SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 23, 1996 (August 15,
1996)
ARTRA GROUP INCORPORATED
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(Exact name of registrant as specified in its charter)
Pennsylvania
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State or Other Jurisdiction of Incorporation
1-3916 25-1095978
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Commission File Number I.R.S. Employer
Identification No.
500 Central Avenue, Northfield, IL 60093
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (847) 441-6650
Not Applicable
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Former name, former address and former fiscal year, if changed since last report
<PAGE>
Item 5. Other Events
On August 15, 1996, ARTRA GROUP Incorporated ("ARTRA" or the "Registrant") and
its 100% owned subsidiary, Fill-Mor Holding, Inc. ("Fill-Mor") entered into a
$2,500,000 term loan agreement with a bank. The loan, payable by Fill-Mor in 90
days, bears interest, payable monthly, at the bank's reference rate. Fill-Mor
has an option to extend the loan for an additional 90 days. The loan, guaranteed
by ARTRA, is collateralized by 800,000 shares of COMFORCE common stock owned by
Fill-Mor. If an Event of Default (as defined in the loan agreement) shall occur,
the bank has the right to sell all of its rights and interest in the loan to an
unaffiliated individual for an aggregate price equal to the outstanding
principal balance of the loan plus accrued interest. The proceeds of the loan
were used for working capital.
<PAGE>
Item 7. Exhibits
10.1 LOAN AGREEMENT, dated as of August 15, 1996, between
Fill-Mor Holding, Inc. ARTRA GROUP Incorporated, and
Manufacturers Bank.
10.2 TERM LOAN PROMISSORY NOTE in the principal amount of
$2,500,000, dated August 15, 1996.
10.3 STOCK PLEDGE AGREEMENT entered into as of August 15,
1996, between Fill-Mor Holding, Inc. ("Pledgor") and
Manufacturers Bank ("Lender").
10.4 GUARANTY of ARTRA GROUP Incorporated, dated as of
August 15, 1996.
10.5 PURCHASE, SALE AND PUT AGREEMENT by and between
Manufacturers Bank and Peer Pedersen, dated as of
August 15, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
ARTRA GROUP INCORPORATED
Registrant
Dated: August 23, 1996 JAMES D. DOERING
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Vice President and Chief Financial Officer
EHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated as of August 15, 1996, is
made by and between Fill-Mor Holding, Inc., a Delaware corporation ("Fill-Mor"),
ARTRA GROUP Incorporated, a Pennsylvania corporation and the parent corporation
of Fill-Mor ("ARTRA") and Manufacturers Bank, an Illinois State banking
corporation with main offices in Chicago, Illinois ("Bank").
WITNESSETH:
WHEREAS, Fill-Mor desires to borrow from Bank the amount of Two
Million, Five Hundred Thousand Dollars ($2,500,000.00) and Bank is willing to
make a loan of such amount to Fill-Mor subject to and upon the terms and
conditions set forth herein, including without limitation the guaranty of the
debt by ARTRA and Fill-Mor's pledge of 800,000 shares of the common stock of
Comforce Corporation, a Delaware corporation ("Comforce"), which are registered
in the name of Fill-Mor.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, and of other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
1.1 Definitions. Capitalized terms used in this Agreement and not
otherwise defined in this Agreement shall have the meanings ascribed to them in
Schedule 1.1. All Schedules, Exhibits and other attachments hereto, or expressly
identified to this Agreement, are incorporated by reference, and taken together
with this Agreement, shall constitute but a single agreement.
2. TERM LOAN
2.1 Loan Amount. Bank agrees to extend to Fill-Mor a term loan in the
principal amount of $2,500,000.00 (the "Term Loan").
2.2 Promissory Note. The Term Loan shall be evidenced by a term loan
promissory note executed by Fill-Mor in favor of Bank in the principal amount of
$2,500,000.00, in form and substance satisfactory to Bank (the "Note"). The Note
will bear interest, payable monthly calculated at a rate per annum equal to the
Reference Rate. The Note will be payable in full ninety (90) days ( the "Term")
after the date of the Note.
2.3 Option to Extend. Fill-Mor shall have the right to extend the Note
for an additional ninety (90) days provided that each of the following
conditions shall be satisfied: (a) Fill-Mor shall give the Bank five (5) days
notice of its intention to extend the Note and shall pay the Bank the additional
Term Loan Fee described in Section 2.8 hereof, (b) at the time of extension ,
there shall be no Default or Event of Default, and (c) all accrued and unpaid
interest on the Note shall be paid in full.
<PAGE>
2.4 Interest. All computations in interest shall be made by Bank on the
basis of a three hundred sixty (360) day year in each case for the actual number
of days occurring in the period for which such interest is payable. Interest
rate changes will be effective for interest computation purposes as and when the
Reference Rate changes. Each determination by Bank of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error or bad
faith.
2.5 Default Rate. Upon the occurrence of an Event of Default, as
hereafter defined, the Note shall bear interest at a rate per annum equal to
five percent (5%) over the Reference Rate (the "Default Rate") from the date of
the Event of Default until the default is cured.
2.6 Prepayment. Fill-Mor may prepay the Obligations in full or in part,
without penalty, during the Term, upon three (3) days prior written notice to
Bank. Any prepayments of less than all of the outstanding balance of the Term
Loan shall be applied first to then due and payable fees and expenses; then to
accrued interest owed; then to the then remaining balance of the Term Loan until
paid in full.
2.7 Use of Proceeds. Fill-Mor shall utilize the proceeds of the Term
Loan solely for general working capital purposes.
2.8 Term Loan Fee. Fill-Mor agrees upon execution of this Agreement to
pay to Bank a fee ("Term Loan Fee") of one-half percent (1/2%) of the Term Loan,
or $12,500, for the Bank's costs and risks in making the Term Loan. If Fill-Mor
chooses to extend the due date on the Note an additional ninety days pursuant to
Section 2.3 hereof, then Fill-Mor agrees to pay Bank an additional Term Loan Fee
of 1/2%, or $12,500, prior to such extension.
3. CONDITIONS PRECEDENT
3.1 Before any proceeds are disbursed to Fill-Mor under this Loan
Agreement, Fill-Mor or ARTRA (as the case may be) shall deliver to Bank, in form
and substance satisfactory to Bank:
(a) Loan Documents. This Agreement, the Note, and, as hereafter
defined, the Guaranty, the Pledge Agreement, the Put Agreement, an opinion of
counsel for Fill-Mor and ARTRA and any other documents which Bank may reasonably
require to give effect to the transactions described in this Agreement (each, a
"Loan Document" and collectively, the "Loan Documents").
<PAGE>
(b) Evidence of Due Organization and Good Standing. Evidence of the due
organization and good standings of each of Fill-Mor and ARTRA. Such evidence
shall include articles of incorporation, bylaws and a certificate of good
standing.
(c) Evidence of Authority to Enter into Loan Documents. Evidence that
(i) each of Fill-Mor and ARTRA is authorized to enter into the transactions
described in this Agreement and the other Loan Documents, and (ii) the person
signing on behalf of each such party is authorized to do so. Such evidence shall
be in the form of resolutions of the Board of Directors and an incumbency
certificate, certified by the respective Secretary or Assistant Secretary of
Fill-Mor and ARTRA, respectively, and an opinion of counsel.
(d) Financial Information. Fill-Mor and ARTRA shall have provided Bank
with any and all financial information and documentation as may reasonably have
been required by Bank, all in form and substance as requested by Bank.
(e) Delivery of Pledged Shares. Fill-Mor shall have delivered to the
Bank the Pledged Shares and duly executed stock powers, executed in blank.
(f) Delivery of Financing Statements. Fill-Mor shall have delivered to
the Bank UCC-1 Financing Statements in form and content satisfactory to Bank.
3.2 Before any proceeds are disbursed to Fill-Mor under this Agreement,
the following conditions must be satisfied:
(a) Representations. The representations and warranties under this
Agreement and the other presently existing Loan Documents are true on and as of
the date hereof.
(b) No Event of Default. No Event of Default has occurred and is
continuing or would result from the transaction contemplated under this
Agreement.
(c) Continued Satisfaction. There has been no Material Adverse Effect
in the financial condition of Fill-Mor or ARTRA since March 31, 1996.
4. BANK'S EXPENSES
4.1 In addition to the Term Loan Fee, Fill-Mor shall pay Bank for its
out-of-pocket expenses and attorneys' fees incurred in connection with the
transaction contemplated by this Agreement and the other presently existing Loan
Documents.
5. GUARANTY
5.1 ARTRA shall guarantee the full performance by Fill-Mor of all
obligations under the Note and all other Loan Documents, and ARTRA shall execute
and deliver to Bank a guaranty in the form of the Guaranty attached as Exhibit A
hereto (the "Guaranty").
<PAGE>
6. PLEDGE
6.1 Pledge and Pledge Agreement. To secure its obligations under the
Loan Documents, Fill-Mor shall pledge and deliver to Bank the Collateral. The
Collateral, including the Pledged Shares, shall be accompanied by stock powers
executed in blank. Such pledge shall be evidenced by the execution and delivery
of a stock pledge agreement in the form of the Stock Pledge Agreement attached
as Exhibit B hereto (the "Pledge Agreement").
7. PUT AGREEMENT
Concurrently with the extension of the Term Loan to Fill-Mor,
Fill-Mor ARTRA, Bank and Peer Pedersen ("Pedersen") shall execute a Purchase,
Sale and Put Agreement in form and substance satisfactory to Bank (the "Put
Agreement"). Such Put Agreement shall give Bank the unrestricted right to sell
the Note and assign its rights to this Agreement, the Pledge Agreement, the
Guaranty, and the Pledged Shares to Pedersen if an Event of Default (as defined
herein) occurs.
8. REPRESENTATIONS AND WARRANTIES
8.1 ARTRA, Fill-Mor. Fill-Mor or ARTRA (as the case may be) represent
and warrant to the Bank as of the date hereof and each day thereafter,
continuing so long as the Obligations remain outstanding, and (even if there
shall be no Obligations outstanding) so long as this Agreement remains in
effect:
(a) Entity Existence. Each of Fill-Mor and ARTRA is a corporation duly
organized and in good standing under the laws of the state of its incorporation
as set forth in the preamble hereto, and is duly qualified as a foreign
corporation and in good standing in all other states where the nature and extent
of the business transacted by it or the ownership of its assets makes such
qualification necessary.
(b) Authority. The execution and delivery by each of Fill-Mor and ARTRA
of this Agreement and all of the other Loan Documents executed by it and the
performance of the Obligations: (i) are within their respective powers; (ii) are
duly authorized by their respective Boards of Directors and, if necessary, their
respective stockholders; (iii) are not in contravention of the terms of their
respective Certificates of Incorporation or By-Laws or of any indenture,
agreement or undertaking to which either is a party or by which either (or any
of their respective properties) are bound or any applicable judgment, decree or
order; (iv) do not, as of the execution hereof, require either one to obtain any
governmental consent, registration or approval; (v) do not contravene any
contractual or governmental restriction binding upon either one; and (vi) will
not, except as contemplated herein, result in the imposition of any lien,
charge, security interest or encumbrance upon any property of either one under
any existing indenture, mortgage, deed of trust, loan or credit agreement or
other material agreement or instrument to which either one is a party or by
which it or any of the respective property of each may be bound or affected.
<PAGE>
(c) Binding Effect. This Agreement and all of the other Loan Documents
to which Fill-Mor or ARTRA is a party are the legal, valid and binding
obligations of each and are enforceable against each in accordance with their
respective terms.
(d) Financial Data. ARTRA has furnished to Bank its consolidating
financial statements which include all relevant financial information with
respect to Fill-Mor as of March 31, 1996 (including the financial information of
Fill-Mor, the "Financials"). The Financials are, and all financial statements of
ARTRA to be furnished to Bank in accordance with subsection 9.1 below, will be
in accordance with the books and records of Fill-Mor and/or ARTRA and fairly
present the financial condition of Fill-Mor and ARTRA at the dates thereof and
the results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments) and such
financial statements have been and will be prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved. Since the date of the Financials, there have been no adverse changes
in the condition, financial or otherwise, of ARTRA or Fill-Mor as shown on such
Financials, except as expressly contemplated herein. All information, reports
and other papers and data to be furnished to Bank are or will be, at the time
the same are so furnished to Bank, accurate and correct in all material respects
and.
(e) Solvency. Fill-Mor, as of the Closing Date (a) will not be
"insolvent" as that term is defined in Section 101(32)(A) of the Federal
Bankruptcy Code (the "Bankruptcy Code") (11 U.S.C. ss. 101(32)) or Section 3 of
the Uniform Fraudulent Transfer Act ("UFTA"), (b) will not have "unreasonably
small capital," as that term is used in Section 548(a)(2)(B)(ii) of the
Bankruptcy Code, (c) will not be engaged or about to engage in a business or a
transaction for which its remaining property is "unreasonably small" in relation
to the business or transaction as that term is used in Section 5 of the UFTA,
(d) will be able to pay its debts as they mature or become due, within the
meaning of Section 548(a)(2) - (B)(iii) of the Bankruptcy Code and Section 3 of
the UFTA, and (e) will own assets having a value both at "fair valuation" and at
"present fair salable value" greater than the amount required to pay Fill-Mor's
"debts" as such terms are used in Section 2 of the UFTA. Fill-Mor shall not be
rendered insolvent (as defined above) by the execution and deliver of this
Agreement or any of the other Loan Documents or by the transactions contemplated
hereunder or thereunder.
(f) Chief Place of Business. As of the execution hereof, the principal
place of business and chief executive office of Fill-Mor and ARTRA is located at
the address set forth in Section 12.13 to this Agreement. If any change in such
location occurs, Fill-Mor and ARTRA shall promptly notify Bank thereof in
accordance with subsection 12.13 hereof, but in no event more than five (5) days
after such change. As of the execution hereof, the books and records of Fill-Mor
and ARTRA and all records of account are located at such principal place of
business and chief executive office, and if any change in such location occurs,
Fill-Mor and ARTRA shall promptly notify Bank thereof in accordance with
subsection 12.13 hereof, but in no event more than five (5) days after such
change.
<PAGE>
(g) Other Corporate Names. Neither Fill-Mor nor ARTRA has used any
corporate or fictitious names other than the names shown in the preamble to this
Agreement.
(h) Tax Liabilities. Fill-Mor and ARTRA have filed all federal, state
and local tax reports and returns required by any law or regulation to be filed
by it except for extensions duly obtained. Fill-Mor and ARTRA have either duly
paid all taxes, duties and charges indicated due on the basis of such returns
and reports, or have made adequate provision for the payment thereof, and the
assessment of any material amount of additional taxes in excess of those paid
and reported is not reasonably expected. The reserves for taxes, if any,
reflected on the Financials constitute, and the balance sheets of Fill-Mor and
ARTRA submitted to the Bank in accordance with the terms of subsection 9.1 below
will constitute, reasonable estimations of the amount necessary for the payment
of all liabilities for all federal, state and local taxes (whether or not
disputed) of Fill-Mor and ARTRA accrued through the date of such balance sheets.
There are no material unresolved questions or claims concerning any tax
liability of Fill-Mor and ARTRA.
(i) Loans. Except as disclosed on the Financials, Fill-Mor and ARTRA
currently have no loans or other indebtedness for borrowed money and are not
liable on any guarantees.
(j) Litigation and Proceedings. Except as disclosed in Schedule 8(j)
attached hereto, no judgments are outstanding against Fill-Mor or ARTRA nor is
there now pending or, to the best of Fill-Mor's or ARTRA's knowledge after
reasonably diligent inquiry, threatened any litigation, contested claim, or
governmental proceeding by or against either of them. To the best of ARTRA's and
Fill-Mor's' knowledge, the amount of liability set forth on the Financials as to
each suit listed thereon is the maximum amount of potential liability under such
suit.
(k) Other Agreements. Except as disclosed in Schedule 8(k) attached
hereto, neither Fill-Mor nor ARTRA is in default under any material contract,
lease, or commitment to which it is a party or by which they are bound. Neither
Fill-Mor nor ARTRA know of any dispute regarding any contract, lease, or
commitment which is material to the continued financial success and well-being
of each of them.
(l) Intentionally Deleted.
<PAGE>
(m) Compliance with Laws and Regulations.
(i) General Compliance. The execution and delivery by each of
Fill-Mor and ARTRA of this Agreement and all of the other Loan
Documents to which each is a respective party and the performance of
the respective obligations of each hereunder and thereunder are not in
contravention of any law or laws. Each of Fill-Mor and ARTRA is in
compliance with all laws, orders, regulations and ordinances of all
federal, foreign, state and local governmental authorities relating to
the business operations and the assets of each, except for laws,
orders, regulations and ordinances the violation of which would not, in
the aggregate, have a Material Adverse Effect.
(ii) Environmental Compliance. The operations of each of
Fill-Mor and ARTRA comply with all applicable federal, state or local
environmental, health and safety statutes and regulations. Except as
set forth in Schedule 8(j) attached hereto, neither Fill-Mor nor ARTRA
have received notice of any judicial or administrative proceeding
alleging the violation of any federal, state or local environmental,
health or safety statute or regulation by or pertaining to them or
their respective properties or operations or stating that either one is
the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any hazardous
or toxic waste, substance, material or constituent, or other substance
into the environment. Schedule 8(j) summarizes all actual or potential
Environmental Liabilities and costs and expenses associated thereto, in
each case relating to either one of Fill-Mor or ARTRA. Neither Fill-Mor
nor ARTRA has filed any notice under any federal or state law
indicating past or present treatment, storage or disposal of a
hazardous waste or reporting a spill or release of a hazardous or toxic
waste, substance, material or constituent, or other substance into the
environment. Neither Fill-Mor nor ARTRA has any contingent liability of
which they have knowledge or reasonably should have knowledge in
connection with any release of any hazardous or toxic waste, substance,
material or constituent, or other substance into the environment,
except as set forth in Schedule 8(j).
(n) Intentionally Deleted.
(o) ERISA. Neither Fill-Mor, ARTRA nor any ERISA Affiliate of each of
them maintain or contribute to any pension plan other than a pension plan
disclosed in the Financials (a "Pension Plan"). Each Pension Plan which is
intended to be a qualified plan under Section 401(a) of the IRC has been
determined by the Internal Revenue Service to be so qualified and each trust
related to any such Pension Plan has been determined to be exempt from federal
income tax under subsection 501(a) of the IRC. Each Pension Plan has been
administered in all material respects in accordance with its terms and the terms
of ERISA, the IRC and all other statutes and regulations applicable thereto.
<PAGE>
(p) Ownership of Fill-Mor. ARTRA is the sole shareholder of Fill-Mor.
(q) Survival of Warranties. All representations and warranties
contained in this Agreement or any of the other Loan Documents shall survive the
execution and delivery of this Agreement.
8.2 Comforce Shares. With respect to the Collateral, Fill-Mor and ARTRA
(as the case may be) represent and warrant to the Bank as of the date hereof and
each day thereafter, continuing so long as the Obligations remain outstanding,
and (even if there shall be no Obligations outstanding) so long as this
Agreement remains in effect:
(a) Fill-Mor is, and at the time of delivery of the Pledged
Shares to Bank pursuant to the Pledge Agreement will be, the sole holder of
record and the sole beneficial owner of the Collateral free and clear of any
Lien (except for the lien created by the Pledge Agreement) or restrictions of
any kind (except for volume sales restrictions imposed by Federal and state
securities laws on the sale thereof) thereon or affecting the title thereto.
(b) All of the Pledged Shares have been duly authorized,
validly issued, are fully paid and non-assessable, and were acquired by Fill-Mor
more than two (2) years prior to the date hereof.
(c) Fill-Mor has the right and requisite authority and has
taken all required corporate actions to pledge, assign, transfer, deliver,
deposit and set over the Collateral to Bank as provided in the Pledge Agreement.
(d) None of the Pledged Shares has been issued or transferred
in violation of the securities registration, securities disclosure or similar
laws of any jurisdiction to which such issuance or transfer may be subject.
(e) No consent, approval, authorization or other order of any
person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required either (i) for
the pledge by Fill-Mor of the Collateral pursuant to the Pledge Agreement or for
the execution, delivery or performance of the Pledge Agreement by Fill-Mor or
(ii) for the exercise by Bank of the voting or other rights provided for in the
Pledge Agreement or the remedies in respect of the Collateral pursuant to the
Pledge Agreement, except as may be required in connection with such disposition
by laws affecting the offering and sale of securities generally.
(f) Upon foreclosure by Bank of the Pledged Shares, Bank shall
be able to sell the Pledged Shares free of registration, subject to the volume
limitations of Rule 144 of the Rules of the Securities and Exchange Commission
("Rule 144"), as promulgated under the Securities Act.
<PAGE>
9. AFFIRMATIVE COVENANTS
9.1 Fill-Mor or ARTRA (as the case may be) covenant to the Bank and
agree that, from the date hereof and each day thereafter, continuing so long as
the Obligations remain outstanding, and (even if there shall be no Obligations
outstanding) so long as this Agreement remains in effect:
(a) Maintenance of Existence and Conduct of Business. Each of Fill-Mor
and ARTRA shall (i) do or cause to be done all things necessary to preserve and
keep in full force and effect the respective corporate existence of each and the
rights and franchises of each; (ii) continue to conduct their business
substantially as now conducted or as otherwise permitted hereunder; (iii)
preserve all of their property, in use or useful in the conduct of their
business , so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; and (iv) transact business
only in such names as are set forth in this Agreement.
(b) Books and Records; Access to Same. Each of Fill-Mor and ARTRA shall
keep adequate records and books of account with respect to the respective
business activities of each, in which proper entries, reflecting all financial
transactions, are made in accordance with generally accepted accounting
principles and on a basis consistent with the Financials referred to in Section
8.1(d) herein. The Bank shall make any and all audits and investigations which
it deems reasonably necessary in connection with the Term Loan, at the sole
expense of Fill-Mor and ARTRA. For the purposes of this Agreement, the Bank
shall have free and ready access at all times during normal business hours, upon
reasonable advance oral or written notice, to the books of account, records,
papers and documents of Fill-Mor and ARTRA.
(c) Litigation. Each of Fill-Mor and ARTRA shall notify Bank in
writing, promptly upon learning thereof, of any litigation commenced or
threatened against either one of any suit or administrative proceeding that (i)
may involve an amount in excess of One Hundred Thousand Dollars ($100,000) or
(ii) seeks injunctive relief or could have or result in a Material Adverse
Effect on either one if adversely determined.
<PAGE>
(d) Financial Reports. Fill-Mor and ARTRA shall furnish to Bank
whatever information, books and records Bank may request, including at a
minimum:
(i) Within 50 days after and as of the end of each first,
second and third quarter, a Form 10-Q as filed by ARTRA with the
Securities and Exchange Commission ("SEC") and a quarterly consolidated
financial statement of ARTRA including a balance sheet and statement of
income, cash flow and retained earnings.
(ii) Within 105 days after, and as of the end of each of its
fiscal years, a Form 10-K as filed with the SEC and an annual financial
statement of ARTRA including a balance sheet and statement of income,
cash flow and retained earnings.
(iii) A quarterly compliance certificate, substantially in the
form of Exhibit C attached hereto, executed by Fill-Mor and ARTRA.
(e) Compliance with Laws. Each of Fill-Mor and ARTRA shall comply in
all material respects with all federal, state and local laws, regulations,
orders and agreements (including conciliation agreements) applicable to it, to
the extent that any failure to comply could have a Material Adverse Effect.
(f) Agreements. Each of Fill-Mor and ARTRA shall perform in all
material respects, within all required time periods (after giving effect to any
applicable grace periods), all of its obligations and enforce all of its rights
under each agreement to which it is a party, including any lease or customer
contracts to which it is a party to the extent that such performance or
enforcement shall not cause a Material Adverse Effect.
(g) Supplemental Disclosure. On the request of Bank (in the event that
such information is not otherwise delivered by Fill-Mor or ARTRA to Bank
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, and with reasonable frequency (unless a Default or an Event of
Default has occurred and is continuing, then, in such case, as frequently as
requested by Bank), Fill-Mor or ARTRA will supplement each schedule or
representation herein with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such schedule or as an exception to such
representation or which is necessary to correct any information in such schedule
or representation which has been rendered inaccurate thereby; provided, however,
that such supplement to such schedule or representation shall not be deemed an
amendment thereof unless expressly consented to in writing by Bank, and no such
amendments, except as the same may be consented to in a writing which expressly
includes a waiver, shall be or be deemed a waiver of any Default or Event of
Default disclosed therein.
(h) Employee Plans. Fill-Mor and ARTRA shall notify Bank of any and all
claims, actions, or lawsuits asserted or instituted, and of any threatened
litigation or claims, against either Fill-Mor or ARTRA or against any ERISA
affiliate of each in connection with any Pension Plan or/and against any such
Pension Plan itself, or against any fiduciary of or service provided to any such
Pension Plan which may involve claims of more than One Hundred Thousand Dollars
($100,000). Fill-Mor and ARTRA shall notify Bank of the occurrence of any
reportable event with respect to any Pension Plan.
<PAGE>
(i) Environmental Matters. Each of Fill-Mor and ARTRA shall (i) comply
in all respects with the Environmental Laws applicable to it, (ii) notify Bank
promptly after each respectively becomes aware of any violation or potential
violation of Environmental Laws, and (iii) promptly forward to Bank a copy of
any order, notice, permit, application, or any communication or report
respectively received by each one in connection with any release or any other
matter relating to the Environmental Laws that may affect any premises owned or
occupied by Fill-Mor and ARTRA. The provisions of this Section 9.1(i) shall
apply whether or not the Environmental Protection Agency, any other federal
agency or any state, local or foreign environmental agency has taken or
threatened any action.
10. NEGATIVE COVENANTS
10.1 Fill-Mor or ARTRA (as the case may be) covenant to the Bank and
agree that, without Bank's prior written consent, from the date hereof and each
day thereafter, continuing so long as the Obligations remain outstanding, and
(even if there shall be no Obligations outstanding) so long as this Agreement
remains in effect:
(a) Capital Structure and Business. Neither Fill-Mor nor ARTRA shall
make any changes in any of their respective business objectives, purposes or
operations which could in any way materially adversely affect the repayment of
the Term Loan, or any of the Obligations or could have or result in a Material
Adverse Effect.
(b) Mergers, Etc. Neither Fill-Mor nor ARTRA shall wind up, liquidate,
or dissolve itself, reorganize, merge, or consolidate with or into, or convey,
sell, assign, transfer, lease, or otherwise dispose of (whether in one
transaction or a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to any person.
(c) Transfer of Fill-Mor Stock. ARTRA shall not sell, transfer,
hypothecate, pledge or otherwise encumber any of its stock in Fill-Mor, unless
such proceeds are utilized to reduce the Obligations.
(d) Events of Default. Neither Fill-Mor nor ARTRA shall take any action
or omit to take any action, which act or omission would constitute a Default or
an Event of Default under, pursuant to, or noncompliance with any of, the terms
of this Agreement or any other Loan Document.
(e) Intentionally Deleted.
(f) Cancellation of Indebtedness. Neither Fill-Mor nor ARTRA shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its business.
<PAGE>
11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.1 Defaults. The occurrence of any of the following events shall
constitute an "Event of Default:"
(a) Fill-Mor fails to pay any of its Obligations, including any
principal or interest due on the Note, when such Obligations are due or are
declared due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall not be fully cured within three (3)
Business Days thereafter;
(b) Pursuant to the Guaranty, ARTRA fails to pay any of its Obligations
when such Obligations are due or are declared due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) ;
(c) Either Fill-Mor or ARTRA fails or neglects to perform, keep or
observe any of its respective covenants, conditions or agreements contained in
this Agreement or any of the other Loan Documents, and such failure to perform,
keep, or observe, as the case may be, shall not be fully cured within seven (7)
Business Days thereafter;
(d) Any warranty or representation now or hereafter made by either
Fill-Mor or ARTRA is untrue or incorrect in any material respect when made, or
any schedule, certificate, statement, report, financial data, notice, or writing
furnished at any time by it, or any of the foregoing omits to state a fact
necessary to make the statements therein contained not misleading in any
material respect;
(e) Except for any judgments listed on Schedule 8(j) hereto, a judgment
or order requiring payment in excess of One Hundred Thousand Dollars ($100,000)
shall be rendered against Fill-Mor or ARTRA and such judgment or order shall
remain unsatisfied or undischarged and in effect for thirty (30) consecutive
days without a stay of enforcement or execution, provided that this subsection
11.1(e) shall not apply to any judgment for which Fill-Mor or ARTRA are fully
insured (except for normal deductibles in connection therewith) or indemnified
and with respect to which the insurer or indemnitor has assumed the defense and
is not defending under reservation of right and with respect to which Bank
reasonably believes the insurer or indemnitor will pay the full amount thereof
(except for normal deductibles in connection therewith);
(f) A notice of lien, levy or assessment is filed or recorded with
respect to all or a substantial part of the assets of either Fill-Mor or ARTRA
by the United States, or by any state, county, municipality or other
governmental agency or any taxes or debts owing at any time or times hereafter
by any one or more of them become a lien upon all or a substantial part of the
Collateral or the assets of or Collateral provided by Fill-Mor or ARTRA, and (i)
such lien, levy or assessment is not discharged or released or the enforcement
thereof is not stayed within forty-five (45) days of the notice or attachment
thereof, or (ii) if the enforcement thereof is stayed, such stay shall cease to
be in effect, provided that this subsection 11.1(f) shall not apply to any
liens, levies or assessments which relate to current taxes not yet due and
payable;
<PAGE>
(g) A proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
(i) against either Fill-Mor or ARTRA and an adjudication or appointment is made
or order for relief is entered, or such proceeding remains undismissed for a
period in excess of sixty (60) days, or (ii) by either Fill-Mor or ARTRA, or
either one makes an assignment for the benefit of creditors, or either one takes
any corporate action to authorize any of the foregoing;
(h) Either Fill-Mor or ARTRA voluntarily or involuntarily dissolves or
is dissolved, terminates or is terminated;
(i) Either Fill-Mor or ARTRA becomes insolvent or fails generally to
pay its debts as they become due;
(j) Either Fill-Mor or ARTRA is enjoined, restrained, or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business affairs;
(k) A breach by Fill-Mor shall occur under any material agreement,
document or instrument (other than an agreement, document or instrument
evidencing the lending of money), whether heretofore, now or hereafter existing
between Fill-Mor and any other person, and such breach continues unwaived for
more than thirty (30) days after such breach first occurs, provided that such
grace period shall not apply, and a default shall be deemed to have occurred
promptly upon such breach, if such breach may not, in Bank's reasonable
determination, be cured by Fill-Mor during such thirty (30) day grace period;
(l) As to more than $50,000.00 in indebtedness of Fill-Mor in the
aggregate at any time (i) Fill-Mor shall fail to make any payment due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
on any other obligation for borrowed money and such failure shall continue after
the applicable grace period, if any, specified in the agreement or instrument
relating to such indebtedness; (ii) any other default under any agreement or
instrument relating to any such indebtedness, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument if the effect of such default or event is to accelerate,
or to permit the acceleration of, the maturity of such indebtedness; or (iii)
any such indebtedness shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof; (m)A Material Adverse Effect shall occur (i) in the
present or reasonably foreseeable prospective operations or financial condition
of either Fill-Mor or ARTRA, or (ii) which materially impairs the ability of
either Fill-Mor or ARTRA to perform the Obligations, in each case as determined
by Bank in its sole discretion;
(n) A Termination Event occurs which Bank in good faith believes could
individually, or together with any other Termination Event subject either
Fill-Mor or ARTRA to liability which would constitute a Material Adverse Effect;
(o) the market price of the common stock of Comforce Corporation, as
traded and reported on the American Stock Exchange, shall be less than $13.01
per share at the regular close of trading on any trading day;
(p) the common stock of Comforce Corporation shall be delisted by the
American Stock Exchange;
(q) the Bank, in good faith, deems itself reasonably insecure for any
reason due to any Material Adverse Effect;
(r) ARTRA shall terminate, repudiate, revoke or disavow any of its
obligations under the Guaranty or breach any of the terms thereof; or
(s) Pedersen shall terminate, repudiate, revoke or disavow any of his
obligations under the Put Agreement or breach any of the terms thereof.
<PAGE>
11.2 Remedies. If any Default or Event or Default shall have occurred
and be continuing, Bank may, without notice, take any one or more of the
following actions:
(a) increase the rate of interest applicable to the Term Loan to the
Default Rate, as described in Section 2.5; and/or
(b)(i) declare all or any portion of the Obligations, including all or
any portion of the Term Loan to be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by each of Fill-Mor and ARTRA; and (ii) exercise any rights and
remedies provided to Bank under the Loan Documents (including the Put Agreement)
and/or at law or equity, including all remedies provided under the UCC.
11.3 Waivers by ARTRA and Fill-Mor. Except as otherwise provided for in
this Agreement or by applicable law, each of Fill-Mor and ARTRA waive: (a)
presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper; accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Bank on which either party may in any
way be liable, and hereby ratifies and confirms whatever Bank may do in this
regard, (b) all rights to notice and a hearing prior to Bank's taking possession
or control of, or to Bank's replevy, attachment or levy upon, the Collateral or
any bond or security which might be required by any court prior to allowing Bank
to exercise any of its remedies, and (c) the benefit of all valuation, appraisal
and exemption laws. Each of ARTRA and Fill-Mor acknowledge that they have been
advised by counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the other Loan
Documents and understands fully the terms, conditions and implications of each
of the foregoing.
12. MISCELLANEOUS
12.1 Complete Agreement; Modification Agreement. This Agreement and the
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in Section 12.2 below.
12.2 Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by either Fill-Mor or ARTRA, shall in any
event be effective unless the same shall be in writing and signed by Bank,
Fill-Mor and ARTRA.
12.3 Fees and Expenses. Fill-Mor and ARTRA shall reimburse Bank for all
out-of-pocket expenses reasonably incurred in connection with (a) the
preparation of this Agreement and the Loan Documents, and (b) wire transfers to
the account of Fill-Mor. Fill-Mor and ARTRA shall reimburse Bank for all fees,
costs and expenses reasonably incurred, including the fees, costs and expenses
of counsel or other advisors for advice, assistance or other representation in
connection with this Agreement, any amendment, modification or waiver of or
consent, any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Bank, either Fill-Mor or ARTRA, or any other person) in any way
relating to this Agreement or any of the Loan Documents or any other Agreement
to be executed or delivered in connection herewith, any attempt to enforce any
rights of Bank against either Fill-Mor, ARTRA or Pedersen or any other person
that may be obligated to Bank by virtue of any of the Loan Documents, including,
without limitation, all attorneys and other professional and service provider
fees arising from such services. All such fees as described in this Section 12.3
shall be payable, on demand, by Fill-Mor and ARTRA to Bank.
<PAGE>
Notwithstanding anything to the contrary in the preceding paragraph, neither
ARTRA nor Fill-Mor shall be required to reimburse Bank for any fees, costs
and/or expenses as described in the preceding paragraph if such fees, costs
and/or expenses arise in connection with any litigation, contest, dispute, suit,
proceeding or action which has been instituted by either Fill-Mor or ARTRA and
which has been resolved in either Fill-Mor or ARTRA's favor, as the case may be,
in all material respects by the court or authority having proper jurisdiction
over such litigation, contest, dispute, suit, proceeding or action, and all
possible appeals in connection therewith have been exhausted.
12.4 Lien Absolute. All rights of Bank and all Obligations of ARTRA and
Fill-Mor under this Agreement and the other Loan Documents shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of this Agreement or any
other Loan Document or any other agreement or instrument governing or evidencing
any of the Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Obligations, or any other amendment or
waiver of or any consent to any departure from this Agreement or any other Loan
Document or any other agreement or instrument governing or evidencing any of the
Obligations;
(c) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations; or
(d) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, Fill-Mor or ARTRA.
12.5 Release. Each of Fill-Mor and ARTRA consent and agree that Bank
may at any time, or from time to time, in its discretion (a) renew, extend or
change the time of payment, and/or the manner, place or terms of payment of all
or any part of the Obligations and (b) exchange, release and/or surrender all or
any of the Collateral, or any part thereof, by whomsoever deposited, which is
now or may hereafter be held by Bank in connection with all or any of the
Obligations; all in such manner and upon such terms as Bank may deem proper, and
without notice to or further assent from either Fill-Mor or ARTRA, it being
hereby agreed that both ARTRA and Fill-Mor shall be and remain bound upon this
Agreement, irrespective of the existence, value or condition of any of the
Collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and notwithstanding also
that the Obligations may, at any time, exceed the aggregate principal amount
thereof set forth in this Agreement, or any other agreement governing any
Obligations. Each of Fill-Mor and ARTRA hereby waive notice of acceptance of
this Agreement, and promptness in commencing suit against any party hereto or
liable hereon, and in giving any notice to or of making any claim or demand
hereunder upon Fill-Mor or ARTRA. No act or omission of any kind on Bank's part
shall in any event affect or impair this Agreement.
12.6 Governing Law, Severability. This Agreement is governed by and
construed in accordance with the internal laws of the State of Illinois.
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be held to be prohibited 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. 12.7Termination of Loan Agreement. This
Agreement and the rights, obligations and interests created hereunder shall
terminate upon the date on which the Obligations have been indefeasibly paid in
full.
<PAGE>
12.8 Assignment. Bank may assign, endorse or transfer any instrument
evidencing all or any part of the Obligations as provided in, and in accordance
with, this Agreement and the other Loan Documents, and the holder of such
instrument shall be entitled to the benefits of this Agreement. Neither Fill-Mor
nor ARTRA may assign, sell or otherwise transfer any interest in or obligation
under this Agreement and the other Loan Documents.
12.9 Successors. This Agreement and all obligations of Fill-Mor or
ARTRA hereunder shall be binding upon their respective successors and shall,
together with the rights and remedies of Bank hereunder, inure to the benefit of
Bank, all future holders of any instrument evidencing any of the Obligations and
their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the security interest granted to Bank under
the Pledge Agreement.
12.10 Consent to Jurisdiction. The parties hereto agree that, subject
to the Bank's sole and absolute election, all legal actions or proceedings in
any manner or respect arising out of or related to this Agreement shall be
brought and litigated only in courts having situs in Cook County, Illinois; and
ARTRA and Fill-Mor hereby consent to and submit to the jurisdiction of any
local, state or federal court located within Cook County, and ARTRA and Fill-Mor
hereby waive any right the they may have to transfer or change the venue of any
such legal action or proceeding.
12.11 WAIVER OF JURY TRIAL.Each party to this Agreement waives
irrevocably the right to a trial by jury in any action or proceeding to enforce
or defend any rights (a) under this Agreement or under any amendment,
instrument, document or agreement delivered or which may in the future be
delivered in connection herewith, or (b) arising from any banking relationship
existing in connection with this Agreement, and agrees that any such action or
proceeding shall be tried before a court and not before a jury. .
12.12 Indemnity. Fill-Mor and ARTRA shall jointly and severally
indemnify and hold the Bank and their respective (a) affiliates, officers,
directors, employees, attorneys agents and representatives; and (b) successors
and assigns to any of the Bank's rights in and to the Obligations (each an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended under this Agreement or in connection with or arising out
of the transactions contemplated hereunder and thereunder; provided, that
Fill-Mor and ARTRA shall not be liable for any indemnification to such
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results solely from such Indemnified Person's
gross negligence or willful misconduct, as finally determined by a court of
competent jurisdiction after all possible appeals have been exhausted. Neither
Bank nor any other Indemnified Person shall be responsible or liable to any
other party hereto, any successor, assignee or third party beneficiary of such
person or any other person asserting claims derivitively through such party, for
indirect, punitive, exemplary or consequential damages in connection with this
Agreement. Furthermore, Fill-Mor and ARTRA hereby acknowledge and agree that
Bank (i) is not now, and has not ever been, in control of any of their
respective affairs, and (ii) does not have the capacity through the provisions
of this Agreement to influence their respective conduct with respect to the
ownership, operation or management of any of their respective businesses or
properties.
<PAGE>
12.13 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 any other party, or whenever any of the parties desires to give or
serve upon any other a 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 sent by registered or certified mail, return receipt requested,
postage prepaid, or by facsimile and confirmed by facsimile answerback addressed
as follows:
(a) If to Bank, at:
Manufacturers Bank
1200 N. Ashland Avenue
Chicago, Illinois 60622-2298
Attn: Tom Panos, Debbie Domovich
Phone:(312) 278-4040
Fax: (312) 278-5341
With copies to:
Kwiatt, Silverman & Ruben, Ltd.
500 N. Central Avenue
Northfield, IL 60093
Attn: Philip E. Ruben, Esq.
Phone: (847) 441-7676
Fax:(847) 441-7696
and
Cohen, Cohen & Salk, P.C.
630 Dundee Rd.
Suite 120
Northbrook, IL 60062
Attn: Bennett L. Cohen
Phone: (847) 480-7800
Fax: (847) 480-7882
(b) If to ARTRA and/or Fill-Mor at:
ARTRA GROUP Incorporated
500 Central Avenue
Northfield, Illinois 60093
Attn: Peter R. Harvey
Phone: 847-441-6650
Fax: 847-441-6959
With copies to:
Marcus, Steer & Freibrun
Hyatt Deerfield Business Campus
102 Wilmot Road - Suite 190
Deerfield, Illinois 60015
Attn: Jay Marcus, Esq.
Phone: 847-940-0072
Fax: 847-940-0061
12.14 Headings. The descriptive headings of the sections of this
Agreement are inserted for convenience of reference only and shall not control
or affect the meaning or construction of any provisions hereof.
12.15 Counterparts. This Agreement may be executed in any number of
separate counterparts, which shall collectively constitute one and the same
agreement.
Remainder of page left intentionally blank
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
FILL-MOR HOLDING, INC.
By: ___________________________
Title: ___________________________
ARTRA GROUP INCORPORATED
By: ___________________________
Title: ___________________________
MANUFACTURERS BANK
By: ___________________________
Title: ___________________________
EXHIBIT 10.2
TERM LOAN PROMISSORY NOTE
$2,500,000.00 Chicago, Illinois
August 15, 1996
FOR VALUE RECEIVED, the undersigned, Fill-Mor Holding, Inc., a Delaware
corporation, ("Borrower"), HEREBY PROMISES TO PAY to the order of Manufacturers
Bank, an Illinois state banking corporation with main offices in Illinois
("Bank"), at the address of the Bank at 1200 N. Ashland, Chicago, Illinois, or
at such other place as Bank may designate from time to time in writing, in
lawful money of the United States of America and in immediately available funds,
the principal amount of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS
($2,500,000.00) plus interest, on the terms hereinafter provided. Capitalized
terms, unless otherwise defined herein, shall have the respective meanings
assigned to such terms in the Loan Agreement (as hereinafter defined).
This Term Note is issued pursuant to that certain Loan Agreement, dated
of even date herewith, by and among Borrower, ARTRA GROUP Incorporated ("ARTRA")
and Bank, (as amended, restated, supplemented or otherwise modified from time to
time, the "Loan Agreement"), and is entitled to the benefit and security of the
other Loan Documents referred to therein. Reference is hereby made to the Loan
Agreement for a statement of all of the terms and conditions under which the
loan evidenced hereby was made and is to be repaid.
Borrower promises to pay interest on the unpaid principal balance of
this Note, payable monthly, calculated at a variable rate per annum equal to the
Reference Rate. Interest shall be payable on the fifteenth (15th) day of each
month, commencing on September 15, 1996. Borrower promises to pay to the Bank on
November 13, 1996, the entire unpaid principal balance of this Note plus all
accrued and unpaid interest hereon.
Borrower shall have the right to extend the maturity date of this Note
for an additional ninety (90) days provided that each of the following
conditions shall have been satisfied: (a) Borrower shall give the Bank five (5)
days prior notice of its intention to extend this Note and shall pay the Bank
the additional Term Loan Fee described in Section 2.8 of the Loan Agreement, (b)
at the time of such extension, there shall be no Default or Event of Default,
and (c) all accrued and unpaid interest on this Note shall be paid in full.
"Reference Rate" shall mean the rate of interest announced by Bank from
time to time as its reference rate, which shall not necessarily be the lowest
rate of interest which Bank charges to its customers. Interest rate changes will
be effective for interest computation purposes as and when the Reference Rate
changes.
All computations in interest shall be made by Bank on the basis of a
three hundred sixty (360) day year in each case for the actual number of days
occurring in the period for which such interest is payable. Each determination
by Bank of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error or bad faith.
<PAGE>
Upon the occurrence of an Event of Default, this Term Note shall bear
interest at a rate per annum equal to five percent (5%) over the Reference Rate
(the "Default Rate") from the date of the Event of Default until the default is
cured.
Borrower may prepay the obligations under this Term Note in full or in
part, without penalty, during the term, upon three (3) days prior written notice
to Bank. Any prepayments of less than all of the outstanding balance of the Term
Loan shall be applied first to then due and payable fees and expenses; then to
accrued interest owed; then to the then remaining balance of the Term Loan until
paid in full.
If any payment on this Term Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
In the event of non-payment when due of any amount payable on this Note
or any other Event of Default shall occur, then this Note and all other
indebtedness of the Borrower to the Bank, at the option of Bank, shall
immediately become due and payable, without notice or demand on the Borrower,
together with all expenses, costs and reasonable attorneys' fees incurred or
expended by the Bank in enforcing its rights hereunder which shall become
additional indebtedness immediately due and payable hereon, and Bank may
exercise any of the remedies provided by the Loan Agreement, the Pledge
Agreement, the Put Agreement, any of the other Loan Documents, or under
applicable Illinois law.
The Bank may, at any time or times after an Event of Default,
appropriate and apply toward the payment of this Note any moneys, credits,
deposits, checks, accounts, drafts, securities, certificates of deposit or other
property belonging to the Borrower, in the possession of or under the control of
the Bank as well as any indebtedness of the Bank to the Borrower, then due and
become due.
This Term Note may be assigned by the Bank to Pedersen in accordance
with the terms of the Put Agreement.
Borrower hereby waives presentment, demand, notice of dishonor and all
other notices and demands in connection with the enforcement of the Bank's
rights hereunder. Any failure of the Bank to exercise any right hereunder shall
not be construed as a waiver of the right to exercise the same or any other
right at any other time.
Borrower agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses and
reasonable attorneys' fees, whether or not suit is instituted, and, if suit is
instituted, whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in collecting or
attempting to collect this Note or incurred in any other matter or proceeding
relating to this Note.
<PAGE>
Borrower hereby represents that the principal amount of the loan
evidenced hereby is a business loan, that the proceeds thereof shall be used for
business purposes only and that the same is exempt from limitations upon lawful
interest, pursuant to the terms of Section 205/4 of Chapter 815 of the Illinois
Complied Statutes.
This Note may not be amended, modified or changed nor shall any waiver
of any of the provisions hereof be effective, except only by an instrument in
writing, signed by the party against whom enforcement of any waiver. amendment,
change, modification or discharge is sought.
To further secure the payment of this Note, Borrower hereby irrevocably
authorizes any attorney of any court of record to appear for the Borrower in
such court in term, time or vacation, at any time hereafter and confess judgment
without process against Borrower, in favor of the holder of this Note for such
sums as may appear to be unpaid and owing thereon together with interest, costs
and attorneys' fees, and to waive and release all errors which may intervene in
such proceeding and consent to immediate execution upon such judgment, hereby
ratifying and confirming all that said attorney may do by virtue hereof.
The provisions of this Note shall be binding upon Borrower, it
successors and assigns, and shall inure to the benefit of and extend to the Bank
and any holder hereof.
This Note has been delivered at Chicago, Illinois and shall be
construed according to the laws of the State of Illinois, in which State it
shall be performed by the Borrower. The Borrower agrees that, subject to the
Bank's sole and absolute election, all legal actions or proceedings in any
manner or respect arising out of or related to this Note shall be brought and
litigated only in courts having situs in Cook County, Illinois; and the Borrower
hereby consents to and submits to the jurisdiction of any local, state or
federal court located within Cook County, and the Borrower hereby waives any
right the Borrower may have to transfer or change the venue of any such legal
action or proceeding.
The Borrower waives irrevocably the right to a trial by jury in any
action or proceeding to enforce or defend any rights (a) under this Note or
under any amendment, instrument, document or agreement delivered or which may in
the future be delivered in connection herewith, or (b) arising from any banking
relationship existing in connection with this Note, and agrees that any such
action or proceeding shall be tried before a court and not before a jury.
Fill-Mor Holding, Inc.
By: ______________________________
Title: ___________________________
EXHIBIT 10.3
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is entered into as of
the 15th day of August, 1996 by and between Fill-Mor Holding, Inc. ("Pledgor"),
a Delaware corporation and wholly-owned subsidiary of ARTRA GROUP Incorporated,
a Pennsylvania corporation ("ARTRA" ) and Manufacturers Bank, an Illinois state
banking corporation with main offices in Chicago, Illinois ("Lender").
WITNESSETH:
WHEREAS, Pledgor is the owner of those shares of common stock more
fully described on Exhibit A attached hereto and by this reference incorporated
herein (the "Pledged Shares");
WHEREAS, Lender has agreed to make a loan in the amount of $2,500,000
(the "Loan"), to Fill-Mor to be evidenced by Pledgor's Term Loan Promissory Note
of even date herewith in said principal amount, payable to the order of Lender
with interest as therein described (such Term Loan Promissory Note, together
with any and all renewals, extensions, replacements, supplements or additional
notes are hereinafter collectively referred to as the "Note"); and
WHEREAS, Lender has required as a condition, among others, to making
the Loan, and in order to secure the prompt and complete payment, observance and
performance of all of Pledgor's obligations and liabilities hereunder, under the
Note and Loan Agreement of even date herewith by and among Pledgor, Lender and
ARTRA (the "Loan Agreement") and under all of the other instruments, documents
and agreements executed and delivered by Pledgor to Lender from time to time in
connection with the Loan, that Pledgor execute and deliver to Lender, this Stock
Pledge Agreement pledging to Lender as security for the Loan the Pledged Shares,
and
WHEREAS, capitalized terms used herein, if not defined, shall have the
meaning assigned to them in the Loan Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Grant of Security Interest. To secure the prompt payment and
performance of the following (hereinafter collectively, the "Obligations"): (a)
the prompt payment and performance of the Note (and all extensions, renewals,
modifications or refinancings thereof or thereto), and all other amounts,
liabilities and obligations now or hereafter owed by Fill-Mor under the Loan
Documents; and (b) the prompt performance, observance and accuracy of Pledgor's
<PAGE>
covenants, warranties and representations contained herein; and (c) all advances
made by Lender to pay or discharge any other lien, security interest or
encumbrance upon the Pledged Collateral (as hereinafter defined); and (d) all
advances made by Lender to protect the Pledged Collateral and/or Lender's
security interest therein; and (e) all costs and expense incurred by the Lender
in the collection of the Obligations and any other obligation or indebtedness
secured hereby, including reasonable attorneys' fees and legal expenses, Pledgor
hereby pledges, assigns and delivers to Lender and grants to Lender a first
priority security interest in the Pledged Shares and in all cash, securities,
distributions, share dividends, payments, rights and other property at any time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares, including, without limitation, shares issued
as a result of any reclassifications, split-up or any other corporate
reorganization, and all proceeds of the foregoing described collateral, of every
kind and nature whatsoever (hereinafter, all of the foregoing shall be referred
to collectively as the "Pledged Collateral"). Pledgor shall deliver promptly to
Lender, in the exact form received, all such securities or other property which
comes into the possession, custody or control of Pledgor. Pledgor agrees to
execute and deliver to Lender (i) stock powers appropriately endorsed in blank,
with respect to the Pledged Shares and (ii) such other documents of transfer as
Lender may from time to time request to enable Lender to transfer the Pledged
Shares and the other Pledged Collateral into its name or the name of its
nominee.
2. Perfection of Security Interest. Pledgor agrees (1) immediately to
deliver to Lender all certificates evidencing any of the Pledged Collateral
which may at any time come into the possession of Pledgor, (ii) to instruct each
"financial intermediary" (as defined in the Uniform Commercial Code of the State
of Illinois) with whom Pledgor maintains an account reflecting Pledgor's
ownership of any of the Pledged Collateral to note Lender's security interest in
such Pledged Collateral on the books and records of such financial intermediary,
(iii) to execute and deliver a notice of Lender's security interest in the
Pledged Collateral (which notice shall be satisfactory in form and substance to
Lender and may reasonably request acknowledgment from the addressee) to each
third party which either has possession of the Pledged Collateral or any
certificates evidencing any of the Pledged Collateral or otherwise has the
ability under applicable law to transfer ownership of any of the Pledged
Collateral (whether at the direction of Pledgor or otherwise), (iv) to execute
and deliver to Lender such financing statements as Lender may reasonably request
with respect to the Pledged Collateral, and (v) to take such other steps as
Lender may from time to time reasonably request to perfect Lender's security
interest in the Pledged Collateral under applicable law. Pledgor hereby appoints
Lender, upon or at any time after the occurrence and during the continuance of
any Event of Default, as hereinafter defined, as its attorney in-fact, with
authority at any time or times to take any of the foregoing actions on behalf of
Pledgor. The Pledgor agrees that this Agreement or a photocopy of this Agreement
shall be sufficient as a financing statement.
3. Voting Rights. During the term of this Agreement, and so long as no
Event of Default has occurred and is continuing, Pledgor shall have the right to
vote the Pledged Shares and exercise any voting rights pertaining to the Pledged
Collateral (which may, subject to any registration of Lender's security interest
pursuant to Paragraph 2 above, be registered on the books and records of the
issuer in Pledgor's name except as otherwise provided in Paragraph 7 below), and
to give consents, ratifications and waivers with respect thereto, on all
corporate questions for all purposes not inconsistent with the terms of any
agreements and documents executed in connection with the transactions
contemplated thereby. The Lender shall, at the request of Pledgor, provide
Pledgor with appropriate proxies and any other documents necessary or
appropriate to permit Pledgor to exercise the rights set forth in the preceding
sentence. Upon or at any time after the occurrence and during the continuance of
an Event of Default, Lender shall be entitled, at Lender's option and following
written notice from Lender to Pledgor, to exercise all voting powers pertaining
to the Pledged Collateral.
<PAGE>
4. Dividends and Other Distributions. By written direction in form and
substance acceptable to Lender, Pledgor shall cause the issuer of the Pledged
Shares to remit all dividends and other distributions payable with respect to
the Pledged Collateral directly to Lender. With respect to cash dividends,
Lender shall apply such dividends to the Obligations of Pledgor in such manner
as Lender, in its sole discretion, shall determine. With respect to dividends or
distributions other than cash, such dividend or distribution shall be held by
Lender as additional collateral; and shall, upon receipt by Lender, become part
of the Pledged Collateral. Pledgor shall promptly remit to Lender any such
dividend or other distribution paid to Pledgor, and until so paid to Lender,
Pledgor shall hold such dividend or other distribution in trust for Lender.
5. Representations. Pledgor warrants and represents to Lender as
follows:
(a) Pledgor is, and at the time of delivery of the Pledged
Shares to Lender pursuant to Section 1 hereof will be, the sole holder of record
and the sole beneficial owner of the Pledged Collateral free and clear of any
lien (except for the lien created by this Agreement), claim, encumbrance,
covenant or restrictions of any kind (except restrictions imposed by Federal and
state securities laws on the sale thereof described in subsection (f) below)
thereon or affecting the title thereto,;
(b) All of the Pledged Shares have been duly authorized,
validly issued are fully paid and non-assessable, and were acquired by Pledgor
more than two (2) years prior to the date hereof;
(c) Pledgor has the right and requisite authority and has
taken all required corporate actions to pledge, assign, transfer, deliver,
deposit and set over the Pledged Collateral to Lender as provided herein;
(d) None of the Pledged Shares has been issued or transferred
in violation of the securities registration, securities disclosure or similar
laws of any jurisdiction to which such issuance or transfer may be subject;
(e) No consent, approval, authorization or other order of any
person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required either (i) for
the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by Pledgor or (ii)
for the exercise by Lender of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally;
(f) Upon foreclosure by Lender of the Pledged Shares, Lender
shall be able to sell the Pledged Shares free of registration, subject to the
volume limitations of Rule 144 of the Rules of the Securities and Exchange
Commission ("Rule 144"), as promulgated under the Securities Act.
<PAGE>
(g) This Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
Pledgor enforceable in according with its terms;
(h) Pledgor is a corporation duly organized, validly existing,
and in good standing in the State of Delaware, has full corporate power to own
its properties, to carry on its businesses, to execute, deliver and perform the
transactions under this Agreement and is duly qualified to do business and in
good standing in each jurisdiction in which the character of its properties or
transactions material to its business makes such qualification necessary;
(i) Pledgor has no assets, other than shares of Common Stock
of Comforce Corporation, including the Pledged Shares, no liabilities or
obligations of any kind (other than those incurred in connection with the Loan)
and no creditors except Lender;
(j) The stock powers delivered in connection with the Pledged Shares
are duly executed and give Lender the authority they purport to confer. The
representations and warranties set forth in this Agreement shall survive the
execution and delivery of this Agreement.
6. Subsequent Changes Affecting Pledged Collateral. Pledgor represents
to Lender that Pledgor has made its own arrangements for keeping informed of
changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights), and Pledgor
agrees that Lender shall not have any responsibility or liability for informing
Pledgor of any such changes or potential changes or for taking any action or
omitting to take any action with respect thereto. The Lender may, upon or at any
time after the occurrence of an Event of Default, without notice and at its
option, transfer or register the Pledged Collateral or any part thereof into its
or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder.
7. Registration. In the event that registration under or compliance in
any way with the Securities Act of 1933 or any similar federal or state law is
required with respect to the securities included in the Pledged Collateral prior
to the sale thereof by Lender, Pledgor will use its best efforts to cause such
registration to be effectively made, at no expense to Lender, and to continue
such registration effective for such time as may be reasonably necessary in the
opinion of Lender and will reimburse Lender for any expense incurred by Lender,
including, without limitation, reasonable attorneys and accountants fees and
expenses in connection therewith. Upon an Event of Default, should Lender
determine that, prior to a public offering of any securities contained in the
Pledged Collateral by Lender, such securities should be registered under the
Securities Act of 1933 and/or registered or qualified under any other federal or
state law, and that such registration and/or qualification is not practical,
then Pledgor agrees that it will be commercially reasonable if a private sale,
upon at least ten (10) days notice to Pledgor, is arranged so as to avoid a
public offering, even though the sales price established and/or obtained may be
substantially less than prices which might be quoted for such security on any
market exchange, if such securities had been registered and were available on a
market or exchange.
<PAGE>
8. Pledged Shares Adjustments. In the event that, during the term of
this Agreement, any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of any issuer of the Pledged
Shares (including, without limitation, the issuance of additional shares of
capital stock by any such issuer), then Lender shall have a security interest in
all new, substituted and additional shares or other securities so issued, or
acquired by Pledgor by reason of any such change or exercise, and such shares or
other securities shall become part of the Pledged Collateral.
9. Events of Defaults. Each of the following shall constitute an "Event
of Default" hereunder:
(a) The Pledgor shall fail to pay when due any of the Obligations,
including any principal or interest due on the Note, and such failure shall not
be fully cured within three (3) Business Days thereafter;.
(b) Lender shall fail to have an enforceable first lien on, or security
interest in, any of the Pledged Collateral.
(c) Any of the representations and warranties of Pledgor contained
herein shall be false or misleading.
(d) Pledgor fails or neglects to perform, keep or observe any of its
covenants, conditions or agreements contained in this Agreement or any of the
other Loan Documents, and such failure to perform, keep, or observe, as the case
may be, shall not be fully cured within seven (7) Business Days thereafter.
(e) An Event of Default (as defined in the Loan Agreement) shall occur
or a default shall occur under any of the other Loan Documents.
10. Event of Default Remedies. Lender may, upon or at any time after
the occurrence and during the continuance of an Event of Default, at its option,
transfer or register the Pledged Collateral or any part thereof into its name
with or without any indication that such Pledged Collateral is subject to the
security interest hereunder. Except as otherwise limited herein, Lender shall
have, in addition to the foregoing and any other rights given under this
Agreement or by law, all of the rights and remedies with respect to the Pledged
Collateral of a secured party under the Uniform Commercial Code as in effect in
the State of Illinois. In addition, following the occurrence and during the
continuance of a Event of Default, Lender shall have such powers of sale and
other powers as may be conferred by applicable law. With respect to the Pledged
Collateral or any part thereof which shall then be in or shall thereafter come
into the possession or custody of Lender or which Lender shall otherwise have
the ability to transfer under applicable law, Lender may, in its sole
discretion, without notice except as specified below, following the occurrence
and during the continuance of an Event of Default, sell or cause the same to be
sold at any exchange or broker's board or at public or private sale, in one or
more sales or lots, at such price as Lender may deem best, for cash or on credit
or for future delivery, without assumption of any credit risk, and the purchaser
of any or all of the Pledged Collateral so sold shall thereafter own the same,
absolutely free from any claim, encumbrance or right of any kind whatsoever.
Unless any of the Pledged Collateral threatens to decline speedily in value or
is or becomes of a type sold on a recognized market, Lender will give Pledgor
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or other intended disposition is to be made.
<PAGE>
Any sale of the Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, commercial finance companies, insurance companies
or other financial institutions disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable. Notwithstanding any
provision to the contrary contained herein, any requirements of reasonable
notice shall be met if five (5) days notice of such sale or disposition is
provided to Pledgor. Any other requirement of notice, demand or advertisement
for sale is, to the extent permitted by law, waived. Lender may, in its own name
or in the name of a designee or nominee, buy all or any part of the Pledged
Collateral at any public sale and, if permitted by applicable law, buy all or
any part of the Pledged Collateral at any private sale. Pledgor will pay to
Lender all its reasonable expenses (including, without limitation, court costs
and reasonable attorneys and paralegals fees and expenses of, or incident to,
(i) the custody or preservation of, or the sale or collection of or other
realization upon, any of the Pledged Collateral, (ii) the exercise or
enforcement of any of the rights of Lender hereunder, or (iii) the failure by
Pledgor to perform or observe any provision hereof. In view of the fact that
federal and state securities laws may impose certain restrictions on the method
by which a sale of the Pledged Collateral may be effected after the occurrence
of an Event of Default, Pledgor agrees that after the occurrence and during the
continuance of an Event of Default, Lender may, from time to time, attempt to
sell all or any part of the Pledged Collateral by means of a private placement
restricting the bidders and prospective purchasers to those who are qualified
and will represent and agree that they are purchasing for investment only and
not for distribution. In so doing, Lender may solicit offers to buy the Pledged
Collateral, or any part of it, for cash, from a limited number of investors
deemed by Lender, in its reasonable judgment, to be financially responsible
parties who might be interested in purchasing the Pledged Collateral, and if
Lender solicits such offers from not less than four (4) such investors, then the
acceptance by Lender of the highest offer obtained therefrom shall be deemed to
be a commercially reasonable method of disposing of such Pledged Collateral.
Any cash held by Lender as Pledged Collateral and all cash proceeds
received by Lender in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the sole
discretion of Lender, be applied by Lender against all or any part of the
Obligations. Any surplus remaining after application of cash proceeds and
payments in full of the Obligations shall be paid to Pledgor. In the event of a
deficiency, Pledgor shall pay the deficiency to Lender forthwith.
11. Term. This Agreement shall remain in full force and effect until
all of the Obligations shall have been paid in full, at which time Lender, at
the request and expense of Pledgor, will execute and deliver to Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to Pledgor (without
recourse and without any representation or warranty) such of the Pledged
Collateral as may be in the possession of Lender and has not theretofore been
sold or otherwise applied or released pursuant to this Agreement, together with
any moneys at the time held by Lender hereunder.
12. Lender's Exercise of Rights and Remedies upon the Occurrence and
during the Continuance of an Event of Default. Notwithstanding anything set
forth herein to the contrary, it is hereby expressly agreed that, upon the
occurrence and during the continuance of an Event of Default, Lender may
exercise any of the rights and remedies provided in this Agreement, the Loan
Agreement, or any other agreement, document or instrument executed in connection
with the transactions contemplated hereby, subject, however, to any applicable
notice requirements provided for in this Agreement.
<PAGE>
13. Covenants. Pledgor covenants and agrees that up to and through the
date on which this Agreement terminates:
(a)Without the prior written consent of Lender, Pledgor will not sell,
assign, transfer, pledge, exchange or otherwise encumber or restrict any of its
rights in or to the Pledged Collateral pledged or any unpaid dividends or other
distributions or payments with respect thereto or grant a security interest in
any therein except to Lender.
(b)Pledgor has and will defend the title to the Pledged Collateral and
the lien of Lender thereon against the claim of any person and will maintain and
preserve such lien until the termination of the pledge hereunder.
14. Definitions. The singular shall include the plural and vice versa
and any gender shall include any other gender as the context may require.
15. Put Agreement. This Agreement may be assigned by Lender to Peer
Pedersen ("Pedersen") pursuant to and in accordance with that certain Purchase,
Sale and Put Agreement dated August 15, 1996 by and between ARTRA, Pledgor,
Lender and Pedersen.
16. Successors and Assigns. This Agreement and all obligations of
Pledgor hereunder shall be binding upon its successors and shall, together with
the rights and remedies of Lender hereunder, inure to the benefit of Lender, all
future holders of any instrument evidencing any of the Obligations and its
successors and assigns. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner affect the security interest granted to Lender under the this
Agreement.
17. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be held to be prohibited 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.
<PAGE>
18. Further Assurances. Pledgor agrees that it will cooperate with
Lender and will execute and deliver, or cause to be executed and delivered, all
such other stock powers, proxies, instruments, and documents, and will take all
such other reasonable action, including, without limitation, the filing of
financing statements, as Lender may reasonably request from time to time in
order to carry out the provisions and purposes hereof.
19. Lender's Duty. Lender shall not be liable for any acts, omissions,
errors of judgment or mistakes of fact or law including, without limitation,
acts, omissions, errors or mistakes with respect to the Pledged Collateral,
except for those arising out of or in connection with Lender's (i) gross
negligence or willful misconduct, or (ii) failure to use reasonable care with
respect to the safe custody of any certificate evidencing any of the Pledged
Collateral which is in the physical possession of Lender. Without limiting the
generality of the foregoing, Lender shall be under no obligation to take any
steps necessary to preserve rights in the Pledged Collateral against any other
parties but may do so at its option, and all expenses incurred in connection
therewith shall be for the sole account of Pledgor, and shall be added to the
Obligations secured hereby.
20. 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 any other party, or whenever any of the parties desires to give or
serve upon any other a 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 sent by registered or certified mail, return receipt requested,
postage prepaid, or by facsimile and confirmed by facsimile answerback addressed
as listed in Paragraph 21 below:
21. Notice Addresses.
If to Pledgor:
Fill-Mor Holding, Inc.
c/o ARTRA GROUP Incorporated
500 Central Avenue
Northfield, IL 60093
Attn: Peter R. Harvey
telephone: (847) 441-6650
fax (847) 441-6959
with a copy to:
Marcus, Steer & Freibrun
Hyatt Deerfied Business Campus
102 Wilmot Road, Suite 190
Deerfield, IL 60015
Attn: Jay Marcus, Esq.
telephone (847) 940-0060
fax (847) 940-0061
<PAGE>
If to Lender:
Manufacturers Bank
1200 N. Ashland Avenue
Chicago, IL 60622-2298
Attn: Tom Panos
Debbie Domovich
telephone (312) 278-4040
fax (312)
with a copy to:
Kwiatt, Silverman & Ruben, Ltd.
500 N. Central Avenue
Northfield, IL 60093
Attn: Philip E. Ruben, Esq.
telephone (847) 441-7676
fax (847) 441-7696
Cohen, Cohen & Salk, P.C.
630 Dundee Road, Suite 120
Northbrook, IL 60062
Attn: Bennett L. Cohen
telephone (847) 480-7800
fax (847) 480-7882
22. Counterparts. This Agreement may be executed in any number of
separate counterparts, which shall collectively constitute one and the same
agreement.
23. Section Headings. The descriptive headings of the sections of this
Agreement are inserted for convenience of reference only and shall not control
or affect the meaning or construction of any provisions hereof.
Consent to Jurisdiction. The Pledgor agrees that, subject to the Lender's sole
and absolute election, all legal actions or proceedings in any manner or
respect arising out of or related to this Pledgor shall be brought and
litigated only in courts having situs in Cook County, Illinois; and the
Pledgor hereby consents to and submits to the jurisdiction of any local,
state or federal court located within Cook County, and the Pledgor hereby
waives any right the Pledgor may have to transfer or change the venue of
any such legal action or proceeding.
Waiver of Jury Trial. The Pledgor waives irrevocably the right to a trial by
jury in any action or proceeding to enforce or defend any rights (a) under
this Agreement any amendment, instrument, document or agreement delivered
or which may in the future be delivered in connection herewith, or (b)
arising from any banking relationship existing in connection with this
Agreement, and agrees that any such action or proceeding shall be tried
before a court and not before a jury.
IN WITNESS WHEREOF, Pledgor and Lender have executed this Agreement as
of the date first above written.
PLEDGOR:
FILL-MOR HOLDING, INC.
By:___________________________
Its: _________________________
LENDER:
MANUFACTURERS BANK
By: __________________________
Its: _________________________
<PAGE>
EXHIBIT A
to
PLEDGE AGREEMENT
Description of Pledged Shares
Issuer No. of Shares Class of Shares Certificate No.
- ------ ------------- --------------- ---------------
Comforce Corporation 100,000 Common CC0144
Comforce Corporation 100,000 Common CC0145
Comforce Corporation 100,000 Common CC0146
Comforce Corporation 100,000 Common CC0147
Comforce Corporation 100,000 Common CC0148
Comforce Corporation 100,000 Common CC0149
Comforce Corporation 100,000 Common CC0150
Comforce Corporation 100,000 Common CC0151
TOTAL 800,000
EXHIBIT 10.4
GUARANTY
WHEREAS, FILL-MOR HOLDING, INC., a Delaware corporation (the "Debtor")
desires to obtain from MANUFACTURERS BANK (the "Lender"), an Illinois state
banking corporation, with its principal offices at 1200 North Ashland Avenue,
Chicago, Illinois 60622, a loan in the principal amount of Two Million Five
Hundred Thousand and no/l00 ($2,500,000.00) Dollars (the "Loan"), to be
evidenced by a Term Loan Promissory Note of even date herewith in said principal
amount executed by Debtor, payable to the order of Lender with interest as
therein described (such Term Loan Promissory Note, and all extensions, renewals,
modifications or refinancings thereof or thereto, the "Note"); and
WHEREAS, Lender will not make the Loan to Debtor unless the undersigned
guarantor (the "Undersigned") executes and delivers this Guaranty to Lender; and
WHEREAS, capitalized terms, unless otherwise defined herein, shall have
the respective meanings assigned to such terms in the Loan Agreement (as
hereinafter defined).
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of the Loan
being made to the Debtor by the Lender, the Undersigned hereby, unconditionally
guarantees, irrespective of the validity, regularity or enforceability of the
Note, the Stock Pledge Agreement of even date herewith between the Debtor and
Lender, encumbering 800,000 shares of the common stock of Comforce Corporation
owned by Debtor (the "Stock Pledge"), the Loan Agreement of even date herewith
by and among Debtor, Lender and the Undersigned (the "Loan Agreement") or any
other instrument, writing or agreement relating to the Loan, the full and prompt
payment to the Lender at maturity (whether by acceleration, lapse of time, or
otherwise, and at all times thereafter) of the principal and interest due under
the Note, and the prompt payment of all other sums which may now or hereafter
become due and owing under the Note, the Stock Pledge, the Loan Agreement, and
any other instrument, writing or agreement executed by the Debtor in connection
with the Loan; and the Undersigned further agrees to pay all costs and expenses
(including court costs and reasonable attorneys' fees), paid or incurred by the
Lender in connection with the Loan or in endeavoring to collect the Loan, or any
part thereof, and to enforce this Guaranty or in defending any suit based on any
act of commission or omission of the Lender with respect to the Loan or this
Guaranty or in connection with any repayment claim hereinbelow defined.
The term "Guaranteed Debt", as used herein, shall be deemed to mean and
include all principal and interest due and to become due under the Note, all
other sums which may now or hereafter become due and owing under the Note, the
Stock Pledge, the Loan Agreement, and under any other instrument, writing or
agreement executed by the Debtor in connection with the Loan, and all costs and
expenses described in the preceding paragraph.
The Undersigned agrees that this Guaranty is an absolute guaranty of
payment and performance and is not a guaranty of collection.
<PAGE>
In case of the dissolution, liquidation or insolvency (howsoever
evidenced) of the Debtor or the Undersigned, or in case any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution, liquidation or receivership proceeding, is
instituted by or against the Debtor or the Undersigned, all Guaranteed Debt then
existing shall at the option of the Lender, without notice to anyone, become due
or accrued and be payable from the Undersigned immediately.
All payments received by the Lender from the Debtor or on account of
the Guaranteed Debt, from whatever source derived, shall be taken and applied by
the Lender toward payment of such of the Guaranteed Debt and in such order of
application as the Lender may in its sole discretion from time to time elect,
and this Guaranty shall apply to and secure any ultimate balance that shall
remain owing to the Lender. The Lender shall have the exclusive right to
determine, how, when and what application of payments and credits, if any,
whether derived from the Debtor or any other source, shall be made on the
Guaranteed Debt, or any part thereof, and such determination shall be conclusive
upon the Undersigned.
This Guaranty shall in all respects be continuing, absolute and
unconditional and shall remain in full force and effect with respect to the
Undersigned until the Loan and all other Guaranteed Debt shall be fully paid and
discharged. The Undersigned irrevocably waives the right to discontinue or
terminate this Guaranty.
The Undersigned's liability hereunder shall in no way be affected or
impaired by any of the following (any or all of which may be done or omitted by
the Lender in its sole discretion, without notice to anyone and irrespective of
whether the Guaranteed Debt shall be increased or decreased thereby), namely:
(a) any acceptance by the Lender of any security or collateral for, or other
guarantors or obligors upon, any Guaranteed Debt; (b) the Lender's election, in
any proceeding instituted under Chapter 11 of Title 11 of the United States Code
(11 U.S.C., 101 et seq.) (the "Bankruptcy Code") of the application of Section
1111(b)(2) of the Bankruptcy Code; (c) any compromise, settlement, surrender,
release, discharge, renewal, extension, alteration, exchange, sale, pledge or
other disposition of, or substitution for, or indulgence with respect to, or
failure, neglect or omission to realize upon, or to enforce or exercise any
liens or rights of appropriation or other rights with respect to, any Guaranteed
Debt or any security or collateral therefor or any claims against any person or
persons primarily or secondarily liable thereon; or (d) any act of commission or
omission of any kind or at any time upon the part of the Lender with respect to
any matter whatsoever, other than the execution and delivery by the Lender to
the Undersigned of an express written release or cancellation of this Guaranty.
The Undersigned hereby consents to all acts of commission or omission of the
Lender hereinabove set forth.
In order to proceed to enforce this Guaranty and hold the Undersigned
liable hereunder, there shall be no obligation on the part of the Lender, at any
time, to resort for payment to the Debtor or any other guarantor, or to any
other person or entity, or to any collateral, security, property, liens or other
rights or remedies whatsoever, all of which are hereby expressly waived by the
Undersigned.
<PAGE>
Diligence in collection or protection, presentment, demand or protest
or in giving notice to anyone of protest, dishonor, default, or nonpayment or of
the creation or existence of any Guaranteed Debt or of any security or
collateral therefor or of the acceptance of this Guaranty or of extension of
credit or indulgences hereunder or of any other matters or things whatsoever
relating hereto are expressly waived by the Undersigned. The Undersigned further
waives the filing of claims with a court in the event of receivership or
bankruptcy of the Debtor, the benefits of all statutes of limitations, and all
other demands whatsoever, and covenant that this Guaranty will not be
discharged, except by complete performance of the Guaranteed Debt and any other
obligations contained herein.
The Undersigned waives any claim or other right which the Undersigned
may now have or hereafter may acquire against the Debtor or any other person who
is primarily or contingently liable on the Guaranteed Debt that arise from the
existence or performance of the Undersigned's obligations under this Guaranty,
including, without limitation, any right of subrogation (whether contractual,
under Section 509 of the Bankruptcy Code, under common law, or otherwise), and
all contractual, statutory or common law rights of reimbursement, exoneration,
contribution, indemnification and similar rights and "claims" (as such term is
defined in the Bankruptcy Code), and any right to participate in any claim or
remedy of the Lender against the Debtor or any collateral therefor, which the
Lender now has or hereafter acquires; whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law.
The Undersigned further agrees that Lender may proceed immediately to
enforce this Guaranty against the Undersigned in the event of the dissolution,
liquidation or insolvency (howsoever evidenced) of the Debtor or the
Undersigned, or in case any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law, or any dissolution,
liquidation or receivership proceeding, is instituted by or against the Debtor
or the Undersigned.
The Undersigned waives every defense, counterclaim, or setoff which the
Undersigned may now have, or hereafter may have, against the Debtor, or any
other party liable to the Lender in any manner, and further agrees that this
Guaranty shall remain fully enforceable against the Undersigned, irrespective of
any defenses which the Debtor may assert on the Guaranteed Debt, including, but
not limited to, failure of consideration, breach of warranty, fraud, payment,
statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury. As further security, any and all
debts and liabilities now or hereafter arising and owing to the Undersigned by
the Debtor, or any other party liable to the Lender are hereby subordinated to
the Lender's claims and are hereby collaterally assigned to Lender as security
for the Undersigned's obligations hereunder. The Undersigned ratifies and
confirms whatever Lender may do pursuant to the terms hereof and with respect to
any collateral for the Guaranteed Debt, and agrees that Lender shall not be
liable for any error or judgment or mistakes of fact or law.
The Undersigned agrees that, to the extent that the Debtor makes a
payment or payments to the Lender or the Lender receives any proceeds of
<PAGE>
collateral, which payment or payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to the Debtor, its estate, trustee, receiver, or
any other party, including, without limitation, the Undersigned, under any
bankruptcy law, state or federal law, common law, judgment, decree, or order of
any court or administrative body having jurisdiction over the Lender or any of
its property, or equitable cause, or any settlement or compromise of any such
repayment claim effected by the Lender with the claimant (including Debtor),
then to the extent of such payment or repayment, the Guaranteed Debt or part
thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the time immediately
preceding such initial payment, reduction or satisfaction, and the Undersigned
shall remain jointly and severally liable to the Lender for the amount so repaid
to the same extent as if such amount had never originally been received by the
Lender, notwithstanding any termination hereof or the cancellation of any note
or other instrument evidencing any of the Guaranteed Debt.
The Lender may, without notice to anyone, sell or assign the Guaranteed
Debt, or any part thereof, or grant participations therein, and in any such
event each and every immediate or remote assignee or holder of, or participant
in, all or any of the Guaranteed Debt shall have the right to enforce this
Guaranty, by suit or otherwise for his benefit, as fully as if herein by name
specifically given such right; but the Lender shall have an unimpaired right,
prior and superior to that of any such assignee, holder or participant, to
enforce this Guaranty for the benefit of the Lender, as to any part of the
Guaranteed Debt retained by the Lender.
No release or discharge of the Undersigned, or of any other person,
whether primarily or secondarily liable for and obligated with respect to the
Guaranteed Debt, or the institution of bankruptcy, receivership, insolvency,
reorganization, dissolution or liquidation proceedings by or against any such
guarantor or person, or the entry of any restraining or other order in any such
proceedings, shall release or discharge the Undersigned or any other guarantor
of the indebtedness, or any other person, firm or corporation liable to the
Lender for the Guaranteed Debt, unless and until all of the Guaranteed Debt
shall have been fully paid.
Whenever possible, each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
It is agreed that the Undersigned's liability hereunder is several and
is independent of any other guaranties at any time in effect with respect to all
or any part of the Guaranteed Debt, and that the Undersigned's liability
hereunder may be enforced regardless of the existence of any such other
guaranties.
The provisions hereof shall be binding upon the Undersigned and its
successors and assigns, and shall inure to the benefit of Lender's successors
and assigns.
<PAGE>
The Undersigned assumes all responsibility for being and keeping itself
informed of Debtor's present and future financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Debt and the nature, scope and extent of the risks which the Undersigned assumes
and incurs hereunder, and the Undersigned agrees that the Lender shall have no
duty to advise the Undersigned of information now or hereafter known to it
regarding such circumstances or risks.
This writing is intended by the parties as a final expression of this
Guaranty, and is intended as a complete and exclusive statement of the terms of
this Guaranty. This Guaranty shall not be or be deemed to be amended, modified,
or limited orally, or by any course of conduct or dealing or in any manner other
than by an instrument in writing signed by the party against which such
amendment, modification or limitation is sought to be charged. There are no
conditions to the full effectiveness of this Guaranty.
This Guaranty has been delivered at Chicago, Illinois and shall be
construed according to the laws of the State of Illinois, in which State it
shall be performed by the Undersigned. The Undersigned agrees that, subject to
the Lender's sole and absolute election, all legal actions or proceedings in any
manner or respect arising out of or related to this Guaranty shall be brought
and litigated only in courts having situs in Cook County, Illinois; and the
Undersigned hereby consents to and submits to the jurisdiction of any local,
state or federal court located within Cook County, and the Undersigned hereby
waives any right the Undersigned may have to transfer or change the venue of any
such legal action or proceeding.
The Undersigned waives irrevocably the right to a trial by jury in any action or
proceeding to enforce or defend any rights (a) under this Guaranty or under any
amendment, instrument, document or agreement delivered or which may in the
future be delivered in connection herewith, or (b) arising from any banking
relationship existing in connection with this Guaranty, and agrees that any such
action or proceeding shall be tried before a court and not before a jury.
SIGNED AND DELIVERED by the Undersigned at Chicago, Illinois,
this 15th day of August, 1996.
ARTRA GROUP Incorporated
By: ______________________
Title: ______________________
Attest:______________________
Title:_______________________
<PAGE>
ACKNOWLEDGMENT OF SIGNATURES
STATE OF ILLINOIS)
) ss.
COUNTY OF COOK )
I, ______________________________, a Notary Public in and for the state
and county aforesaid do hereby certify that before me this day personally
appeared _______________________ and _______________________, the
______________________ and ________________________, respectively, of ARTRA
GROUP Incorporated, a Pennsylvania corporation, known to me to be the same
persons whose names are subscribed to this Agreement as such officers, and
acknowledged to me that they executed and delivered this Agreement as their own
free and voluntary acts, and as the free and voluntary act of said corporation,
for the uses set forth above.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
________ day of __________________, 1996.
------------------------------------
Notary Public
My Commission Expires: _____________
EXHIBIT 10.5
PURCHASE, SALE AND PUT AGREEMENT
This PURCHASE, SALE AND PUT AGREEMENT ("Agreement") is made and entered
into as of this 15th day of August, 1996, by and between Manufacturers Bank, an
Illinois State banking corporation with main offices in Chicago, Illinois
("Bank") and Peer Pedersen ("Pedersen").
PRELIMINARY STATEMENTS
1. Concurrently with the execution of this Agreement Bank, ARTRA GROUP
Incorporated, a Pennsylvania corporation ("ARTRA") and Fill-Mor Holding, Inc., a
Delaware corporation and wholly-owned subsidiary of ARTRA ("Fill-Mor") have
entered into that certain Loan Agreement, dated as of the date hereof (the "Loan
Agreement") whereby Bank has agreed to make a loan to Fill-Mor in the amount of
$2,500,000 (the "Loan"), such Loan to be evidenced by a term promissory note
made by Fill-Mor to Bank [the "Note", and collectively with the Loan Agreement
and related documents, including a stock pledge agreement executed by Fill-Mor
in favor of Bank of even date herewith (the "Stock Pledge Agreement"), and the
guaranty of the Loan by ARTRA pursuant to a guaranty of even date herewith (the
"Guaranty") the "Loan Documents"].
2. Pursuant to the Stock Pledge Agreement the Loan will be
collateralized by a pledge by Fill-Mor to Bank of certain common stock of
Comforce Corporation, a Delaware corporation ("Comforce") which is currently
owned by Fill-Mor and which is more fully described on Exhibit A attached hereto
and by this reference incorporated herein (the "Pledged Shares").
3. Fill-Mor's obligations under the Loan Documents are guaranteed by
ARTRA, pursuant to the Guaranty.
4. As a condition to making the Loan, Bank has required that Pedersen
execute and deliver this Agreement.
5. Pedersen has a material interest in, and will derive a benefit from,
Bank's agreement to make the Loan, and Pedersen desires to induce the Bank to
make the Loan.
6. If an Event of Default (as defined in the Loan Agreement) shall
occur, Bank will have the option to sell to Pedersen, and upon Bank's exercise
of its rights, Pedersen shall have the unconditional obligation to purchase from
Bank, upon the terms and conditions set forth in this Agreement, all of Bank's
right, title and interest in the Loan Documents (the "Purchase and Sale"),
including the right to put all of the Loan Documents to Pedersen (the "Put"),
all for an aggregate price of $2,500,000, less any principal payments made under
the Note, plus all accrued and unpaid interest under the Note, and all accrued
and unpaid costs and expenses incurred by the Bank in connection with the Loan.
<PAGE>
7. In connection with any future Purchase and Sale, Pedersen will
receive an assignment of all of Bank's right, title and interest in the Loan
Documents.
NOW, THEREFORE, for and in consideration of the foregoing mutual
promises, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT:
Bank and Pedersen agree that the following terms and conditions govern
this Agreement:
1. Purchase, Sale and Assignment
1.1 Purchase and Sale. If an Event of Default shall occur under the
Loan Agreement, Bank shall have the option, in its sole discretion, to sell to
Pedersen, and upon the Bank's exercise of such option in accordance with
Paragraph 2.1 below, Pedersen shall be unconditionally obligated to purchase
from Bank, all of Bank's right, title and interest in and under the Loan
Documents, including the right to put (the "Put") the Loan Documents to Pedersen
on the terms set forth herein.
1.2 Assignment. Upon a Purchase and Sale as described in Paragraph 1.1
above, Bank shall assign and deliver to Pedersen all of the original Loan
Documents and the Pledged Shares together with blank stock powers executed by
Fill-Mor.
1.3 Non-Recourse Sale. It is agreed by Bank and Pedersen that any
Purchase and Sale under this Agreement, as well as any assignment, will be
without recourse and without representation or warranty, express (except as set
forth in Paragraph 3) or implied, by Bank.
1.4 Further Assurances. Bank agrees that at any time and from time to
time, at the cost and expense of Pedersen, Bank will execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary to complete any assignment by Bank hereunder.
2. Pedersen's Obligation to Purchase.
2.1 General. If an Event of Default shall occur and Bank elects to
exercise its right to a Purchase and Sale, the Bank will, upon the occurrence of
such Event of Default, or at any time thereafter, send written notice of such
exercise to Pedersen. Pedersen shall, within five (5) Business Days (as defined
in the Loan Agreement) after receipt of such written notice, purchase from Bank
all of the Bank's right, title and interest in and under the Loan Documents for
an amount equal to the Purchase Price ( as defined below). Pedersen irrevocably
consents to the service of the aforesaid written notice on his law firm,
Pedersen & Houpt, 161 N. Clark Street, Suite 3100, Chicago, Illinois 60601, and
agrees that service on such law firm shall be deemed effective notice to him, as
if he were personally served.
<PAGE>
Pedersen acknowledges and agrees that his obligation to
purchase the Loan from the Bank under this Agreement is absolute and
unconditional, and Pedersen agrees the upon his receipt of the Bank's notice
provided for in the preceding paragraph, he will purchase the Loan for the
Purchase Price in accordance with the preceding paragraph, without raising any
claim or defense against the Bank, including without limitation, the bankruptcy
or insolvency of Fill-Mor or ARTRA.
2.2 Purchase Price. Upon closing of the Purchase and Sale, Pedersen
shall pay to Bank, in immediately available funds, a purchase price (the
"Purchase Price") equal to the sum of (i) the principal sum of $2,500,000.00,
less any principal payments made on the Note, plus (ii) all accrued and unpaid
interest under the Note, plus (iii) all accrued and unpaid expenses incurred by
the Bank in connection with the Loan.
Notwithstanding the foregoing paragraph, and except as otherwise set
forth in the following paragraph, if (a) the Bank shall declare Fill-Mor in
default in writing (hereafter, the "Default Notice"), and shall exercise its
election for a Purchase and Sale pursuant to Section 2.1 hereof as a result of
such default, and (b) the Bank's notice to Pedersen for such Purchase and Sale
shall be dated more than thirty (30) days after the date of the Default Notice,
the interest component of the Purchase Price shall include (i) accrued and
unpaid interest on the Note calculated at the Reference Rate (as defined in the
Note) up to the date of the Default Notice, (ii) accrued and unpaid interest on
the Note calculated at the Default Rate (as defined in the Note) commencing on
the date of the Default Notice and continuing until the earlier to occur of (x)
the date of the closing of the Purchase and Sale, and (y) thirty (30) days after
the date of the Default Notice, and (iii) if the Bank's notice to Pedersen for
such Purchase and Sale pursuant to Section 2.1 hereof shall be dated more than
thirty (30) days after the date of the Default Notice, accrued and unpaid
interest on the Note calculated at the Reference Rate from the expiration of
such thirty (30) day period up to and including the date of the closing of the
Purchase and Sale. If the Bank shall be restrained from exercising its election
for a Purchase and Sale following an Event of Default as a result of any legal
proceeding, whether it be a lawsuit, bankruptcy, or any other proceeding, the
thirty (30) day period set forth in the preceding sentence shall be extended by
the number of days the Bank is so restrained.
Notwithstanding the preceding paragraph, if Pedersen fails to timely
pay the Bank the Purchase Price in full when due under this Agreement, the
interest component of the Purchase Price shall include (i) accrued and unpaid
interest on the Note calculated at the Reference Rate up to the date of such
Event of Default, and (ii) accrued and unpaid interest on the Note calculated at
the Default Rate commencing on the date of such Event of Default and continuing
until the Bank's receipt of the Purchase Price, regardless of when or if the
Bank served a written notice of default on Fill-Mor with respect to such Event
of Default.
<PAGE>
If the Bank shall exercise its election for a Purchase and Sale
pursuant to Section 2.1 hereof and shall not have given any Default Notice to
Fill-Mor prior to the Bank's notice to Pedersen exercising such election for a
Purchase And Sale, the interest component of the Purchase Price shall be
calculated solely at the Reference Rate, and not at the Default Rate.
Should any Default Rate accrue on the Loan and not be payable by
Pedersen as part of the Purchase Price in accordance with the terms of this
Section 2.2, after the closing of the Purchase and Sale, the Bank shall reserve
the right to sue Fill-Mor and/or ARTRA for the unpaid interest due the Bank, and
Pedersen will cooperate with the Bank in any suit to collect such interest.
3. Representations and Warranties of Bank.
To induce Pedersen to enter into this Agreement, Bank represents and
warrants to Pedersen that:
3.1 Authority and Enforceability. The execution and delivery of this
Agreement and the Loan Documents by Bank have been duly authorized by all
necessary action on the part of Bank.
3.2 Loan Documents. The Loan Documents constitute all of the
obligations of Fill-Mor or ARTRA to Bank with respect to the Loan.
3.3 Exclusive Representations and Warranties. The representations and
warranties set forth in this Paragraph 3 are the sole and exclusive
representations and warranties made by Bank, its representatives, agents,
officers, directors and other employees, with respect to the Loan Documents, and
the potential sale or assignment thereof to Pedersen under this Agreement or
otherwise. Without limiting the generality of the foregoing, it is expressly
acknowledged and agreed by Pedersen that no covenant, agreement, representation
or warranty made by Bank or any other such other person, in this Agreement or
otherwise, is construed as a warranty, representation, guaranty or other
agreement or acknowledgment as to, nor does Bank or any other such person assume
any responsibility for:
(A) the creditworthiness of Fill-Mor or ARTRA, or the
collectability of the Note or other Loan Documents by reason
of the respective obligors' ability to make payments with
respect thereto;
(B) the conformity of the Loan Documents with the laws and
regulations binding upon Bank or Pedersen;
(C) the genuineness, legality, validity or enforceability of the
Loan Documents, whether by Bank or otherwise;
(D) the value of the Loan Documents or the value or liquidity of
the Pledged Shares or the priority or validity of the liens
and security interests with respect to the Loan Documents or
the Pledged Shares.
<PAGE>
4. Representations and Warranties of Pedersen.
To induce Bank to enter into this Agreement, Pedersen represents and
warrants to Bank that:
4.1 Ability to Purchase. Pedersen has the financial ability to meet his
obligations under any future Purchase and Sale as provided in this Agreement.
4.2 Accuracy of Financial Data. At the time it was provided and
continuing to the date hereof, the information provided by Pedersen to Bank in
connection with the Loan is an accurate reflection of Pedersen's financial
condition and is not misleading in any material respect. Pedersen agrees to
immediately notify Bank, if at any time during which Fill-Mor's or ARTRA's
obligations to Bank have not been fully satisfied, there has been a materially
adverse change in the financial condition of Pedersen.
4.3 Capacity. Pedersen has full power, authority and legal right to
execute and deliver, and to perform and observe the provisions of this Agreement
and to carry out the transactions contemplated by this Agreement, including,
without limitation, to purchase the Loan Documents and to receive an assignment
of the Loan Documents and the Pledged Shares from Bank.
4.4 No Reliance. Pedersen has, independently and without reliance upon
Bank or any of Bank's officers, directors, employees, agents or affiliates, and
based upon such documents and information as Pedersen has deemed appropriate,
made its own investigation into Fill-Mor and ARTRA and the Loan Documents and
made his own decision to enter into this Agreement and, if required pursuant to
Section 2.1 hererof, to purchase the Loan Documents and to receive an assignment
of the Loan Documents under this Agreement.
4.5 Restrictions on Sale of Pledges Shares. Pedersen is aware of and
has been fully informed of the restrictions on the sale of the Pledged Shares,
as described in Section 8.2(f) of the Loan Agreement.
5. Indemnification. In the event that Bank exercises its right to cause
a Purchase and Sale under this Agreement, Pedersen agrees to indemnify, defend
and hold harmless Bank from and against any and all liabilities, claims,
demands, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees for Bank's outside attorneys and allocated costs and
expenses of Bank's in-house attorneys), actions or causes of action
(collectively, "Claims"), assessed against or imposed upon Bank by any person or
entity, arising out of or related to any action or inaction by Pedersen
following the closing of any Purchase and Sale hereunder or under the Loan
documents; provided, however, that Pedersen has no obligation under this
Paragraph 5 with respect to any Claims directly resulting from the willful
misconduct of Bank or the breach by Bank of its representations and warranties
contained in Section 3 hereof.
<PAGE>
6. Conditions Precedent.
6.1 Conditions Precedent to the Obligations of Bank. The obligations of
Bank to Pedersen under any Purchase and Sale hereunder, are subject to the
following conditions:
(A) Purchase Price. Pedersen shall have delivered the
Purchase Price.
(B) Other. Bank has received all further instruments and
documents which are necessary or appropriate, or which
Bank reasonably requests, in order to implement the
agreements hereunder, each duly executed by all parties
to such instruments and documents.
6.2 Conditions Precedent to the Obligations of Pedersen. The
obligations of Pedersen to Bank under any Purchase and Sale hereunder, are
subject to the following conditions:
(A) Notice. Bank shall have notified Pedersen of an Event
of Default and of Peterson's obligation to purchase the
Loan Documents not less than five (5) business days
before closing of the Purchase and Sale, in accordance
with Section 2.1 hereof.
(B) Loan Documents. Bank shall have delivered to Pedersen
the original Loan Documents, including the Note,
endorsed as follows:
Pay to The Order of Peer Pedersen, without recourse.
Manufacturers Bank
By:______________
(C) Pledged Shares. Bank shall have delivered to Pedersen
the Pledged Shares together with stock powers
appropriately endorsed in blank, with respect to the
Pledged Shares .
<PAGE>
7. Miscellaneous.
7.1 The representations, warranties, covenants and agreements of Bank
and Pedersen under this Agreement survive the closing of any Purchase and Sale.
7.2 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, further or continuing waiver of any such term,
provision or condition, or of any other term, provision or condition of this
agreement.
7.3 Captions. The preliminary statements of this Agreement (except for
definitions) and section or other headings contained in this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement.
7.4 Entire Agreement. This Agreement constitutes the entire agreement
between Bank and Pedersen with regard subject matter of this Agreement, and
there are no prior agreements, understandings, restrictions, warranties or
representations between the parties with regard to the subject of this
Agreement.
7.5 Assignment. Bank may assign, endorse or transfer any instrument
evidencing all or any part of the Obligations as provided in, and in accordance
with, this Agreement and the other Loan Documents, and the holder of such
instrument shall be entitled to the benefits of this Agreement. Pedersen may not
assign, sell or otherwise transfer any interest in or obligation under this
Agreement and the other Loan Documents
7.6 Amendment and Waiver. Neither this Agreement nor any provision of
this Agreement may be changed, waived, discharged or terminated orally, except
by an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
7.7 Counterparts. This Agreement may be executed in any number of
separate counterparts, which shall collectively constitute one and the same
agreement.
7.8 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 any other party, or whenever any of the parties desires to give or
serve upon any other a 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 sent by registered or certified mail, return receipt requested,
postage prepaid, or by facsimile and confirmed by facsimile answerback addressed
as follows:
If to Bank
Tom Panos
Debbie Domovich
Manufacturers Bank
1200 N. Ashland Avenue
Chicago, IL 60622
Telephone (Panos) (312) 292-5407
Telephone (Domovich) (312) 292 6286
Fax (Panos and Domovich) (312) 489-4058
<PAGE>
with a copy to:
Kwiatt, Silverman & Ruben
500 North Central Avenue
Northfield, Illinois 60093
Attention: Philip E. Ruben, Esq.
Telephone (847)441-7676
Fax (847)441-7696
and
Cohen, Cohen & Salk, P.C.
630 Dundee Rd.
Suite 120
Northbrook, IL 60062
Attn: Bennett L. Cohen
Phone: (847) 480-7800
Fax (847) 480-7882
ARTRA GROUP Incorporated
500 N. Central Avenue
Northfield, Illinois 60093
Attention:Peter R. Harvey
Telephone: (847) 441-6650
Fax (847) 441-6959
Fill-Mor Holding, Inc.
c/o ARTRA GROUP Incorporated
500 N. Central Avenue
Northfield, Illinois 60093
Attention:Peter R. Harvey
Telephone: (847) 441-6650
Fax (847) 441-6959
Marcus, Steer & Friebrun
Hyatt Deerfield Business Campus
102 Wilmot Road - Suite 190
Deerfield, Illinois 60015
Attn: Jay E. Marcus, Esq.
Phone (847) 940-0072
Fax (847) 940-0061
<PAGE>
If To Pedersen:
Peer Pedersen
c/o Pedersen & Houpt
161 North Clark Street, Suite 3100
Chicago, Illinois 60601
Telephone (312) 781-2106
Fax (312) 641-6895
with a copy to:
James J. Clarke, II, Esq.
Pedersen & Houpt
161 N. Clark, Suite 3100
Chicago, IL 60601-3224
Telephone (312) 781 2106
Fax (312) 641-6895
ARTRA GROUP Incorporated
500 N. Central Avenue
Northfield, Illinois 60093
Attention: Peter R. Harvey
Telephone: (847) 441-6650
Fax (847) 441-6959
Fill-Mor Holding, Inc.
c/o ARTRA GROUP Incorporated
500 N. Central Avenue
Northfield, Illinois 60093
Attention: Peter R. Harvey
Telephone: (847) 441-6650
Fax (847) 441-6959
Marcus, Steer & Friebrun
Hyatt Deerfield Business Campus
102 Wilmot Road - Suite 190
Deerfield, Illinois 60015
Attn: Jay E. Marcus, Esq.
Phone (847) 940-0072
Fax (847) 940-0061
<PAGE>
7.9 Fees and Expenses. Pedersen agrees to promptly pay Lender forthwith
any and all expenses, including legal expenses and reasonable attorneys' fees,
incurred or expended by Lender in enforcing any of the duties and obligations of
Pedersen or rights of the Lender under this Agreement.
7.10 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Wherever possible, each provision of this Agreement is interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is prohibited by, or invalid under, applicable law, such
provision is ineffective only to the extent of such prohibition or invalidity
and without invalidating the remaining provisions of this Agreement.
7.11 CONSENT TO JURISDICTION. The parties hereto agree that, subject to
the Bank's sole and absolute election, all legal actions or proceedings in any
manner or respect arising out of or related to this Agreement shall be brought
and litigated only in courts having situs in Cook County, Illinois; and Pedersen
hereby consents to and submit to the jurisdiction of any local, state or federal
court located within Cook county, and Pedersen hereby waives any right he may
have to transfer or change the venue of any such legal action or proceeding.
7.12 WAIVER OF JURY TRIAL. Each party to this Agreement waives
irrevocably the right to a trial by jury in any action or proceeding to enforce
or defend any rights (a) under this Agreement or under any amendment,
instrument, document or agreement delivered or which may in the future be
delivered in connection herewith, or (b) arising from any relationship existing
in connection with this Agreement, and agrees that any such action or proceeding
shall be tried before a court and not before a jury.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
MANUFACTURERS BANK
By: _________________________
Its: ________________________ PEER PEDERSEN
Acknowledged and Accepted:
FILL-MOR HOLDING, INC.
ARTRA GROUP INCORPORATED
By: __________________________
By: __________________________
Its: _________________________
Its: _________________________
<PAGE>
EXHIBIT A
to
PURCHASE SALE AND PUT AGREEMENT
Issuer No. of Shares Class of Shares Certificate No.
- ------ ------------- --------------- ---------------
Comforce Corporation 100,000 Common CC0144
Comforce Corporation 100,000 Common CC0145
Comforce Corporation 100,000 Common CC0146
Comforce Corporation 100,000 Common CC0147
Comforce Corporation 100,000 Common CC0148
Comforce Corporation 100,000 Common CC0149
Comforce Corporation 100,000 Common CC0150
Comforce Corporation 100,000 Common CC0151
TOTAL 800,000
