foregoing, except such right and interest in or to any of the
foregoing as expressly provided herein. Against the possibility that, despite
such agreement and intentions of the parties, PST is found to have an ownership
interest in or to such deposits, credit balances and/or reserves or any of the
proceeds of any of the foregoing, and to provide GE Capital with further
assurance, secure GE Capital's rights under the Program (including its right to
collect Receivables that GE Capital has purchased or with respect to which GE
Capital has given consideration hereunder and to apply deposits, credit balances
and/or reserves), and secure payment and/or performance of all of PST's
Obligations, PST hereby grants to GE Capital a present and continuing security
interest (subject to no other Liens other than as specified in the Amendment) in
and to the following, whether now existing or hereafter created or acquired: (a)
all deposits, credit balances and/or reserves on the books of GE Capital
relative to the Program or this Agreement including, without limitation, the
Reserve Account described in Article IV, and (b) all proceeds of any of the
foregoing.
(iii) The parties hereto intend and agree that PST shall have
no right, title or interest in or to returned Merchandise, to the extent such
Merchandise was purchased with respect to a Receivable owned by GE Capital that
has not been paid by PST with respect thereto, or any of the proceeds of any of
the foregoing. Against the possibility that, despite such agreement and
intentions of the parties, PST is found to have some right, title or interest in
or to
29
such returned Merchandise or any of the proceeds of any of the foregoing, and to
provide GE Capital with further assurance, secure GE Capital's rights under the
Program (including its right to collect Receivables that GE Capital has
purchased or with respect to which GE Capital has given consideration
hereunder), and secure payment and/or performance of all of PST's Obligations,
PST hereby grants to GE Capital a present and continuing security interest
(subject to no other Liens other than as specified in the Amendment) in and to
the following, whether now existing or hereafter created or acquired: (a)
returned Merchandise, to the extent such Merchandise was purchased with respect
to a Receivable owned by GE Capital or with respect to which GE Capital has
given consideration pursuant to this Agreement and GE Capital has not been paid
by PST with respect thereto; and (b) all proceeds of any of the foregoing.
(iv) PST agrees to cooperate fully with GE Capital in order to
give effect to the security interest granted, including, without limitation, the
filing of UCC-1s or comparable statements in order to perfect and continue such
security interest, notifying GE Capital as to its knowledge of any Liens or
purported Liens held or asserted by Persons other than GE Capital and other than
as specified in the Amendment and the obtaining of such releases and agreements
from its creditors as GE Capital may require.
Section 11.02 Notices to GE Capital.
Promptly after it becomes aware thereof, PST shall inform GE
Capital of all information relating to the collectability of a Receivable
purchased by GE Capital, any changes of address or corporate structure of
Obligors with respect to such Receivables, and notices of filings under the
Bankruptcy Code with respect to such Obligors.
Section 11.03 Further Assurances.
In addition to the undertakings specifically provided for in
this Agreement, PST and GE Capital shall each do all other things and sign and
deliver all other documents and instruments reasonably requested by the other to
perfect, protect, maintain and help enforce the Liens of GE Capital and the
priority of such Liens, and all other rights granted pursuant to this Agreement.
Such acts shall include, without limitation, indicating on the books and records
of PST that Receivables purchased by GE Capital are the property of GE Capital
and/or its assignees; and the
30
filing of financing statements, amendments, and termination statements under the
UCC relating to such Receivables. If PST fails to do so within ten (10) days
after a request to do so, PST irrevocably authorizes GE Capital to execute alone
any financing statement or any other document or instrument which may be
required to perfect or protect the interest of GE Capital, including any Lien
granted to GE Capital pursuant to this Agreement, and authorizes GE Capital to
sign PST's name on the same.
Section 11.04 Attorney-in-Fact.
PST appoints GE Capital or GE Capital's designee as its
attorney-in-fact (a) to endorse its name on any checks, notes, acceptances,
money orders, drafts, or other forms of payment of or security for any
Receivables purchased by GE Capital and not repurchased by PST, (b) to sign its
name(s) on any notices to any Obligor in connection with the collection of such
Receivables, (c) to send requests for verification of any such Receivables to
Obligors thereon, (d) to xxx Obligors for the collection of such Receivables and
(e) to do all things necessary to carry out or enforce the obligations of such
Obligors and to preserve GE Capital's Lien in and to Receivables it has
purchased and which have not been repurchased by PST. This power, being coupled
with an interest, is irrevocable until there shall no longer be any amounts
outstanding on Receivables purchased by GE Capital, provided that GE Capital
shall not use such power to take any action it is prohibited from taking under
this Agreement.
Section 11.05 Continued Liability.
PST shall perform all of its respective duties and obligations
under any contracts or agreements between them and any Obligors of Receivables
purchased by GE Capital that relate to Merchandise purchased (as opposed to the
Receivables) in connection with such Receivables. Anything herein to the
contrary notwithstanding, (a) PST shall remain liable under any contracts and
agreements with any such Obligor that relate to the Merchandise sold (as opposed
to the Receivables), and to the extent set forth therein to perform all of their
duties and obligations pursuant thereto to the same extent as if this Agreement
had not been executed; (b) the exercise by GE Capital of any rights pursuant to
this Agreement shall not release PST of such duties or obligations under the
contracts and agreements; and (c) except to the extent specifically set forth
herein,
31
GE Capital shall not have any obligation or liability with respect to any
Merchandise by reason of this Agreement or be obligated to perform any of the
obligations or duties of PST pursuant to this Agreement.
Section 11.06 Other Party May Perform.
If PST fails to perform any of its duties or obligations
contained herein and such failure has remained unremedied for a period of ten
(10) days after notice to it from GE Capital, or if such failure is not
reasonably susceptible of being cured within such ten (10) day period, or if PST
fails to commence to cure such failure within such ten (10) day period and
diligently proceed to cure thereafter, GE Capital may itself perform, or cause
performance of, such duties or obligations, and the reasonably incurred expenses
of GE Capital incurred in connection therewith shall be payable by PST on
demand.
Section 11.07 Audit Rights.
In addition to the other rights set forth in this Agreement,
GE Capital (by any of its officers, employees, designees and/or agents) shall
have the right, during normal business hours upon reasonable notice to PST, in
such a manner as to minimize interference with PST's normal business operations,
to examine, audit, inspect, and make extracts from all of the data, records,
files, and books of account including, without limitation, non-financial
information under the control of PST relating to the Receivables purchased by GE
Capital, and PST shall use its reasonable best efforts to facilitate GE
Capital's exercise of such right, including the assignment of such personnel of
PST for the assistance of GE Capital as GE Capital shall reasonably request. PST
shall deliver any document or instrument necessary for GE Capital to obtain such
information from any Person maintaining records for PST. GE Capital's right to
audit information shall include the right to audit information necessary to
determine if payments, credits, calculations or allocations made pursuant to
this Agreement were accurate. PST shall maintain for a period of at least three
(3) years, or any longer period during which an item is being contested,
information reasonably sufficient for GE Capital to perform such audits. PST
shall reimburse GE Capital for all reasonable out of pocket expenses incurred by
GE Capital in connection with such audits, including a per diem fee of Three
Hundred Dollars ($300) per day for GE Capital's field examiners, provided
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that such reimbursement shall be limited to two audits per calendar year unless
a Default or an Event of Default shall have occurred and be continuing in which
event no limitation on reimbursement shall apply.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Complete Agreement; Modification of
Agreement; Sale of Interest.
This Agreement constitutes the complete agreement between the
parties with respect to the subject matter hereof and neither this Agreement nor
any Exhibit or Schedule hereto may be modified, altered, or amended, except by
an agreement in writing duly executed by authorized representatives of GE
Capital and PST. PST may not sell, assign, transfer or delegate any of its
rights, titles, interests, remedies, powers, and duties hereunder. PST hereby
consents to GE Capital's assignment, transfer, or other disposition, at any time
or times, of any of GE Capital's rights, titles, interests, remedies, powers, or
duties hereunder; provided, however, that PST shall not be obligated to such
assignee or transferee until (a) PST receives notice of the assignment or
transfer, and (b) such assignee, transferee or purchaser assumes and agrees,
directly or indirectly, to perform all obligations of GE Capital hereunder and
provided further that, if the number of owners of Receivables purchased by GE
Capital is at any time more than two, the power of attorney under Section 11.04
and the audit rights under Section 11.07 shall be limited to two Persons.
Section 12.02 No Waiver.
Either party's failure, at any time or times, to require
strict performance by the other party of any provision of this Agreement shall
not waive, affect, or diminish any right of such party thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by GE
Capital of an Event of Default shall not suspend, waive, or affect any other
Event of Default, whether the same is prior or subsequent thereto and whether of
the same or of a different type. None of the undertakings, agreements,
warranties, covenants, and representations of PST contained in this Agreement
and no Event of Default pursuant to this Agreement shall be deemed
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to have been suspended or waived by GE Capital, unless such suspension or waiver
is by an instrument in writing signed by an officer of GE Capital and directed
to the appropriate Person specifying such suspension or waiver.
Section 12.03 Remedies.
Each party's rights and remedies pursuant to this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which such
party may have pursuant to any other agreement, by operation of law, or
otherwise.
Section 12.04 Waiver of Jury Trial.
The parties hereto waive all right to trial by jury in any
action or proceeding to enforce or defend any rights hereunder.
Section 12.05 Fees and Expenses.
PST shall be responsible for and pay all reasonable
out-of-pocket costs and expenses incurred by GE Capital in connection with the
negotiation and execution of this Agreement, including but not limited to
reasonable legal fees and disbursements of GE Capital's outside counsel. PST
shall be responsible also for the payment of all reasonable fees (including
reasonable attorneys' fees) and reasonable out-of-pocket disbursements incurred
by GE Capital (a) in connection with actual or proposed workouts, waivers,
consents, modifications, intercreditor agreements and the like related to the
Agreement and with amending, enforcing (except under circumstances where a court
of competent jurisdiction determines that the claims made by GE Capital are
without merit), or reasonably protecting its rights under this Agreement or
obtaining advice as to whether PST is or may be in breach of this Agreement
(including all reasonable attorneys' fees and reasonable out-of-pocket costs
incurred in connection with bankruptcy or insolvency proceedings affecting GE
Capital with respect to PST); and (b) in connection with any collection efforts
relating to this Agreement, provided however, that with respect to attorney's
fees PST shall only be obligated to reimburse the reasonable attorney's fees of
a single law firm acting as special counsel and any single law firm acting as
local counsel.
Section 12.06 Severability.
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Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law; if
any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 12.07 Parties.
This Agreement shall be binding upon, and inure to the benefit
of the successors of the parties hereof and permitted assigns of GE Capital.
Section 12.08 Authorized Signature.
Until GE Capital shall be notified to the contrary, the
signature upon any document or instrument delivered pursuant hereto of an
officer of PST listed in Exhibit C hereto shall bind PST and be deemed to be the
act of PST affixed pursuant to and in accordance with resolutions duly adopted
by the Board of Directors of PST.
Section 12.09 Governing Law.
This Agreement and the Obligations arising pursuant hereto
shall, in all respects, including all matters of construction, validity, and
performance, be governed by, and construed in accordance with, the laws of the
State of New York (other than conflicts of law provisions thereof) applicable to
contracts made and performed in such state and any applicable laws of the United
States of America. PST and GE Capital each agrees to submit to personal
jurisdiction and to waive any objection as to venue of the federal or state
courts in the County of New York, State of New York. Service of process on PST
or GE Capital in any action arising out of or relating to this Agreement shall
be effective upon receipt thereof if sent or delivered to PST or GE Capital, as
the case may be, in accordance with Section 12.10 hereof.
Section 12.10 Notices.
Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration, or
other communication shall or may be given to or served upon any of the parties
by
35
another, or whenever any of the parties desires to give or serve upon another
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration, or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows (and if notice is transmitted by mail, a copy thereof shall be
transmitted by electronic facsimile to the telephone number indicated below):
1. If to GE Capital, at
General Electric Capital
Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Account Manager - PST
Facsimile: 000-000-0000
With a copy to:
General Electric Capital
Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Counsel-
Commercial Finance
Facsimile: 000-000-0000
2. If to PST, at
Plastic Specialties and
Technologies, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
With a copy to:
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required
36
pursuant hereto may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration, or other
communication pursuant hereto shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged, or five
(5) Business Days after the same shall have been deposited in the United States
mail (and a copy sent by electronic facsimile). Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, or other
communication to the Persons designated above to receive copies shall in no way
adversely effect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.
Section 12.11 Publicity.
From and after the date hereof, with the prior consent of PST,
which such consent shall not be unreasonably withheld, GE Capital shall have the
right to issue press releases, advertisements, and other promotional materials
describing in general terms or in detail GE Capital's participation in the
transactions contemplated by this Agreement.
Section 12.12 Confidentiality.
Subject to Section 12.11, each party hereto shall hold in
confidence any confidential information obtained from any other party hereto in
connection with this Agreement and shall not disclose the same to any third
party, except that disclosure to an Affiliate of PST or GE Capital is allowed on
a need to know basis with respect to this transaction. The parties hereto agree
that the financial terms of this Agreement are considered confidential and will
not be disclosed (except in the circumstances described in subsections (b) and
(c) below) to any Person if there are practical ways, after discussion with the
other party hereto, of avoiding such disclosure. Nothing contained herein shall
limit the right of either party to disclose any information (a) as required by
law or by judicial or administrative process or to appropriate regulatory
authorities, (b) as such information is or becomes public knowledge, (c) to the
extent that such information is disclosed to recover the balances owing on
Receivables or amounts owing hereunder from another party hereto, and (d) for
legitimate business purposes, including but not limited to purposes relating to
any securitization,
37
securities filings or in connection with providing information to auditors,
prospective purchasers and lenders, provided, however, that prior to disclosing
any confidential information of another party hereto to any Person, the party
making such disclosure shall notify the appropriate party of the nature of such
disclosure and of the fact that such disclosure will be made.
Section 12.13 Section Titles.
The Section Titles contained in this Agreement are and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
Section 12.14 Counterparts.
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
38
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PLASTIC SPECIALTIES AND TECHNOLOGIES, INC.
By:
-----------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
39
EXHIBIT B
Location of Records
Colorite Hose
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Colorite Plastics Waco
000 Xxxxx Xxxxx
Xxxx, Xxxxx 00000
Colorite Plastics Sparks
000 Xxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxx 00000
40
EXHIBIT C
Authorized Officers
Xxxx Xxxxxxx, Chief Executive Officer
Xxxxxx Xxxxxx, Chief Financial Officer
Xxxxx Xxxx, President
Xxxx Xxxxxxxxxx, Secretary
Xxxxxx Xxxxxxx, Assistant Secretary
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