SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- -----------
Commission file number 0-5485
----------
VISKASE COMPANIES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2677354
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6855 West 65th Street, Chicago, Illinois 60638
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 496-4200
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements
for the past 90 days. Yes X No
------ -------
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities
under a plan confirmed by a court. Yes X No
------ ------
As of August 9, 1999, there were 14,884,536 shares outstanding of
the registrant's Common Stock, $.01 par value.
Page 1 of 18 Pages
<PAGE>
INDEX TO FINANCIAL STATEMENTS
VISKASE COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Unaudited consolidated balance sheet at June 30, 1999
and audited consolidated balance sheet at December 31, 1998 4
Unaudited consolidated statements of operations
for the three months ended June 30, 1999 and
June 25, 1998 and for the six months ended
June 30, 1999 and June 25, 1998 5
Unaudited consolidated statements of cash flows
for the six months ended June 30, 1999 and
June 25, 1998 6
Notes to consolidated financial statements 7
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
The financial information included in this quarterly report has been
prepared in conformity with the accounting principles and practices
reflected in the financial statements included in the annual report on
Form 10-K filed with the Securities and Exchange Commission for the year
ended December 31, 1998 (1998 Form 10-K). These quarterly financial
statements should be read in conjunction with the financial statements
and the notes thereto included in the 1998 Form 10-K. The accompanying
financial information, which is unaudited, reflects all adjustments
which are, in the opinion of management, necessary for a fair statement
of the results for the interim periods presented.
The condensed consolidated balance sheet as of December 31, 1998 was
derived from the audited consolidated financial statements in the
Company's annual report on Form 10-K.
Reported interim results of operations are based in part on estimates
which may be subject to year-end adjustments. In addition, these
quarterly results of operations are not necessarily indicative of those
expected for the year.
<PAGE>
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------------- -------------
(unaudited)
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 3,738 $ 9,028
Receivables, net 50,732 47,718
Inventories 90,383 93,228
Other current assets 19,321 15,337
-------- --------
Total current assets 164,174 165,311
Property, plant and equipment,
including those under capital leases 477,541 475,525
Less accumulated depreciation
and amortization 161,574 145,680
-------- --------
Property, plant and equipment, net 315,967 329,845
Deferred financing costs, net 5,976 1,198
Other assets 32,887 34,715
-------- --------
Total assets $519,004 $531,069
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt including current portion
of long-term debt and obligations
under capital leases $ 20,434 $ 16,120
Accounts payable 33,867 36,337
Accrued liabilities 56,225 62,319
Current deferred income taxes 8,810 8,810
-------- --------
Total current liabilities 119,336 123,586
Long-term debt including obligations
under capital leases 410,001 388,880
Accrued employee benefits 48,143 48,115
Deferred and noncurrent income taxes 20,448 26,395
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value;
none outstanding
Common stock, $.01 par value;
14,879,707 shares issued and
outstanding at June 30, 1999 and
14,859,467 shares at December 31, 1998 149 149
Paid in capital 136,790 136,715
Accumulated (deficit) (216,863) (197,454)
Cumulative foreign currency
translation adjustments 1,000 4,693
Unearned restricted stock issued
for future service (10)
-------- --------
Total stockholders' equity (deficit) (78,924) (55,907)
-------- --------
Total liabilities and stockholders' equity $519,004 $531,069
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
<PAGE>
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended June Ended June Ended June Ended June
30, 1999 25, 1998 30, 1999 25, 1998
------------ ------------- ------------ --------------
(in thousands, except for number of shares and per share amounts)
<S> <C> <C> <C> <C>
NET SALES $97,098 $105,389 $189,165 $206,666
COSTS AND EXPENSES
Cost of sales 73,165 78,287 142,547 152,548
Selling, general and administrative 18,549 22,271 38,826 43,649
Amortization of intangibles
and excess reorganization value 1,250 3,471 2,500 6,939
Unusual charge 1,500 1,500
------- -------- -------- --------
OPERATING INCOME 4,134 (140) 5,292 2,030
Interest income 183 117 286 302
Interest expense 11,040 14,552 21,373 28,027
Other expense (income), net 1,477 (323) 4,561 466
------- -------- -------- --------
(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (8,200) (14,252) (20,356) (26,161)
Income tax (benefit) (127) (7,812) (947) (8,538)
------- -------- -------- --------
NET (LOSS) FROM CONTINUING
OPERATIONS (8,073) (6,440) (19,409) (17,623)
DISCONTINUED OPERATIONS:
Income from operations
net of income taxes (Note 5) 263 56
(Loss) on sale of discontinued
operations net of income tax
benefit of $998 (1,560) (1,560)
------- -------- -------- --------
NET (LOSS) (8,073) (7,737) (19,409) (19,127)
Other comprehensive (loss),
net of tax:
Foreign currency translation
adjustments (1,258) (495) (2,253) (164)
------- -------- -------- --------
COMPREHENSIVE (LOSS) $(9,331) $ (8,232) $(21,662) $(19,291)
======= ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
- BASIC AND DILUTED 14,875,506 14,818,561 14,871,305 14,796,136
========== ========== ========== ==========
PER SHARE AMOUNTS:
BASIC EARNINGS (LOSS) PER SHARE:
- basic and diluted
Continuing operations $(.54) $(.43) $(1.31) $(1.19)
Discontinued operations:
Income from operations .02 .01
Loss on sale of
discontinued operations (.11) (.11)
------- -------- -------- --------
Net (loss) $(.54) $(.52) $(1.31) $(1.29)
===== ===== ====== ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------------
June 30, June 25,
1999 1998
----------------- ----------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (19,409) $ (19,127)
Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization under capital lease 20,079 22,613
Amortization of intangibles and excess
reorganization value 2,500 7,666
Amortization of deferred financing fees and discount 635 945
(Decrease) in deferred and
noncurrent income taxes (3,328) (10,407)
Foreign currency transaction loss (gain) 401 (22)
Loss on disposition of assets 29 2,764
Bad debt provision 526 505
Changes in operating assets and liabilities:
Receivables (5,108) 9,211
Inventories 420 (18,070)
Other current assets (4,478) (7,440)
Accounts payable and accrued liabilities (5,911) (7,028)
Other 2,062 (109)
-------- --------
Total adjustments 7,827 628
-------- --------
Net cash (used in) operating activities (11,582) (18,499)
Cash flows from investing activities:
Capital expenditures (13,706) (26,292)
Proceeds from disposition of assets 88 18,207
-------- --------
Net cash (used in) investing activities (13,618) (8,085)
Cash flows from financing activities:
Issuance of common stock 85 446
Deferred financing costs (5,689) (585)
Proceeds from revolving loan and long-term
borrowings 125,491 31,475
Repayment of revolving loan, long-term borrowings
and capital lease obligation (99,478) (12,454)
-------- --------
Net cash provided by financing activities 20,409 18,882
Effect of currency exchange rate changes on cash (499) (131)
-------- --------
Net (decrease) in cash and equivalents (5,290) (7,833)
Cash and equivalents at beginning of period 9,028 24,407
-------- --------
Cash and equivalents at end of period $ 3,738 $ 16,574
======== ========
- ------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Interest paid $25,587 $33,146
Income taxes paid $ 1,382 $ 3,609
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
VISKASE COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INVENTORIES (dollars in thousands)
Inventories consisted of:
June December
30, 1999 25, 1998
Raw materials $ 9,393 $10,500
Work in process 38,100 38,291
Finished products 42,890 44,437
------- -------
$90,383 $93,228
======= =======
Approximately 61% of the inventories at June 30, 1999 were valued at
Last-In, First-Out (LIFO). These LIFO values exceeded current
manufacturing cost by approximately $5,263 at June 30, 1999.
2. DEBT OBLIGATIONS (dollars in thousands)
During June 1999, the Company entered into two-year secured credit
agreements consisting of a $50,000 senior revolving credit facility,
including a $26,000 sublimit for issuance of letters of credit (Senior
Revolving Credit Facility), a $50,000 senior term facility (Senior Term
Facility), collectively the "Senior Secured Credit Facility," and $35,000
of junior secured term loans (Junior Term Loans). The proceeds of the
Senior Secured Credit Facility and the Junior Term Loans were used to repay
the $55,000 Senior Secured Notes outstanding and obligations outstanding
under the Company's existing Revolving Credit Facility. The Senior Secured
Credit Facility and the Junior Term Loans have a maturity date of June 30,
2001. The 12% Senior Secured Notes, as of December 31, 1998, have been
reclassified to long-term debt based upon the Company's refinancing of
obligations on a long-term basis.
Outstanding short-term and long-term debt consisted of:
June December
30, 1999 31, 1998
-------- --------
Short-term debt, current maturity
of long-term debt, and
capital lease obligation:
Senior Term Facility $ 3,572
Current maturity of
Viskase Capital Lease Obligation 14,376 $13,031
Current maturity of Viskase
Limited Term Loan (3.2%) 1,532 1,742
Other 954 1,347
-------- --------
Total short-term debt $ 20,434 $ 16,120
======== ========
Long-term debt:
Senior Revolving Credit Facility $10,339
Senior Term Facility 46,428
Junior Term Facility 35,000
12% Senior Secured Notes due 1999 $ 55,000
10.25% Senior Notes due 2001 219,262 219,262
Viskase Capital Lease Obligation 97,466 111,842
Viskase Limited Term Loan (3.2%) 868
Other 1,506 1,908
-------- --------
Total long-term debt $410,001 $388,880
======== ========
The Company's Senior Secured Credit Facility and Junior Term Loans contain
a number of financial covenants that, among other things, require the
maintenance of a minimum level of tangible net worth, a minimum fixed
charge coverage ratio and a minimum leverage ratio of total liabilities to
earnings before depreciation, interest, amortization, and taxes (EBDIAT)
and a limitation on capital expenditures. As of June 30, 1999, the Company
is in compliance with covenants under its debt obligations.
On August 24, 1998, the Company redeemed $105,000 of the aggregate
principal amount of its 12% Senior Secured Notes using proceeds from the
Clear Shield National, Inc. (Clear Shield) divestiture. The notes were
redeemed at approximately 108.5% of principal amount, plus accrued interest
to the date of redemption. The Company recognized an extraordinary after-
tax loss of $6,800 on the partial redemption of its 12% Senior Secured
Notes. The extraordinary loss is comprised of $8,900 of yield maintenance
premiums and $2,200 write-off of deferred debt issuance costs, net of a
$4,300 income tax benefit.
3. CONTINGENCIES
In late 1993, Viskase commenced a legal action against American National
Can Company (ANC) in Federal District Court for the Northern District of
Illinois, Eastern Division, 93C7651. Viskase claimed that ANC's use of two
different very low density polyethylene plastic resins in the manufacture
of ANC's multi-layer barrier shrink film products was infringing various
Viskase patents relating to multi-layer barrier plastic films used for
fresh red meat, processed meat and poultry product applications. In
November 1996, after a three-week trial, a jury found that ANC had
willfully infringed Viskase's patents and awarded Viskase $102.4 million
in compensatory damages. The Court also entered an order permanently
enjoining ANC from making or selling infringing products.
In September 1997, the Court set aside the jury verdict in part and ordered
a retrial on certain issues. The Court upheld the jury finding on the
validity of all of Viskase's patents and the jury finding that ANC had
willfully infringed Viskase's patents by ANC's use of Dow Chemical
Company's "Attane" brand polyethylene plastic resin in ANC's products.
However, the Court ordered a new trial on the issue of whether ANC's use
of Dow Chemical Company's "Affinity" brand polyethylene plastic resin
infringed Viskase's patents and whether such conduct was willful. Because
the jury rendered one general damage verdict, the Court ordered a retrial
of all damage issues. By operation of the Court's order, the injunction in
respect of ANC's future use of the "Affinity" brand resin was removed.
On August 19, 1998, the Court granted Viskase's motion for partial summary
judgment finding that ANC's use of the "Affinity" brand resin infringed
Viskase's patents. The Court also reinstated the permanent injunction.
Viskase filed a motion to have the jury verdict as to compensatory damages
reinstated. ANC filed a motion to dismiss the lawsuit claiming that
Viskase's patents are invalid and Viskase failed to join an indispensable
party to the lawsuit. On May 10, 1999, the Court granted Viskase's motion
to have the jury verdict as to the compensatory damages reinstated. In May
and June 1999, the parties briefed the issue of enhanced damages and on
July 2, 1999, the Court awarded Viskase total damages of $164.9 million.
ANC has filed a motion for reconsideration.
In addition, ANC has challenged two of the five Viskase patents in suit by
filing requests for reexamination with the United States Patent and
Trademark Office (USPTO). With respect to the challenge of the first
patent, on September 25, 1998, the USPTO, after initially rejecting
Viskase's claims, gave notice of its intent to reissue Viskase's patent in
its entirety. ANC filed another request for reexamination of the patent,
which has the effect of staying the reissuance. The USPTO initially
rejected Viskase's claims and Viskase has filed its response. With respect
to the challenge of the second patent, the USPTO, after initially rejecting
Viskase's claims, withdrew the rejection in view of Viskase's response and
raised new grounds of rejection. Viskase is preparing a response to the new
grounds of rejection. If the USPTO ultimately disallows the claims of the
second Viskase patent, the effect upon the Court action will not be
significant.
On May 3, 1999, ANC commenced legal action in the Federal District Court
for the Northern District of Illinois seeking declaratory relief that
Viskase's second patent is invalid. ANC also filed a motion to consolidate
the new action with the existing suit. ANC's motion to consolidate was
granted and then the Court dismissed ANC's suit with prejudice.
The Company expects ANC to vigorously contest these matters in the Court
and the USPTO and to appeal any final judgment. No part of the pending
claims has been recorded in the Company's financial statements. Through
June 30, 1999, $4.7 million in patent defense costs had been accrued and
capitalized.
In March 1997 Viskase Corporation received a subpoena from the Antitrust
Division of the United States Department of Justice relating to a grand
jury investigation of the sausage casings industry. Viskase Corporation is
cooperating fully with the investigation.
The Company and its subsidiaries are involved in various legal proceedings
arising out of their business and other environmental matters, none of
which is expected to have a material adverse effect upon results of
operations, cash flows or financial position.
4. UNUSUAL CHARGE
During the third quarter of 1998, due to the business conditions leading
to the Viskase plan of restructuring, the Company evaluated the
recoverability of long-lived assets including property, plant and
equipment, patents and excess reorganization on a consolidated basis. Based
upon the analysis, the Company recognized an impairment because the
estimated consolidated undiscounted future cash flows derived from long-
lived assets were determined to be less than their carrying value. The
amount of the impairment was calculated using the present value of the
Company's estimated future net cash flows to determine the assets' fair
value. Based on this analysis, an impairment charge of $91.2 million for
excess reorganization and $4.3 million for the write-down of the Chicago
facility was taken. In addition, the Viskase plan of restructuring included
charges for the decommissioning of the Chicago plant and the
decommissioning of some of its foreign operations.
During the second quarter of 1999 and accumulated to date, cash payments
against the reserve were $.6 million and $8.3 million, respectively. A
remaining restructuring reserve of $4.2 million is included in accrued
liabilities on the balance sheet.
5. DISCONTINUED OPERATIONS (dollars in thousands)
In June 1998 the Company's Board of Directors agreed to sell the Clear
Shield and Sandusky Plastics, Inc. (Sandusky) subsidiaries. Sandusky was
sold on June 11, 1998 and the Company completed the divestiture of Clear
Shield on July 23, 1998. Accordingly, the operating results from both
subsidiaries have been segregated from continuing operations and reported
as a separate line item, Results of Discontinued Operations, on the
Statements of Operations.
Operating results from discontinued operations are as follows:
Three Months Six Months
Ended June Ended June
25, 1998 25, 1998
----------- ------------
Net sales $29,403 $56,781
Costs and expenses
Cost of sales 24,329 46,634
Selling, general and administrative 4,435 8,732
Amortization of intangibles and
excess reorganization value 394 727
------- -------
Operating income 245 688
Interest expense 21 43
Other expense (income), net (441) 103
------- -------
Income from continuing
operations before taxes 665 542
Income tax provision 402 486
------- -------
Net Income from continuing
operations $ 263 $ 56
======= =======
6. COMPREHENSIVE INCOME (dollars in thousands)
During 1998 the Company adopted the Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income," which requires
the Company to disclose comprehensive income in addition to net income.
Comprehensive income includes all other non-shareholder changes in equity.
All such changes in equity resulted from changes in foreign currency
translation adjustments.
The following sets forth the components of other comprehensive income
(loss) and the related income tax provision (benefit):
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended June Ended June Ended June Ended June
30, 1999 25, 1998 30, 1999 25, 1998
------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Foreign currency
translation
adjustment (1) $(1,258) $(495) $(2,253) $(164)
</TABLE>
(1) Net of related tax (benefit) of $(804) and $(316) for the second
quarter ended 1999 and 1998, respectively, and $(1,440) and $(105)
for the first six months ended 1999 and 1998, respectively.
7. EARNINGS PER SHARE
In February 1997 the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share," which became effective for both interim and
annual financial statement periods ending after December 15, 1997. As
required by this Statement, the Company adopted the new standards for
computing and presenting earnings per share (EPS) for all period EPS data
presented. Following are the reconciliations of the numerators and
denominators of the basic and diluted EPS.
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended June Ended June Ended June Ended June
30, 1999 25, 1998 30, 1999 25, 1998
------------- ------------- ---------- ------------
(in thousands, except for weighted average shares outstanding)
<S> <C> <C> <C> <C>
NUMERATOR (in thousands):
Net (loss) available
to common stockholders:
From continuing operations: $(8,073) $(6,440) $(19,409) $(17,623)
Discontinued operations:
Income from discontinued
operations: 263 56
(Loss) on disposal (1,560) (1,560)
------- ------- -------- --------
Net (loss) available to common
stockholders for basic and
diluted EPS $(8,073) $(7,737) $(19,409) $(19,127)
======= ======= ======== ========
DENOMINATOR:
Weighted average shares
outstanding
for basic EPS 14,875,506 14,818,561 14,871,305 14,796,136
Effect of dilutive securities 0 0 0 0
---------- ---------- ---------- ----------
Weighted average shares
outstanding
for diluted EPS 14,875,506 14,818,561 14,871,305 14,796,136
========== ========== ========== ==========
</TABLE>
Common stock equivalents are excluded from the loss-per-share calculations
as the result is antidilutive since the numerator is a loss from continuing
operations.
8. ACCOUNTING STANDARDS
The Company will implement the provisions of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS No. 133), which will be effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards for derivative instruments
and for hedging activities. It requires recognition of all derivative
instruments as either assets or liabilities in the statement of financial
condition and the measurement of those instruments at fair value.
Management believes the adoption of SFAS No. 133 will not have a
significant effect on the Company's financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
- ---------------------
The Company's net sales from continuing operations for the first six months
and second quarter of 1999 were $189.2 million and $97.1 million,
respectively, which represent a decrease of 8.5% and 7.9%, respectively,
from comparable periods of 1998. The decline in sales reflects the
continuing effect of competitive selling prices in the casings industry in
both the domestic and European markets. Brazil's sales have increased over
the prior year due to significant volume gains in both the casing and film
product lines, offset by the translation effect of the strengthening of the
U.S. dollar against the real.
Operating income from continuing operations for the first six months and
second quarter of 1999 were $5.3 million and $4.1 million, respectively,
which compared favorably to the same prior year periods of $2.0 million and
$(.1) million, respectively. The increase in operating income has
benefitted from cost cutting efforts undertaken by the Company during the
fourth quarter of 1998. The cost savings from lower selling,
administration, and amortization expenses for the six-month and three-month
periods over the prior year were $10.8 million and $7.4 million,
respectively, and were partially offset by the reduction in gross margin
due to competitive selling prices in the casings industry.
Net interest expense from continuing operations for the six-month period
in 1999 totaled $21.1 million, representing a decrease of $6.6 million from
the six-month period in 1998. The decrease is primarily due to interest
savings from the redemption of $105 million of the 12% Senior Secured
Notes. (Refer to Note 2.)
Other expense from continuing operations of approximately $4.6 million and
$.5 million for the first six months of 1999 and 1998, respectively,
consists principally of foreign exchange losses.
The Company uses foreign exchange forward contracts to hedge some of its
non-functional currency receivables and payables, which are denominated in
major currencies that can be traded on open markets. This strategy is used
to reduce the overall exposure to the effects of currency fluctuations on
cash flows. The Company's policy is not to speculate in financial
instruments.
Receivables and payables, which are denominated in non-functional
currencies, are translated to the functional currency at month end and the
resulting gain or loss is taken to other income/expense on the income
statement. Gains and losses on hedges of receivables and payables are
marked to market. The result is recognized in other net expense on the
income statement.
The tax benefit for the first six months of 1999 resulted from the benefit
of U.S. losses partially offset by the provision related to income from
foreign subsidiaries. Due to the permanent differences in the U.S. resulting
from foreign losses for which no tax benefit is provided, a benefit of $.9
million was provided on a loss from continuing operations of $20.4 million.
The U.S. tax benefit is recorded as a reduction of the deferred tax liability
and does not result in a refund of income taxes.
Discontinued operations
- -----------------------
On June 8, 1998, the Company's Board of Directors approved the sale of two
of the Company's subsidiaries, Clear Shield and Sandusky. Accordingly, the
operating results of the two subsidiaries have been segregated from
continuing operations and reported as a separate line item on the income
statement under the heading Discontinued Operations.
The sales of Sandusky and Clear Shield were completed on June 11, 1998 and
July 23, 1998, respectively. A $39.1 million combined gain, net of taxes,
was recognized on these sales.
Other
- -----
In September 1997 the Company retained Donaldson, Lufkin and Jenrette
Securities Corporation to assist the Board of Directors in evaluating the
Company's strategic alternatives. Such alternatives included, among other
things, sale of the entire company, sale of business units or
recapitalization. In June 1998, the Company sold its wholly owned
subsidiary Sandusky, and in July 1998 the Company sold its wholly owned
subsidiary Clear Shield. The Company is still reviewing strategic and
recapitalization alternatives available.
The Company will implement the provisions of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which will be effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No.
133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires recognition of all
derivative instruments as either assets or liabilities in the balance sheet
and the measurement of those instruments at fair value. Management believes
the adoption of SFAS No. 133 will not have a significant effect on the
Company's financial statements.
Liquidity and Capital Resources
- -------------------------------
Cash and equivalents decreased by $5.3 million during the six months ended
June 30, 1999. Cash flows used in operating activities of $11.6 million and
investing activities of $13.6 million exceeded funds provided by financing
activities of $20.4 million. Cash flows used in operating activities were
principally attributable to the Company's loss from operations and an
increase in working capital usage offset by the effect of depreciation and
amortization. Cash flows provided by financing activities were principally
due to the Company's June 1999 refinancing. The Company entered into a $100
million Senior Secured Credit Facility and $35 million of Junior Term
Loans. The proceeds were used to redeem the $55 million 12% Senior Secured
Notes and the $30 million existing Revolving Credit Facility. In the first
quarter of 1999, a $13 million principal repayment was made under the
General Electric Capital Corporation (GECC) lease. Cash flows used in
investing activities consist principally of capital expenditures for
property, plant and equipment.
The Company finances its working capital needs through a combination of
internally generated cash from operations and borrowings under its $50
million Senior Revolving Credit Facility entered into in June 1999. The
availability of funds under the Senior Revolving Credit Facility is subject
to the Company's compliance with certain covenants, borrowing base limita-
tions measured by accounts receivable and inventory of the Company, and
reserves that may be established at the discretion of the lenders. There
is approximately $10.3 million outstanding under the Senior Revolving
Credit Facility at June 30, 1999.
The Company's Senior Secured Credit Facility and Junior Term Loans contain
a number of financial covenants that, among other things, require the
maintenance of a minimum level of tangible net worth, a minimum fixed
charge coverage ratio and minimum leverage ratio of total liabilities to
EBDIAT, and a limitation on capital expenditures.
As of June 30, 1999, the Company is in compliance with the covenants under
its debt obligations.
The Company anticipates that its current cash position, its operating cash
flows and the availability under its credit agreement will be sufficient
to meet its operating expenses and debt service requirements. The Company's
10.25% Notes, of which $219.3 million principal amount is outstanding, will
mature in December 2001. The Company anticipates it will refinance the
10.25% Notes or seek alternative strategies including, but not limited to,
selling additional equity capital.
Capital expenditures for continuing operations for the first six months of
1999 and 1998 totaled $13.7 million and $18.5 million, respectively.
Capital expenditures for discontinued operations for the first six months
of 1998 totaled $7.8 million. Significant 1999 and 1998 capital
expenditures for continuing operations included a new information
technology system at Viskase, costs associated with the Nucel(R) project,
and additional production capacity for specialty films. Capital
expenditures for discontinued operations included the construction of Clear
Shield's Twin Falls, Idaho facility. Capital expenditures for continuing
operations for 1999 are expected to be approximately $27 million. Capital
expenditures for continuing operations for 2000 are expected to be $13
million.
The Company has spent approximately $7 million annually on research and
development programs, including product and process development, and on new
technology development during each of the past three years. The 1999
research and development and product introduction expenses are expected to
be in the $9 million range. Among the projects included in the current
research and development efforts is the application of certain patents and
technology licensed by Viskase to the manufacture of cellulosic casings
under the Nucel(R) process. The commercialization of these applications and
the related fixed asset expense associated with such commercialization may
require substantial financial commitments in future periods.
Year 2000
- ---------
The Year 2000 (Y2K) issue concerns the inability of information systems to
properly recognize and process date-sensitive information beyond January
1, 2000. Businesses are at risk for possible miscalculations or systems
failures that may disrupt their business operations due to the Year 2000
issue.
In order to address the Y2K issue, the Company has formed a Year 2000
committee (Y2K Committee) that has separated the Company's risk into three
categories: significant business information technology (IT) systems,
internal non-information technology (Non-IT) systems and external readiness
by customers and vendors.
<PAGE>
Significant Business Information Technology Systems
In January 1996, the Company began a system conversion which incorporated
Y2K readiness. The following table shows the status of the business system
conversions by country:
Country Implementation Date Status
- -------------------- ------------------- ---------------------
United States January 1, 1998 Complete
France October 1, 1998 Complete
United Kingdom January 1, 1999 Complete
Brazil January 1, 1998 Complete
Canada October 1, 1999 Planned completion
The Company's significant business IT system is run on servers and a wide-
area network outsourced to IBM Global Services. IBM has been certified Y2K
compliant for all its system components. By June 30, 1999, all of the
Company's personal computers, network server hardware and software had been
checked for Y2K compatibility with the vendors. Of the equipment, 95% is
compatible and the remaining 5% will be made compatible by September 30,
1999. The expenditures associated with this are approximately $50 thousand.
The expenditures for the European implementation totaled approximately $5.0
million in 1998 and through the second quarter of 1999. The Company has
capitalized the costs necessary to upgrade its significant business
systems.
Internal Non-IT Systems
The Non-IT systems consist primarily of PC-based manufacturing systems and
process control units. The Y2K Committee has designated a member at each
plant to inventory its systems and determine the status of its Y2K
readiness. These systems were tested for compliance by June 30, 1999. The
Company has estimated the cost of Y2K readiness to be approximately $.4
million for its non-financial systems. A contingency plan is in place.
Y2K Compliance by Customers and Vendors
The Y2K Committee mailed a questionnaire to material third party vendors
in January 1999 to address material third party readiness with Y2K.
Responses to the questionnaires have been received from most key suppliers.
Those failing to respond to the questionnaire have been contacted. To date,
no significant compliance issues have been uncovered.
Should responses to the questionnaires indicate that suppliers, service
providers or contractors are not Y2K ready, the Company will change to
those vendors who have demonstrated Y2K readiness. The Company cannot be
assured that it will be successful in finding such alternative suppliers,
service providers and contractors.
Forward-looking Statements
- --------------------------
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties that could cause actual results
and Company plans and objectives to differ materially from those projected.
Such risks and uncertainties include, but are not limited to, general
business and economic conditions; competitive pricing pressures for the
Company's products; changes in other costs; opportunities that may be
presented to and pursued by the Company; determinations by regulatory and
governmental authorities; and the ability to achieve synergistic and other
cost reductions and efficiencies.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
-----------------
For a description of pending litigation and other contingencies, see Part
1, Note 3, Contingencies in Notes to Consolidated Financial Statements for
Viskase Companies, Inc. and Subsidiaries.
Item 2 - Changes in Securities
---------------------
No reportable events occurred during the quarter ended June 30, 1999.
Item 3 - Defaults Upon Senior Securities
-------------------------------
None.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5 - Other Information
-----------------
None.
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
10.22 Financing Agreement, dated June 14, 1999, among Viskase
Corporation, Viskase Sales Corporation and the CIT
Group/Business Credit, Inc. on behalf of itself and certain
lenders.
10.23 Financing Agreement, dated June 14, 1999, among Viskase
Corporation, Viskase Sales Corporation and the lenders
listed on the signature page thereto.
10.24 Financing Agreement, dated June 14, 1999, among Viskase
Corporation, Viskase Sales Corporation and D.P. Kelly &
Associates, L.P.
10.25 Form of Pledge Agreements made by Viskase Corporation to
each of (i) the CIT Group/Business Credit, Inc. on behalf
of itself and certain lenders, (ii) certain institutional
lenders listed on the signature page thereto, and (iii)
D.P. Kelly & Associates, L.P.
10.26 Form of Pledge Agreements made by Viskase Sales Corporation
to each of (i) the CIT Group/Business Credit, Inc. on
behalf of itself and certain lenders, (ii) certain
institutional lenders listed on the signature page thereto,
and (iii) D.P. Kelly & Associates, L.P.
10.27 Form of Pledge Agreements made by Viskase Holding
Corporation to each of (i) the CIT Group/Business Credit,
Inc. on behalf of itself and certain lenders, (ii) certain
institutional lenders listed on the signature page thereto,
and (iii) D.P. Kelly & Associates, L.P.
10.28 Form of Parent Pledge Agreements made by Viskase Companies,
Inc. to each of (i) the CIT Group/Business Credit, Inc. on
behalf of itself and certain lenders, (ii) certain
institutional lenders listed on the signature page thereto,
and (iii) D.P. Kelly & Associates, L.P.
10.29 Form of Security Agreements made by Viskase Holding
Corporation in favor of each of (i) the CIT Group/Business
Credit, Inc. on behalf of itself and certain lenders, (ii)
certain institutional lenders listed on the signature page
thereto, and (iii) D.P. Kelly & Associates, L.P.
10.30 Form of Parent Security Agreements made by Viskase
Companies, Inc. in favor of each of (i) the CIT
Group/Business Credit, Inc. on behalf of itself and certain
lenders, (ii) certain institutional lenders listed on the
signature page thereto, and (iii) D.P. Kelly & Associates,
L.P.
10.31 Form of Joint and Several Guaranty of Viskase Corporation
and Viskase Sales Corporation to each of (i) the CIT
Group/Business Credit, Inc. on behalf of itself and certain
lenders, (ii) certain institutional lenders listed on the
signature page thereto, and (iii) D.P. Kelly & Associates,
L.P.
27 Financial Data Schedule.
(b) Reports on Form 8-K
(1) On May 20, 1999, the Company filed a Form 8-K to report that on
May 13, 1999 the Company announced that the U.S. District Court
for the Northern District of Illinois, Eastern Division, granted
Viskase Corporation's motion to reinstate the $102.4 million
damage award in the case of Viskase Corporation vs. American
National Can.
(2) On July 7, 1999, the Company filed a Form 8-K to report that on
July 6, 1999 the Company announced that the U.S. District Court
for the Northern District of Illinois, Eastern Division, entered
a final judgment in favor of Viskase Corporation in the amount
of $164.9 million for compensatory and enhanced damages and
prejudgment interest in the case of Viskase Corporation vs.
American National Can Company.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISKASE COMPANIES, INC.
-----------------------
Registrant
By: /s/
----------------------
Gordon S. Donovan
Vice President, Chief
Financial Officer and
Treasurer (Duly authorized
officer and principal
financial officer of the
registrant)
Date: August 16, 1999
<PAGE>
FINANCING AGREEMENT
dated as of June 14, 1999
among
THE CIT GROUP/BUSINESS CREDIT, INC.
("Agent"),
THE LENDERS WHICH ARE PARTIES HERETO
(the "Lenders")
and
VISKASE CORPORATION and VISKASE SALES CORPORATION
(collectively, the "Companies")
TABLE OF CONTENTS
Page
SECTION 1. Definitions 1
SECTION 2. Conditions Precedent 19
SECTION 3. Revolving Loans 24
SECTION 4. Term Loan 27
SECTION 5. Letters of Credit 28
SECTION 6. Collateral 30
SECTION 7. Representations, Warranties and Covenants 34
SECTION 8. Interest, Fees and Expenses 45
SECTION 9. Powers 48
SECTION 10. Events of Default and Remedies 49
SECTION 11. Termination 52
SECTION 12. Miscellaneous 52
SECTION 13. Agreements Regarding the Lenders 55
SECTION 14. Agency 58
EXHIBITS
- --------
Exhibit A - Form of Term Loan Promissory Note
Exhibit B - Form of Assignment and Transfer Agreement
SCHEDULES
- ---------
Schedule 1.1(a) - Permitted Liens
Schedule 1.1(b) - Certain Customers
Schedule 1.1(c) - Permitted Indebtedness
Schedule 6.1 - Excluded Assets
Schedule 7.1 - Collateral Locations, Chief
Executive Office and Tradenames
Schedule 7.7 - Environmental Matters
Schedule 7.9(e) - Existing Guaranties
<PAGE>
FINANCING AGREEMENT
-------------------
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
-----------------------------------
("CITBC"), with offices located at 10 South LaSalle Street, Chicago,
Illinois 60603; any other party hereafter becoming a Lender hereunder
pursuant to Section 13.5 hereof hereinafter are collectively referred to
------------
as the "Lenders" and individually as a "Lender"); and CITBC, as Agent
for the Lenders (hereinafter the "Agent"); are pleased to confirm the
terms and conditions under which the Lenders acting through the Agent
shall make revolving loans, term loans and other financial
accommodations to each of VISKASE CORPORATION, a Pennsylvania
-------------------
corporation ("Viskase Corporation"), with its principal place of
business at 6855 West 65th Street, Bedford Park, Illinois 60638, and
VISKASE SALES CORPORATION, a Delaware corporation ("Viskase Sales"),
- -------------------------
with its principal place of business at 6855 West 65th Street, Bedford
Park, Illinois 60638, jointly and severally (Viskase Corporation and
Viskase Sales are hereinafter sometimes referred to individually as a
"Company" and collectively as the "Companies").
SECTION 1. Definitions
-----------
1.1 For purposes of this Financing Agreement (this "Agreement"
or this "Financing Agreement"), the following terms shall be defined in
the following manner:
Accounts shall mean all of each Company's now existing and future:
--------
(a) accounts (as defined in the U.C.C.) and any and all other
receivables (whether or not specifically listed on schedules furnished
to the Agent), including, without limitation, all accounts created by or
arising from each Company's sales of goods or rendition of services to
its customers, and all accounts arising from sales or rendition of
services made under any Company's trade names or styles, or through any
Company's divisions; (b) instruments (as defined in the U.C.C.),
documents (as defined in the U.C.C.), contract rights and chattel paper
(as defined in the U.C.C.); (c) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to
the foregoing or arising therefrom; (d) rights to any goods represented
by any of the foregoing, including rights to returned or repossessed
goods; (e) reserves and credit balances arising hereunder;
(f) guarantees or collateral for any of the foregoing; (g) insurance
policies or rights relating to any of the foregoing; and (h) cash and
non-cash proceeds of any and all the foregoing.
Accounts Receivable Advance Percentage shall mean eighty-five
--------------------------------------
percent (85%).
Agent Proposal Letter shall mean the Proposal Letter dated
---------------------
April 14, 1999 issued by Agent, and accepted by Viskase Corporation.
Alternate Base Rate shall mean the higher of (i) the annual rate of
-------------------
interest announced from time to time by The Chase Manhattan Bank in New
York, New York as its Base Rate and (ii) one-half of one percent (.50%)
above the Federal Funds Effective Rate.
Applicable Margin shall mean the percentage per annum set forth
below:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for Applicable Margin for Applicable Margin for
Revolving Base Rate Loans Revolving LIBOR Loans Term Base Rate Loans Term LIBOR Loans
- ------------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
0.75% 2.75% 1.25% 3.25%
</TABLE>
Assignment and Transfer Agreement shall mean the Assignment and
---------------------------------
Transfer Agreement in the form of Exhibit B hereto.
---------
Availability shall mean at any time the excess, if any, of (a) the
------------
lesser of (i) the Revolving Line of Credit and (ii) the Borrowing Base
over (b) the sum of (i) the outstanding aggregate principal amount of
all Obligations then due and owing (other than the unpaid principal
balance of the Term Loan) and (ii) the Availability Reserve.
Availability Reserve shall mean (a) an amount equal to three (3)
--------------------
months rental payments on each Company's leased premises for which each
Company has not delivered to the Agent a landlord's waiver (in form and
substance satisfactory to the Agent in the exercise of its reasonable
business judgment), provided that such amount shall be adjusted from
time to time hereafter upon (i) delivery to the Agent of an acceptable
landlord's waiver, (ii) the opening or closing of a Collateral location
and/or (iii) any change in rental payment, plus (b) the aggregate amount
of rebates granted by any Company on Trade Accounts Receivable to any
customers of such Company, provided that the amount of rebates relating
to any such customer at any time shall in no event exceed the aggregate
amount of such Trade Accounts Receivable owed by such customers at such
time.
Base Rate shall mean the rate of interest (expressed as a
---------
percentage per annum) most recently announced or published publicly from
time to time by The Chase Manhattan Bank in New York, New York as its
base or prime rate of interest, which is not necessarily the lowest or
most favorable rate of interest charged by The Chase Manhattan Bank in
New York, New York on commercial loans at any one time. The Base Rate
shall change automatically and immediately as and when such announced
rate shall change, without notice to the Companies, and any such change
in The Chase Manhattan Bank in New York, New York Base Rate shall not
affect any of the terms and conditions of this Agreement, all of which
shall remain in full force and effect.
Borrowing Base shall mean the sum of (a) the outstanding Eligible
--------------
Accounts Receivable of each Company multiplied by the Accounts
Receivable Advance Percentage, plus (b) the lesser of (i) the Inventory
Loan Cap and (ii) the aggregate value of Eligible Inventory of each
Company (as determined at the lower of cost or market on a first-in,
first-out basis) multiplied by the Inventory Advance Percentage.
Business Day shall mean any day on which the Agent, each Lender and
------------
The Chase Manhattan Bank in New York, New York are open for business.
Canada Intercompany Loan shall have the meaning assigned to such
------------------------
term in Section 2.1(cc).
---------------
Canada Security Agreement shall have the meaning assigned to such
-------------------------
term in Section 2.1(cc).
---------------
Capital Expenditures for any period shall mean the aggregate of all
--------------------
expenditures of each Company during such period that in conformity with
GAAP are required to be included in or reflected by the property, plant
or equipment or similar fixed asset account reflected in the
consolidated balance sheet of the Companies.
Capital Improvements shall mean operating Equipment and facilities
--------------------
(other than land) acquired or installed for use in each Company's
business operations.
Capital Lease shall mean any lease of property (whether real,
-------------
personal or mixed) which, in conformity with GAAP, is accounted for as
a capital lease or a Capital Expenditure on the consolidated balance
sheet of the Parent and its Subsidiaries.
Closing Date shall mean the date (on or after the date hereof) on
------------
which the Lenders (or the Agent on behalf of the Lenders) makes the
initial extension of credit hereunder, whether in the form of Revolving
Loans, Letters of Credit or the Term Loan.
Collateral Assignment of Intercompany Loan shall have the meaning
------------------------------------------
assigned to such term in Section 2.1(cc) below.
---------------
Collateral shall mean all present and future Accounts, Equipment,
----------
Inventory, Documents of Title, General Intangibles, Investment Property,
Other Collateral and Real Estate of each Company; provided, however,
that "Collateral" shall not include the items listed in clauses (i) -
(iv) of Section 6.1.
-----------
Collateral Assignment of Lawsuit Proceeds means that certain
-----------------------------------------
Collateral Assignment of Lawsuit Proceeds of even date herewith made by
Viskase Corporation in favor of Agent.
Collateral Management Fee shall mean the sum of Seventy-Five
-------------------------
Thousand Dollars ($75,000) which the Companies shall pay to Agent for
its own account in accordance with Section 8.9 hereof to offset the
-----------
expenses and costs of CITBC in connection with record keeping, periodic
examinations and analyzing and evaluating the Collateral.
Consolidated Balance Sheet shall mean a consolidated balance sheet
--------------------------
for Parent, eliminating all inter-company transactions and prepared in
accordance with GAAP.
Consolidating Balance Sheet shall mean a consolidating balance
---------------------------
sheet for (a) Parent, (b) the Companies and Viskase Holding, (c) Viskase
Europe and its Subsidiaries, (d) Viskase Brazil, (e) Viskase Canada and
(f) Viskase Chile, in each case showing all eliminations of
inter-company transactions and prepared in accordance with GAAP.
Copyrights shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash and
non-cash proceeds thereof.
Current Assets means all current assets of each Company, as
--------------
determined in accordance with GAAP.
Current Liabilities means all current liabilities of each Company,
-------------------
as determined in accordance with GAAP.
Customarily Permitted Liens shall mean: (a) liens of local or
---------------------------
state authorities for franchise or other like taxes provided the
aggregate amount of such liens shall not exceed One Hundred Thousand
Dollars ($100,000) in the aggregate at any one time; (b) statutory liens
of landlords and liens of carriers, warehousemen, mechanics,
materialmen, lessors and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are
being contested in good faith by appropriate proceedings or other
appropriate actions which are sufficient to prevent imminent foreclosure
of such liens) and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance, pensions and other types of social security
benefits or to secure the performance of tenders, bids, contracts (other
than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations, surety and appeal bonds and other
similar obligations arising as a result of progress payments under
government contracts; and (d) easements (including, without limitation,
reciprocal easement agreements and utility agreements), zoning
restrictions, licenses, reservations, covenants, encroachments, minor
defects or irregularities in title, variations and other restrictions,
charges or encumbrances (whether or not recorded) affecting the Real
Estate and which are listed in Schedule B of each title insurance policy
-----------
delivered to the Agent in connection with this Financing Agreement or
which arise after the date hereof and which do not in the aggregate
materially impair the use of such Real Estate in the operation of the
business of the owner thereof as determined in Agent's reasonable
discretion.
Default shall mean any event specified in Section 10 hereof,
------- ----------
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, event or act, has been satisfied.
Default Rate of Interest shall mean a rate of interest per annum
------------------------
equal to the sum of two percent (2.0%) plus the Alternate Base Rate,
----
which the Lenders shall be entitled to charge the Company on all
Obligations to the extent provided in Section 10.2 of this Financing
------------
Agreement.
Depository Account shall mean the bank account owned and maintained
------------------
by the Agent, for the benefit of the Lenders, and designated for the
deposit of proceeds of Collateral.
Documentation Fee shall mean (a) the reasonable legal fees and
-----------------
costs and expenses of outside counsel for the Agent in documenting, in
whole or in part, the initial transaction on behalf of the Agent, plus
Out-of-Pocket Expenses, (b) the reasonable legal fees and costs and
expenses necessary to compensate the Agent for the use of Agent's in-
house legal department and facilities for any documentation of
transactions after the initial transaction, and (c) the Agent's
reasonable legal fees and costs and expenses relating to any and all
modifications, waivers, releases, amendments or additional collateral
with respect to this Financing Agreement, the Collateral and/or the
Obligations.
Documents of Title shall mean all present and future documents (as
------------------
defined in the U.C.C.) including, without limitation, all warehouse
receipts, bills of lading, shipping documents and similar documents,
whether negotiable or nonnegotiable, and all goods and Inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
D.P. Kelly shall mean D.P. Kelly & Associates, L.P., a Delaware
----------
limited partnership.
D.P. Kelly Financing Agreement shall mean that certain Financing
------------------------------
Agreement, dated as of the date hereof, by and between D.P. Kelly and
the Companies, as the same may be amended, restated or supplemented from
time to time.
D.P. Kelly Loan Documents shall mean the D.P. Kelly Financing
-------------------------
Agreement and all other instruments and documents that are in effect as
of the date hereof and are executed in connection with or otherwise
relating to the D.P. Kelly Financing Agreement, as the same may be
amended, restated or supplemented from time to time.
Early Termination Date shall mean any date other than the
----------------------
Termination Date on which the Companies terminate this Financing
Agreement or the Revolving Line of Credit.
Early Termination Fee shall mean the fee payable by the Companies
---------------------
to the Lenders in the event the Companies terminate the Revolving Line
of Credit or this Financing Agreement on a date other than the date
occurring between the thirtieth (30th) day preceding the Termination
Date and the Termination Date, and be equal to the product obtained by
multiplying the aggregate amount of the Revolving Line of Credit by one
percent (1%).
EBITDA shall mean, for any period, all earnings before all
------
interest, tax obligations and depreciation and amortization expense for
such period, all determined in accordance with GAAP on a basis
consistent with the latest consolidated audited financial statements of
the Parent and its Subsidiaries, but excluding the effect of
extraordinary and/or nonrecurring gains or losses for such period.
Eligible Accounts Receivable shall mean the gross amount of each
----------------------------
Company's Trade Accounts Receivable that are subject to a valid, first
priority and fully perfected security interest in favor of the Agent,
for the benefit of the Lenders, and which conform to the warranties
contained herein and at all times continue to be acceptable to the Agent
in the exercise of its reasonable business judgment, less, without
duplication, the sum of (a) any returns, discounts, claims, credits and
allowances of any nature (whether issued, owing, granted or outstanding)
and (b) reserves for: (i) sales to the United States of America or to
any agency, department or division thereof, unless such Company assigns
its right to payment therefor to Agent, in form and substance acceptable
to Agent, and takes all other action necessary to comply with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-section 203
et seq.), or any successor statute; (ii) foreign sales other than sales
(x) secured by stand-by letters of credit (in form and substance
reasonably satisfactory to the Agent) issued or confirmed by, and
payable at, banks having a place of business in the United States of
America and payable in United States currency, (y) to customers residing
in Canada, provided that such sales otherwise comply with all of the
other criteria for eligibility hereunder, are payable in United States
currency and do not exceed Five Million Dollars ($5,000,000) in the
aggregate at any one time, or (z) subject to credit insurance payable to
Agent, for the benefit of the Lenders, issued by an insurer, reasonably
acceptable to Agent, and on terms and in an amount acceptable to Agent;
(iii) accounts that remain unpaid more than either ninety (90) days from
invoice date or sixty (60) days from the due date thereof; provided,
however, that only such sixty (60) day limitation shall be applicable
for the customers listed on Schedule 1.1(b) hereto: (iv) contras;
---------------
(v) sales to Parent, any Subsidiary, or to any company affiliated with
any Company, Parent or any Subsidiary in any way; (vi) bill and hold
(deferred shipment) or consignment sales; (vii) sales to any customer
which is (w) insolvent, (x) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under
any federal or state law, (y) negotiating, or has called a meeting of
its creditors for purposes of negotiating, a compromise of its debts or
(z) financially unacceptable to the Agent or has a credit rating
unacceptable to the Agent, in each case as determined by Agent in its
reasonable discretion; (viii) all sales to any customer if fifty percent
(50%) or more of either (x) all outstanding invoices or (y) the
aggregate dollar amount of all outstanding invoices, are unpaid more
than either ninety (90) days from invoice date or sixty (60) days from
the due date thereof; (ix) historical returns, discounts, claims,
credits and allowances; and (x) any other reasons deemed necessary by
the Agent in its reasonable business judgment and which are customary
either in the commercial finance industry or in the lending practices of
the Agent. Notwithstanding the foregoing, Trade Accounts Receivable for
foreign sales subject to credit insurance in accordance with the
foregoing shall be deemed Eligible Accounts Receivable whether or not
such foreign Trade Accounts Receivable meet all of the other foregoing
eligibility requirements; provided, however, that the gross amount of
such foreign Trade Accounts Receivable that shall be deemed Eligible
Accounts Receivable shall not exceed the aggregate amount that any
credit insurer is obligated to pay with respect thereto.
Eligible Inventory shall mean the gross amount of each Company's
------------------
Inventory that is subject to a valid, first priority and fully perfected
security interest in favor of the Agent, for the benefit of the Lenders
and which conform to the warranties contained herein and which at all
times continue to be acceptable to the Agent in the exercise of its
reasonable business judgment, excluding, however, without duplication of
--------- -------
reserves taken by the Companies, (a) supplies (other than raw
materials), (b) goods not present in the United States of America,
(c) goods returned or rejected by any Company's customers (other than
goods that are undamaged and resalable in the normal course of
business), (d) goods to be returned to any Company's suppliers and
(e) goods in transit to third parties (other than to any Company's
agents, processors or warehouses), and less any reserves required by the
Agent in its reasonable discretion for special order goods, market value
declines, goods subject to bill and hold (deferred shipment) or
consignment sales, damaged goods, out-of-season goods and obsolete
goods. After July 15, 1999, Eligible Inventory shall not include
Inventory in possession of a warehouseman, bailee, customer or other
third party, unless such warehouseman, bailee, customer or third party
has executed an agreement acknowledging the security interest in favor
of Agent and agreeing to permit Agent to repossess the inventory (in
form and substance satisfactory to the Agent) and the Agent has taken
all other action required to perfect its security interest in such
Inventory.
Equipment shall mean all present and hereafter acquired equipment
---------
(as defined in the U.C.C.) including, without limitation, all machinery,
equipment, furnishings and fixtures, and all additions, substitutions
and replacements thereof, wherever located, together with all
attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time and the rules and regulations
promulgated thereunder from time to time.
Event(s) of Default shall have the meaning provided for in
-------------------
Section 10 of this Financing Agreement.
- ----------
Excluded Assets shall have the meaning provided for in Section 6.1
--------------- -----------
below.
Federal Funds Effective Rate means, for any day, the rate per annum
----------------------------
equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not published for any day
that is a Business Day, the average of the quotations for such day on
such transactions received by The Chase Manhattan Bank in New York, New
York from three (3) funds brokers of recognized standing selected by The
Chase Manhattan Bank in New York, New York.
Fixed Charge Coverage Ratio shall mean, for any period, the ratio
---------------------------
determined by dividing (a) EBITDA by (b) Fixed Charges.
Fixed Charges shall mean the sum of (i) all interest obligations
-------------
paid or due during such period, (ii) the amount of principal repaid or
scheduled to be repaid on all Indebtedness during such period,
(iii) Capital Expenditures paid for in cash by each Company during such
period, (iv) all federal, state and local income tax expenses due and
payable during such period, (v) the amount of Permitted Distributions
made during such period, and (vi) all payments due under the Lease
Documents.
GAAP shall mean generally accepted accounting principles in the
----
United States of America as in effect from time to time and for the
period as to which such accounting principles are to apply.
GECC shall mean General Electric Capital Corporation.
----
GECC Intercreditor Agreement shall mean that certain Intercreditor
----------------------------
Agreement dated as of June 14, 1999 among Agent, the Term Financiers,
D.P. Kelly, General Electric Capital Corporation, State Street Bank and
Trust Company of Connecticut, Parent and the Companies, as the same may
be amended, restated or supplemented from time to time.
General Intangibles shall mean all present and hereafter acquired
-------------------
general intangibles (as defined in the U.C.C.) including, without
limitation, all right, title and interest in and to all (a) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereon, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof (collectively referred to herein as "Patents"),
(b) all trademarks, service marks, trade dress, logos, trade names,
domain names, and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all
goodwill associated therewith, and all applications, registrations and
renewals in connection therewith (collectively referred to herein as
"Trademarks"), (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith
(collectively referred to herein as "Copyrights"), (d) all mask works
and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
methods, schematics, technology, technical data, designs, drawings,
flowcharts, block diagrams, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments of the foregoing categories of intellectual
property listed in subsections (a) through (g) herein (in whatever form
or medium), and (i) all licenses, sublicenses, agreements, or
permissions related to the foregoing categories of intellectual property
listed in subsections (a) through (g) herein (categories (a) through (i)
herein are collectively referred to as "Intellectual Property"), and
distribution agreements, supply agreements and tax refunds, together
with all money and claims for money now or hereafter due and payable in
connection with any of the foregoing or otherwise, and all cash and non-
cash proceeds thereof.
Guaranty means the Joint and Several Guaranty Agreement of even
--------
date herewith of the Guarantors.
Guarantors shall mean, collectively (a) Parent and (b) Viskase
----------
Holding.
Indebtedness shall mean, without duplication, all liabilities,
------------
contingent or otherwise, which are either (a) obligations in respect of
borrowed money or for the deferred purchase price of property, services
or assets, other than Inventory, or (b) lease obligations which, in
accordance with GAAP, have been, or which should be capitalized.
Intellectual Property shall have the meaning assigned to such term
---------------------
in the definition of "General Intangibles" in this Agreement.
Intellectual Property Assignment means those certain Grants of
--------------------------------
Security Interests in Intellectual Property of even date herewith made
by Parent and each Company in favor of Agent, on behalf of the Lenders.
Intercompany Loans shall mean all Indebtedness incurred by any
------------------
Company from any Subsidiary.
Intercompany Receivables shall mean all bona fide Trade Accounts
------------------------
Receivable resulting from the sale of goods or the rendering of services
by any Company, Guarantor or Subsidiary to any other Company, Guarantor
or Subsidiary, provided that the amounts payable with respect thereto is
in the ordinary course of business consistent with past practice.
Inventory shall mean all of each Company's present and hereafter
---------
acquired inventory (as defined in the U.C.C.) including, without
limitation, all merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with
all goods and materials used or usable in manufacturing, processing,
packaging or shipping same; in all stages of production - from raw
materials through work-in-process to finished goods - and all proceeds
thereof of whatever sort.
Inventory Advance Percentage shall mean sixty-five percent (65%).
----------------------------
Inventory Loan Cap shall mean Thirty-Five Million Dollars
------------------
($35,000,000).
Investment Property shall mean all of each Company's present and
-------------------
hereafter acquired securities, securities entitlements, securities
accounts and other investment property (as such terms are defined in the
U.C.C.).
Issuing Bank shall mean the bank issuing Letters of Credit for each
------------
Company, which shall initially be The Chase Manhattan Bank, New York,
New York, unless otherwise elected by Agent.
Lease Documents shall have the meaning assigned to such term in
---------------
Schedule I to the GECC Intercreditor Agreement.
Letters of Credit shall mean all letters of credit issued with the
-----------------
assistance of the Lenders (acting through the Agent) by an Issuing Bank
for or on behalf of each Company.
Letter of Credit Guaranty shall mean the guaranty of each Company's
-------------------------
reimbursement obligation under the Issuing Bank's reimbursement
agreement, application for letter of credit or other like document which
the Agent, on behalf of the Lenders, delivers to the Issuing Bank.
Letter of Credit Guaranty Fee shall mean the fee that the Agent,
-----------------------------
for the benefit of the Lenders, may charge the Company under Section 8.5
-----------
of this Financing Agreement for (a) issuing the Letter of Credit
Guaranty or (b) otherwise aiding any Company in obtaining Letters of
Credit.
Letter of Credit Sub-Line shall mean Twenty-Six Million Dollars
-------------------------
($26,000,000) in the aggregate.
Leverage Ratio shall mean the ratio determined by dividing
--------------
(a) Total Liabilities by (b) EBITDA.
LIBOR shall mean at any time of determination and subject to
-----
availability, for each LIBOR Period, the London Interbank Offered Rate
paid in London on dollar deposits from other banks for such LIBOR Period
as quoted by The Chase Manhattan Bank in New York, New York. In the
event that The Chase Manhattan Bank in New York, New York ceases to
quote such a rate for any LIBOR Period requested by Representative, then
LIBOR shall mean at any time of determination and subject to
- -----
availability, for each LIBOR Period, the London Interbank Offered Rate
paid in London on dollar deposits from other banks for such LIBOR Period
as determined by the Agent based upon information presented by Telerate
Systems on page 3750 as of 11:00 a.m. (London Time).
LIBOR Loan shall mean those Revolving Loans and the Term Loan for
----------
which the Representative has elected, in accordance with the provisions
of Section 8 hereof, to use LIBOR as the applicable interest rate.
---------
LIBOR Period shall mean a one (1) month, two (2) month, three (3)
------------
month or six (6) month period, as selected by Representative in
accordance with the provisions of this Financing Agreement.
Line of Credit Fee shall (a) mean the monthly fee owed by the
------------------
Companies to the Lenders for the Revolving Line of Credit, and (b) be
equal to the product obtained by multiplying (i) the difference between
(x) aggregate amount of the Revolving Line of Credit, and (y) the sum of
the average daily balance of Revolving Loans and the average daily
undrawn face amount of all Letters of Credit outstanding for each month,
by (ii) one-half of one percent (0.50%) per annum for the number of days
in said month.
Loan Documents shall mean this Financing Agreement, the Guaranty,
--------------
the Viskase Companies Pledge, the Viskase Corporation Pledge, the
Viskase Holding Pledge, the Collateral Assignment of Lawsuit Proceeds,
the Security Agreements, the Patent, Trademark and License Assignments,
the Subordination Agreements, the Real Estate Collateral Documents, the
Collateral Assignment of Intercompany Loan, the Canada Security
Agreement, the GECC Intercreditor Agreement and any other document,
instrument or agreement entered into in connection with this Financing
Agreement.
Mandatory Prepayment shall (a) mean the amount, if any, by which
--------------------
the Companies must prepay the Term Loan on or before the 90th day after
the end of the Companies' fiscal year, and (b) be determined as set
forth in Section 4.6 of this Financing Agreement.
Material Adverse Effect shall mean a material adverse effect on
-----------------------
either (a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Companies, taken as a whole,
(b) the ability of any Company to perform its obligations under this
Financing Agreement or (c) the ability of the Agent or the Lenders to
enforce the Obligations or their respective rights and remedies under
this Financing Agreement.
Net Worth shall mean assets in excess of liabilities, determined in
---------
accordance with GAAP, on a consistent basis with the latest consolidated
audited financial statements of the Parent and its Subsidiaries.
Obligations shall mean (a) all loans and advances made by the Agent
-----------
and the Lenders to each Company or to others for each Company's account
(including, without limitation, all Revolving Loans, Letters of Credit
and the Term Loan); (b) any and all other indebtedness, obligations and
liabilities which may be owed by any Company to the Agent or any Lender
and arising out of, or incurred in connection with, this Financing
Agreement or any of the other Loan Documents (including, without
limitation, all Out-of-Pocket Expenses and interest accruing after
commencement of a case under the Bankruptcy Code, 11 U.S.C. 101-1331),
whether (i) now in existence or incurred by any Company from time to
time hereafter (including any Company operating as a Debtor or Debtor in
Possession under the Bankruptcy Code, 11 U.S.C. 101-1331),
(ii) secured by pledge, lien upon or security interest in any Company's
assets or property or the assets or property of any other person, firm,
entity or corporation, (iii) such indebtedness is absolute or
contingent, joint or several, matured or unmatured, direct or indirect,
or (iv) any Company is liable to the Agent or any Lender for such
indebtedness as principal, surety, endorser, guarantor or otherwise;
(c) all indebtedness, obligations and liabilities owed by each Company
to the Agent or the Lenders under any other agreement or arrangement now
or hereafter entered into between any Company, on one hand, and the
Agent and/or the Lenders, on the other hand, relating to the
transactions contemplated by this Financing Agreement; (d) indebtedness,
obligations and liabilities incurred by, or imposed on, the Agent and/or
the Lenders as a result of environmental claims relating to each
Company's operations, premises or waste disposal practices or disposal
sites; (e) each Company's liabilities to the Agent and the Lenders as
maker or endorser on any promissory note or other instrument for the
payment of money pursuant to the terms hereof or any other Loan
Document; (f) each Company's liabilities to the Agent and the Lenders
under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which the Agent and/or the Lenders
may make or issue to others for any Company's account pursuant to the
terms hereof or any other Loan Document, including any accommodations
extended by the Agent or any Lender with respect to applications for
Letters of Credit, the Agent's acceptance of drafts on behalf of the
Lenders or the Agent's endorsement of notes or other instruments on
behalf of the Lenders for the Company's account and benefit; and (g) the
amount of any payments made by Agent to cure any "Events of Default" (as
such term is defined in the GECC Intercreditor Agreement) as permitted
by Section 4 of the GECC Intercreditor Agreement. By virtue of its
execution of this Agreement, the Companies hereby consent to the Agent's
making payments to cure any "Event of Default" pursuant to Section 4 of
the GECC Intercreditor Agreement.
Operating Leases shall mean all leases of property (whether real,
----------------
personal or mixed) other than Capital Leases.
Other Collateral shall mean: (a) all now owned and hereafter
----------------
acquired deposit accounts maintained by or on behalf of each Company
with any bank or financial institution; (b) all of each Company's cash
and other money and property in the possession or control of the Agent
or any Lender; (c) all of each Company's books, records, ledger cards,
disks and related data processing software at any time evidencing or
containing information relating to any of the Collateral described
herein or otherwise necessary or helpful in the collection thereof or
realization thereon; (d) all cash and non-cash proceeds of the
foregoing; and (e) all payments and damage awards received by Viskase
Corporation in connection with the lawsuit between Viskase Corporation
and American National Can Company pursuant to the terms of the
Collateral Assignment of Lawsuit Proceeds.
Out-of-Pocket Expenses shall mean all of the Agent's present and
----------------------
future out-of-pocket-expenses incurred in connection with this Financing
Agreement and the other Loan Documents, including, without limitation,
(a) the cost of lien searches (including tax lien and judgment lien
searches), pending litigation searches and similar items, (b) fees and
taxes imposed in connection with the filing of any financing statements
or other personal property security documents; (c) all costs and
expenses incurred by the Agent and the Lenders in opening and
maintaining Deposit Accounts, depositing checks, receiving and
transferring funds (including charges imposed on the Agent and the
Lenders for "insufficient funds" and the return of deposited checks;
(d) any amounts paid by, incurred by or charged to the Agent or any
Lender by the Issuing Bank under any Letter of Credit Guaranty or any
Company's reimbursement agreement, application for Letter of Credit or
other like document which pertains either directly or indirectly to
Letters of Credit, and the Agent's standard fees relating to the Letters
of Credit and any drafts thereunder; (e) title insurance premiums, real
estate survey costs and mortgage or recording taxes and fees; (f) all
expenses, costs and fees incurred by the Agent in connection with any
action taken under Section 10.3 hereof; and (g) without duplication, all
costs and expenses incurred by the Agent and the Lenders in connection
with the collection, liquidation, enforcement and defense of the
Obligations and the Agent's and the Lenders' rights in the Collateral,
and all disbursements and reasonable fees of in-house and outside
counsel to the Agent and the Lenders, including but not limited to such
fees and disbursements incurred as a result of a workout, restructuring,
reorganization, liquidation, insolvency proceeding and in any appeals
arising therefrom, whether incurred before, during or after the
termination of this Financing Agreement or the commencement of any case
with respect to Parent, any Company or any Subsidiary under the United
States Bankruptcy Code or any similar statute.
Parent shall mean Viskase Companies, Inc. (formerly known as
------
Envirodyne Industries, Inc.), a Delaware corporation.
Patents shall have the meaning assigned in the definition of
-------
"General Intangibles" in this Agreement, and all cash and non-cash
proceeds thereof.
Permitted Distributions shall mean (a) distributions from Viskase
-----------------------
Corporation to the Parent not to exceed Fifty-Five Million Dollars
($55,000,000), plus accrued interest and any applicable prepayment fees,
for the sole purpose of permitting Parent to satisfy a mandatory
redemption payment due and payable on or before June 15, 1999 in
connection with the Senior Secured Notes, (b) dividends from the
Companies and any Subsidiary to the parent corporation thereof;
provided, however, that dividends to Parent shall be limited to
dividends needed for Parent to make payments on the Senior Unsecured
Notes, existing Indebtedness under that certain Amended and Restated
Credit Agreement dated as of June 1, 1998 among Parent, the lenders
party thereto and BT Commercial Corporation, as agent, and for the
payment of corporate overhead items (up to Two Million Five Hundred
Thousand Dollars ($2,500,000) in the aggregate during any fiscal year),
and (c) dividends paid in shares of capital stock of Parent or any
Subsidiary.
Permitted Encumbrances shall mean: (a) liens existing on the date
----------------------
hereof on specific items of Equipment and listed on Schedule 1.1(a)
hereto; (b) Purchase Money Liens; (c) Customarily Permitted Liens;
(d) liens granted to the Agent, on behalf of the Lenders, by each
Company and the Guarantors and liens granted to secure the Canada
Intercompany Loan; (e) liens of judgment creditors provided such liens
do not exceed, in the aggregate, at any time, One Million Dollars
($1,000,000) (other than liens bonded or insured to the reasonable
satisfaction of the Agent); (f) liens for taxes not yet due and payable,
or liens for taxes due and payable, which are being contested diligently
and in good faith by such Company, Guarantor or Subsidiary by
appropriate proceedings, and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP, but only if such liens (i) are not (other than with respect to
Real Estate) senior to the liens granted by the Companies to the Agent,
on behalf of the Lenders, or (ii) do not secure taxes owed to the United
States of America or any department thereof; (g) liens to secure
(i) Intercompany Loans made by any Guarantor or any Subsidiary to any
Company, (ii) Intercompany Loans made by a Subsidiary (not a Guarantor)
to another Subsidiary (not a Guarantor), and (iii) Intercompany
Receivables that qualify as Permitted Indebtedness hereunder; (h) liens
to secure Indebtedness of foreign domiciled Subsidiaries that qualifies
as Permitted Indebtedness hereunder; provided, that such liens are not
granted on the stock, share interests or equity interests of any such
Subsidiaries; (i) liens granted by each Company and the Guarantors to
the Term Financiers pursuant to the Term Financiers Loan Documents;
(j) liens granted by each Company and the Guarantors to D.P. Kelly
pursuant to the D.P. Kelly Loan Documents; and (k) renewals and
extensions of liens constituting Permitted Encumbrances hereunder,
provided that the lien encumbering the asset giving rise to such
Permitted Encumbrance does not encumber any other asset of a Company,
Guarantor or Subsidiary.
Permitted Indebtedness shall mean: (a) current Indebtedness
----------------------
maturing in less than one year and incurred in the ordinary course of
business for raw materials, supplies, equipment, services, taxes or
labor; (b) Indebtedness secured by Purchase Money Liens;
(c) Subordinated Debt; (d) Indebtedness arising under the Letters of
Credit and this Financing Agreement; (e) indebtedness arising under the
Term Financiers Financing Agreement, in an amount not to exceed, without
the prior written consent of the Agent, $30,000,000 plus, accrued and
unpaid interest thereon and all fees payable thereunder;
(f) indebtedness arising under the D.P. Kelly Financing Agreement in an
amount not to exceed, without the prior written consent of the Agent,
$5,000,000 plus, accrued and unpaid interest thereon; (g) deferred taxes
and other expenses incurred in the ordinary course of business;
(h) other Indebtedness existing on the date of execution and set forth
on Schedule 1.1(c) attached hereto; (i) Intercompany Loans and
---------------
Intercompany Receivables; (j) Indebtedness incurred by foreign domiciled
Subsidiaries for their own working capital and general corporate
purposes not to exceed Fifteen Million Dollars ($15,000,000) in the
aggregate at any one time outstanding; provided, that in no event shall
such Indebtedness be guaranteed by a Company or Guarantor or be secured
by assets other than the assets of such Subsidiary incurring the
applicable Indebtedness; (k) Indebtedness to a third party, not secured
by liens or security interests of any kind, not to exceed Two Million
Five Hundred Thousand Dollars ($2,500,000) in the aggregate at any one
time outstanding; (l) the Canada Intercompany Loan; (m) guaranties
permitted under Section 7.9(e) hereof; and (n) refinancings and renewals
--------------
of Permitted Indebtedness, provided that the aggregate principal amount
thereof does not increase as a result of any such refinancing or renewal
from the amount outstanding at the time of such refinancing or renewal
unless such increase does not cause such Indebtedness to fail to qualify
as Permitted Indebtedness hereunder.
Permitted Investments shall mean: (a) readily marketable direct
---------------------
obligations of the United States of America or of any agency or
instrumentality thereof, the obligations of which are backed by the full
faith and credit of the United States of America, or readily marketable
obligations unconditionally guaranteed by the United States of America
or by any such agency or instrumentality, in each case maturing within
one year from the date of acquisition thereof; (b) certificates of
deposit, time deposits or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by, or demand deposit
accounts maintained with, any commercial bank or trust company which is
a member of the Federal Reserve System, the long-term debt obligations
of which are rated at least A by Moody's Investors Service Inc.
("Moody's") or Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and which has combined capital and
surplus of at least Two Hundred Fifty Million Dollars ($250,000,000)
(any such bank or trust company, an "Eligible Bank"); (c) repurchase
agreements with respect to securities of the type referred to in the
foregoing clause (a) transacted with Eligible Banks, provided that each
such repurchase agreement obligates an Eligible Bank to repurchase the
securities which are the subject thereof no later than thirty (30) days
after the acquisition of such repurchase agreement; (d) money-market
preferred stock or money-market auction notes, in each case maturing or
redeemable at the option of the holder thereof no more than one year
after the date of acquisition thereof and having a rating of at least A3
by Moody's or at least A- by S&P, and Tax Exempt Obligations (as
hereinafter defined) in the form of auction rate reset notes that reset
within one year from the date of acquisition thereof; (e) obligations,
the interest with respect to which is exempt from federal income
taxation under Section 103 of the Internal Revenue Code, having a long
term rating of at least A3 or A-, or a short term rating of at least P-1
or A-1, by Moody's or S&P, respectively, and having a maturity of less
than two years ("Tax Exempt Obligations"), in addition to those
described in the foregoing clause (d); (f) open market commercial paper
of United States corporations maturing not later than Two Hundred
Seventy (270) days after the issuance thereof and having a rating of at
least P-2 by Moody's or at least A-2 by S&P; (g) investments in any
mutual fund registered under the Investment Company Act of 1940, as
amended, the portfolio of which is limited to Investments of the
character described in the foregoing clauses (a) through (f); and (h)
notes or other debt obligations or securities received in connection
with the bankruptcy or reorganization of customers and in settlement of
delinquent obligations of, or disputes with, customers or suppliers in
the ordinary course of business.
Person shall mean and include an individual, a partnership, a joint
------
venture, a limited liability company, a corporation (whether or not for
profit), a trust, an unincorporated organization, a government or any
department or agency thereof or any other entity or organization.
Pledgors means, collectively, Viskase Companies, Viskase
--------
Corporation, Viskase Sales and Viskase Holding.
Pledge Agreements means, collectively, the Viskase Companies
-----------------
Pledge, the Viskase Corporation Pledge, the Viskase Sales Pledge and the
Viskase Holding Pledge.
Prepayment Premium shall (a) mean the amount payable by the
------------------
Companies to the Agent for the benefit of the Lenders upon a voluntary
prepayment, in whole or in part, of the Term Loan on a date other than
the date occurring between the thirtieth (30th) day preceding the
Termination Date and the Termination Date and (b) be computed by
multiplying the amount so prepaid by one percent (1.00%).
Notwithstanding the foregoing, (a) if the Term Loan is prepaid in full
with the proceeds of asset sales (regardless of whether the Revolving
Line of Credit is terminated concurrently), the Lenders shall earn a
prepayment premium equal to one-quarter of one percent (0.25%) of the
principal amount of the Term Loan prepaid and (b) if the Term Loan is
prepaid in whole or in part with the proceeds of payments or damage
awards in connection with the existing American National Can litigation
described in the Collateral Assignment of Lawsuit Proceeds (regardless
of whether the Revolving Line of Credit is terminated concurrently), no
Prepayment Premium shall be due and payable.
Promissory Note shall mean the note, in the form of Exhibit A
--------------- ---------
attached hereto, delivered by the Company to Agent to evidence the Term
Loan.
Purchase Money Liens shall mean liens on any item of Equipment or
--------------------
real property (other than the Real Estate) acquired after the date of
this Financing Agreement (including by way of Capital Lease) provided
that (a) each such lien shall attach only to the property to be
acquired, (b) a description of the property so acquired (having a book
value in excess of One Hundred Thousand Dollars ($100,000)) is furnished
to the Agent, and (c) the debt incurred in connection with such
acquisitions shall not exceed in the aggregate Five Million Dollars
($5,000,000) at any time outstanding.
Real Estate shall mean the Companies' owned real property located
-----------
in Centerville, Iowa; Kentland, Indiana; Loudon, Tennessee; Osceola,
Arkansas; Pauls Valley, Oklahoma; Bensalem, Pennsylvania; Chicago,
Illinois and Bedford Park, Illinois , each parcel of which has been, or
will be, encumbered, mortgaged, pledged or assigned to the Agent on
behalf of the Lenders or its designee.
Real Estate Collateral Documents shall mean each Mortgage, Security
--------------------------------
Agreement and Assignment of Leases and Rents, each Deed of Trust,
Security Agreement and Assignment of Leases and Rents and the
Environmental Indemnity Agreement, each of even date herewith made by
the Companies, as applicable, in favor of Agent on behalf of the Lenders
with respect to each owned parcel of Real Estate.
Representative shall mean Viskase Corporation, which shall act as
--------------
Companies' sole and exclusive representative under this Agreement for
all purposes, including, without limitation, to receive funds advanced
hereunder, to receive notices and other communications from Lenders or
Agent hereunder, to make requests for advances of funds hereunder and to
amend this Agreement.
Required Lenders shall mean (a) at all times while there are (2)
----------------
two or fewer Lenders hereunder, all of the Lenders, and (b) at all times
while there are three (3) or more Lenders hereunder, those Lenders
holding at least fifty-one percent (51%) of the commitments under the
Line of Credit (or fifty-one percent (51%) of the outstanding balance of
all loans and Letters of Credit, in the event that the commitments of
the Lenders have terminated).
Revolving Base Rate Loans shall mean Revolving Loans bearing
-------------------------
interest at the Base Rate plus the Applicable Margin.
Revolving LIBOR Loans shall mean Revolving Loans which are LIBOR
---------------------
Loans.
Revolving Line of Credit shall mean the commitments of the Lenders
------------------------
to make Revolving Loans pursuant to Section 3 of this Financing
Agreement and to assist each Company in obtaining Letters of Credit
pursuant to Section 5 of this Financing Agreement (subject to the Letter
of Credit Sub-Line) in the maximum aggregate amount equal to FIFTY
MILLION DOLLARS ($50,000,000).
Revolving Loans shall mean the loans and advances made, from time
---------------
to time, to or for the account of each Company by the Agent on behalf of
the Lenders pursuant to Section 3 of this Financing Agreement.
Revolving Loan Account shall have the meaning specified in
----------------------
Section 3.6 of this Financing Agreement.
- -----------
Security Agreements means, collectively, the Viskase Companies
-------------------
Security Agreement and the Viskase Holding Security Agreement.
Senior Secured Notes shall means those certain First Priority
--------------------
Senior Secured Notes due 2000 issued by Parent, pursuant to that certain
Indenture dated as of June 20, 1995 between Parent and Shawmut Bank
Connecticut, National Association, as Trustee.
Senior Unsecured Notes shall mean those certain 10 1/4% senior
----------------------
notes issued by Parent pursuant to that certain Indenture dated as of
December 31, 1993 between Parent and Bankers Trust Company, as Trustee.
Settlement Date shall mean Friday of each week (or if any Friday is
---------------
not a Business Day, the immediately preceding Business Day), provided
that, after the occurrence of an Event of Default or during a continuing
decline or sudden increase in the principal amount of Revolving Loans,
the Agent, in its discretion, may require that the Settlement Date occur
more frequently (even daily), so long as the Settlement Date chosen by
the Agent is a Business Day.
Subordinated Debt shall mean the debt owed by each Company to a
-----------------
Subordinating Creditor (and the instrument evidencing such debt).
Subordinating Creditors shall mean each of the Term Financiers and
-----------------------
D.P. Kelly.
Subordination Agreements shall mean each agreement, in form and
------------------------
substance satisfactory to the Agent, among each Company, each Guarantor,
as applicable, each Subordinating Creditor and the Agent, on behalf of
the Lenders, pursuant to which the Subordinated Debt is subordinated to
the prior payment and satisfaction of the Companies' Obligations to the
Agent and the Lenders.
Subsidiary means any domestic or foreign corporation, partnership,
----------
joint venture, limited liability company or other entity or organization
of which a Person owns, directly or indirectly through one or more
intermediaries, more than fifty percent (50%) of the voting stock at the
time of determination.
Surplus Cash shall mean for any fiscal year of the Parent, the
------------
excess of the Parent's EBITDA for such fiscal year over Fixed Charges
for such fiscal year, in each case on a consolidated basis.
Tangible Net Worth shall mean, at any time, Net Worth plus
------------------
Subordinated Debt after subtracting therefrom the amount of any
intangible assets (as determined in accordance with GAAP), including
amounts due from Subsidiaries and amounts due from investments in
Subsidiaries (to the extent such amounts due were treated as assets in
the determination of Net Worth).
Term Base Rate Loans shall mean any borrowing of a Term Loan
--------------------
bearing interest at the Base Rate plus the Applicable Margin.
Term Financiers shall mean, collectively, General Motors Employee
---------------
Global Group Pension Trust, Department of Pensions - City of Los
Angeles, Navy Exchange Service Command Retirement Trust, Ratheon Co.
Master Pension Trust, and First Data Corporation Master Retirement Trust
and their successors and assigns.
Term Financiers Financing Agreement shall mean that certain
-----------------------------------
Financing Agreement, dated as of the date hereof, by and between the
Term Financiers and the Companies, as the same may be amended, restated
or supplemented from time to time.
Term Financiers Loan Documents shall mean the Term Financiers
------------------------------
Financing Agreement and all other instruments and documents that are in
effect as of the date hereof and are executed in connection with or
otherwise relating to the Term Financiers Financing Agreement, as the
same may be amended, restated or supplemented from time to time.
Term LIBOR Loans shall mean any borrowing of a Term Loan which is
----------------
a LIBOR Loan.
Term Loan Promissory Note shall mean the promissory note in the
-------------------------
form of Exhibit A hereto, executed by the Company to evidence the Term
Loan .
Term Loan shall mean the term loan in the original principal amount
---------
of FIFTY MILLION DOLLARS ($50,000,000), made by the Lenders pursuant to,
and repayable in accordance with, the provisions of Section 4 of this
---------
Financing Agreement.
Termination Date shall mean June 30, 2001.
----------------
Total Liabilities shall mean total liabilities of each Company
-----------------
determined in accordance with GAAP, on a basis consistent with the
latest audited financial statements of the Companies.
Trade Accounts Receivable shall mean that portion of Accounts which
-------------------------
arises from the sale of Inventory or the rendition of services in the
ordinary course of business.
Trademarks shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash and
non-cash proceeds thereof.
U.C.C. shall mean the Uniform Commercial Code as in effect from
-----
time to time in the State of Illinois.
Viskase Brazil means Viskase Brasil Embalagens, organized under the
--------------
laws of Brazil.
Viskase Canada means Viskase Canada Inc., a corporation organized
--------------
under the laws of Ontario, Canada.
Viskase Chile means Viskase Chile Embalajes LTDA, organized under
-------------
the laws of Chile.
Viskase Companies Pledge means that certain Pledge Agreement of
------------------------
even date herewith made by Parent in favor of Agent pledging one hundred
percent (100%) of the capital stock of Viskase Corporation, Viskase
Films and all other directly owned Subsidiaries of Parent, as described
therein.
Viskase Companies Security Agreement means that certain Security
------------------------------------
Agreement of even date herewith made by Parent in favor of Agent.
Viskase Corporation Pledge means that certain Pledge Agreement of
--------------------------
even date herewith made by Viskase Corporation in favor of Agent
pledging one hundred percent (100%) of the capital stock of Viskase
Sales and Viskase Holding.
Viskase Europe means Viskase Europe Limited, organized under the
--------------
laws of the United Kingdom.
Viskase Films means Viskase Films, Inc., a Delaware corporation.
-------------
Viskase Holding means Viskase Holding, Inc., a Delaware
---------------
corporation.
Viskase Holding Pledge means that certain Pledge Agreement of even
----------------------
date herewith made by Viskase Holding in favor of Agent pledging (i)
sixty-five percent (65%) of the capital stock of Viskase Europe and
Viskase Brazil and (ii) one hundred percent (100%) of the capital stock
of Viskase Australia Limited.
Viskase Holding Security Agreement means that certain Security
----------------------------------
Agreement of even date herewith made by Viskase Holding in favor of
Agent.
Viskase Sales Pledge means that certain Pledge Agreement of even
--------------------
date herewith made by Viskase Sales in favor of Agent pledging one
hundred percent (100%) of the capital stock of Viskase Puerto Rico
Corporation.
Working Capital means Current Assets less Current Liabilities.
---------------
SECTION 2. Conditions Precedent
--------------------
2.1 The obligation of the Agent and the Lenders to make the
initial loans hereunder is subject to the satisfaction, immediately
prior to or concurrently with the making of such loans, of the following
conditions precedent:
(a) Lien Priority - The liens granted in favor of the Agent
-------------
pursuant to the Loan Documents shall be valid and perfected, first
priority liens on the Collateral subject only to the Permitted
Encumbrances.
(b) Term Financiers Loan Documents and D.P. Kelly Loan
--------------------------------------------------
Documents. The terms and conditions of each of the Term Financiers Loan
- ---------
Documents and the D.P. Kelly Loan Documents shall be satisfactory to
Agent in all respects. Each Company shall have executed and delivered
to the Agent the Term Financiers Loan Documents and the D.P. Kelly Loan
Documents.
(c) Fraudulent Conveyances and Similar Issues. The Agent
-----------------------------------------
shall be satisfied with all fraudulent conveyances and similar issues
arising out of the structure of the financing arrangements provided for
under the terms and conditions of the Loan Documents, the Term
Financiers Loan Documents and the D.P. Kelly Loan Documents.
(d) Lien Searches - The Agent shall have received tax,
-------------
judgment and U.C.C. searches (or the foreign country equivalents
thereof) satisfactory to the Agent for all locations presently occupied
or used by each Company, each Guarantor, and such other Subsidiaries
deemed necessary by Agent.
(e) Casualty Insurance - Each Company and each Guarantor
------------------
shall have delivered to the Agent evidence satisfactory to the Agent
that casualty insurance policies listing the Agent on behalf of the
Lenders as loss payee or mortgagee, as the case may be, are in full
force and effect, all as set forth in paragraph (a) of Section 7.5 of
this Financing Agreement.
(f) Mortgages/Deeds of Trust/Assignments of Rents - The
---------------------------------------------
Companies shall have executed and delivered to the Agent on behalf of
the Lenders (or to an agent of the Agent or an agent of a title
insurance company acceptable to the Agent), such mortgages, deeds of
trust and assignments of rents and leases as the Agent may reasonably
require to obtain first liens on the Real Estate, including, without
limitation, the Real Estate Collateral Documents.
(g) UCC Filings - Any documents (including without
-----------
limitation, financing statements) required to be filed in order to
create, in favor of the Agent on behalf of the Lenders, a first priority
and, subject to Permitted Encumbrances, exclusive perfected security
interest in the Collateral and substantially all of the assets of the
Guarantors (to the extent that such a security interest may be perfected
by a filing under the U.C.C.), shall have been properly filed in each
office in each jurisdiction required in order to create in favor of the
Agent on behalf of the Lenders a perfected lien on the Collateral. The
Agent shall have received acknowledgment copies of all such filings (or,
in lieu thereof, the Agent shall have received other evidence
satisfactory to the Agent that all such filings have been made); and the
Agent shall have received evidence that all necessary filing fees, taxes
and other expenses related to such filings have been paid in full.
(h) Title Insurance Policies - The Agent shall have
------------------------
received, in respect of each mortgage or deed of trust, a mortgagee's
marked-up unconditional commitment for title insurance from a title
insurance company reasonably satisfactory to the Agent (the "Title
Insurance Company"). Each such commitment shall obligate the Title
Insurance Company to issue to the Agent a title insurance policy (i) in
an amount not less than the appraised value of the Real Estate covered
thereby; (ii) that insures that the mortgage or deed of trust insured
thereby creates a valid first priority lien on the property covered by
such mortgage or deed of trust, free and clear of all defects and
encumbrances except for Permitted Encumbrances; (iii) that names the
Agent, for the benefit of the Lenders, as the insured thereunder; and
(iv) that contains such endorsements and effective coverage as the Agent
may reasonably request, including without limitation a revolving line of
credit endorsement. The Agent also shall have received evidence that
all premiums in respect of the policies to be issued have or will be
paid on the Closing Date and that all charges for mortgage taxes and
recording fees, if any, shall have been paid.
(i) Surveys - The Agent and the Title Insurance Company shall
-------
have received maps or plats of a perimeter or boundary of the site of
each of the properties covered by the mortgages or deeds of trust, dated
a date satisfactory to the Agent and the Title Insurance Company
prepared by an independent professional licensed land surveyor
satisfactory to the Agent and the relevant Title Insurance Company,
which maps or plats and the surveys on which they are based shall be
made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping;
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on the maps or plats or surveys the following:
(i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines insofar as
the foregoing affect the perimeter or boundary of such property;
(ii) the lines of streets abutting the sites and width thereof;
(iii) all access and other easements appurtenant to the sites or
necessary or desirable to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the sites, whether recorded, apparent
from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (vi) if the site
is designated as being on a filed map, a legend relating the survey to
said map. Further, the survey shall be certified to the Agent in behalf
of the Lenders and the Title Insurance Company and contain a legend
reciting as to whether or not the site is located in a flood zone.
(j) Guaranty and Guarantor Security Agreements - (i) Each
------------------------------------------
Guarantor shall have executed and delivered to the Agent a guaranty, in
form acceptable to the Agent, guaranteeing the Obligations, including,
but not limited to, the Guaranty, and (ii) each of Parent and Viskase
Holding shall have executed a security agreement and other appropriate
security documents, including, but not limited to, the Security
Agreements, pursuant to which Parent and Viskase Holding each grant to
the Agent, for the benefit of the Lenders, a security interest in
substantially all of its assets.
(k) Opinions - Subject to the filing, priority and remedies
--------
provisions of the U.C.C., the provisions of the Bankruptcy Code,
insolvency statutes or other like laws, the equity powers of a court of
law and such other matters as may be agreed upon with the Agent, counsel
for the Company, the Pledgors and the Guarantors shall have delivered to
the Agent opinion(s) satisfactory to the Agent opining, inter alia,
that: (x) this Financing Agreement, the Guaranties, the Security
Agreements and the Pledge Agreements executed by each Company, each
Guarantor and each Pledgor, as applicable, and all other Loan Documents
executed by each Company and delivered to the Agent in connection with
this Financing Agreement are (1) valid, binding and enforceable
according to their respective terms, (2) duly authorized and (3) do not
violate any terms, provisions, representations or covenants in the
charter, by-laws or other organizational agreement of any Company, any
Pledgor or any Guarantor or, to the best knowledge of such counsel, of
any loan agreement, mortgage, deed of trust, note, security or pledge
agreement or indenture to which any Company, any Pledgor or any
Guarantor is a signatory or by which any Company, any Pledgor, any
Guarantor or any Company's, any Pledgor's or any Guarantor's assets are
bound.
(l) Pledge Agreements - Each Pledgor, as applicable, shall
-----------------
(i) execute and deliver to the Agent on behalf of the Lenders the Pledge
Agreements, and (ii) deliver to the Agent on behalf of the Lenders the
stock certificates evidencing such stock together with duly executed
stock powers with respect thereto, as applicable.
(m) Intercreditor Agreement - GECC and all applicable parties
-----------------------
shall have entered into the GECC Intercreditor Agreement with Agent, in
form and substance acceptable to Agent.
(n) Additional Documents - Each Company shall have executed
--------------------
and delivered to the Agent loan documents necessary to consummate the
lending arrangement contemplated among the Companies and the Lenders.
(o) Subordination Agreement(s) - Each Subordinating
--------------------------
Creditor(s) shall have executed and delivered to the Agent a
Subordination Agreement.
(p) Environmental Reports - The Agent shall have received
---------------------
environmental audit reports on (i) all of each Company's leasehold and
fee interests in the Real Estate, and (ii) the Company's waste disposal
practices. The reports must be satisfactory to the Agent and not
disclose or indicate any material liability (real or potential) arising
out of any Company's premises, its operations, its waste disposal
practices or waste disposal sites used by any Company.
(q) Board Resolutions - The Agent shall have received a copy
-----------------
of the resolutions of the Board of Directors of each Company, each
Pledgor and each Guarantor (as the case may be) authorizing the
execution, delivery and performance of (i) this Financing Agreement, as
applicable, (ii) the Guaranties executed by the Guarantors, as
applicable, (iii) the Pledge Agreements executed by each Pledgor, as
applicable, and (iv) any related agreements, in each case certified by
the Secretary or Assistant Secretary of each Company, the Pledgors and
the Guarantors (as the case may be) as of the date hereof, together with
a certificate of the Secretary or Assistant Secretary of each Company,
each Pledgor and each Guarantor (as the case may be) as to the
incumbency and signature of the officers executing such agreements and
any certificate or other documents to be delivered by them pursuant
hereto.
(r) Corporate Organization - The Agent shall have received
----------------------
(i) a copy of the Certificate or Articles of Incorporation (or other
equivalent organizational documents) of each Company, each Pledgor and
each Guarantor, certified by the applicable authority in such entity's
State of organization or foreign country of organization, as applicable,
and (ii) copies of the By-Laws or equivalent corporate constituent
document (as amended through the date hereof), if any, of each Company,
each Pledgor and each Guarantor, certified by the Secretary or Assistant
Secretary thereof.
(s) Officer's Certificate - The Agent shall have received an
---------------------
executed Officer's Certificate of each Company, satisfactory in form and
substance to the Agent, certifying that (i) the representations and
warranties contained herein are true and correct in all material
respects on and as of the date hereof, (ii) each Company is in
compliance with all of the terms and provisions set forth herein and
(iii) no Default or Event of Default has occurred.
(t) Absence of Default - No Default, Event of Default or any
------------------
fact or circumstance having a Material Adverse Effect shall have
occurred or arisen.
(u) Appraisals - The Agent shall have received appraisals on
----------
each Company's fixed assets, which appraisals shall be by an appraiser
acceptable to Agent and shall indicate an orderly liquidation value
acceptable to the Agent with respect to the Equipment, and a fair market
value acceptable to the Agent with respect to the aggregate value of the
owned Real Estate.
(v) Legal Restraints/Litigation - At the date of execution of
---------------------------
this Financing Agreement, there shall be no (i) litigation,
investigation or proceeding (judicial or administrative) pending or
threatened against any Company, any Pledgor or any Guarantor or any of
their assets or respective Subsidiaries, by any agency, division or
department of any county, city, state or federal government arising out
of this Financing Agreement, (ii) injunction, writ or restraining order
restraining or prohibiting the consummation of the financing
arrangements contemplated under this Financing Agreement or (iii) to the
best knowledge of each Company, suit, action, investigation or
proceeding (judicial or administrative) pending or threatened against
any Company, any Pledgor, any Guarantor or any of their respective
Subsidiaries or their assets, which, in the opinion of the Agent, if
adversely determined could have a Material Adverse Effect.
(w) Disbursement Authorization - The Companies shall have
--------------------------
delivered to the Agent all information necessary for the Agent to issue
wire transfer instructions on behalf of the Companies for the initial
and subsequent loans and/or advances to be made by the Agent and/or the
Lenders under this Financing Agreement including, but not limited to,
disbursement authorizations in form acceptable to the Agent.
(x) Examination & Verification; Availability - The Agent
----------------------------------------
shall have completed to the satisfaction of the Agent an examination and
verification of the Accounts, Inventory, books and records of each
Company and each Guarantor which examination shall indicate that, after
giving effect to all loans, advances and extensions of credit to be made
at closing, the Companies shall have an opening additional Availability
of Ten Million Dollars ($10,000,000).
(y) Collection Accounts; Payment Direction - The Agent on
--------------------------------------
behalf of the Lenders shall have established a lockbox and opened a bank
account in its name for the collection of each Company's Accounts and
the deposit of the proceeds of the Collateral, and the Agent, each
Company and the depository bank shall have entered into an agreement in
form and substance satisfactory to the Agent regarding the
administration and control of such lockbox and bank account. In
addition, each Company shall have provided the Agent with satisfactory
evidence that such Company has directed its account debtors to send
payments on all Accounts directly to such lockbox.
(z) Existing Revolving Credit Agreement - (i) The Companies'
-----------------------------------
existing credit agreement agented by BT Commercial Corporation shall be
terminated, (ii) all loans and obligations of each Company and/or the
Guarantors and each Pledgor thereunder shall be paid or satisfied in
full utilizing the proceeds of the initial Revolving Loans and the Term
Loan to be made under this Financing Agreement and (iii) all liens upon
or security interest in favor of BT Commercial Corporation, as
collateral agent, in connection therewith shall be terminated and/or
released upon such payment.
(aa) Agent Proposal Letter/Fee Letter - Each Company shall
--------------------------------
have (i) fully complied, to the satisfaction of the Agent, with all of
the terms and conditions of the Agent Proposal Letter (except to the
extent specifically overridden in the fee letter referred to in clause
(ii) below), and (ii) paid to Agent all sums due to Agent pursuant to
the fee letter agreement dated as of June 14, 1999 between Agent and the
Companies, which fee letter agreement is deemed incorporated herein by
this reference.
(ab) D.P. Kelly Payoff - All amounts owed to D.P. Kelly,
-----------------
however evidenced, incurred prior to the date hereof, shall be fully
paid or refinanced and all liens, mortgages, deeds of trust, security
interests and filings related thereto shall be duly released prior to
the Closing Date, and evidence of such releases, satisfactory to Agent,
shall be provided to Agent on or prior to the Closing Date.
(ac) Collateral Assignment of Intercompany Loan - All amounts
------------------------------------------
owed by Viskase Canada to any Company or any Guarantor from time to time
shall be (i) evidenced by a Promissory Note payable by Viskase Canada to
such Company or Guarantor and (ii) secured by all of the assets of
Viskase Canada pursuant to a Security Agreement in form and substance
acceptable to Agent (the "Canada Security Agreement"). On the Closing
Date, and from time to time thereafter, as applicable, such Company or
Guarantor loaning funds to Viskase Canada shall execute a Collateral
Assignment of Intercompany Note and Security Agreement of even date
herewith (the "Collateral Assignment of Intercompany Loan") in favor of
Agent, for the benefit of the Lenders, pursuant to which such Company or
Guarantor shall assign all right, title and interest in the Canada
Intercompany Loan and the Canada Security Agreement to Agent as
collateral security for the Obligations, and such Company or Guarantor
shall execute such financing statements, documents, instruments and
agreements as shall be necessary to perfect the foregoing security
interest assignment in favor of Agent, as Agent so requests.
Upon the execution of this Financing Agreement and the initial
disbursement of loans hereunder, all of the above conditions precedent
shall have been deemed satisfied except as each Company and the Agent
shall otherwise agree herein or in a separate writing.
2.2 The obligation of the Agent and the Lenders to make any loan
to any Company or to assist any Company in the issuance of any Letter of
Credit after the Closing Date is subject to the satisfaction,
immediately prior to or concurrently with the making of such loan, of
the following conditions precedent:
(a) No Default or Event of Default shall have occurred and
remain outstanding; and
(b) All representations and warranties made by each Company
in this Financing Agreement shall be true and correct in all material
respects.
All of the representations and warranties made by each Company in this
Financing Agreement shall be deemed to be remade by each Company each
time that any Company requests a Revolving Loan or a Letter of Credit
hereunder, and each such request shall also constitute, unless otherwise
disclosed in writing to Agent, a representation and warranty by each
Company that after giving effect to the requested advance, no Default or
Event of Default then exists or would result therefrom, and that such
requested Revolving Loan is within the Revolving Line of Credit
Availability.
SECTION 3. Revolving Loans
---------------
3.1 The Agent and the Lenders severally (and not jointly) agree,
subject to the terms and conditions of this Financing Agreement from
time to time, so long as sufficient Availability exists (but subject to
the Agent's and each Lender's right to make "overadvances"), to make
loans and advances to each Company on a revolving basis in amounts up to
the Borrowing Base. All requests for loans and advances must be
received from Representative by an officer of Agent no later than
1:00 p.m., New York time, of the Business Day on which such loans and
advances are required. Should Agent for any reason honor requests for
advances in excess of the limitations set forth herein, such advances
shall be considered "overadvances" and shall be made in Agent's sole
discretion, subject to any additional terms Agent deems necessary.
3.2 In furtherance of the continuing assignment and security
interest in each Company's Accounts, each Company will, upon the
reasonable request of Agent relating to the creation of Accounts,
execute and deliver to the Agent, in such form and manner as the Agent
may reasonably require, solely for the Agent's convenience in
maintaining records of collateral, such confirmatory schedules of
Accounts as the Agent may reasonably request, and such other appropriate
reports designating, identifying and describing the Accounts as the
Agent may reasonably require. In addition, upon the Agent's reasonable
request, each Company shall provide the Agent with copies of agreements
with, or purchase orders from, such Company's customers, and copies of
invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other
collateral as the Agent may reasonably require. Failure to provide the
Agent with any of the foregoing shall in no way affect, diminish, modify
or otherwise limit the security interests granted herein. Each Company
hereby authorizes the Agent to regard each Company's printed name or
rubber stamp signature on assignment schedules or invoices as the
equivalent of a manual signature by one of such Company's authorized
officers or agents.
3.3 Each Company hereby represents and warrants to the Agent and
the Lenders that: (a) each Trade Account Receivable is based on an
actual and bona fide sale and delivery of goods or rendition of services
to customers, made by such Company in the ordinary course of its
business; (b) the Inventory being sold and the Trade Accounts Receivable
created are the exclusive property of such Company and are not and shall
not be subject to any lien, consignment arrangement, encumbrance,
security interest or financing statement whatsoever, other than the
Permitted Encumbrances; (c) the invoices evidencing such Trade Accounts
Receivable are in the name of such Company; and (d) except as may
otherwise be disclosed to Agent from time to time pursuant to
Section 3.5 below, the customers of each Company have accepted the goods
or services, owe and are obligated to pay the full amounts stated in the
invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, other than normal returns, disputes and other
matters arising in the ordinary course of business. Each Company
confirms to the Agent that any and all taxes or fees relating to its
business, its sales, the Accounts or goods relating thereto, are its
sole responsibility. Each Company also represents and warrants to the
Agent and the Lenders that each Company is a duly and validly existing
corporation, and is qualified in all states where the failure to so
qualify would have a Material Adverse Effect. Each Company agrees to
maintain such books and records regarding Accounts as the Agent may
reasonably require and agrees that the books and records of each Company
will reflect the interest of the Agent, on behalf of the Lenders, in the
Accounts. All of the books and records of each Company will be
available to the Agent and the Lenders at normal business hours upon
reasonable notice of at least one (1) Business Day prior to an Event of
Default, including any records handled or maintained for each Company by
any other company or entity.
3.4 Each Company may and will enforce, collect and receive all
Accounts and other proceeds from sales of Inventory for the Lenders'
benefit and on the Lenders' behalf, but at each Company's expense. All
checks, cash, notes or other instruments or property received by any
Company with respect to sales of Inventory shall be held by such Company
in trust for the Agent, for the benefit of the Lenders, separate from
such Company's other property and funds, and deposited directly into the
Depository Account on each Business Day. Funds remaining on deposit in
the Depository Account at the end of each Business Day shall be wire
transferred to the Agent's bank account at The Chase Manhattan Bank in
New York, New York ("Agent's Bank Account") for application against the
obligations in accordance with the terms hereof. Each Company agrees to
take all actions reasonably required by the Agent or any financial
institution at which the Depository Account is maintained in order to
effectuate the transfer of funds contemplated above. All amounts
received by the Agent from the Depository Account and any other proceeds
of the Collateral deposited into the Agent's Bank Account will be
credited to the Companies' Revolving Loan Account upon the Agent's
receipt of "collected funds" at the Agent's Bank Account on the Business
Day of receipt, if received no later than 1:00 pm, New York time, or on
the next succeeding Business Day, if received after 1:00 pm, New York
time. No checks, drafts or other instrument received by the Agent shall
constitute final payment to the Lenders unless and until such
instruments have actually been collected.
3.5 Each Company agrees to notify the Agent promptly of any
matters materially affecting the value, enforceability or collectibility
of the Accounts and of all material customer disputes, offsets,
defenses, counterclaims, returns, rejections and all reclaimed or
repossessed merchandise or goods. Each Company agrees to issue credit
memoranda promptly (with duplicates to the Agent upon request after the
occurrence of an Event of Default) upon accepting returns or granting
allowances, and may continue to do so until the Agent has notified the
Representative following the occurrence and during the continuance of an
Event of Default that all future credits or allowances are to be made
only after the Agent's prior written approval. Upon the occurrence of
an Event of Default and until such time as such Event of Default is
waived, and on notice from the Agent, each Company agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set
aside by each Company and held by each Company for the account of the
Agent, on behalf of the Lenders, as owner and assignee.
3.6 The Agent shall maintain an account on its books in the
Companies' name (the "Revolving Loan Account") in which the Companies
will be charged with loans and advances made by the Agent and the
Lenders to each Company or for each Company's account, and with any
other Obligations, including any and all costs, expenses and reasonable
attorney's fees which the Agent may incur in connection with the
exercise by or for the Agent of any of the rights or powers herein
conferred upon the Agent, or in the prosecution or defense of any action
or proceeding to enforce or protect any rights of the Agent or the
Lenders in connection with this Financing Agreement or the Collateral
assigned hereunder, or any Obligations. The Companies will be credited
with all amounts received by the Agent from each of the Companies or
from others for the Companies' account, including, as above set forth,
all amounts received by the Agent in payment of Accounts and sales of
Inventory, and such amounts will be applied to payment of the
Obligations. In no event shall prior recourse to any Accounts,
Inventory or other security granted to or by any Company be a
prerequisite to the Agent's or the Lenders' rights to demand payment of
any Obligation.
3.7 After the end of each month, the Agent shall promptly send the
Representative and the Lenders a statement showing the accounting for
the charges, loans, advances and other transactions occurring among the
Agent, the Lenders and the Companies during that month. The monthly
statements shall be deemed correct and binding upon each Company and the
Lenders, and shall constitute accounts stated between the Companies and
the Lenders absent manifest error, unless the Agent receives a written
statement of the exception from the Representative or any Lender within
thirty (30) days of the date of the monthly statement.
3.8 If at any time (a) the sum of the outstanding balance of
Revolving Loans and outstanding balance of Letters of Credit exceed the
Revolving Line of Credit, or (b) Availability is less than zero, the
amount of such excess (in the case of clause (a)) or the amount of the
Obligations required to be repaid to make Availability greater than zero
(in the case of clause (b)), shall be immediately due and payable to the
Agent, for the benefit of the Lenders.
SECTION 4. Term Loan
---------
4.1 Each Company hereby agrees to execute and deliver to the Agent
the Term Loan Promissory Note to evidence the Term Loan to be extended
to each Company by the Lenders.
4.2 Upon receipt of the Term Loan Promissory Note, the Lenders
hereby severally (and not jointly) agree to extend to the Companies the
Term Loan in the original principal amount of Fifty Million Dollars
($50,000,000).
4.3 The principal amount of the Term Loan shall be repaid by the
Company in six (6) consecutive quarterly principal installments of One
Million Seven Hundred Eighty-Five Thousand Seven Hundred Fifteen Dollars
($1,785,715) each, commencing January 4, 2000 and on the first day of
each calendar quarter thereafter through April 1, 2001. The entire
remaining principal balance of the Term Loan shall be due and payable in
full on June 30, 2001.
4.4 In the event this Financing Agreement or the Line of Credit is
terminated by one or more Lenders (acting through the Agent) or the
Companies for any reason whatsoever as provided in Section 11 hereof,
the Term Loans shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in the
Term Loan Promissory Note or this Financing Agreement.
4.5 The Companies, at their option, may prepay the Term Loan at
any time, in whole or in part, provided that on each such prepayment,
the Companies shall pay (a) accrued interest on the principal so prepaid
to the date of such prepayment and (b) the Prepayment Premium then due,
if any.
4.6 In the event the Companies have generated Surplus Cash in any
fiscal year, on or prior to the date which is ninety (90) days after the
end of such fiscal year, there shall be due and payable a Mandatory
Prepayment of the Term Loan in an amount equal to fifty percent (50%) of
the Surplus Cash for such fiscal year; provided, that no such Mandatory
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Prepayment shall be required hereunder to the extent that such Mandatory
Prepayment would reduce the average daily amount of Availability for the
thirty (30) day period ending on the date such Mandatory Prepayment is
due to less than Ten Million Dollars ($10,000,000). No Prepayment
Premium shall be due with respect to prepayments made under this
Section.
4.7 Each prepayment of the Term Loan (whether voluntary or
mandatory) shall be applied to the last maturing installments of
principal of the Term Loan until fully repaid.
4.8 Each Company hereby authorizes the Agent to charge the
Companies' Revolving Loan Account with the amount of all amounts due
under this Section 4 as such amounts become due. Any amount charged to
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the Companies' Revolving Loan Account shall be deemed a Revolving Loan
hereunder and shall incur interest at the rate provided in Section 8.1
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of this Financing Agreement. Each Company confirms that any charges
which the Agent may make to the Companies' Revolving Loan Account as
herein provided will be made as an accommodation to the Companies and
solely at the Agent's discretion.
SECTION 5. Letters of Credit
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In order to assist the Companies in establishing or opening Letters
of Credit with an Issuing Bank, the Companies have requested that the
Agent, on behalf of the Lenders, join in the applications for such
Letters of Credit, and/or guarantee payment or performance of such
Letters of Credit and any drafts or acceptances thereunder through the
issuance of a Letter of Credit Guaranty, thereby lending the Lenders'
credit to each Company, and the Agent and the Lenders have agreed to do
so. These arrangements shall be handled by the Agent subject to the
terms and conditions set forth below.
5.1 Within the Revolving Line of Credit and Availability, the
Lenders (acting through the Agent) shall assist each Company in
obtaining Letters of Credit in an aggregate undrawn amount outstanding
at any time equal to or less than the Letter of Credit Sub-Line. The
Lenders' assistance for amounts in excess of the limitation set forth
herein shall at all times and in all respects be in the Agent's sole
discretion. It is understood that the terms, conditions and purpose of
each Letter of Credit (and any modifications thereof) shall be subject
to the prior approval of the Agent in the exercise of its reasonable
discretion. Any and all outstanding Letters of Credit shall be treated
as Revolving Loans for Availability purposes. Notwithstanding anything
herein to the contrary, upon the occurrence of a Default or Event of
Default, the Agent's and the Lenders' assistance in connection with any
Letter of Credit Guaranty shall be in the Agent's sole discretion until
such Event of Default is waived.
5.2 The Agent shall have the right, without notice to any Company,
to charge the Companies' Revolving Loan Account with the amount of any
and all indebtedness, liability or obligation of any kind incurred by
the Agent under any Letter of Credit Guaranty at the earlier of
(a) payment by the Agent, on behalf of the Lenders, under such Letter of
Credit Guaranty, (b) the occurrence of an Event of Default or (c) the
termination of the Revolving Line of Credit or this Financing Agreement.
Any amount charged to the Companies' Revolving Loan Account shall be
deemed a Revolving Loan hereunder and shall incur interest at the rate
provided in Section 8.1 of this Financing Agreement.
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5.3 Each Company unconditionally indemnifies the Agent and the
Lenders against, and holds the Agent and the Lenders harmless from, any
and all loss, claim or liability incurred by the Agent or the Lenders
arising from any transactions or occurrences relating to Letters of
Credit established or opened for the Companies' account, the collateral
relating thereto and any drafts or acceptances thereunder, and all
Obligations thereunder, other than for any such loss, claim or liability
arising out of the gross negligence or willful misconduct by the Agent
under the Letter of Credit Guaranty. Each Company further agrees to
hold the Agent and the Lenders harmless from any errors or omission,
negligence or misconduct by the Issuing Bank. Each Company's
unconditional obligations to the Agent and the Lenders hereunder shall
not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of the Agent's gross negligence or
willful misconduct. Each Company agrees that any charges incurred by
the Agent for the Companies' account by the Issuing Bank shall be
conclusive on the Agent and the Lenders, and may be charged to the
Companies' Revolving Loan Account.
5.4 Neither the Agent nor any Lender shall be responsible for:
(a) the existence, character, quality, quantity, condition, packing,
value or delivery of the goods purporting to be represented by any
documents; (b) any difference or variation in the character, quality,
quantity, condition, packing, value or delivery of the goods from that
expressed in the documents; (c) the validity, sufficiency or genuineness
of any documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (d) the time, place, manner or order in which
shipment is made; (e) partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of
Credit or documents; (f) any deviation from instructions; (g) delay,
default, or fraud by the shipper and/or anyone else in connection with
the Collateral or the shipping thereof; or (h) any breach of contract
between the shipper or vendors and any Company. Furthermore, without
being limited by the foregoing, neither the Agent nor any Lender shall
be responsible for any act or omission with respect to or in connection
with any Collateral unless such act or omission constitutes gross
negligence or willful misconduct.
5.5 Each Company agrees that any action taken by the Agent or any
Lender, if taken in good faith, or any action taken by any Issuing Bank
of whatever nature under or in connection with the Letters of Credit,
the guarantees, the drafts or acceptances, or the Collateral, shall be
binding on each Company and shall not put the Agent or any Lender in any
resulting liability to any Company. In furtherance thereof but subject
to Section 5.6 below, the Agent shall have the full right and authority
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to clear and resolve any questions of non-compliance of documents; to
give any instructions as to acceptance or rejection of any documents or
goods; to execute any and all steamship or airways guaranties (and
applications therefor), indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to agree to
any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; all in the sole
name of the Agent, on behalf of the Lenders, and the Issuing Bank shall
be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from the Agent, all without
any notice to or any consent from any Company.
5.6 Without the Agent's express consent and endorsement in
writing, each Company agrees: (a) not to execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances or documents; or to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; and (b) upon
instruction from the Agent, after the occurrence of an Event of Default
which is not waived, not to (i) clear and resolve any questions of non-
compliance of documents or (ii) give any instructions as to acceptances
or rejection of any documents or goods.
5.7 Each Company agrees that any necessary import, export or other
licenses or certificates for the import or handling of the Collateral
will have been promptly procured; all foreign and domestic governmental
laws and regulations in regard to the shipment and importation of the
Collateral, or the financing thereof will have been promptly and fully
complied with in all material respects; and any certificates in that
regard that the Agent may at any time request will be promptly
furnished. In this connection, each Company warrants and represents to
the Agent and the Lenders that all shipments made under any such Letters
of Credit are in accordance in all material respects with the laws and
regulations of the countries in which the shipments originate and
terminate, and are not prohibited by any such laws and regulations.
Each Company assumes all risk, liability and responsibility for, and
agrees to pay and discharge, all present and future local, state,
federal or foreign taxes, duties, or levies pertaining to the
importation and delivery of the Collateral. Any embargo, restriction,
laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or
wherein payments are to be made, or wherein drafts may be drawn,
negotiated, accepted, or paid, shall be solely the Companies' risk,
liability and responsibility.
5.8 Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent, for the benefit of the Lenders, shall
acquire by subrogation, any rights, remedies, duties or obligations
granted or undertaken by each Company to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to
Letters of Credit or otherwise, all of which shall be deemed to have
been granted to the Agent and apply in all respects to the Agent, and
shall be in addition to any rights, remedies, duties or obligations
contained herein.
SECTION 6. Collateral
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6.1 As security for the prompt payment in full of all loans and
advances made and to be made to each Company from time to time by the
Agent and the Lenders pursuant hereto, as well as to secure the payment
in full of the other Obligations, each Company hereby pledges and grants
to the Agent, for the benefit of the Lenders, a continuing general lien
upon and security interest in all of such Company's:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles;
(f) present and future Investment Property;
(g) present and future Other Collateral;
(h) Real Estate; and
(i) any such other property not included under clauses
(a) through (h) above that would otherwise be deemed to constitute
"Collateral" as defined in the Term Financiers Loan Documents or the
D.P. Kelly Loan Documents, as such agreements may be amended, modified
or replaced from time to time.
Notwithstanding anything contained herein to the contrary, the
Collateral shall not include, and neither Company shall be deemed to
have granted a lien or security interest hereunder in:
(i) any property or asset to the extent, and only for so
long as, such property is subject to a Permitted Encumbrance (in
favor of Persons other than the Term Financiers and D.P. Kelly)
which specifically restricts the granting of additional liens or
security interests on such property; provided that (A) such lien or
security interest constitutes a Permitted Encumbrance and (B) the
restriction on the granting of additional liens or security
interests extends only to the property subject to such a Permitted
Encumbrance and the proceeds thereof;
(ii) any contract that prohibits the granting of a
security interest in such contract or the rights thereunder without
the consent of the other party(ies) thereto, which consent has not
been obtained (except to the extent any such prohibition would be
rendered ineffective or unenforceable under applicable laws);
(iii) any "Sale-Leaseback Property" as defined in the
GECC Intercreditor Agreement; or
(iv) the specific assets identified on Schedule 6.1
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hereto (the "Excluded Assets"); provided, however, that the
Companies agree to cause the proceeds of the sale of the Excluded
Assets to be used as set forth in Section 7.16 below.
6.2 The security interests granted hereunder shall extend and
attach to:
(a) All Collateral which is presently in existence and which
is owned by any Company or in which any Company has any interest,
whether held by any Company or others for its account, and, if any
Collateral is Equipment, whether such Company's interest in such
Equipment is as owner or lessee or conditional vendee;
(b) All Equipment whether the same constitutes personal
property or fixtures, including, but without limiting the generality of
the foregoing, all dies, jigs, tools, benches, tables, accretions,
component parts thereof and additions thereto, as well as all
accessories, motors, engines and auxiliary parts used in connection with
or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either the Agent or any
Company from such Company's customers, as well as to all supplies,
goods, incidentals, packaging materials, labels and any other items
which contribute to the finished goods or products manufactured or
processed by any Company, or to the sale, promotion or shipment thereof.
6.3 Each Company agrees to safeguard, protect and hold all
Inventory for the account of the Agent, on behalf of the Lenders, and
make no disposition thereof except in the regular course of the business
of each Company; provided, however, that each Company may make bulk
sales of Inventory that is obsolete and non-marketable under ordinary
terms if such Company gives prompt written notice to Agent after any
such sale. Inventory may be sold and shipped by each Company to its
customers in the ordinary course of each Company's business, on open
account and on commercially reasonable terms, provided that all proceeds
of all sales (including cash, accounts receivable, checks, notes,
instruments for the payment of money and similar proceeds) are forthwith
transferred, endorsed, and turned over and delivered to the Agent by
deposit in the Depository Accounts. The Agent shall have the right to
withdraw this permission at any time upon the occurrence of an Event of
Default which results in acceleration of the Obligations due and payable
under this Agreement, in which event no further disposition shall be
made of the Inventory by any Company without the Agent's prior written
approval. Cash sales or sales of Inventory in which a lien upon, or
security interest in, Inventory is retained by each Company shall be
made by such Company only with the approval of the Agent, and the
proceeds of such sales or sales of Inventory for cash shall not be
commingled with any Company's other property, but shall be segregated,
held by such Company in trust for the Agent, on behalf of the Lenders as
the Lenders' exclusive property, and shall be delivered immediately by
each Company to the Agent by deposit to the Depository Accounts. Upon
the sale, exchange, or other disposition of Inventory, as herein
provided, the security interest in each Company's Inventory provided for
herein shall, without break in continuity and without further formality
or act, continue in, and attach to, all proceeds, including any
instruments for the payment of money, accounts receivable, contract
rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sale, exchange or disposition.
As to any such sale, exchange or other disposition, the Agent shall have
all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.
6.4 Each Company agrees at its own cost and expense to keep the
Equipment in as good repair and condition as the same is now or at the
time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and
replacements when and where necessary. Each Company also agrees to
safeguard, protect and hold all Equipment for the account of the Agent,
on behalf of the Lenders, and make no disposition thereof (other than
dispositions expressly permitted hereunder) unless such Company first
obtains the prior written approval of the Agent (which approval shall
not be unreasonably withheld). Any sale, exchange or other disposition
of any Equipment (other than dispositions expressly permitted hereunder)
shall only be made by the Companies with the prior written approval of
the Agent, and the proceeds of any such sales shall not be commingled
with any Company's other property, but shall be segregated, held by each
Company in trust for the Agent, for the benefit of the Lenders, as the
Lenders' exclusive property, and shall be delivered immediately by each
Company to the Agent by deposit to the Depository Accounts. Upon the
sale, exchange, or other disposition of the Equipment, as herein
provided, the security interest provided for herein shall, without break
in continuity and without further formality or act, continue in, and
attach to, all proceeds, including any instruments for the payment of
money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash
proceeds of such sales, exchanges or dispositions. As to any such sale,
exchange or other disposition, the Agent shall have all of the rights of
an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation. Notwithstanding anything set forth herein to the
contrary, each Company may sell, exchange or otherwise dispose of (a)
obsolete Equipment or Equipment no longer needed in such Company's
operations, provided that the then book value of the Equipment so
disposed of does not exceed Five Hundred Thousand Dollars ($500,000) in
the aggregate in any fiscal year and (b) items of Equipment not listed
in or appraised pursuant to the appraisals described in Section 2.1(u)
--------------
above to Subsidiaries, provided (i) Representative shall notify Agent of
any such disposition in reasonable detail if the Equipment subject
thereto has a minimum book value of Two Hundred Fifty Thousand Dollars
($250,000.00) per item and (ii) that the aggregate book value of any
such Equipment so disposed to Subsidiaries shall not exceed Seven
Hundred Fifty Thousand Dollars ($750,000.00) in the aggregate in any
fiscal year. To the extent that any Equipment is sold, exchanged or
otherwise disposed of pursuant to the preceding sentence, the proceeds
of such sales or dispositions shall be delivered to the Agent by deposit
into the Depository Account in accordance with the foregoing provisions
of this Section 6.4, except that each Company may retain and use such
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proceeds to purchase forthwith replacement Equipment which such Company
determines in its reasonable business judgment to have a collateral
value at least equal to the Equipment so disposed of or sold, and
provided further that the aforesaid right shall automatically cease upon
the occurrence of an Event of Default which is not waived.
6.5 The rights and security interests granted hereunder to the
Agent, for the benefit of the Lenders, are to continue in full force and
effect, notwithstanding the termination of this Financing Agreement or
the fact that the account maintained in the Companies' name on the books
of the Agent may from time to time be temporarily in a credit position,
until the final payment in full to the Agent and the Lenders of all
Obligations and the termination of this Financing Agreement. Any delay,
or omission by the Agent or the Lenders to exercise any right hereunder,
shall not be deemed a waiver thereof, or be deemed a waiver of any other
right, unless such waiver be in writing and signed by the Agent. A
waiver on any one occasion shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.
6.6 To the extent that the Obligations are now or hereafter
secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other person, then the
Agent shall have the right in its sole discretion to determine which
rights, security, liens, security interests or remedies the Agent shall
at any time pursue, foreclose upon, relinquish, subordinate, modify or
take any other action with respect to, without in any way modifying or
affecting any of them, or any of the Agent's or the Lenders' rights
hereunder.
6.7 Any reserves or balances to the credit of any Company and any
other property or assets of any Company in the possession of the Agent
may be held by the Agent, for the benefit of the Lenders, as security
for any Obligations and applied in whole or partial satisfaction of such
Obligations when due upon written notice to the Companies. The liens
and security interests granted herein and any other lien or security
interest which the Agent may have in any other assets of any Company,
shall secure payment and performance of all now existing and future
Obligations. The Agent may in its discretion charge any or all of the
Obligations to the Companies' Revolving Loan Account when due and
payable.
6.8 This Financing Agreement and the obligation of each Company to
perform all of its covenants and obligations hereunder are further
secured by mortgage(s), deed(s) of trust or assignment(s) covering the
Real Estate including, but not limited to, the Real Estate Collateral
Documents.
6.9 From time to time, each Company shall deliver to the Agent,
for the benefit of the Lenders, such mortgage(s), deed(s) of trust or
assignment(s) covering the Real Estate or real estate acquired after the
date hereof as the Agent shall require to obtain a valid first lien
thereon, subject only to Permitted Encumbrances.
6.10 From time to time, each Company, each Guarantor and each
Pledgor shall deliver to the Agent, or shall cause Parent to deliver to
the Agent, such pledge or security agreements with respect to
(a) trademarks, patents, licenses and capital stock in each Company and
(b) capital stock in any and all direct Subsidiaries of each Company,
each Guarantor and each Pledgor, as applicable, as the Agent shall
require to obtain valid first liens thereon (subject to Permitted
Encumbrances); provided, however, that in no event shall a pledge of
more than sixty-five percent (65%) of the equity interests of any
foreign entity directly owned be required so long as applicable law
would treat any such pledge in excess of such amount as a "deemed
dividend" to the parent company of such foreign entity.
SECTION 7. Representations, Warranties and Covenants
-----------------------------------------
7.1 Each Company hereby warrants and represents and/or covenants
that: (a) the fair value of each Company's assets exceeds the book
value of each Company's liabilities; (b) each Company is generally able
to pay its debts as they become due and payable; (c) no Company has
unreasonably small capital to carry on its business as it is currently
conducted absent extraordinary and unforeseen circumstances; (d) the
consolidated audited balance sheet and related statements of operations
and cash flow and changes in stockholders' equity for the Parent as of
December 31, 1998 and for the fiscal year then ended, and the
consolidated unaudited balance sheet and related statements of
operations and cash flow for the Parent as of March 31, 1999 and for the
three (3) months then ended, have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the Parent's
financial position as at the dates thereof and the Parent's results of
operation for the periods then ended; (e) each Company is duly organized
and validly existing under the laws of the state of its incorporation,
and is qualified to do business in each State where the failure to so
qualify would have a Material Adverse Effect; (f) Schedule 7.1 hereto
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correctly and completely sets forth each Company's chief executive
office, all of the Collateral locations and all tradenames used by each
Company; (g) the execution and delivery of this Financing Agreement by
each Company and the consummation of the transactions contemplated
hereby, do not violate any term, provision or covenant contained in the
Articles or Certificate of Incorporation or Bylaws of any Company, or
any term, provision, covenant or representation contained in any loan
agreement, lease, indenture, mortgage, deed of trust, note, security
agreement or pledge agreement to which any Company is a signatory or by
which any Company or any Company's assets are bound; (h) except for the
Permitted Encumbrances, the security interests granted herein and in the
other Loan Documents constitute and shall at all times constitute first
priority and exclusive liens on the Collateral; (i) except for the
Permitted Encumbrances, each Company is or will be at the time
additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, transfer and create a
security interest therein, free and clear of any and all claims or liens
in favor of others; (j) the Indebtedness listed on Schedule 1.1(c)
---------------
hereto constitutes all funded indebtedness of each Company existing as
of the date hereof; (k) each Company will at its expense forever warrant
and, at the Agent's request, defend the Collateral from any and all
claims and demands of any other person other than the Permitted
Encumbrances; (l) no Company will grant, create or permit to exist, any
lien upon or security interest in the Collateral, or any proceeds
thereof, in favor of any other person other than the holders of the
Permitted Encumbrances; and (m) each Company will provide the Agent with
prior written notice of any change in the location of any Collateral.
7.2 Each Company agrees to maintain books and records pertaining
to the Collateral in such detail, form and scope as the Agent shall
reasonably require. Each Company agrees that the Agent and/or its
designated agents, accompanied by any Lender and/or such Lender's
designated agents (at such Lender's expense), may enter upon each
Company's offices, or other premises at any time during normal business
hours and upon reasonable notice of at least one (1) Business Day prior
to an Event of Default, and from time to time, in order to (a) examine
and inspect the books and records of each Company, and make copies
thereof and take extracts therefrom, and (b) verify, inspect, appraise
and perform physical counts and other valuations of the Collateral and
any and all records pertaining thereto; provided, however, that so long
as no Event of Default exists and is continuing, the number of such
examinations, inspections, appraisals, physical counts and other
valuations shall be limited to four (4) per annum. All reasonable
costs, fees and expenses incurred by the Agent in connection with such
examinations, inspections, appraisals, physical counts and other
valuations shall constitute Out-of-Pocket Expenses for purposes of this
Financing Agreement.
7.3 Each Company agrees to execute and deliver to the Agent, from
time to time, solely for the Agent's convenience in maintaining a record
of the Collateral, such written statements, schedules and other
information and documentation as the Agent may reasonably require,
designating, identifying or describing the Collateral. Without limiting
the foregoing, each Company shall deliver to the Agent, in such detail
as the Agent shall reasonably require, (a) at least once each week (but
more frequently upon the Agent's reasonable request) weekly sales
reports and collection journals indicating cash received by the
Companies from sources other than account debtors with respect to the
Trade Accounts Receivable, (b) on or before the twentieth (20th) day
following the last day of each month, a borrowing base certificate (as
of the last day of the immediately preceding month) in a form
satisfactory to the Companies and the Agent, certified by the treasurer
or chief financial officer of each Company (or any other authorized
officer satisfactory to the Agent), and (c) on or before the twentieth
(20th) day of each fiscal month, an aging of all Accounts existing as of
the last day of the preceding fiscal month and a summary of Inventory as
of the last day of the preceding fiscal month, certified by the
treasurer or the chief financial officer of each Company (or any other
authorized officer satisfactory to the Agent). Any Company's failure,
however, to promptly give the Agent such statements or schedules shall
not affect, diminish, modify or otherwise limit the security interests
of the Agent, for the benefit of the Lenders, in the Collateral.
7.4 Each Company agrees to comply with the requirements of all
state and federal laws in order to grant to the Agent, for the benefit
of the Lenders, valid and perfected first security interests in the
Collateral, subject only to the Permitted Encumbrances. The Agent is
hereby authorized by each Company to file any financing statements
covering the Collateral whether or not such Company's signature appears
thereon. Each Company agrees to do whatever the Agent reasonably may
request from time to time, by way of: (a) filing notices of liens,
financing statements, amendments, renewals and continuations thereof;
(b) cooperating with the Agent's designated agents and employees;
(c) keeping Collateral records; (d) transferring proceeds of Collateral
to the Agent's possession in accordance with the terms hereof; and
(e) performing such further acts as the Agent reasonably may require in
order to effect the purposes of this Financing Agreement.
7.5 (a) Each Company agrees to maintain insurance on the Real
Estate, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to the Agent
(the "Required Insurance"). All policies covering the Real Estate,
Equipment and Inventory are, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Agent, to be made
payable to the Agent, for the benefit of the Lenders, in case of loss,
under a standard non-contributory "mortgagee", "lender" or "secured
party" clause and are to contain such other provisions as the Agent
reasonably may require to fully protect the Agent's and the Lenders'
interests in the Real Estate, Inventory and Equipment and to any
payments to be made under such policies. All summaries of such policies
are to be delivered to the Agent. All such insurance policies shall be
prepaid, with a loss payable endorsement in favor of the Agent, for the
benefit of the Lenders, and shall provide for not less than thirty (30)
days prior written notice to the Agent of the exercise of any right of
cancellation. Upon the occurrence of an Event of Default which is not
waived, the Agent shall, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Agent, have the sole
right, in the name of the Agent or any Company, to file claims under any
insurance policies, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b) Unless any Company provides the Agent with evidence of
the Required Insurance in the manner set forth in paragraph (a) above,
the Agent may, upon prior notice to the Companies, purchase insurance at
each Company's expense to protect the interests of the Agent and the
Lenders in the Collateral. The insurance purchased by the Agent may,
but need not, protect such Company's interests in the Collateral, and
therefore such insurance may not pay any claim which any Company makes
or any claim which is made against any Company in connection with the
Collateral. The Companies may later request that the Agent cancel any
insurance purchased by the Agent, but only after providing the Agent
with satisfactory evidence that the Companies have the Required
Insurance. If the Agent, on behalf of the Lenders, purchases insurance
covering all or any portion of the Collateral, the Companies shall be
responsible for the costs of such insurance, including interest (at the
applicable rate set forth hereunder) and other charges accruing on the
purchase price therefor, until the effective date of the cancellation or
the expiration of the insurance, and the Agent may charge all of such
costs, interest and other charges to the Revolving Loan Account. The
costs of the premiums of any insurance purchased by the Agent may exceed
the costs of insurance which the Companies may be able to purchase on
their own. In the event that the Agent purchases insurance, the Agent
will notify the Representative of such purchase within thirty (30) days
after the date of such purchase. If, within thirty (30) days of the
date of such notice, the Companies provide the Agent with proof that the
Companies had the Required Insurance as of the date on which the Agent
purchased insurance and the Companies have continued at all times
thereafter to have the Required Insurance, then the Agent agrees to
cancel the insurance purchased by the Agent and credit the Revolving
Loan Account by the amount of all costs, interest and other charges
associated with such insurance previously charged to the Revolving Loan
Account.
(c)
(i) In the event of any loss or damage by condemnation,
fire or other casualty, insurance proceeds relating to Inventory
shall first reduce the Revolving Loan and then the Term Loan.
(ii) In the event any part of the Company's Real Estate
or Equipment is condemned or damaged by fire or other casualty and
the insurance or condemnation proceeds for such condemnation,
damage or other casualty (the "Proceeds") is less than or equal to
One Million Dollars ($1,000,000.00), the Agent shall promptly apply
such Proceeds to reduce the Revolving Loan.
(iii) As long as an Event of Default has not occurred
(which is not waived), the Companies have sufficient business
interruption insurance to replace the lost profits of any Company's
facilities, and the Proceeds are in excess of One Million Dollars
($1,000,000.00), the Companies may elect (by delivering written
notice to the Agent) to replace, repair or restore such Real Estate
or Equipment to substantially the equivalent condition prior to
such condemnation, fire or other casualty as set forth herein. If
the Companies do not, or cannot, elect to use the Proceeds as set
forth above, the Agent may, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Agent, apply
the Proceeds to the payment of the Obligations in such manner and
in such order as the Agent reasonably may elect.
(iv) If the Companies elect to use the Proceeds for the
repair, replacement or restoration of any Real Estate or Equipment,
and there is then no Event of Default, (x) proceeds of insurance on
Equipment or Real Estate in excess of One Million Dollars
($1,000,000.00) will be applied to the reduction of the Revolving
Loans of the Companies and (y) the Agent may set up a reserve
against Availability for an amount equal to the proceeds referred
to in clause (x) hereof. The reserve will be reduced dollar-for-
dollar upon receipt of non-cancelable executed purchase orders,
delivery receipts or contracts for the replacement, repair or
restoration of Equipment or the Real Estate and disbursements in
connection therewith. Prior to the commencement of any
restoration, repair or replacement of Real Estate, the Companies
shall provide the Agent with a restoration plan and a total budget
certified by an independent third party experienced in construction
costing. If there are insufficient Proceeds to cover the cost of
restoration as so determined, the Companies shall be responsible
for the amount of any such deficiency, and shall fund such
deficiency before the reserve will be reduced. Completion of
restoration shall be evidenced by a final, unqualified
certification of the design architect employed, if any; an
unconditional certificate of occupancy, if applicable; such other
certification as may be required by law; or if none of the above is
applicable, a written good faith determination of completion by the
Companies (herein collectively the "Completion"). Upon Completion,
any remaining reserve as established hereunder will be
automatically released.
(v) The Companies agree to pay any reasonable costs,
fees or expenses which the Agent may reasonably incur in connection
with this Section 7.5.
-----------
7.6 The Companies agree to pay, prior to the imposition of any
lien or penalty (other than Permitted Encumbrances), all taxes,
assessments, claims and other charges (herein "taxes") lawfully levied
or assessed upon any Company or the Collateral, including, without
limitation, all sales taxes collected by any Company on behalf of any
Company's customers in connection with sales of Inventory. If such
taxes remain unpaid after such date (unless such taxes are being
diligently contested in good faith by such Company by appropriate
proceedings), or if any lien shall be claimed thereunder (a) for taxes
due the United States of America or (b) which in the Agent's opinion
secures an obligation having priority over the rights granted to the
Agent and the Lenders herein, then the Agent may, on behalf of the
Companies and/or the Lenders, pay such taxes, and the amount thereof
shall be an Obligation secured hereby and due to the Agent on demand.
7.7
(a) Each Company agrees to comply with all acts, rules,
regulations and orders of any legislative, administrative or judicial
body or official, which the failure to comply with would have a Material
Adverse Effect on such Company, provided that any Company may contest
any acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in the Agent's
reasonable opinion, materially and adversely effect the Agent's or the
Lenders' rights or priorities in the Collateral.
(b) Without limiting the generality of paragraph (a) above,
each Company agrees to comply with all environmental statutes, acts,
rules, regulations or orders, as presently existing or as adopted or
amended in the future, applicable to the ownership and/or use of its
real property and operation of its business, if the failure to so comply
would have a Material Adverse Effect on such Company. Each Company
hereby indemnifies the Agent and the Lenders, and agrees to defend and
hold the Agent and the Lenders harmless, from and against any and all
loss, damage, claim, liability, injury or expense which the Agent or the
Lenders may sustain or incur in connection with any claim or expense
asserted against the Agent or the Lenders as a result of any
environmental pollution, hazardous material or environmental clean-up of
any Company's owned or leased real property; or any claim or expense
which results from any Company's operations (including, but not limited
to, the Company's off-site disposal practices) except as a result of the
gross negligence or willful misconduct of the Agent or any Lender, and
each Company further agrees that this indemnification shall survive
termination of this Financing Agreement as well as the payment of all
Obligations or amounts payable hereunder. No Company shall be deemed to
have breached any provision of this Section 7.7 if (i) the failure to
-----------
comply with the requirements of this Section 7.7 resulted from good
-----------
faith error or innocent omission, (ii) the Companies promptly commence
and diligently pursue a cure of such breach and (iii) such failure is
cured within fifteen (15) Business Days following any Company's receipt
of notice of such failure.
(c) As of the date hereof, each Company represents and
warrants to the Agent and the Lenders that except as disclosed on
Schedule 7.7 attached hereto, (i) none of the operations of any Company
- ------------
are, to their knowledge after diligent inquiry, the subject of any
federal, state or local investigation to determine whether any remedial
action is needed to address the presence or disposal of any
environmental pollution, hazardous material or environmental clean-up of
the Real Estate or any Company's leased real property, (ii) no Company
has any known contingent liability with respect to any release of any
environmental pollution or hazardous material, (iii) each Company
presently is in compliance with all environmental statutes, acts, rules,
regulations or orders applicable to each Company's owned or leased real
property or the operation of each Company's business, except where the
failure to be in such compliance would not have a Material Adverse
Effect, (iv) no enforcement proceeding, complaint, summons, citation,
notice, order, claim, litigation, investigation, letter or other
communication from a federal, state or local authority has been filed
against or delivered to any Company, regarding or involving any release
of any environmental pollution or hazardous material on any real
property now or previously owned or leased by any Company, and (v) each
Company has obtained and maintains all permits, approvals,
authorizations and licenses, if any, required by applicable
environmental statutes, acts, rules, regulations and orders, except
where the failure to have such permits, approvals, authorizations or
licenses would not have a Material Adverse Effect on such Company.
7.8 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that,
unless Agent shall have otherwise consented in writing, the Companies
will furnish to Agent: (a) within ninety (90) days after the end of
each fiscal year of the Parent, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the close of such year, and statements
of operations, cash flow and reconciliation of stockholders' equity for
such year, in the case of the Consolidated Balance Sheet and related
statements audited by such independent public accountants selected by
the Parent and satisfactory to the Agent, together with the unqualified
opinion of the accountants preparing such financial statements (except
that for the fiscal year 2000 audited financial statements, the opinion
of such accountants may be qualified, if necessary, for the sole purpose
of reflecting that, as of the date of such opinion, the Companies do not
have a financing commitment in place for the period commencing on the
Termination Date); (b) within forty-five (45) days of the end of each
fiscal quarter, a Consolidated Balance Sheet and a Consolidating Balance
Sheet as at the end of such fiscal quarter, and a consolidated statement
of operations and cash flow for such fiscal quarter and for the period
commencing on the first day of the current fiscal quarter through the
end of such fiscal quarter; (c) within thirty-five (35) days after the
end of each fiscal month, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the end of such fiscal month, and a
consolidated statement of operations and cash flow for such fiscal month
and for the period commencing on the first day of the current fiscal
year through the end of such fiscal month; (d) no later than thirty (30)
days after the beginning of each fiscal year, monthly projections of the
Consolidated Balance Sheet, Consolidating Balance Sheet, the
consolidated and consolidating statements of operations and cash flow of
Parent, as well as projected Availability for such fiscal year; and
(e) from time to time, such further information regarding the business
affairs and financial condition of each Company as the Agent may
reasonably request. Each financial statement which the Companies are
required to submit hereunder must be accompanied by an officer's
certificate, signed by the Treasurer or Chief Financial Officer of
Representative, pursuant to which such officer must certify that:
(x) the financial statement(s) fairly and accurately represent(s)
Parent's and the Companies' financial condition at the end of the
particular accounting period, as well as Parent's and the Companies'
operating results during such accounting period, subject to year-end
audit adjustments; (y) during the particular accounting period (i) there
has occurred no Default or Event of Default under this Financing
Agreement, or, if any such officer has knowledge that any such Default
or Event of Default, has occurred during such period, the existence of
and a detailed description of same shall be set forth in such officer's
certificate, and (ii) no Company has received any notice of cancellation
with respect to its property insurance policies; and (z) the exhibits
attached to such financial statement(s) constitute detailed calculations
showing compliance with all financial covenants contained in this
Financing Agreement and, in the case of the exhibits to the financial
statements referred to in clauses (a) and (b) above, setting forth the
computation of the Leverage Ratio level for purposes of determination of
the Applicable Margin (it being understood that the Applicable Margin
determination will be made based upon the computation of the Leverage
Ratio level on a quarterly basis as of each Test Date after the Start
Date).
7.9 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that,
without the prior written consent of the Required Lenders, except as
otherwise herein provided, no Company will, and will not permit any
Guarantor or Subsidiary to:
(a) Except for transfers of assets permitted under Section
7.9(c) below and Permitted Encumbrances, mortgage, assign, pledge,
transfer or otherwise permit any lien, charge, security interest,
encumbrance or judgment, (whether as a result of a purchase money or
title retention transaction, or other security interest, or otherwise)
to exist on any of its assets or goods, whether real, personal or mixed,
whether now owned or hereafter acquired;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Sell, lease, assign, transfer or otherwise dispose of
(i) Collateral, except as otherwise specifically permitted by this
Financing Agreement, or (ii) either all or any substantial part of its
assets, if any, which do not constitute Collateral; provided, however,
that (A) transfers of Inventory solely among the Companies and/or the
Guarantors (other than Parent) shall be permitted hereunder so long as
any such transfer would be classified as an Intercompany Receivable,
(B) sales or dispositions of Excluded Assets shall be permitted
hereunder, and (C) sales or transfers of Collateral to either Company by
the other Company or by any Subsidiary to any Company shall be permitted
hereunder;
(d) (i) Merge or consolidate with any other entity; provided,
however, that (x) any Company may merge or consolidate with any
Guarantor (other than Parent) and (y) any non-Guarantor Subsidiary may
merge or consolidate with any other non-Guarantor Subsidiary;
(ii) change its corporate name or principal place of business without at
least thirty (30) days prior written notice to the Agent, (iii) change
the form of its organization from for-profit corporation or (iv) enter
into or engage in any operation or activity materially different from
that presently being conducted by either Company.
(e) Assume, guarantee, endorse, or otherwise become liable
upon the obligations of any person, firm, entity or corporation, except
(i) by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(ii) existing guaranties listed on Schedule 7.9(e) hereof,
---------------
(iii) guaranties in favor of Agent under the Loan Documents,
(iv) guaranties entered into in the ordinary course of business by any
Company or any Guarantor of the obligations of any Company or any
Guarantor, (v) guaranties entered into in the ordinary course of
business by any Subsidiary that is not a Guarantor of the obligations of
any other Subsidiary that is not a Guarantor, (vi) guaranties in support
of the Subordinated Debt, and (vii) guaranties entered into in
connection with the refinancing of any Indebtedness permitted to be
guaranteed by this Section, provided that the guarantor thereof was
previously guaranteeing the Indebtedness being refinanced and the
principal amount of such Indebtedness being refinanced shall not be
increased from such principal amount outstanding on the day prior to the
date of such refinancing; provided, however, that the principal amount
of such Indebtedness being guaranteed may be increased by up to Two
Million Five Hundred Thousand ($2,500,000.00) if, and only if, such
Indebtedness is Permitted Indebtedness;
(f) Declare or pay any dividend or distribution of any kind
on, or purchase, acquire, redeem or retire, any of Parent's or any
Company's equity interests (of any class or type whatsoever), whether
now or hereafter issued and outstanding, other than Permitted
Distributions;
(g) Create any new Subsidiary, or make any advance or loan
to, or any investment in, or acquire all or substantially all of the
assets or capital stock of, or other equity interests in, any firm,
entity, person or corporation, other than (i) investments in the
Subsidiaries, (ii) Permitted Investments, (iii) loans constituting
Permitted Indebtedness hereunder, and (iv) advances to officers and
directors in the ordinary course of business for travel expenses,
employment relocation programs and similar business expenses subject to
a limit of Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any one time outstanding; provided, however that such limit
shall not apply with respect to legally required and permissible
indemnification of officers and directors;
(h) Amend or modify any provision of the Lease Documents to
the extent such amendments or modifications would (i) accelerate the
term or maturity date of any obligations thereunder, (ii) increase the
amount of rental payments, royalty payments or other payments required
thereunder, (iii) accelerate any obligations thereunder, (iv) increase
the amount of any interest or royalty rate attributable thereto, or (v)
otherwise impose any covenant, term, restriction, condition or
obligation determined by Agent, in its reasonable discretion, to be
materially more restrictive or burdensome to any Company or Parent than
existed prior to such amendment or modification. It is understood and
agreed that to the extent an amendment or modification of the Lease
Documents is permissible hereunder, Agent shall be promptly provided
with a copy thereof; and
(i) Amend or modify any provisions of the Term Financiers
Loan Documents or the D.P. Kelly Loan Documents.
7.10 Until termination of this Financing Agreement and payment and
satisfaction in full of all Obligations hereunder, each Company shall:
(a) cause Parent to maintain at all times during the periods
below a Tangible Net Worth of not less than the amount set forth below
for the applicable period:
<TABLE>
<CAPTION>
Quarterly Period Ending Tangible Net Worth Quarterly Period Ending Tangible Net Worth
- ---------------------- ------------------ ----------------------- ------------------
<S> <C> <C> <C>
June 30, 1999 $99,000,000 June 30, 2000 $88,000,000
September 30, 1999 $95,000,000 September 30, 2000 $86,000,000
December 31, 1999 $91,000,000 December 31, 2000 $86,000,000
March 31, 2000 $88,000,000 March 31, 2001 $82,000,000
June 30, 2001 and
each quarter
thereafter $83,000,000
</TABLE>
(b) maintain at the end of each fiscal quarter during the
periods set forth below a Fixed Charge Coverage Ratio of not less than
the ratio set forth below for the applicable period (measured as
follows: (i) for the quarter ending June 30, 1999, measured on a
trailing basis taking into account the prior quarter; (ii) for the
quarter ending September 30, 1999, measured on a trailing basis taking
into account the prior two (2) quarters; (iii) for the quarter ending
December 31, 1999, measured on a trailing basis taking into account the
prior three (3) quarters; and (iv) for the quarter ending March 31, 2000
and each fiscal quarter thereafter, measured on a rolling four (4)
quarter basis taking into account such quarter and the prior three (3)
fiscal quarters):
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio Fiscal Quarter Ending Ratio
- --------------------- -------------- --------------------- ---------------
<S> <C> <C> <C>
June 30, 1999 0.61 to 1.0 June 30, 2000 0.75 to 1.0
September 30, 1999 0.80 to 1.0 September 30, 2000 0.84 to 1.0
December 31, 1999 0.80 to 1.0 December 31, 2000 0.89 to 1.0
March 31, 2000 0.68 to 1.0 March 31, 2001 0.91 to 1.0
June 30, 2001 and
each fiscal quarter
thereafter 0.93 to 1.0
</TABLE>
(c) maintain at the end of each quarter during the periods
set forth below a Leverage Ratio of no more than the ratio set forth
below for the applicable period:
<TABLE>
<CAPTION>
Quarterly Period Ending Ratio Quarterly Period Ending Ratio
- ----------------------- ----------- ----------------------- --------------
<S> <C> <C> <C>
June 30, 1999 45 to 1.0 June 30, 2000 35 to 1.0
September 30, 1999 40 to 1.0 September 30, 2000 35 to 1.0
December 31, 1999 35 to 1.0 December 31, 2000 30 to 1.0
March 31, 2000 42 to 1.0 March 31, 2001 37 to 1.0
June 30, 2001 and
each quarter
thereafter 30 to 1.0
</TABLE>
7.11 Without the prior written consent of the Required Lenders, the
Parent, on a consolidated basis with its Subsidiaries, will not:
(a) enter into any Operating Lease if after giving effect thereto the
aggregate obligations with respect to Operating Leases of the Companies
during any fiscal year would exceed Seven Million Dollars ($7,000,000),
or (b) make any Capital Expenditures (whether subject to a security
interest or otherwise) during any fiscal year in the aggregate amount in
excess of:
(i) $28,000,000.00 for the fiscal year ending
December 31, 1999;
(ii) $14,000,000.00 for the fiscal year ending
December 31, 2000;
(iii) $7,500,000.00 for the six (6) month period
ending June 30, 2001;
provided that if the maximum amount set forth above for any year exceeds
- --------
the aggregate amount of Capital Leases and Capital Expenditures made or
incurred (or committed to be made or incurred) during such period, then
the maximum amount set forth above for the following period(s) shall be
increased by up to Three Million Dollars ($3,000,000) of the amount of
such excess.
7.12 The Company agrees to advise Agent in writing of (a) all
expenditures (actual or anticipated) in excess of Five Hundred Thousand
Dollars ($500,000.00) for (i) environmental clean-up, (ii) environmental
compliance or (iii) environmental testing and the impact of said
expenses on any Company's Working Capital, and (b) any notices any
Company receives from any local, state or federal authority advising any
Company of any environmental liability (real or potential) stemming from
any Company's operations, its premises, its waste disposal practices, or
waste disposal sites used by any Company and to provide Agent with
copies of all such notices if so required.
7.13 Without the prior written consent of the Required Lenders,
each Company agrees that it will not enter into any transaction,
including, without limitation, any purchase, sale, lease, loan or
exchange of property, with any person or entity affiliated with either
Parent, any Company or any Subsidiary, unless such transaction otherwise
complies with the provisions of this Financing Agreement and is on
arms-length terms, except that the foregoing restrictions shall not
apply to (a) Intercompany Receivables, (b) fees payable to members of
the Board of Directors of Parent in the ordinary course of business
consistent with past practice, except the amount of such fees may be
increased by ten percent (10%) per annum, and (c) advances of expenses
otherwise permitted by this Agreement.
7.14 Each Company, each Guarantor and each Subsidiary shall take
all action reasonably necessary to assure that its computer-based
systems are able to effectively process date-sensitive data functions.
Each Company represents and warrants to the Agent that the "Year 2000"
problem (that is, the inability of certain computer applications to
recognize and properly perform date-sensitive functions involving dates
subsequent to December 31, 1999) will not have a Material Adverse Effect
on any such entity. Each Company, each Guarantor and each Subsidiary
reasonably anticipates that all computer applications which are material
to the operation of its business will, on a timely basis, properly
perform date-sensitive functions on and after January 1, 2000. Upon the
Agent's request from time to time, each Company shall provide the Agent
with assurances, in form and substance reasonably satisfactory to the
Agent, that each Company's, each Guarantor's and each Subsidiary's
computer systems and applications are, or will be, Year 2000 compliant
on a timely basis.
7.15 Each Company hereby represents and warrants to Agent that
Viskase Holding has no creditors with respect to Indebtedness (other
than the Lenders under the Guaranty) and no trade credit of any kind as
of the date hereof. Each Company hereby covenants to Agent that it
shall cause Viskase Holding not to incur any additional Indebtedness
and/or trade credit.
7.16 The Companies agree to utilize all net proceeds received by
either of them, any Guarantor or any Subsidiary of the sale, transfer or
other disposition of the Excluded Assets to pay the outstanding
principal balance plus accrued interest on the Revolving Loans then
outstanding.
7.17 Each Company hereby represents and warrants to Agent that its
execution and delivery of a guaranty and grant of a security interest in
its assets to support Parent's obligations under the Senior Secured
Notes was for fair consideration and that a substantial portion of the
proceeds of the Senior Secured Notes were used to pay direct obligations
of the Companies as well as to provide funds to the Companies for
working capital and capital expenditures.
7.18 Each Company hereby represents and warrants that the Lease
Documents were entered into on December 18, 1990 and have not been
amended or modified since such date except for (a) certain Lease
Supplements dated as of December 28, 1990 and July 24, 1991,
respectively, and (b) a certain Amendment No. 1 to Participation
Agreement dated July 24, 1991 and a Waiver to Participation Agreement
dated on or about the date hereof. Each Company hereby further
represents and warrants that true and correct copies of the Lease
Documents, as so amended, have been provided to Agent.
7.19 Each Company hereby represents and warrants that each of
Viskase Argentina and Viskase De Mexico S.A. de C.V. have ceased all
business operations. Each Company covenants and agrees that it will not
conduct any business within such entities until such time as sixty-five
percent (65%) of the capital stock of each such entity has been pledged
to Agent, for the benefit of the Lenders, pursuant to pledge
arrangements in form and substance satisfactory to Agent.
7.20 Each Company hereby represents and warrants that it has
delivered to the Agent pursuant to Section 2.1(b) hereof true, correct
and complete copies of the Term Financiers Loan Documents and the
D.P. Kelly Loan Documents.
SECTION 8. Interest, Fees and Expenses
---------------------------
8.1 Interest on the outstanding balances of the Revolving Base
Rate Loans shall be payable monthly on the first Business Day of each
month and shall accrue at a rate per annum equal to the Alternate Base
Rate plus the Applicable Margin on the average of the net balances owing
by the Companies to the Agent and the Lenders in the Companies'
Revolving Loan Account at the close of each day during the immediately
preceding month. With respect to Revolving LIBOR Loans, interest shall
be payable monthly on the first Business Day of each month and shall
accrue at a rate per annum equal to the applicable LIBOR plus the
Applicable Margin on the average balances of all LIBOR Loans outstanding
during the immediately preceding month. In the event of any change in
the Alternate Base Rate, the rate set forth in the first sentence of
this Section 8.1 shall change, as of the first of the month following
-----------
any such change, so as to remain by a percentage equal to the Applicable
Margin above the Alternate Base Rate then in effect. All interest rates
shall be calculated based on a 360-day year. The Agent, on behalf of
the Lenders, shall be entitled to charge the Companies' Revolving Loan
Account for all interest provided for herein when due until all
Obligations have been paid in full.
8.2 Interest on any portion of the principal amount of the Term
Loan for which the Companies have not elected to use LIBOR as the basis
for the interest rate (i.e., a Term Base Rate Loan) shall be payable
---
monthly on the first Business Day of each month and shall accrue at a
rate per annum equal to the sum of the Alternate Base Rate plus the
----
Applicable Margin. Interest on any portion of the principal amount of
the Term Loan for which the Companies have elected to use LIBOR as the
basis for the interest rate (i.e., a Term LIBOR Loan) shall be payable
---
monthly on the first Business Day of each month and shall accrue at a
rate per annum equal to the sum of the applicable LIBOR plus the
----
Applicable Margin. In the event of any change in the Alternate Base
Rate, the rate set forth in the first sentence of this Section 8.2 shall
-----------
change, as of the first of the month following any such change, so as to
remain by a percentage equal to the Applicable Margin above the
Alternate Base Rate then in effect. All interest rates shall be
calculated based on a 360-day year. The Agent, on behalf of the
Lenders, shall be entitled to charge the Companies' Revolving Loan
Account for all interest provided for herein when due until all
Obligations have been paid in full.
8.3 The Companies may elect to use LIBOR as to any outstanding
Revolving Loans and any portion of the principal amount of the Term Loan
provided that there then exists no Default or Event of Default and the
Representative has so advised the Agent of its election to use LIBOR and
the LIBOR Period selected no later than three (3) Business Days
preceding the first day of a LIBOR Period. The election and LIBOR shall
be effective, provided there then exists no Default or Event of Default,
on the fourth Business Day following said notice. The LIBOR elections
must be for One Million Dollars ($1,000,000) or whole multiples thereof
and there shall be no more than seven (7) LIBOR Loans outstanding at one
time. If no such election is timely made or can be made, or if the
LIBOR rate can not be determined, then the Agent shall use the Alternate
Base Rate plus the Applicable Margin for Revolving Base Rate Loans or
Term Base Rate Loans, as applicable, to compute interest. Upon demand
by the Lenders, each Company shall pay to the Agent, for the benefit of
the Lenders, such amount or amounts as shall compensate the Lenders for
any loss, costs or expenses incurred by the Lenders (as reasonably
determined by the Lenders) as a result of (a) any payment or prepayment
on a date other than the last day of a LIBOR Period for such LIBOR Loan,
or (b) any failure of any Company to borrow a LIBOR Loan on the date for
such borrowing specified in the relevant notice; such compensation to
include, without limitation, an amount equal to any loss or expense
suffered by each Lender during the period from the date of receipt of
such payment or prepayment or the date of such failure to borrow to the
last day of such LIBOR Period if the rate of interest obtained by such
Lender upon the reemployment of an amount of funds equal to the amount
of such payment, prepayment or failure to borrow is less than the rate
of interest applicable to such LIBOR Loan for such LIBOR Period. The
determination by the Lenders of the amount of any such loss or expense,
when set forth in a written notice to the Representative from the Agent,
containing the Lenders' calculations thereof in reasonable detail, shall
be conclusive on the Companies, in the absence of manifest error.
Calculation of all amounts payable to the Lenders under this paragraph
with regard to LIBOR Loans shall be made as though each Lender had
actually funded the LIBOR Loans through the purchase of deposits in the
relevant market and currency, as the case may be, bearing interest at
the rate applicable to such LIBOR Loans in an amount equal to the amount
of the LIBOR Loans and having a maturity comparable to the relevant
interest period, provided that the Lenders may fund each of the LIBOR
Loans in any manner the Lenders see fit and the foregoing assumption
shall be used only for calculation of amounts payable under this
Section 8.3. In addition, notwithstanding anything to the contrary
- -----------
contained herein, the Agent shall apply all proceeds of Collateral,
including the Accounts, and all other amounts received by it from or on
behalf of the Companies initially to the loans accruing interest at the
Alternate Base Rate and then to LIBOR Loans, provided that upon the
occurrence and during the continuance of an Event of Default, or in the
event the aggregate amount of outstanding LIBOR Loans exceeds
Availability or the applicable maximum levels set forth therefor, the
Agent may apply all such amounts received by it to the payment of
Obligations in such manner and in such order as the Agent may elect in
its reasonable business judgment. In the event that any such amounts
are applied to Revolving Loans which are LIBOR Loans, such application
shall be treated as a prepayment of such loans and the Lenders shall be
entitled to indemnification hereunder.
8.4
(a) Notwithstanding any other provision of this Financing
Agreement to the contrary, if any law, regulation, treaty or directive,
or any change therein or in the interpretation or application thereof,
shall make it unlawful for the Agent or any Lender to make or maintain
LIBOR Loans as contemplated herein, the then outstanding LIBOR Loans so
affected, if any, shall be converted automatically to loans accruing
interest at the Alternate Base Rate, plus the Applicable Margin for
Revolving Base Rate Loans or Term Base Rate Loans, as applicable, at the
end of the applicable LIBOR Period or within such earlier period as
required by law. Each Company hereby agrees to pay the Agent, for the
benefit of the Lenders, on demand, any additional amounts necessary to
compensate the Agent or any Lender for any costs incurred by the Agent
or any Lender in making any conversion in accordance with Section 8.3.
-----------
(b) Notwithstanding any other provision of this Financing
Agreement to the contrary, in the event that, by reason of any
Regulatory Change (for purposes hereof "Regulatory Change" shall mean,
with respect to the Agent or any Lender, any change after the date of
this Agreement in United States federal, state or foreign law or
regulations or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks
including the Agent or any Lender of or under any United States federal,
state or foreign law or regulations (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful)),
the Agent or any Lender either (i) incurs any material additional costs
based on or measured by the excess above a specified level of the amount
of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on LIBOR Loans
is determined as provided in this Financing Agreement or a category of
extensions of credit or other assets of the Agent or any Lender which
includes LIBOR Loans or (ii) becomes subject to any material
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if the Agent or the Required Lenders so elect
by notice to the Representative, the obligation of the Agent and the
Lenders to make or continue LIBOR Loans hereunder shall be suspended
until such Regulatory Change ceases to be in effect.
8.5 In consideration of the Letter of Credit Guaranty, the Company
shall pay to the Agent, for the benefit of the Lenders, a Letter of
Credit Guaranty Fee equal to two and one-quarter percent (2.25%) per
annum on the undrawn face amount of each Letter of Credit. For each
documentary Letter of Credit, the entire Letter of Credit Guaranty Fee
shall be payable on the date of issuance, and for each standby Letter of
Credit, the Letter of Credit Guaranty fee shall be payable monthly on
the first day of each month.
8.6 Any charges, fees, commissions, costs and expenses charged to
the Agent for any Company's account by any Issuing Bank in connection
with or arising out of Letters of Credit issued pursuant to this
Financing Agreement or out of transactions relating thereto will be
charged to the Companies' Revolving Loan Account in full when charged to
or paid by the Agent, and when made by any such Issuing Bank shall be
conclusive and binding upon the Agent and the Lenders.
8.7 On demand, the Companies shall reimburse or pay the Agent for
all Out-of-Pocket Expenses and the Documentation Fee.
8.8 Commencing on the first day of the month following the month
in which the Closing Date occurs, and on the first day of each month
thereafter, each Company shall pay to the Agent, for the benefit of the
Lenders, the Line of Credit Fee.
8.9 On the date hereof and on July 1, 2000, the Companies shall
pay to the Agent, for its own account, the Collateral Management Fee,
which shall be fully earned and not refundable or rebateable when due.
8.10 After the occurrence and during the continuance of an Event of
Default, each Company shall pay the Agent's standard charges for, and
the reasonable fees and expenses of, the Agent's personnel used by Agent
for reviewing the books and records of each Company and for verifying,
testing protecting, safeguarding, preserving or disposing of all or any
part of the Collateral, which fees and expenses shall be in addition to
the Collateral Management Fee.
8.11 Each Company hereby authorizes the Agent to charge the
Companies' Revolving Loan Account with the amount of all payments due
under this Section 8 as such payments become due. Any amount charged to
the Companies' Revolving Loan Account shall be deemed a Revolving Loan
hereunder and shall incur interest at the rate provided in Section 8.1
-----------
of this Financing Agreement. Each Company confirms that any charge
which the Agent may make to the Companies' Revolving Loan Account as
herein provided will be made as an accommodation to each Company and
solely at the Agent's discretion.
8.12 If the Term Loan is not prepaid in full before March 1, 2000,
the Companies shall pay to the Agent, for the benefit of the Lenders, a
fee on March 1, 2000 in the amount of Two Hundred Fifty Thousand Dollars
($250,000). If the Term Loan is not prepaid in full before June 1,
2000, the Companies shall pay to the Agent, for the benefit of the
Lenders, an additional fee on June 1, 2000, in the amount of Five
Hundred Thousand Dollars ($500,000). If the Term Loan is not prepaid in
full prior to any September 1, December 1, March 1, or June 1,
commencing September 1, 2000, on each such date, the Companies shall pay
to Agent, for the benefit of the Lenders, additional fees in the amount
of Two Hundred Fifty Thousand Dollars ($250,000) each.
8.13 The Companies agree that, subsequent to the Closing Date,
Agent will conduct comprehensive appraisals of the fixed assets of the
Companies (in addition to the appraisals referred to in Section 2.1(u)
--------------
above) at the expense of the Companies, payable on demand of Agent;
provided, that the cost thereof to the Companies shall not exceed Sixty-
Seven Thousand Five Hundred Dollars ($67,500).
SECTION 9. Powers
------
9.1 Each Company hereby constitutes the Agent, on behalf of the
Lenders, or any person or agent which the Agent may designate, as its
attorney-in-fact, at each Company's cost and expense, to exercise all of
the following powers, which being coupled with an interest, shall be
irrevocable until all of the Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all
in the name of the Agent or any Company, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to
each Company and to notify postal authorities to change the address for
delivery thereof to such address as the Agent may designate;
(c) To request from customers indebted on Accounts at any
time, in the name of the Agent or any Company or that of the Agent's
designee, information concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of
the Agent's and the Lenders' interests therein and to notify customers
indebted on Accounts to make payment directly to the Agent, on behalf of
the Lenders, for each Company's account; and
(e) To take or bring, in the name of the Agent, the Lenders
and/or any Company, all steps, actions, suits or proceedings deemed by
the Agent necessary or desirable to enforce or effect collection of the
Accounts.
9.2 Notwithstanding anything set forth herein to the contrary, the
powers set forth in paragraphs (b), (d) and (e) of Section 9.1 may only
-----------
be exercised after the occurrence of an Event of Default and until such
time as such Event of Default is waived.
SECTION 10. Events of Default and Remedies
------------------------------
10.1 Notwithstanding any provision of this Financing Agreement to
the contrary, Agent may terminate this Financing Agreement immediately
upon the occurrence of any of the following (herein "Events of
Default"):
(a) cessation of the business of Parent, any Company or any
Guarantor or the calling of a meeting of the creditors of any of them
for purposes of compromising the debts and obligations of any Company;
(b) the failure of the Parent, any Company or any Guarantor
to generally meet its debts as those debts mature;
(c) the commencement by or against the Parent, any Company or
any Guarantor of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or
state law, provided that in the event of any involuntary proceeding
commenced against any Company and such proceeding is not dismissed or
discharged within thirty (30) days after commencement thereof;
(d) (i) breach by any Company of any covenant contained
herein (other than those referred to in paragraph (e) below) or in any
of the other Loan Documents, provided that such breach by any Company of
any of the covenants referenced in this paragraph (d) shall not be
deemed to be an Event of Default unless and until such breach shall
remain unremedied to Agent's satisfaction for a period of fifteen (15)
days from the date of such breach or (ii) any representation or warranty
contained herein shall be false or misleading in any material respect
when made or remade;
(e) breach by any Company of any warranty, representation or
covenant of Sections 3.3 (other than the third sentence of Section 3.3)
------------ ------------
and 3.4, Section 4, Sections 6.3 and 6.4 (other than the first sentence
--- --------- ----------- ---
of Section 6.4), and Sections 7.1, 7.5, 7.6, 7.9 through 7.11,
----------- ------------ --- --- --- ----
inclusive, and 7.16;
---
(f) failure of any Company to pay any of the Obligations on
the due date thereof, provided that nothing contained herein shall
prohibit the Agent from charging such amounts to the Companies'
Revolving Loan Account on the due date thereof;
(g) any Company shall (i) engage in any "prohibited
transaction" as defined in ERISA, (ii) incur any "accumulated funding
deficiency" as defined in ERISA, (iii) incur any "Reportable Event" as
defined in ERISA, (iv) terminate any "Plan", subject to Title IV of
ERISA or (v) engage in any proceeding in which the Pension Benefit
Guaranty Corporation shall seek appointment, or is appointed, as trustee
or administrator of any Plan, as defined in ERISA; and with respect to
this paragraph (g) such event or condition (x) remains uncured for a
period of thirty (30) days from date of occurrence and (y) could subject
any Company to any tax, penalty or other liability that could reasonably
be expected to have a Material Adverse Effect;
(h) a default (after all applicable cure periods with respect
thereto have expired) or an "Event of Default" shall occur under any of
the other Loan Documents;
(i) without the prior written consent of Agent, any Company
shall either (i) amend or modify the Subordinated Debt, or (ii) make any
payment on account of or in connection with any Subordinated Debt
including, without limitation, the Term Financiers Loan Documents or the
D.P. Kelly Loan Documents, except as expressly permitted in the
applicable Subordination Agreement;
(j) the occurrence of any event of default (after giving
effect to any applicable grace or cure periods) under any instrument or
agreement evidencing either (i) the Subordinated Debt or (ii) any other
Indebtedness of any Company having a principal amount in excess of Two
Million Five Hundred Thousand Dollars ($2,500,000); or
(k) a default (after all applicable cure periods with respect
thereto have expired) or an "Event of Default" shall occur under any of
the Lease Documents.
10.2 Upon the occurrence of an Event of Default, the Agent may, at
its option, and the Agent shall, upon the request of the Required
Lenders, declare that all loans, advances and extensions of credit
provided for in Sections 3, 4 and 5 of this Financing Agreement
------------- -
thereafter shall be made in the Lender's sole discretion, and the
obligation of the Lenders to make Revolving Loans and/or open Letters of
Credit shall cease unless such Event of Default is waived. In addition,
upon the occurrence of an Event of Default, the Agent may, at its
option, and the Agent shall, upon the request of the Required Lenders:
(a) declare all Obligations immediately due and payable; (b) charge each
Company the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in
Section 8 of this Financing Agreement, provided that with respect to
- ---------
this clause (b), the Agent gives Representative written notice of the
Event of Default (provided that no notice is required if the Event of
Default is the Event listed in paragraph (c) of Section 10.1) and the
------------
Companies fail to cure the Event of Default to the Agent's satisfaction
within ten (10) days after Representative is deemed to have received
such notice hereunder (or within 10 days of the occurrence of the Event
of Default, in the case of an Event of Default listed in paragraph (c)
of Section 10.1); and (c) immediately terminate this Financing Agreement
------------
upon notice to Representative, provided that no notice of termination is
required in the case of an Event of Default listed in paragraph (c) of
Section 10.1. The exercise of any option is not exclusive of any other
- ------------
option which may be exercised at any time by the Agent or the Lenders.
10.3 Immediately after the occurrence and during the continuance of
any Event of Default, the Agent may, at its option, and the Agent shall,
upon the request of the Required Lenders: (a) remove from any premises
where same may be located any and all documents, instruments, files and
records, and any receptacles or cabinets containing same, relating to
the Accounts, or the Agent may use, at each Company's expense, such of
each Company's personnel, supplies or space at each Company's places of
business or otherwise, as may be necessary to properly administer and
control the Accounts or the handling of collections and realizations
thereon; (b) bring suit, in the name of any Company, the Agent and/or
the Lenders, and generally shall have all other rights respecting said
Accounts, including, without limitation, the right to (i) accelerate or
extend the time of payment, (ii) settle, compromise, release in whole or
in part any amounts owing on any Accounts and (iii) issue credits in the
name of any Company, the Agent and/or the Lenders; (c) sell, assign and
deliver the Collateral and any returned, reclaimed or repossessed
merchandise, with or without advertisement, at public or private sale,
for cash, on credit or otherwise, at the Agent's sole option and
discretion, and the Agent, on behalf of the Lenders, may bid or become
a purchaser at any such sale, free from any right of redemption, which
right is hereby expressly waived by each Company; (d) foreclose its
security interests in the Collateral by any available judicial
procedure, or take possession of any or all of the Inventory and/or
Other Collateral without judicial process, and enter any premises where
any Inventory and/or Other Collateral may be located for the purpose of
taking possession of or removing the same, and (e) exercise any other
rights and remedies provided in law, in equity, by contract or
otherwise. For the purpose of enabling Agent, on behalf of the Lenders,
to exercise rights and remedies hereunder, the Companies hereby grant to
the Agent, to the extent assignable, licensable, or sublicensable,
without breaching any underlying agreements with third parties, an
irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Companies) to use, assign, license
or sublicense any of the General Intangibles. After the occurrence and
during the continuance of an Event of Default, the Agent shall have the
right, without notice or advertisement, to sell, lease, or otherwise
dispose of all or any part of the Collateral whether in its then
condition or after further preparation or processing, in the name of
each Company, the Agent and/or the Lenders, or in the name of such other
party as the Agent may designate, either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit, with or
without warranties or representations, and upon such other terms and
conditions as the Agent and the Lenders in their sole discretion may
deem advisable. Any Lender or the Agent, on behalf of the Lenders,
shall have the right to purchase at any such sale. If any Inventory
shall require rebuilding, repairing, maintenance or preparation, the
Agent, on behalf of the Lenders, shall have the right, at its option, to
do such of the aforesaid as is necessary, for the purpose of putting the
Inventory in such saleable form as the Agent shall deem appropriate.
Each Company agrees, at the request of the Agent, to assemble the
Inventory and to make it available to the Agent at premises of each
Company or elsewhere, and to make available to the Agent the premises
and facilities of each Company for the purpose of the Agent's taking
possession of, removing or putting the Inventory in saleable form.
However, if notice of intended disposition of any Collateral is required
by law, it is agreed that ten (10) days notice shall constitute
reasonable notification and full compliance with the law. The net cash
proceeds resulting from the exercise of any of the foregoing rights
(after deducting all charges, costs and expenses, including reasonable
attorneys' fees) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in such order as the Agent
and the Lenders may elect, and each Company shall remain liable to the
Agent and the Lenders for any deficiencies. The Agent, on behalf of the
Lenders, in turn agrees to remit to each Company or its successors or
assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of
any right shall not preclude the exercise of any other rights by the
Agent or the Lenders, all of which shall be cumulative. The
mortgage(s), deed(s) of trust and other documents relating to the Real
Estate including, but not limited to, the Real Estate Collateral
Documents shall govern the rights and remedies of the Agent with respect
thereto.
SECTION 11. Termination
-----------
11.1 Except as otherwise provided herein, this Financing Agreement
shall terminate on the Termination Date. Notwithstanding the foregoing,
(a) the Lenders (acting through the Agent) may terminate the Financing
Agreement immediately upon the occurrence of an Event of Default,
provided that in the case of an Event of Default listed in paragraph (c)
of Section 10.1 hereof, the Agent and the Lenders may regard the
------------
Financing Agreement as terminated and notice to that effect is not
required, and (b) the Companies may terminate this Financing Agreement
and the Revolving Line of Credit prior to the Termination Date upon at
least fifteen (15) days' prior written notice to the Agent, provided
that the Companies pay to the Agent, for the benefit of the Lenders,
immediately on demand, any applicable Early Termination Fee and
Prepayment Premium. For purposes of this Financing Agreement, the
repayment of the Revolving Loans in full, by itself, shall not
constitute a termination of this Financing Agreement or the Revolving
Line of Credit. All Obligations shall become due and payable as of any
termination hereunder or under Section 10 hereof and, pending a final
----------
accounting, the Agent may withhold any balances in the Companies'
Revolving Loan Account (unless supplied with an indemnity satisfactory
to the Agent) to cover all of the Obligations, whether absolute or
contingent. All of the Agent's and the Lenders' rights, liens and
security interests shall continue after any termination until all
Obligations have been paid and satisfied in full.
SECTION 12. Miscellaneous
-------------
12.1 Each Company hereby waives diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No
waiver of any Event of Default shall be effective unless made by the
Required Lenders, and such waiver must be in writing and signed by an
officer of the Required Lenders. No delay or failure by the Agent or
the Lenders to exercise any right or remedy hereunder, whether before or
after the happening of any Event of Default, shall impair any such
right, or shall operate as a waiver of such right or as a waiver of any
such Event of Default. No single or partial exercise by the Agent or
the Lenders of any right or remedy precludes any other or further
exercise thereof, or precludes any other right or remedy.
12.2 This Financing Agreement and the documents executed and
delivered in connection therewith: (a) constitute the entire agreement
among each Company, the Agent and the Lenders; (b) supersede any prior
agreements; (c) subject to the provisions of Section 14.10 hereof, may
-------------
be amended only by a writing signed by each Company, the Agent and the
Required Lenders; and (d) shall bind and benefit each Company, the
Agent, the Lenders and their respective successors and assigns.
12.3 In no event shall any Company, upon demand by the Agent for
payment of any Indebtedness relating hereto, by acceleration of the
maturity thereof, or otherwise, be obligated to pay interest and fees in
excess of the amount permitted by law. Regardless of any provision
herein or in any agreement made in connection herewith, the Agent and
the Lenders shall never be entitled to receive, charge or apply, as
interest on any Indebtedness relating hereto, any amount in excess of
the maximum amount of interest permissible under applicable law. If the
Agent or any Lender ever receives, collects or applies any such excess,
it shall be deemed a partial repayment of principal and treated as such.
If as a result, principal is paid in full, any remaining excess shall be
refunded to the Companies. This Section 12.3 shall control every other
------------
provision hereof and of any other agreement made in connection herewith.
12.4 If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such
provision shall be fully severable, and the remaining provisions of the
applicable agreement shall remain in full force and effect and shall not
be affected by such provision's severance. Furthermore, in lieu of any
such provision, there shall be added automatically as a part of the
applicable agreement a legal and enforceable provision as similar in
terms to the severed provision as may be possible.
12.5 EACH COMPANY, THE AGENT AND THE LENDERS EACH HEREBY WAIVE ANY
-------------------------------------------------------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF
- -------------------------------------------------------------------
THIS FINANCING AGREEMENT. EACH COMPANY HEREBY IRREVOCABLY WAIVES
- ------------------------------------------------------------------
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY
- -----------------------------------------------------------------
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
- ------------------------------------------------------
12.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered when received by
the recipient if hand delivered, sent by commercial overnight courier or
sent by facsimile, or three (3) Business Days after deposit in the
United State mail, with proper first class postage prepaid and addressed
to the party to be notified as follows:
(a) if to the Agent, at:
The CIT Group/Business Credit, Inc.
10 South LaSalle Street, 22nd Floor
Chicago, Illinois 60603
Attn: Regional Manager
Telecopier No.: (312) 443-0139;
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
Attn: Michael A. Nemeroff, Esq.
Telecopier No.: (312) 609-5005
(b) if to the Companies at:
Viskase Companies, Inc.
6855 West 65th Street
Bedford Park, Illinois 60638
Attention: President and General Counsel
Telecopier No.: (708) 496-4472
with a copy to:
Holleb & Coff
55 East Monroe Street, Suite 4100
Chicago, Illinois 60603
Attn: Allan Brilliant, Esq.
Telecopier: (312) 807-3900
(c) if to any Lender, at its address set forth below its
signature to this Financing Agreement or its address specified in the
Assignment and Transfer Agreement executed by such Lender; or
(d) to such other address as any party may designate for
itself by like notice.
12.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
--------------------------------------------------------------
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
- ------------------------------------------------------------------
12.8 Joint and Several Liability. The liability of each Company
---------------------------
under this Agreement and the Loan Documents in general shall be joint
and several, and each reference herein to the Companies shall be deemed
to refer to each such Company. In furtherance and not in limitation of
Agent's rights and remedies hereunder or at law, Agent may proceed under
this Agreement and the Loan Documents against any one or more of the
Companies in its absolute and sole discretion for any of the Obligations
or any other liability or obligation of any Company arising hereunder.
12.9 Interrelationship Among the Companies. Each Company
-------------------------------------
acknowledges that: (a) that the business operations of each Company are
interrelated and compliment one another, and that such entities have a
common business purpose; (b) to permit their uninterrupted and
continuous operations, such entities now require and will in the future
require various funds and other credit accommodations from the Lenders;
and (c) the funds obtained by the Companies under the this Agreement
will be used by each Company to (i) refinance certain obligations for
which the Companies were guarantors and which obligations were secured
by liens on each Company's assets and (ii) for general working capital
purposes.
12.10 Within thirty (30) days of the Closing Date, each Company
shall, to the extent permitted by law, cause Viskase Holding to pledge
or transfer to Agent, for the benefit of Lenders, a participating
equity interest in sixty-five percent (65%) of the equity interest owned
by Viskase Holding in Viskase Chile, which pledge or transfer, as
applicable, shall be (a) in form and substance reasonably satisfactory
to Agent and (b) effective only upon the acceleration of the Obligations
hereunder.
SECTION 13. Agreements Regarding the Lenders
--------------------------------
13.1 (a) The Agent, on behalf of the Lenders, shall disburse all
loans and advances to the Representative and shall handle all
collections of Collateral and repayment of all Obligations. It is
understood that for purposes of advances to each Company and for
purposes of this Section 13, the Agent will be using the funds of the
Agent.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to any advance to any Company that such Lender will not
make the amount which would constitute its pro rata share of the
--- ----
borrowing (based on the "Commitment Amount" set forth on the signature
pages of this Financing Agreement or on the amount of the "Assigned
Facilities" set forth in an Assignment and Transfer Agreement delivered
in accordance herewith, as the case may be) on such date available to
the Agent, the Agent may assume that such Lender shall make such amount
available to the Agent on a Settlement Date, and in reliance upon such
assumption, the Agent may make available to such Company a corresponding
amount. A certificate of the Agent submitted to any Lender with respect
to any amount owing under this subsection shall be conclusive, absent
manifest error. If such Lender's pro rata share of such borrowing is
--- ----
not in fact made available to the Agent by such Lender on the Settlement
Date, the Agent shall be entitled to recover such amount with interest
thereon at the rate per annum applicable to Revolving Loans hereunder,
on demand, from the Companies without prejudice to any rights which the
Agent may have against such Lender hereunder. Nothing contained in this
subsection shall relieve any Lender which has failed to make available
its pro rata share of any borrowing hereunder from its obligation to do
so in accordance with the terms hereof. In addition, nothing contained
herein shall be deemed to obligate the Agent to make available to any
Company the full amount of a requested advance when the Agent has any
notice (written or otherwise) that any of the Lenders will not advance
its pro rata share thereof.
13.2 On each Settlement Date, the Agent and the Lenders shall each
remit to the other, in immediately available funds, all amounts
necessary so as to ensure that, as of the Settlement Date, the Lenders
shall have their pro rata share of all outstanding Obligations.
--- ----
13.3 The Agent shall forward to each Lender, at the end of each
month, a copy of the account statement rendered by the Agent to the
Representative.
13.4 After the Agent's receipt of any interest and fees earned
under this Financing Agreement, the Agent promptly will remit to the
Lenders (a) their pro rata share of all fees to which the Lenders are
entitled hereunder and (b) interest computed at the rate and as provided
for in Section 8 of this Financing Agreement on all outstanding amounts
---------
advanced by the Lenders on each Settlement Date, prior to adjustment,
that are subsequent to the last remittance by the Agent to the Lenders
of the Companies' interest.
13.5 (a) The Lenders may, with the prior written consent of the
Agent, which consent will not unreasonably be withheld or delayed, sell
to one or more commercial banks, commercial finance lenders or other
financial institutions, participations in the loans and extensions of
credit made and to be made to the Companies hereunder. Such participant
shall have no rights as a Lender hereunder, and notwithstanding the sale
of any participation by a Lender, (i) such Lender shall remain solely
responsible to the other parties hereto for the performance of its
obligations hereunder, and (ii) the Companies, the Agent and the Lenders
may continue to deal solely with such Lender with respect to all matters
relating to this Financing Agreement and the transactions contemplated
hereby. It is understood and agreed that no Lender shall transfer or
grant any participation under this Agreement under which the participant
shall have any rights to approve any amendment to or waiver of this
Agreement or any other Loan Document except to the extent such amendment
or waiver would (A) extend the final scheduled maturity of any
Obligations or extend the expiry date of any Letter of Credit in which
such participant is participating beyond the Termination Date,
(B) increase the amount of the participant's participation beyond over
the amount thereof in effect (it being understood that waivers or
modifications of conditions precedent, covenants, defaults or Events of
Default shall not constitute a change in the terms of such participation
and that an increase in any Lender's Commitment or Obligations shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (C) consent to the
assignment or transfer by the Companies of any of their rights and
obligations under this Agreement, (D) decrease the interest rate
applicable to the principal amount of the Obligations in which the
participant is participating, or (E) release all or substantially all of
the Collateral with respect to any portion of the Obligations in which
a participant is participating. In addition, all amounts payable under
this Financing Agreement to any Lender which sells a participation in
accordance with this paragraph shall continue to be paid directly to
such Lender and shall be determined as if such Lender had not sold any
such participation.
(b) The Lenders may also (after Agent's consultation with the
Representative), with the prior written consent of the Agent, which
consent will not be unreasonably withheld or delayed, assign to one or
more commercial banks, commercial finance lenders or other financial
institutions, all or a portion of their rights and obligations under
this Financing Agreement (including, without limitation, its obligations
under the Line of Credit and its rights and obligations with respect to
Letters of Credit). Any such assignment shall (i) apply to the same pro
rata share of such Lender's commitments and interests in the Revolving
Loans, Term Loan and Letters of Credit and (ii) if such assignment is a
partial assignment, be in a minimum principal amount of Five Million
Dollars ($5,000,000) and in integral multiples of One Million Dollars
($1,000,000) in excess thereof. Upon execution of an Assignment and
Transfer Agreement, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such assignment, have the rights and
obligations of the assigning Lender as the case may be hereunder and
(ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by such Lender pursuant to such
assignment, relinquish such Lender's rights and be released from its
obligations under this Financing Agreement. Each Company shall, if
necessary, execute any documents reasonably required to effectuate and
acknowledge the assignments.
(c) Subject to the provisions of Section 13.9, each Company
------------
authorizes each Lender to disclose to any participant or purchasing
lender any and all financial information in such Lender's possession
concerning each Company and their affiliates which has been delivered to
such Lender by or on behalf of each Company pursuant to this Financing
Agreement or which has been delivered to such Lender by or on behalf of
each Company in connection with such Lender's credit evaluation of each
Company and its affiliates prior to entering into this Financing
Agreement.
13.6 Each Company hereby agrees that each Lender is solely
responsible for funding its pro rata share of the Line of Credit and
that neither the Agent nor any Lender shall be responsible for, nor
assume any obligations for, the failure of any Lender to make available
its pro rata share of the Line of Credit. Further, should any Lender
--- ----
refuse to make available its pro rata share of the Line of Credit, then
--- ----
any other Lender may, but without obligation to do so, increase,
unilaterally, its pro rata share of the Line of Credit, in which event
--- ----
each Company shall be obligated to that other Lender.
13.7 In the event that the Agent, the Lenders or any one of them
is sued or threatened with suit by any Company, or by any receiver,
trustee, creditor or any committee of creditors on account of any
preference, voidable transfer or lender liability issue, alleged to have
occurred or been received as a result of, or during the transactions
contemplated under this Financing Agreement, then in such event any
money paid in satisfaction or compromise of such suit, action, claim or
demand and any expenses, costs and attorneys' fees paid or incurred in
connection therewith, whether by the Agent, the Lenders or any one of
them, shall be shared proportionately by the Lenders. In addition, any
costs, expenses, fees or disbursements incurred by outside agencies or
attorneys retained by the Agent to effect collection or enforcement of
any rights in the Collateral, including enforcing, preserving or
maintaining rights under this Financing Agreement shall be shared pro
rata among the Lenders to the extent not reimbursed by the Companies or
from the proceeds of Collateral. The provisions of this paragraph shall
not apply to any suits, actions, proceedings or claims that (a) predate
the date of this Financing Agreement or (b) are based on transactions,
actions or omissions that predate the date of this Financing Agreement.
13.8 Each Company authorizes each Lender, and each Lender shall
have the right, without notice, after the acceleration of the
Obligations, to set-off and apply against any and all property held by,
or in the possession of such Lender, any of the Obligations owed to such
Lender.
13.9 For the purposes of this Section 13.9, "Confidential
------------
Information" means all financial projections and all other information
delivered to the Agent or any Lender by or on behalf of Parent, any
Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Financing Agreement that
is proprietary in nature and that is clearly marked or labeled or
otherwise adequately identified as being confidential information of
Parent, any Company or any Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to
the Agent or the Lenders prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by
the Agent or the Lenders or any person acting on their behalf,
(c) otherwise becomes known to the Agent or the Lenders other than
through disclosure by the Agent, the Lenders, any Company or any
Subsidiary or (d) constitutes financial statements delivered under
Section 7.8 that are otherwise publicly available. The Agent and the
- -----------
Lenders will maintain the confidentiality of such Confidential
Information in accordance with commercially reasonable procedures
adopted by the Agent and the Lenders in good faith to protect
confidential information of third parties delivered to them, provided
that the Agent and the Lenders may deliver or disclose Confidential
Information to (a) their respective directors, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the Revolving Line of Credit
and such Person has been notified of these confidentiality provisions),
(b) their respective financial advisors and other professional advisors
who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 13.9, (c) any
----
other Lender, (d) any bank or other commercial lender to which the Agent
or a Lender sells or offers to sell a portion of their rights and
obligations under this Financing Agreement or any participation therein
(if such person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 13.9), or (e) any other person (including bank auditors and
- ------------
other regulatory officials) to which such delivery or disclosure may be
necessary or appropriate (i) to comply with compliance with any
applicable law, rule, regulation or order, (ii) in response to any
subpoena or other legal process after giving the Companies notice and an
opportunity to seek judicial protection for such materials, (iii) in
connection with any litigation to which the Agent or a Lender is a party
or (iv) if an Event of Default has occurred and is continuing, to the
extent the Agent may reasonably determine such delivery and disclosure
to be necessary or appropriate in the enforcement or for the protection
of the rights and remedies under this Financing Agreement. Each Lender
becoming a Lender subsequent to the initial execution and delivery of
this Financing Agreement, by its execution and delivery of an Assignment
and Transfer Agreement, will be deemed to have agreed to be bound by,
and to be entitled to the benefits of, this Section 13.9.
------------
SECTION 14. Agency
------
14.1 Each Lender hereby irrevocably designates and appoints Agent
to act as the Agent for the Lenders under this Financing Agreement and
any ancillary loan documents, and irrevocably authorizes Agent, as Agent
for such Lender, to take such action on its behalf under the provisions
of this Financing Agreement and all ancillary documents, and to exercise
such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Financing Agreement and all ancillary
documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in
this Financing Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Financing Agreement and the ancillary documents or
otherwise exist against the Agent.
14.2 The Agent may execute any of its duties under this Financing
Agreement and all ancillary documents by or through agents or attorneys-
in-fact and shall be entitled to the advice of counsel concerning all
matters pertaining to such duties.
14.3 Neither the Agent nor any of its officers, directors,
employees, agents, or attorneys-in-fact shall be (a) liable to any
Lender for any action lawfully taken or omitted to be taken by the Agent
or such person under or in connection with the Financing Agreement and
all ancillary documents (except for its or such person's own gross
negligence or willful misconduct), or (b) responsible in any manner to
any of the Lenders for (i) any recitals, statements, representations or
warranties made by any Company or any officer thereof contained in this
Financing Agreement or in any ancillary document or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Financing
Agreement, (ii) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Financing Agreement or any
ancillary document or (iii) any failure of any Company to perform its
obligations hereunder or under any ancillary document. The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in,
or conditions of, this Financing Agreement or any ancillary document, or
to inspect the properties, books or records of any Company.
14.4 The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by the Agent to be genuine and correct and to have
been signed, sent or made by the proper person or persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Companies), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Financing Agreement and all
ancillary documents unless the Agent (a) shall first receive such advice
or concurrence of the Lenders or the Required Lenders, as the case may
be, as the Agent deems appropriate, or (b) shall first be indemnified to
its satisfaction by the Lenders against any and all liability and
expense which may be incurred by the Agent by reason of taking or
continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Financing Agreement and all ancillary documents in accordance with a
request of all Lenders or the Required Lenders, as the case may be, and
such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders.
14.5 The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Lender or Representative describing
such Default or Event of Default. In the event that the Agent receives
such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the Lenders or
Required Lenders, as the case may be; provided that unless and until the
Agent shall have received such direction, the Agent may (but shall not
be obligated to) in the interim take such action, or refrain from taking
such action, with respect to such Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Lenders.
14.6 Each Lender expressly acknowledges that neither the Agent nor
any of its officers, directors, employees, agents or attorneys-in-fact
has made any representations or warranties to such Lender, and agrees
that no act by the Agent hereinafter taken, including any review of the
affairs of any Company, shall be deemed to constitute any representation
or warranty by the Agent to any Lender. Each Lender represents to the
Agent that such Lender has, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as
such Lender has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and
other condition and creditworthiness of each Company and made its own
decision to enter into this Financing Agreement. Each Lender also
represents to the Agent that such Lender will, independently and without
reliance upon the Agent or any other Lender and based on such documents
and information as such Lender shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under the Financing Agreement and to make
such investigation as such Lender deems necessary to inform itself as to
the business, operations, property, financial and other condition or
creditworthiness of each Company. The Agent, however, agrees to provide
the Lenders with copies of all financial statements, projections and
business plans which come into the possession of the Agent.
14.7 The Lenders agree to indemnify the Agent (to the extent not
reimbursed by the Companies and without limiting the obligation of the
Companies to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of (a) this Financing Agreement or any
ancillary document, or any documents contemplated by or referred to
herein, (b) the transactions contemplated hereby or (c) any action taken
or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful
misconduct. The agreements of the Lenders set forth in this paragraph
shall survive the payment of the Obligations.
14.8 The Agent may make loans to, and generally engage in any kind
of business with either Company as though the Agent were not the Agent
hereunder. With respect to loans made or renewed by the Agent, or loan
obligations hereunder as Lender, the Agent shall have the same rights
and powers, duties and liabilities under this Financing Agreement as any
Lender and may exercise the same as though it was not the Agent, and the
terms "Lender" and "Lenders" shall include the Agent in its individual
capacities.
14.9 The Agent may resign as the Agent upon thirty (30) days'
notice to the Lenders and such resignation shall be effective upon the
appointment of a successor Agent. If the Agent shall resign as Agent,
then the Lenders promptly shall appoint a successor to the Agent,
whereupon such successor shall succeed to the rights, powers and duties
of the Agent, and the term "Agent" shall mean such successor effective
upon its appointment. Upon such appointment, the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the
parties to this Financing Agreement. After any Agent's resignation
hereunder, the provisions of this Section 14 shall inure to its benefit
----------
as to any actions taken or omitted to be taken by it while acting as the
Agent.
14.10 Notwithstanding anything contained in this Financing
Agreement to the contrary, the Agent will not, without the prior written
consent of all Lenders: (a) amend the Financing Agreement to
(i) increase the Line of Credit, (ii) reduce the interest rates;
(iii) reduce or waive (A) any fees in which the Lenders share hereunder
or (B) the repayment of any Obligations due the Lenders, (iv) extend the
maturity of the Obligations or (v) alter or amend (1) this Section 14.10
-------------
or (2) the definitions of Availability, Availability Reserve, Borrowing
Base, Eligible Inventory, Inventory Advance Percentage or Required
Lenders; (b) release Collateral in bulk without a corresponding
reduction in the Obligations; or (c) intentionally make any Revolving
Loan or assist in opening any Letter of Credit hereunder, if after
giving effect thereto the aggregate amount of Revolving Loans and
Letters of Credit made or issued hereunder would exceed one hundred ten
percent (110%) of the maximum amount available under Sections 3 and 5
---------- -
hereof. In all other respects the Agent is authorized to take or to
refrain from taking any action which the Agent, in its reasonable
discretion, deems to be advisable and in the best interest of the
Lenders (including, without limitation, the making of an overadvance or
the termination of the Financing Agreement upon the occurrence of an
Event of Default), unless this Financing Agreement specifically requires
the Companies or the Agent to obtain the consent of, or act at the
direction of, the Required Lenders.
14.11 In the event any Lender's consent is required pursuant to
the provisions of this Financing Agreement and such Lender does not
respond to any request by the Agent for such consent within ten (10)
days after such request is made to such Lender, such failure to respond
shall be deemed a consent. In addition, in the event that any Lender
declines to give its consent to any such request, the Lenders hereby
mutually agree that the Agent and/or any other Lender shall have the
right (but not the obligation) to purchase such Lender's pro rata share
of the Obligations for the full amount thereof as of the date of such
purchase.
14.12 Each Lender agrees that notwithstanding the provisions of
Section 11 of this Financing Agreement, any Lender may terminate this
Financing Agreement and the Line of Credit only as of the Termination
Date.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed, agreed to, accepted and delivered in Chicago,
Illinois by their proper and duly authorized officers as of the 14th day
of June, 1999.
Commitment Amount THE CIT GROUP/BUSINESS CREDIT,
- ----------------- INC., as the Agent and a Lender
$100,000,000
By:
--------------------------
Its: Vice President
VISKASE CORPORATION, a Pennsylvania
corporation
By:
---------------------------
Its:
-----------------------
VISKASE SALES CORPORATION, a
Delaware corporation
By:
----------------------------
Its:
-----------------------
<PAGE>
FINANCING AGREEMENT
dated as of June ___, 1999
among
THE LENDERS LISTED ON THE SIGNATURE PAGES HERETO
(the "Lenders")
and
VISKASE CORPORATION and VISKASE SALES CORPORATION
(collectively, the "Companies")
TABLE OF CONTENTS
Page
SECTION 1. Definitions 1
SECTION 2. Conditions Precedent 14
SECTION 3. Term Loan 20
SECTION 4. Collateral 20
SECTION 5. Representations, Warranties and Covenants 24
SECTION 6. Interest, Fees and Expenses 34
SECTION 7. Powers 35
SECTION 8. Events of Default and Remedies 36
SECTION 9. Miscellaneous 38
SECTION 10. Agreements Regarding the Lenders 42
EXHIBITS
- --------
Exhibit A - Form of Term Loan Promissory Note
Exhibit B - Form of Assignment and Transfer Agreement
SCHEDULES
- ---------
Schedule 1.1(a) - Permitted Liens
Schedule 1.1(b) - Permitted Indebtedness
Schedule 4.1 - Excluded Assets
Schedule 5.1 - Collateral Locations, Chief Executive
Office and Tradenames
Schedule 5.7 - Environmental Matters
Schedule 5.9(e) - Existing Guaranties
<PAGE>
FINANCING AGREEMENT
-------------------
The lenders listed on the signature pages hereto (each a "Lender"
and collectively, the "Lenders") are pleased to confirm the terms and
conditions under which the Lenders shall make a secured term loan to
each of VISKASE CORPORATION, a Pennsylvania corporation ("Viskase
------- -----------
Corporation"), with its principal place of business at 6855 West 65th
Street, Bedford Park, Illinois 60638, and VISKASE SALES CORPORATION, a
------- ----- -----------
Delaware corporation ("Viskase Sales"), with its principal place of
business at 6855 West 65th Street, Bedford Park, Illinois 60638, jointly
and severally (Viskase Corporation and Viskase Sales are hereinafter
sometimes referred to individually as a "Company" and collectively as
the "Companies").
SECTION 1. Definitions
-----------
1.1 For purposes of this Financing Agreement (this "Agreement"
or this "Financing Agreement"), the following terms shall be defined in
the following manner:
Accelerated Maturity Date shall mean the date on which the
-------------------------
Obligations (including, without limitation, the entire unpaid principal
balance of the Term Loan and accrued but unpaid interest thereon) shall
become due and payable pursuant to the terms of any of the Loan
Documents, including, without limitation, by reason of the occurrence of
an Event of default.
Accounts shall mean all of each Company's now existing and future:
--------
(a) accounts (as defined in the U.C.C.) and any and all other
receivables (whether or not specifically listed on schedules furnished
to the Lenders), including, without limitation, all accounts created by
or arising from each Company's sales of goods or rendition of services
to its customers, and all accounts arising from sales or rendition of
services made under any Company's trade names or styles, or through any
Company's divisions; (b) instruments (as defined in the U.C.C.),
documents (as defined in the U.C.C.), contract rights and chattel paper
(as defined in the U.C.C.); (c) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to
the foregoing or arising therefrom; (d) rights to any goods represented
by any of the foregoing, including rights to returned or repossessed
goods; (e) reserves and credit balances arising hereunder;
(f) guarantees or collateral for any of the foregoing; (g) insurance
policies or rights relating to any of the foregoing; and (h) cash and
non-cash proceeds of any and all the foregoing.
Applicable Rate shall mean an interest rate of 14% per annum;
---------------
provided, that, from and after the six month anniversary of the Closing
- -------- ----
Date and semi-annually thereafter, the Applicable Rate shall increase by
0.50%.
Assignment and Transfer Agreement shall mean the Assignment and
---------------------------------
Transfer Agreement in the form of Exhibit B hereto.
---------
Business Day shall mean any day on which CITBC, each Lender and The
------------
Chase Manhattan Bank in New York, New York are open for business.
Canada Intercompany Loan shall have the meaning assigned to such
------------------------
term in Section 2.1(hh).
---------------
Canada Security Agreement shall have the meaning assigned to such
-------------------------
term in Section 2.1(hh).
---------------
Capital Expenditures for any period shall mean the aggregate of all
--------------------
expenditures of each Company during such period that in conformity with
GAAP are required to be included in or reflected by the property, plant
or equipment or similar fixed asset account reflected in the
consolidated balance sheet of the Companies.
Capital Lease shall mean any lease of property (whether real,
-------------
personal or mixed) which, in conformity with GAAP, is accounted for as
a capital lease or a Capital Expenditure on the consolidated balance
sheet of the Parent and its Subsidiaries.
CITBC shall mean The CIT Group/Business Credit, Inc., as agent for
-----
the lenders which are parties to the CITBC Financing Agreement.
CITBC-D.P. Kelly Subordination Agreement shall mean that certain
----------------------------------------
Subordination Agreement, dated as of the date hereof, among CITBC, D.P.
Kelly and the Companies, as the same may be amended, restated or
supplemented from time to time.
CITBC Financing Agreement shall mean that certain Financing
-------------------------
Agreement, dated as of the date hereof, by and between the CITBC, the
lenders party thereto and the Companies, as the same may be amended,
restated or supplemented from time to time.
CITBC Loan Documents shall mean the CITBC Financing Agreement and
--------------------
all other instruments and documents that are in effect as of the date
hereof and are executed in connection with or otherwise relating to the
CITBC Financing Agreement, as the same may be amended, restated or
supplemented from time to time.
CITBC Subordination Agreement shall mean that certain Subordination
-----------------------------
Agreement, dated as of the date hereof, among CITBC, the Lenders and the
Companies, as the same may be amended, restated or supplemented from
time to time.
Closing Date shall mean the date, which date shall be no earlier
------------
than June 9, 1999, on which the Lenders make the extension of credit
hereunder in the form of the Term Loan.
Collateral shall mean all present and future Accounts, Equipment,
----------
Inventory, Documents of Title, General Intangibles, Investment Property,
Other Collateral and Real Estate of each Company; provided, however,
that "Collateral" shall not include the items listed in clauses (i) -
(iv) of Section 4.1.
-----------
Collateral Assignment of Intercompany Loan shall have the meaning
------------------------------------------
assigned to such term in Section 2.1(hh) below.
---------------
Collateral Assignment of Lawsuit Proceeds means that certain
-----------------------------------------
Collateral Assignment of Lawsuit Proceeds of even date herewith made by
Viskase Corporation in favor of the Lenders.
Commitment Letter shall mean the Commitment Letter, dated June 3,
-----------------
1999, issued by Magten and accepted by the Companies, which Commitment
Letter is deemed incorporated herein by this reference.
Consolidated Balance Sheet shall mean a consolidated balance sheet
--------------------------
for Parent, eliminating all inter-company transactions and prepared in
accordance with GAAP.
Consolidating Balance Sheet shall mean a consolidating balance
---------------------------
sheet for (a) Parent, (b) the Companies and Viskase Holding, (c) Viskase
Europe and its Subsidiaries, (d) Viskase Brazil, (e) Viskase Canada and
(f) Viskase Chile, in each case showing all eliminations of
inter-company transactions and prepared in accordance with GAAP.
Copyrights shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash and
non-cash proceeds thereof.
Current Assets means all current assets of each Company, as
--------------
determined in accordance with GAAP.
Current Liabilities means all current liabilities of each Company,
-------------------
as determined in accordance with GAAP.
Customarily Permitted Liens shall mean: (a) liens of local or
---------------------------
state authorities for franchise or other like taxes provided the
aggregate amount of such liens shall not exceed One Hundred Thousand
Dollars ($100,000) in the aggregate at any one time; (b) statutory liens
of landlords and liens of carriers, warehousemen, mechanics,
materialmen, lessors and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are
being contested in good faith by appropriate proceedings or other
appropriate actions which are sufficient to prevent imminent foreclosure
of such liens) and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance, pensions and other types of social security
benefits or to secure the performance of tenders, bids, contracts (other
than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations, surety and appeal bonds and other
similar obligations arising as a result of progress payments under
government contracts; and (d) easements (including, without limitation,
reciprocal easement agreements and utility agreements), zoning
restrictions, licenses, reservations, covenants, encroachments, minor
defects or irregularities in title, variations and other restrictions,
charges or encumbrances (whether or not recorded) affecting the Real
Estate and which are listed in Schedule B of each title insurance policy
----------
delivered to the Lenders in connection with this Financing Agreement or
which arise after the date hereof and which do not in the aggregate
materially impair the use of such Real Estate in the operation of the
business of the owner thereof as determined in the Lenders' reasonable
discretion.
Default shall mean any event specified in Section 8 hereof, whether
------- ---------
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, event or act, has been satisfied.
Default Rate of Interest shall mean a rate of interest per annum
------------------------
equal to the sum of two percent (2%) plus the Applicable Rate, which the
Lenders shall be entitled to charge the Companies on all Obligations to
the extent provided in Section 8.2 of this Financing Agreement.
-----------
Documentation Fee shall mean (a) the reasonable legal fees and
-----------------
costs and expenses of outside counsel for the Lenders in documenting, in
whole or in part, the initial transaction on behalf of the Lenders, plus
Out-of-Pocket Expenses, (b) the reasonable legal fees and costs and
expenses necessary to compensate the Lenders for the use of in-house
facilities for any documentation of transactions after the initial
transaction, and (c) the Lenders' reasonable legal fees and costs and
expenses relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing
Agreement, the Collateral and/or the Obligations.
Documents of Title shall mean all present and future documents (as
------------------
defined in the U.C.C.) including, without limitation, all warehouse
receipts, bills of lading, shipping documents and similar documents,
whether negotiable or nonnegotiable, and all goods and Inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
D.P. Kelly shall mean D.P. Kelly & Associates, L.P., a Delaware
----------
limited partnership, and its successors and assigns.
D.P. Kelly Financing Agreement shall mean that certain Financing
------------------------------
Agreement, dated as of the date hereof, by and between D.P. Kelly and
the Companies, as the same may be amended, restated or supplemented from
time to time.
D.P. Kelly Intercreditor Agreement shall mean that certain
----------------------------------
Intercreditor Agreement dated as of the date hereof, among D.P. Kelly,
the Lenders and the Companies, as the same may be amended, restated or
supplemented from time to time.
D.P. Kelly Loan Documents shall mean the D.P. Kelly Financing
-------------------------
Agreement and all other instruments and documents that are in effect as
of the date hereof and are executed in connection with or otherwise
relating to the D.P. Kelly Financing Agreement, as the same may be
amended, restated or supplemented from time to time.
EBITDA shall mean, for any period, all earnings before all
------
interest, tax obligations and depreciation and amortization expense for
such period, all determined in accordance with GAAP on a basis
consistent with the latest consolidated audited financial statements of
the Parent and its Subsidiaries, but excluding the effect of
extraordinary and/or nonrecurring gains or losses for such period.
Equipment shall mean all present and hereafter acquired equipment
---------
(as defined in the U.C.C.) including, without limitation, all machinery,
equipment, furnishings and fixtures, and all additions, substitutions
and replacements thereof, wherever located, together with all
attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time and the rules and regulations
promulgated thereunder from time to time.
Event(s) of Default shall have the meaning provided for in
-------------------
Section 8 of this Financing Agreement.
- ---------
Excluded Asset shall have the meaning provided for in Section 4.1
-------------- -----------
below.
Expense Deposit shall mean the $125,000 expense deposit payable
---------------
towards the satisfaction of the Companies' obligations to reimburse the
Lenders for their Out-of-Pocket Expenses, paid by the Companies to the
Lenders on June 3, 1999.
Fixed Charge Coverage Ratio shall mean, for any period, the ratio
---------------------------
determined by dividing (a) EBITDA by (b) Fixed Charges.
Fixed Charges shall mean the sum of (i) all interest obligations
-------------
paid or due during such period, (ii) the amount of principal repaid or
scheduled to be repaid on all Indebtedness during such period,
(iii) Capital Expenditures paid for in cash by each Company during such
period, (iv) all federal, state and local income tax expenses due and
payable during such period, (v) the amount of Permitted Distributions
made during such period, and (vi) all payments due under the Lease
Documents.
GAAP shall mean generally accepted accounting principles in the
----
United States of America as in effect from time to time and for the
period as to which such accounting principles are to apply.
GECC shall mean General Electric Capital Corporation.
----
GECC Intercreditor Agreement shall mean that certain Intercreditor
----------------------------
Agreement dated as of June __, 1999 among CITBC, the Lenders, D.P.
Kelly, General Electric Capital Corporation, State Street Bank and Trust
Company of Connecticut, Parent and the Companies, as the same may be
amended, restated or supplemented from time to time.
General Intangibles shall mean all present and hereafter acquired
-------------------
general intangibles (as defined in the U.C.C.) including, without
limitation, all right, title and interest in and to (a) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof (collectively referred to herein as "Patents"),
(b) all trademarks, service marks, trade dress, logos, trade names,
domain names, and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all
goodwill associated therewith, and all applications, registrations and
renewals in connection therewith (collectively referred to herein as
"trademarks"), (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith
(collectively referred to herein as "Copyrights"), (d) all mask works
and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
methods, schematics, technology, technical data, designs, drawings,
flowcharts, block diagrams, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments of the foregoing categories of intellectual
property listed in subsections (a) though (g) herein (in whatever form
or medium), and (i) all licenses, sublicenses, agreements or permission
related to the foregoing categories of intellectual property listed in
subsections (a) through (g) herein (categories (a) through (i) herein
are collectively referred to as "Intellectual Property"), and
distribution agreements, supply agreements and tax refunds, together
with all money and claims for money now or hereafter due and payable in
connection with any of the foregoing or otherwise, and all cash and non-
cash proceeds thereof.
Guarantors shall mean, collectively (a) Parent and (b) Viskase
----------
Holding.
Guaranty means the Joint and Several Guaranty Agreement of even
--------
date herewith of the Guarantors.
Indebtedness shall mean, without duplication, all liabilities,
------------
contingent or otherwise, which are either (a) obligations in respect of
borrowed money or for the deferred purchase price of property, services
or assets, other than Inventory, or (b) lease obligations which, in
accordance with GAAP, have been, or which should be capitalized.
Intellectual Property shall have the meaning assigned to such term
---------------------
in the definition of "General Intangibles" in this Agreement.
Intellectual Property Assignment means those certain Grants of
--------------------------------
Security Interests in Intellectual Property of even date herewith made
by Parent and each Company in favor of the Lenders.
Intercompany Loans shall mean all Indebtedness incurred by any
------------------
Company from any Subsidiary.
Intercompany Receivables shall mean all bona fide Trade Accounts
------------------------
Receivable resulting from the sale of goods or the rendering of services
by any Company, Guarantor or Subsidiary to any other Company, Guarantor
or Subsidiary, provided that the amounts payable with respect thereto is
in the ordinary course of business consistent with past practice.
Inventory shall mean all of each Company's present and hereafter
---------
acquired inventory (as defined in the U.C.C.) including, without
limitation, all merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with
all goods and materials used or usable in manufacturing, processing,
packaging or shipping same; in all stages of production - from raw
materials through work-in-process to finished goods - and all proceeds
thereof of whatever sort.
Investment Property shall mean all of each Company's present and
-------------------
hereafter acquired securities, securities entitlements, securities
accounts and other investment property (as such terms are defined in the
U.C.C.).
Lease Documents shall have the meaning assigned to such term in
---------------
Schedule I to the GECC-CITBC Intercreditor Agreement.
Leverage Ratio shall mean the ratio determined by dividing
--------------
(a) Total Liabilities by (b) EBITDA.
Loan Documents shall mean this Financing Agreement, the Guaranty,
--------------
the Viskase Companies Pledge, the Viskase Corporation Pledge, the
Viskase Holding Pledge, the Collateral Assignment of Lawsuit Proceeds,
the Security Agreements, the Patent, Trademark and License Assignments,
the CITBC Subordination Agreement, the D.P. Kelly Intercreditor
Agreement, the CITBC-D.P. Kelly Subordination Agreement, the Real Estate
Collateral Documents, the Collateral Assignment of Intercompany Loan,
the Canada Security Agreement, the GECC-CITBC Intercreditor Agreement,
the GECC Intercreditor Agreement, and any other document, instrument or
agreement entered into in connection with this Financing Agreement.
Loan Facility Fee shall mean the loan facility fee payable to the
-----------------
Lenders in the amount of $1,200,000, less the $200,000 which was
previously paid by the Companies to the Lenders under the Commitment
Letter, which fee shall be fully earned as of the Closing Date and shall
be due and payable as set forth in Section 6.2 of this Financing
-----------
Agreement.
Magten shall mean Magten Asset Management Corp., as investment
------
manager on behalf of various of its investment management clients, which
include the Lenders.
Material Adverse Effect shall mean a material adverse effect on
-----------------------
either (a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Companies, taken as a whole,
(b) the ability of any Company to perform its obligations under this
Financing Agreement or (c) the ability of any of the Lenders to enforce
the Obligations or their respective rights and remedies under this
Financing Agreement.
Maturity Date shall mean the earlier to occur of (a) the
-------------
Accelerated Maturity Date and (b) the Stated Maturity Date.
Net Worth shall mean assets in excess of liabilities, determined in
---------
accordance with GAAP, on a consistent basis with the latest consolidated
audited financial statements of the Parent and its Subsidiaries.
Obligations shall mean (a) all loans and advances made by the
-----------
Lenders to each Company or to others for each Company's account
(including, without limitation, the Term Loan); (b) any and all other
indebtedness, obligations and liabilities which may be owed by any
Company to the Lenders and arising out of, or incurred in connection
with, this Financing Agreement or any of the other Loan Documents
(including, without limitation, Out-of-Pocket Expenses and interest
accruing after commencement of a case under the Bankruptcy Code, 11
U.S.C. Sec. 101-1331) whether (i) now in existence or incurred by any
Company from time to time hereafter (including any Company operating as
Debtor or Debtor in Possession under the Bankruptcy Code, 11 U.S.C.
Sec. 101-1331), (ii) secured by pledge, lien upon or security interest in
any Company's assets or property or the assets or property of any other
person, firm, entity or corporation, (iii) such indebtedness is absolute
or contingent, joint or several, matured or unmatured, direct or
indirect, or (iv) any Company is liable to any Lender for such
indebtedness as principal, surety, endorser, guarantor or otherwise;
(c) all indebtedness, obligations and liabilities owed by each Company
to the Lenders under any other agreement or arrangement now or hereafter
entered into between any Company, on one hand, and the Lenders, on the
other hand, relating to the transactions contemplated by this Financing
Agreement; (d) indebtedness, obligations and liabilities incurred by, or
imposed on, the Lenders as a result of environmental claims relating to
each Company's operations, premises or waste disposal practices or
disposal sites; (e) each Company's liabilities to the Lenders as maker
or endorser on any promissory note or other instrument for the payment
of money pursuant to the terms hereof or any other Loan Document;
(f) each Company's liabilities to the Lenders under any instrument of
guaranty or indemnity, or arising under any guaranty, endorsement or
undertaking which the Lenders may make or issue to others for any
Company's account pursuant to the terms hereof or any other Loan
Document, including the Lenders' acceptance of drafts or the Lenders
endorsement of notes or other instruments for the Company's account and
benefit; and (g) the amount of any payments made by the Lenders to cure
any "Events of Default" (as such term is defined in the GECC
Intercreditor Agreement) as permitted by Section 4 of the GECC
Intercreditor Agreement. By virtue of its execution of this Agreement,
the Companies hereby consent to the Lenders making payments to cure any
"Event of Default" pursuant to Section 4 of the GECC Intercreditor
Agreement.
Operating Leases shall mean all leases of property (whether real,
----------------
personal or mixed) other than Capital Leases.
Other Collateral shall mean: (a) all now owned and hereafter
----------------
acquired deposit accounts maintained by or on behalf of each Company
with any bank or financial institution; (b) all of each Company's cash
and other money and property in the possession or control of any Lender;
(c) all of each Company's books, records, ledger cards, disks and
related data processing software at any time evidencing or containing
information relating to any of the Collateral described herein or
otherwise necessary or helpful in the collection thereof or realization
thereon; (d) all cash and non-cash proceeds of the foregoing and (e) all
payments and damage awards received by Viskase Corporation in connection
with the lawsuit between Viskase Corporation and American National Can
Company pursuant to the terms of the Collateral Assignment of Lawsuit
Proceeds.
Out-of-Pocket Expenses shall mean all of the Lenders' present and
----------------------
future out-of-pocket expenses incurred in connection with this Financing
Agreement and the other Loan Documents, including, without limitation,
(a) the cost of lien searches (including tax lien and judgment lien
searches), pending litigation searches and similar items, (b) fees and
taxes imposed in connection with the filing of any financing statements
or other personal property security documents; (c) title insurance
premiums, real estate survey costs and mortgage or recording taxes and
fees; (d) all expenses, costs and fees incurred by the Lenders in
connection with any action taken under Section 8 hereof; and (e) without
---------
duplication, all costs and expenses incurred by the Lenders in
connection with the collection, liquidation, enforcement and defense of
the Obligations and the Lenders' rights in the Collateral, and all
disbursements and reasonable fees of in-house and outside counsel to the
Lenders, including but not limited to such fees and disbursements
incurred as a result of a workout, restructuring, reorganization,
liquidation, insolvency proceeding and in any appeals arising therefrom,
whether incurred before, during or after the termination of this
Financing Agreement or the commencement of any case with respect to
Parent, any Company or any Subsidiary under the United States Bankruptcy
Code or any similar statute.
Parent shall mean Viskase Companies, Inc. (formerly known as
------
Envirodyne Industries, Inc.), a Delaware corporation.
Patents shall have the meaning assigned in the definition of
-------
"General Intangibles" in this Agreement, and all cash and non-cash
proceeds thereof.
Percentage Interest shall mean, with respect to each Lender, the
-------------------
percentage interest of the Term Loan made by such Lender as set forth
next to such Lender's name on the signature pages hereto.
Permitted Distributions shall mean (a) distributions from Viskase
-----------------------
Corporation to the Parent not to exceed Fifty-Five Million Dollars
($55,000,000), plus accrued interest and any applicable prepayment fees,
for the sole purpose of permitting Parent to satisfy a mandatory
redemption payment due and payable on or before June 15, 1999 in
connection with the Senior Secured Notes, (b) dividends from the
Companies and any Subsidiary to the parent corporation thereof;
provided, however, that dividends to Parent shall be limited to
- -------- -------
dividends needed for Parent to make payments on the Senior Unsecured
Notes, existing Indebtedness under that certain Amended and Restated
Credit Agreement dated as of June 1, 1998 among Parent, the lenders
party thereto and BT Commercial Corporation, as agent, and for the
payment of corporate overhead items (up to Two Million Five Hundred
Thousand Dollars ($2,500,000) in the aggregate during any fiscal year),
and (c) dividends paid in shares of capital stock of Parent or any
Subsidiary.
Permitted Encumbrances shall mean: (a) liens existing on the date
----------------------
hereof on specific items of Equipment and listed on Schedule 1.1(a)
---------------
hereto; (b) Purchase Money Liens; (c) Customarily Permitted Liens;
(d) liens granted to the agent and the lenders under the CITBC Financing
Agreement pursuant to the CITBC Loan Documents, by each Company and the
Guarantors and liens granted to secure the Canada Intercompany Loan;
(e) liens granted to the Lenders pursuant to the Loan Documents, by each
Company and the Guarantors; (f) liens granted to D.P. Kelly pursuant to
the D.P. Kelly Loan Documents, by each Company and the Guarantors;
(g) liens granted to secure the Canada Intercompany Loan; (h) liens of
judgment creditors provided such liens do not exceed, in the aggregate,
at any time, One Million Dollars ($1,000,000) (other than liens bonded
or insured to the reasonable satisfaction of the Lenders); (i) liens for
taxes not yet due and payable, or liens for taxes due and payable, which
are being contested diligently and in good faith by such Company,
Guarantor or Subsidiary by appropriate proceedings, and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP, but only if such liens (i) are not
(other than with respect to Real Estate) senior to the liens granted by
the Companies to the Lenders, or (ii) do not secure taxes owed to the
United States of America or any department thereof; (j) liens to secure
(i) Intercompany Loans made by any Guarantor or any Subsidiary to any
Company, (ii) Intercompany Loans made by a Subsidiary (not a Guarantor)
to another Subsidiary (not a Guarantor), and (iii) Intercompany
Receivables that qualify as Permitted Indebtedness hereunder; (k) liens
to secure Indebtedness of foreign domiciled Subsidiaries that qualifies
as Permitted Indebtedness hereunder; provided, that such liens are not
granted on the stock, share interests or equity interests of such
Subsidiaries; and (k) renewals and extensions of liens constituting
Permitted Encumbrances hereunder, provided that the lien encumbering the
asset giving rise to such Permitted Encumbrance does not encumber any
other asset of a Company, Guarantor or Subsidiary.
Permitted Indebtedness shall mean: (a) current Indebtedness
----------------------
maturing in less than one year and incurred in the ordinary course of
business for raw materials, supplies, equipment, services, taxes or
labor; (b) Indebtedness secured by Purchase Money Liens;
(c) Indebtedness arising under the CITBC Loan Documents, in an amount
not to exceed, without the prior written consent of the Lenders, at any
time, the sum of (1) the outstanding principal balance of the Term Loan,
(2) the Borrowing Base and (3) the greater of (A) $5,000,000 and (B) 15%
of the Borrowing Base, provided however, that such limitation shall not
-------- -------
apply to advances under the "Revolving Line of Credit" (as defined in
the CITBC Financing Agreement) required by CITBC to cover costs of
liquidating the "Collateral" (as defined in the CITBC Financing
Agreement)(including the costs of preserving and protecting such
"Collateral" in connection therewith); (d) Indebtedness arising under
this Financing Agreement and the other Loan Documents; (e) Indebtedness
arising under the D.P. Kelly Loan Documents, in an amount not to exceed,
without prior written consent of the Lenders, $5,000,000 plus, accrued
and unpaid interest thereon; (f) deferred taxes and other expenses
incurred in the ordinary course of business; (g) other Indebtedness
existing on the date of execution and set forth on Schedule 1.1(b)
---------------
attached hereto;
(h) Intercompany Loans and Intercompany Receivables; (i) Indebtedness
incurred by foreign domiciled Subsidiaries for their own working capital
and general corporate purposes not to exceed Fifteen Million Dollars
($15,000,000) in the aggregate at any one time outstanding; provided,
that in no event shall such Indebtedness be guaranteed by a Company or
Guarantor or be secured by assets other than the assets of such
Subsidiary incurring the applicable Indebtedness; (j) Indebtedness to a
third party, not secured by liens or security interests of any kind, not
to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) in the
aggregate at any one time outstanding; (k) the Canada Intercompany Loan;
(l) guarantees permitted under Section 5.9(e) hereof below; and
-----------
(n) refinancings and renewals of Permitted Indebtedness, provided that
the aggregate principal amount thereof does not increase as a result of
any such refinancing or renewal from the amount outstanding at the time
of such refinancing or renewal unless such increase does not cause such
Indebtedness to fail to qualify as Permitted Indebtedness hereunder.
Permitted Investments shall mean: (a) readily marketable direct
---------------------
obligations of the United States of America or of any agency or
instrumentality thereof, the obligations of which are backed by the full
faith and credit of the United States of America, or readily marketable
obligations unconditionally guaranteed by the United States of America
or by any such agency or instrumentality, in each case maturing within
one year from the date of acquisition thereof; (b) certificates of
deposit, time deposits or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by, or demand deposit
accounts maintained with, any commercial bank or trust company which is
a member of the Federal Reserve System, the long-term debt obligations
of which are rated at least A by Moody's Investors Service Inc.
("Moody's") or Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and which has combined capital and
surplus of at least Two Hundred Fifty Million Dollars ($250,000,000)
(any such bank or trust company, an "Eligible Bank"); (c) repurchase
agreements with respect to securities of the type referred to in the
foregoing clause (a) transacted with Eligible Banks, provided that each
such repurchase agreement obligates an Eligible Bank to repurchase the
securities which are the subject thereof no later than thirty (30) days
after the acquisition of such repurchase agreement; (d) money-market
preferred stock or money-market auction notes, in each case maturing or
redeemable at the option of the holder thereof no more than one year
after the date of acquisition thereof and having a rating of at least A3
by Moody's or at least A- by S&P, and Tax Exempt Obligations (as
hereinafter defined) in the form of auction rate reset notes that reset
within one year from the date of acquisition thereof; (e) obligations,
the interest with respect to which is exempt from federal income
taxation under Section 103 of the Internal Revenue Code, having a long
term rating of at least A3 or A-, or a short term rating of at least P-1
or A-1, by Moody's or S&P, respectively, and having a maturity of less
than two years ("Tax Exempt Obligations"), in addition to those
described in the foregoing clause (d); (f) open market commercial paper
of United States corporations maturing not later than Two Hundred
Seventy (270) days after the issuance thereof and having a rating of at
least P-2 by Moody's or at least A-2 by S&P; (g) investments in any
mutual fund registered under the Investment Company Act of 1940, as
amended, the portfolio of which is limited to Investments of the
character described in the foregoing clauses (a) through (f); and
(h) notes or other debt obligations or securities received in connection
with the bankruptcy or reorganization of customers and in settlement of
delinquent obligations of, or disputes with, customers or suppliers in
the ordinary course of business.
Person shall mean and include an individual, a partnership, a joint
------
venture, a limited liability company, a corporation (whether or not for
profit), a trust, an unincorporated organization, a government or any
department or agency thereof or any other entity or organization.
Pledgors means, collectively, Viskase Companies, Viskase
--------
Corporation, Viskase Holding and Viskase Sales.
Pledge Agreements means, collectively, the Viskase Companies
-----------------
Pledge, the Viskase Corporation Pledge, the Viskase Sales Pledge and the
Viskase Holding Pledge.
Promissory Note shall mean the note, in the form of Exhibit A
--------------- ---------
attached hereto, delivered by the Company to each of the Lenders to
evidence the Term Loan.
Purchase Money Liens shall mean liens on any item of Equipment or
--------------------
real property (other than the Real Estate) acquired after the date of
this Financing Agreement (including by way of Capital Lease) provided
that (a) each such lien shall attach only to the property to be
acquired, (b) a description of the property so acquired (having a book
value in excess of $100,000) is furnished to the Lenders, and (c) the
debt incurred in connection with such acquisitions shall not exceed in
the aggregate Five Million Dollars ($5,000,000) at any time outstanding.
Real Estate shall mean the Companies' owned real property located
-----------
in Centerville, Iowa; Kentland, Indiana; Loudon, Tennessee; Osceola,
Arkansas; Pauls Valley, Oklahoma; Bensalem, Pennsylvania; Chicago,
Illinois and Bedford Park, Illinois, each parcel of which has been, or
will be, encumbered, mortgaged, pledged or assigned to any of the
Lenders or its designee.
Real Estate Collateral Documents shall mean each Mortgage, Security
--------------------------------
Agreement and Assignment of Leases and Rents, each Deed of Trust,
Security Agreement and Assignment of Leases and Rents and the
Environmental Indemnity Agreement, each of even date herewith made by
the Companies, as applicable, in favor of each of the Lenders with
respect to each owned parcel of Real Estate.
Representative shall mean Viskase Corporation, which shall act as
--------------
Companies' sole and exclusive representative under this Agreement for
all purposes, including, without limitation, to receive funds advanced
hereunder, to receive notices and other communications from the Lenders
hereunder, to make requests for advances of funds hereunder and to amend
this Agreement.
Security Agreements means, collectively, the Viskase Companies
-------------------
Security Agreement, and the Viskase Holding Security Agreement.
Senior Secured Notes shall mean those certain First Priority Senior
--------------------
Secured Notes due 2000 issued by Parent, pursuant to that certain
Indenture dated as of June 20, 1995 between Parent and Shawmut Bank
Connecticut, National Association, as Trustee.
Senior Unsecured Notes shall mean those certain 10 1/4% senior
----------------------
notes issued by Parent pursuant to that certain Indenture dated as of
December 31, 1993 between Parent and Bankers Trust Company, as Trustee.
Stated Maturity Date shall mean June 30, 2001.
--------------------
Subsidiary means any domestic or foreign corporation, partnership,
----------
joint venture, limited liability company or other entity or organization
of which a Person owns, directly or indirectly through one or more
intermediaries, more than fifty percent (50%) of the voting stock at the
time of determination.
Tangible Net Worth shall mean, at any time, Net Worth plus
------------------
"Subordinated Debt" (as such term is defined in the CITBC Financing
Agreement) after subtracting therefrom the amount of any intangible
assets (as determined in accordance with GAAP), including amounts due
from Subsidiaries and amounts due from investments in Subsidiaries (to
the extent such amounts due were treated as assets in the determination
of Net Worth).
Term Loan shall mean the term loan in the original aggregate
---------
principal amount of THIRTY MILLION DOLLARS ($30,000,000), made by the
Lenders pursuant to, and repayable in accordance with, the provisions of
Section 3 of this Financing Agreement.
- ---------
Term Loan Promissory Notes shall mean the promissory notes in the
--------------------------
form of Exhibit A hereto, executed by the Company to evidence the Term
---------
Loan.
Total Liabilities shall mean total liabilities of each Company
-----------------
determined in accordance with GAAP, on a basis consistent with the
latest audited financial statements of the Companies.
Trade Accounts Receivable shall mean that portion of Accounts which
-------------------------
arises from the sale of Inventory or the rendition of services in the
ordinary course of business.
Trademarks shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash and
non-cash proceeds thereof.
U.C.C. shall mean the Uniform Commercial Code as in effect from
------
time to time in the State of Illinois.
Viskase Brazil means Viskase Brazil Embalagens, organized under the
--------------
laws of Brazil.
Viskase Canada means Viskase Canada Inc., a corporation organized
--------------
under the laws of Ontario, Canada.
Viskase Chile means Viskase Chile Embalajes LTDA, organized under
-------------
the laws of Chile.
Viskase Companies Pledge means that certain Pledge Agreement of
------------------------
even date herewith made by Parent in favor of the Lenders pledging one
hundred percent (100%) of the capital stock of Viskase Corporation,
Viskase Films and all other directly owned Subsidiaries of Parent, as
described herein.
Viskase Companies Security Agreement means that certain Security
------------------------------------
Agreement of even date herewith made by Parent in favor of the Lenders.
Viskase Corporation Pledge means that certain Pledge Agreement of
--------------------------
even date herewith made by Viskase Corporation in favor of the Lenders
pledging one hundred percent (100%) of the capital stock of Viskase
Sales and Viskase Holding.
Viskase Europe means Viskase Europe Limited, organized under the
--------------
laws of the United Kingdom.
Viskase Films means Viskase Films, Inc., a Delaware corporation.
-------------
Viskase Holding means Viskase Holding, Inc., a Delaware
---------------
corporation.
Viskase Holding Pledge means that certain Pledge Agreement of even
----------------------
date herewith made by Viskase Holding in favor of the Lenders pledging
(i) sixty-five percent (65%) of the capital stock of Viskase Europe and
Viskase Brazil and (ii) one hundred percent (100%) of the capital stock
of Viskase Australia Limited.
Viskase Holding Security Agreement means that certain Security
----------------------------------
Agreement of even date herewith made by Viskase Holding in favor of the
Lenders.
Viskase Sales Pledge means that certain Pledge Agreement of even
--------------------
date herewith made by Viskase Sales in favor of the Lenders pledging one
hundred percent (100%) of the capital stock of Viskase Puerto Rico
Corporation.
Working Capital means Current Assets less Current Liabilities.
---------------
SECTION 2. Conditions Precedent
--------------------
2.1 The obligation of the Lenders to make the Term Loan hereunder
is subject to the satisfaction, immediately prior to or concurrently
with the making of such Term Loan, of the following conditions
precedent:
(a) Payment of Out-of-Pocket Expenses - The Companies shall
---------------------------------
have paid all amounts then owing to the Lenders by the Companies or
Guarantors hereunder, or under any other Loan Document or the Commitment
Letter, including, without limitation, that portion of the Loan Facility
Fee payable on the Closing Date pursuant to Section 6.2 hereof.
-----------
(b) Lien Priority - The liens granted in favor of the
-------------
Lenders pursuant to the Loan Documents shall be valid and perfected,
first priority liens on the Collateral, subject only to the Permitted
Encumbrances.
(c) CITBC Loan Documents - The terms and conditions of the
--------------------
CITBC Loan Documents, including without limitation, the total commitment
under the CITBC Financing Agreement and the amount of "Availability" (as
such term is defined in the CITBC Financing Agreement), shall be
satisfactory to the Lenders in all respects. Each Company and CITBC
shall have executed and delivered to the Lenders the CITBC Loan
Documents.
(d) D.P. Kelly Loan Documents - The terms and conditions of
-------------------------
the D.P. Kelly Loan Documents shall be satisfactory to the Lenders in
all respects. Each Company and D.P. Kelly shall have executed and
delivered to the Lenders the D.P. Kelly Loan Documents.
(e) Capital Structure - All aspects of the capital structure
-----------------
of the Companies shall be satisfactory to the Lenders in all respects.
(f) Fraudulent Conveyances and Similar Issues - The Lenders
-----------------------------------------
shall be satisfied with all fraudulent conveyances and similar issues
arising out of the structure of the financing arrangements provided for
under the terms and conditions of the Loan Documents, the CITBC Loan
Documents and the D.P. Kelly Loan Documents.
(g) Lien Searches - The Lenders shall have received tax,
-------------
judgment and U.C.C. searches (or the foreign country equivalents
thereof) satisfactory to the Lenders for all locations presently
occupied or used by each Company, each Guarantor, and such other
Subsidiaries deemed necessary by the Lenders.
(h) Casualty Insurance - Each Company and each Guarantor
------------------
shall have delivered to the Lenders evidence satisfactory to the Lenders
that casualty insurance policies listing the Lenders as an additional
loss payee or mortgagee, as the case may be, are in full force and
effect, all as set forth in paragraph (a) of Section 5.5 of this
-----------
Financing Agreement.
(i) Mortgages/Deeds of Trust/Assignments of Rents - The
---------------------------------------------
Companies shall have executed and delivered to the Lenders (or to an
agent of the Lenders or an agent of a title insurance company acceptable
to the Lenders), such mortgages, deeds of trust and assignments of rents
and leases as the Lenders may reasonably require to obtain first liens
on the Real Estate, including, without limitation, the Real Estate
Collateral Documents, subject to Permitted Encumbrances.
(j) UCC Filings - Any documents (including without
-----------
limitation, financing statements) required to be filed in order to
create, in favor of the Lenders, subject to Permitted Encumbrances, a
first priority and perfected security interest in the Collateral and
substantially all of the assets of the Guarantors (to the extent that
such a security interest may be perfected by a filing under the U.C.C.),
shall have been properly filed in each office in each jurisdiction
required in order to create in favor of the Lenders a perfected lien on
the Collateral. The Lenders shall have received acknowledgment copies
of all such filings (or, in lieu thereof, the Lenders shall have
received other evidence satisfactory to the Lenders that all such
filings have been made); and the Lenders shall have received evidence
that all necessary filing fees, taxes and other expenses related to such
filings have been paid in full.
(k) Title Insurance Policies - The Lenders shall have
------------------------
received, in respect of each mortgage or deed of trust, a mortgagee's
marked-up unconditional commitment for title insurance from a title
insurance company reasonably satisfactory to the Lenders (the "Title
Insurance Company"). Each such commitment shall obligate the Title
Insurance Company to issue to the Lenders a title insurance policy
(i) in an amount not less than the appraised value of the Real Estate
covered thereby; (ii) that insures that the mortgage or deed of trust
insured thereby creates, subject to Permitted Encumbrances, a valid
first priority lien on the property covered by such mortgage or deed of
trust, free and clear of all defects and encumbrances; (iii) that names
the Lenders as the insured thereunder; and (iv) that contains such
endorsements and effective coverage as the Lenders may reasonably
request. The Lenders also shall have received evidence that all
premiums in respect of the policies to be issued have or will be paid on
the Closing Date and that all charges for mortgage taxes and recording
fees, if any, shall have been paid.
(l) Surveys - The Lenders and the Title Insurance Company
-------
shall have received maps or plats of a perimeter or boundary of the site
of each of the properties covered by the mortgages or deeds of trust,
dated a date satisfactory to the Lenders and the Title Insurance Company
prepared by an independent professional licensed land surveyor
satisfactory to the Lenders and the relevant Title Insurance Company,
which maps or plats and the surveys on which they are based shall be
made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping;
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on the maps or plats or surveys the following:
(i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines insofar as
the foregoing affect the perimeter or boundary of such property;
(ii) the lines of streets abutting the sites and width thereof;
(iii) all access and other easements appurtenant to the sites or
necessary or desirable to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the sites, whether recorded, apparent
from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (vi) if the site
is designated as being on a filed map, a legend relating the survey to
said map. Further, the survey shall be certified to the Lenders and the
Title Insurance Company and shall contain a legend reciting as to
whether or not the site is located in a flood zone.
(m) Guaranty and Guarantor Security Agreements - (i) Each
------------------------------------------
Guarantor shall have executed and delivered to the Lenders a guaranty,
in form acceptable to the Lenders, guaranteeing the Obligations,
including, but not limited to, the Guaranty, and (ii) each of Parent and
Viskase Holding shall have executed a security agreement and other
appropriate security documents, including, but not limited to, the
Security Agreements, pursuant to which Parent and Viskase Holding each
grant to the Lenders, a security interest in substantially all of its
assets.
(n) Opinions - Subject to the filing, priority and remedies
--------
provisions of the U.C.C., the provisions of the Bankruptcy Code,
insolvency statutes or other like laws, the equity powers of a court of
law and such other matters as may be agreed upon with the Lenders,
counsel for the Companies, the Pledgors and the Guarantors shall have
delivered to the Lenders opinion(s) satisfactory to the Lenders opining,
inter alia, that: (x) this Financing Agreement, the Guaranties, the
- ----- ----
Security Agreements and the Pledge Agreements executed by each Company,
each Guarantor and each Pledgor, as applicable, and all other Loan
Documents executed by each Company and delivered to the Lenders in
connection with this Financing Agreement are (1) valid, binding and
enforceable according to their respective terms, (2) duly authorized and
(3) do not violate any terms, provisions, representations or covenants
in the charter, by-laws or other organizational agreement of any
Company, any Pledgor or any Guarantor or, to the best knowledge of such
counsel, of any loan agreement, mortgage, deed of trust, note, security
or pledge agreement or indenture to which any Company, any Pledgor or
any Guarantor is a signatory or by which any Company, any Pledgor, any
Guarantor or any Company's, any Pledgor's or any Guarantor's assets are
bound.
(o) Pledge Agreements - Each Pledgor, as applicable, shall
-----------------
(A) execute and deliver to the Lenders the Pledge Agreements, and (B)
deliver to CITBC, on behalf of the Lenders, the stock certificates
covered by the Pledge Agreements together with duly executed stock
powers in blank.
(p) [Intentionally omitted]
(q) GECC Intercreditor Agreement - GECC and all applicable
----------------------------
parties shall have entered into the GECC Intercreditor Agreement with
the Lenders.
(r) CITBC Subordination Agreement - CITBC shall have
-----------------------------
executed and delivered the CITBC Subordination Agreement to the Lenders,
in form and substance satisfactory to the Lenders.
(s) D.P. Kelly Intercreditor Agreement - D.P. Kelly shall
----------------------------------
have executed and delivered the D.P. Kelly Intercreditor Agreement to
the Lenders, in form and substance satisfactory to the Lenders.
(t) CITBC-D.P. Kelly Subordination Agreement - CITBC and
----------------------------------------
D.P. Kelly shall have entered into the CITBC-D.P. Kelly Subordination
Agreement, that is substantially identical to the CITBC Subordination
Agreement and on terms and conditions satisfactory to the Lenders.
(u) Additional Documents - Each Company shall have executed
--------------------
and delivered to the Lenders, on or before the Closing Date, the
appropriate legal documentation, each in form and substance satisfactory
to the Companies, the Lenders and their respective counsel, necessary to
consummate the lending arrangement contemplated among the Companies and
the Lenders.
(v) Environmental Reports - The Lenders shall have received
---------------------
environmental audit reports on (i) all of each Company's leasehold and
fee interests in the Real Estate, and (ii) the Company's waste disposal
practices. The reports must be satisfactory to the Lenders and not
disclose or indicate any material liability (real or potential) arising
out of any Company's premises, its operations, its waste disposal
practices or waste disposal sites used by any Company.
(w) Board Resolutions - The Lenders shall have received a
-----------------
copy of the resolutions of the Board of Directors of each Company, each
Pledgor and each Guarantor (as the case may be) authorizing the
execution, delivery and performance of (i) this Financing Agreement, as
applicable, (ii) the Guaranties executed by the Guarantors, as
applicable, (iii) the Pledge Agreements executed by each Pledgor, as
applicable, and (iv) any related agreements, in each case certified by
the Secretary or Assistant Secretary of each Company, the Pledgors and
the Guarantors (as the case may be) as of the date hereof, together with
a certificate of the Secretary or Assistant Secretary of each Company,
each Pledgor and each Guarantor (as the case may be) as to the
incumbency and signature of the officers executing such agreements and
any certificate or other documents to be delivered by them pursuant
hereto.
(x) Corporate Organization - The Lenders shall have received
----------------------
(i) a copy of the Certificate or Articles of Incorporation (or other
equivalent organizational documents) of each Company, each Pledgor and
each Guarantor, certified by the applicable authority in such entity's
State of organization or foreign country of organization, as applicable,
and (ii) copies of the By-Laws or equivalent corporate constituent
document (as amended through the date hereof), if any, of each Company,
each Pledgor and each Guarantor, certified by the Secretary or Assistant
Secretary thereof.
(y) Officer's Certificate - The Lenders shall have received
---------------------
an executed Officer's Certificate of each Company, satisfactory in form
and substance to the Lenders, certifying that (i) the representations
and warranties contained herein are true and correct in all material
respects on and as of the date hereof, (ii) each Company is in
compliance with all of the terms and provisions set forth herein and
(iii) no Default or Event of Default has occurred.
(z) Absence of Default or Material Adverse Effect - No
---------------------------------------------
Default, Event of Default or any fact or circumstance having a Material
Adverse Effect shall have occurred or arisen. The Companies acknowledge
that an adverse change in the terms, conditions, assumptions or
projections supplied by Companies and any Guarantor, and on which the
Magten based its decision to issue the Commitment Letter, in the
Lenders' reasonable business judgement, may be construed by the Lenders
as a Material Adverse Change for the purposes of this clause (z).
(aa) Appraisals - The Lenders shall have received appraisals
----------
on each Company's fixed assets, which appraisals shall be by an
appraiser acceptable to the Lenders and shall indicate an orderly
liquidation value acceptable to the Lenders with respect to the
Equipment, and a fair market value acceptable to the Lenders with
respect to the aggregate value of the owned Real Estate.
(bb) Legal Restraints/Litigation - At the date of execution
---------------------------
of this Financing Agreement, there shall be no (i) litigation,
investigation or proceeding (judicial or administrative) pending or
threatened against any Company, any Pledgor or any Guarantor or any of
their assets or respective Subsidiaries, by any agency, division or
department of any county, city, state or federal government arising out
of the CITBC Financing Agreement, the D.P. Kelly Financing Agreement or
this Financing Agreement, (ii) injunction, writ or restraining order
restraining or prohibiting the consummation of the financing
arrangements contemplated under the CITBC Financing Agreement, the D.P.
Kelly Financing Agreement or this Financing Agreement or (iii) to the
best knowledge of each Company, suit, action, investigation or
proceeding (judicial or administrative) pending or threatened against
any Company, any Pledgor, any Guarantor or any of their respective
Subsidiaries or their assets, which, in the opinion of the Lenders, if
adversely determined could have a Material Adverse Effect.
(cc) Disbursement Authorization - The Companies shall have
--------------------------
delivered to the Lenders all information necessary for the Lenders to
issue wire transfer instructions on behalf of the Companies for the
loans and/or advances to be made by the Lenders under this Financing
Agreement including, but not limited to, disbursement authorizations in
form acceptable to the Lenders.
(dd) Examination & Verification; Availability - The Lenders
----------------------------------------
shall have completed to the satisfaction of the Lenders an examination
and verification of the Accounts, Inventory, books and records of each
Company and each Guarantor.
(ee) Existing Revolving Credit Agreement - (i) The
-----------------------------------
Companies' existing credit agreement agented by BT Commercial
Corporation shall be terminated, (ii) all loans and obligations of each
Company and/or the Guarantors and each Pledgor thereunder shall be paid
or satisfied in full utilizing the proceeds of the revolving loans and
other financial accommodations to be made under the CITBC Financing
Agreement and the Term Loan to be made under this Financing Agreement
and (iii) all liens upon or security interest in favor of BT Commercial
Corporation, as collateral agent, in connection therewith shall be
terminated and/or released upon such payment.
(ff) Commitment Letter. Each Company shall have (i) fully
-----------------
complied, to the satisfaction of the Lenders, with all of the terms and
conditions of the Commitment Letter and (ii) paid to the Lenders all
sums due to the Lenders pursuant to the Commitment Letter.
(gg) D.P. Kelly Payoff - All amounts owed to D.P. Kelly,
-----------------
however evidenced, incurred prior to the date hereof, shall be fully
paid or refinanced and all liens, mortgages, deeds of trust, security
interests and filings related thereto shall be duly released prior to
the Closing Date, and evidence of such releases, satisfactory to
Lenders, shall be provided to Lenders on or prior to the Closing Date.
(hh) Collateral Assignment of Intercompany Loan - All
------------------------------------------
amounts owed by Viskase Canada to any Company or any Guarantor from time
to time shall be (i) evidenced by a Promissory Note payable by Viskase
Canada to such Company of Guarantor and (ii) secured by all of the
assets of Viskase Canada pursuant to a security agreement in form and
substance acceptable to Agent (the "Canada Security Agreement"). On the
Closing Date, and from time to time thereafter, as applicable, such
Company or Guarantor loaning funds to Viskase Canada shall execute a
Collateral Assignment of Intercompany Note and Security Agreement of
even date herewith (the "Collateral Assignment of Intercompany Loan")
in favor of the Lenders, pursuant to which such Company or Guarantor
shall assign all right, title and interest in the Canada Intercompany
Loan and the Canada Security Agreement to the Lenders as collateral
security for the Obligations, and such Company or Guarantor shall
execute such financing statements, documents, instruments and agreements
as shall be necessary to perfect the foregoing security interest
assignment in favor of the Lenders, as the Lenders so request.
(ii) All conditions precedent to the consummation of the
CITBC Financing Agreement and the D.P. Kelly Financing Agreement shall
have been satisfied or waived in accordance with the terms thereof.
Upon the execution of this Financing Agreement and the initial
disbursement of loans hereunder, all of the above conditions precedent
shall have been deemed satisfied except as each Company and the Lenders
shall otherwise agree herein or in a separate writing.
SECTION 3. Term Loan
---------
3.1 Each Company hereby agrees to execute and deliver to each of
the Lenders on the Closing Date, a Term Loan Promissory Note, dated the
Closing Date, payable to the order of such Lender in the principal
amount of its respective Percentage Interest in the Term Loan.
3.2 Subject to the terms and conditions hereof, upon receipt of
the Term Loan Promissory Notes, each Lender hereby severally (and not
jointly) agrees to extend to the Companies a portion of the Term Loan in
the original principal amount equal to such Lender's Percentage Interest
of Thirty Million Dollars ($30,000,000).
3.3 The principal amount of the Term Loan shall be due and payable
to each Lender in its Percentage Interest, and repaid by the Company, in
full in cash on the Maturity Date.
3.4 The Companies shall prepay the Term Loan as provided for in
this Agreement, including, without limitation, pursuant to Section 5.16
------------
hereof.
3.5 The Companies, at their option, may prepay the Term Loan at
any time, in whole or in part, without penalty or premium, provided that
on each such prepayment, the Companies shall pay accrued interest on the
principal so prepaid to the date of such prepayment.
SECTION 4. Collateral
----------
4.1 As security for the prompt payment in full of all loans and
advances made and to be made to each Company from time to time by the
Lenders pursuant hereto, as well as to secure the payment in full of the
other Obligations, each Company hereby pledges and grants to the
Lenders, a continuing general lien upon and security interest in all of
such Company's:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles;
(f) present and future Investment Property;
(g) present and future Other Collateral;
(h) Real Estate; and
(i) any such other property not included under clauses (a)
through (h) above that would otherwise be deemed to
constitute "Collateral" as defined in the CITBC Loan
Documents or the D.P. Kelly Loan Documents, as such
agreements may be amended, modified or replaced from
time to time;
Notwithstanding anything contained herein to the contrary, the
Collateral shall not include, and neither Company shall be deemed to
have granted a lien or security interest hereunder in:
(i) any property or asset to the extent, and only for
so long as, such property is subject to a Permitted Encumbrance
(other than the CITBC Loan Documents and the D.P. Kelly Loan
Documents) which specifically restricts the granting of additional
liens or security interests on such property; provided that
--------
(A) such lien or security interest constitutes a Permitted
Encumbrance and (B) the restriction on the granting of additional
liens or security interests extends only to the property subject to
such a Permitted Encumbrance and the proceeds thereof;
(ii) any contract that prohibits the granting of a
security interest in such contract or the rights thereunder without
the consent of the other party(ies) thereto, which consent has not
been obtained (except to the extent any such prohibition would be
rendered ineffective or unenforceable under applicable laws);
(iii) any "Sale-Leaseback Property" as defined in the GECC
Intercreditor Agreement; or
(iv) the specific assets identified on Schedule 4.1 hereto
------------
(the "Excluded Assets"); provided, however, that the Companies
agree to cause the proceeds of the sale of the Excluded Assets to
be used as set forth in Section 5.16 below.
------------
4.2 The security interests granted hereunder shall extend and
attach to:
(a) All Collateral which is presently in existence and which
is owned by any Company or in which any Company has any interest,
whether held by any Company or others for its account, and, if any
Collateral is Equipment, whether such Company's interest in such
Equipment is as owner or lessee or conditional vendee;
(b) All Equipment whether the same constitutes personal
property or fixtures, including, but without limiting the generality of
the foregoing, all dies, jigs, tools, benches, tables, accretions,
component parts thereof and additions thereto, as well as all
accessories, motors, engines and auxiliary parts used in connection with
or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either the Lenders or
any Company from such Company's customers, as well as to all supplies,
goods, incidentals, packaging materials, labels and any other items
which contribute to the finished goods or products manufactured or
processed by any Company, or to the sale, promotion or shipment thereof.
4.3 Each Company agrees to safeguard, protect and hold all
Inventory for the account of the Lenders, and make no disposition
thereof except in the regular course of the business of each Company;
provided, however, that each Company may make bulk sales of Inventory
that is obsolete and non-marketable under ordinary terms if such Company
gives prompt written notice to the Lenders after any such sale.
Inventory may be sold and shipped by each Company to its customers in
the ordinary course of each Company's business, on open account and on
commercially reasonable terms, provided that, subject to the CITBC
Subordination Agreement and the D.P. Kelly Intercreditor Agreement, all
proceeds of all sales (including cash, accounts receivable, checks,
notes, instruments for the payment of money and similar proceeds) are
forthwith transferred, endorsed, and turned over and delivered to the
Lenders based upon each Lender's Percentage Interest. Upon the sale,
exchange, or other disposition of Inventory, as herein provided, the
security interest in each Company's Inventory provided for herein shall,
without break in continuity and without further formality or act,
continue in, and attach to, all proceeds, including any instruments for
the payment of money, accounts receivable, contract rights, documents of
title, shipping documents, chattel paper and all other cash and non-cash
proceeds of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, the Lenders shall have all of the rights
of an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation.
4.4 Each Company agrees at its own cost and expense to keep the
Equipment in as good repair and condition as the same is now or at the
time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and
replacements when and where necessary. Each Company also agrees to
safeguard, protect and hold all Equipment for the account of the
Lenders, and make no disposition thereof (other than dispositions
expressly permitted hereunder) unless such Company first obtains the
prior written approval of CITBC). Any sale, exchange or other
disposition of any Equipment (other than dispositions expressly
permitted hereunder) shall only be made by the Companies with the prior
written approval of the Lenders, and the proceeds of any such sales
shall not be commingled with any Company's other property, but shall be
segregated, and subject to the CITBC Subordination Agreement and the
D.P. Kelly Intercreditor Agreement, held by each Company in trust for
the Lenders, for the benefit of the Lenders, as the Lenders' exclusive
property, and shall be delivered immediately by each Company to the
Lenders based upon each Lender's Percentage Interest. Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the
security interest provided for herein shall, without break in continuity
and without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sales,
exchanges or dispositions. As to any such sale, exchange or other
disposition, the Lenders shall have all of the rights of an unpaid
seller, including stoppage in transit, replevin, rescission and
reclamation. Notwithstanding anything set forth herein to the contrary,
each Company may sell, exchange or otherwise dispose of (a) obsolete
Equipment or Equipment no longer needed in such Company's operations,
provided that the then book value of the Equipment so disposed of does
not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate in
any fiscal year and (b) items of Equipment not listed in or appraised
pursuant to the appraisals described in Section 2.1(aa) above to
---------------
Subsidiaries, provided (i) the Companies shall notify the Lenders of any
such disposition in reasonable detail if the Equipment subject thereto
has a minimum book value of Two Hundred Fifty Thousand Dollars
($250,000.00) per item and (ii) that the aggregate book value of any
such Equipment so disposed to Subsidiaries shall not exceed
Seven Hundred Fifty Thousand Dollars ($750,000.00) in the aggregate in
any fiscal year. Subject to the CITBC Subordination Agreement and the
D.P. Kelly Intercreditor Agreement, to the extent that any Equipment is
sold, exchanged or otherwise disposed of pursuant to the preceding
sentence, the proceeds of such sales or dispositions shall be delivered
to the Lenders based upon each Lender's Percentage Interest in
accordance with the foregoing provisions of this Section 4.4, except
-----------
that each Company may retain and use such proceeds to purchase forthwith
replacement Equipment which such Company determines in its reasonable
business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold, and provided further that the
aforesaid right shall automatically cease upon the occurrence of an
Event of Default which is not waived.
4.5 The rights and security interests granted hereunder to the
Lenders, are to continue in full force and effect, until the final
payment in full to the Lenders of all Obligations. Any delay, or
omission by the Lenders to exercise any right hereunder, shall not be
deemed a waiver thereof, or be deemed a waiver of any other right,
unless such waiver be in writing and signed by the Lenders. A waiver on
any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.
4.6 To the extent that the Obligations are now or hereafter
secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other person, then the
Lenders shall have the right in their sole discretion to determine which
rights, security, liens, security interests or remedies the Lenders
shall at any time pursue, foreclose upon, relinquish, subordinate,
modify or take any other action with respect to, without in any way
modifying or affecting any of them, or any of the Lenders' rights
hereunder.
4.7 Any property or assets of any Company in the possession of the
Lenders may be held by the Lenders as security for any Obligations and
applied in whole or partial satisfaction of such Obligations when due
upon written notice to the Companies. The liens and security interests
granted herein and any other lien or security interest which the Lenders
may have in any other assets of any Company, shall secure payment and
performance of all now existing and future Obligations.
4.8 This Financing Agreement and the obligation of each Company to
perform all of its covenants and obligations hereunder are further
secured by mortgage(s), deed(s) of trust or assignment(s) covering the
Real Estate including, but not limited to, the Real Estate Collateral
Documents.
4.9 From time to time, each Company shall deliver to the Lenders,
such mortgage(s), deed(s) of trust or assignment(s) covering the Real
Estate or real estate acquired after the date hereof as the Lenders
shall require to obtain a valid first lien thereon, subject only to
Permitted Encumbrances.
4.10 From time to time, each Company, each Guarantor and each
Pledgor shall deliver to the Lenders, or shall cause Parent to deliver
to the Lenders, such pledge or security agreements with respect to
(a) trademarks, patents, licenses, General Intangibles and capital stock
in each Company and (b) capital stock in any and all direct Subsidiaries
of each Company, each Guarantor and each Pledgor, as applicable, as the
Lenders shall require to obtain valid first liens thereon (subject to
Permitted Encumbrances); provided, however, that in no event shall a
pledge of more than 65% of the equity interests of any foreign entity
directly owned be required [so long as applicable law would treat any
such pledge in excess of such amount as a "deemed dividend" to the
parent company of such foreign entity.
SECTION 5. Representations, Warranties and Covenants
-----------------------------------------
5.1 Each Company hereby warrants and represents and/or covenants
that: (a) the fair value of each Company's assets exceeds the book
value of each Company's liabilities; (b) each Company is generally able
to pay its debts as they become due and payable; (c) no Company has
unreasonably small capital to carry on its business as it is currently
conducted absent extraordinary and unforeseen circumstances; (d) the
consolidated audited balance sheet and related statements of operations
and cash flow and changes in stockholders' equity for the Parent as of
December 31, 1998 and for the fiscal year then ended, and the
consolidated unaudited balance sheet and related statements of
operations and cash flow for the Parent as of March 31, 1999 and for the
three (3) months then ended, have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the Parent's
financial position as at the dates thereof and the Parent's results of
operation for the periods then ended; (e) each Company is duly organized
and validly existing under the laws of the state of its incorporation,
and is qualified to do business in each State where the failure to so
qualify would have a Material Adverse Effect; (f) Schedule 5.1 hereto
------------
correctly and completely sets forth each Company's chief executive
office, all of the Collateral locations and all tradenames used by each
Company; (g) the execution and delivery of this Financing Agreement by
each Company and the consummation of the transactions contemplated
hereby, do not violate any term, provision or covenant contained in the
Articles or Certificate of Incorporation or Bylaws of any Company, or
any term, provision, covenant or representation contained in any loan
agreement, lease, indenture, mortgage, deed of trust, note, security
agreement or pledge agreement to which any Company is a signatory or by
which any Company or any Company's assets are bound; (h) except for the
Permitted Encumbrances, the security interests granted herein and in the
other Loan Documents constitute and shall at all times constitute first
priority and exclusive liens on the Collateral; (i) except for the
Permitted Encumbrances, each Company is or will be at the time
additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, transfer and create a
security interest therein, free and clear of any and all claims or liens
in favor of others; (j) the Indebtedness listed on Schedule 1.1(b)
---------------
hereto constitutes all funded indebtedness of each Company existing as
of the date hereof; (k) each Company will at its expense forever warrant
and, at the Lender's request, defend the Collateral from any and all
claims and demands of any other person other than the Permitted
Encumbrances; (l) no Company will grant, create or permit to exist, any
lien upon or security interest in the Collateral, or any proceeds
thereof, in favor of any other person other than the holders of the
Permitted Encumbrances; and (m) each Company will provide the Lenders
with prior written notice of any change in the location of any
Collateral.
5.2 Each Company agrees to maintain books and records pertaining
to the Collateral in such detail, form and scope as the Lenders shall
reasonably require. Each Company agrees that any Lender and/or such
Lender's designated agents (at such Lender's expense), may enter upon
each Company's offices, or other premises at any time during normal
business hours and upon reasonable notice of at least one (1) Business
Day prior to an Event of Default, and from time to time, in order to
(a) examine and inspect the books and records of each Company, and make
copies thereof and take extracts therefrom, and (b) verify, inspect,
appraise and perform physical counts and other valuations of the
Collateral and any and all records pertaining thereto; provided,
however, that so long as no Event of Default exists and is continuing,
the number of such examinations, inspections, appraisals, physical
counts and other valuations shall be limited to [four (4)] per annum.
All reasonable costs, fees and expenses incurred by the Lenders in
connection with such examinations, inspections, appraisals, physical
counts and other valuations shall constitute Out-of-Pocket Expenses for
purposes of this Financing Agreement.
5.3 Each Company agrees to execute and deliver to the Lenders,
from time to time, solely for the Lenders' convenience in maintaining a
record of the Collateral, such written statements, schedules and other
information and documentation as the Lenders may reasonably require,
designating, identifying or describing the Collateral. Without limiting
the foregoing, each Company shall deliver to Lenders copies of all
schedules and statements delivered to CITBC pursuant to the CITBC
Financing Agreement, including, without limitation, pursuant to Section
7.3 thereof, simultaneously with the delivery of such schedules and
statements to CITBC. Any Company's failure, however, to promptly give
the Lenders such statements or schedules shall not affect, diminish,
modify or otherwise limit the security interests of the Lenders, in the
Collateral.
5.4 Each Company agrees to comply with the requirements of all
state and federal laws in order to grant to the Lenders, valid and
perfected first security interests in the Collateral, subject only to
the Permitted Encumbrances. The Lenders are hereby authorized by each
Company to file any financing statements covering the Collateral whether
or not such Company's signature appears thereon. Each Company agrees to
do whatever the Lenders reasonably may request from time to time, by way
of: (a) filing notices of liens, financing statements, amendments,
renewals and continuations thereof; (b) cooperating with the Lenders'
designated agents and employees; (c) keeping Collateral records;
(d) transferring proceeds of Collateral to the Lenders' possession in
accordance with the terms hereof; and (e) performing such further acts
as the Lenders reasonably may require in order to effect the purposes of
this Financing Agreement.
5.5 (a) Each Company agrees to maintain insurance on the Real
Estate, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to the
Lenders (the "Required Insurance"). All policies covering the Real
Estate, Equipment and Inventory are, subject to the rights of any
holders of Permitted Encumbrances holding claims senior to the Lenders,
to be made payable to the Lenders, for the benefit of the Lenders, in
case of loss, under a standard non-contributory "mortgagee", "lender" or
"secured party" clause and are to contain such other provisions as the
Lenders reasonably may require to fully protect the Lenders' interests
in the Real Estate, Inventory and Equipment and to any payments to be
made under such policies. All summaries of such policies are to be
delivered to the Lenders. All such insurance policies shall be prepaid,
with a loss payable endorsement in favor of the Lenders, for the benefit
of the Lenders, and shall provide for not less than thirty (30) days
prior written notice to the Lenders of the exercise of any right of
cancellation. Upon the occurrence of an Event of Default which is not
waived, the Lenders shall, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Lenders, have the
sole right, in the name of the Lenders or any Company, to file claims
under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and
all endorsements, receipts, releases, assignments, reassignments or
other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance
policies.
(b) Unless any Company provides the Lenders with evidence of
the Required Insurance in the manner set forth in paragraph (a) above,
the Lenders may, upon prior notice to the Companies, purchase insurance
at each Company's expense to protect the interests of the Lenders in the
Collateral. The insurance purchased by the Lenders may, but need not,
protect such Company's interests in the Collateral, and therefore such
insurance may not pay any claim which any Company makes or any claim
which is made against any Company in connection with the Collateral.
The Companies may later request that the Lenders cancel any insurance
purchased by the Lenders, but only after providing the Lenders with
satisfactory evidence that the Companies have the Required Insurance.
If the Lenders purchase insurance covering all or any portion of the
Collateral, the Companies shall be responsible for the costs of such
insurance, including interest (at the applicable rate set forth
hereunder) and other charges accruing on the purchase price therefor,
until the effective date of the cancellation or the expiration of the
insurance. The costs of the premiums of any insurance purchased by the
Lenders may exceed the costs of insurance which the Companies may be
able to purchase on their own. In the event that the Lenders purchase
insurance, the Lenders will notify the Representative of such purchase
within thirty (30) days after the date of such purchase. If, within
thirty (30) days of the date of such notice, the Companies provide the
Lenders with proof that the Companies had the Required Insurance as of
the date on which the Lenders purchased insurance and the Companies have
---
continued at all times thereafter to have the Required Insurance, then
the Lenders agree to cancel the insurance purchased by the Lenders and
reimburse the companies by the amount of all costs, interest and other
charges associated with such insurance.
(c)
(i) Subject to the CITBC Subordination Agreement and the
D.P. Kelly Intercreditor Agreement, in the event of any loss or
damage by condemnation, fire or other casualty, insurance proceeds
relating to Inventory that are paid to the Lenders shall reduce the
Obligations.
(ii) Subject to the CITBC Subordination Agreement and the
D.P. Kelly Intercreditor Agreement, in the event any part of the
Company's Real Estate or Equipment is condemned or damaged by fire
or other casualty and the insurance or condemnation proceeds for
such condemnation, damage or other casualty are paid to the Lenders
(the "Proceeds"), the Lenders shall promptly apply such Proceeds to
reduce the Obligations.
(iii) As long as an Event of Default has not occurred (which
is not waived), the Companies have sufficient business interruption
insurance to replace the lost profits of any Company's facilities,
the Companies may elect (by delivering written notice to the
Lenders) to replace, repair or restore such Real Estate or
Equipment to substantially the equivalent condition prior to such
condemnation, fire or other casualty as set forth herein. If the
Companies do not, or cannot, elect to use the Proceeds as set forth
above, the Lenders may, subject to the CITBC Subordination
Agreement and the D.P. Kelly Intercreditor Agreement and to the
rights of any holders of Permitted Encumbrances holding claims
senior to the Lenders, apply the Proceeds to the payment of the
Obligations.
(iv) Prior to the commencement of any restoration, repair or
replacement of Real Estate, the Companies shall provide the Lenders
with a restoration plan and a total budget certified by an
independent third party experienced in construction costing. If
there are insufficient Proceeds to cover the cost of restoration as
so determined, the Companies shall be responsible for the amount of
any such deficiency, and shall fund such deficiency. Completion of
restoration shall be evidenced by a final, unqualified
certification of the design architect employed, if any; an
unconditional certificate of occupancy, if applicable; such other
certification as may be required by law; or if none of the above is
applicable, a written good faith determination of completion by the
Companies (herein collectively the "Completion").
(v) The Companies agree to pay any reasonable costs, fees or
expenses which the Lenders may reasonably incur in connection with
this Section 5.5.
-----------
5.6 The Companies agree to pay, prior to the imposition of any
lien or penalty (other than Permitted Encumbrances), all taxes,
assessments, claims and other charges (herein "taxes") lawfully levied
or assessed upon any Company or the Collateral, including, without
limitation, all sales taxes collected by any Company on behalf of any
Company's customers in connection with sales of Inventory. If such
taxes remain unpaid after such date (unless such taxes are being
diligently contested in good faith by such Company by appropriate
proceedings), or if any lien shall be claimed thereunder (a) for taxes
due the United States of America or (b) which in the Lenders' opinion
secures an obligation having priority over the rights granted to the
Lenders' herein, then the Lenders may, on behalf of the Companies, pay
such taxes, and the amount thereof shall be an Obligation secured hereby
and due to the Lenders on demand.
5.7 (a) Each Company agrees to comply with all acts, rules,
regulations and orders of any legislative, administrative or judicial
body or official, which the failure to comply with would have a Material
Adverse Effect on such Company, provided that any Company may contest
any acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in the Lenders'
reasonable opinion, materially and adversely effect the Lenders' rights
or priorities in the Collateral.
(b) Without limiting the generality of paragraph (a) above,
each Company agrees to comply with all environmental statutes, acts,
rules, regulations or orders, as presently existing or as adopted or
amended in the future, applicable to the ownership and/or use of its
real property and operation of its business, if the failure to so comply
would have a Material Adverse Effect on such Company. Each Company
hereby indemnifies the Lenders, and agrees to defend and hold the
Lenders harmless, from and against any and all loss, damage, claim,
liability, injury or expense which the Lenders or the Lenders may
sustain or incur in connection with any claim or expense asserted
against the Lenders as a result of any environmental pollution,
hazardous material or environmental clean-up of any Company's owned or
leased real property; or any claim or expense which results from any
Company's operations (including, but not limited to, the Company's off-
site disposal practices) except as a result of the gross negligence or
willful misconduct of any Lender, and each Company further agrees that
this indemnification shall survive the payment of all Obligations or
amounts payable hereunder. No Company shall be deemed to have breached
any provision of this Section 5.7 if (i) the failure to comply with the
-----------
requirements of this Section 5.7 resulted from good faith error or
-----------
innocent omission, (ii) the Companies promptly commence and diligently
pursue a cure of such breach and (iii) such failure is cured within
fifteen (15) Business Days following any Company's receipt of notice of
such failure.
(c) As of the date hereof, each Company represents and
warrants to the Lenders that except as disclosed on Schedule 5.7
------------
attached hereto, (i) none of the operations of any Company are, to their
knowledge after diligent inquiry, the subject of any federal, state or
local investigation to determine whether any remedial action is needed
to address the presence or disposal of any environmental pollution,
hazardous material or environmental clean-up of the Real Estate or any
Company's leased real property, (ii) no Company has any known contingent
liability with respect to any release of any environmental pollution or
hazardous material, (iii) each Company presently is in compliance with
all environmental statutes, acts, rules, regulations or orders
applicable to each Company's owned or leased real property or the
operation of each Company's business, except where the failure to be in
such compliance would not have a Material Adverse Effect, (iv) no
enforcement proceeding, complaint, summons, citation, notice, order,
claim, litigation, investigation, letter or other communication from a
federal, state or local authority has been filed against or delivered to
any Company, regarding or involving any release of any environmental
pollution or hazardous material on any real property now or previously
owned or leased by any Company, and (v) each Company has obtained and
maintains all permits, approvals, authorizations and licenses, if any,
required by applicable environmental statutes, acts, rules, regulations
and orders, except where the failure to have such permits, approvals,
authorizations or licenses would not have a Material Adverse Effect on
such Company.
5.8 Until payment and satisfaction of all Obligations due
hereunder, each Company agrees that, unless the Lenders shall have
otherwise consented in writing, the Companies will furnish to the
Lenders: (a) within ninety (90) days after the end of each fiscal year
of the Parent, a Consolidated Balance Sheet and a Consolidating Balance
Sheet as at the close of such year, and statements of operations, cash
flow and reconciliation of stockholders' equity for such year, in the
case of the Consolidated Balance Sheet and related statements audited by
such independent public accountants selected by the Parent and
satisfactory to the Lenders, together with the unqualified opinion of
the accountants preparing such financial statements (except that for the
fiscal year 2000 audited financial statements, the opinion of such
accountants may be qualified, if necessary, for the sole purpose of
reflecting that, as of the date of such opinion, the Companies do not
have a financing commitment in place for the period commencing on the
Termination Date); (b) within forty-five (45) days of the end of each
fiscal quarter, a Consolidated Balance Sheet and a Consolidating Balance
Sheet as at the end of such fiscal quarter, and a consolidated statement
of operations and cash flow for such fiscal quarter and for the period
commencing on the first day of the current fiscal quarter through the
end of such fiscal quarter; (c) within thirty-five (35) days after the
end of each fiscal month, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the end of such fiscal month, and a
consolidated statement of operations and cash flow for such fiscal month
and for the period commencing on the first day of the current fiscal
year through the end of such fiscal month; (d) no later than thirty
(30) days after the beginning of each fiscal year, monthly projections
of the Consolidated Balance Sheet, Consolidating Balance Sheet, the
consolidated and consolidating statements of operations and cash flow of
Parent; and (e) from time to time, such further information regarding
the business affairs and financial condition of each Company as the
Lenders may reasonably request. Each financial statement which the
Companies are required to submit hereunder must be accompanied by an
officer's certificate, signed by the Treasurer or Chief Financial
Officer of Representative, pursuant to which such officer must certify
that: (x) the financial statement(s) fairly and accurately represent(s)
Parent's and the Companies' financial condition at the end of the
particular accounting period, as well as Parent's and the Companies'
operating results during such accounting period, subject to year-end
audit adjustments; (y) during the particular accounting period (i) there
has occurred no Default or Event of Default under this Financing
Agreement, or, if any such officer has knowledge that any such Default
or Event of Default, has occurred during such period, the existence of
and a detailed description of same shall be set forth in such officer's
certificate, and (ii) no Company has received any notice of cancellation
with respect to its property insurance policies; and (z) the exhibits
attached to such financial statement(s) constitute detailed calculations
showing compliance with all financial covenants contained in this
Financing Agreement.
5.9 Until payment and satisfaction in full of all Obligations due
hereunder, each Company agrees that, without the prior written consent
of the Lenders, except as otherwise herein provided, no Company will,
and will not permit any Guarantor or Subsidiary to:
(a) Except for transfers of assets permitted under
Section 5.9(c) below and Permitted Encumbrances, mortgage, assign,
- --------------
pledge, transfer or otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a purchase
money or title retention transaction, or other security interest, or
otherwise) to exist on any of its assets or goods, whether real,
personal or mixed, whether now owned or hereafter acquired;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Sell, lease, assign, transfer or otherwise dispose of
(i) Collateral, except as otherwise specifically permitted by this
Financing Agreement, or (ii) either all or any substantial part of its
assets, if any, which do not constitute Collateral; provided, however,
(A) that transfers of Inventory solely among the Companies and/or the
Guarantors (other than Parent) shall be permitted hereunder so long as
any such transfer would be classified as an Intercompany Receivable,
(B) sales or dispositions of Excluded Assets shall be permitted
hereunder, and (C) sales or transfers of Collateral to either Company by
the other Company or by any Subsidiary to any Company shall be permitted
hereunder;
(d) (i) Merge or consolidate with any other entity; provided,
however, that (x) any Company may merge or consolidate with any
Guarantor (other than Parent) and (y) any non-Guarantor Subsidiary may
merge or consolidate with any other non-Guarantor Subsidiary;
(ii) change its corporate name or principal place of business without at
least thirty (30) days prior written notice to the Lenders, (iii) change
the form of its organization from for-profit corporation or (iv) enter
into or engage in any operation or activity materially different from
that presently being conducted by either Company;
(e) Assume, guarantee, endorse, or otherwise become liable
upon the obligations of any person, firm, entity or corporation, except
(i) by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(ii) existing guaranties listed on Schedule 5.9(e) hereof,
---------------
(iii) guaranties in favor of CITBC, individually and as agent and the
other lenders under the CITBC Loan Documents, D.P. Kelly under the D.P.
Kelly Loan Documents and the Lenders under the Loan Documents,
(iv) guaranties entered into in the ordinary course of business by any
Company or any Guarantor of the obligations of any Company or any
Guarantor, (v) guaranties entered into in the ordinary course of
business by any Subsidiary that is not a Guarantor of the obligations of
any other Subsidiary that is not a Guarantor, and (vi) guaranties
entered into in connection with the refinancing of any Indebtedness
permitted to be guaranteed by this Section, provided that the guarantor
thereof was previously guaranteeing the Indebtedness being refinanced
and the principal amount of such Indebtedness being refinanced shall not
be increased from such principal amount outstanding on the day prior to
the date of such refinancing; provided, however, that the principal
amount of such Indebtedness being guaranteed may be increased by up to
Two Million Five Hundred Thousand ($2,500,000.00) if, and only if, such
Indebtedness is Permitted Indebtedness;
(f) Declare or pay any dividend or distribution of any kind
on, or purchase, acquire, redeem or retire, any of Parent's or any
Company's equity interests (of any class or type whatsoever), whether
now or hereafter issued and outstanding, other than Permitted
Distributions;
(g) Create any new Subsidiary, or make any advance or loan
to, or any investment in, or acquire all or substantially all of the
assets or capital stock of, or other equity interests in, any firm,
entity, person or corporation, other than (i) investments in the
Subsidiaries, (ii) Permitted Investments, (iii) loans constituting
Permitted Indebtedness hereunder, and (iv) advances to officers and
directors in the ordinary course of business for travel expenses,
employment relocation programs and similar business expenses subject to
a limit of Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any one time outstanding; provided, however that such limit
shall not apply with respect to legally required and permissible
indemnification of officers and directors;
(h) Amend or modify any provision of the Lease Documents to
the extent such amendments or modifications would (i) accelerate the
term or maturity date of any obligations thereunder, (ii) increase the
amount of rental payments, royalty payments or other payments required
thereunder, (iii) accelerate any obligations thereunder, (iv) increase
the amount of any interest or royalty rate attributable thereto, or
(v) otherwise impose any covenant, term, restriction, condition or
obligation determined by the Lenders, in their reasonable discretion, to
be materially more restrictive or burdensome to any Company or Parent
than existed prior to such amendment or modification. It is understood
and agreed that to the extent an amendment or modification of the Lease
Documents is permissible hereunder, the Lenders shall be promptly
provided with a copy thereof;
(i) Amend or modify any provision of any of the D.P. Kelly
Loan Documents;
(j) Amend the CITBC Financing Agreement to modify the timing
of any scheduled payment of principal of the Term Loan;
(k) Amend or modify (i) the definitions in the CITBC
Financing Agreement of "Accounts Receivable Advance Percentage,"
"Availability," and "Inventory Advance Percentage," (but only to the
extent that any such alteration or modification would result in an
increase in Availability (as defined in the CITBC Financing Agreement)),
(ii) the definitions in the CITBC Financing Agreement of "Excluded
Assets," Permitted Distributions," "Permitted Encumbrances," "Permitted
Indebtedness," "Purchase Money Liens," "Revolving Line of Credit" or
"Term Lien," or (iii) Sections 5.9(a), (b), (c), (d), (e), (f), (g), (h)
--------------- --- --- --- --- --- --- ---
or 5.15 of the CITBC Financing Agreement;
----
(l) Request, incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any advance (which in
the case of clauses 2 and 3 below shall be advances under the Revolving
Line of Credit) which would cause the principal amount of Senior Debt to
exceed, at any time, the sum of (1) the outstanding principal balance of
the Term Loan, (2) the Borrowing Base and (3) the greater of
(A) $5,000,000, and (B) 15% of the Borrowing Base, provided, however,
-------- -------
that such limitation on advances shall not apply to advances under the
"Revolving Credit Line" (as such term is defined in the Financing
Agreement) required by CITBC to cover costs of liquidating "Collateral"
(as such term is defined in the CITBC financing Agreement) (including
the costs and expenses of preserving and protecting such "Collateral" in
connection therewith);
5.10 Until payment and satisfaction in full of all Obligations
hereunder, each Company shall:
(a) cause Parent to maintain at all times during the periods
below a Tangible Net Worth of not less than the amount set forth below
for the applicable period:
<TABLE>
<CAPTION>
Quarterly Period Ending Tangible Net Worth Quarterly Period Ending Tangible Net Worth
- ----------------------- ------------------- ----------------------- -------------------
<S> <C> <C> <C>
June 30, 1999 $ 99,000,000 June 30, 2000 $88,000,000
------------ -----------
September 30, 1999 $ 95,000,000 September 30, 2000 $86,000,000
------------ -----------
December 31, 1999 $ 91,000,000 December 31, 2000 $86,000,000
------------ -----------
March 31, 2000 $ 88,000,000 March 31, 2001 $82,000,000
------------ -----------
June 30, 2001 and
each quarter
thereafter $83,000,000
-----------
</TABLE>
(b) maintain at the end of each fiscal quarter during the
periods set forth below a Fixed Charge Coverage Ratio of not less than
the ratio set forth below for the applicable period (measured as
follows: (i) for the quarter ending June 30, 1999, measured on a
trailing basis taking into account the prior quarter; (ii) for the
quarter ending September 30, 1999, measured on a trailing basis taking
into account the prior two (2) quarters; (iii) for the quarter ending
December 31, 1999, measured on a trailing basis taking into account the
prior three (3) quarters; and (iv) for the quarter ending March 31, 2000
and each fiscal quarter thereafter, measured on a rolling four
(4) quarter basis taking into account such quarter and the prior three
(3) fiscal quarters):
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio Fiscal Quarter Ending Ratio
- --------------------- ------------- --------------------- ---------------
<S> <C> <C> <C>
June 30, 1999 0.61 to 1.0 June 30, 2000 0.75 to 1.0
September 30, 1999 0.80 to 1.0 September 30, 2000 0.84 to 1.0
December 31, 1999 0.80 to 1.0 December 31, 2000 0.89 to 1.0
March 31, 2000 0.68 to 1.0 March 31, 2001 0.91 to 1.0
June 30, 2001 and
each fiscal quarter
thereafter 0.93 to 1.0
</TABLE>
(c) maintain at the end of each month quarter during the
periods set forth below a Leverage Ratio of no more than the ratio set
forth below for the applicable period:
<TABLE>
<CAPTION>
Quarterly Period Ending Ratio Quarterly Period Ending Ratio
- ----------------------- ----------- ----------------------- ------------
<S> <C> <C> <C>
June 30, 1999 45 to 1.0 June 30, 2000 35 to 1.0
September 30, 1999 40 to 1.0 September 30, 2000 35 to 1.0
December 31, 1999 35 to 1.0 December 31, 2000 30 to 1.0
March 31, 2000 42 to 1.0 March 31, 2001 37 to 1.0
June 30, 2001 and
each quarter
thereafter 30 to 1.0
</TABLE>
5.11 Without the prior written consent of the Lenders, the
Parent, on a consolidated basis with its Subsidiaries, will not:
(a) enter into any Operating Lease if after giving effect thereto the
aggregate obligations with respect to Operating Leases of the Companies
during any fiscal year would exceed Seven Million Dollars ($7,000,000),
or (b) make any Capital Expenditures (whether subject to a security
interest or otherwise) during any fiscal year in the aggregate amount in
excess of:
(i) $28,000,000.00 for the fiscal year ending
December 31, 1999;
(ii) $14,000,000.00 for the fiscal year ending
December 31, 2000;
(iii) $7,500,000.00 for the six (6) month period
ending June 30, 2001;
provided that if the maximum amount set forth above for any year exceeds
- --------
the aggregate amount of Capital Leases and Capital Expenditures made or
incurred (or committed to be made or incurred) during such period, then
the maximum amount set forth above for the following period(s) shall be
increased by up to Three Million Dollars ($3,000,000) of the amount of
such excess.
5.12 The Company agrees to advise the Lenders in writing of
(a) all expenditures (actual or anticipated) in excess of Five Hundred
Thousand Dollars ($500,000.00) for (i) environmental clean-up,
(ii) environmental compliance or (iii) environmental testing and the
impact of said expenses on any Company's Working Capital, and (b) any
notices any Company receives from any local, state or federal authority
advising any Company of any environmental liability (real or potential)
stemming from any Company's operations, its premises, its waste disposal
practices, or waste disposal sites used by any Company and to provide
the Lenders with copies of all such notices if so required.
5.13 Without the prior written consent of the Lenders, each
Company agrees that it will not enter into any transaction, including,
without limitation, any purchase, sale, lease, loan or exchange of
property, with any person or entity affiliated with either Parent, any
Company or any Subsidiary, unless such transaction otherwise complies
with the provisions of this Financing Agreement and is on arms-length
terms, except that the foregoing restrictions shall not apply to
(a) Intercompany Receivables, (b) fees payable to members of the Board
of Directors of Parent in the ordinary course of business consistent
with past practice, except the amount of such fees may be increased by
ten percent (10%) per annum, and (c) advances of expenses otherwise
permitted by this Agreement.
5.14 Each Company, each Guarantor and each Subsidiary shall take
all actions reasonably necessary to assure that its computer-based
systems are able to effectively process date-sensitive data functions.
Each Company represents and warrants to the Lenders that the "Year 2000"
problem (that is, the inability of certain computer applications to
recognize and properly perform date-sensitive functions involving dates
subsequent to December 31, 1999) will not have a Material Adverse Effect
on any such entity. Each Company, each Guarantor and each Subsidiary
reasonably anticipates that all computer applications which are material
to the operation of its business will, on a timely basis, properly
perform date-sensitive functions on and after January 1, 2000. Upon the
Lenders' request from time to time, each Company shall provide the
Lenders with assurances, in form and substance reasonably satisfactory
to the Lenders, that each Company's, each Guarantor's and each
Subsidiary's computer systems and applications are, or will be, Year
2000 compliant on a timely basis.
5.15 Each Company hereby represents and warrants to the Lenders
that Viskase Holding has no creditors with respect to Indebtedness
(other than the Lenders under the Guaranty, CITBC, individually and as
agent and the other lenders under the CITBC Loan Documents and D.P.
Kelly under the D.P. Kelly Loan Documents) and no trade credit of any
kind as of the date hereof. Each Company hereby covenants to Lenders
that it shall cause Viskase Holding not to incur any additional
Indebtedness and/or trade credit.
5.16 Subject to the payment in full of the $50,000,000 term loan
under the CITBC Financing Agreement and the terms of the D.P. Kelly
Intercreditor Agreement, the Companies agree to utilize all net proceeds
received by either of them, any Guarantor or any Subsidiary of the sale,
transfer or other disposition of the (i) capital stock of any Company or
Guarantor, or (ii) substantially all the assets of any Company or
Guarantor, to pay the Obligations.
5.17 Each Company hereby represents and warrants to the Lenders
that its execution and delivery of a guaranty and grant of a security
interest in its assets to support Parent's obligations under the Senior
Secured Notes was for fair consideration and that a substantial portion
of the proceeds of the Senior Secured Notes were used to pay direct
obligations of the Companies as well as to provide funds to the
Companies for working capital and capital expenditures.
5.18 Each Company hereby represents and warrants that the Lease
Documents were entered into on December 18, 1990 and have not been
amended or modified since such date except for (a) certain Lease
Supplements dated as of December 28, 1990 and July 24, 1991,
respectively, and (b) a certain Amendment No. 1 to Participation
Agreement dated July 24, 1991, and a Waiver to Participation Agreement
dated on or about the date hereof. Each Company hereby further
represents and warrants that true and correct copies of the Lease
Documents, as so amended, have been provided to the Lenders.
5.19 Each Company hereby represents and warrants that each of
Viskase Argentina and Viskase De Mexico S.A. de C.V. have ceased all
business operations. Each Company covenants and agrees that it will not
conduct any business within such entities until such time as 65% of the
capital stock of each such entity has been pledged to the Lenders,
pursuant to pledge arrangements in form and substance satisfactory to
the Lenders.
5.20 Each Company hereby represents and warrants that it has
delivered to the Lenders pursuant to Section 2.2(c) hereof true, correct
--------------
and complete copies of the CITBC Loan Documents.
5.21 Each Company hereby represents and warrants that it has
delivered to the Lenders pursuant to Section 2.2(d) hereof true, correct
--------------
and complete copies of the D.P. Kelly Loan Documents.
SECTION 6. Interest, Fees and Expenses
---------------------------
6.1 Interest on the outstanding balance of the Term Loan shall be
payable monthly to the Lenders based upon each Lenders' Percentage
Interest on the first Business Day of each month and shall accrue at a
rate per annum equal to the Applicable Rate. All interest rates shall
be calculated based on a 360 day year.
6.2 The Companies shall pay to the Lenders the Loan Facility Fee
as follows (i) $850,000 on the Closing Date, and (ii) $37,500 on the six
month anniversary of the Closing Date and semi-annually thereafter (each
a "Semi-Annual Payment"); provided that if the Term Loan is paid in full
prior to any Semi-Annual Payment, all Semi-Annual Payments due after
such date shall be waived by the Lenders.
6.3 On demand, the Companies shall reimburse or pay to the Lenders
all Out-of-Pocket Expenses (net of any previously unapplied amount of
the expense deposit previously paid by the Companies pursuant to the
Commitment Letter) and the Documentation Fee.
6.4 After the occurrence and during the continuance of an Event of
Default, each Company shall pay the Lenders' standard charges for, and
the reasonable fees and expenses of, the Lenders' personnel used by the
Lenders for reviewing the books and records of each Company and for
verifying, testing protecting, safeguarding, preserving or disposing of
all or any part of the Collateral.
SECTION 7. Powers
------
7.1 Each Company hereby constitutes the Lenders, or any person or
agent which the Lenders may designate, as its attorney-in-fact, at each
Company's cost and expense, to exercise all of the following powers,
which being coupled with an interest, shall be irrevocable until all of
the Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all
in the name of the Lenders or any Company, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to
each Company and to notify postal authorities to change the address for
delivery thereof to such address as the Lenders may designate;
(c) To request from customers indebted on Accounts at any
time, in the name of the Lenders or any Company or that of the Lenders'
designee, information concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of
the Lenders' interests therein and to notify customers indebted on
Accounts to make payment directly to the Lenders, for each Company's
account; and
(e) To take or bring, in the name of the Lenders and/or any
Company, all steps, actions, suits or proceedings deemed by the Lenders
necessary or desirable to enforce or effect collection of the Accounts.
7.2 Notwithstanding anything set forth herein to the contrary, the
powers set forth in paragraphs (b), (d) and (e) of Section 7.1 may only
-----------
be exercised after the occurrence of an Event of Default and until such
time as such Event of Default is waived.
SECTION 8. Events of Default and Remedies
------------------------------
8.1 Notwithstanding any provision of this Financing Agreement to
the contrary, an "Event of Default" shall mean the occurrence or
existence of one or more of the following events or conditions (whatever
the reason for such Event of Default and whether voluntary, involuntary
or effected by operation of law):
(a) cessation of the business of Parent, any Company or any
Guarantor or the calling of a meeting of the creditors of any of them
for purposes of compromising the debts and obligations of any Company;
(b) the failure of the Parent, any Company or any Guarantor
to generally meet its debts as those debts mature;
(c) the commencement by or against the Parent, any Company or
any Guarantor of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or
state law, provided that in the event of any involuntary proceeding
commenced against any Company and such proceeding is not dismissed or
discharged within thirty (30) days after commencement thereof;
(d) (i) breach by any Company of any covenant contained
herein (other than those referred to in paragraph (e) below) or in any
of the other Loan Documents, provided that such breach by any Company of
any of the covenants referenced in this paragraph (d) shall not be
deemed to be an Event of Default unless and until such breach shall
remain unremedied to the Lenders' satisfaction for a period of fifteen
(15) days from the date of such breach or (ii) any representation or
warranty contained herein shall be false or misleading in any material
respect when made or remade;
(e) breach by any Company of any warranty, representation or
covenant of Section 3, Sections 4.3 and 4.4 (other than the first
--------- ------------ ---
sentence of Section 4.4), and Sections 5.1, 5.5, 5.6, 5.9 through 5.11,
----------- ------------ --- --- --- ----
inclusive, and 5.16;
----
(f) failure of any Company to pay any of the Obligations on
the due date thereof;
(g) any Company shall (i) engage in any "prohibited
transaction" as defined in ERISA, (ii) incur any "accumulated funding
deficiency" as defined in ERISA, (iii) incur any "Reportable Event" as
defined in ERISA, (iv) terminate any "Plan", subject to Title IV of
ERISA or (v) engage in any proceeding in which the Pension Benefit
Guaranty Corporation shall seek appointment, or is appointed, as trustee
or administrator of any Plan, as defined in ERISA; and with respect to
this paragraph (g) such event or condition (x) remains uncured for a
period of thirty (30) days from date of occurrence and (y) could subject
any Company to any tax, penalty or other liability that could reasonably
be expected to have a Material Adverse Effect;
(h) a default (after all applicable cure periods with respect
thereto have expired) or an "Event of Default" shall occur under any of
the other Loan Documents;
(i) any Company shall make any payment in connection with the
D.P. Kelly Loan Documents except as expressly permitted in the CITBC-
D.P. Kelly Subordination Agreement and the D.P. Kelly Intercreditor
Agreement;
(j) the occurrence of any event of default (after giving
effect to any applicable grace or cure periods) under (i) CITBC Loan
Documents or the D.P. Kelly Loan Documents or (ii) any other
Indebtedness of any Company having a principal amount in excess of
Two Million Five Hundred Thousand Dollars ($2,500,000); or
(k) a default (after all applicable cure periods with respect
thereto have expired) or an "Event of Default" shall occur under any of
the Lease Documents.
8.2 Upon the occurrence of an Event of Default, the Lenders may,
at its option: (a) declare all Obligations immediately due and payable;
and (b) charge each Company the Default Rate of Interest on all then
outstanding or thereafter incurred Obligations in lieu of the interest
provided for in Section 6 of this Financing Agreement; provided that,
--------- -------- ----
with respect to this clause (b), the Lenders give Representative written
notice of the Event of Default (provided that no notice is required if
the Event of Default is the Event listed in paragraph (c) of Section
-------
8.1) and the Companies fail to cure the Event of Default to the
- ---
Lenders' satisfaction within ten (10) days after Representative is
deemed to have received such notice hereunder (or within ten (10) days
of the occurrence of the Event of Default, in the case of an Event of
Default listed in paragraph (c) of Section 8.1). The exercise of any
-----------
option is not exclusive of any other option which may be exercised at
any time by any of the Lenders.
8.3 Immediately after the occurrence and during the continuance of
any Event of Default, the Lenders may, at their option, (a) remove from
any premises where same may be located any and all documents,
instruments, files and records, and any receptacles or cabinets
containing same, relating to the Accounts, or the Lenders may use, at
each Company's expense, such of each Company's personnel, supplies or
space at each Company's places of business or otherwise, as may be
necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the
name of any Company, and/or any of the Lenders, and generally shall have
all other rights respecting said Accounts, including, without
limitation, the right to (i) accelerate or extend the time of payment,
(ii) settle, compromise, release in whole or in part any amounts owing
on any Accounts and (iii) issue credits in the name of any Company
and/or the Lenders; (c) sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed merchandise, with or without
advertisement, at public or private sale, for cash, on credit or
otherwise, at the Lenders' sole option and discretion, and the Lenders
may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by each Company;
(d) foreclose their security interests in the Collateral by any
available judicial procedure, or take possession of any or all of the
Inventory and/or Other Collateral without judicial process, and enter
any premises where any Inventory and/or Other Collateral may be located
for the purpose of taking possession of or removing the same, and
(e) exercise any other rights and remedies provided in law, in equity,
by contract or otherwise. For the purpose of enabling the Lenders to
exercise rights and remedies hereunder, the Companies hereby grant to
the Lenders to the extent assignable, licensable, or sublicensable,
without breaching any underlying agreements with third parties, an
irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Companies) to use, assign, license
or sublicense any of the General Intangibles. After the occurrence and
during the continuance of an Event of Default, the Lenders shall have
the right, without notice or advertisement, to sell, lease, or otherwise
dispose of all or any part of the Collateral whether in its then
condition or after further preparation or processing, in the name of
each Company and/or the Lenders, or in the name of such other party as
the Lenders may designate, either at public or private sale or at any
broker's board, in lots or in bulk, for cash or for credit, with or
without warranties or representations, and upon such other terms and
conditions as the Lenders in their sole discretion may deem advisable.
Any Lender shall have the right to purchase at any such sale. If any
Inventory shall require rebuilding, repairing, maintenance or
preparation, each of the Lenders shall have the right, at its option, to
do such of the aforesaid as is necessary, for the purpose of putting the
Inventory in such saleable form as such Lenders shall deem appropriate.
Each Company agrees, at the request of the Lenders, to assemble the
Inventory and to make it available to the Lenders at premises of each
Company or elsewhere, and to make available to the Lenders the premises
and facilities of each Company for the purpose of the Lenders' taking
possession of, removing or putting the Inventory in saleable form.
However, if notice of intended disposition of any Collateral is required
by law, it is agreed that ten (10) days notice shall constitute
reasonable notification and full compliance with the law. The net cash
proceeds resulting from the exercise of any of the foregoing rights
(after deducting all charges, costs and expenses, including reasonable
attorneys' fees) shall be applied by the Lenders to the payment of the
Obligations, whether due or to become due, in such order as the Lenders
may elect, and each Company shall remain liable to the Lenders for any
deficiencies. The Lenders in turn agree to remit to each Company or its
successors or assigns, any surplus resulting therefrom. The enumeration
of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other
rights by the Lenders, all of which shall be cumulative. The
mortgage(s), deed(s) of trust and other documents relating to the Real
Estate including, but not limited to, the Real Estate Collateral
Documents shall govern the rights and remedies of the Lenders with
respect thereto.
SECTION 9. Miscellaneous
-------------
9.1 Each Company hereby waives diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No
waiver of any Event of Default shall be effective unless made by each of
the Lenders, and such waiver must be in writing and signed by each of
the Lenders. No delay or failure by the any of the Lenders to exercise
any right or remedy hereunder, whether before or after the happening of
any Event of Default, shall impair any such right, or shall operate as
a waiver of such right or as a waiver of any such Event of Default. No
single or partial exercise by any of the Lenders of any right or remedy
precludes any other or further exercise thereof, or precludes any other
right or remedy.
9.2 This Financing Agreement and the documents executed and
delivered in connection therewith: (a) constitute the entire agreement
among each Company and the Lenders; (b) supersede any prior agreements;
(c) may be amended only by a writing signed by each Company and the
Lenders; and (d) shall bind and benefit each Company, each of the
Lenders and their respective successors and assigns.
9.3 In no event shall any Company, upon demand by any of the
Lenders for payment of any Indebtedness relating hereto, by acceleration
of the maturity thereof, or otherwise, be obligated to pay interest and
fees in excess of the amount permitted by law. Regardless of any
provision herein or in any agreement made in connection herewith, the
Lenders shall never be entitled to receive, charge or apply, as interest
on any Indebtedness relating hereto, any amount in excess of the maximum
amount of interest permissible under applicable law. If any Lender ever
receives, collects or applies any such excess, it shall be deemed a
partial repayment of principal and treated as such. If as a result,
principal is paid in full, any remaining excess shall be refunded to the
Companies. This Section 9.3 shall control every other provision hereof
-----------
and of any other agreement made in connection herewith.
9.4 If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such
provision shall be fully severable, and the remaining provisions of the
applicable agreement shall remain in full force and effect and shall not
be affected by such provision's severance. Furthermore, in lieu of any
such provision, there shall be added automatically as a part of the
applicable agreement a legal and enforceable provision as similar in
terms to the severed provision as may be possible.
9.5 EACH COMPANY AND EACH OF THE LENDERS HEREBY WAIVE ANY RIGHT TO
--------------------------------------------------------------
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
- ---------------------------------------------------------------
FINANCING AGREEMENT. EACH COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL
- ---------------------------------------------------------------------
SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR
- ---------------------------------------------------------------------
REGISTERED MAIL, RETURN RECEIPT REQUESTED.
- -----------------------------------------
9.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered when received by
the recipient if hand delivered, sent by commercial overnight courier or
sent by facsimile, or three (3) Business Days after deposit in the
United States mail, with proper first class postage prepaid and
addressed to the party to be notified as follows:
(a) if to the Lenders:
c/o Magten Asset Management Corp.
35 East 21st Street
New York, NY 10010
Attn: Robert Capozzi
Telecopier No.: (212) 505-0484
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attn: Lawrence A. First, Esq.
Telecopier No.: (212) 859-4000
(b) if to the Companies at:
Viskase Companies, Inc.
6855 West 65th Street
Bedford Park, Illinois 60638
Attention: President and General Counsel
Telecopier No.: (708) 496-4472
with a copy to:
Holleb & Coff
55 East Monroe Street, Suite 4100
Chicago, Illinois 60603
Attn: Allan Brilliant, Esq.
Telecopier: (312) 807-3900
(c) to such other address as any party may designate for
itself by like notice.
9.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
--------------------------------------------------------------
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
- -----------------------------------------------------------------
9.8 Joint and Several Liability. (a) Notwithstanding anything
---------------------------
herein or in any other Loan Document to the contrary, or any document or
instrument executed and delivered in connection herewith, the parties
hereto agree that the obligations and liabilities of each Lender
hereunder shall be several and not joint, and no Lender shall have any
liability hereunder for any breach by any other Lender of any obligation
of such Lender set forth herein or in any other Loan Document.
(b) The Companies and Guarantors hereby acknowledge and agree
that neither this Agreement nor any other Loan Document is being
executed on behalf of the partners of any Lender that is a limited
partnership as individuals and the obligations of this Agreement are not
binding upon any of the limited partners, officers, employees or
beneficiaries of such Lender individually but are binding only upon the
assets and property of such Lender, and the Companies and Guarantors
agree that no beneficiary, limited partner, employee or officer of such
Lender may be held personally liable or responsible for any obligations
of such Lender arising out of this Agreement or any other Loan Document.
With respect to obligations of each Lender arising out of this Agreement
or any other Loan Document, the Companies and Guarantors shall look for
payment or satisfaction of any claim solely to the assets and property
of such Lender.
(c) Magten represents and warrants to the Companies and
Guarantors that it has full power and authority to execute and deliver
this Agreement as agent or as general partner, as applicable, for the
Lenders on whose behalf Magten is executing this Agreement as set forth
on the signature pages hereto. Except for the foregoing representations
and warranties, the Companies and Guarantors hereby acknowledge and
agree that Magten shall not have any personal obligation or liability to
the Companies and Guarantors under this Agreement or any other Loan
Document but that it is acting solely for and on behalf of the
aforementioned Lenders, and without limiting the generality of the
foregoing, the Companies and Guarantors shall have no recourse against
Magten for the performance or satisfaction of any obligation under this
Agreement or any other Loan Document, but shall look for payment or
satisfaction of any claim arising under this Agreement or any other Loan
Document solely to the assets and properties of the Lenders.
(d) The liability of each Company under this Agreement and
the Loan Documents in general shall be joint and several, and each
reference herein to the Companies shall be deemed to refer to each such
Company. In furtherance and not in limitation of each Lenders' rights
and remedies hereunder or at law, the Lenders may proceed under this
Agreement and the Loan Documents against any one or more of the
Companies in their absolute and sole discretion for any of the
Obligations or any other liability or obligation of any Company arising
hereunder.
9.9 Interrelationship Among the Companies. Each Company
-------------------------------------
acknowledges that: (a) that the business operations of each Company are
interrelated and compliment one another, and that such entities have a
common business purpose; (b) to permit their uninterrupted and
continuous operations, such entities now require various funds and other
credit accommodations from the Lenders; and (c) the funds obtained by
the Companies under the this Agreement will be used by each Company to
(i) refinance certain obligations for which the Companies were
guarantors and which obligations were secured by liens on each Company's
assets and (ii) for general working capital purposes.
9.10. Within thirty (30) days of the Closing Date, each Company
shall, to the extent permitted by law, cause Viskase Holding to pledge
or transfer to Lenders, a participating equity interest in Viskase
Chile, which pledge or transfers, as applicable, shall be (a) in form
and substance reasonably satisfactory to the Lenders and (b) effective
only upon the acceleration of the Obligations hereunder.
9.11. CITBC Subordination Agreement. The rights, remedies and
-----------------------------
priorities of the Lenders under this Agreement are subject to the CITBC
Subordination Agreement. If any provision of this Agreement shall be
inconsistent with, or contrary to, any provision in the CITBC
Subordination Agreement, the provision in the CITBC Subordination
Agreement shall be controlling and shall supersede such inconsistent
provision to the extent necessary to give full effect to the provision
contained in the CITBC Subordination Agreement.
9.12. D.P. Kelly Intercreditor Agreement. The rights, remedies
----------------------------------
and priorities of the Lenders under this Agreement are subject to the
D.P. Kelly Intercreditor Agreement. If any provision of this Agreement
shall be inconsistent with, or contrary to, any provision in the D. P.
Kelly Intercreditor Agreement, the provision in the D. P. Kelly
Intercreditor Agreement shall be controlling and shall supersede such
inconsistent provision to the extent necessary to give full effect to
the provision contained in the D.P. Kelly Intercreditor Agreement.
SECTION 10. Agreements Regarding the Lenders
--------------------------------
10.1 (a) The Lenders may sell to one or more commercial banks,
commercial finance lenders or other financial institutions,
participations in the loans and extensions of credit made and to be made
to the Companies hereunder. Such participant shall have no rights as a
Lender hereunder, and notwithstanding the sale of any participation by
a Lender, (i) such Lender shall remain solely responsible to the other
parties hereto for the performance of its obligations hereunder, and
(ii) the Companies and the Lenders may continue to deal solely with such
Lender with respect to all matters relating to this Financing Agreement
and the transactions contemplated hereby. It is understood and agreed
that no Lender shall transfer or grant any participation under this
Agreement under which the participant shall have any rights to approve
any amendment to or waiver of this Agreement or any other Loan Document
except to the extent such amendment or waiver would (A) extend the final
scheduled maturity of any Obligations in which such participant is
participating beyond the Maturity Date, (B) increase the amount of the
participant's participation beyond over the amount thereof in effect (it
being understood that waivers or modifications of conditions precedent,
covenants, defaults or Events of Default shall not constitute a change
in the terms of such participation and that an increase in any Lender's
Commitment or Obligations shall be permitted without the consent of any
participant if the participant's participation is not increased as a
result thereof), (C) consent to the assignment or transfer by the
Companies of any of their rights and obligations under this Agreement,
(D) decrease the interest rate applicable to the principal amount of the
Obligations in which the participant is participating, or (E) release
all or substantially all of the Collateral with respect to any portion
of the Obligations in which a participant is participating. In
addition, all amounts payable under this Financing Agreement to any
Lender which sells a participation in accordance with this paragraph
shall continue to be paid directly to such Lender and shall be
determined as if such Lender had not sold any such participation.
(b) The Lenders may also (after their consultation with the
Representative) assign to one or more commercial banks, commercial
finance lenders or other financial institutions, all or a portion of
their rights and obligations under this Financing Agreement. Any such
assignment shall (i) apply to the same pro rata share of such Lender's
--- ----
Percentage Interest in the Term Loan and (ii) shall not be a partial
assignment of such Lender's Percentage Interest. Upon execution of an
Assignment and Transfer Agreement, (i) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such assignment, have the rights
and obligations of the assigning Lender as the case may be hereunder and
(ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by such Lender pursuant to such
assignment, relinquish such Lender's rights and be released from its
obligations under this Financing Agreement. Each Company shall, if
necessary, execute any documents reasonably required to effectuate and
acknowledge the assignments.
(c) Subject to the provisions of Section 10.2, each Company
------------
authorizes each Lender to disclose to any participant or purchasing
lender any and all financial information in such Lender's possession
concerning each Company and their affiliates which has been delivered to
such Lender by or on behalf of each Company pursuant to this Financing
Agreement or which has been delivered to such Lender by or on behalf of
each Company in connection with such Lender's credit evaluation of each
Company and its affiliates prior to entering into this Financing
Agreement.
10.2 For the purposes of this Section 10.2, "Confidential
------------
Information" means all financial projections and all other information
delivered to Magten or any Lender by or on behalf of Parent, any Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Financing Agreement that is proprietary in
nature [and that is clearly marked or labeled or otherwise adequately
identified as being confidential information of Parent, any Company or
any Subsidiary, provided that such term does not include information
that (a) was publicly known or otherwise known to Magten or the Lenders
prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by Magten or the Lenders or any person
acting on their behalf, (c) otherwise becomes known to Magten or the
Lenders other than through disclosure by Magten, the Lenders, any
Company or any Subsidiary or (d) constitutes financial statements
delivered under Section 5.8 that are otherwise publicly available.
-----------
Magten and the Lenders will maintain the confidentiality of such
Confidential Information in accordance with commercially reasonable
procedures adopted by Magten and the Lenders in good faith to protect
confidential information of third parties delivered to them, provided
that Magten and the Lenders may deliver or disclose Confidential
Information to (a) their respective directors, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the Term Loan and such
Person has been notified of these confidentiality provisions), (b) their
respective financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 10.2, (c) any other Lender,
------------
(d) any bank or other commercial lender to which a Lender sells or
offers to sell a portion of their rights and obligations under this
Financing Agreement or any participation therein (if such person has
agreed in writing prior to its receipt of such Confidential Information
to be bound by the provisions of this Section 10.2), or (e) any other
------------
person (including bank auditors and other regulatory officials) to which
such delivery or disclosure may be necessary or appropriate (i) to
comply with compliance with any applicable law, rule, regulation or
order, (ii) in response to any subpoena or other legal process after
giving the Companies notice and an opportunity to seek judicial
protection for such materials, (iii) in connection with any litigation
to which Magten or a Lender is a party or (iv) if an Event of Default
has occurred and is continuing, to the extent Magten or the Lenders may
reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and
remedies under this Financing Agreement. Each Lender becoming a Lender
subsequent to the initial execution and delivery of this Financing
Agreement, by its execution and delivery of an Assignment and Transfer
Agreement, will be deemed to have agreed to be bound by, and to be
entitled to the benefits of, this Section 10.2.
------------
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed, agreed to, accepted and delivered in Chicago,
Illinois by their proper and duly authorized officers as of the ____ day
of June, 1999.
LENDERS
-------
Percentage Interest GENERAL MOTORS EMPLOYEE
- ------------------- GLOBAL GROUP PENSION TRUST
40.75%
By: MAGTEN ASSET MANAGEMENT
CORP., as its attorney-in-fact
By:
-------------------------
Name: Robert Capozzi
Its: Managing Director
Percentage Interest
- ------------------- DEPARTMENT OF PENSIONS ! CITY
OF LOS ANGELES
39.67%
By: MAGTEN ASSET MANAGEMENT
CORP., as its attorney-in-fact
By:
-------------------------
Name: Robert Capozzi
Its: Managing Director
Percentage Interest NAVY EXCHANGE SERVICE
- ------------------- COMMAND RETIREMENT TRUST
7.17%
By: MAGTEN ASSET MANAGEMENT
CORP., as its attorney-in-fact
By:
-------------------------
Name: Robert Capozzi
Its: Managing Director
Percentage Interest RAYTHEON CO. MASTER PENSION TRUST
- -------------------
6.33%
By: MAGTEN ASSET MANAGEMENT
CORP., as its attorney-in-fact
By:
------------------------------
Name: Robert Capozzi
Its: Managing Director
Percentage Interest FIRST DATA CORPORATION MASTER
- ------------------- RETIREMENT TRUST
6.08%
By: MAGTEN ASSET MANAGEMENT
CORP., as its attorney-in-fact
By:
------------------------------
Name: Robert Capozzi
Its: Managing Director
BORROWERS
---------
VISKASE CORPORATION, a Pennsylvania
corporation
By:
------------------------------
Its:
------------------------
VISKASE SALES CORPORATION, a
Delaware corporation
By:
------------------------------
Its:
------------------------
<PAGE>
FINANCING AGREEMENT
dated as of June ___, 1999
among
D.P. KELLY & ASSOCIATES, L.P.
and
VISKASE CORPORATION and VISKASE SALES CORPORATION
(collectively, the "Companies")
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions 1
SECTION 2. Conditions Precedent 14
SECTION 3. Term Loan 20
SECTION 4. Collateral 20
SECTION 5. Representations, Warranties
and Covenants 24
SECTION 6. Interest, Fees and Expenses 35
SECTION 7. Powers 35
SECTION 8. Events of Default and Remedies 36
SECTION 9. Miscellaneous 38
SECTION 10. Agreements Regarding the Lender 42
EXHIBITS
- --------
Exhibit A - Form of Term Loan Promissory Note
Exhibit B - Form of Assignment and Transfer Agreement
SCHEDULES
- ---------
Schedule 1.1(a) - Permitted Liens
Schedule 1.1(b) - Permitted Indebtedness
Schedule 4.1 - Excluded Assets
Schedule 5.1 - Collateral Locations, Chief
Executive Office and Tradenames
Schedule 5.7 - Environmental Matters
Schedule 5.9(e) - Existing Guaranties
<PAGE>
FINANCING AGREEMENT
-------------------
D.P. Kelly & Associates, L.P. ("Lender") is pleased to
----------------------------
confirm the terms and conditions under which the Lender shall make
a secured term loan to each of VISKASE CORPORATION, a Pennsylvania
-------------------
corporation ("Viskase Corporation"), with its principal place of
business at 6855 West 65th Street, Bedford Park, Illinois 60638,
and VISKASE SALES CORPORATION, a Delaware corporation ("Viskase
-------------------------
Sales"), with its principal place of business at 6855 West 65th
Street, Bedford Park, Illinois 60638, jointly and severally
(Viskase Corporation and Viskase Sales are hereinafter sometimes
referred to individually as a "Company" and collectively as the
"Companies").
SECTION 1. Definitions
-----------
1.1 For purposes of this Financing Agreement (this
"Agreement" or this "Financing Agreement"), the following terms
shall be defined in the following manner:
Accelerated Maturity Date shall mean the date on which the
Obligations (including, without limitation, the entire unpaid
principal balance of the Term Loan and accrued but unpaid interest
thereon) shall become due and payable pursuant to the terms of any
of the Loan Documents, including, without limitation, by reason of
the occurrence of an Event of default.
Accounts shall mean all of each Company's now existing and
--------
future: (a) accounts (as defined in the U.C.C.) and any and all
other receivables (whether or not specifically listed on schedules
furnished to the Lender), including, without limitation, all
accounts created by or arising from each Company's sales of goods
or rendition of services to its customers, and all accounts arising
from sales or rendition of services made under any Company's trade
names or styles, or through any Company's divisions;
(b) instruments (as defined in the U.C.C.), documents (as defined
in the U.C.C.), contract rights and chattel paper (as defined in
the U.C.C.); (c) unpaid seller's rights (including rescission,
replevin, reclamation and stoppage in transit) relating to the
foregoing or arising therefrom; (d) rights to any goods represented
by any of the foregoing, including rights to returned or
repossessed goods; (e) reserves and credit balances arising
hereunder; (f) guarantees or collateral for any of the foregoing;
(g) insurance policies or rights relating to any of the foregoing;
and (h) cash and non-cash proceeds of any and all the foregoing.
Additional Term Lender shall mean Magten Asset Management
----------------------
Corp., as investment manager on behalf of various of its investment
management clients, which include the Additional Term Lenders.
Additional Term Lenders shall mean General Motors Employee
-----------------------
Global Group Pension Trust, Department of Pensions-City of Los
Angeles, Navy Exchange Service Command Retirement Trust, Raytheon
Co. Master Pension Trust, First Data Corporation Master Retirement
Trust.
Additional Term Lender Loan Documents shall mean the
-------------------------------------
Additional Term Lender Financing Agreement and all other
instruments and documents that are in effect as of the date hereof
and are executed in connection with or otherwise relating to any
Additional Term Lender Loan Document, as the same may be amended,
restated or supplemented from time to time.
Additional Term Lender Financing Agreement shall mean that
------------------------------------------
certain Financing Agreement, dated as of the date hereof, among
D.P. Kelly and the Companies, as the same may be amended, restated
or supplemented from time to time.
Additional Term Lender Intercreditor Agreement shall mean that
----------------------------------------------
certain Subordination Agreement dated as of the date hereof, among
D.P. Kelly, the Additional Term Lenders and the Companies, as the
same may be amended, restated or supplemented from time to time.
Applicable Rate shall mean an interest rate of 14% per annum;
---------------
provided, that, from and after the six month anniversary of the
- -------- ----
Closing Date and semi-annually thereafter, the Applicable Rate
shall increase by 0.50%.
Assignment and Transfer Agreement shall mean the Assignment
---------------------------------
and Transfer Agreement in the form of Exhibit B hereto.
---------
Business Day shall mean any day on which CITBC, the Lender and
------------
The Chase Manhattan Bank in New York, New York are open for
business.
Canada Intercompany Loan shall have the meaning assigned to
------------------------
such term in Section 2.1(hh).
---------------
Canada Security Agreement shall have the meaning assigned to
-------------------------
such term in Section 2.1(hh).
---------------
Capital Expenditures for any period shall mean the aggregate
--------------------
of all expenditures of each Company during such period that in
conformity with GAAP are required to be included in or reflected by
the property, plant or equipment or similar fixed asset account
reflected in the consolidated balance sheet of the Companies.
Capital Lease shall mean any lease of property (whether real,
-------------
personal or mixed) which, in conformity with GAAP, is accounted for
as a capital lease or a Capital Expenditure on the consolidated
balance sheet of the Parent and its Subsidiaries.
CITBC shall mean The CIT Group/Business Credit, Inc., as agent
-----
for the lenders which are parties to the CITBC Financing Agreement.
CITBC-Additional Term Lender Subordination Agreement shall
----------------------------------------------------
mean that certain Subordination Agreement, dated as of the date
hereof, among CITBC, the Additional Term Lenders and the Companies,
as the same may be amended, restated or supplemented from time to
time.
CITBC Financing Agreement shall mean that certain Financing
-------------------------
Agreement, dated as of the date hereof, by and between the CITBC,
the Lender party thereto and the Companies, as the same may be
amended, restated or supplemented from time to time.
CITBC Loan Documents shall mean the CITBC Financing Agreement
--------------------
and all other instruments and documents that are in effect as of
the date hereof and are executed in connection with or otherwise
relating to the CITBC Financing Agreement, as the same may be
amended, restated or supplemented from time to time.
CITBC Subordination Agreement shall mean that certain
-----------------------------
Subordination Agreement, dated as of the date hereof, among CITBC,
the Lender and the Companies, as the same may be amended, restated
or supplemented from time to time.
Closing Date shall mean the date, which date shall be no
------------
earlier than June 9, 1999, on which the Lender makes the extension
of credit hereunder in the form of the Term Loan.
Collateral shall mean all present and future Accounts,
----------
Equipment, Inventory, Documents of Title, General Intangibles,
Investment Property, Other Collateral and Real Estate of each
Company; provided, however, that "Collateral" shall not include the
items listed in clauses (i) - (iv) of Section 4.1.
Collateral Assignment of Intercompany Loan shall have the
------------------------------------------
meaning assigned to such term in Section 2.1(hh) below.
---------------
Collateral Assignment of Lawsuit Proceeds means that certain
-----------------------------------------
Collateral Assignment of Lawsuit Proceeds of even date herewith
made by Viskase Corporation in favor of the Lender.
Consolidated Balance Sheet shall mean a consolidated balance
--------------------------
sheet for Parent, eliminating all inter-company transactions and
prepared in accordance with GAAP.
Consolidating Balance Sheet shall mean a consolidating balance
---------------------------
sheet for (a) Parent, (b) the Companies and Viskase Holding,
(c) Viskase Europe and its Subsidiaries, (d) Viskase Brazil,
(e) Viskase Canada and (f) Viskase Chile, in each case showing all
eliminations of inter-company transactions and prepared in
accordance with GAAP.
Copyrights shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash
and non-cash proceeds thereof.
Current Assets means all current assets of each Company, as
--------------
determined in accordance with GAAP.
Current Liabilities means all current liabilities of each
-------------------
Company, as determined in accordance with GAAP.
Customarily Permitted Liens shall mean: (a) liens of local or
---------------------------
state authorities for franchise or other like taxes provided the
aggregate amount of such liens shall not exceed One Hundred
Thousand Dollars ($100,000) in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen, lessors and other like liens
imposed by law, created in the ordinary course of business and for
amounts not yet due (or which are being contested in good faith by
appropriate proceedings or other appropriate actions which are
sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP; (c) deposits made
(and the liens thereon) in the ordinary course of business
(including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance, pensions and other types of
social security benefits or to secure the performance of tenders,
bids, contracts (other than for the repayment or guarantee of
borrowed money or purchase money obligations), statutory
obligations, surety and appeal bonds and other similar obligations
arising as a result of progress payments under government
contracts; and (d) easements (including, without limitation,
reciprocal easement agreements and utility agreements), zoning
restrictions, licenses, reservations, covenants, encroachments,
minor defects or irregularities in title, variations and other
restrictions, charges or encumbrances (whether or not recorded)
affecting the Real Estate and which are listed in Schedule B of
----------
each title insurance policy delivered to the Lender in connection
with this Financing Agreement or which arise after the date hereof
and which do not in the aggregate materially impair the use of such
Real Estate in the operation of the business of the owner thereof
as determined in the Lender's reasonable discretion.
Default shall mean any event specified in Section 8
------- ---------
hereof, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition, event or act,
has been satisfied.
Default Rate of Interest shall mean a rate of interest per
------------------------
annum equal to the sum of two percent (2%) plus the Applicable
Rate, which the Lender shall be entitled to charge the Companies on
all Obligations to the extent provided in Section 8.2 of this
Financing Agreement.
Documentation Fee shall mean (a) the reasonable legal fees and
-----------------
costs and expenses of outside counsel for the Lender in
documenting, in whole or in part, the initial transaction on behalf
of the Lender, plus Out-of-Pocket Expenses, (b) the reasonable
legal fees and costs and expenses necessary to compensate the
Lender for the use of in-house facilities for any documentation of
transactions after the initial transaction, and (c) the Lender's
reasonable legal fees and costs and expenses relating to any and
all modifications, waivers, releases, amendments or additional
collateral with respect to this Financing Agreement, the Collateral
and/or the Obligations.
Documents of Title shall mean all present and future documents
------------------
(as defined in the U.C.C.) including, without limitation, all
warehouse receipts, bills of lading, shipping documents and similar
documents, whether negotiable or nonnegotiable, and all goods and
Inventory relating thereto and all cash and non-cash proceeds of
the foregoing.
Loan Documents shall mean this Financing Agreement and all
--------------
other instruments and documents that are in effect as of the date
hereof and are executed in connection with or otherwise relating to
the Financing Agreement, as the same may be amended, restated or
supplemented from time to time.
EBITDA shall mean, for any period, all earnings before all
------
interest, tax obligations and depreciation and amortization expense
for such period, all determined in accordance with GAAP on a basis
consistent with the latest consolidated audited financial
statements of the Parent and its Subsidiaries, but excluding the
effect of extraordinary and/or nonrecurring gains or losses for
such period.
Equipment shall mean all present and hereafter acquired
---------
equipment (as defined in the U.C.C.) including, without limitation,
all machinery, equipment, furnishings and fixtures, and all
additions, substitutions and replacements thereof, wherever
located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and
all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act
-----
of 1974, as amended from time to time and the rules and regulations
promulgated thereunder from time to time.
Event(s) of Default shall have the meaning provided for in
-------------------
Section 8 of this Financing Agreement.
- ---------
Excluded Asset shall have the meaning provided for in
--------------
Section 4.1 below.
- -----------
Fixed Charge Coverage Ratio shall mean, for any period, the
---------------------------
ratio determined by dividing (a) EBITDA by (b) Fixed Charges.
Fixed Charges shall mean the sum of (i) all interest
-------------
obligations paid or due during such period, (ii) the amount of
principal repaid or scheduled to be repaid on all Indebtedness
during such period, (iii) Capital Expenditures paid for in cash by
each Company during such period, (iv) all federal, state and local
income tax expenses due and payable during such period, (v) the
amount of Permitted Distributions made during such period, and
(vi) all payments due under the Lease Documents.
GAAP shall mean generally accepted accounting principles in
----
the United States of America as in effect from time to time and for
the period as to which such accounting principles are to apply.
GECC shall mean General Electric Capital Corporation.
----
GECC Intercreditor Agreement shall mean that certain
----------------------------
Intercreditor Agreement dated as of June ___, 1999 among CITBC, the
Additional Term Lenders, the Lender, General Electric Capital
Corporation, State Street Bank and Trust Company of Connecticut,
Parent and the Companies, as the same may be amended, restated or
supplemented from time to time.
General Intangibles shall mean all present and hereafter
-------------------
acquired general intangibles (as defined in the U.C.C.) including,
without limitation, all right, title and interest in and to (a) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereon, and all patents,
patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof (collectively referred to
herein as "Patents"), (b) all trademarks, service marks, trade
dress, logos, trade names, domain names, and corporate names,
together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in
connection therewith (collectively referred to herein as
"Trademarks"), (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith
(collectively referred to herein as "Copyrights"), (d) all mask
works and all applications, registrations and renewals in
connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, methods, schematics, technology,
technical data, designs, drawings, flowcharts, block diagrams,
specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (f)
all computer software (including data and related documentation),
(g) all other proprietary rights, (h) all copies and tangible
embodiments of the foregoing categories of intellectual property
listed in subsections (a) though (g) herein (in whatever form or
medium), and (i) all licenses, sublicenses, agreements or
permission related to the foregoing categories of intellectual
property listed in subsections (a) through (g) herein (categories
(a) through (i) herein are collectively referred to as
"Intellectual Property"), and distribution agreements, supply
agreements and tax refunds, together with all money and claims for
money now or hereafter due and payable in connection with any of
the foregoing or otherwise, and all cash and non-cash proceeds
thereof.
Guarantors shall mean, collectively (a) Parent and (b) Viskase
----------
Holding.
Guaranty means the Joint and Several Guaranty Agreement, dated
--------
as of the date hereof, of the Guarantors.
Indebtedness shall mean, without duplication, all liabilities,
------------
contingent or otherwise, which are either (a) obligations in
respect of borrowed money or for the deferred purchase price of
property, services or assets, other than Inventory, or (b) lease
obligations which, in accordance with GAAP, have been, or which
should be capitalized.
Intellectual Property shall have the meaning assigned to such
---------------------
term in the definition of "General Intangibles" in this Agreement.
Intellectual Property Assignment means those certain Grants of
--------------------------------
Security Interests in Intellectual Property of even date herewith
made by Parent and each Company in favor of the Lender.
Intercompany Loans shall mean all Indebtedness incurred by any
------------------
Company from any Subsidiary.
Intercompany Receivables shall mean all bona fide Trade
------------------------
Accounts Receivable resulting from the sale of goods or the
rendering of services by any Company, Guarantor or Subsidiary to
any other Company, Guarantor or Subsidiary, provided that the
amounts payable with respect thereto is in the ordinary course of
business consistent with past practice.
Inventory shall mean all of each Company's present and
---------
hereafter acquired inventory (as defined in the U.C.C.) including,
without limitation, all merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever
located, together with all goods and materials used or usable in
manufacturing, processing, packaging or shipping same; in all
stages of production - from raw materials through work-in-process
to finished goods - and all proceeds thereof of whatever sort.
Investment Property shall mean all of each Company's present
-------------------
and hereafter acquired securities, securities entitlements,
securities accounts and other investment property (as such terms
are defined in the U.C.C.).
Lease Documents shall have the meaning assigned to such term
---------------
in Schedule I to the GECC-CITBC Intercreditor Agreement.
Leverage Ratio shall mean the ratio determined by dividing
--------------
(a) Total Liabilities by (b) EBITDA.
Loan Documents shall mean this Financing Agreement, the
--------------
Guaranty, the Viskase Companies Pledge, the Viskase Corporation
Pledge, the Viskase Holding Pledge, the Collateral Assignment of
Lawsuit Proceeds, the Security Agreements, the Patent, Trademark
and License Assignments, the CITBC Subordination Agreement, the
Additional Term Lender Subordination Agreement, the CITBC-
Additional Term Lender Intercreditor Agreement, the Real Estate
Collateral Documents, the Collateral Assignment of Intercompany
Loan, the Canada Security Agreement, the GECC Intercreditor
Agreement, and any other document, instrument or agreement entered
into in connection with this Financing Agreement.
Material Adverse Effect shall mean a material adverse effect
-----------------------
on either (a) the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Companies,
taken as a whole, (b) the ability of any Company to perform its
obligations under this Financing Agreement or (c) the ability of
the Lender to enforce the Obligations or its respective rights and
remedies under this Financing Agreement.
Maturity Date shall mean the earlier to occur of (a) the
-------------
Accelerated Maturity Date and (b) the Stated Maturity Date.
Net Worth shall mean assets in excess of liabilities,
---------
determined in accordance with GAAP, on a consistent basis with the
latest consolidated audited financial statements of the Parent and
its Subsidiaries.
Obligations shall mean (a) all loans and advances made by the
-----------
Lender to each Company or to others for each Company's account
(including, without limitation, the Term Loan); (b) any and all
other indebtedness, obligations and liabilities which may be owed
by any Company to the Lender and arising out of, or incurred in
connection with, this Financing Agreement or any of the other Loan
Documents (including, without limitation, Out-of-Pocket Expenses
and interest accruing after commencement of a case under the
Bankruptcy Code, 11 U.S.C. Sec. 101-1331) whether (i) now in existence
or incurred by any Company from time to time hereafter (including
any Company operating as Debtor or Debtor in Possession under the
Bankruptcy Code, 11 U.S.C. Sec. 101-1331), (ii) secured by pledge,
lien upon or security interest in any Company's assets or property
or the assets or property of any other person, firm, entity or
corporation, (iii) such indebtedness is absolute or contingent,
joint or several, matured or unmatured, direct or indirect, or
(iv) any Company is liable to Lender for such indebtedness as
principal, surety, endorser, guarantor or otherwise; (c) all
indebtedness, obligations and liabilities owed by each Company to
the Lender under any other agreement or arrangement now or
hereafter entered into between any Company, on one hand, and the
Lender, on the other hand, relating to the transactions
contemplated by this Financing Agreement; (d) indebtedness,
obligations and liabilities incurred by, or imposed on, the Lender
as a result of environmental claims relating to each Company's
operations, premises or waste disposal practices or disposal sites;
(e) each Company's liabilities to the Lender as maker or endorser
on any promissory note or other instrument for the payment of money
pursuant to the terms hereof or any other Loan Document; (f) each
Company's liabilities to the Lender under any instrument of
guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which the Lender may make or issue to others for any
Company's account pursuant to the terms hereof or any other Loan
Document, including the Lender's acceptance of drafts or the Lender
endorsement of notes or other instruments for the Company's account
and benefit; and (g) the amount of any payments made by the Lender
to cure any "Events of Default" (as such term is defined in the
GECC Intercreditor Agreement) as permitted by Section 4 of the GECC
Intercreditor Agreement. By virtue of its execution of this
Agreement, the Companies hereby consent to the Lender making
payments to cure any "Event of Default" pursuant to Section 4 of
the GECC Intercreditor Agreement.
Operating Leases shall mean all leases of property (whether
----------------
real, personal or mixed) other than Capital Leases.
Other Collateral shall mean: (a) all now owned and hereafter
----------------
acquired deposit accounts maintained by or on behalf of each
Company with any bank or financial institution; (b) all of each
Company's cash and other money and property in the possession or
control of Lender; (c) all of each Company's books, records, ledger
cards, disks and related data processing software at any time
evidencing or containing information relating to any of the
Collateral described herein or otherwise necessary or helpful in
the collection thereof or realization thereon; (d) all cash and
non-cash proceeds of the foregoing and (e) all payments and damage
awards received by Viskase Corporation in connection with the
lawsuit between Viskase Corporation and American National Can
Company pursuant to the terms of the Collateral Assignment of
Lawsuit Proceeds.
Out-of-Pocket Expenses shall mean all of the Lender's present
----------------------
and future out-of-pocket expenses incurred in connection with this
Financing Agreement and the other Loan Documents, including,
without limitation, (a) the cost of lien searches (including tax
lien and judgment lien searches), pending litigation searches and
similar items, (b) fees and taxes imposed in connection with the
filing of any financing statements or other personal property
security documents; (c) title insurance premiums, real estate
survey costs and mortgage or recording taxes and fees; (d) all
expenses, costs and fees incurred by the Lender in connection with
any action taken under Section 8 hereof; and (e) without
---------
duplication, all costs and expenses incurred by the Lender in
connection with the collection, liquidation, enforcement and
defense of the Obligations and the Lender's rights in the
Collateral, and all disbursements and reasonable fees of in-house
and outside counsel to the Lender, including but not limited to
such fees and disbursements incurred as a result of a workout,
restructuring, reorganization, liquidation, insolvency proceeding
and in any appeals arising therefrom, whether incurred before,
during or after the termination of this Financing Agreement or the
commencement of any case with respect to Parent, any Company or any
Subsidiary under the United States Bankruptcy Code or any similar
statute.
Parent shall mean Viskase Companies, Inc. (formerly known as
------
Envirodyne Industries, Inc.), a Delaware corporation.
Patents shall have the meaning assigned in the definition of
-------
"General Intangibles" in this Agreement, and all cash and non-cash
proceeds thereof.
Permitted Distributions shall mean (a) distributions from
-----------------------
Viskase Corporation to the Parent not to exceed Fifty-Five Million
Dollars ($55,000,000), plus accrued interest and any applicable
prepayment fees, for the sole purpose of permitting Parent to
satisfy a mandatory redemption payment due and payable on or before
June 15, 1999 in connection with the Senior Secured Notes,
(b) dividends from the Companies and any Subsidiary to the parent
corporation thereof; provided, however, that dividends to Parent
shall be limited to dividends needed for Parent to make payments on
the Senior Unsecured Notes, existing Indebtedness under that
certain Amended and Restated Credit Agreement dated as of June 1,
1998 among Parent, the Lender party thereto and BT Commercial
Corporation, as agent, and for the payment of corporate overhead
items (up to Two Million Five Hundred Thousand Dollars ($2,500,000)
in the aggregate during any fiscal year), and (c) dividends paid in
shares of capital stock of Parent or any Subsidiary.
Permitted Encumbrances shall mean: (a) liens existing on the
----------------------
date hereof on specific items of Equipment and listed on
Schedule 1.1(a) hereto; (b) Purchase Money Liens; (c) Customarily
- ---------------
Permitted Liens; (d) liens granted to the Lender under the CITBC
Financing Agreement pursuant to the CITBC Loan Documents, by each
Company and the Guarantors and liens granted to secure the Canada
Intercompany Loan; (e) liens granted to the Lender pursuant to the
Loan Documents, by each Company and the Guarantors; (f) liens
granted to the Additional Term Lenders pursuant to the Additional
Term Lender Loan Documents, by each Company and the Guarantors;
(g) liens granted to secure the Canada Intercompany Loan; (h) liens
of judgment creditors provided such liens do not exceed, in the
aggregate, at any time, One Million Dollars ($1,000,000) (other
than liens bonded or insured to the reasonable satisfaction of the
Lender); (i) liens for taxes not yet due and payable, or liens for
taxes due and payable, which are being contested diligently and in
good faith by such Company, Guarantor or Subsidiary by appropriate
proceedings, and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with
GAAP, but only if such liens (i) are not (other than with respect
to Real Estate) senior to the liens granted by the Companies to the
Lender, or (ii) do not secure taxes owed to the United States of
America or any department thereof; (j) liens to secure
(i) Intercompany Loans made by any Guarantor or any Subsidiary to
any Company, (ii) Intercompany Loans made by a Subsidiary (not a
Guarantor) to another Subsidiary (not a Guarantor), and
(iii) Intercompany Receivables that qualify as Permitted
Indebtedness hereunder; (k) liens to secure Indebtedness of foreign
domiciled Subsidiaries that qualifies as Permitted Indebtedness
hereunder; provided, that such liens are not granted on the stock,
share interests or equity interests of such Subsidiaries; and
(l) renewals and extensions of liens constituting Permitted
Encumbrances hereunder, provided that the lien encumbering the
asset giving rise to such Permitted Encumbrance does not encumber
any other asset of a Company, Guarantor or Subsidiary.
Permitted Indebtedness shall mean: (a) current Indebtedness
----------------------
maturing in less than one year and incurred in the ordinary course
of business for raw materials, supplies, equipment, services, taxes
or labor; (b) Indebtedness secured by Purchase Money Liens;
(c) Indebtedness arising under the CITBC Loan Documents;
(d) Indebtedness arising under this Financing Agreement and the
other Loan Documents; (e) Indebtedness arising under the Additional
Term Lender Loan Documents, in an amount not to exceed, without
prior written consent of the Lender, $30,000,000 plus, accrued and
unpaid interest thereon; (f) deferred taxes and other expenses
incurred in the ordinary course of business; (g) other Indebtedness
existing on the date of execution and set forth on Schedule 1.1(b)
---------------
attached hereto; (h) Intercompany Loans and Intercompany
Receivables; (i) Indebtedness incurred by foreign domiciled
Subsidiaries for their own working capital and general corporate
purposes not to exceed Fifteen Million Dollars ($15,000,000) in the
aggregate at any one time outstanding; provided, that in no event
shall such Indebtedness be guaranteed by a Company or Guarantor or
be secured by assets other than the assets of such Subsidiary
incurring the applicable Indebtedness; (j) Indebtedness to a third
party, not secured by liens or security interests of any kind, not
to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) in
the aggregate at any one time outstanding; (k) the Canada
Intercompany Loan; (l) guarantees permitted under Section 5.9(e)
hereof; and (m) refinancing and renewals of Permitted Indebtedness,
provided that the aggregate principal amount thereof does not
increase as a result of any such refinancing or renewal from the
amount outstanding at the time of such refinancing or renewal
unless such increase does not cause such Indebtedness to fail to
qualify as Permitted Indebtedness hereunder.
Permitted Investments shall mean: (a) readily marketable
---------------------
direct obligations of the United States of America or of any agency
or instrumentality thereof, the obligations of which are backed by
the full faith and credit of the United States of America, or
readily marketable obligations unconditionally guaranteed by the
United States of America or by any such agency or instrumentality,
in each case maturing within one year from the date of acquisition
thereof; (b) certificates of deposit, time deposits or bankers'
acceptances maturing within one year from the date of acquisition
thereof issued by, or demand deposit accounts maintained with, any
commercial bank or trust company which is a member of the Federal
Reserve System, the long-term debt obligations of which are rated
at least A by Moody's Investors Service Inc. ("Moody's") or
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P") and which has combined capital and surplus
of at least Two Hundred Fifty Million Dollars ($250,000,000) (any
such bank or trust company, an "Eligible Bank"); (c) repurchase
agreements with respect to securities of the type referred to in
the foregoing clause (a) transacted with Eligible Banks, provided
that each such repurchase agreement obligates an Eligible Bank to
repurchase the securities which are the subject thereof no later
than thirty (30) days after the acquisition of such repurchase
agreement; (d) money-market preferred stock or money-market auction
notes, in each case maturing or redeemable at the option of the
holder thereof no more than one year after the date of acquisition
thereof and having a rating of at least A3 by Moody's or at least
A- by S&P, and Tax Exempt Obligations (as hereinafter defined) in
the form of auction rate reset notes that reset within one year
from the date of acquisition thereof; (e) obligations, the interest
with respect to which is exempt from federal income taxation under
Section 103 of the Internal Revenue Code, having a long term rating
of at least A3 or A-, or a short term rating of at least P-1 or
A-1, by Moody's or S&P, respectively, and having a maturity of less
than two years ("Tax Exempt Obligations"), in addition to those
described in the foregoing clause (d); (f) open market commercial
paper of United States corporations maturing not later than
Two Hundred Seventy (270) days after the issuance thereof and
having a rating of at least P-2 by Moody's or at least A-2 by S&P;
(g) investments in any mutual fund registered under the Investment
Company Act of 1940, as amended, the portfolio of which is limited
to Investments of the character described in the foregoing
clauses (a) through (f); and (h) notes or other debt obligations or
securities received in connection with the bankruptcy or
reorganization of customers and in settlement of delinquent
obligations of, or disputes with, customers or suppliers in the
ordinary course of business.
Person shall mean and include an individual, a partnership, a
------
joint venture, a limited liability company, a corporation (whether
or not for profit), a trust, an unincorporated organization, a
government or any department or agency thereof or any other entity
or organization.
Pledgors means, collectively, Viskase Companies, Viskase
--------
Corporation, Viskase Holding and Viskase Sales.
Pledge Agreements means, collectively, the Viskase Companies
-----------------
Pledge, the Viskase Corporation Pledge, the Viskase Sales Pledge
and the Viskase Holding Pledge.
Promissory Note shall mean the note, in the form of Exhibit A
--------------- ---------
attached hereto, delivered by the Company to Lender to evidence the
Term Loan.
Purchase Money Liens shall mean liens on any item of Equipment
--------------------
or real property (other than the Real Estate) acquired after the
date of this Financing Agreement (including by way of Capital
Lease) provided that (a) each such lien shall attach only to the
property to be acquired, (b) a description of the property so
acquired (having a book value in excess of $100,000) is furnished
to the Lender, and (c) the debt incurred in connection with such
acquisitions shall not exceed in the aggregate Five Million Dollars
($5,000,000) at any time outstanding.
Real Estate shall mean the Companies' owned real property
-----------
located in Centerville, Iowa; Kentland, Indiana; Loudon, Tennessee;
Osceola, Arkansas; Pauls Valley, Oklahoma; Bensalem, Pennsylvania;
Chicago, Illinois and Bedford Park, Illinois, each parcel of which
has been, or will be, encumbered, mortgaged, pledged or assigned to
any of the Lender or its designee.
Real Estate Collateral Documents shall mean each Mortgage,
--------------------------------
Security Agreement and Assignment of Leases and Rents, each Deed of
Trust, Security Agreement and Assignment of Leases and Rents and
the Environmental Indemnity Agreement, each of even date herewith
made by the Companies, as applicable, in favor of the Lender with
respect to each owned parcel of Real Estate.
Representative shall mean Viskase Corporation, which shall act
--------------
as Companies' sole and exclusive representative under this
Agreement for all purposes, including, without limitation, to
receive funds advanced hereunder, to receive notices and other
communications from the Lender hereunder, to make requests for
advances of funds hereunder and to amend this Agreement.
Security Agreements means, collectively, the Viskase Companies
-------------------
Security Agreement, and the Viskase Holding Security Agreement.
Senior Secured Notes shall mean those certain First Priority
--------------------
Senior Secured Notes due 2000 issued by Parent, pursuant to that
certain Indenture dated as of June 20, 1995 between Parent and
Shawmut Bank Connecticut, National Association, as Trustee.
Senior Unsecured Notes shall mean those certain 10 1/4% senior
----------------------
notes issued by Parent pursuant to that certain Indenture dated as
of December 31, 1993 between Parent and Bankers Trust Company, as
Trustee.
Stated Maturity Date shall mean June 30, 2001.
--------------------
Subsidiary means any domestic or foreign corporation,
----------
partnership, joint venture, limited liability company or other
entity or organization of which a Person owns, directly or
indirectly through one or more intermediaries, more than fifty
percent (50%) of the voting stock at the time of determination.
Tangible Net Worth shall mean, at any time, Net Worth plus
------------------
"Subordinated Debt" (as such term is defined in the CITBC Financing
Agreement) after subtracting therefrom the amount of any intangible
assets (as determined in accordance with GAAP), including amounts
due from Subsidiaries and amounts due from investments in
Subsidiaries (to the extent such amounts due were treated as assets
in the determination of Net Worth).
Term Loan shall mean the term loan in the original aggregate
---------
principal amount of Five Million Dollars ($5,000,000), made by the
Lender pursuant to, and repayable in accordance with, the
provisions of Section 3 of this Financing Agreement.
---------
Term Loan Promissory Note shall mean the promissory note in
-------------------------
the form of Exhibit A hereto, executed by the Company to evidence
---------
the Term Loan.
Total Liabilities shall mean total liabilities of each Company
-----------------
determined in accordance with GAAP, on a basis consistent with the
latest audited financial statements of the Companies.
Trade Accounts Receivable shall mean that portion of Accounts
-------------------------
which arises from the sale of Inventory or the rendition of
services in the ordinary course of business.
Trademarks shall have the meaning assigned to that term in the
----------
definition of "General Intangibles" in this Agreement, and all cash
and non-cash proceeds thereof.
U.C.C. shall mean the Uniform Commercial Code as in effect
------
from time to time in the State of Illinois.
Viskase Brazil means Viskase Brazil Embalagens, organized
--------------
under the laws of Brazil.
Viskase Canada means Viskase Canada Inc., a corporation
--------------
organized under the laws of Ontario, Canada.
Viskase Chile means Viskase Chile Embalajes LTDA, organized
-------------
under the laws of Chile.
Viskase Companies Pledge means that certain Pledge Agreement
------------------------
of even date herewith made by Parent in favor of the Lender
pledging one hundred percent (100%) of the capital stock of Viskase
Corporation,Viskase Films and all other directly owned Subsidiaries
of Parent, as described herein.
Viskase Companies Security Agreement means that certain
------------------------------------
Security Agreement of even date herewith made by Parent in favor of
the Lender.
Viskase Corporation Pledge means that certain Pledge Agreement
--------------------------
of even date herewith made by Viskase Corporation in favor of the
Lender pledging one hundred percent (100%) of the capital stock of
Viskase Sales and Viskase Holding.
Viskase Europe means Viskase Europe Limited, organized under
--------------
the laws of the United Kingdom.
Viskase Films means Viskase Films, Inc., a Delaware
-------------
corporation.
Viskase Holding means Viskase Holding, Inc., a Delaware
---------------
corporation.
Viskase Holding Pledge means that certain Pledge Agreement of
----------------------
even date herewith made by Viskase Holding in favor of the Lender
pledging sixty-five percent (65%) of the capital stock of Viskase
Europe and Viskase Brazil and (ii) one hundred percent (100%) of
the capital stock of Viskase Australia Limited.
Viskase Holding Security Agreement means that certain Security
----------------------------------
Agreement of even date herewith made by Viskase Holding in favor of
the Lender.
Viskase Sales Pledge means that certain Pledge Agreement of
--------------------
even date herewith made by Viskase Sales in favor of the Lenders
pledging one hundred percent (100%) of the capital stock of Viskase
Puerto Rico Corporation.
Working Capital means Current Assets less Current Liabilities.
---------------
SECTION 2. Conditions Precedent
--------------------
2.1 The obligation of the Lender to make the Term Loan
hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Term Loan, of the following
conditions precedent:
(a) Payment of Out-of-Pocket Expenses - The Companies
---------------------------------
shall have paid all amounts then owing to the Lender by the
Companies or Guarantors hereunder, or under any other Loan
Document.
(b) Lien Priority - The liens granted in favor of the
-------------
Lender pursuant to the Loan Documents shall be valid and perfected,
first priority liens on the Collateral, subject only to the
Permitted Encumbrances.
(c) CITBC Loan Documents - The terms and conditions
--------------------
of the CITBC Loan Documents, including without limitation, the
total commitment under the CITBC Financing Agreement and the amount
of "Availability" (as such term is defined in the CITBC Financing
Agreement), shall be satisfactory to the Lender in all respects.
Each Company and CITBC shall have executed and delivered to the
Lender the CITBC Loan Documents.
(d) Additional Term Lender Loan Documents - The terms
-------------------------------------
and conditions of the Additional Term Lender Loan Documents shall
be satisfactory to the Lender in all respects. Each Company and
Additional Term Lenders shall have executed and delivered to the
Lender the Additional Term Lender Loan Documents.
(e) Capital Structure - All aspects of the capital
-----------------
structure of the Companies shall be satisfactory to the Lender in
all respects.
(f) Fraudulent Conveyances and Similar Issues - The
-----------------------------------------
Lender shall be satisfied with all fraudulent conveyances and
similar issues arising out of the structure of the financing
arrangements provided for under the terms and conditions of the
Loan Documents, the CITBC Loan Documents and the Additional Term
Lender Loan Documents.
(g) Lien Searches - The Lender shall have received
-------------
tax, judgment and U.C.C. searches (or the foreign country
equivalents thereof) satisfactory to the Lender for all locations
presently occupied or used by each Company, each Guarantor, and
such other Subsidiaries deemed necessary by the Lender.
(h) Casualty Insurance - Each Company and each
------------------
Guarantor shall have delivered to the Lender evidence satisfactory
to the Lender that casualty insurance policies listing the Lender
as an additional loss payee or mortgagee, as the case may be, are
in full force and effect, all as set forth in paragraph (a) of
Section 5.5 of this Financing Agreement.
- -----------
(i) Mortgages/Deeds of Trust/Assignments of Rents -
---------------------------------------------
The Companies shall have executed and delivered to the Lender (or
to an agent of the Lender or an agent of a title insurance company
acceptable to the Lender), such mortgages, deeds of trust and
assignments of rents and leases as the Lender may reasonably
require to obtain first liens on the Real Estate, including,
without limitation, the Real Estate Collateral Documents, subject
to Permitted Encumbrances.
(j) UCC Filings - Any documents (including without
-----------
limitation, financing statements) required to be filed in order to
create, in favor of the Lender, subject to Permitted Encumbrances,
a first priority and perfected security interest in the Collateral
and substantially all of the assets of the Guarantors (to the
extent that such a security interest may be perfected by a filing
under the U.C.C.), shall have been properly filed in each office in
each jurisdiction required in order to create in favor of the
Lender a perfected lien on the Collateral. The Lender shall have
received acknowledgment copies of all such filings (or, in lieu
thereof, the Lender shall have received other evidence satisfactory
to the Lender that all such filings have been made); and the Lender
shall have received evidence that all necessary filing fees, taxes
and other expenses related to such filings have been paid in full.
(k) Title Insurance Policies - The Lender shall have
------------------------
received, in respect of each mortgage or deed of trust, a
mortgagee's marked-up unconditional commitment for title insurance
from a title insurance company reasonably satisfactory to the
Lender (the "Title Insurance Company"). Each such commitment shall
obligate the Title Insurance Company to issue to the Lender a title
insurance policy (i) in an amount not less than the appraised value
of the Real Estate covered thereby; (ii) that insures that the
mortgage or deed of trust insured thereby creates, subject to
Permitted Encumbrances, a valid first priority lien on the property
covered by such mortgage or deed of trust, free and clear of all
defects and encumbrances; (iii) that names the Lender as the
insured thereunder; and (iv) that contains such endorsements and
effective coverage as the Lender may reasonably request. The
Lender also shall have received evidence that all premiums in
respect of the policies to be issued have or will be paid on the
Closing Date and that all charges for mortgage taxes and recording
fees, if any, shall have been paid.
(l) Surveys - The Lender and the Title Insurance
-------
Company shall have received maps or plats of a perimeter or
boundary of the site of each of the properties covered by the
mortgages or deeds of trust, dated a date satisfactory to the
Lender and the Title Insurance Company prepared by an independent
professional licensed land surveyor satisfactory to the Lender and
the relevant Title Insurance Company, which maps or plats and the
surveys on which they are based shall be made in accordance with
the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping;
and, without limiting the generality of the foregoing, there shall
be surveyed and shown on the maps or plats or surveys the
following: (i) the locations on such sites of all the buildings,
structures and other improvements and the established building
setback lines insofar as the foregoing affect the perimeter or
boundary of such property; (ii) the lines of streets abutting the
sites and width thereof; (iii) all access and other easements
appurtenant to the sites or necessary or desirable to use the
sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the sites, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures
and improvements on the sites; and (vi) if the site is designated
as being on a filed map, a legend relating the survey to said map.
Further, the survey shall be certified to the Lender and the Title
Insurance Company and shall contain a legend reciting as to whether
or not the site is located in a flood zone.
(m) Guaranty and Guarantor Security Agreements -
------------------------------------------
(i) Each Guarantor shall have executed and delivered to the Lender
a guaranty, in form acceptable to the Lender, guaranteeing the
Obligations, including, but not limited to, the Guaranty, and
(ii) each of Parent and Viskase Holding shall have executed a
security agreement and other appropriate security documents,
including, but not limited to, the Security Agreements, pursuant to
which Parent and Viskase Holding each grant to the Lender, a
security interest in substantially all of its assets.
(n) Opinions - (i) Subject to the filing, priority
--------
and remedies provisions of the U.C.C., the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, the equity
powers of a court of law and such other matters as may be agreed
upon with the Lender, counsel for the Companies, the Pledgors and
the Guarantors shall have delivered to the Lender opinion(s)
satisfactory to the Lender opining, inter alia, that: (x) this
----- ----
Financing Agreement, the Guaranties, the Security Agreements and
the Pledge Agreements executed by each Company, each Guarantor and
each Pledgor, as applicable, and all other Loan Documents executed
by each Company and delivered to the Lender in connection with this
Financing Agreement are (1) valid, binding and enforceable
according to their respective terms, (2) duly authorized and (3) do
not violate any terms, provisions, representations or covenants in
the charter, by-laws or other organizational agreement of any
Company, any Pledgor or any Guarantor or, to the best knowledge of
such counsel, of any loan agreement, mortgage, deed of trust, note,
security or pledge agreement or indenture to which any Company, any
Pledgor or any Guarantor is a signatory or by which any Company,
any Pledgor, any Guarantor or any Company's, any Pledgor's or any
Guarantor's assets are bound.
(o) Pledge Agreements - Each Pledgor, as applicable,
-----------------
shall (A) execute and deliver to the Lender the Pledge Agreements,
and (B) deliver to CITBC, as the bailee of the Lender, the stock
certificates covered by the Pledge Agreements together with duly
executed stock powers in blank.
(p) [Intentionally omitted]
(q) GECC Intercreditor Agreement - GECC and all
----------------------------
applicable parties shall have entered into the GECC Intercreditor
Agreement with the Lender.
(r) CITBC Subordination Agreement - CITBC shall have
------------------------------
executed and delivered the CITBC Subordination Agreement to the
Lender, in form and substance satisfactory to the Lender.
(s) Additional Term Lender Interecreditor Agreement
-----------------------------------------------
The Additional Term Lenders shall have executed and delivered the
Additional Term Lender Intercreditor Agreement to the Lender, in
form and substance satisfactory to the Lender.
(t) CITBC-Additional Term Lender Subordination
------------------------------------------
Agreement - CITBC and Additional Term Lenders shall have entered
- ---------
into the CITBC-Additional Term Lender Subordination Agreement, that
is substantially identical to the CITBC Subordination Agreement and
on terms and conditions satisfactory to the Lender.
(u) Additional Documents - Each Company shall have
--------------------
executed and delivered to the Lender, on or before the Closing
Date, the appropriate legal documentation, each in form and
substance satisfactory to the Companies, the Lender and its
respective counsel, necessary to consummate the lending arrangement
contemplated among the Companies and the Lender.
(v) Environmental Reports - The Lender shall have
---------------------
received environmental audit reports on (i) all of each Company's
leasehold and fee interests in the Real Estate, and (ii) the
Company's waste disposal practices. The reports must be
satisfactory to the Lender and not disclose or indicate any
material liability (real or potential) arising out of any Company's
premises, its operations, its waste disposal practices or waste
disposal sites used by any Company.
(w) Board Resolutions - The Lender shall have
-----------------
received a copy of the resolutions of the Board of Directors of
each Company, each Pledgor and each Guarantor (as the case may be)
authorizing the execution, delivery and performance of (i) this
Financing Agreement, as applicable, (ii) the Guaranties executed by
the Guarantors, as applicable, (iii) the Pledge Agreements executed
by each Pledgor, as applicable, and (iv) any related agreements, in
each case certified by the Secretary or Assistant Secretary of each
Company, the Pledgors and the Guarantors (as the case may be) as of
the date hereof, together with a certificate of the Secretary or
Assistant Secretary of each Company, each Pledgor and each
Guarantor (as the case may be) as to the incumbency and signature
of the officers executing such agreements and any certificate or
other documents to be delivered by them pursuant hereto.
(x) Corporate Organization - The Lender shall have
----------------------
received (i) a copy of the Certificate or Articles of Incorporation
(or other equivalent organizational documents) of each Company,
each Pledgor and each Guarantor, certified by the applicable
authority in such entity's State of organization or foreign country
of organization, as applicable, and (ii) copies of the By-Laws or
equivalent corporate constituent document (as amended through the
date hereof), if any, of each Company, each Pledgor and each
Guarantor, certified by the Secretary or Assistant Secretary
thereof.
(y) Officer's Certificate - The Lender shall have
---------------------
received an executed Officer's Certificate of each Company,
satisfactory in form and substance to the Lender, certifying that
(i) the representations and warranties contained herein are true
and correct in all material respects on and as of the date hereof,
(ii) each Company is in compliance with all of the terms and
provisions set forth herein and (iii) no Default or Event of
Default has occurred.
(z) Absence of Default or Material Adverse Effect -
----------------------------------------------
No Default, Event of Default or any fact or circumstance having a
Material Adverse Effect shall have occurred or arisen. The
Companies acknowledge that an adverse change in the terms,
conditions, assumptions or projections supplied by Companies and
any Guarantor, in the Lender's reasonable business judgement, may
be construed by the Lender as a Material Adverse Change for the
purposes of this clause (z).
(aa) Appraisals - The Lender shall have received
----------
appraisals on each Company's fixed assets, which appraisals shall
be by an appraiser acceptable to the Lender and shall indicate an
orderly liquidation value acceptable to the Lender with respect to
the Equipment, and a fair market value acceptable to the Lender
with respect to the aggregate value of the owned Real Estate.
(bb) Legal Restraints/Litigation - At the date of
---------------------------
execution of this Financing Agreement, there shall be no
(i) litigation, investigation or proceeding (judicial or
administrative) pending or threatened against any Company, any
Pledgor or any Guarantor or any of their assets or respective
Subsidiaries, by any agency, division or department of any county,
city, state or federal government arising out of the CITBC
Financing Agreement, the Additional Term Lender Financing Agreement
or this Financing Agreement, (ii) injunction, writ or restraining
order restraining or prohibiting the consummation of the financing
arrangements contemplated under the CITBC Financing Agreement, the
Additional Term Lender Financing Agreement or this Financing
Agreement or (iii) to the best knowledge of each Company, suit,
action, investigation or proceeding (judicial or administrative)
pending or threatened against any Company, any Pledgor, any
Guarantor or any of their respective Subsidiaries or their assets,
which, in the opinion of the Lender, if adversely determined could
have a Material Adverse Effect.
(cc) Disbursement Authorization - The Companies shall
--------------------------
have delivered to the Lender all information necessary for the
Lender to issue wire transfer instructions on behalf of the
Companies for the loans and/or advances to be made by the Lender
under this Financing Agreement including, but not limited to,
disbursement authorizations in form acceptable to the Lender.
(dd) Examination & Verification; Availability - The
----------------------------------------
Lender shall have completed to the satisfaction of the Lender an
examination and verification of the Accounts, Inventory, books and
records of each Company and each Guarantor.
(ee) Existing Revolving Credit Agreement - (i) The
-----------------------------------
Companies' existing credit agreement agented by BT Commercial
Corporation shall be terminated, (ii) all loans and obligations of
each Company and/or the Guarantors and each Pledgor thereunder
shall be paid or satisfied in full utilizing the proceeds of the
revolving loans and other financial accommodations to be made under
the CITBC Financing Agreement and the Term Loan to be made under
this Financing Agreement and (iii) all liens upon or security
interest in favor of BT Commercial Corporation, as collateral
agent, in connection therewith shall be terminated and/or released
upon such payment.
(ff) D.P. Kelly Payoff - All amounts owed to D.P.
Kelly other than pursuant to the Loan Documents, however evidenced,
incurred prior to the date hereof, shall be fully paid or
refinanced and all liens, mortgages, deeds of trust, security
interests and filings related thereto shall be duly released prior
to the Closing Date, and evidence of such releases, satisfactory to
Lenders, shall be provided to Lenders on or prior to the Closing
Date.
(gg) Collateral Assignment of Intercompany Loan - All
------------------------------------------
amounts owed by Viskase Canada to any Company or any Guarantor from
time to time (the "Canada Intercompany Loan") shall be
(i) evidenced by a Promissory Note payable by Viskase Canada to
such Company of Guarantor and (ii) secured by all of the assets of
Viskase Canada pursuant to a security agreement in form and
substance acceptable to Agent (the "Canada Security Agreement").
On the Closing Date, and from time to time thereafter, as
applicable, such Company or Guarantor loaning funds to Viskase
Canada shall execute a Collateral Assignment of Intercompany Note
and Security Agreement of even date herewith (the "Collateral
Assignment of Intercompany Loan") in favor of the Lender, pursuant
to which such Company or Guarantor shall assign all right, title
and interest in the Canada Intercompany Loan and the Canada
Security Agreement to the Lender as collateral security for the
Obligations, and such Company or Guarantor shall execute such
financing statements, documents, instruments and agreements as
shall be necessary to perfect the foregoing security interest
assignment in favor of the Lender, as the Lender so requests.
(hh) All conditions precedent to the consummation of
the CITBC Financing Agreement and the Additional Term Lender
Financing Agreement shall have been satisfied or waived in
accordance with the terms thereof.
Upon the execution of this Financing Agreement and the initial
disbursement of loans hereunder, all of the above conditions
precedent shall have been deemed satisfied except as each Company
and the Lender shall otherwise agree herein or in a separate
writing.
SECTION 3. Term Loan
---------
3.1 Each Company hereby agrees to execute and deliver to
Lender on the Closing Date, a Term Loan Promissory Note, dated the
Closing Date, payable to the order of the Lender in the principal
amount of Five Million Dollars ($5,000,000).
3.2 Subject to the terms and conditions hereof, upon
receipt of the Term Loan Promissory Notes, the Lender hereby agrees
to extend to the Companies a portion of the Term Loan in the
original principal amount equal to Five Million Dollars
($5,000,000).
3.3 The principal amount of the Term Loan shall be due and
payable to the Lender and repaid by the Company, in full in cash on
the Stated Maturity Date.
3.4 The Companies shall prepay the Term Loan as provided
for in this Agreement, including, without limitation, pursuant to
Section 5.16 hereof.
3.5 The Companies, at their option, may prepay the Term
Loan at any time, in whole or in part, without penalty or premium,
provided that on each such prepayment, the Companies shall pay
accrued interest on the principal so prepaid to the date of such
prepayment.
SECTION 4. Collateral
----------
4.1 As security for the prompt payment in full of all
loans and advances made and to be made to each Company from time to
time by the Lender pursuant hereto, as well as to secure the
payment in full of the other Obligations, each Company hereby
pledges and grants to the Lender, a continuing general lien upon
and security interest in all of such Company's:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles;
(f) present and future Investment Property;
(g) present and future Other Collateral;
(h) Real Estate; and
(i) any such other property not included under
clauses (a) through (h) above that would
otherwise be deemed to constitute "Collateral" as
defined in the CITBC Loan Documents or the
Additional Term Lender Loan Documents, as such
agreements may be amended, modified or replaced
from time to time;
provided that the Collateral shall not include, and neither Company
shall be deemed to have granted a lien or security interest
hereunder in:
(i) any property or asset to the extent, and only for
so long as, such property is subject to a Permitted
Encumbrance in favor of CITBC, the lenders under the CITBC
Financing Agreement, and the Additional Term Lenders which
specifically restricts the granting of additional liens or
security interests on such property; provided that (A) such
--------
lien or security interest constitutes a Permitted Encumbrance
and (B) the restriction on the granting of additional liens or
security interests extends only to the property subject to
such a Permitted Encumbrance and the proceeds thereof;
(ii) any contract that prohibits the granting of a
security interest in such contract or the rights thereunder
without the consent of the other party(ies) thereto, which
consent has not been obtained (except to the extent any such
prohibition would be rendered ineffective or unenforceable
under applicable laws);
(iii) any "Sale-Leaseback Property" as defined in the
GECC Intercreditor Agreement; or
(iv) the specific assets identified on Schedule 4.1
------------
hereto (the "Excluded Assets"); provided, however, that the
Companies agree to cause the proceeds of the sale of the
Excluded Assets to be used as set forth in Section 5.16 below.
------------
4.2 The security interests granted hereunder shall extend
and attach to:
(a) All Collateral which is presently in existence
and which is owned by any Company or in which any Company has any
interest, whether held by any Company or others for its account,
and, if any Collateral is Equipment, whether such Company's
interest in such Equipment is as owner or lessee or conditional
vendee;
(b) All Equipment whether the same constitutes
personal property or fixtures, including, but without limiting the
generality of the foregoing, all dies, jigs, tools, benches,
tables, accretions, component parts thereof and additions thereto,
as well as all accessories, motors, engines and auxiliary parts
used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may
be returned, rejected, reclaimed or repossessed by either the
Lender or any Company from such Company's customers, as well as to
all supplies, goods, incidentals, packaging materials, labels and
any other items which contribute to the finished goods or products
manufactured or processed by any Company, or to the sale, promotion
or shipment thereof.
4.3 Each Company agrees to safeguard, protect and hold all
Inventory for the account of the Lender, and make no disposition
thereof except in the regular course of the business of each
Company; provided, however, that each Company may make bulk sales
of Inventory that is obsolete and non-marketable under ordinary
terms if such Company gives prompt written notice to the Lender
after any such sale. Inventory may be sold and shipped by each
Company to its customers in the ordinary course of each Company's
business, on open account and on commercially reasonable terms,
provided that, subject to the CITBC Subordination Agreement and the
Additional Term Lender Intercreditor Agreement, all proceeds of all
sales (including cash, accounts receivable, checks, notes,
instruments for the payment of money and similar proceeds) are
forthwith transferred, endorsed, and turned over and delivered to
the Lender. Upon the sale, exchange, or other disposition of
Inventory, as herein provided, the security interest in each
Company's Inventory provided for herein shall, without break in
continuity and without further formality or act, continue in, and
attach to, all proceeds, including any instruments for the payment
of money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash
proceeds of such sale, exchange or disposition. As to any such
sale, exchange or other disposition, the Lender shall have all of
the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.
4.4 Each Company agrees at its own cost and expense to
keep the Equipment in as good repair and condition as the same is
now or at the time the lien and security interest granted herein
shall attach thereto, reasonable wear and tear excepted, making any
and all repairs and replacements when and where necessary. Each
Company also agrees to safeguard, protect and hold all Equipment
for the account of the Lender, and make no disposition thereof
(other than dispositions expressly permitted hereunder) unless such
Company first obtains the prior written approval of Lender). Any
sale, exchange or other disposition of any Equipment (other than
dispositions expressly permitted hereunder) shall only be made by
the Companies with the prior written approval of the Lender, and
the proceeds of any such sales shall not be commingled with any
Company's other property, but shall be segregated, and subject to
the CITBC Subordination Agreement and the Additional Term Lender
Intercreditor Agreement, held by each Company in trust for the
Lender, for the benefit of the Lender, as the Lender's exclusive
property, and shall be delivered immediately by each Company to the
Lender. Upon the sale, exchange, or other disposition of the
Equipment, as herein provided, the security interest provided for
herein shall, without break in continuity and without further
formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds
of such sales, exchanges or dispositions. As to any such sale,
exchange or other disposition, the Lender shall have all of the
rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation. Notwithstanding anything set
forth herein to the contrary, each Company may sell, exchange or
otherwise dispose of (a) obsolete Equipment or Equipment no longer
needed in such Company's operations, provided that the then book
value of the Equipment so disposed of does not exceed Five Hundred
Thousand Dollars ($500,000) in the aggregate in any fiscal year and
(b) items of Equipment not listed in or appraised pursuant to the
appraisals described in Section 2.1(aa) above to Subsidiaries,
---------------
provided (I) the Companies shall notify the Lenders of any such
disposition in reasonable detail if the Equipment subject thereto
has a minimum book value of Two Hundred Fifty Thousand Dollars
($250,000.00) per item and (ii) that the aggregate book value of
any such Equipment so disposed to Subsidiaries shall not exceed
Seven Hundred Fifty Thousand Dollars ($750,000.00) in the aggregate
in any fiscal year. Subject to the CITBC Subordination Agreement
and the Additional Term Lender Intercreditor Agreement, to the
extent that any Equipment is sold, exchanged or otherwise disposed
of pursuant to the preceding sentence, the proceeds of such sales
or dispositions shall be delivered to the Lender in accordance with
the foregoing provisions of this Section 4.4, except that each
-----------
Company may retain and use such proceeds to purchase forthwith
replacement Equipment which such Company determines in its
reasonable business judgment to have a collateral value at least
equal to the Equipment so disposed of or sold, and provided further
that the aforesaid right shall automatically cease upon the
occurrence of an Event of Default which is not waived.
4.5 The rights and security interests granted hereunder to
the Lender, are to continue in full force and effect, until the
final payment in full to the Lender of all Obligations. Any delay,
or omission by the Lender to exercise any right hereunder, shall
not be deemed a waiver thereof, or be deemed a waiver of any other
right, unless such waiver be in writing and signed by the Lender.
A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion.
4.6 To the extent that the Obligations are now or
hereafter secured by any assets or property other than the
Collateral or by the guarantee, endorsement, assets or property of
any other person, then the Lender shall have the right in its sole
discretion to determine which rights, security, liens, security
interests or remedies the Lender shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other
action with respect to, without in any way modifying or affecting
any of them, or any of the Lender's rights hereunder.
4.7 Any property or assets of any Company in the
possession of the Lender may be held by the Lender as security for
any Obligations and applied in whole or partial satisfaction of
such Obligations when due upon written notice to the Companies.
The liens and security interests granted herein and any other lien
or security interest which the Lender may have in any other assets
of any Company, shall secure payment and performance of all now
existing and future Obligations.
4.8 This Financing Agreement and the obligation of each
Company to perform all of its covenants and obligations hereunder
are further secured by mortgage(s), deed(s) of trust or
assignment(s) covering the Real Estate including, but not limited
to, the Real Estate Collateral Documents.
4.9 From time to time, each Company shall deliver to the
Lender, such mortgage(s), deed(s) of trust or assignment(s)
covering the Real Estate or real estate acquired after the date
hereof as the Lender shall require to obtain a valid first lien
thereon, subject only to Permitted Encumbrances.
4.10 From time to time, each Company, each Guarantor and
each Pledgor shall deliver to the Lender, or shall cause Parent to
deliver to the Lender, such pledge or security agreements with
respect to (a) trademarks, patents, licenses, General Intangibles
and capital stock in each Company and (b) capital stock in any and
all direct Subsidiaries of each Company, each Guarantor and each
Pledgor, as applicable, as the Lender shall require to obtain valid
first liens thereon (subject to Permitted Encumbrances); provided,
however, that in no event shall a pledge of more than 65% of the
equity interests of any foreign entity directly owned be required
so long as applicable law would treat any such pledge in excess of
such amount as a "deemed dividend" to the parent company of such
foreign entity.
SECTION 5. Representations, Warranties and Covenants
-----------------------------------------
5.1 Each Company hereby warrants and represents and/or
covenants that: (a) the fair value of each Company's assets
exceeds the book value of each Company's liabilities; (b) each
Company is generally able to pay its debts as they become due and
payable; (c) no Company has unreasonably small capital to carry on
its business as it is currently conducted absent extraordinary and
unforeseen circumstances; (d) the consolidated audited balance
sheet and related statements of operations and cash flow and
changes in stockholders' equity for the Parent as of December 31,
1998 and for the fiscal year then ended, and the consolidated
unaudited balance sheet and related statements of operations and
cash flow for the Parent as of March 31, 1999 and for the three
(3) months then ended, have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the
Parent's financial position as at the dates thereof and the
Parent's results of operation for the periods then ended; (e) each
Company is duly organized and validly existing under the laws of
the state of its incorporation, and is qualified to do business in
each State where the failure to so qualify would have a Material
Adverse Effect; (f) Schedule 5.1 hereto correctly and completely
------------
sets forth each Company's chief executive office, all of the
Collateral locations and all tradenames used by each Company;
(g) the execution and delivery of this Financing Agreement by each
Company and the consummation of the transactions contemplated
hereby, do not violate any term, provision or covenant contained in
the Articles or Certificate of Incorporation or Bylaws of any
Company, or any term, provision, covenant or representation
contained in any loan agreement, lease, indenture, mortgage, deed
of trust, note, security agreement or pledge agreement to which any
Company is a signatory or by which any Company or any Company's
assets are bound; (h) except for the Permitted Encumbrances, the
security interests granted herein and in the other Loan Documents
constitute and shall at all times constitute first priority and
exclusive liens on the Collateral; (i) except for the Permitted
Encumbrances, each Company is or will be at the time additional
Collateral is acquired by it, the absolute owner of the Collateral
with full right to pledge, sell, transfer and create a security
interest therein, free and clear of any and all claims or liens in
favor of others; (j) the Indebtedness listed on Schedule 1.1(b)
-------- ------
hereto constitutes all funded indebtedness of each Company existing
as of the date hereof; (k) each Company will at its expense forever
warrant and, at the Lender's request, defend the Collateral from
any and all claims and demands of any other person other than the
Permitted Encumbrances; (l) no Company will grant, create or permit
to exist, any lien upon or security interest in the Collateral, or
any proceeds thereof, in favor of any other person other than the
holders of the Permitted Encumbrances; and (m) each Company will
provide the Lender with prior written notice of any change in the
location of any Collateral.
5.2 Each Company agrees to maintain books and records
pertaining to the Collateral in such detail, form and scope as the
Lender shall reasonably require. Each Company agrees that Lender
and/or Lender's designated agents (at Lender's expense), may enter
upon each Company's offices, or other premises at any time during
normal business hours and upon reasonable notice of at least one
(1) Business Day prior to an Event of Default, and from time to
time, in order to (a) examine and inspect the books and records of
each Company, and make copies thereof and take extracts therefrom,
and (b) verify, inspect, appraise and perform physical counts and
other valuations of the Collateral and any and all records
pertaining thereto; provided, however, that so long as no Event of
Default exists and is continuing, the number of such examinations,
inspections, appraisals, physical counts and other valuations shall
be limited to four (4) per annum. All reasonable costs, fees and
expenses incurred by the Lender in connection with such
examinations, inspections, appraisals, physical counts and other
valuations shall constitute Out-of-Pocket Expenses for purposes of
this Financing Agreement.
5.3 Each Company agrees to execute and deliver to the
Lender, from time to time, solely for the Lender's convenience in
maintaining a record of the Collateral, such written statements,
schedules and other information and documentation as the Lender may
reasonably require, designating, identifying or describing the
Collateral. Without limiting the foregoing, each Company shall
deliver to Additional Term copies of all schedules and statements
delivered to CITBC pursuant to the CITBC Financing Agreement,
including, without limitation, pursuant to Section 7.3 thereof,
simultaneously with the delivery of such schedules and statements
to CITBC. Any Company's failure, however, to promptly give the
Lender such statements or schedules shall not affect, diminish,
modify or otherwise limit the security interests of the Lender, in
the Collateral.
5.4 Each Company agrees to comply with the requirements of
all state and federal laws in order to grant to the Lender, valid
and perfected first security interests in the Collateral, subject
only to the Permitted Encumbrances. The Lender is hereby
authorized by each Company to file any financing statements
covering the Collateral whether or not such Company's signature
appears thereon. Each Company agrees to do whatever the Lender
reasonably may request from time to time, by way of: (a) filing
notices of liens, financing statements, amendments, renewals and
continuations thereof; (b) cooperating with the Lender's designated
agents and employees; (c) keeping Collateral records;
(d) transferring proceeds of Collateral to the Lender's possession
in accordance with the terms hereof; and (e) performing such
further acts as the Lender reasonably may require in order to
effect the purposes of this Financing Agreement.
5.5 (a) Each Company agrees to maintain insurance on
the Real Estate, Equipment and Inventory under such policies of
insurance, with such insurance companies, in such reasonable
amounts and covering such insurable risks as are at all times
reasonably satisfactory to the Lender (the "Required Insurance").
All policies covering the Real Estate, Equipment and Inventory are,
subject to the rights of any holders of Permitted Encumbrances
holding claims senior to the Lender, to be made payable to the
Lender, for the benefit of the Lender, in case of loss, under a
standard non-contributory "mortgagee", "lender" or "secured party"
clause and are to contain such other provisions as the Lender
reasonably may require to fully protect the Lender's interests in
the Real Estate, Inventory and Equipment and to any payments to be
made under such policies. All summaries of such policies are to be
delivered to the Lender. All such insurance policies shall be
prepaid, with a loss payable endorsement in favor of the Lender,
for the benefit of the Lender, and shall provide for not less than
thirty (30) days prior written notice to the Lender of the exercise
of any right of cancellation. Upon the occurrence of an Event of
Default which is not waived, the Lender shall, subject to the
rights of any holders of Permitted Encumbrances holding claims
senior to the Lender, have the sole right, in the name of the
Lender or any Company, to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may
be payable thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b) Unless any Company provides the Lender with
evidence of the Required Insurance in the manner set forth in
paragraph (a) above, the Lender may, upon prior notice to the
Companies, purchase insurance at each Company's expense to protect
the interests of the Lender in the Collateral. The insurance
purchased by the Lender may, but need not, protect such Company's
interests in the Collateral, and therefore such insurance may not
pay any claim which any Company makes or any claim which is made
against any Company in connection with the Collateral. The
Companies may later request that the Lender cancels any insurance
purchased by the Lender, but only after providing the Lender with
satisfactory evidence that the Companies have the Required
Insurance. If the Lender purchases insurance covering all or any
portion of the Collateral, the Companies shall be responsible for
the costs of such insurance, including interest (at the applicable
rate set forth hereunder) and other charges accruing on the
purchase price therefor, until the effective date of the
cancellation or the expiration of the insurance. The costs of the
premiums of any insurance purchased by the Lender may exceed the
costs of insurance which the Companies may be able to purchase on
their own. In the event that the Lender purchases insurance, the
Lender will notify the Representative of such purchase within
thirty (30) days after the date of such purchase. If, within
thirty (30) days of the date of such notice, the Companies provide
the Lender with proof that the Companies had the Required Insurance
as of the date on which the Lender purchased insurance and the
---
Companies have continued at all times thereafter to have the
Required Insurance, then the Lender agrees to cancel the insurance
purchased by the Lender and reimburse the Companies by the amount
of all costs, interest and other charges associated with such
insurance.
(c)
(i) Subject to the CITBC Subordination
Agreement and the Additional Term Lender Intercreditor
Agreement, in the event of any loss or damage by condemnation,
fire or other casualty, insurance proceeds relating to
Inventory that are paid to the Lender shall reduce the
Obligations.
(ii) Subject to the CITBC Subordination
Agreement and the Additional Term Lender Intercreditor
Agreement, in the event any part of the Company's Real Estate
or Equipment is condemned or damaged by fire or other casualty
and the insurance or condemnation proceeds for such
condemnation, damage or other casualty are paid to the Lender
(the "Proceeds"), the Lender shall promptly apply such
Proceeds to reduce the Obligations.
(iii) As long as an Event of Default has not
occurred (which is not waived), the Companies have sufficient
business interruption insurance to replace the lost profits of
any Company's facilities, the Companies may elect (by
delivering written notice to the Lender) to replace, repair or
restore such Real Estate or Equipment to substantially the
equivalent condition prior to such condemnation, fire or other
casualty as set forth herein. If the Companies do not, or
cannot, elect to use the Proceeds as set forth above, the
Lender may, subject to the CITBC Subordination Agreement and
the D.P. Kelly Intercreditor Agreement and the rights of any
holders of Permitted Encumbrances holding claims senior to the
Lender, apply the Proceeds to the payment of the Obligations.
(iv) Prior to the commencement of any
restoration, repair or replacement of Real Estate, the
Companies shall provide the Lender with a restoration plan and
a total budget certified by an independent third party
experienced in construction costing. If there are
insufficient Proceeds to cover the cost of restoration as so
determined, the Companies shall be responsible for the amount
of any such deficiency, and shall fund such deficiency.
Completion of restoration shall be evidenced by a final,
unqualified certification of the design architect employed, if
any; an unconditional certificate of occupancy, if applicable;
such other certification as may be required by law; or if none
of the above is applicable, a written good faith determination
of completion by the Companies (herein collectively the
"Completion").
(v) The Companies agree to pay any reasonable
costs, fees or expenses which the Lender may reasonably incur
in connection with this Section 5.5.
5.6 The Companies agree to pay, prior to the imposition of
any lien or penalty (other than Permitted Encumbrances), all taxes,
assessments, claims and other charges (herein "taxes") lawfully
levied or assessed upon any Company or the Collateral, including,
without limitation, all sales taxes collected by any Company on
behalf of any Company's customers in connection with sales of
Inventory. If such taxes remain unpaid after such date (unless
such taxes are being diligently contested in good faith by such
Company by appropriate proceedings), or if any lien shall be
claimed thereunder (a) for taxes due the United States of America
or (b) which in the Lender's opinion secures an obligation having
priority over the rights granted to the Lender's herein, then the
Lender may, on behalf of the Companies, pay such taxes, and the
amount thereof shall be an Obligation secured hereby and due to the
Lender on demand.
5.7
(a) Each Company agrees to comply with all acts,
rules, regulations and orders of any legislative, administrative or
judicial body or official, which the failure to comply with would
have a Material Adverse Effect on such Company, provided that any
Company may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner
which will not, in the Lender's reasonable opinion, materially and
adversely effect the Lender's rights or priorities in the
Collateral.
(b) Without limiting the generality of paragraph (a)
above, each Company agrees to comply with all environmental
statutes, acts, rules, regulations or orders, as presently existing
or as adopted or amended in the future, applicable to the ownership
and/or use of its real property and operation of its business, if
the failure to so comply would have a Material Adverse Effect on
such Company. Each Company hereby indemnifies the Lender, and
agrees to defend and hold the Lender harmless, from and against any
and all loss, damage, claim, liability, injury or expense which the
Lender or the Lender may sustain or incur in connection with any
claim or expense asserted against the Lender as a result of any
environmental pollution, hazardous material or environmental clean-
up of any Company's owned or leased real property; or any claim or
expense which results from any Company's operations (including, but
not limited to, the Company's off-site disposal practices) except
as a result of the gross negligence or willful misconduct of
Lender, and each Company further agrees that this indemnification
shall survive the payment of all Obligations or amounts payable
hereunder. No Company shall be deemed to have breached any
provision of this Section 5.7 if (i) the failure to comply with the
-----------
requirements of this Section 5.7 resulted from good faith error or
-----------
innocent omission, (ii) the Companies promptly commence and
diligently pursue a cure of such breach and (iii) such failure is
cured within fifteen (15) Business Days following any Company's
receipt of notice of such failure.
(c) As of the date hereof, each Company represents
and warrants to the Lender that except as disclosed on Schedule 5.7
------------
attached hereto, (i) none of the operations of any Company are, to
their knowledge after diligent inquiry, the subject of any federal,
state or local investigation to determine whether any remedial
action is needed to address the presence or disposal of any
environmental pollution, hazardous material or environmental clean-
up of the Real Estate or any Company's leased real property,
(ii) no Company has any known contingent liability with respect to
any release of any environmental pollution or hazardous material,
(iii) each Company presently is in compliance with all
environmental statutes, acts, rules, regulations or orders
applicable to each Company's owned or leased real property or the
operation of each Company's business, except where the failure to
be in such compliance would not have a Material Adverse Effect,
(iv) no enforcement proceeding, complaint, summons, citation,
notice, order, claim, litigation, investigation, letter or other
communication from a federal, state or local authority has been
filed against or delivered to any Company, regarding or involving
any release of any environmental pollution or hazardous material on
any real property now or previously owned or leased by any Company,
and (v) each Company has obtained and maintains all permits,
approvals, authorizations and licenses, if any, required by
applicable environmental statutes, acts, rules, regulations and
orders, except where the failure to have such permits, approvals,
authorizations or licenses would not have a Material Adverse Effect
on such Company.
5.8 Until payment and satisfaction of all Obligations due
hereunder, each Company agrees that, unless the Lender shall have
otherwise consented in writing, the Companies will furnish to the
Lender: (a) within ninety (90) days after the end of each fiscal
year of the Parent, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the close of such year, and
statements of operations, cash flow and reconciliation of
stockholders' equity for such year, in the case of the Consolidated
Balance Sheet and related statements audited by such independent
public accountants selected by the Parent and satisfactory to the
Lender, together with the unqualified opinion of the accountants
preparing such financial statements (except that for the fiscal
year 2000 audited financial statements, the opinion of such
accountants may be qualified, if necessary, for the sole purpose of
reflecting that, as of the date of such opinion, the Companies do
not have a financing commitment in place for the period commencing
on the Termination Date); (b) within forty-five (45) days of the
end of each fiscal quarter, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the end of such fiscal quarter,
and a consolidated statement of operations and cash flow for such
fiscal quarter and for the period commencing on the first day of
the current fiscal quarter through the end of such fiscal quarter;
(c) within thirty-five (35) days after the end of each fiscal
month, a Consolidated Balance Sheet and a Consolidating Balance
Sheet as at the end of such fiscal month, and a consolidated
statement of operations and cash flow for such fiscal month and for
the period commencing on the first day of the current fiscal year
through the end of such fiscal month; (d) no later than thirty
(30) days after the beginning of each fiscal year, monthly
projections of the Consolidated Balance Sheet, Consolidating
Balance Sheet, the consolidated and consolidating statements of
operations and cash flow of Parent; and (e) from time to time, such
further information regarding the business affairs and financial
condition of each Company as the Lender may reasonably request.
Each financial statement which the Companies are required to submit
hereunder must be accompanied by an officer's certificate, signed
by the Treasurer or Chief Financial Officer of Representative,
pursuant to which such officer must certify that: (x) the
financial statement(s) fairly and accurately represent(s) Parent's
and the Companies' financial condition at the end of the particular
accounting period, as well as Parent's and the Companies' operating
results during such accounting period, subject to year-end audit
adjustments; (y) during the particular accounting period (i) there
has occurred no Default or Event of Default under this Financing
Agreement, or, if any such officer has knowledge that any such
Default or Event of Default, has occurred during such period, the
existence of and a detailed description of same shall be set forth
in such officer's certificate, and (ii) no Company has received any
notice of cancellation with respect to its property insurance
policies; and (z) the exhibits attached to such financial
statement(s) constitute detailed calculations showing compliance
with all financial covenants contained in this Financing Agreement.
5.9 Until payment and satisfaction in full of all
Obligations due hereunder, each Company agrees that, without the
prior written consent of the Lender, except as otherwise herein
provided, no Company will, and will not permit any Guarantor or
Subsidiary to:
(a) Except for transfers of assets permitted under
Section 5.9(c) below and Permitted Encumbrances, mortgage, assign,
- --------------
pledge, transfer or otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a
purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of its assets or goods,
whether real, personal or mixed, whether now owned or hereafter
acquired;
(b) Incur or create any Indebtedness other than the
Permitted Indebtedness;
(c) Sell, lease, assign, transfer or otherwise
dispose of (i) Collateral, except as otherwise specifically
permitted by this Financing Agreement, or (ii) either all or any
substantial part of its assets, if any, which do not constitute
Collateral; provided, however, that transfers of Inventory solely
among the Companies and/or the Guarantors (other than Parent) shall
be permitted hereunder so long as any such transfer would be
classified as an Intercompany Receivable, (B) sales or dispositions
of Excluded Assets shall be permitted hereunder, and (C) sales or
transfers of Collateral to either Company by the other Company or
by any Subsidiary to any Company shall be permitted hereunder;
(d) (i) Merge or consolidate with any other entity;
provided, however, that (x) any Company may merge or consolidate
with any Guarantor (other than Parent) and (y) any non-Guarantor
Subsidiary may merge or consolidate with any other non-Guarantor
Subsidiary; (ii) change its corporate name or principal place of
business without at least thirty (30) days prior written notice to
the Lender, (iii) change the form of its organization from for-
profit corporation or (iv) enter into or engage in any operation or
activity materially different from that presently being conducted
by either Company;
(e) Assume, guarantee, endorse, or otherwise become
liable upon the obligations of any person, firm, entity or
corporation, except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business, (ii) existing guaranties listed on
Schedule 5.9(e) hereof, (iii) guaranties in favor of CITBC,
- ---------------
individually and as agent and the other lenders under the CITBC
Loan Documents, the Additional Term Lenders under the Additional
Term Lender Loan Documents and the Lender under the Loan Documents,
(iv) guaranties entered into in the ordinary course of business by
any Company or any Guarantor of the obligations of any Company or
any Guarantor, (v) guaranties entered into in the ordinary course
of business by any Subsidiary that is not a Guarantor of the
obligations of any other Subsidiary that is not a Guarantor, and
(vi) guaranties entered into in connection with the refinancing of
any Indebtedness permitted to be guaranteed by this Section,
provided that the guarantor thereof was previously guaranteeing the
Indebtedness being refinanced and the principal amount of such
Indebtedness being refinanced shall not be increased from such
principal amount outstanding on the day prior to the date of such
refinancing; provided, however, that the principal amount of such
Indebtedness being guaranteed may be increased by up to Two Million
Five Hundred Thousand ($2,500,000.00) if, and only if, such
Indebtedness is Permitted Indebtedness;
(f) Declare or pay any dividend or distribution of
any kind on, or purchase, acquire, redeem or retire, any of
Parent's or any Company's equity interests (of any class or type
whatsoever), whether now or hereafter issued and outstanding, other
than Permitted Distributions;
(g) Create any new Subsidiary, or make any advance or
loan to, or any investment in, or acquire all or substantially all
of the assets or capital stock of, or other equity interests in,
any firm, entity, person or corporation, other than (i) investments
in the Subsidiaries, (ii) Permitted Investments, (iii) loans
constituting Permitted Indebtedness hereunder, and (iv) advances to
officers and directors in the ordinary course of business for
travel expenses, employment relocation programs and similar
business expenses subject to a limit of Seven Hundred
Fifty Thousand Dollars ($750,000) in the aggregate at any one time
outstanding; provided, however that such limit shall not apply with
respect to legally required and permissible indemnification of
officers and directors;
(h) Amend or modify any provision of the Lease
Documents to the extent such amendments or modifications would
(i) accelerate the term or maturity date of any obligations
thereunder, (ii) increase the amount of rental payments, royalty
payments or other payments required thereunder, (iii) accelerate
any obligations thereunder, (iv) increase the amount of any
interest or royalty rate attributable thereto, or (v) otherwise
impose any covenant, term, restriction, condition or obligation
determined by the Lender, in its reasonable discretion, to be
materially more restrictive or burdensome to any Company or Parent
than existed prior to such amendment or modification. It is
understood and agreed that to the extent an amendment or
modification of the Lease Documents is permissible hereunder, the
Lender shall be promptly provided with a copy thereof;
(i) Amend or modify any provision of any of the
Additional Term Lender Loan Documents;
5.10 Until payment and satisfaction in full of all
Obligations hereunder, each Company shall:
(a) cause Parent to maintain at all times during the
periods below a Tangible Net Worth of not less than the amount set
forth below for the applicable period:
<TABLE>
<CAPTION>
Quarterly Period Ending Tangible Net Worth Quarterly Period Ending Tangible Net Worth
- ----------------------- ------------------ ----------------------- ------------------
<S> <C> <C> <C>
June 30, 1999 $ 99,000,000 June 30, 2000 $88,000,000
------------ -----------
September 30, 1999 $ 95,000,000 September 30, 2000 $86,000,000
------------ -----------
December 31, 1999 $ 91,000,000 December 31, 2000 $86,000,000
------------ -----------
March 31, 2000 $ 88,000,000 March 31, 2001 $82,000,000
------------ -----------
June 30, 2001 and
each quarter thereafter $83,000,000
-----------
</TABLE>
(b) maintain at the end of each fiscal quarter
during the periods set forth below a Fixed Charge Coverage Ratio of
not less than the ratio set forth below for the applicable period
(measured as follows: (i) for the quarter ending June 30, 1999,
measured on a trailing basis taking into account the prior quarter;
(ii) for the quarter ending September 30, 1999, measured on a
trailing basis taking into account the prior two (2) quarters;
(iii) for the quarter ending December 31, 1999, measured on a
trailing basis taking into account the prior three (3) quarters;
and (iv) for the quarter ending March 31, 2000 and each fiscal
quarter thereafter, measured on a rolling four (4) quarter basis
taking into account such quarter and the prior three (3) fiscal
quarters):
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio Fiscal Quarter Ending Ratio
- --------------------- ------------- --------------------- ---------------
<S> <C> <C> <C>
June 30, 1999 0.61 to 1.0 June 30, 2000 0.75 to 1.0
September 30, 1999 0.80 to 1.0 September 30, 2000 0.84 to 1.0
December 31, 1999 0.80 to 1.0 December 31, 2000 0.89 to 1.0
March 31, 2000 0.68 to 1.0 March 31, 2001 0.91 to 1.0
June 30, 2001 and
each fiscal quarter
thereafter 0.93 to 1.0
(c) maintain at the end of each quarter during
the periods set forth below a Leverage Ratio of no more than
the ratio set forth below for the applicable period:
</TABLE>
<TABLE>
<CAPTION>
Quarterly Period Ending Ratio Quarterly Period Ending Ratio
- ----------------------- --------------- ----------------------- -------------
<S> <C> <C> <C>
June 30, 1999 45 to 1.0 June 30, 2000 35 to 1.0
September 30, 1999 40 to 1.0 September 30, 2000 35 to 1.0
December 31, 1999 35 to 1.0 December 31, 2000 30 to 1.0
March 31, 2000 42 to 1.0 March 31, 2001 37 to 1.0
June 30, 2001 and
each quarter thereafter 30 to 1.0
</TABLE>
5.11 Without the prior written consent of the Lender, the
Parent, on a consolidated basis with its Subsidiaries, will not:
(a) enter into any Operating Lease if after giving effect thereto
the aggregate obligations with respect to Operating Leases of the
Companies during any fiscal year would exceed Seven Million Dollars
($7,000,000), or (b) make any Capital Expenditures (whether subject
to a security interest or otherwise) during any fiscal year in the
aggregate amount in excess of:
(i) $28,000,000.00 for the fiscal year ending
December 31, 1999;
(ii) $14,000,000.00 for the fiscal year ending
December 31, 2000;
(iii) $7,500,000.00 for the six (6) month period
ending June 30, 2001;
provided that if the maximum amount set forth above for any year
- --------
exceeds the aggregate amount of Capital Leases and Capital
Expenditures made or incurred (or committed to be made or incurred)
during such period, then the maximum amount set forth above for the
following period(s) shall be increased by up to Three Million
Dollars ($3,000,000) of the amount of such excess.
5.12 The Company agrees to advise the Lender in writing of
(a) all expenditures (actual or anticipated) in excess of
Five Hundred Thousand Dollars ($500,000.00) for (i) environmental
clean-up, (ii) environmental compliance or (iii) environmental
testing and the impact of said expenses on any Company's Working
Capital, and (b) any notices any Company receives from any local,
state or federal authority advising any Company of any
environmental liability (real or potential) stemming from any
Company's operations, its premises, its waste disposal practices,
or waste disposal sites used by any Company and to provide the
Lender with copies of all such notices if so required.
5.13 Without the prior written consent of the Lender, each
Company agrees that it will not enter into any transaction,
including, without limitation, any purchase, sale, lease, loan or
exchange of property, with any person or entity affiliated with
either Parent, any Company or any Subsidiary, unless such
transaction otherwise complies with the provisions of this
Financing Agreement and is on arms-length terms, except that the
foregoing restrictions shall not apply to (a) Intercompany
Receivables, (b) fees payable to members of the Board of Directors
of Parent in the ordinary course of business consistent with past
practice, except the amount of such fees may be increased by ten
percent (10%) per annum, and (c) advances of expenses otherwise
permitted by this Agreement.
5.14 Each Company, each Guarantor and each Subsidiary
shall take all actions reasonably necessary to assure that its
computer-based systems are able to effectively process date-
sensitive data functions. Each Company represents and warrants to
the Lender that the "Year 2000" problem (that is, the inability of
certain computer applications to recognize and properly perform
date-sensitive functions involving dates subsequent to December 31,
1999) will not have a Material Adverse Effect on any such entity.
Each Company, each Guarantor and each Subsidiary reasonably
anticipates that all computer applications which are material to
the operation of its business will, on a timely basis, properly
perform date-sensitive functions on and after January 1, 2000.
Upon the Lender's request from time to time, each Company shall
provide the Lender with assurances, in form and substance
reasonably satisfactory to the Lender, that each Company's, each
Guarantor's and each Subsidiary's computer systems and applications
are, or will be, Year 2000 compliant on a timely basis.
5.15 Each Company hereby represents and warrants to the
Lender that Viskase Holding has no creditors with respect to
Indebtedness (other than the Lender under the Guaranty, CITBC under
the CITBC Loan Documents and Additional Term Lender under the
Additional Term Lender Loan Documents) and no trade credit of any
kind as of the date hereof. Each Company hereby covenants to
Lender that it shall cause Viskase Holding not to incur any
additional Indebtedness and/or trade credit.
5.16 Subject to the payment in full of the $50,000,000
term loan under the CITBC Financing Agreement, and the terms of the
Additional Term Lender Intercreditor Agreement, the Companies agree
to utilize all net proceeds received by either of them, any
Guarantor or any Subsidiary of the sale, transfer or other
disposition of the (i) capital stock of any Company or Guarantor,
or (ii) substantially all the assets of any Company or Guarantor to
pay the Obligations.
5.17 Each Company hereby represents and warrants to the
Lender that its execution and delivery of a guaranty and grant of
a security interest in its assets to support Parent's obligations
under the Senior Secured Notes was for fair consideration and that
a substantial portion of the proceeds of the Senior Secured Notes
were used to pay direct obligations of the Companies as well as to
provide funds to the Companies for working capital and capital
expenditures.
5.18 Each Company hereby represents and warrants that the
Lease Documents were entered into on December 18, 1990 and have not
been amended or modified since such date except for (a) certain
Lease Supplements dated as of December 28, 1990, July 24, 1991,
respectively, and (b) a certain Amendment No. 1 to Participation
Agreement dated July 24, 1991, and a Waiver to Participation
Agreement dated on or about the date hereof. Each Company hereby
further represents and warrants that true and correct copies of the
Lease Documents, as so amended, have been provided to the Lender.
5.19 Each Company hereby represents and warrants that each
of Viskase Argentina and Viskase De Mexico S.A. de C.V. have ceased
all business operations. Each Company covenants and agrees that it
will not conduct any business within such entities until such time
as 65% of the capital stock of each such entity has been pledged to
the Lender, pursuant to pledge arrangements in form and substance
satisfactory to the Lender.
5.20 Each Company hereby represents and warrants that it
has delivered to the Lender pursuant to Section 2.2(c) hereof true,
correct and complete copies of the CITBC Loan Documents.
5.21 Each Company hereby represents and warrants that it
has delivered to the Lender pursuant to Section 2.2(d) hereof true,
correct and complete copies of the Additional Term Lender Loan
Documents.
SECTION 6. Interest, Fees and Expenses
---------------------------
6.1 Interest on the outstanding balance of the Term Loan
shall be payable monthly to the Lender on the first Business Day of
each month and shall accrue at a rate per annum equal to the
Applicable Rate. All interest rates shall be calculated based on
a 360 day year.
6.2 On demand, the Companies shall reimburse or pay to the
Lender all Out-of-Pocket Expenses and the Documentation Fee.
6.3 After the occurrence and during the continuance of an
Event of Default, each Company shall pay the Lender's standard
charges for, and the reasonable fees and expenses of, the Lender's
personnel used by the Lender for reviewing the books and records of
each Company and for verifying, testing protecting, safeguarding,
preserving or disposing of all or any part of the Collateral.
SECTION 7. Powers
------
7.1 Each Company hereby constitutes the Lender, or any
person or agent which the Lender may designate, as its attorney-in-
fact, at each Company's cost and expense, to exercise all of the
following powers, which being coupled with an interest, shall be
irrevocable until all of the Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and
deliver, all in the name of the Lender or any Company, any and all
checks, notes, drafts, and other documents or instruments relating
to the Collateral;
(b) To receive, open and dispose of all mail
addressed to each Company and to notify postal authorities to
change the address for delivery thereof to such address as the
Lender may designate;
(c) To request from customers indebted on Accounts at
any time, in the name of the Lender or any Company or that of the
Lender's designee, information concerning the amounts owing on the
Accounts;
(d) To transmit to customers indebted on Accounts
notice of the Lender's interests therein and to notify customers
indebted on Accounts to make payment directly to the Lender, for
each Company's account; and
(e) To take or bring, in the name of the Lender
and/or any Company, all steps, actions, suits or proceedings deemed
by the Lender necessary or desirable to enforce or effect
collection of the Accounts.
7.2 Notwithstanding anything set forth herein to the
contrary, the powers set forth in paragraphs (b), (d) and (e) of
Section 7.1 may only be exercised after the occurrence of an Event
- -----------
of Default and until such time as such Event of Default is waived.
SECTION 8. Events of Default and Remedies
------------------------------
8.1 Notwithstanding any provision of this Financing
Agreement to the contrary, an "Event of Default" shall mean the
occurrence or existence of one or more of the following events or
conditions (whatever the reason for such Event of Default and
whether voluntary, involuntary or effected by operation of law):
(a) cessation of the business of Parent, any Company
or any Guarantor or the calling of a meeting of the creditors of
any of them for purposes of compromising the debts and obligations
of any Company;
(b) the failure of the Parent, any Company or any
Guarantor to generally meet its debts as those debts mature;
(c) the commencement by or against the Parent, any
Company or any Guarantor of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings
under any federal or state law, provided that in the event of any
involuntary proceeding commenced against any Company and such
proceeding is not dismissed or discharged within thirty (30) days
after commencement thereof;
(d) (i) breach by any Company of any covenant
contained herein (other than those referred to in paragraph (e)
below) or in any of the other Loan Documents, provided that such
breach by any Company of any of the covenants referenced in this
paragraph (d) shall not be deemed to be an Event of Default unless
and until such breach shall remain unremedied to the Lender's
satisfaction for a period of fifteen (15) days from the date of
such breach or (ii) any representation or warranty contained herein
shall be false or misleading in any material respect when made or
remade;
(e) breach by any Company of any warranty,
representation or covenant of Section 3, Sections 4.3 and 4.4
--------- ------------ ---
(other than the first sentence of Section 4.4), and Sections 5.1,
----------- ------------
5.5, 5.6, 5.9 through 5.11, inclusive, and 5.16;
- --- --- --- ---- ----
(f) failure of any Company to pay any of the
Obligations on the due date thereof;
(g) any Company shall (i) engage in any "prohibited
transaction" as defined in ERISA, (ii) incur any "accumulated
funding deficiency" as defined in ERISA, (iii) incur any
"Reportable Event" as defined in ERISA, (iv) terminate any "Plan",
subject to Title IV of ERISA or (v) engage in any proceeding in
which the Pension Benefit Guaranty Corporation shall seek
appointment, or is appointed, as trustee or administrator of any
Plan, as defined in ERISA; and with respect to this paragraph (g)
such event or condition (x) remains uncured for a period of thirty
(30) days from date of occurrence and (y) could subject any Company
to any tax, penalty or other liability that could reasonably be
expected to have a Material Adverse Effect;
(h) an event of default (after all applicable cure
periods with respect thereto have expired) or an "Event of Default"
shall occur under any of the other Loan Documents;
(i) any Company shall make any payment in connection
with the Additional Term Lender Loan Documents except as expressly
permitted in the CITBC-Additional Term Lender Subordination
Agreement and the Additional Term Lender Intercreditor Agreement;
(j) the occurrence of any event of default (after
giving effect to any applicable grace or cure periods) under (i)
CITBC Loan Documents or the Additional Term Lender Loan Documents
or (ii) any other Indebtedness of any Company having a principal
amount in excess of Two Million Five Hundred Thousand Dollars
($2,500,000); or
(k) a default (after all applicable cure periods with
respect thereto have expired) or an "Event of Default" shall occur
under any of the Lease Documents.
8.2 Upon the occurrence of an Event of Default, the Lender
may, at its option: (a) declare all Obligations immediately due and
payable; and (b) charge each Company the Default Rate of Interest
on all then outstanding or thereafter incurred Obligations in lieu
of the interest provided for in Section 6 of this Financing
---------
Agreement; provided that, with respect to this clause (b), the
-------- ----
Lender give Representative written notice of the Event of Default
(provided that no notice is required if the Event of Default is the
Event listed in paragraph (c) of Section 8.1) and the Companies
-----------
fail to cure the Event of Default to the Lender's satisfaction
within ten (10) days after Representative is deemed to have
received such notice hereunder (or within ten (10) days of the
occurrence of the Event of Default, in the case of an Event of
Default listed in paragraph (c) of Section 8.1). The exercise of
-----------
any option is not exclusive of any other option which may be
exercised at any time by any of the Lender.
8.3 Immediately after the occurrence and during the
continuance of any Event of Default, the Lender may, at its option,
(a) remove from any premises where same may be located any and all
documents, instruments, files and records, and any receptacles or
cabinets containing same, relating to the Accounts, or the Lender
may use, at each Company's expense, such of each Company's
personnel, supplies or space at each Company's places of business
or otherwise, as may be necessary to properly administer and
control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of any Company,
and/or any of the Lender, and generally shall have all other rights
respecting said Accounts, including, without limitation, the right
to (i) accelerate or extend the time of payment, (ii) settle,
compromise, release in whole or in part any amounts owing on any
Accounts and (iii) issue credits in the name of any Company and/or
the Lender; (c) sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed merchandise, with or without
advertisement, at public or private sale, for cash, on credit or
otherwise, at the Lender's sole option and discretion, and the
Lender may bid or become a purchaser at any such sale, free from
any right of redemption, which right is hereby expressly waived by
each Company; (d) foreclose their security interests in the
Collateral by any available judicial procedure, or take possession
of any or all of the Inventory and/or Other Collateral without
judicial process, and enter any premises where any Inventory and/or
Other Collateral may be located for the purpose of taking
possession of or removing the same, and (e) exercise any other
rights and remedies provided in law, in equity, by contract or
otherwise. For the purpose of enabling the Lender to exercise
rights and remedies hereunder, the Companies hereby grant to the
Lender to the extent assignable, licensable, or sublicensable,
without breaching any underlying agreements with third parties, an
irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Companies) to use, assign,
license or sublicense any of the General Intangibles. After the
occurrence and during the continuance of an Event of Default, the
Lender shall have the right, without notice or advertisement, to
sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further
preparation or processing, in the name of each Company and/or the
Lender, or in the name of such other party as the Lender may
designate, either at public or private sale or at any broker's
board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and
conditions as the Lender in its sole discretion may deem advisable.
Lender shall have the right to purchase at any such sale. If any
Inventory shall require rebuilding, repairing, maintenance or
preparation, Lender shall have the right, at its option, to do such
of the aforesaid as is necessary, for the purpose of putting the
Inventory in such saleable form as such Lender shall deem
appropriate. Each Company agrees, at the request of the Lender, to
assemble the Inventory and to make it available to the Lender at
premises of each Company or elsewhere, and to make available to the
Lender the premises and facilities of each Company for the purpose
of the Lender's taking possession of, removing or putting the
Inventory in saleable form. However, if notice of intended
disposition of any Collateral is required by law, it is agreed that
ten (10) days notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from
the exercise of any of the foregoing rights (after deducting all
charges, costs and expenses, including reasonable attorneys' fees)
shall be applied by the Lender to the payment of the Obligations,
whether due or to become due, in such order as the Lender may
elect, and each Company shall remain liable to the Lender for any
deficiencies. The Lender in turn agrees to remit to each Company
or its successors or assigns, any surplus resulting therefrom. The
enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the
exercise of any other rights by the Lender, all of which shall be
cumulative. The mortgage(s), deed(s) of trust and other documents
relating to the Real Estate including, but not limited to, the Real
Estate Collateral Documents shall govern the rights and remedies of
the Lender with respect thereto.
SECTION 9. Miscellaneous
-------------
9.1 Each Company hereby waives diligence, demand,
presentment and protest and any notices thereof as well as notice
of nonpayment. No waiver of any Event of Default shall be
effective unless made by Lender, and such waiver must be in writing
and signed by Lender. No delay or failure by the any of the Lender
to exercise any right or remedy hereunder, whether before or after
the happening of any Event of Default, shall impair any such right,
or shall operate as a waiver of such right or as a waiver of any
such Event of Default. No single or partial exercise by any of the
Lender of any right or remedy precludes any other or further
exercise thereof, or precludes any other right or remedy.
9.2 This Financing Agreement and the documents executed
and delivered in connection therewith: (a) constitute the entire
agreement among each Company and the Lender; (b) supersede any
prior agreements; (c) may be amended only by a writing signed by
each Company and the Lender; and (d) shall bind and benefit each
Company, of the Lender and its respective successors and assigns.
9.3 In no event shall any Company, upon demand by any of
the Lender for payment of any Indebtedness relating hereto, by
acceleration of the maturity thereof, or otherwise, be obligated to
pay interest and fees in excess of the amount permitted by law.
Regardless of any provision herein or in any agreement made in
connection herewith, the Lender shall never be entitled to receive,
charge or apply, as interest on any Indebtedness relating hereto,
any amount in excess of the maximum amount of interest permissible
under applicable law. If Lender ever receives, collects or applies
any such excess, it shall be deemed a partial repayment of
principal and treated as such. If as a result, principal is paid
in full, any remaining excess shall be refunded to the Companies.
This Section 9.3 shall control every other provision hereof and of
-----------
any other agreement made in connection herewith.
9.4 If any provision hereof or of any other agreement made
in connection herewith is held to be illegal or unenforceable, such
provision shall be fully severable, and the remaining provisions of
the applicable agreement shall remain in full force and effect and
shall not be affected by such provision's severance. Furthermore,
in lieu of any such provision, there shall be added automatically
as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be
possible.
9.5 EACH COMPANY AND LENDER HEREBY WAIVES ANY RIGHT TO A
----------------------------------------------------
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
- --------------------------------------------------------------
FINANCING AGREEMENT. EACH COMPANY HEREBY IRREVOCABLY WAIVES
- ------------------------------------------------------------
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY
- -----------------------------------------------------------------
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
- ------------------------------------------------------
9.6 Except as otherwise herein provided, any notice or
other communication required hereunder shall be in writing, and
shall be deemed to have been validly served, given or delivered
when received by the recipient if hand delivered, sent by
commercial overnight courier or sent by facsimile, or three
(3) Business Days after deposit in the United States mail, with
proper first class postage prepaid and addressed to the party to be
notified as follows:
(a) if to the Lender:
D.P. Kelly & Associates, L.P.
701 Harger Road, Suite 190
Oak Brook, IL 60523
Telecopier No. (630) 571-0959
with a copy to:
Freeborn & Peters
311 South Wacker Drive, Suite 3000
Chicago, IL 60606
Attn: Joel T. Cooper, Esq.
Telecopier No.: (312) 360-6572
(b) if to the Companies at:
Viskase Companies, Inc.
6855 West 65th Street
Bedford Park, Illinois 60638
Attention: President and General Counsel
Telecopier No.: (708) 496-4472
with a copy to:
Holleb & Coff
55 East Monroe Street, Suite 4100
Chicago, Illinois 60603
Attn: Allan Brilliant, Esq.
Telecopier: (312) 807-3900
(c) to such other address as any party may designate
for itself by like notice.
9.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
FINANCING AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS.
9.8 Joint and Several Liability. (a) The Companies
and Guarantors hereby acknowledge and agree that neither this
Agreement nor any other Loan Document is being executed on behalf
of the partners of the Lender as individuals and the obligations of
this Agreement are not binding upon any of the limited partners,
officers, employees or beneficiaries of such Lender individually
but are binding only upon the assets and property of such Lender,
and the Companies and Guarantors agree that no beneficiary, limited
partner, employee or officer of such Lender may be held personally
liable or responsible for any obligations of such Lender arising
out of this Agreement or any other Loan Document. With respect to
obligations of Lender arising out of this Agreement or any other
Loan Document, the Companies and Guarantors shall look for payment
or satisfaction of any claim solely to the assets and property of
such Lender.
(c) Lender represents and warrants to the Companies
and Guarantors that it has full power and authority to execute and
deliver this Agreement as general partner for the Lender on whose
behalf Lender is executing this Agreement as set forth on the
signature pages hereto. Except for the foregoing representations
and warranties, the Companies and Guarantors hereby acknowledge and
agree that Lender shall not have any personal obligation or
liability to the Companies and Guarantors under this Agreement or
any other Loan Document, and without limiting the generality of the
foregoing, the Companies and Guarantors shall have no recourse
against Lender for the performance or satisfaction of any
obligation under this Agreement or any other Loan Document, but
shall look for payment or satisfaction of any claim arising under
this Agreement or any other Loan Document solely to the assets and
properties of the Lender.
(d) The liability of each Company under this
Agreement and the Loan Documents in general shall be joint and
several, and each reference herein to the Companies shall be deemed
to refer to each such Company. In furtherance and not in
limitation of Lender's rights and remedies hereunder or at law, the
Lender may proceed under this Agreement and the Loan Documents
against any one or more of the Companies in its absolute and sole
discretion for any of the Obligations or any other liability or
obligation of any Company arising hereunder.
9.9 Interrelationship Among the Companies. Each Company
-------------------------------------
acknowledges that: (a) that the business operations of each
Company are interrelated and compliment one another, and that such
entities have a common business purpose; (b) to permit their
uninterrupted and continuous operations, such entities now require
various funds and other credit accommodations from the Lender; and
(c) the funds obtained by the Companies under the this Agreement
will be used by each Company to (i) refinance certain obligations
for which the Companies were guarantors and which obligations were
secured by liens on each Company's assets and (ii) for general
working capital purposes.
9.10. Within thirty (30) days of the Closing Date, each
Company shall, to the extent permitted by law, cause Viskase
Holding to pledge or transfer to Lender, a participating equity
interest in Viskase Chile, which pledge or transfers, as
applicable, shall be (a) in form and substance reasonably
satisfactory to the Lenders and (b) effective only upon the
acceleration of the Obligations hereunder.
9.11. CITBC Subordination Agreement. The rights, remedies
and priorities of Lender under this Agreement are subject to the
CITBC Subordination Agreement. If any provision of this Agreement
shall be inconsistent with, or contrary to, any provision in the
CITBC Subordination Agreement, the provision in the CITBC
Subordination Agreement shall be controlling and shall supersede
such inconsistent provision to the extent necessary to give full
effect to the provision contained in the CITBC Subordination
Agreement.
9.12. Additional Term Lender Intercreditor Agreement. The
rights, remedies and priorities of the Lenders under this Agreement
are subject to the Additional Term Lender Intercreditor Agreement.
If any provision of this Agreement shall be inconsistent with, or
contrary to, any provision in the Additional Term Lender
Intercreditor Agreement, the provision in the Additional Term
Lender Intercreditor Agreement shall be controlling and shall
supersede such inconsistent provision to the extent necessary to
give full effect to the provision contained in the Additional Term
Lender Intercreditor Agreement.
SECTION 10. Agreements Regarding the Lender
-------------------------------
10.1 (a) The Lender may sell to one or more commercial
banks, commercial finance Lender or other financial institutions,
participations in the loans and extensions of credit made and to be
made to the Companies hereunder. Such participant shall have no
rights as a Lender hereunder, and notwithstanding the sale of any
participation by a Lender, (i) such Lender shall remain solely
responsible to the other parties hereto for the performance of its
obligations hereunder, and (ii) the Companies and the Lender may
continue to deal solely with such Lender with respect to all
matters relating to this Financing Agreement and the transactions
contemplated hereby. It is understood and agreed that no Lender
shall transfer or grant any participation under this Agreement
under which the participant shall have any rights to approve any
amendment to or waiver of this Agreement or any other Loan Document
except to the extent such amendment or waiver would (A) extend the
final scheduled maturity of any Obligations in which such
participant is participating beyond the Maturity Date, (B) increase
the amount of the participant's participation beyond over the
amount thereof in effect (it being understood that waivers or
modifications of conditions precedent, covenants, defaults or
Events of Default shall not constitute a change in the terms of
such participation and that an increase in Lender's Commitment or
Obligations shall be permitted without the consent of any
participant if the participant's participation is not increased as
a result thereof), (C) consent to the assignment or transfer by the
Companies of any of their rights and obligations under this
Agreement, (D) decrease the interest rate applicable to the
principal amount of the Obligations in which the participant is
participating, or (E) release all or substantially all of the
Collateral with respect to any portion of the Obligations in which
a participant is participating. In addition, all amounts payable
under this Financing Agreement to Lender which sells a
participation in accordance with this paragraph shall continue to
be paid directly to such Lender and shall be determined as if such
Lender had not sold any such participation.
(b) The Lender may also (after their consultation
with the Representative) assign to one or more commercial banks,
commercial finance lenders or other financial institutions, all or
a portion of its rights and obligations under this Financing
Agreement. Upon execution of an Assignment and Transfer Agreement,
(i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to
it pursuant to such assignment, have the rights and obligations of
the assigning Lender as the case may be hereunder and (ii) the
assigning Lender shall, to the extent that rights and obligations
hereunder have been assigned by such Lender pursuant to such
assignment, relinquish such Lender's rights and be released from
its obligations under this Financing Agreement. Each Company
shall, if necessary, execute any documents reasonably required to
effectuate and acknowledge the assignments.
(c) Subject to the provisions of Section 10.2, each
------------
Company authorizes Lender to disclose to any participant or
purchasing lender any and all financial information in such
Lender's possession concerning each Company and their affiliates
which has been delivered to such Lender by or on behalf of each
Company pursuant to this Financing Agreement or which has been
delivered to such Lender by or on behalf of each Company in
connection with such Lender's credit evaluation of each Company and
its affiliates prior to entering into this Financing Agreement.
10.2 For the purposes of this Section 10.2, "Confidential
------------
Information" means all financial projections and all other
information delivered to Lender by or on behalf of Parent, any
Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Financing Agreement
that is proprietary in nature and that is clearly marked or labeled
or otherwise adequately identified as being confidential
information of Parent, any Company or any Subsidiary, provided that
such term does not include information that (a) was publicly known
or otherwise known to Lender prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission
by Lender or any person acting on its behalf, (c) otherwise becomes
known to Lender other than through disclosure by Lender, any
Company or any Subsidiary or (d) constitutes financial statements
delivered under Section 5.8 that are otherwise publicly available.
-----------
Lender will maintain the confidentiality of such Confidential
Information in accordance with commercially reasonable procedures
adopted by Lender in good faith to protect confidential information
of third parties delivered to them, provided that Lender may
deliver or disclose Confidential Information to (a) its respective
directors, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the
administration of the Term Loan and such Person has been notified
of these confidentiality provisions), (b) their respective
financial advisors and other professional advisors who agree to
hold confidential the Confidential Information substantially in
accordance with the terms of this Section 10.2, (c) any other
------------
Lender, (d) any bank or other commercial lender to which a Lender
sells or offers to sell a portion of its rights and obligations
under this Financing Agreement or any participation therein (if
such person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 10.2), or (e) any other person (including bank auditors and
- ------------
other regulatory officials) to which such delivery or disclosure
may be necessary or appropriate (i) to comply with compliance with
any applicable law, rule, regulation or order, (ii) in response to
any subpoena or other legal process after giving the Companies
notice and an opportunity to seek judicial protection for such
materials, (iii) in connection with any litigation to which Lender
is a party or (iv) if an Event of Default has occurred and is
continuing, to the extent Lender may reasonably determine such
delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under
this Financing Agreement. A lender becoming a lender subsequent to
the initial execution and delivery of this Financing Agreement, by
its execution and delivery of an Assignment and Transfer Agreement,
will be deemed to have agreed to be bound by, and to be entitled to
the benefits of, this Section 10.2.
------------
IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be executed, agreed to, accepted and
delivered in Chicago, Illinois by their proper and duly authorized
officers as of the ____ day of June, 1999.
LENDER
------
D.P. KELLY AND ASSOCIATES, L.P.
By:
-----------------------------
Its General Partner
By:
----------------------------
Title
----------------------------
BORROWERS
---------
VISKASE CORPORATION, a
Pennsylvania corporation
By:
----------------------------
Its:
-----------------------
VISKASE SALES CORPORATION, a
Delaware corporation
By:
---------------------------
Its:
<PAGE>
[VISKASE CORPORATION]
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement"), dated as of June __,
----------------
1999, made by VISKASE CORPORATION, a Pennsylvania corporation (the
-------------------
"Pledgor"), to THE CIT GROUP/BUSINESS CREDIT, INC., a New York
----------------------------------
corporation, as agent ("Agent") on behalf of itself and the lenders
("Lenders") a party to that certain Financing Agreement of even date
herewith (as amended, modified or restated from time to time, the
"Financing Agreement") among Lenders and each of Pledgor and VISKASE
-------
SALES CORPORATION ("Viskase Sales"), a Delaware corporation (the Pledgor
- -----------------
and Viskase Sales are collectively referred to as the "Companies"). All
capitalized terms used in this Agreement but not otherwise defined
herein shall have the respective meanings as ascribed to such terms in
the Financing Agreement.
W I T N E S S E T H:
-------------------
WHEREAS, Pledgor, as party to the Financing Agreement and the
parent of Viskase Sales, will receive significant and material benefits
from the financial accommodations made in connection with the Financing
Agreement;
WHEREAS, pursuant to the Financing Agreement, the Companies are
about to incur certain Obligations;
WHEREAS, pursuant to the Financing Agreement the Pledgor has
granted to the Agent, on behalf and for the benefit of the Lenders, a
lien upon and security interest in substantially all of its property and
assets, including, without limitation, the Pledged Collateral (defined
below), to secure the prompt and complete payment, performance and
observance of the Obligations;
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of capital stock described in Schedule I hereto (the "Pledged
----------
Shares") and issued by the issuers named therein; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement that the Pledgor shall have entered into this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Agent and Lenders from time to time to make the extensions of
credit and other financial accommodations contemplated by the Financing
Agreement, the Pledgor hereby agrees with the Agent, on behalf and for
the benefit of the Lenders, as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Agent, on
------
behalf and for the benefit of the Lenders, and grants to the Agent, on
behalf and for the benefit of the Lenders, a lien upon and security
interest in, all of the following property and interests in property
(the "Pledged Collateral"):
(i) all of the Pledged Shares;
(ii) all additional shares of stock or other securities
of any issuer of the Pledged Shares from time to time acquired by
the Pledgor in any manner and all shares of stock or other
securities of any Person owned by the Pledgor who, after the date
of this Agreement, becomes, as a result of any occurrence, a
Subsidiary of the Pledgor (any such shares being "Additional
Shares"); provided, however that the pledge of capital stock of any
foreign Subsidiary of Pledgor shall be limited to sixty-five
percent (65%) of such capital stock;
(iii) the certificates representing the shares
referred to in clauses (i) and (ii) above; and
(iv) all dividends, cash, instruments and other property
or proceeds, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
SECTION 2. Security for Obligations. This Agreement secures and
------------------------
the Pledged Collateral is security for the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of, and the
performance and observance of, the Obligations.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Agent pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent
shall have the right, at any time in its discretion and without notice
to the Pledgor, to transfer to or to register in its name or in the name
of any of its nominees any or all of the Pledged Collateral. In
addition, the Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The Pledgor makes the
------------------------------
following representations:
(a) The Pledged Shares (i) have been duly authorized and
validly issued; (ii) are fully paid and non-assessable; and
(iii) constitute 100% of the issued and outstanding shares of stock of
the issuers owned by the Pledgor named in Schedule I hereto.
----------
(b) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any mortgage, pledge, lien, charge,
security interest, conditional sale or other title retention agreement
or other encumbrance of any kind or description, including, without
limitation, any agreement to give or grant a lien ("Lien"), except for
the Lien created by this Agreement and Liens granted to the Term Lenders
and D.P. Kelly (collectively, the "Permitted Liens").
(c) Assuming continuous possession of the Pledged Shares by
the Agent, the pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of all of the Obligations.
(d) 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 the Pledgor of the Pledged Collateral
pursuant to this Agreement or for the due execution, delivery or
performance of this Agreement by the Pledgor, or (ii) for the exercise
by the Agent of the voting or other rights provided for in this
Agreement or of the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally.
(e) The issuers named in Schedule I are the direct
----------
Subsidiaries of the Pledgor on the date hereof.
SECTION 5. Further Assurances, Etc. (a) The Pledgor agrees that
-----------------------
at any time and from time to time, at the cost and expense of the
Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in
order to perfect and protect the Lien granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
(b) The Pledgor agrees to defend the title to the Pledged
Collateral and the Lien thereon of the Agent against the claim of any
other Person and to maintain and preserve such Lien until indefeasible
payment in full of all of the Obligations.
SECTION 6. Voting Rights; Dividends; Etc.
------------------------------
(a) As long as no Event of Default shall have occurred and be
continuing (and, in the case of subsection (a)(i) of this Section 6, as
---------
long as no notice thereof shall have been given by the Agent to the
Pledgor):
(i) The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Financing Agreement or any
other Loan Document; provided, however, that the Pledgor shall not
exercise or shall refrain from exercising any such right if such
action could reasonably be expected to have a material adverse
effect on the value of the Pledged Collateral consisting of the
capital stock of any Subsidiary of Pledgor.
(ii) The Pledgor shall be entitled to receive and retain
any and all dividends paid in respect of the Pledged Collateral,
other than any and all:
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus; and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
all of which shall be forthwith delivered to the Agent to hold as
Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from
the other property or funds of the Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i)
above and to receive the dividends which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default (and, in the case of subsection (a)(i) of this
Section 6, upon notice thereof given by the Agent to the Pledgor):
- ---------
(i) Upon notice by the Agent to the Pledgor, all rights
of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) above shall cease, and all such rights shall
---------------
thereupon become vested in the Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights;
(ii) All rights of the Pledgor to receive the dividends
which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease, and all such rights
----------------
shall thereupon become vested in the Agent who shall thereupon have
the sole right to receive and hold as Pledged Collateral such
dividends;
(iii) All dividends which are received by the Pledgor
contrary to the provisions of paragraph (ii) of this Section 6(b)
-----------
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement); and
(iv) The Pledgor shall, if necessary to permit the Agent
to exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 6(b)(i) above and to receive all
--------------
dividends and distributions which it may be entitled to receive
under Section 6(b)(ii) above, execute and deliver to the Agent,
---------------
from time to time and upon written notice of the Agent, appropriate
proxies, dividend payment orders and other instruments as the Agent
may reasonably request. The foregoing shall not in any way limit
the Agent's power and authority granted pursuant to Section 8
----------
hereof.
SECTION 7. Transfers and Other Liens; Additional Shares. (a) The
--------------------------------------------
Pledgor agrees that it will not (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the Permitted
Liens.
(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares not to issue any shares of stock or other securities
in addition to or in substitution for the Pledged Shares, except, with
the written consent of the Agent, to the Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
and all Additional Shares, and (iii) promptly (and in any event within
three Business Days) deliver to the Agent a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule II hereto
(a "Pledge Amendment"), in respect of the Additional Shares, together
with all certificates or instruments representing or evidencing the
same. The Pledgor hereby (i) authorizes the Agent to attach each Pledge
Amendment to this Pledge Agreement, (ii) agrees that all Additional
Shares listed on any Pledge Amendment delivered to the Agent shall for
all purposes hereunder constitute Pledged Shares, and (iii) is deemed to
have made, upon such delivery, the representations and warranties
contained in Section 4 hereof with respect to such Pledged Collateral.
---------
SECTION 8. Agent Appointed Attorney-in-Fact and Proxy. The
------------------------------------------
Pledgor hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact and proxy with full irrevocable power and
authority in the place and stead of the Pledgor and in the name of the
Pledgor or in its own name, from time to time in the Agent's discretion
upon the occurrence and during the continuance of any Event of Default,
for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute and deliver any and all
documents and instruments which the Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, indorse and collect all instruments made
payable to the Pledgor representing any dividend or other distribution
or payment in respect of the Pledged Collateral or any part thereof and
to give full discharge of the same and to vote or grant any consent in
respect of the Pledged Shares authorized by Section 6(b) hereof;
-----------
provided, however, that the Agent will forbear from exercising the power
of attorney or any of the rights granted to the Agent pursuant to this
Section 8 unless and until the Agent shall have requested that Pledgor
- ---------
take such action, and Pledgor shall have failed to take such action
within five (5) days of its receipt of such request. The Pledgor hereby
ratifies, to the extent permitted by law, all that any said attorney
shall lawfully do or cause to be done by virtue hereof. This power,
being coupled with an interest, is irrevocable until the Obligations are
paid in full and all commitments under the Financing Agreement and the
Loan Documents have terminated.
SECTION 9. Agent Perform. If the Pledgor fails to perform any
--------------
agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Pledgor under
Section 12 hereof and shall constitute Obligations secured hereby.
- ----------
SECTION 10. Reasonable Care. The Agent shall be deemed to have
---------------
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, it being understood that neither the Agent nor any Lender
shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Agent or
any other Lender has or is deemed to have knowledge of any such matter,
or (ii) taking any necessary steps to preserve rights against any Person
with respect to any Pledged Collateral.
SECTION 11. Remedies Upon Default. If any Event of Default shall
---------------------
have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party after default under the Uniform Commercial Code (the "Code") in
effect in the State of Illinois at that time, and the Agent may also,
without notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at
any exchange, broker's board or at any office of the Agent or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned. The Pledgor hereby waives any claims against the
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Agent
accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) If the Agent shall determine to exercise its right to
sell all or any of the Pledged Collateral pursuant to this Section 11,
----------
the Pledgor agrees that, upon request of the Agent, the Pledgor will, at
its own cost and expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Shares and its directors and
officers to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Agent,
necessary or advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration
statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and
to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities
and Exchange Commission ("SEC") applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Agent;
(iii) make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the
provisions of section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Agent by reason of the
failure by the Pledgor to perform any of the covenants contained in this
Section 11 and, consequently, agrees that, if the Pledgor shall fail to
- ----------
perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value of the Pledged Collateral
on the date the Agent shall demand compliance with this Section.
(c) The Pledgor recognizes that, by reason of the
aforementioned requirements and certain prohibitions contained in the
Securities Act and applicable state securities laws, the Agent may, at
its option, elect not to require the Pledgor to register all or any part
of the Pledged Collateral and may therefore be compelled, with respect
to any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to acquire such
securities for their own account, for investment, and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale without such
restrictions and, notwithstanding such circumstances, agrees that any
such sale shall be deemed to have been made in a commercially reasonable
manner. The Agent shall be under no obligation to delay the sale of any
of the Pledged Collateral for the period of time necessary to permit the
Pledgor to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the Pledgor
would agree to do so.
(d) If the Agent determines to exercise its right to sell any
or all of the Pledged Collateral pursuant to this Section 11, upon
----------
written request, the Pledgor shall, from time to time, furnish to the
Agent all such information as the Agent may request in order to
determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by the Agent as exempt transactions
under the Securities Act and rules of the SEC thereunder, as the same
are from time to time in effect.
(e) Subject to the requirements set forth in the Loan
Documents, any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged
Collateral shall be applied by the Agent in the order of priorities set
forth in the Loan Documents.
SECTION 12. Expenses. The Pledgor will upon demand pay to the
--------
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of the Agent's counsel and
of any expert, and agents, which the Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any
of the rights and remedies hereunder of the Agent, or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.
SECTION 13. INTENTIONALLY DELETED.
---------------------
SECTION 14. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent and the Pledgor, and then any such
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 15. No Waiver; Remedies. (a) No failure on the part of
-------------------
Agent to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or the Financing Agreement or
other Loan Documents.
(b) Failure by the Agent or any other Lender at any time or
times hereafter to require strict performance by the Pledgor or any
other Person of any of the provisions, warranties, terms or conditions
contained in the Financing Agreement or other Loan Documents now or at
any time or times hereafter executed by the Pledgor or any such other
Person and delivered to any of the Agent shall not waive, affect or
diminish any right of the Agent at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the
Agent, or any agent, officer or employee of Agent.
SECTION 16. Addresses for Notices. Except as otherwise provided
---------------------
herein, all notices and correspondences hereunder shall be in writing
and shall be delivered and deemed to be effective in the manner and at
the time set forth in Section 12.6 of the Financing Agreement.
SECTION 17. Continuing Security Interest; Transfer of Obligations.
-----------------------------------------------------
This Pledge Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until
payment in full of the Obligations and the termination of any
commitments under the Financing Agreement or any Loan Document, (ii) be
binding upon the Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Agent hereunder, to the
benefit of and be enforceable by the Agent and its successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise transfer all
or any portion of the Obligations owing to it to any other Person, and
such other Person shall thereupon become vested with all the rights in
respect thereof granted to such Lender herein or otherwise with respect
to such of the Obligations so transferred or assigned, subject, however,
to compliance with the provisions of the Financing Agreement and Loan
Documents in respect of assignments. Upon the payment in full of the
Obligations, the Pledgor shall be entitled to the return, upon its
request and at its expense, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 18. Governing Law; Severability Terms. This agreement
---------------------------------
shall be governed by, and be construed and interpreted in accordance
with, the internal law of the State of Illinois, without regard to
conflict of law principles. Wherever 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 prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity and
without invalidating the remaining provisions of this Agreement. Unless
otherwise defined herein, terms defined in Article 9 of the Uniform
Commercial Code as in effect in the State of Illinois are used herein as
therein defined.
SECTION 19. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT
-------------------- -------------------------
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
- ----------------------------------------------------------------------
AND ALL RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
- ------------------------------------------------------------------
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
- -------------------------------------------------------------------
THIS AGREEMENT.
- --------------
SECTION 20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this Agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
duly executed and delivered by its duly authorized officer on the date
first above written.
VISKASE CORPORATION, a
Pennsylvania corporation
By:
---------------------
Its:
---------------------
ACCEPTED AND ACKNOWLEDGED:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
---------------------------
Its:
---------------------------
[VISKASE SALES]
PLEDGE AGREEMENT
----------------
This PLEDGE AGREEMENT (this "Agreement"), dated as of June __,
----------------
1999, made by VISKASE SALES CORPORATION, a Delaware corporation (the
-------------------------
"Pledgor"), to THE CIT GROUP/BUSINESS CREDIT, INC., a New York
----------------------------------
corporation, as agent ("Agent") on behalf of itself and the lenders
("Lenders") a party to that certain Financing Agreement of even date
herewith (as amended, modified or restated from time to time, the
"Financing Agreement") among Lenders and each of Pledgor and VISKASE
-------
CORPORATION ("Viskase Corporation"), a Pennsylvania corporation (the
- -----------
Pledgor and Viskase Corporation are collectively referred to as the
"Companies"). All capitalized terms used in this Agreement but not
otherwise defined herein shall have the respective meanings as ascribed
to such terms in the Financing Agreement.
W I T N E S S E T H:
-------------------
WHEREAS, Pledgor, as party to the Financing Agreement and the
subsidiary of Viskase Corporation, will receive significant and material
benefits from the financial accommodations made in connection with the
Financing Agreement;
WHEREAS, pursuant to the Financing Agreement, the Companies are
about to incur certain Obligations;
WHEREAS, pursuant to the Financing Agreement the Pledgor has
granted to the Agent, on behalf and for the benefit of the Lenders, a
lien upon and security interest in substantially all of its property and
assets, including, without limitation, the Pledged Collateral (defined
below), to secure the prompt and complete payment, performance and
observance of the Obligations;
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of capital stock described in Schedule I hereto (the "Pledged
----------
Shares") and issued by the issuers named therein; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement that the Pledgor shall have entered into this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Agent and Lenders from time to time to make the extensions of
credit and other financial accommodations contemplated by the Financing
Agreement, the Pledgor hereby agrees with the Agent, on behalf and for
the benefit of the Lenders, as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Agent, on behalf
and for the benefit of the Lenders, and grants to the Agent, on behalf
and for the benefit of the Lenders, a lien upon and security interest
in, all of the following property and interests in property (the
"Pledged Collateral"):
(i) all of the Pledged Shares;
(ii) all additional shares of stock or other securities of any
issuer of the Pledged Shares from time to time acquired by the
Pledgor in any manner and all shares of stock or other securities
of any Person owned by the Pledgor who, after the date of this
Agreement, becomes, as a result of any occurrence, a Subsidiary of
the Pledgor (any such shares being "Additional Shares"); provided,
however that the pledge of capital stock of any foreign Subsidiary
of Pledgor shall be limited to sixty-five percent (65%) of such
capital stock;
(iii) the certificates representing the shares referred to in
clauses (i) and (ii) above; and
(iv) all dividends, cash, instruments and other property or
proceeds, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
SECTION 2. Security for Obligations. This Agreement secures and the
------------------------
Pledged Collateral is security for the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of, and the
performance and observance of, the Obligations.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Agent pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent
shall have the right, at any time in its discretion and without notice
to the Pledgor, to transfer to or to register in its name or in the name
of any of its nominees any or all of the Pledged Collateral. In
addition, the Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The Pledgor makes the
------------------------------
following representations:
(a) The Pledged Shares (i) have been duly authorized and validly
issued; (ii) are fully paid and non-assessable; and (iii) constitute
100% of the issued and outstanding shares of stock of the issuers owned
by the Pledgor named in Schedule I hereto.
----------
(b) The Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any mortgage, pledge, lien, charge,
security interest, conditional sale or other title retention agreement
or other encumbrance of any kind or description, including, without
limitation, any agreement to give or grant a lien ("Lien"), except for
the Lien created by this Agreement and Liens granted to the Term Lenders
and D.P. Kelly (collectively, the "Permitted Liens").
(c) Assuming continuous possession of the Pledged Shares by the
Agent, the pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of all of the Obligations.
(d) 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 the Pledgor of the Pledged Collateral
pursuant to this Agreement or for the due execution, delivery or
performance of this Agreement by the Pledgor, or (ii) for the exercise
by the Agent of the voting or other rights provided for in this
Agreement or of the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally.
(e) The issuers named in Schedule I are the direct Subsidiaries of
----------
the Pledgor on the date hereof.
SECTION 5. Further Assurances, Etc. (a) The Pledgor agrees that at
any time and from time to time, at the cost and expense of the Pledgor,
the Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to perfect
and protect the Lien granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
(b) The Pledgor agrees to defend the title to the Pledged
Collateral and the Lien thereon of the Agent against the claim of any
other Person and to maintain and preserve such Lien until indefeasible
payment in full of all of the Obligations.
SECTION 6. Voting Rights; Dividends; Etc.
-----------------------------
(a) As long as no Event of Default shall have occurred and be
continuing (and, in the case of subsection (a)(i) of this Section 6, as
---------
long as no notice thereof shall have been given by the Agent to the
Pledgor):
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Financing Agreement or any
other Loan Document; provided, however, that the Pledgor shall not
exercise or shall refrain from exercising any such right if such
action could reasonably be expected to have a material adverse
effect on the value of the Pledged Collateral consisting of the
capital stock of any Subsidiary of Pledgor.
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends paid in respect of the Pledged Collateral, other
than any and all:
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with
a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in
-surplus; and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
all of which shall be forthwith delivered to the Agent to hold as
Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from
the other property or funds of the Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose
of enabling the Pledgor to exercise the voting and other rights
which it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends which it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default (and, in the case of subsection (a)(i) of this Section 6, upon
---------
notice thereof given by the Agent to the Pledgor):
(i) Upon notice by the Agent to the Pledgor, all rights of
the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) above shall cease, and all such rights shall
---------------
thereupon become vested in the Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights;
(ii) All rights of the Pledgor to receive the dividends
which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease, and all such rights
----------------
shall thereupon become vested in the Agent who shall thereupon have
the sole right to receive and hold as Pledged Collateral such
dividends;
(iii) All dividends which are received by the Pledgor
contrary to the provisions of paragraph (ii) of this Section 6(b)
------------
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement); and
(v) The Pledgor shall, if necessary to permit the Agent to
exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 6(b)(i) above and to receive all
---------------
dividends and distributions which it may be entitled to receive
under Section 6(b)(ii) above, execute and deliver to the Agent,
----------------
from time to time and upon written notice of the Agent, appropriate
proxies, dividend payment orders and other instruments as the Agent
may reasonably request. The foregoing shall not in any way limit
the Agent's power and authority granted pursuant to Section 8
---------
hereof.
SECTION 7. Transfers and Other Liens; Additional Shares. (a) The
--------------------------------------------
Pledgor agrees that it will not (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the Permitted
Liens.
(b) The Pledgor agrees that it will (i) cause each issuer of the
Pledged Shares not to issue any shares of stock or other securities in
addition to or in substitution for the Pledged Shares, except, with the
written consent of the Agent, to the Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
and all Additional Shares, and (iii) promptly (and in any event within
three Business Days) deliver to the Agent a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule II hereto
-----------
(a "Pledge Amendment"), in respect of the Additional Shares, together
with all certificates or instruments representing or evidencing the
same. The Pledgor hereby (i) authorizes the Agent to attach each Pledge
Amendment to this Pledge Agreement, (ii) agrees that all Additional
Shares listed on any Pledge Amendment delivered to the Agent shall for
all purposes hereunder constitute Pledged Shares, and (iii) is deemed to
have made, upon such delivery, the representations and warranties
contained in Section 4 hereof with respect to such Pledged Collateral.
---------
SECTION 8. Agent Appointed Attorney-in-Fact and Proxy. The Pledgor
------------------------------------------
hereby irrevocably constitutes and appoints the Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact and proxy with full irrevocable power and authority in
the place and stead of the Pledgor and in the name of the Pledgor or in
its own name, from time to time in the Agent's discretion upon the
occurrence and during the continuance of any Event of Default, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable
to the Pledgor representing any dividend or other distribution or
payment in respect of the Pledged Collateral or any part thereof and to
give full discharge of the same and to vote or grant any consent in
respect of the Pledged Shares authorized by Section 6(b) hereof;
------------
provided, however, that the Agent will forbear from exercising the power
of attorney or any of the rights granted to the Agent pursuant to this
Section 8 unless and until the Agent shall have requested that Pledgor
- ---------
take such action, and Pledgor shall have failed to take such action
within five (5) days of its receipt of such request. The Pledgor hereby
ratifies, to the extent permitted by law, all that any said attorney
shall lawfully do or cause to be done by virtue hereof. This power,
being coupled with an interest, is irrevocable until the Obligations are
paid in full and all commitments under the Financing Agreement and the
Loan Documents have terminated.
SECTION 9. Agent Perform. If the Pledgor fails to perform any
-------------
agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Pledgor under
Section 12 hereof and shall constitute Obligations secured hereby.
- ----------
SECTION 10. Reasonable Care. The Agent shall be deemed to have
---------------
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, it being understood that neither the Agent nor any Lender
shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Agent or
any other Lender has or is deemed to have knowledge of any such matter,
or (ii) taking any necessary steps to preserve rights against any Person
with respect to any Pledged Collateral.
SECTION 11. Remedies Upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party after default under the Uniform Commercial Code (the "Code") in
effect in the State of Illinois at that time, and the Agent may also,
without notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at
any exchange, broker's board or at any office of the Agent or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned. The Pledgor hereby waives any claims against the
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Agent
accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) If the Agent shall determine to exercise its right to sell all
or any of the Pledged Collateral pursuant to this Section 11, the
----------
Pledgor agrees that, upon request of the Agent, the Pledgor will, at its
own cost and expense:
(i) execute and deliver, and use its best efforts to cause
each issuer of the Pledged Shares and its directors and officers to
execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Agent, necessary or advisable
to register such Pledged Shares under the provisions of the
Securities Act of 1933, as from time to time amended (the
"Securities Act"), and to cause the registration statement relating
thereto to become effective and to remain effective for such period
as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
prospectus which, in the opinion of the Agent, are necessary or
advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission ("SEC") applicable thereto;
(ii) use its best efforts to qualify the Pledged Collateral
under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Pledged
Collateral, as requested by the Agent;
(iii) make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the
provisions of section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable
law.
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Agent by reason of the
failure by the Pledgor to perform any of the covenants contained in this
Section 11 and, consequently, agrees that, if the Pledgor shall fail to
- ----------
perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value of the Pledged Collateral
on the date the Agent shall demand compliance with this Section.
(c) The Pledgor recognizes that, by reason of the aforementioned
requirements and certain prohibitions contained in the Securities Act
and applicable state securities laws, the Agent may, at its option,
elect not to require the Pledgor to register all or any part of the
Pledged Collateral and may therefore be compelled, with respect to any
sale of all or any part of the Pledged Collateral, to limit purchasers
to those who will agree, among other things, to acquire such securities
for their own account, for investment, and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale without such
restrictions and, notwithstanding such circumstances, agrees that any
such sale shall be deemed to have been made in a commercially reasonable
manner. The Agent shall be under no obligation to delay the sale of any
of the Pledged Collateral for the period of time necessary to permit the
Pledgor to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the Pledgor
would agree to do so.
(d) If the Agent determines to exercise its right to sell any or
all of the Pledged Collateral pursuant to this Section 11, upon written
----------
request, the Pledgor shall, from time to time, furnish to the Agent all
such information as the Agent may request in order to determine the
number of shares and other instruments included in the Pledged
Collateral which may be sold by the Agent as exempt transactions under
the Securities Act and rules of the SEC thereunder, as the same are from
time to time in effect.
(e) Subject to the requirements set forth in the Loan Documents,
any cash held by the Agent as Pledged Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral shall
be applied by the Agent in the order of priorities set forth in the Loan
Documents.
SECTION 12. Expenses. The Pledgor will upon demand pay to the Agent
--------
the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of the Agent's counsel and
of any expert, and agents, which the Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any
of the rights and remedies hereunder of the Agent, or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.
SECTION 13. INTENTIONALLY DELETED.
SECTION 14. Amendments, Etc. No amendment or waiver of any provision
----------------
of this Agreement nor consent to any departure by the Pledgor herefrom
shall in any event be effective unless the same shall be in writing and
signed by the Agent and the Pledgor, and then any such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 15. No Waiver; Remedies. (a) No failure on the part of Agent
-------------------
to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or the Financing Agreement or
other Loan Documents.
(b) Failure by the Agent or any other Lender at any time or times
hereafter to require strict performance by the Pledgor or any other
Person of any of the provisions, warranties, terms or conditions
contained in the Financing Agreement or other Loan Documents now or at
any time or times hereafter executed by the Pledgor or any such other
Person and delivered to any of the Agent shall not waive, affect or
diminish any right of the Agent at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the
Agent, or any agent, officer or employee of Agent.
SECTION 16. Addresses for Notices. Except as otherwise provided
---------------------
herein, all notices and correspondences hereunder shall be in writing
and shall be delivered and deemed to be effective in the manner and at
the time set forth in Section 12.6 of the Financing Agreement.
SECTION 17. Continuing Security Interest; Transfer of Obligations.
-----------------------------------------------------
This Pledge Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until
payment in full of the Obligations and the termination of any
commitments under the Financing Agreement or any Loan Document, (ii) be
binding upon the Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Agent hereunder, to the
benefit of and be enforceable by the Agent and its successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise transfer all
or any portion of the Obligations owing to it to any other Person, and
such other Person shall thereupon become vested with all the rights in
respect thereof granted to such Lender herein or otherwise with respect
to such of the Obligations so transferred or assigned, subject, however,
to compliance with the provisions of the Financing Agreement and Loan
Documents in respect of assignments. Upon the payment in full of the
Obligations, the Pledgor shall be entitled to the return, upon its
request and at its expense, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 18. Governing Law; Severability Terms. This agreement shall be
---------------------------------
governed by, and be construed and interpreted in accordance with, the
internal law of the State of Illinois, without regard to conflict of law
principles. Wherever 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
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity and
without invalidating the remaining provisions of this Agreement. Unless
otherwise defined herein, terms defined in Article 9 of the Uniform
Commercial Code as in effect in the State of Illinois are used herein as
therein defined.
SECTION 19. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT HEREBY
-------------------- --------------------------------
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
- ----------------------------------------------------------------------
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
- -------------------------------------------------------------------
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
- --------------------------------------------------------------
AGREEMENT.
- ---------
SECTION 20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this Agreement.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
duly executed and delivered by its duly authorized officer on the date
first above written.
VISKASE SALES CORPORATION, a
Delaware corporation
By:
-------------------------------------
Its:
-----------------------------------
ACCEPTED AND ACKNOWLEDGED:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
----------------------------
Its:
----------------------------
[VISKASE HOLDING]
PLEDGE AGREEMENT
----------------
This PLEDGE AGREEMENT (this "Agreement"), dated as of June __,
----------------
1999, made by VISKASE HOLDING CORPORATION, a Delaware corporation (the
---------------------------
"Pledgor"), to THE CIT GROUP/BUSINESS CREDIT, INC., a New York
-----------------------------------
corporation, as agent ("Agent") on behalf of itself and the lenders
("Lenders") a party to that certain Financing Agreement of even date
herewith (as amended, modified or restated from time to time, the
"Financing Agreement") among Lenders and each of VISKASE CORPORATION, a
-------------------
Pennsylvania corporation and VISKASE SALES CORPORATION, a Delaware
-------------------------
corporation (collectively, the "Companies"). All capitalized terms used
in this Agreement but not otherwise defined herein shall have the
respective meanings as ascribed to such terms in the Financing
Agreement.
W I T N E S S E T H:
-------------------
WHEREAS, Pledgor, as an affiliate of each of the Companies, will
receive significant and material benefits from the financial
accommodations made to the Companies in connection with the Financing
Agreement;
WHEREAS, pursuant to the Financing Agreement, the Companies are
about to incur certain Obligations;
WHEREAS, pursuant to that certain Security Agreement of even date
herewith between Pledgor and Agent (the "Security Agreement"), the
Pledgor has granted to the Agent, on behalf and for the benefit of the
Lenders, a lien upon and security interest in substantially all of its
property and assets, including, without limitation, the Pledged
Collateral (defined below), to secure the prompt and complete payment,
performance and observance of the Guaranteed Obligations (as defined in
the Security Agreement);
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of capital stock described in Schedule I hereto (the "Pledged
----------
Shares") and issued by the issuers named therein; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement that the Pledgor shall have entered into this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Agent and Lenders from time to time to make the extensions of
credit and other financial accommodations contemplated by the Financing
Agreement, the Pledgor hereby agrees with the Agent, on behalf and for
the benefit of the Lenders, as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Agent, on
------
behalf and for the benefit of the Lenders, and grants to the Agent, on
behalf and for the benefit of the Lenders, a lien upon and security
interest in, all of the following property and interests in property
(the "Pledged Collateral"):
(i) all of the Pledged Shares;
(ii) all additional shares of stock or other securities of
any issuer of the Pledged Shares from time to time acquired by the
Pledgor in any manner and all shares of stock or other securities
of any Person owned by the Pledgor who, after the date of this
Agreement, becomes, as a result of any occurrence, a Subsidiary of
the Pledgor (any such shares being "Additional Shares"); provided,
however that the pledge of capital stock of any foreign Subsidiary
of Pledgor shall be limited to sixty-five percent (65%) of such
capital stock;
(iii) the certificates representing the shares referred to in
clauses (i) and (ii) above; and
(iv) all dividends, cash, instruments and other property or
proceeds, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
SECTION 2. Security for Guaranteed Obligations. This Agreement
-----------------------------------
secures and the Pledged Collateral is security for the prompt and
complete payment (whether at stated maturity, by acceleration or
otherwise) of, and the performance and observance of, the Guaranteed
Obligations.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Agent pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent
shall have the right, at any time in its discretion and without notice
to the Pledgor, to transfer to or to register in its name or in the name
of any of its nominees any or all of the Pledged Collateral. In
addition, the Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The Pledgor makes the
------------------------------
following representations:
(a) The Pledged Shares (i) have been duly authorized and
validly issued; (ii) are fully paid and non-assessable; and
(iii) constitute 65% of the issued and outstanding shares of stock of
each of Viskase Brazil (as defined in the Financing Agreement) and
Viskase Europe (as defined in the Financing Agreement) and 100% of
Viskase Australia Limited, a Delaware corporation.
(b) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any mortgage, pledge, lien, charge,
security interest, conditional sale or other title retention agreement
or other encumbrance of any kind or description, including, without
limitation, any agreement to give or grant a lien ("Lien"), except for
the Lien created by this Agreement and Liens granted to the Term Lenders
and D.P. Kelly (collectively, the "Permitted Liens").
(c) Assuming continuous possession of the Pledged Shares by
the Agent, the pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of all of the Guaranteed
Obligations.
(d) 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 the Pledgor of the Pledged Collateral
pursuant to this Agreement or for the due execution, delivery or
performance of this Agreement by the Pledgor, or (ii) for the exercise
by the Agent of the voting or other rights provided for in this
Agreement or of the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally.
(e) The issuers named in Schedule I are the direct
----------
Subsidiaries of the Pledgor on the date hereof.
(f) Pledgor agrees to register the pledge of the Pledged
Shares of each of Viskase Brazil and Viskase Europe on the books of each
such Company.
SECTION 5. Further Assurances, Etc. (a) The Pledgor agrees that at
------------------------
any time and from time to time, at the cost and expense of the Pledgor,
the Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to perfect
and protect the Lien granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
(b) The Pledgor agrees to defend the title to the Pledged
Collateral and the Lien thereon of the Agent against the claim of any
other Person and to maintain and preserve such Lien until indefeasible
payment in full of all of the Guaranteed Obligations.
SECTION 6. Voting Rights; Dividends; Etc.
------------------------------
(a) As long as no Event of Default shall have occurred and be
continuing (and, in the case of subsection (a)(i) of this Section 6, as
---------
long as no notice thereof shall have been given by the Agent to the
Pledgor):
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Financing Agreement or any
other Loan Document; provided, however, that the Pledgor shall not
exercise or shall refrain from exercising any such right if such
action could reasonably be expected to have a material adverse
effect on the value of the Pledged Collateral consisting of the
capital stock of any Subsidiary of Pledgor.
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends paid in respect of the Pledged Collateral, other
than any and all:
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus; and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
all of which shall be forthwith delivered to the Agent to hold as
Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from
the other property or funds of the Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose
of enabling the Pledgor to exercise the voting and other rights
which it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends which it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default (and, in the case of subsection (a)(i) of this
Section 6, upon notice thereof given by the Agent to the Pledgor):
- ---------
(i) Upon notice by the Agent to the Pledgor, all rights of
the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) above shall cease, and all such rights shall
---------------
thereupon become vested in the Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights;
(ii) All rights of the Pledgor to receive the dividends which
it would otherwise be authorized to receive and retain pursuant to
Section 6(a)(ii) above shall cease, and all such rights shall
----------------
thereupon become vested in the Agent who shall thereupon have the
sole right to receive and hold as Pledged Collateral such
dividends;
(iii) All dividends which are received by the Pledgor
contrary to the provisions of paragraph (ii) of this Section 6(b)
------------
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement); and
(iv) The Pledgor shall, if necessary to permit the Agent to
exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 6(b)(i) above and to receive all
---------------
dividends and distributions which it may be entitled to receive
under Section 6(b)(ii) above, execute and deliver to the Agent,
----------------
from time to time and upon written notice of the Agent, appropriate
proxies, dividend payment orders and other instruments as the Agent
may reasonably request. The foregoing shall not in any way limit
the Agent's power and authority granted pursuant to Section 8
---------
hereof.
SECTION 7. Transfers and Other Liens; Additional Shares. (a) The
--------------------------------------------
Pledgor agrees that it will not (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the Permitted
Liens.
(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares not to issue any shares of stock or other securities
in addition to or in substitution for the Pledged Shares, except, with
the written consent of the Agent, to the Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
and all Additional Shares, and (iii) promptly (and in any event within
three Business Days) deliver to the Agent a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule II hereto
-----------
(a "Pledge Amendment"), in respect of the Additional Shares, together
with all certificates or instruments representing or evidencing the
same. The Pledgor hereby (i) authorizes the Agent to attach each Pledge
Amendment to this Pledge Agreement, (ii) agrees that all Additional
Shares listed on any Pledge Amendment delivered to the Agent shall for
all purposes hereunder constitute Pledged Shares, and (iii) is deemed to
have made, upon such delivery, the representations and warranties
contained in Section 4 hereof with respect to such Pledged Collateral.
---------
SECTION 8. Agent Appointed Attorney-in-Fact and Proxy. The Pledgor
------------------------------------------
hereby irrevocably constitutes and appoints the Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact and proxy with full irrevocable power and authority in
the place and stead of the Pledgor and in the name of the Pledgor or in
its own name, from time to time in the Agent's discretion upon the
occurrence and during the continuance of any Event of Default, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable
to the Pledgor representing any dividend or other distribution or
payment in respect of the Pledged Collateral or any part thereof and to
give full discharge of the same and to vote or grant any consent in
respect of the Pledged Shares authorized by Section 6(b) hereof;
------------
provided, however, that the Agent will forbear from exercising the power
of attorney or any of the rights granted to the Agent pursuant to this
Section 8 unless and until the Agent shall have requested that Pledgor
- ---------
take such action, and Pledgor shall have failed to take such action
within five (5) days of its receipt of such request. The Pledgor hereby
ratifies, to the extent permitted by law, all that any said attorney
shall lawfully do or cause to be done by virtue hereof. This power,
being coupled with an interest, is irrevocable until the Guaranteed
Obligations are paid in full and all commitments under the Financing
Agreement and the Loan Documents have terminated.
SECTION 9. Agent Perform. If the Pledgor fails to perform any
-------------
agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Pledgor under
Section 12 hereof and shall constitute Guaranteed Obligations secured
- ----------
hereby.
SECTION 10. Reasonable Care. The Agent shall be deemed to have
---------------
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, it being understood that neither the Agent nor any Lender
shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Agent or
any other Lender has or is deemed to have knowledge of any such matter,
or (ii) taking any necessary steps to preserve rights against any Person
with respect to any Pledged Collateral.
SECTION 11. Remedies Upon Default. If any Event of Default shall
---------------------
have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party after default under the Uniform Commercial Code (the "Code") in
effect in the State of Illinois at that time, and the Agent may also,
without notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at
any exchange, broker's board or at any office of the Agent or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned. The Pledgor hereby waives any claims against the
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Agent
accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) If the Agent shall determine to exercise its right to
sell all or any of the Pledged Collateral pursuant to this Section 11,
----------
the Pledgor agrees that, upon request of the Agent, the Pledgor will, at
its own cost and expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Shares and its directors and
officers to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Agent,
necessary or advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration
statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and
to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities
and Exchange Commission ("SEC") applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Agent;
(iii) make available to its security holders, as
soon as practicable, an earnings statement which will satisfy the
provisions of section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts
and things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Agent by reason of the
failure by the Pledgor to perform any of the covenants contained in this
Section 11 and, consequently, agrees that, if the Pledgor shall fail to
- ----------
perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value of the Pledged Collateral
on the date the Agent shall demand compliance with this Section.
(c) The Pledgor recognizes that, by reason of the
aforementioned requirements and certain prohibitions contained in the
Securities Act and applicable state securities laws, the Agent may, at
its option, elect not to require the Pledgor to register all or any part
of the Pledged Collateral and may therefore be compelled, with respect
to any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to acquire such
securities for their own account, for investment, and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale without such
restrictions and, notwithstanding such circumstances, agrees that any
such sale shall be deemed to have been made in a commercially reasonable
manner. The Agent shall be under no obligation to delay the sale of any
of the Pledged Collateral for the period of time necessary to permit the
Pledgor to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the Pledgor
would agree to do so.
(d) If the Agent determines to exercise its right to sell
any or all of the Pledged Collateral pursuant to this Section 11, upon
----------
written request, the Pledgor shall, from time to time, furnish to the
Agent all such information as the Agent may request in order to
determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by the Agent as exempt transactions
under the Securities Act and rules of the SEC thereunder, as the same
are from time to time in effect.
(e) Subject to the requirements set forth in the Loan
Documents, any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged
Collateral shall be applied by the Agent in the order of priorities set
forth in the Loan Documents.
SECTION 12. Expenses. The Pledgor will upon demand pay to the
--------
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of the Agent's counsel and
of any expert, and agents, which the Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any
of the rights and remedies hereunder of the Agent, or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.
SECTION 13. INTENTIONALLY DELETED.
---------------------
SECTION 14. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent and the Pledgor, and then any such
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 15. No Waiver; Remedies. (a) No failure on the part of
-------------------
Agent to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or the Financing Agreement or
other Loan Documents.
(b) Failure by the Agent or any other Lender at any time or
times hereafter to require strict performance by the Pledgor or any
other Person of any of the provisions, warranties, terms or conditions
contained in the Financing Agreement or other Loan Documents now or at
any time or times hereafter executed by the Pledgor or any such other
Person and delivered to any of the Agent shall not waive, affect or
diminish any right of the Agent at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the
Agent, or any agent, officer or employee of Agent.
SECTION 16. Addresses for Notices. Except as otherwise provided
---------------------
herein, all notices and correspondences hereunder shall be in writing
and shall be delivered and deemed to be effective in the manner and at
the time set forth in Section 10 of the Security Agreement.
SECTION 17. Continuing Security Interest; Transfer of Guaranteed
----------------------------------------------------
Obligations. This Pledge Agreement shall create a continuing security
- -----------
interest in the Pledged Collateral and shall (i) remain in full force
and effect until payment in full of the Guaranteed Obligations and the
termination of any commitments under the Financing Agreement or any Loan
Document, (ii) be binding upon the Pledgor, its successors and assigns,
and (iii) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of and be enforceable by the Agent and its
successors, transferees and assigns. Without limiting the generality of
the foregoing clause (iii), any Lender may assign or otherwise transfer
all or any portion of the Guaranteed Obligations owing to it to any
other Person, and such other Person shall thereupon become vested with
all the rights in respect thereof granted to such Lender herein or
otherwise with respect to such of the Guaranteed Obligations so
transferred or assigned, subject, however, to compliance with the
provisions of the Financing Agreement and Loan Documents in respect of
assignments. Upon the payment in full of the Guaranteed Obligations,
the Pledgor shall be entitled to the return, upon its request and at its
expense, of such of the Pledged Collateral as shall not have been sold
or otherwise applied pursuant to the terms hereof.
SECTION 18. Governing Law; Severability Terms. The Pledgor and
---------------------------------
Agent each hereby irrevocable consents to the in personam jurisdiction
of any Illinois state or federal court sitting in Chicago, Illinois,
with respect to any action or proceeding arising out of or relating to
this Pledge Agreement, and each hereby irrevocably waive, to the
fullest extent they may effectively do so, the defense of an
inconvenient forum to the maintenance of any such action or proceeding.
Each of the Pledgor and Agent agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced not only in
Illinois, but also in other jurisdictions by suit on the judgment or in
any other manner provided by law. Nothing herein shall affect either
parties' right to bring any action or proceeding against the other party
or its property in the courts of other jurisdictions or otherwise in
accordance with the laws of other jurisdictions. Wherever 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 prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining
provisions of this Agreement. Unless otherwise defined herein, terms
defined in Article 9 of the Uniform Commercial Code as in effect in the
State of Illinois are used herein as therein defined.
SECTION 19. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT
-------------------- -------------------------
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
- ---------------------------------------------------------------------
AND ALL RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
- ----------------------------------------------------------------
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
- -------------------------------------------------------------------
THIS AGREEMENT.
- ---------------
SECTION 20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this Agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
duly executed and delivered by its duly authorized officer on the date
first above written.
VISKASE HOLDING CORPORATION, a
Delaware corporation
By:
--------------------------------
Its:
--------------------------------
ACCEPTED AND ACKNOWLEDGED:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
---------------------------
Its:
---------------------------
PARENT PLEDGE AGREEMENT
-----------------------
This PARENT PLEDGE AGREEMENT (this "Agreement"), dated as of June
-----------------------
__, 1999, made by VISKASE COMPANIES, INC., a Delaware corporation (the
----------------------
"Pledgor"), to THE CIT GROUP/BUSINESS CREDIT, INC., a New York
----------------------------------
corporation, as agent ("Agent") on behalf of itself and the lenders
("Lenders") a party to that certain Financing Agreement of even date
herewith (as amended, modified or restated from time to time, the
"Financing Agreement") among Lenders and each of VISKASE CORPORATION, a
-------------------
Pennsylvania corporation, and VISKASE SALES CORPORATION, a Delaware
-------------------------
corporation (each a "Company" and collectively, the "Companies"). All
capitalized terms used in this Agreement but not otherwise defined
herein shall have the respective meanings as ascribed to such terms in
the Financing Agreement.
W I T N E S S E T H:
-------------------
WHEREAS, Pledgor, as the direct or indirect owner of all of the
capital stock of the Companies, will receive significant and material
benefits from the financial accommodations made to the Companies in
connection with the Financing Agreement;
WHEREAS, pursuant to the Financing Agreement, the Companies are
about to incur certain Obligations;
WHEREAS, pursuant to that certain Parent Security Agreement of even
date herewith (the "Parent Security Agreement"), the Pledgor has granted
to the Agent, on behalf and for the benefit of the Lenders, a lien upon
and security interest in substantially all of its property and assets,
including, without limitation, the Pledged Collateral (defined below),
to secure the prompt and complete payment, performance and observance of
the Guaranteed Obligations (as defined in the Parent Security
Agreement);
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of capital stock described in Schedule I hereto (the "Pledged
----------
Shares") and issued by the issuers named therein; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement that the Pledgor shall have entered into this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Agent and Lenders from time to time to make the extensions of
credit and other financial accommodations contemplated by the Financing
Agreement, the Pledgor hereby agrees with the Agent, on behalf and for
the benefit of the Lenders, as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Agent, on
-------
behalf and for the benefit of the Lenders, and grants to the Agent, on
behalf and for the benefit of the Lenders, a lien upon and security
interest in, all of the following property and interests in property
(the "Pledged Collateral"):
(i) all of the Pledged Shares;
(ii) all additional shares of stock or other securities
of any issuer of the Pledged Shares from time to time acquired by
the Pledgor in any manner and all shares of stock or other
securities of any Person owned by the Pledgor who, after the date
of this Agreement, becomes, as a result of any occurrence, a
Subsidiary of the Pledgor (any such shares being "Additional
Shares"); provided, however that the pledge of capital stock of any
foreign Subsidiary of Pledgor shall be limited to sixty-five
percent (65%) of such capital stock;
(iii) the certificates representing the shares
referred to in clauses (i) and (ii) above; and
(iv) all dividends, cash, instruments and other property
or proceeds, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
SECTION 2. Security for Guaranteed Obligations. This Agreement
-----------------------------------
secures and the Pledged Collateral is security for the prompt and
complete payment (whether at stated maturity, by acceleration or
otherwise) of, and the performance and observance of, the Guaranteed
Obligations.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Agent pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent
shall have the right, at any time in its discretion and without notice
to the Pledgor, to transfer to or to register in its name or in the name
of any of its nominees any or all of the Pledged Collateral. In
addition, the Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The Pledgor makes the
------------------------------
following representations:
(a) The Pledged Shares (i) have been duly authorized and
validly issued; (ii) are fully paid and non-assessable; and
(iii) constitute 100% of the issued and outstanding shares of stock of
the issuers owned by the Pledgor named in Schedule I hereto.
----------
(b) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any mortgage, pledge, lien, charge,
security interest, conditional sale or other title retention agreement
or other encumbrance of any kind or description, including, without
limitation, any agreement to give or grant a lien ("Lien"), except for
the Lien created by this Agreement and Liens granted to the Term Lenders
and D.P. Kelly (collectively, the "Permitted Liens").
(c) Assuming continuous possession of the Pledged Shares by
the Agent, the pledge of the Pledged Shares pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of all of the Guaranteed
Obligations.
(d) 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 the Pledgor of the Pledged Collateral
pursuant to this Agreement or for the due execution, delivery or
performance of this Agreement by the Pledgor, or (ii) for the exercise
by the Agent of the voting or other rights provided for in this
Agreement or of the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally.
(e) The issuers named in Schedule I are the direct
Subsidiaries of the Pledgor on the date hereof.
SECTION 5. Further Assurances, Etc. (a) The Pledgor agrees that
------------------------
at any time and from time to time, at the cost and expense of the
Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in
order to perfect and protect the Lien granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
(b) The Pledgor agrees to defend the title to the Pledged
Collateral and the Lien thereon of the Agent against the claim of any
other Person and to maintain and preserve such Lien until indefeasible
payment in full of all of the Guaranteed Obligations.
SECTION 6. Voting Rights; Dividends; Etc.
-----------------------------
(a) As long as no Event of Default shall have occurred and be
continuing (and, in the case of subsection (a)(i) of this Section 6, as
---------
long as no notice thereof shall have been given by the Agent to the
Pledgor):
(i) The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Financing Agreement or any
other Loan Document; provided, however, that the Pledgor shall not
exercise or shall refrain from exercising any such right if such
action could reasonably be expected to have a material adverse
effect on the value of the Pledged Collateral consisting of the
capital stock of any Subsidiary of Pledgor.
(ii) The Pledgor shall be entitled to receive and retain
any and all dividends paid in respect of the Pledged Collateral,
other than any and all:
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus; and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
all of which shall be forthwith delivered to the Agent to hold as
Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from
the other property or funds of the Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i)
above and to receive the dividends which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default (and, in the case of subsection (a)(i) of this
Section 6, upon notice thereof given by the Agent to the Pledgor):
- ---------
(i) Upon notice by the Agent to the Pledgor, all rights
of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) above shall cease, and all such rights shall
--------------
thereupon become vested in the Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights;
(ii) All rights of the Pledgor to receive the dividends
which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease, and all such rights
---------------
shall thereupon become vested in the Agent who shall thereupon have
the sole right to receive and hold as Pledged Collateral such
dividends;
(iii) All dividends which are received by the Pledgor
contrary to the provisions of paragraph (ii) of this Section 6(b)
-----------
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement); and
(iv) The Pledgor shall, if necessary to permit the Agent
to exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 6(b)(i) above and to receive all
---------------
dividends and distributions which it may be entitled to receive
under Section 6(b)(ii) above, execute and deliver to the Agent,
---------------
from time to time and upon written notice of the Agent, appropriate
proxies, dividend payment orders and other instruments as the Agent
may reasonably request. The foregoing shall not in any way limit
the Agent's power and authority granted pursuant to Section 8
---------
hereof.
SECTION 7. Transfers and Other Liens; Additional Shares. (a) The
--------------------------------------------
Pledgor agrees that it will not (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral, except for the Permitted
Liens.
(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares not to issue any shares of stock or other securities
in addition to or in substitution for the Pledged Shares, except, with
the written consent of the Agent, to the Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
and all Additional Shares, and (iii) promptly (and in any event within
three Business Days) deliver to the Agent a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule II hereto
-----------
(a "Pledge Amendment"), in respect of the Additional Shares, together
with all certificates or instruments representing or evidencing the
same. The Pledgor hereby (i) authorizes the Agent to attach each Pledge
Amendment to this Parent Pledge Agreement, (ii) agrees that all
Additional Shares listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder constitute Pledged Shares, and (iii) is
deemed to have made, upon such delivery, the representations and
warranties contained in Section 4 hereof with respect to such Pledged
---------
Collateral.
SECTION 8. Agent Appointed Attorney-in-Fact and Proxy. The
------------------------------------------
Pledgor hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact and proxy with full irrevocable power and
authority in the place and stead of the Pledgor and in the name of the
Pledgor or in its own name, from time to time in the Agent's discretion
upon the occurrence and during the continuance of any Event of Default,
for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute and deliver any and all
documents and instruments which the Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, indorse and collect all instruments made
payable to the Pledgor representing any dividend or other distribution
or payment in respect of the Pledged Collateral or any part thereof and
to give full discharge of the same and to vote or grant any consent in
respect of the Pledged Shares authorized by Section 6(b) hereof;
provided, however, that the Agent will forbear from exercising the power
of attorney or any of the rights granted to the Agent pursuant to this
Section 8 unless and until the Agent shall have requested that Pledgor
take such action, and Pledgor shall have failed to take such action
within five (5) days of its receipt of such request. The Pledgor hereby
ratifies, to the extent permitted by law, all that any said attorney
shall lawfully do or cause to be done by virtue hereof. This power,
being coupled with an interest, is irrevocable until the Guaranteed
Obligations are paid in full and all commitments under the Financing
Agreement and the Loan Documents have terminated.
SECTION 9. Agent Perform. If the Pledgor fails to perform any
-------------
agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Pledgor under
Section 12 hereof and shall constitute Guaranteed Obligations secured
hereby.
SECTION 10. Reasonable Care. The Agent shall be deemed to have
---------------
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, it being understood that neither the Agent nor any Lender
shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Agent or
any other Lender has or is deemed to have knowledge of any such matter,
or (ii) taking any necessary steps to preserve rights against any Person
with respect to any Pledged Collateral.
SECTION 11. Remedies Upon Default. If any Event of Default shall
---------------------
have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party after default under the Uniform Commercial Code (the "Code") in
effect in the State of Illinois at that time, and the Agent may also,
without notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at
any exchange, broker's board or at any office of the Agent or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned. The Pledgor hereby waives any claims against the
Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Agent
accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) If the Agent shall determine to exercise its right to
sell all or any of the Pledged Collateral pursuant to this Section 11,
----------
the Pledgor agrees that, upon request of the Agent, the Pledgor will, at
its own cost and expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Shares and its directors and
officers to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Agent,
necessary or advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration
statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and
to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities
and Exchange Commission ("SEC") applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Agent;
(iii) make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the
provisions of section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Agent by reason of the
failure by the Pledgor to perform any of the covenants contained in this
Section 11 and, consequently, agrees that, if the Pledgor shall fail to
- ----------
perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value of the Pledged Collateral
on the date the Agent shall demand compliance with this Section.
(c) The Pledgor recognizes that, by reason of the
aforementioned requirements and certain prohibitions contained in the
Securities Act and applicable state securities laws, the Agent may, at
its option, elect not to require the Pledgor to register all or any part
of the Pledged Collateral and may therefore be compelled, with respect
to any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to acquire such
securities for their own account, for investment, and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale without such
restrictions and, notwithstanding such circumstances, agrees that any
such sale shall be deemed to have been made in a commercially reasonable
manner. The Agent shall be under no obligation to delay the sale of any
of the Pledged Collateral for the period of time necessary to permit the
Pledgor to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the Pledgor
would agree to do so.
(d) If the Agent determines to exercise its right to sell any
or all of the Pledged Collateral pursuant to this Section 11, upon
----------
written request, the Pledgor shall, from time to time, furnish to the
Agent all such information as the Agent may request in order to
determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by the Agent as exempt transactions
under the Securities Act and rules of the SEC thereunder, as the same
are from time to time in effect.
(e) Subject to the requirements set forth in the Loan
Documents, any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged
Collateral shall be applied by the Agent in the order of priorities set
forth in the Loan Documents.
SECTION 12. Expenses. The Pledgor will upon demand pay to the
--------
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of the Agent's counsel and
of any expert, and agents, which the Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any
of the rights and remedies hereunder of the Agent, or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.
SECTION 13. INTENTIONALLY DELETED.
---------------------
SECTION 14. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent and the Pledgor, and then any such
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 15. No Waiver; Remedies. (a) No failure on the part of
-------------------
Agent to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or the Financing Agreement or
other Loan Documents.
(b) Failure by the Agent or any other Lender at any time or
times hereafter to require strict performance by the Pledgor or any
other Person of any of the provisions, warranties, terms or conditions
contained in the Financing Agreement or other Loan Documents now or at
any time or times hereafter executed by the Pledgor or any such other
Person and delivered to any of the Agent shall not waive, affect or
diminish any right of the Agent at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the
Agent, or any agent, officer or employee of Agent.
SECTION 16. Addresses for Notices. Except as otherwise provided
---------------------
herein, all notices and correspondences hereunder shall be in writing
and shall be delivered and deemed to be effective in the manner and at
the time set forth in Section 10 of the Parent Security Agreement.
SECTION 17. Continuing Security Interest; Transfer of Guaranteed
----------------------------------------------------
Obligations. This Parent Pledge Agreement shall create a continuing
- -----------
security interest in the Pledged Collateral and shall (i) remain in full
force and effect until payment in full of the Guaranteed Obligations and
the termination of any commitments under the Financing Agreement or any
Loan Document, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure, together with the rights and remedies of the
Agent hereunder, to the benefit of and be enforceable by the Agent and
its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Lender may assign or
otherwise transfer all or any portion of the Obligations owing to it to
any other Person, and such other Person shall thereupon become vested
with all the rights in respect thereof granted to such Lender herein or
otherwise with respect to such of the Obligations so transferred or
assigned, subject, however, to compliance with the provisions of the
Financing Agreement and Loan Documents in respect of assignments. Upon
the payment in full of the Guaranteed Obligations, the Pledgor shall be
entitled to the return, upon its request and at its expense, of such of
the Pledged Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof.
SECTION 18. Governing Law; Severability Terms. This agreement
---------------------------------
shall be governed by, and be construed and interpreted in accordance
with, the internal law of the State of Illinois, without regard to
conflict of law principles. Wherever 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 prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity and
without invalidating the remaining provisions of this Agreement. Unless
otherwise defined herein, terms defined in Article 9 of the Uniform
Commercial Code as in effect in the State of Illinois are used herein as
therein defined.
SECTION 19. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT
-------------------- -------------------------
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
- ------------------------------------------------------------
LAW, ANY AND ALL RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN
- ----------------------------------------------------------
RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR
- ---------------------------------------------------------------
IN CONNECTION WITH, THIS AGREEMENT.
- ----------------------------------
SECTION 20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this greement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
duly executed and delivered by its duly authorized officer on the date
first above written.
VISKASE COMPANIES, INC., a
Delaware corporation
By:
----------------------
Its:
----------------------
ACCEPTED AND ACKNOWLEDGED:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
--------------------------
Its:
--------------------------
[VISKASE HOLDING]
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as of
------------------
June __, 1999 made by VISKASE HOLDING CORPORATION, a Delaware
---------------------------
corporation (the "Grantor"), in favor of THE CIT GROUP/BUSINESS CREDIT,
-----------------------------
INC., a New York corporation, as Agent ("Agent") on behalf of itself and
- ---
the lenders ("Lenders") party to that certain Financing Agreement of
even date herewith (as amended, modified or supplemented from time to
time, the "Financing Agreement") among Lenders, each of Viskase
Corporation, a Pennsylvania corporation ("Viskase Corporation"), and
Viskase Sales Corporation, a Delaware corporation ("Viskase Sales")
(Viskase Corporation and Viskase Sales are sometimes referred to herein
individually as a "Company" and collectively as the "Companies"), and
certain other parties.
W I T N E S S E T H:
-------------------
WHEREAS, Grantor is a wholly-owned subsidiary of Viskase
Corporation;
WHEREAS, pursuant to the Financing Agreement, the Companies are
about to incur certain Obligations (as defined in the Financing
Agreement);
WHEREAS, Grantor acknowledges that in view of the affiliate
relationship and other business relations between Grantor and the
Companies, the extensions of credit and other financial accommodations
contemplated by the Financing Agreement will inure to the benefit of
Grantor and it is in the direct interest and to the direct advantage of
Grantor that it execute and deliver this Agreement;
WHEREAS, pursuant to that certain Joint and Several Guaranty
Agreement of even date herewith (the "Guaranty"), made by the Grantor
and Parent (as defined below) in favor of the Agent, on behalf and for
the benefit of the Lenders, the Grantor has guaranteed the full and
prompt payment and performance of the "Guaranteed Obligations" (as
defined in the Guaranty), including the indebtedness and other
obligations of the Companies under the Financing Agreement; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement that the Grantor shall have entered into this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Agent and the Lenders from time to time to make the
extensions of credit and other financial accommodations contemplated by
the Financing Agreement, the Grantor hereby agrees with the Agent on
behalf and for the benefit of the Lenders as follows:
1. Defined Terms. Capitalized terms used in this Agreement but not
-------------
otherwise defined herein shall have the respective meanings
ascribed to such terms in the Guaranty. As used in this Agreement,
the following terms have the meanings specified below (such
meanings being equally applicable to both the singular and plural
forms of the terms defined):
"Account" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by the Grantor
and, in any event, includes, without limitation, (i) all accounts
receivable, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper, Documents or Instruments) now
owned or hereafter received or acquired by or belonging or owing to the
Grantor (including, without limitation, under any trade name, style or
division thereof) whether arising out of goods sold or services rendered
by the Grantor or from any other transaction, whether or not the same
involves the sale of goods or services by the Grantor (including,
without limitation, any such obligation which might be characterized as
an account or contract right under the UCC), (ii) all of Grantor's
rights in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, and all of Grantor's
rights to any goods represented by any of the foregoing (including,
without limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (iii) all moneys due or to become due to the Grantor
under all contracts for the sale of goods or the performance of services
or both by the Grantor (whether or not yet earned by performance on the
part of the Grantor or in connection with any other transaction), now in
existence or hereafter occurring, including, without limitation, the
right to receive the proceeds of said purchase orders and contracts, and
(iv) all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Account Debtor" means any "account debtor," as such term is
defined in Section 9-105(l)(a) of the UCC.
"Chattel Paper" means any "chattel paper," as such term is defined
in Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by
the Grantor.
"Collateral" has the meaning assigned to such term in Section 2 of
this Agreement.
"Contracts" means all contracts, undertakings or other agreements
(other than Chattel Paper, Documents or Instruments) in or under which
the Grantor may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof.
"Documents" means any "document," as such term is defined in
Section 9-105(l)(f) of the UCC, now owned or hereafter acquired by the
Grantor.
"Equipment" means any "equipment," as such term is defined in
Section 9-109(2) of the UCC, now owned or hereafter acquired by the
Grantor and, in any event, includes, without limitation, all machinery,
equipment, furnishings, fixtures, vehicles, computers and other
electronic data-processing and office equipment now owned or hereafter
acquired by the Grantor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with
all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto.
"Excluded Assets" has the meaning assigned to such term in the
Financing Agreement.
"GECC Lease Documents" shall have the meaning assigned to such term
in the Financing Agreement.
"General Intangibles" means any "general intangibles," as such term
is defined in Section 9-106 of the UCC, now owned or hereafter acquired
by the Grantor and, in any event, includes, without limitation, (a) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereon, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, service marks, trade dress,
logos, trade names, domain names, and corporate names, together with all
translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e)
all trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, methods,
schematics, technology, technical data, designs, drawings, flowcharts,
block diagrams, specifications, customer and supplier lists, pricing and
cost information and business and marketing plans and proposals), (f)
all computer software (including data and related documentation), (g)
all other proprietary rights, (h) all copies and tangible embodiments of
the foregoing categories of intellectual property listed in subsections
(a) through (g) herein (in whatever form of medium), and (i) all
licenses, sublicenses, agreements, or permissions related to the
foregoing categories of intellectual property listed in subsections (a)
through (g) herein (categories (a) through (i) herein are collectively
referred to as "Intellectual Property").
All General Intangibles which are patents, patent applications,
trademarks, trademark applications, copyrights, copyright applications,
mask works, and mask work applications are listed on Schedule III
hereto.
"Guaranteed Parties" means the Agent and the Lenders, collectively.
"Guarantors" has the meaning assigned to such term in the Financing
Agreement.
"Instrument" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by the
Grantor, other than instruments that constitute or are a part of a group
of writings that constitute Chattel Paper.
"Intellectual Property" has the meaning assigned to such term in
the definition of General Intangibles in this Agreement.
"Intercompany Receivable" has the meaning assigned to such term in
the Financing Agreement.
"Inventory" means any "inventory," as such term is defined in
Section 9-109(4) of the UCC, now owned or hereafter acquired by the
Grantor, and wherever located, and, in any event, includes, without
limitation, all inventory, merchandise, goods and other personal
property now owned or hereafter acquired by the Grantor which are held
for sale or lease or are furnished or are to be furnished under a
contract of service or which constitute raw materials, work in process
or materials used or consumed or to be used or consumed in the Grantor's
business, or the processing, packaging, delivery or shipping of the
same, and all finished goods.
"Lien" means any mortgage, pledge, lien, charge, security interest,
conditional sale or other title retention agreement or other encumbrance
of any kind or description, including, without limitation, any agreement
to give or grant a Lien.
"Loan Documents" has the meaning assigned to such term in the
Financing Agreement.
"Parent" has the meaning assigned to such term in the Financing
Agreement.
"Permitted Encumbrances" has the meaning assigned to such term in
the Financing Agreement.
"Permitted Indebtedness" has the meaning assigned to such term in
the Financing Agreement.
"Proceeds" means "proceeds," as such term is defined in
Section 9-306(1) of the UCC, and, in any event, shall include, without
limitation, (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Grantor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental
authority (or any Person acting under color of governmental authority),
and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Subsidiary" has the meaning assigned to such term in the Financing
Agreement.
"UCC" means the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of Illinois; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of the Agent's security interest
in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Illinois, the term
"UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions
related to such provisions.
2. Grant of Security Interest.
--------------------------
a. As collateral security for the full and prompt payment
when due (whether at stated maturity, by acceleration or otherwise) of,
and the performance and observance of, all the Guaranteed Obligations
and to induce the Guaranteed Parties to make the extensions of credit
and other financial accommodations contemplated by the Financing
Agreement, the Grantor hereby grants, assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Agent, on behalf and for the
benefit of the Guaranteed Parties, a lien upon and security interest in,
all of the Grantor's right, title and interest in, to and under the
following (all of which being hereinafter collectively called the
"Collateral"):
i. all Accounts;
ii. all Chattel Paper;
iii. all Contracts;
iv. all Documents;
v. all Equipment;
vi. all General Intangibles;
vii. all Instruments;
viii. all Inventory;
ix. all other goods and personal property of the Grantor
whether tangible or intangible or whether now owned or hereafter
acquired by the Grantor and wherever located; and
x. to the extent not otherwise included, all Proceeds
of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the
foregoing;
provided, however, that, notwithstanding anything to the contrary
contained in this Section 2 (a), the collateral shall not include any
-------------
Contract or General Intangible if (and solely to the extent and for so
long as) such Contract or General Intangible expressly prohibits Grantor
from granting any Lien thereon or may otherwise not be assigned,
licensed, or sublicensed, without breaching any underlying agreements
with third parties.
b. In addition, as collateral security for the full and
prompt payment when due (whether at stated maturity, by acceleration or
otherwise) of, and the performance and observance of, all the Guaranteed
Obligations and to induce the Guaranteed Parties to make the extensions
of credit and other financial accommodations contemplated by the
Financing Agreement, the Agent, for the benefit of each Guaranteed
Party, is hereby granted a lien upon and security interest in all
property of the Grantor held by the Guaranteed Party, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to such Guaranteed Party for any
purpose, including safekeeping, collection or pledge, for the account of
the Grantor, or as to which the Grantor may have any right or power.
3. Rights of the Guaranteed Parties; Limitations on Guaranteed
-----------------------------------------------------------
Parties' Obligations.
--------------------
a. It is expressly agreed by the Grantor that, anything
herein to the contrary notwithstanding, the Grantor shall remain liable
under each of the Contracts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder and the
Grantor shall perform all of its duties and obligations thereunder, all
in accordance with and pursuant to the terms and provisions of each such
Contract. Neither the Agent nor any other Guaranteed Party shall have
any obligation or liability under any Contract by reason of or arising
out of this Agreement or the granting of a security interest in any
Contract to the Agent on behalf and for the benefit of the Guaranteed
Parties or the receipt by the Agent or any other Guaranteed Party of any
payment relating to any Contract pursuant hereto, nor shall the Agent or
any other Guaranteed Party be required or obligated in any manner to
perform or fulfill any of the obligations of the Grantor under or
pursuant to any Contract, or to make any payment, or to make any inquiry
as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract, or to
present or file any claim, or to take any action to collect or enforce
any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
b. If an Event of Default has occurred and is continuing, at
the request of the Agent, the Grantor shall deliver to the Agent all
original and other documents evidencing, and relating to, the sale and
delivery of Inventory or the performance of labor or service which
created Accounts, including, without limitation, all original orders,
invoices, and shipping receipts; and, prior to the occurrence of an
Event of Default, the Grantor shall deliver photocopies thereof to the
Agent at its request.
c. The Agent may at any time, upon the occurrence and during
the continuance of any Event of Default, upon concurrent notice to the
Grantor of its intention to do so, notify Account Debtors of the
Grantor, parties to Contracts of the Grantor, obligors of Instruments of
the Grantor and obligors in respect of Chattel Paper of the Grantor that
the Accounts and the right, title and interest of the Grantor in and
under such Accounts, Contracts, such Instruments and such Chattel Paper
have been assigned to the Agent and that payments shall be made directly
to the Agent. Upon the occurrence of an Event of Default, at the
request of the Agent, the Grantor will so notify such Account Debtors,
parties to such Contracts, obligors of such Instruments and obligors in
respect of such Chattel Paper. Upon the occurrence and during the
continuance of an Event of Default, the Agent may in its own name or in
the name of others communicate with such Account Debtors, parties to
such Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper to verify with such Persons to the Agent's
satisfaction the existence, amount and terms of any Accounts, Contracts,
Instruments or Chattel Paper.
d. Upon an Event of Default, the Agent shall have the right
to make test verifications of the Accounts and physical verifications of
the Inventory in any manner and through any medium that it considers
advisable, and the Grantor agrees to furnish all such assistance and
information as the Agent may reasonably require in connection therewith.
The Grantor, at its own cost and expense, will prepare and deliver to
the Agent, upon the occurrence and during the continuance of an Event of
Default, upon the Agent's request, the following reports: (i) a
reconciliation of all its Accounts, (ii) an aging of all its Accounts,
(iii) trial balances, (iv) a test verification of such Accounts as the
Agent may request, and (v) a certificate or certificates of an officer
of Grantor certifying as to the foregoing. The Grantor at its expense
will prepare and deliver to the Agent the results of the annual physical
verification of its Inventory made or observed by such accountants.
4. Representations and Warranties. The Grantor hereby represents and
------------------------------
warrants to the Guaranteed Parties as follows:
a. The Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest hereunder,
having good title thereto, free and clear of any and all Liens, except
for the security interests granted pursuant to this Agreement, the GECC
Lease Documents, the Loan Documents or other Permitted Encumbrances
(collectively, the "Encumbrances"). No material amounts payable under
or in connection with any of its Accounts or Contracts are evidenced by
Instruments which have not been delivered to the Agent;
b. No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed by the Grantor in
favor of the Agent pursuant to this Agreement or such as relate to other
Permitted Encumbrances;
c. Assuming appropriate financing statements have been filed
in the jurisdictions listed on Schedule I hereto, appropriate filings
have been made with the United States Patent and Trademark Office and
the United States Copyright Office, appropriate delivery has been made
of any and all Instruments, and, solely with respect to Chattel Paper,
Instruments and vehicles, all other appropriate actions have been taken,
this Agreement is effective to create a valid and continuing first
priority Lien on, and security interest in, the Collateral prior to all
other Liens except the Encumbrances;
d. The Grantor's principal place of business and the place
where its records concerning the Collateral are kept and the location of
its Inventory and Equipment are set forth on Schedule II hereto;
e. The amount represented by the Grantor to the Agent from
time to time as owing by each Account Debtor or by all Account Debtors
in respect of the Accounts of the Grantor will at such time be the
correct amount actually and unconditionally owing by such Account
Debtors thereunder;
f. Intentionally omitted.
g. (i) the fair value of Grantor's assets exceeds the book
value of Grantor's liabilities, (ii) Grantor is generally able to pay
its debts as they become due and payable, and (iii)Grantor does not have
unreasonably small capital to carry on its business as it is currently
conducted absent extraordinary and unforeseen circumstances;
h. Grantor is duly organized and validly existing under the
laws of the state of its incorporation, and is qualified to do business
in each State where the failure to so qualify would have a material
adverse effect on the business, assets or condition (financial or
otherwise) of the Grantor and its Subsidiaries taken as a whole; and
i. the execution and delivery of this Agreement by Grantor
and the consummation of the transactions contemplated hereby, do not
violate any term, provision or covenant contained in the Articles or
Certificate of Incorporation or Bylaws of Grantor, or any term,
provision, covenant or representation contained in any loan agreement,
lease, indenture, mortgage, deed of trust, note, security agreement or
pledge agreement to which any Grantor is a signatory or by which Grantor
or any Grantor's assets are bound.
5. Covenants. The Grantor covenants and agrees with the Agent that
---------
from and after the date of this Agreement and until the Guaranteed
Obligations are fully satisfied:
a. Further Documentation; Pledge of Instruments. At any
--------------------------------------------
time and from time to time, upon the written request of the Agent, and
at the sole expense of the Grantor, the Grantor will promptly and duly
execute and deliver any and all such further instruments and documents
and take such further action as the Agent may reasonably deem desirable
to obtain the full benefits of this Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the UCC with respect to the
Liens and security interests granted hereby, transferring Collateral to
the Agent's possession (if a security interest in such Collateral can be
perfected by possession), placing the interest of the Agent as
lienholder on the certificate of title of any vehicle and, upon an Event
of Default, using its good faith reasonable efforts to secure all
consents and approvals necessary or appropriate for the assignment to
the Agent of any Contract held by the Grantor or in which the Grantor
has any rights not heretofore assigned. The Grantor also hereby
authorizes the Agent to file any such financing or continuation
statement without the signature of the Grantor to the extent permitted
by applicable law. If any of the Collateral shall be or become
evidenced by any Instrument, the Grantor agrees to pledge such
Instrument to the Agent and shall duly endorse such Instrument in a
manner satisfactory to the Agent and deliver the same to the Agent.
b. Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral
and all other dealings with the Collateral. At the Agent's request, the
Grantor will mark its books and records pertaining to the Collateral to
evidence this Agreement and the Lien and security interests granted
hereby. If requested by the Agent, all Chattel Paper will be marked
with the following legend: "This writing and the obligations evidenced
or secured hereby are subject to the security interest of The CIT
Group/Business Credit, Inc., as Agent." If requested by the Agent, the
security interest of the Agent shall be noted on the certificate of
title of each vehicle. For the Agent's further security, the Grantor
agrees that the Agent shall have a special property interest in all of
the Grantor's books and records pertaining to the Collateral and, upon
the occurrence and during the continuance of any Event of Default, at
the request of the Agent, the Grantor shall deliver and turn over any
such books and records to the Agent or to its representatives at any
time on demand of the Agent. Prior to the occurrence of an Event of
Default and upon reasonable notice from the Agent, the Grantor shall
permit any representative of the Agent to inspect such books and records
and will provide photocopies thereof to the Agent.
c. Indemnification. In any suit, proceeding or action
---------------
brought by the Agent or any other Guaranteed Party relating to any
Account, Chattel Paper, Contract, General Intangible or Instrument for
any sum owing thereunder, or to enforce any provision of any Account,
Chattel Paper, Contract, General Intangible or Instrument, the Grantor
will save, indemnify and keep each of the Agent and the Guaranteed
Parties harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction
of liability whatsoever of the obligor thereunder, arising out of a
breach by the Grantor of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to, or in
favor of, such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and remain enforceable against and
only against the Grantor and shall not be enforceable against the Agent
or the Guaranteed Parties; provided, however, that the Grantor shall not
have any obligation under this Section 5(c) to the Agent or the
Guaranteed Parties with respect to any expense, loss or damage caused by
or resulting from the gross negligence or willful misconduct of the
Agent or the Guaranteed Parties.
d. Compliance with Laws, Etc. The Grantor will comply, in
-------------------------
all material respects, with all applicable requirements of law,
contractual obligations, commitments, instruments, licenses, permits and
franchises applicable to the Collateral, including, without limitation,
all permits; provided, however, that the Grantor shall not be deemed in
default of this Section 5(d) if all such non-compliances in the
aggregate could not reasonably be expected to have a material adverse
effect on the business, assets or condition (financial or otherwise) of
the Grantor and its Subsidiaries taken as a whole.
e. Payment of Taxes, Etc. (i) The Grantor will pay and
---------------------
discharge before the same shall become delinquent, all federal, state,
local and other taxes and similar charges (other than immaterial state,
local and foreign taxes and similar charges) except where contested in
good faith pursuant to Section 5(e)(ii).
ii. The Grantor may in good faith contest, by proper
legal actions or proceedings, the validity or amount of any charges
or claims arising under Section 5(e)(i), provided that at the time
of commencement of any such action or proceeding, and during the
pendency thereof (A) no Event of Default shall have occurred,
(B) adequate reserves with respect thereto are maintained on the
books of the Grantor in accordance with generally accepted
accounting principles, in effect from time to time, (C) none of the
assets of the Grantor would be subject to forfeiture or loss or any
Lien by reasons of the institution or prosecution of such contest,
(D) if such contest is terminated or discontinued adversely to the
Grantor, the Grantor will promptly pay or discharge such contested
charges or claims and all additional charges, interest, penalties
and expenses, if any, and will deliver to the Agent evidence
acceptable to the Agent of such compliance, payment or discharge,
and (E) the nonpayment or nondischarge thereof could not singly or
in the aggregate reasonably be expected to have a material adverse
effect on the business, assets or condition (financial or
otherwise) of the Grantor and its Subsidiaries taken as a whole.
f. Compliance with Terms of Accounts, Etc. In all material
--------------------------------------
respects, the Grantor will comply with and perform all obligations,
covenants, conditions and agreements with respect to any Account,
Chattel Paper, Contract, License and all other agreements to which it is
a party or by which it is bound.
g. Limitation on Liens on Collateral. The Grantor will not
---------------------------------
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any Lien
on the Collateral except Permitted Encumbrances, and will defend the
right, title and interest of the Agent in and to any of the Grantor's
rights under the Chattel Paper, Contracts, Documents, General
Intangibles and Instruments and to the Equipment and Inventory and in
and to the Proceeds thereof against the claims and demands of all
Persons whomsoever.
h. Limitations on Modifications of Accounts. Upon the
----------------------------------------
occurrence and during the continuance of any Event of Default, the
Grantor will not, without the Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts, Chattel Paper
or Instruments, or compromise, compound or settle the same for less than
the full amount thereof, or release, wholly or partly, any Person liable
for the payment thereof, or allow any credit or discount whatsoever
thereon.
i. Maintenance of Insurance.
------------------------
(a) The Grantor agrees to maintain insurance on the
Equipment and Inventory under such policies of insurance, with such
insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to the
Agent (the "Required Insurance"). All policies covering the
Equipment and Inventory are subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Agent, to be
made payable to the Agent, for the benefit of the Lenders, in case
of loss, under a standard non-contributory "lender" or "secured
party" clause and are to contain such other provisions as the Agent
reasonably may require to fully protect the Agent's and the
Lenders' interests in the Inventory and Equipment and to any
payments to be made under such policies. All summaries of such
policies are to be delivered to the Agent. All such insurance
policies shall be prepaid, with a loss payable endorsement in favor
of the Agent, for the benefit of the Lenders, and shall provide for
not less than thirty (30) days prior written notice to the Agent of
the exercise of any right of cancellation. Upon the occurrence of
an Event of Default which is not waived, the Agent shall, subject
to the rights of any holders of Permitted Encumbrances holding
claims senior to the Agent, have the sole right, in the name of the
Agent or Grantor, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b) Grantor hereby acknowledges that in the event
Grantor, at any time, fails to provide Agent with evidence of the
Required Insurance, Agent may purchase the Required Insurance at
Grantor's expense to protect Agent's interests in the Collateral.
Such insurance may, but need not, protect Grantor's interests, and
Agent shall be under no obligation to so protect Grantor's
interests. The Required Insurance that Agent purchases on behalf
of Grantor may not pay any claim that Grantor makes or any claim
that is made against Grantor in connection with the Collateral.
Grantor may later cancel any Required Insurance purchased by Agent,
but only after providing Agent with evidence that Required
Insurance has been obtained as provided for in this Agreement. In
the event Agent purchases all or any portion of the Required
Insurance for the Collateral or as otherwise required hereunder,
Grantor will be responsible for all costs and expenses of such
Required Insurance, including, but not limited to, interest and any
other charges imposed by Agent in connection with the purchase of
the Required Insurance, until the effective date of the
cancellation or expiration of the Required Insurance. The costs
and expenses of any Required Insurance purchased by Agent shall be
added to the Guaranteed Obligations. Grantor acknowledges that the
cost of the Required Insurance purchased by Agent pursuant hereto
may be more than the cost of insurance Grantor may be able to
obtain on its own.
j. Limitations on Disposition. The Grantor will not sell,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so, except as expressly permitted herein or by
the Financing Agreement.
k. Further Identification of Collateral. The Grantor will,
------------------------------------
if so requested by the Agent, furnish to the Agent, as often as the
Agent reasonably requests, statements and schedules further identifying
and describing the Collateral and such other reports in connection with
the Collateral as the Agent may reasonably request, all in reasonable
detail.
l. Notices. The Grantor will advise the Agent promptly, in
-------
reasonable detail, (i) of any material Lien or claim made or asserted
against any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse
effect on the aggregate value of the property and assets of the Grantor
and its Subsidiaries taken as a whole or in the security interests
created hereunder.
m. Right of Inspection. Upon reasonable notice to the
-------------------
Grantor (unless an Event of Default has occurred and is continuing, in
which case no notice is necessary), the Agent shall at all times have
full and free access during normal business hours to all the books and
records and correspondence of the Grantor, and the Agent, or its
representatives, may examine the same, take abstracts therefrom and make
photocopies thereof, and the Grantor agrees to render to the Agent, at
the Grantor's cost and expense, such clerical and other assistance as
may be reasonably requested with regard thereto. Upon reasonable notice
to the Grantor (unless an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Agent and its
representatives shall also have the right to enter into and upon any
premises where any of the Equipment or Inventory is located for the
purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
n. Maintenance of Equipment. The Grantor will keep and
------------------------
maintain the Equipment, other than Equipment that has become obsolete,
in good operating condition, ordinary wear and tear excepted, sufficient
for the continuation of the business conducted by the Grantor on a basis
consistent with past practices, and the Grantor will provide all
maintenance and service and all repairs necessary for such purpose.
o. Continuous Perfection. The Grantor will not change its
---------------------
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the UCC
(or any other then applicable provision of the UCC) unless the Grantor
shall have given the Agent at least 30 days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably
requested by the Agent to amend such financing statement or continuation
statement so that it is not seriously misleading. The Grantor will not
change its principal place of business or remove its records or change
the location of its Inventory and Equipment, each as set forth on
Schedule II hereto, unless it gives the Agent at least 30 days' prior
written notice thereof and has taken such action as is necessary to
cause the security interest of the Agent in the Collateral to continue
to be perfected.
p. Intentionally omitted.
---------------------
q. Operating Restrictions. Until termination of this
----------------------
Agreement and payment and satisfaction of all Guaranteed Obligations due
hereunder, Grantor agrees that, without the prior written consent of the
Agent, except as otherwise herein provided, Grantor will not, and will
not permit any Subsidiary to:
i. Except for transfers of assets permitted under Sub
Section (iii) below and Permitted Encumbrances, mortgage, assign,
pledge, transfer or otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a
purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of its assets or goods,
whether real, personal or mixed, whether now owned or hereafter
acquired;
ii. Incur or create any Indebtedness other than the
Permitted Indebtedness;
iii. Sell, lease, assign, transfer or otherwise dispose
of (i) Collateral, except as otherwise specifically permitted by
this Agreement, or (ii) either all or substantially all of its
assets, if any, which do not constitute Collateral; provided,
however, that (A) transfers of Inventory solely among the Companies
and/or the Guarantors (other than Parent) shall be permitted
hereunder so long as any such transfer would be classified as an
Intercompany Receivable, (B) sales or dispositions of Excluded
Assets shall be permitted hereunder, and (C) sales or transfers of
Collateral to either Company by the other Company or by Grantor or
any Subsidiary to any Company shall be permitted hereunder;
iv. (i) Merge or consolidate with any other entity,
provided, however, that (x) any Company may merge or consolidate
with any Guarantor (other than Parent) and (y) any non-Guarantor
Subsidiary may merge or consolidate with any other non-Guarantor
Subsidiary; (ii) change its corporate name or principal place of
business without at least thirty (30) days prior written notice to
the Agent, (iii) change the form of its organization from for-
profit corporation or (iv) enter into or engage in any operation or
activity materially different from that presently being conducted
by Grantor or such Subsidiary;
v. Assume, guarantee, endorse, or otherwise become
liable upon the obligations of any person, firm, entity or
corporation, except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business, (ii) guaranties in favor of Agent
under the Loan Documents, (iii) existing guaranties listed on
Schedule 7.9(a) of the Financing Agreement, (iv) guaranties entered
into in the ordinary course of business by Grantor of the
obligations of Grantor or any Company, (v) guaranties entered into
in the ordinary course of business by any Subsidiary (vi)
guaranties in support of the Subordinated Debt (as defined in the
Financing Agreement) and (vii) guaranties entered into in
connection with the refinancing of any Indebtedness (as defined in
the Financing Agreement) permitted to be guaranteed by this
Section, provided that the guarantor thereof was previously
guaranteeing the Indebtedness being refinanced and the principal
amount of such Indebtedness being refinanced shall not be increased
from such principal amount outstanding on the day prior to the date
of such refinancing; provided, however, that the principal amount
of such Indebtedness being guaranteed may be increased by up to Two
Million Five Hundred Thousand Dollars ($2,500,000) if, and only if,
such Indebtedness is Permitted Indebtedness;
vi. Declare or pay any dividend or distribution of any
kind on, or purchase, acquire, redeem or retire, any of its equity
interests (of any class or type whatsoever), whether now or
hereafter issued and outstanding, other than Permitted
Distributions (as defined in the Financing Agreement); or
vii. Create any new Subsidiary, or make any advance or
loan to, or any investment in, or acquire all or substantially all
of the assets or capital stock of, or other equity interests in,
any firm, entity, person or corporation, other than (i) investments
in the Subsidiaries, (ii) Permitted Investments (as defined in the
Financing Agreement), (iii) loans constituting Permitted
Indebtedness, and (iv) advances to officers and directors in the
ordinary course of business for travel expenses, employment
relocation programs and similar business expenses subject to a
limit of Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any one time outstanding; provided, however that such
limit shall not apply with respect to legally required and
permissible indemnification of officers and directors.
r. Intentionally omitted.
---------------------
s. Millennium Compliance. Grantor and each Subsidiary shall
---------------------
take all action reasonably necessary to assure that its computer-based
systems are able to effectively process date-sensitive data functions.
Grantor represents and warrants to the Agent that the "Year 2000"
problem (that is, the inability of certain computer applications to
recognize and properly perform date-sensitive functions involving dates
subsequent to December 31, 1999) will not have a Material Adverse Effect
on any such entity. Grantor and each Subsidiary reasonably anticipate
that all computer applications which are material to the operation of
its business will, on a timely basis, properly perform date-sensitive
functions on and after January 1, 2000. Upon the Agent's request from
time to time, Grantor shall provide the Agent with assurances, in form
and substance reasonably satisfactory to the Agent, that Grantor's and
each Subsidiary's computer systems and applications are, or will be,
Year 2000 compliant on a timely basis.
6. The Agent's Appointment as Attorney-in-Fact.
-------------------------------------------
a. The Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney- in-fact with full,
irrevocable power and authority in the place and stead of the Grantor
and in the name of the Grantor or in its own name, from time to time in
the Agent's discretion upon the occurrence and during the continuance of
an Event of Default, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which the Agent may deem
necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby grants the
Agent the power and right, on behalf of the Grantor, without notice to
or assent by the Grantor to do the following:
i. to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to become
due under any Collateral and, in the name of the Grantor or in its
own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other Instruments
for the payment of moneys due under any Collateral and to file any
claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such moneys due under any
Collateral whenever payable and to file any claim or to take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any Collateral
whenever payable;
ii. to pay or discharge taxes, Liens, security interests
or other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or maintain any insurance called
for by the terms of this Agreement and to pay all or any part of
the premiums therefor and the costs thereof; and
iii. (A) to direct any party liable for any payment under
any of the collateral to make payment of any and all moneys due,
and to become due thereunder, directly to the Agent or as the Agent
shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due, and to become due at any
time, in respect of or arising out of any Collateral; (C) to sign
and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts
and other Documents constituting or relating to the Collateral;
(D) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other right
in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Grantor with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give
such discharges or releases as the Agent may deem appropriate;
(G) to license or, to the extent permitted by an applicable
license, sublicense, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any patent or
trademark, throughout the world for such term or terms, on such
conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (H) generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Agent was the
absolute owner thereof for all purposes, and to do, at the Agent's
option and the Grantor's expense, at any time, or from time to
time, all acts and things which the Agent reasonably deems
necessary to protect, preserve or realize upon the Collateral and
the Agent's and the Guaranteed Parties' Lien therein, in order to
effect the intent of this Agreement, all as fully and effectively
as the Grantor might do.
b. The Grantor hereby ratifies, to the extent permitted by
law, all that any said attorney shall lawfully do or cause to be done by
virtue hereof. The power of attorney granted pursuant to this
Section 6, being coupled with an interest, shall be irrevocable until
the Guaranteed Obligations are fully paid and satisfied.
c. The powers conferred on the Agent hereunder are solely to
protect the Agent's and the Guaranteed Parties' interests in the
Collateral and shall not impose any duty upon either of them to exercise
any such powers. The Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall
be responsible to the Grantor for any act or failure to act.
d. The Grantor also authorizes the Agent, at any time and
from time to time upon the occurrence and during the continuance of any
Event of Default, (i) to communicate in its own name with any party to
any Contract with regard to the assignment of the right, title and
interest of the Grantor in and under the Contracts hereunder and other
matters relating thereto and (ii) to execute, in connection with the
sale provided for in Section 8 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the
Collateral.
7. Performance by the Agent of the Grantor's Obligations. If the
-----------------------------------------------------
Grantor fails to perform or comply with any of its agreements
contained herein and the Agent, as provided for by the terms of
this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable
expenses of the Agent incurred in connection with such performance
or compliance, together with interest thereon at the highest rate
then in effect in respect of the Guaranteed Obligations, shall be
payable by the Grantor to the Agent on demand and shall constitute
Guaranteed Obligations.
8. Remedies, Rights Upon an Event of Default.
-----------------------------------------
a. If any Event of Default shall occur and be continuing,
the Agent may exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other Loan Document (as
defined in the Financing Agreement), all rights and remedies of a
secured party under the UCC. Without limiting the generality of the
foregoing, the Grantor expressly agrees that in any such event the
Agent, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place
of public or private sale) to or upon the Grantor or any other Person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the UCC and other
applicable law), may forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so),
or any part thereof, in one or more parcels at public or private sale or
sales, at any exchange or broker's board or any of the Agent's offices
or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. For the
purpose of enabling the Agent to exercise its rights and remedies
hereunder, the Grantor hereby grants to Agent, for the benefit of the
Lenders, to the extent assignable, licensable, or sublicensable, without
breaching any underlying agreements with third parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to the Grantor) to use, assign, license or sublicense any
of the General Intangibles. The Agent or any other Guaranteed Party
shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption the Grantor
hereby releases. The Grantor further agrees, at the Agent's request, to
assemble the Collateral and make it available to the Agent at places
which the Agent shall reasonably select, whether at the Grantor's
premises or elsewhere. The Agents shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale,
as provided in Section 8(d) hereof, the Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after so
paying over such net proceeds and after the payment by the Agent of any
other amount required by any provision of law, including
Section 9-504(1)(c) of the UCC, need the Agent account for the surplus,
if any, to the Grantor. To the extent permitted by applicable law, the
Grantor waives all claims, damages, and demands against the Guaranteed
Parties arising out of the repossession, retention or sale of the
Collateral. The Grantor agrees that the Agent need not give more than
ten days notice of the time and place of any public sale or of the time
after which a private sale may take place and that such notice is
reasonable notification of such matters. The Grantor shall remain
liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all Guaranteed Obligations, the
Grantor also being liable for the reasonable fees and expenses of any
attorneys employed by the Agent and the Guaranteed Parties to collect
such deficiency.
b. The Grantor also agrees to pay all costs of the Agent and
the other Guaranteed Parties, including, without limitation, reasonable
attorneys' fees, incurred in connection with the enforcement of any of
their respective rights and remedies hereunder.
c. The Grantor hereby waives presentment, demand, protest or
any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Agreement or any Collateral.
d. The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be distributed
by the Agent in the order of priorities set forth in the Financing
Agreement or other Loan Documents as with respect to the Companies.
e. The Grantor also agrees that the Agent shall be under no
obligation to marshall any assets in favor of the Grantor or any other
party or against or in payment of any or all of the Guaranteed
Obligations. To the extent the Agent or the other Guaranteed Parties
enforce their security interests or any Guaranteed Party exercises its
rights of setoff and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to
be repaid to a trustee, receiver or any other party under any bankruptcy
law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or
setoff had not occurred.
9. Limitation on the Guaranteed Parties' Duty in Respect of
--------------------------------------------------------
Collateral. No Guaranteed Party shall have any duty as to any
----------
Collateral in its possession or control or in the possession or
control of any agent or nominee of it or any income thereon or as
to the preservation of rights against prior parties or any other
rights pertaining thereto, except that each Guaranteed Party shall
use reasonable care with respect to the Collateral in its
possession or under its control. Upon request of the Grantor, the
Agent shall account for any moneys received by it in respect of any
foreclosure on or disposition of the Collateral.
10. Notices. Except as otherwise provided herein, all notices and
-------
correspondences hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, or by overnight
delivery service, with all charges prepaid, if to the Agent, then
to The CIT Group/Business Credit, Inc., 10 South LaSalle Street,
22nd Floor, Chicago, Illinois 60603, Attention: Regional Manager,
if to the Grantor, then to Viskase Companies, Inc., 6855 West 65th
Street, Bedford Park, Illinois 60638, Attention: President and
General Counsel, or by facsimile transmission, promptly confirmed
in writing sent by first class mail, if to the Agent, on behalf of
the Guaranteed Parties, at (312) 443-0139, and if to the Grantor,
at (708) 496-4472. All such notices and correspondence shall be
deemed given (i) if sent by certified or registered mail, three
business days after being postmarked, (ii) if sent by overnight
delivery service, when received at the above stated addresses or
when delivery is refused and (iii) if sent by telex or facsimile
transmission, when receipt of such transmission is acknowledged.
11. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Agreement nor consent to any departure by the Grantor therefrom
shall in any event be effective unless the same shall be in writing
and signed by the Agent and Grantor, and then any such waiver or
consent shall only be effective in the specific instance and for
the specific purpose for which given.
12. No Waiver; Remedies.
-------------------
a. No failure on the part of Agent or any other Guaranteed
Party to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or the Financing Agreement or
other Loan Documents.
b. Failure by the Agent at any time or times hereafter to
require strict performance by the Grantor or any other Person of any of
the provisions, warranties, terms or conditions contained in any of the
Financing Agreement or other Loan Documents now or at any time or times
hereafter executed by the Grantor or any such other Person and delivered
to any of the Guaranteed Parties shall not waive, affect or diminish any
right of any of the Guaranteed Parties at any time or times hereafter to
demand strict performance thereof, and such right shall not be deemed to
have been modified or waived by any course of conduct or knowledge of
any of the Guaranteed Parties, or any agent, officer or employee of any
Guaranteed Party.
13. Successors and Assigns. This Agreement and all obligations of the
----------------------
Grantor hereunder shall be binding upon the successors and assigns
of the Grantor, and shall, together with the rights and remedies of
the Agent hereunder, inure to the benefit of the Agent, the other
Guaranteed Parties, and their respective successors and assigns.
14. Governing Law; Severability. This Agreement shall be governed by,
---------------------------
and be construed and interpreted in accordance with, the internal
law of the State of Illinois, without regard to conflicts of law
principles. Wherever 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 prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of
this Agreement.
15. Waiver of Jury Trial. The Grantor and Agent waive any right they
--------------------
may have to trial by jury in any action or proceeding to enforce or
defend any rights or remedies hereunder, under the Guaranty or
under any of the other Loan Documents.
16. Further Indemnification. The Grantor agrees to pay, and to save
-----------------------
the Agent and each other Guaranteed Party harmless from, any and
all liabilities with respect to, or resulting from any delay in
paying, any and all excise, sales or other similar taxes which may
be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions
contemplated by this Agreement.
17. Section Titles. The Section titles contained in this Agreement are
--------------
and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
18. Confidentiality. For the purposes of this Section 18, "Confidential
---------------
Information" means all financial projections and all other
information delivered to the Agent, the Co-Agent (as defined in the
Financing Agreement), the Syndication Agent (as defined in the
Financing Agreement) or any Lender by or on behalf of Grantor, any
Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that is clearly marked or labeled or
otherwise adequately identified as being confidential information
of Grantor, any Company or any Subsidiary, provided that such term
does not include information that (a) was publicly known or
otherwise known to the Agent, the Co-Agent, the Syndication Agent
or the Lenders prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission
by the Agent, the Co-Agent, the Syndication Agent or the Lenders or
any person acting on their behalf, (c) otherwise becomes known to
the Agent, the Co-Agent, the Syndication Agent or the Lenders other
than through disclosure by the Agent, the Co-Agent, the Syndication
Agent, the Lenders, any Company or any Subsidiary or
(d) constitutes financial statements delivered under Section 5(p)
that are otherwise publicly available. The Agent, the Co-Agent,
the Syndication Agent and the Lenders will maintain the
confidentiality of such Confidential Information in accordance with
commercially reasonable procedures adopted by the Agent, the Co-
Agent, the Syndication Agent and the Lenders in good faith to
protect confidential information of third parties delivered to
them, provided that the Agent, the Co-Agent, the Syndication Agent
and the Lenders may deliver or disclose Confidential Information to
(a) their respective directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of this Agreement and the other Loan
Documents and such Person (as defined in the Financing Agreement)
has been notified of these confidentiality provisions), (b) their
respective financial advisors and other professional advisors who
agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 18,
(c) any other Lender, (d) any bank or other commercial lender to
which the Agent, the Co-Agent or a Lender sells or offers to sell
a portion of their rights and obligations under the Financing
Agreement or any participation therein (if such person has agreed
in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 18), or (e) any other
person (including bank auditors and other regulatory officials) to
which such delivery or disclosure may be necessary or appropriate
(i) to comply with compliance with any applicable law, rule,
regulation or order, (ii) in response to any subpoena or other
legal process after giving the Grantor notice and an opportunity to
seek judicial protection for such materials, (iii) in connection
with any litigation to which the Agent, the Co-Agent, the
Syndication Agent or a Lender is a party or (iv) if an Event of
Default has occurred and is continuing, to the extent the Agent may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under this Agreement or the other Loan
Documents.
19. Security Interest Absolute. All rights of the Agent and security
--------------------------
interests hereunder, and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of:
i. any lack or validity or enforceability of any
provision of any of the Financing Agreement, the Loan Documents or
any other agreement, document or instrument relating thereto;
ii. any change in the time, manner or place of payment
of, or in any other term of, or any increase in the amount of, all
or any of the Guaranteed Obligations, or any other amendment or
waiver of any term of, or any consent to any departure from any
requirement of, any of the Financing Agreement or the Loan
Documents;
iii. any exchange, release or non-perfection of any Lien
on any collateral, or any release or amendment or waiver of any
term of any guaranty of, or consent to departure from any
requirement of any guaranty of all or any of the Guaranteed
Obligations; or
iv. any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Grantor,
other than payment in full of the Guaranteed Obligations.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its duly authorized officer on the date first
above written.
VISKASE HOLDING CORPORATION, a
Delaware corporation
By:
----------------------------
Its:
----------------------------
ACCEPTED AND ACKNOWLEDGED BY:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
-------------------------------
Its:
-------------------------------
PARENT SECURITY AGREEMENT
-------------------------
This PARENT SECURITY AGREEMENT (this "Agreement"), dated as of
-------------------------
June __, 1999 made by VISKASE COMPANIES, INC., a Delaware
----------------------
corporation (the "Grantor"), in favor of THE CIT GROUP/BUSINESS
----------------------
CREDIT, INC., a New York corporation, as Agent ("Agent") on behalf
- -----------
of itself and the lenders ("Lenders") party to that certain
Financing Agreement of even date herewith (as amended, modified or
supplemented from time to time, the "Financing Agreement") among
Lenders, each of Viskase Corporation, a Pennsylvania corporation,
and Viskase Sales Corporation, a Delaware corporation (each a
"Company" and collectively, the "Companies"), and certain other
parties.
W I T N E S S E T H:
-------------------
WHEREAS, Grantor, directly or indirectly, owns all of the
capital stock of the Companies;
WHEREAS, pursuant to the Financing Agreement, the Companies
are about to incur certain Obligations (as defined in the Financing
Agreement);
WHEREAS, Grantor acknowledges that in view of the parent-
subsidiary and other business relations between Grantor and the
Companies, the extensions of credit and other financial
accommodations contemplated by the Financing Agreement will inure
to the benefit of Grantor and it is in the direct interest and to
the direct advantage of Grantor that it execute and deliver this
Agreement;
WHEREAS, pursuant to that certain Joint and Several Guaranty
Agreement of even date herewith (the "Guaranty"), made by the
Grantor and certain indirect subsidiaries thereof in favor of the
Agent, on behalf and for the benefit of the Lenders, the Grantor
has guaranteed the full and prompt payment and performance of the
"Guaranteed Obligations" (as defined in the Guaranty), including
the indebtedness and other obligations of the Companies under the
Financing Agreement; and
WHEREAS, it is a condition precedent to the making of the
extensions of credit and other financial accommodations
contemplated by the Financing Agreement that the Grantor shall have
entered into this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Agent and the Lenders from time to time to make the
extensions of credit and other financial accommodations
contemplated by the Financing Agreement, the Grantor hereby agrees
with the Agent on behalf and for the benefit of the Lenders as
follows:
1. Defined Terms. Capitalized terms used in this Agreement
-------------
but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Guaranty. As used in this Agreement,
the following terms have the meanings specified below (such
meanings being equally applicable to both the singular and plural
forms of the terms defined):
"Account" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by the
Grantor and, in any event, includes, without limitation, (i) all
accounts receivable, book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to the Grantor (including,
without limitation, under any trade name, style or division
thereof) whether arising out of goods sold or services rendered by
the Grantor or from any other transaction, whether or not the same
involves the sale of goods or services by the Grantor (including,
without limitation, any such obligation which might be
characterized as an account or contract right under the UCC),
(ii) all of Grantor's rights in, to and under all purchase orders
or receipts now owned or hereafter acquired by it for goods or
services, and all of Grantor's rights to any goods represented by
any of the foregoing (including, without limitation, unpaid
seller's rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or
repossessed goods), (iii) all moneys due or to become due to the
Grantor under all contracts for the sale of goods or the
performance of services or both by the Grantor (whether or not yet
earned by performance on the part of the Grantor or in connection
with any other transaction), now in existence or hereafter
occurring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and (iv) all
collateral security and guarantees of any kind given by any Person
with respect to any of the foregoing.
"Account Debtor" means any "account debtor," as such term is
defined in Section 9-105(l)(a) of the UCC.
"Chattel Paper" means any "chattel paper," as such term is
defined in Section 9-105(1)(b) of the UCC, now owned or hereafter
acquired by the Grantor.
"Collateral" has the meaning assigned to such term in
Section 2 of this Agreement.
"Contracts" means all contracts, undertakings or other
agreements (other than Chattel Paper, Documents or Instruments) in
or under which the Grantor may now or hereafter have any right,
title or interest, including, without limitation, with respect to
an Account, any agreement relating to the terms of payment or the
terms of performance thereof.
"Documents" means any "document," as such term is defined in
Section 9-105(l)(f) of the UCC, now owned or hereafter acquired by
the Grantor.
"Equipment" means any "equipment," as such term is defined in
Section 9-109(2) of the UCC, now owned or hereafter acquired by the
Grantor and, in any event, includes, without limitation, all
machinery, equipment, furnishings, fixtures, vehicles, computers
and other electronic data-processing and office equipment now owned
or hereafter acquired by the Grantor and any and all additions,
substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Excluded Assets" has the meaning assigned to such term in the
Financing Agreement.
"GECC Lease Documents" shall have the meaning assigned to such
term in the Financing Agreement.
"General Intangibles" means any "general intangibles," as such
term is defined in Section 9-106 of the UCC, now owned or hereafter
acquired by the Grantor and, in any event, includes, without
limitation, (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereon,
and all patents, patent applications and patent disclosures,
together with all reissuances, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names, domain
names, and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all
goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in
connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, methods,
schematics, technology, technical data, designs, drawings,
flowcharts, block diagrams, specifications, customer and supplier
lists, pricing and cost information and business and marketing
plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, (h) all
copies and tangible embodiments of the foregoing categories of
intellectual property listed in subsections (a) through (g) herein
(in whatever form of medium), and (i) all licenses, sublicenses,
agreements, or permissions related to the foregoing categories of
intellectual property listed in subsections (a) through (g) herein
(categories (a) through (i) herein are collectively referred to as
"Intellectual Property").
All General Intangibles which are patents, patent
applications, trademarks, trademark applications, copyrights,
copyright applications, mask works, and mask work applications are
listed on Schedule III hereto.
------------
"Guaranteed Parties" means the Agent and the Lenders,
collectively.
"Guarantors" has the meaning assigned to such term in the
Financing Agreement.
"Instrument" means any "instrument," as such term is defined
in Section 9-105(1)(i) of the UCC, now owned or hereafter acquired
by the Grantor, other than instruments that constitute or are a
part of a group of writings that constitute Chattel Paper.
"Intellectual Property" has the meaning assigned to such term
in the definition of General Intangibles in this Agreement.
"Intercompany Receivable" has the meaning assigned to such
term in the Financing Agreement.
"Inventory" means any "inventory," as such term is defined in
Section 9-109(4) of the UCC, now owned or hereafter acquired by the
Grantor, and wherever located, and, in any event, includes, without
limitation, all inventory, merchandise, goods and other personal
property now owned or hereafter acquired by the Grantor which are
held for sale or lease or are furnished or are to be furnished
under a contract of service or which constitute raw materials, work
in process or materials used or consumed or to be used or consumed
in the Grantor's business, or the processing, packaging, delivery
or shipping of the same, and all finished goods.
"Lien" means any mortgage, pledge, lien, charge, security
interest, conditional sale or other title retention agreement or
other encumbrance of any kind or description, including, without
limitation, any agreement to give or grant a Lien.
"Loan Documents" has the meaning assigned to such term in the
Financing Agreement.
"Permitted Encumbrances" has the meaning assigned to such term
in the Financing Agreement.
"Permitted Indebtedness" has the meaning assigned to such term
in the Financing Agreement.
"Proceeds" means "proceeds," as such term is defined in
Section 9-306(1) of the UCC, and, in any event, shall include,
without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Grantor from time to
time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to the
Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any Person
acting under color of governmental authority), and (iii) any and
all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Subsidiary" has the meaning assigned to such term in the
Financing Agreement.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois; provided,
however, in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of the
Agent's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than
the State of Illinois, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to
such provisions.
2. Grant of Security Interest.
--------------------------
(a) As collateral security for the full and prompt
payment when due (whether at stated maturity, by acceleration or
otherwise) of, and the performance and observance of, all the
Guaranteed Obligations and to induce the Guaranteed Parties to make
the extensions of credit and other financial accommodations
contemplated by the Financing Agreement, the Grantor hereby grants,
assigns, conveys, mortgages, pledges, hypothecates and transfers to
the Agent, on behalf and for the benefit of the Guaranteed Parties,
a lien upon and security interest in, all of the Grantor's right,
title and interest in, to and under the following (all of which
being hereinafter collectively called the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all other goods and personal property of the
Grantor whether tangible or intangible or whether now owned or
hereafter acquired by the Grantor and wherever located; and
(x) to the extent not otherwise included, all
Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and
products of, each of the foregoing;
provided, however, that, notwithstanding anything to the contrary
contained in this Section 2 (a), the collateral shall not include
any Contract or General Intangible if (and solely to the extent and
for so long as) such Contract or General Intangible expressly
prohibits Grantor from granting any Lien thereon or may otherwise
not be assigned, licensed, or sublicensed, without breaching any
underlying agreements with third parties.
(b) In addition, as collateral security for the full and
prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of, and the performance and observance
of, all the Guaranteed Obligations and to induce the Guaranteed
Parties to make the extensions of credit and other financial
accommodations contemplated by the Financing Agreement, the Agent,
for the benefit of each Guaranteed Party, is hereby granted a lien
upon and security interest in all property of the Grantor held by
the Guaranteed Party, including, without limitation, all property
of every description, now or hereafter in the possession or custody
of or in transit to such Guaranteed Party for any purpose,
including safekeeping, collection or pledge, for the account of the
Grantor, or as to which the Grantor may have any right or power.
3. Rights of the Guaranteed Parties; Limitations on
------------------------------------------------
Guaranteed Parties' Obligations.
- -------------------------------
(a) It is expressly agreed by the Grantor that, anything
herein to the contrary notwithstanding, the Grantor shall remain
liable under each of the Contracts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder and the Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such Contract. Neither the Agent nor
any other Guaranteed Party shall have any obligation or liability
under any Contract by reason of or arising out of this Agreement or
the granting of a security interest in any Contract to the Agent on
behalf and for the benefit of the Guaranteed Parties or the receipt
by the Agent or any other Guaranteed Party of any payment relating
to any Contract pursuant hereto, nor shall the Agent or any other
Guaranteed Party be required or obligated in any manner to perform
or fulfill any of the obligations of the Grantor under or pursuant
to any Contract, or to make any payment, or to make any inquiry as
to the nature or the sufficiency of any payment received by it or
the sufficiency of any performance by any party under any Contract,
or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time
or times.
(b) If an Event of Default has occurred and is
continuing, at the request of the Agent, the Grantor shall deliver
to the Agent all original and other documents evidencing, and
relating to, the sale and delivery of Inventory or the performance
of labor or service which created Accounts, including, without
limitation, all original orders, invoices, and shipping receipts;
and, prior to the occurrence of an Event of Default, the Grantor
shall deliver photocopies thereof to the Agent at its request.
(c) The Agent may at any time, upon the occurrence and
during the continuance of any Event of Default, upon concurrent
notice to the Grantor of its intention to do so, notify Account
Debtors of the Grantor, parties to Contracts of the Grantor,
obligors of Instruments of the Grantor and obligors in respect of
Chattel Paper of the Grantor that the Accounts and the right, title
and interest of the Grantor in and under such Accounts, Contracts,
such Instruments and such Chattel Paper have been assigned to the
Agent and that payments shall be made directly to the Agent. Upon
the occurrence of an Event of Default, at the request of the Agent,
the Grantor will so notify such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper. Upon the occurrence and during the continuance
of an Event of Default, the Agent may in its own name or in the
name of others communicate with such Account Debtors, parties to
such Contracts, obligors of such Instruments and obligors in
respect of such Chattel Paper to verify with such Persons to the
Agent's satisfaction the existence, amount and terms of any
Accounts, Contracts, Instruments or Chattel Paper.
(d) Upon an Event of Default, the Agent shall have the
right to make test verifications of the Accounts and physical
verifications of the Inventory in any manner and through any medium
that it considers advisable, and the Grantor agrees to furnish all
such assistance and information as the Agent may reasonably require
in connection therewith. The Grantor, at its own cost and expense,
will prepare and deliver to the Agent, upon the occurrence and
during the continuance of an Event of Default, upon the Agent's
request, the following reports: (i) a reconciliation of all its
Accounts, (ii) an aging of all its Accounts, (iii) trial balances,
(iv) a test verification of such Accounts as the Agent may request,
and (v) a certificate or certificates of an officer of Grantor
certifying as to the foregoing. The Grantor at its expense will
prepare and deliver to the Agent the results of the annual physical
verification of its Inventory made or observed by such accountants.
4. Representations and Warranties. The Grantor hereby
------------------------------
represents and warrants to the Guaranteed Parties as follows:
(a) The Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest
hereunder, having good title thereto, free and clear of any and all
Liens, except for the security interests granted pursuant to this
Agreement, the GECC Lease Documents, the Loan Documents or other
Permitted Encumbrances (collectively, the "Encumbrances"). No
material amounts payable under or in connection with any of its
Accounts or Contracts are evidenced by Instruments which have not
been delivered to the Agent;
(b) No effective security agreement, financing
statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is on file or
of record in any public office, except such as may have been filed
by the Grantor in favor of the Agent pursuant to this Agreement or
such as relate to other Permitted Encumbrances;
(c) Assuming appropriate financing statements have been
filed in the jurisdictions listed on Schedule I hereto, appropriate
filings have been made with the United States Patent and Trademark
Office and the United States Copyright Office, appropriate delivery
has been made of any and all Instruments, and, solely with respect
to Chattel Paper, Instruments and vehicles, all other appropriate
actions have been taken, this Agreement is effective to create a
valid and continuing first priority Lien on, and security interest
in, the Collateral prior to all other Liens except the
Encumbrances;
(d) The Grantor's principal place of business and the
place where its records concerning the Collateral are kept and the
location of its Inventory and Equipment are set forth on
Schedule II hereto;
(e) The amount represented by the Grantor to the Agent
from time to time as owing by each Account Debtor or by all Account
Debtors in respect of the Accounts of the Grantor will at such time
be the correct amount actually and unconditionally owing by such
Account Debtors thereunder;
(f) The consolidated audited balance sheet and related
statements of operations and cashflow, and changes in stockholders'
equity for the Grantor and the Companies as of December 31, 1998
and for the fiscal year then ended, and the consolidated unaudited
balance sheet and related statements of operations and cashflow for
the Grantor and the Companies as of March 31, 1999 and for the
three (3) months then ended, have been prepared in accordance with
GAAP and present accurately and fairly in all material respects the
Grantor's financial position as at the dates thereof and the
Grantor's results of operation for the periods then ended;
(g) (i) the fair value of Grantor's assets exceeds the
book value of Grantor's liabilities, (ii) Grantor is generally able
to pay its debts as they become due and payable, and (iii)Grantor
does not have unreasonably small capital to carry on its business
as it is currently conducted absent extraordinary and unforeseen
circumstances;
(h) Grantor is duly organized and validly existing under
the laws of the state of its incorporation, and is qualified to do
business in each State where the failure to so qualify would have
a material adverse effect on the business, assets or condition
(financial or otherwise) of the Grantor and its Subsidiaries taken
as a whole; and
(i) the execution and delivery of this Agreement by
Grantor and the consummation of the transactions contemplated
hereby, do not violate any term, provision or covenant contained in
the Articles or Certificate of Incorporation or Bylaws of Grantor,
or any term, provision, covenant or representation contained in any
loan agreement, lease, indenture, mortgage, deed of trust, note,
security agreement or pledge agreement to which any Grantor is a
signatory or by which Grantor or any Grantor's assets are bound.
5. Covenants. The Grantor covenants and agrees with the
---------
Agent that from and after the date of this Agreement and until the
Guaranteed Obligations are fully satisfied:
(a) Further Documentation; Pledge of Instruments. At
--------------------------------------------
any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Grantor, the Grantor will
promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the Agent
may reasonably deem desirable to obtain the full benefits of this
Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation
statements under the UCC with respect to the Liens and security
interests granted hereby, transferring Collateral to the Agent's
possession (if a security interest in such Collateral can be
perfected by possession), placing the interest of the Agent as
lienholder on the certificate of title of any vehicle and, upon an
Event of Default, using its good faith reasonable efforts to secure
all consents and approvals necessary or appropriate for the
assignment to the Agent of any Contract held by the Grantor or in
which the Grantor has any rights not heretofore assigned. The
Grantor also hereby authorizes the Agent to file any such financing
or continuation statement without the signature of the Grantor to
the extent permitted by applicable law. If any of the Collateral
shall be or become evidenced by any Instrument, the Grantor agrees
to pledge such Instrument to the Agent and shall duly endorse such
Instrument in a manner satisfactory to the Agent and deliver the
same to the Agent.
(b) Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record
of all payments received and all credits granted with respect to
the Collateral and all other dealings with the Collateral. At the
Agent's request, the Grantor will mark its books and records
pertaining to the Collateral to evidence this Agreement and the
Lien and security interests granted hereby. If requested by the
Agent, all Chattel Paper will be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are
subject to the security interest of The CIT Group/Business Credit,
Inc., as Agent." If requested by the Agent, the security interest
of the Agent shall be noted on the certificate of title of each
vehicle. For the Agent's further security, the Grantor agrees that
the Agent shall have a special property interest in all of the
Grantor's books and records pertaining to the Collateral and, upon
the occurrence and during the continuance of any Event of Default,
at the request of the Agent, the Grantor shall deliver and turn
over any such books and records to the Agent or to its
representatives at any time on demand of the Agent. Prior to the
occurrence of an Event of Default and upon reasonable notice from
the Agent, the Grantor shall permit any representative of the Agent
to inspect such books and records and will provide photocopies
thereof to the Agent.
(c) Indemnification. In any suit, proceeding or action
---------------
brought by the Agent or any other Guaranteed Party relating to any
Account, Chattel Paper, Contract, General Intangible or Instrument
for any sum owing thereunder, or to enforce any provision of any
Account, Chattel Paper, Contract, General Intangible or Instrument,
the Grantor will save, indemnify and keep each of the Agent and the
Guaranteed Parties harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of,
such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and remain enforceable against
and only against the Grantor and shall not be enforceable against
the Agent or the Guaranteed Parties; provided, however, that the
Grantor shall not have any obligation under this Section 5(c) to
the Agent or the Guaranteed Parties with respect to any expense,
loss or damage caused by or resulting from the gross negligence or
willful misconduct of the Agent or the Guaranteed Parties.
(d) Compliance with Laws, Etc. The Grantor will comply,
-------------------------
in all material respects, with all applicable requirements of law,
contractual obligations, commitments, instruments, licenses,
permits and franchises applicable to the Collateral, including,
without limitation, all permits; provided, however, that the
Grantor shall not be deemed in default of this Section 5(d) if all
such non-compliances in the aggregate could not reasonably be
expected to have a material adverse effect on the business, assets
or condition (financial or otherwise) of the Grantor and its
Subsidiaries taken as a whole.
(e) Payment of Taxes, Etc. (i) The Grantor will pay and
---------------------
discharge before the same shall become delinquent, all federal,
state, local and other taxes and similar charges (other than
immaterial state, local and foreign taxes and similar charges)
except where contested in good faith pursuant to Section 5(e)(ii).
(ii) The Grantor may in good faith contest, by
proper legal actions or proceedings, the validity or amount of
any charges or claims arising under Section 5(e)(i), provided
that at the time of commencement of any such action or
proceeding, and during the pendency thereof (A) no Event of
Default shall have occurred, (B) adequate reserves with
respect thereto are maintained on the books of the Grantor in
accordance with generally accepted accounting principles, in
effect from time to time, (C) none of the assets of the
Grantor would be subject to forfeiture or loss or any Lien by
reasons of the institution or prosecution of such contest,
(D) if such contest is terminated or discontinued adversely to
the Grantor, the Grantor will promptly pay or discharge such
contested charges or claims and all additional charges,
interest, penalties and expenses, if any, and will deliver to
the Agent evidence acceptable to the Agent of such compliance,
payment or discharge, and (E) the nonpayment or nondischarge
thereof could not singly or in the aggregate reasonably be
expected to have a material adverse effect on the business,
assets or condition (financial or otherwise) of the Grantor
and its Subsidiaries taken as a whole.
(f) Compliance with Terms of Accounts, Etc. In all
--------------------------------------
material respects, the Grantor will comply with and perform all
obligations, covenants, conditions and agreements with respect to
any Account, Chattel Paper, Contract, License and all other
agreements to which it is a party or by which it is bound.
(g) Limitation on Liens on Collateral. The Grantor will
---------------------------------
not create, permit or suffer to exist, and will defend the
Collateral against and take such other action as is necessary to
remove, any Lien on the Collateral except Permitted Encumbrances,
and will defend the right, title and interest of the Agent in and
to any of the Grantor's rights under the Chattel Paper, Contracts,
Documents, General Intangibles and Instruments and to the Equipment
and Inventory and in and to the Proceeds thereof against the claims
and demands of all Persons whomsoever.
(h) Limitations on Modifications of Accounts. Upon the
----------------------------------------
occurrence and during the continuance of any Event of Default, the
Grantor will not, without the Agent's prior written consent, grant
any extension of the time of payment of any of the Accounts,
Chattel Paper or Instruments, or compromise, compound or settle the
same for less than the full amount thereof, or release, wholly or
partly, any Person liable for the payment thereof, or allow any
credit or discount whatsoever thereon.
(i) Maintenance of Insurance.
------------------------
(a) The Grantor agrees to maintain insurance on the
Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and
covering such insurable risks as are at all times reasonably
satisfactory to the Agent (the "Required Insurance"). All
policies covering the Equipment and Inventory are subject to
the rights of any holders of Permitted Encumbrances holding
claims senior to the Agent, to be made payable to the Agent,
for the benefit of the Lenders, in case of loss, under a
standard non-contributory "lender" or "secured party" clause
and are to contain such other provisions as the Agent
reasonably may require to fully protect the Agent's and the
Lenders' interests in the Inventory and Equipment and to any
payments to be made under such policies. All summaries of
such policies are to be delivered to the Agent. All such
insurance policies shall be prepaid, with a loss payable
endorsement in favor of the Agent, for the benefit of the
Lenders, and shall provide for not less than thirty (30) days
prior written notice to the Agent of the exercise of any right
of cancellation. Upon the occurrence of an Event of Default
which is not waived, the Agent shall, subject to the rights of
any holders of Permitted Encumbrances holding claims senior to
the Agent, have the sole right, in the name of the Agent or
Grantor, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that
may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments
or other documents that may be necessary to effect the
collection, compromise or settlement of any claims under any
such insurance policies.
(b) Grantor hereby acknowledges that in the event
Grantor, at any time, fails to provide Agent with evidence of
the Required Insurance, Agent may purchase the Required
Insurance at Grantor's expense to protect Agent's interests in
the Collateral. Such insurance may, but need not, protect
Grantor's interests, and Agent shall be under no obligation to
so protect Grantor's interests. The Required Insurance that
Agent purchases on behalf of Grantor may not pay any claim
that Grantor makes or any claim that is made against Grantor
in connection with the Collateral. Grantor may later cancel
any Required Insurance purchased by Agent, but only after
providing Agent with evidence that Required Insurance has been
obtained as provided for in this Agreement. In the event
Agent purchases all or any portion of the Required Insurance
for the Collateral or as otherwise required hereunder, Grantor
will be responsible for all costs and expenses of such
Required Insurance, including, but not limited to, interest
and any other charges imposed by Agent in connection with the
purchase of the Required Insurance, until the effective date
of the cancellation or expiration of the Required Insurance.
The costs and expenses of any Required Insurance purchased by
Agent shall be added to the Guaranteed Obligations. Grantor
acknowledges that the cost of the Required Insurance purchased
by Agent pursuant hereto may be more than the cost of
insurance Grantor may be able to obtain on its own.
(j) Limitations on Disposition. The Grantor will not
--------------------------
sell, lease, transfer or otherwise dispose of any of the
Collateral, or attempt or contract to do so, except as expressly
permitted herein or by the Financing Agreement.
(k) Further Identification of Collateral. The Grantor
------------------------------------
will, if so requested by the Agent, furnish to the Agent, as often
as the Agent reasonably requests, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Agent may reasonably request,
all in reasonable detail.
(l) Notices. The Grantor will advise the Agent
-------
promptly, in reasonable detail, (i) of any material Lien or claim
made or asserted against any of the Collateral and (ii) of the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the
property and assets of the Grantor and its Subsidiaries taken as a
whole or in the security interests created hereunder.
(m) Right of Inspection. Upon reasonable notice to the
-------------------
Grantor (unless an Event of Default has occurred and is continuing,
in which case no notice is necessary), the Agent shall at all times
have full and free access during normal business hours to all the
books and records and correspondence of the Grantor, and the Agent,
or its representatives, may examine the same, take abstracts
therefrom and make photocopies thereof, and the Grantor agrees to
render to the Agent, at the Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with
regard thereto. Upon reasonable notice to the Grantor (unless an
Event of Default has occurred and is continuing, in which case no
notice is necessary), the Agent and its representatives shall also
have the right to enter into and upon any premises where any of the
Equipment or Inventory is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests
therein.
(n) Maintenance of Equipment. The Grantor will keep and
------------------------
maintain the Equipment, other than Equipment that has become
obsolete, in good operating condition, ordinary wear and tear
excepted, sufficient for the continuation of the business conducted
by the Grantor on a basis consistent with past practices, and the
Grantor will provide all maintenance and service and all repairs
necessary for such purpose.
(o) Continuous Perfection. The Grantor will not change
---------------------
its name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection
herewith seriously misleading within the meaning of
Section 9-402(7) of the UCC (or any other then applicable provision
of the UCC) unless the Grantor shall have given the Agent at least
30 days' prior written notice thereof and shall have taken all
action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such
action in advance) necessary or reasonably requested by the Agent
to amend such financing statement or continuation statement so that
it is not seriously misleading. The Grantor will not change its
principal place of business or remove its records or change the
location of its Inventory and Equipment, each as set forth on
Schedule II hereto, unless it gives the Agent at least 30 days'
prior written notice thereof and has taken such action as is
necessary to cause the security interest of the Agent in the
Collateral to continue to be perfected.
(p) Financial Statements. Until termination of this
--------------------
Agreement and payment and satisfaction of all Guaranteed
Obligations due hereunder, Grantor agrees that, unless Agent shall
have otherwise consented in writing, Grantor will furnish to Agent
and Co-Agent: (a) within ninety (90) days after the end of each
fiscal year of Grantor, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the close of such year, and
statements of operations, cash flow and reconciliation of
stockholders' equity of Grantor for such year, audited by
independent public accountants selected by Grantor and satisfactory
to the Agent, together with the unqualified opinion (as to scope of
review) of the accountants preparing such financial statements
(except that for the fiscal year 2000 audited financial statements,
the opinion of such accountants may be qualified, if necessary, for
the sole purpose of reflecting that, as of the date of such
opinion, the Companies do not have a financing commitment in place
for the period commencing on the Termination Date(as defined in the
Financing Agreement)); (b) within thirty (30) days of the end of
each fiscal quarter, a Consolidated Balance Sheet and a
Consolidating Balance Sheet as at the end of such fiscal quarter,
and a consolidated statement of operations and cash flow of Grantor
for such fiscal quarter and for the period commencing on the first
day of the current fiscal quarter through the end of such fiscal
quarter; (c) within thirty-five (35) days after the end of each
fiscal month, a Consolidated Balance Sheet and a Consolidating
Balance Sheet as at the end of such fiscal month, and a
consolidated statement of operations and cash flow of Grantor for
such fiscal month and for the period commencing on the first day of
the current fiscal year through the end of such fiscal month;
(d) no later than thirty (30) days after the beginning of each
fiscal year, monthly projections of the Consolidated Balance Sheet,
Consolidating Balance Sheet, the consolidated and consolidating
statements of operations and cash flow of Grantor; and (e) from
time to time, such further information regarding the business
affairs and financial condition of Grantor as the Agent may
reasonably request.
(q) Operating Restrictions. Until termination of this
----------------------
Agreement and payment and satisfaction of all Guaranteed
Obligations due hereunder, Grantor agrees that, without the prior
written consent of the Agent, except as otherwise herein provided,
Grantor will not, and will not permit any Subsidiary to:
(i) Except for transfers of assets permitted under
Sub Section (iii) below and Permitted Encumbrances, mortgage,
----------------
assign, pledge, transfer or otherwise permit any lien, charge,
security interest, encumbrance or judgment, (whether as a
result of a purchase money or title retention transaction, or
other security interest, or otherwise) to exist on any of its
assets or goods, whether real, personal or mixed, whether now
owned or hereafter acquired;
(ii) Incur or create any Indebtedness other than the
Permitted Indebtedness;
(iii) Sell, lease, assign, transfer or otherwise
dispose of (i) Collateral, except as otherwise specifically
permitted by this Agreement, or (ii) either all or
substantially all of its assets, if any, which do not
constitute Collateral; provided, however, that (A) transfers
of Inventory solely among the Companies and/or the Guarantors
(other than Grantor) shall be permitted hereunder so long as
any such transfer would be classified as an Intercompany
Receivable, (B) sales or dispositions of Excluded Assets shall
be permitted hereunder, and (C) sales or transfers of
Collateral to either Company by the other Company or by any
Subsidiary to any Company shall be permitted hereunder;
(iv) (i) Merge or consolidate with any other entity,
provided, however, that (x) any Company may merge or
consolidate with any Guarantor (other than Grantor) and
(y) any non-Guarantor Subsidiary may merge or consolidate with
any other non-Guarantor Subsidiary; (ii) change its corporate
name or principal place of business without at least thirty
(30) days prior written notice to the Agent, (iii) change the
form of its organization from for-profit corporation or
(iv) enter into or engage in any operation or activity
materially different from that presently being conducted by
Grantor or such Subsidiary;
(v) Assume, guarantee, endorse, or otherwise become
liable upon the obligations of any person, firm, entity or
corporation, except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions
in the ordinary course of business, (ii) guaranties in favor
of Agent under the Loan Documents, (iii) existing guaranties
listed on Schedule 7.9(a) of the Financing Agreement, (iv)
---------------
guaranties entered into in the ordinary course of business by
Grantor of the obligations of Grantor or any Company,
(v) guaranties entered into in the ordinary course of business
by any Subsidiary (vi) guaranties in support of the
Subordinated Debt (as defined in the Financing Agreement) and
(vii) guaranties entered into in connection with the
refinancing of any Indebtedness (as defined in the Financing
Agreement) permitted to be guaranteed by this Section,
provided that the guarantor thereof was previously
guaranteeing the Indebtedness being refinanced and the
principal amount of such Indebtedness being refinanced shall
not be increased from such principal amount outstanding on the
day prior to the date of such refinancing; provided, however,
that the principal amount of such Indebtedness being
guaranteed may be increased by up to Two Million Five Hundred
Thousand Dollars ($2,500,000) if, and only if, such
Indebtedness is Permitted Indebtedness;
(vi) Declare or pay any dividend or distribution of
any kind on, or purchase, acquire, redeem or retire, any of
its equity interests (of any class or type whatsoever),
whether now or hereafter issued and outstanding, other than
Permitted Distributions (as defined in the Financing
Agreement); or
(vii) Create any new Subsidiary, or make any
advance or loan to, or any investment in, or acquire all or
substantially all of the assets or capital stock of, or other
equity interests in, any firm, entity, person or corporation,
other than (i) investments in the Subsidiaries, (ii) Permitted
Investments (as defined in the Financing Agreement),
(iii) loans constituting Permitted Indebtedness, and
(iv) advances to officers and directors in the ordinary course
of business for travel expenses, employment relocation
programs and similar business expenses subject to a limit of
Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any one time outstanding; provided, however that
such limit shall not apply with respect to legally required
and permissible indemnification of officers and directors.
(r) Financial Covenants. Grantor shall be in compliance
-------------------
and cause each of the Companies to be in compliance with (i) each
of the Financial Covenants set forth in Section 7.10 of the
Financing Agreement and (ii) the restrictions contained in
Section 7.11 of the Financing Agreement with respect to Capital
Expenditures (as defined in the Financing Agreement) and Operating
Leases (as defined in the Financing Agreement).
(s) Millennium Compliance. Grantor and each Subsidiary
---------------------
shall take all action reasonably necessary to assure that its
computer-based systems are able to effectively process date-
sensitive data functions. Grantor represents and warrants to the
Agent that the "Year 2000" problem (that is, the inability of
certain computer applications to recognize and properly perform
date-sensitive functions involving dates subsequent to December 31,
1999) will not have a Material Adverse Effect on any such entity.
Grantor and each Subsidiary reasonably anticipate that all computer
applications which are material to the operation of its business
will, on a timely basis, properly perform date-sensitive functions
on and after January 1, 2000. Upon the Agent's request from time
to time, Grantor shall provide the Agent with assurances, in form
and substance reasonably satisfactory to the Agent, that Grantor's
and each Subsidiary's computer systems and applications are, or
will be, Year 2000 compliant on a timely basis.
6. The Agent's Appointment as Attorney-in-Fact.
-------------------------------------------
(a) The Grantor hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney- in-fact
with full, irrevocable power and authority in the place and stead
of the Grantor and in the name of the Grantor or in its own name,
from time to time in the Agent's discretion upon the occurrence and
during the continuance of an Event of Default, for the purpose of
carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents
and instruments which the Agent may deem necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby grants the Agent the power and
right, on behalf of the Grantor, without notice to or assent by the
Grantor to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to
become due under any Collateral and, in the name of the
Grantor or in its own name or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances
or other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise
deemed appropriate by the Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and
all such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any repairs or
maintain any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums therefor
and the costs thereof; and
(iii) (A) to direct any party liable for any
payment under any of the collateral to make payment of any and
all moneys due, and to become due thereunder, directly to the
Agent or as the Agent shall direct; (B) to receive payment of
and receipt for any and all moneys, claims and other amounts
due, and to become due at any time, in respect of or arising
out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and
other Documents constituting or relating to the Collateral;
(D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and
to enforce any other right in respect of any Collateral;
(E) to defend any suit, action or proceeding brought against
the Grantor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or
releases as the Agent may deem appropriate; (G) to license or,
to the extent permitted by an applicable license, sublicense,
whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any patent or trademark,
throughout the world for such term or terms, on such
conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (H) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though
the Agent was the absolute owner thereof for all purposes, and
to do, at the Agent's option and the Grantor's expense, at any
time, or from time to time, all acts and things which the
Agent reasonably deems necessary to protect, preserve or
realize upon the Collateral and the Agent's and the Guaranteed
Parties' Lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might
do.
(b) The Grantor hereby ratifies, to the extent permitted
by law, all that any said attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted pursuant to
this Section 6, being coupled with an interest, shall be
irrevocable until the Guaranteed Obligations are fully paid and
satisfied.
(c) The powers conferred on the Agent hereunder are
solely to protect the Agent's and the Guaranteed Parties' interests
in the Collateral and shall not impose any duty upon either of them
to exercise any such powers. The Agent shall be accountable only
for amounts that it actually receives as a result of the exercise
of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Grantor for any act
or failure to act.
(d) The Grantor also authorizes the Agent, at any time
and from time to time upon the occurrence and during the
continuance of any Event of Default, (i) to communicate in its own
name with any party to any Contract with regard to the assignment
of the right, title and interest of the Grantor in and under the
Contracts hereunder and other matters relating thereto and (ii) to
execute, in connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
7. Performance by the Agent of the Grantor's Obligations.
-----------------------------------------------------
If the Grantor fails to perform or comply with any of its
agreements contained herein and the Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the
reasonable expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at the
highest rate then in effect in respect of the Guaranteed
Obligations, shall be payable by the Grantor to the Agent on demand
and shall constitute Guaranteed Obligations.
8. Remedies, Rights Upon an Event of Default.
-----------------------------------------
(a) If any Event of Default shall occur and be
continuing, the Agent may exercise in addition to all other rights
and remedies granted to it in this Agreement and in any other Loan
Document (as defined in the Financing Agreement), all rights and
remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Grantor expressly agrees that in
any such event the Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or
upon the Grantor or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived
to the maximum extent permitted by the UCC and other applicable
law), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or any of
the Agent's offices or elsewhere at such prices as it may deem
best, for cash or on credit or for future delivery without
assumption of any credit risk. For the purpose of enabling the
Agent to exercise its rights and remedies hereunder, the Grantor
hereby grants to Agent, for the benefit of the Lenders, to the
extent assignable, licensable, or sublicensable, without breaching
any underlying agreements with third parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, assign, license or
sublicense any of the General Intangibles. The Agent or any other
Guaranteed Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of said Collateral
so sold, free of any right or equity of redemption, which equity of
redemption the Grantor hereby releases. The Grantor further
agrees, at the Agent's request, to assemble the Collateral and make
it available to the Agent at places which the Agent shall
reasonably select, whether at the Grantor's premises or elsewhere.
The Agents shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, as provided
in Section 8(d) hereof, the Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after
so paying over such net proceeds and after the payment by the Agent
of any other amount required by any provision of law, including
Section 9-504(1)(c) of the UCC, need the Agent account for the
surplus, if any, to the Grantor. To the extent permitted by
applicable law, the Grantor waives all claims, damages, and demands
against the Guaranteed Parties arising out of the repossession,
retention or sale of the Collateral. The Grantor agrees that the
Agent need not give more than ten days notice of the time and place
of any public sale or of the time after which a private sale may
take place and that such notice is reasonable notification of such
matters. The Grantor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are
insufficient to pay all Guaranteed Obligations, the Grantor also
being liable for the reasonable fees and expenses of any attorneys
employed by the Agent and the Guaranteed Parties to collect such
deficiency.
(b) The Grantor also agrees to pay all costs of the
Agent and the other Guaranteed Parties, including, without
limitation, reasonable attorneys' fees, incurred in connection with
the enforcement of any of their respective rights and remedies
hereunder.
(c) The Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Agreement or
any Collateral.
(d) The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be
distributed by the Agent in the order of priorities set forth in
the Financing Agreement or other Loan Documents as with respect to
the Companies.
(e) The Grantor also agrees that the Agent shall be
under no obligation to marshall any assets in favor of the Grantor
or any other party or against or in payment of any or all of the
Guaranteed Obligations. To the extent the Agent or the other
Guaranteed Parties enforce their security interests or any
Guaranteed Party exercises its rights of setoff and such payment or
payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of
such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or
setoff had not occurred.
9. Limitation on the Guaranteed Parties' Duty in Respect of
--------------------------------------------------------
Collateral. No Guaranteed Party shall have any duty as to any
- ----------
Collateral in its possession or control or in the possession or
control of any agent or nominee of it or any income thereon or as
to the preservation of rights against prior parties or any other
rights pertaining thereto, except that each Guaranteed Party shall
use reasonable care with respect to the Collateral in its
possession or under its control. Upon request of the Grantor, the
Agent shall account for any moneys received by it in respect of any
foreclosure on or disposition of the Collateral.
10. Notices. Except as otherwise provided herein, all
-------
notices and correspondences hereunder shall be in writing and sent
by certified or registered mail, return receipt requested, or by
overnight delivery service, with all charges prepaid, if to the
Agent, then to The CIT Group/Business Credit, Inc., 10 South
LaSalle Street, 22nd Floor, Chicago, Illinois 60603, Attention:
Regional Manager, if to the Grantor, then to Viskase Companies,
Inc., 6855 West 65th Street, Bedford Park, Illinois 60638,
Attention: President and General Counsel, or by facsimile
transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, on behalf of the Guaranteed Parties, at
(312) 443-0139, and if to the Grantor, at (708) 496-4472. All such
notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, three business days after being
postmarked, (ii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is refused
and (iii) if sent by telex or facsimile transmission, when receipt
of such transmission is acknowledged.
11. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement nor consent to any departure by the Grantor
therefrom shall in any event be effective unless the same shall be
in writing and signed by the Agent and Grantor, and then any such
waiver or consent shall only be effective in the specific instance
and for the specific purpose for which given.
12. No Waiver; Remedies.
-------------------
(a) No failure on the part of Agent or any other
Guaranteed Party to exercise, and no delay in exercising any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative, may be exercised singly or
concurrently, and are not exclusive of any remedies provided by law
or the Financing Agreement or other Loan Documents.
(b) Failure by the Agent at any time or times hereafter
to require strict performance by the Grantor or any other Person of
any of the provisions, warranties, terms or conditions contained in
any of the Financing Agreement or other Loan Documents now or at
any time or times hereafter executed by the Grantor or any such
other Person and delivered to any of the Guaranteed Parties shall
not waive, affect or diminish any right of any of the Guaranteed
Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified
or waived by any course of conduct or knowledge of any of the
Guaranteed Parties, or any agent, officer or employee of any
Guaranteed Party.
13. Successors and Assigns. This Agreement and all
----------------------
obligations of the Grantor hereunder shall be binding upon the
successors and assigns of the Grantor, and shall, together with the
rights and remedies of the Agent hereunder, inure to the benefit of
the Agent, the other Guaranteed Parties, and their respective
successors and assigns.
14. Governing Law; Severability. This Agreement shall be
---------------------------
governed by, and be construed and interpreted in accordance with,
the internal law of the State of Illinois, without regard to
conflicts of law principles. Wherever 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 prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining
provisions of this Agreement.
15. Waiver of Jury Trial. The Grantor and Agent waive any
--------------------
right they may have to trial by jury in any action or proceeding to
enforce or defend any rights or remedies hereunder, under the
Guaranty or under any of the other Loan Documents.
16. Further Indemnification. The Grantor agrees to pay, and
-----------------------
to save the Agent and each other Guaranteed Party harmless from,
any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes
which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
17. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of this Agreement.
18. Confidentiality. For the purposes of this Section 18,
--------------- ----------
"Confidential Information" means all financial projections and all
other information delivered to the Agent, the Co-Agent (as defined
in the Financing Agreement), the Syndication Agent (as defined in
the Financing Agreement) or any Lender by or on behalf of Grantor,
any Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that is clearly marked or labeled or
otherwise adequately identified as being confidential information
of Grantor, any Company or any Subsidiary, provided that such term
does not include information that (a) was publicly known or
otherwise known to the Agent, the Co-Agent, the Syndication Agent
or the Lenders prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission
by the Agent, the Co-Agent, the Syndication Agent or the Lenders or
any person acting on their behalf, (c) otherwise becomes known to
the Agent, the Co-Agent, the Syndication Agent or the Lenders other
than through disclosure by the Agent, the Co-Agent, the Syndication
Agent, the Lenders, any Company or any Subsidiary or
(d) constitutes financial statements delivered under Section 5(p)
------------
that are otherwise publicly available. The Agent, the Co-Agent,
the Syndication Agent and the Lenders will maintain the
confidentiality of such Confidential Information in accordance with
commercially reasonable procedures adopted by the Agent, the Co-
Agent, the Syndication Agent and the Lenders in good faith to
protect confidential information of third parties delivered to
them, provided that the Agent, the Co-Agent, the Syndication Agent
and the Lenders may deliver or disclose Confidential Information to
(a) their respective directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of this Agreement and the other Loan
Documents and such Person (as defined in the Financing Agreement)
has been notified of these confidentiality provisions), (b) their
respective financial advisors and other professional advisors who
agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 18,
----------
(c) any other Lender, (d) any bank or other commercial lender to
which the Agent, the Co-Agent or a Lender sells or offers to sell
a portion of their rights and obligations under the Financing
Agreement or any participation therein (if such person has agreed
in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 18), or (e) any other
----------
person (including bank auditors and other regulatory officials) to
which such delivery or disclosure may be necessary or appropriate
(i) to comply with compliance with any applicable law, rule,
regulation or order, (ii) in response to any subpoena or other
legal process after giving the Grantor notice and an opportunity to
seek judicial protection for such materials, (iii) in connection
with any litigation to which the Agent, the Co-Agent, the
Syndication Agent or a Lender is a party or (iv) if an Event of
Default has occurred and is continuing, to the extent the Agent may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under this Agreement or the other Loan
Documents.
19. Security Interest Absolute. All rights of the Agent and
--------------------------
security interests hereunder, and all obligations of the Grantor
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack or validity or enforceability of any
provision of any of the Financing Agreement, the Loan
Documents or any other agreement, document or instrument
relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, or any increase in the
amount of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of any term of, or any consent to
any departure from any requirement of, any of the Financing
Agreement or the Loan Documents;
(iii) any exchange, release or non-perfection of
any Lien on any collateral, or any release or amendment or
waiver of any term of any guaranty of, or consent to departure
from any requirement of any guaranty of all or any of the
Guaranteed Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Grantor,
other than payment in full of the Guaranteed Obligations.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be executed and delivered by its duly authorized officer on the
date first above written.
VISKASE COMPANIES, INC., a
Delaware corporation
By:
-----------------------
Its:
-----------------------
ACCEPTED AND ACKNOWLEDGED BY:
THE CIT GROUP/BUSINESS CREDIT, INC.,
a New York corporation, as Agent
By:
-------------------------------
Its:
-------------------------------
JOINT AND SEVERAL GUARANTY AGREEMENT
------------------------------------
June ____, 1999
To: THE CIT GROUP/BUSINESS CREDIT, INC., as Agent
Address: 10 South LaSalle Street, 22nd Floor
Chicago, Illinois 60603
Re: VISKASE CORPORATION AND VISKASE SALES CORPORATION
(collectively, the "Companies")
Ladies and Gentlemen:
Reference is made to a certain Financing Agreement of even date
herewith (as the same may be amended, modified or restated from time to
time, herein called the "Financing Agreement") among you, in your
capacity as the agent thereunder ("Agent"), the lenders party thereto
(the "Lenders") and the Companies. Capitalized terms used herein and
defined in the Financing Agreement shall have the same meanings as set
forth therein unless otherwise specifically defined herein.
Each of the undersigned (herein each a "Guarantor" and collectively
the "Guarantors") will obtain benefits from the incurrence of loans by
the Companies and the issuance of letters of credit pursuant to the
Financing Agreement. The Guarantors understand and agree that it is a
condition to the making of loans and the issuing of letters of credit
under the Financing Agreement that each Guarantor shall have executed
and delivered this Guaranty.
Each Guarantor hereby unconditionally jointly and severally
guarantees and agrees to be liable for the full and indefeasible payment
and performance when due of all now existing and future indebtedness,
obligations or liabilities of the Companies to you and the Lenders,
howsoever arising, whether direct or indirect, absolute or contingent,
secured or unsecured, whether arising under the Financing Agreement as
now written or as amended or supplemented hereafter including, without
limitation, all Obligations owed by the Companies to you and the
Lenders. In addition, each of the Guarantors agrees to pay to you, for
the benefit of the Lenders, on demand (a) the amount of all expenses
(including reasonable attorney's fees) incurred by you and the Lenders
in collecting or attempting to collect any Company's obligations to you
after the same shall become due, whether from any Company, from any
other obligor, or from the Guarantors, or in realizing upon any
collateral, and (b) interest at the Default Rate of Interest on all
overdue amounts payable to you hereunder, even if such amount cannot be
collected from the Companies. (All of the aforementioned obligations,
liabilities, expenses and interest, together with the Obligations, are
hereinafter collectively called the "Guaranteed Obligations").
To the extent you or the Lenders receive payment on account of the
Guaranteed Obligations, which payment is thereafter set aside or
required to be repaid by you or any Lender in whole or in part, then, to
the extent of any sum not finally retained by you or any Lender
(regardless of whether such sum is recovered from you or such Lender by
any Company, their trustees, or any other party acting for, on behalf of
or through any Company or their representatives), the Guarantors'
obligations to you and the Lenders under this Guaranty, as amended,
modified or supplemented, shall remain in full force and effect (or be
reinstated) until the Guarantors have made payment to you, on behalf of
the Lenders, therefor, which payment shall be due upon demand.
This Guaranty is executed as an inducement to you and the Lenders
to make loans or advances to the Companies, or issue guaranties at the
request of the Companies, or otherwise to extend credit or financial
accommodations to the Companies or to enter into or continue a financing
arrangement with the Companies, and is executed in consideration
therefor. Each of the Guarantors agrees that any of the foregoing acts
shall be deemed to have been done or extended by you and the Lenders in
consideration of and in reliance upon the execution of this Guaranty,
but that nothing herein shall obligate you to do any of the foregoing.
In addition, the Guarantors acknowledge: (a) that the business
operations of each Guarantor and each Company are interrelated and
compliment one another, and that such entities have a common business
purpose, with intercompany bookkeeping and accounting adjustments used
to separate their respective properties, liabilities and transactions;
(b) to permit their uninterrupted and continuous operations, such
entities now require and will in the future require various funds and
other credit accommodations from the Companies; and (c) with respect to
certain of the Guarantors, the funds obtained by the Companies under the
Financing Agreement will be used by the Companies to pay for services
rendered by such Guarantors to the Companies, or to pay for the
operating expenses of such Guarantors.
Each Guarantor hereby acknowledges that in the event any Company,
at any time, fails to provide Agent with evidence of the insurance
coverage as required by the Financing Agreement (the "Insurance
Coverage"), Agent may, upon prior written notice to the Guarantor,
purchase the Insurance Coverage at any Company's or any Guarantor's
expense to protect Agent's interests in the Collateral. Such insurance
may, but need not, protect any Company's or any Guarantor's interests,
and Agent shall be under no obligation to so protect any Company's or
any Guarantor's interests. The Insurance Coverage that Agent purchases
on behalf of each Company may not pay any claim that any Company makes
or any claim that is made against any Company in connection with the
Collateral. Any Company or any Guarantor may later cancel any Insurance
Coverage purchased by Agent, but only after providing Agent with
evidence that Insurance Coverage has been obtained as provided for in
the Financing Agreement. In the event Agent purchases all or any
portion of the Insurance Coverage for the Collateral or as otherwise
required hereunder, each Company and each Guarantor will be responsible
for all costs and expenses of such Insurance Coverage, including, but
not limited to, interest and any other charges reasonably imposed by
Agent in connection with the purchase of the Insurance Coverage, until
the effective date of the cancellation or expiration of the Insurance
Coverage. The costs and expenses of any Insurance Coverage purchased by
Agent shall be added to the Guaranteed Obligations. Each Guarantor
acknowledges that the cost of the Insurance Coverage purchased by Agent
pursuant hereto may be more than the cost of insurance any Company or
any Guarantor may be able to obtain on its own.
Notice of acceptance of this Guaranty, the making of loans or
advances, or the extension of credit under the Financing Agreement, the
amendment, execution or termination of the Financing Agreement or any
other agreements in connection therewith, and presentment, demand,
protest, notice of protest, notice of non-payment and all other notices
to which the Guarantors may be entitled (whether under this Guaranty or
the Financing Agreement), and your and the Lenders' reliance on this
Guaranty are hereby waived, except to the extent provided herein or in
the Financing Agreement. Each of the Guarantors also waives notice of
changes in terms or extensions of the time of payment, the taking and
releasing of collateral or guarantees (including the release of any of
the Guarantors) and the settlement, compromise or release of any of the
Guaranteed Obligations, and agrees that, as to each of the Guarantors,
the amount of the Guaranteed Obligations shall not be diminished by any
of the foregoing. Each of the Guarantors also agrees that neither you
nor the Lenders must attempt to collect any of the Guaranteed
Obligations from the other Guarantors or any other obligor or to realize
upon any collateral securing the Guaranteed Obligations, but may require
the Guarantors to make immediate payment of the Guaranteed Obligations
to you, for the benefit of the Lenders, when due. Accordingly, each of
the Guarantors understands this is a guaranty of payment, and not of
collection. Neither you nor the Lenders shall be liable for failure to
collect the Guaranteed Obligations or to realize upon any collateral or
security therefor, or any part thereof, or for any delay in so doing,
nor shall you or the Lenders be under any obligation to take any action
whatsoever with regard thereto.
This Guaranty is absolute, unconditional and continuing, regardless
of the validity, regularity or enforceability of any of the Guaranteed
Obligations or the fact that a security interest or lien in any
collateral or security therefor may not be enforceable by you or may
otherwise be subject to equities or defenses or prior claims in favor of
others, or may be invalid or defective in any way and for any reason,
including any action, or failure to act, on your part or on the part of
the Lenders. Payment by each Guarantor shall be made to you, for the
benefit of the Lenders, at your office from time to time on demand as
the Guaranteed Obligations become due, and one or more successive or
concurrent actions may be brought hereon against the Guarantors (or any
one or more of them) either in the same action or in separate actions.
In the event any claim or action, or action on any judgment, based on
this Guaranty, is made or brought against the Guarantors, the Guarantors
agree not to assert against you or the Lenders any set-off right or
counterclaim which the Company may have, and, further, each Guarantor
agrees not to deduct, set-off, or seek to counterclaim for or recoup,
any amounts which are or may be owed by you or the Lenders to the
Guarantors, or for any loss of contribution from any other Guarantor.
Furthermore, in any litigation based on this Guaranty in which you
and/or the Lenders, on the one hand, and any of the Guarantors, on the
other hand, shall be adverse parties, the Guarantors hereby waive the
right to interpose any defense based upon any statute of limitations or
any claim of laches and waive the performance of each and every
condition precedent to which the Guarantors might otherwise be entitled
by law. Each of the Guarantors hereby consents to the in personam
jurisdiction of the courts of the State of Illinois. In the event that
you bring any action or suit in any court of record in Illinois (whether
State or Federal) to enforce any or all liabilities of the Guarantors
hereunder, service of process may be made on the Guarantors by mailing
a copy of the summons to the Guarantors at the addresses set forth below
by certified mail, return receipt requested.
All sums at any time to the credit of the Guarantors and any
property of the Guarantors on which you at any time have a lien or
security interest, or of which you at any time have possession, shall
secure payment and performance of all of the Guaranteed Obligations.
Upon the occurrence of any of the following events (each, an "Event
of Default"):
(a) any Event of Default under, or the termination of, the
Financing Agreement in accordance with the terms thereof;
(b) the failure of any of the Guarantors to observe or perform
any agreements, warranties or covenants contained herein; or
(c) the dissolution or cessation of any Guarantor's business
(other than a merger of the existing subsidiaries of any Company into
any other Company in the manner permitted by the Financing Agreement),
or the calling by any Guarantor of a meeting of the creditors of any of
the Guarantors for the purposes of compromising the debts of such
Guarantor, or the failure of any of the Guarantors to meet its debts as
they mature, or the commencement by or against any of the Guarantors of
any bankruptcy, insolvency, arrangement, reorganization, receivership or
similar proceedings under any foreign, federal or state law; provided
that in the event of any involuntary proceeding is commenced against any
Guarantor, such proceeding is not dismissed or discharged within thirty
(30) days after commencement thereof;
then, in the case of the Event of Default described in clause (a) above,
the liability of all of the Guarantors for the entire amount of the
Guaranteed Obligations shall mature, and in the case of the Events of
Default described in clauses (b) and (c) above, the liability of each
Guarantor with respect to which such event relates for the entire amount
of the Guaranteed Obligations shall mature even if the liability of the
Companies therefor does not mature.
This Guaranty may be terminated as to any one of the Guarantors
only as of any Anniversary Date and then only upon actual receipt by one
of your officers of at least sixty (60) days prior written notice of
termination sent by registered or certified mail; provided however, that
any of the Guarantors so terminating this Guaranty shall remain bound
hereunder, and this Guaranty shall continue in full force and effect,
with respect to any and all of the Guaranteed Obligations created or
arising prior to the effective date of such termination and with respect
to any and all extensions, renewals or modifications of said
pre-existing Guaranteed Obligations. Termination as to any one of the
Guarantors shall not affect the obligations of any of the other
Guarantors, nor relieve the one giving such notice from liability for
any post-termination collection expenses or interest, to the extent that
such collection expenses and interest relate to or accrue on Guaranteed
Obligations created or arising prior to the effective date of such
termination. This is a continuing agreement and written notice as above
provided shall be the only means of termination, notwithstanding the
fact that for certain periods of time there may be no Guaranteed
Obligations owing to you or the Lenders by the Companies.
Your books and records showing the account between the Lenders and
the Companies shall be admissible in evidence in any action or
proceeding as prima facie proof of the items therein set forth. Your
monthly statements, if any, rendered to the Companies shall be binding
upon the Guarantors (whether or not the Guarantors received copies
thereof) and shall constitute an account stated between the Lenders and
the Companies unless you shall have received a written statement of the
Companies' exceptions within forty-five days after the statement was
mailed to the Companies in accordance with the Financing Agreement.
Each of the Guarantors expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution or any
other claim which it may now or hereafter have against any Company or
any other person directly or contingently liable for the Guaranteed
Obligations, or against or with respect to any Company's property
(including, without limitation, property securing its obligations to you
and the Lenders) arising from the existence or performance of this
Guaranty, except to the extent the Guaranteed Obligations shall have
been paid in full and discharged.
The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor of the Companies
or the Companies, and a separate action or actions may be brought and
prosecuted against each Guarantor, whether or not action is brought
against any other Guarantor, any other guarantor of the Companies or the
Companies and whether or not any other Guarantor, any other guarantor of
the Companies or the Companies be joined in any such action or actions.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any
----- --
payment or distribution is made by any Guarantor (a "Funding Guarantor")
under this Guaranty, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
--- ----
Adjusted Net Assets (as defined below) of each Guarantor (including the
Funding Guarantor) for all payments, damages and expenses incurred by
that Funding Guarantor in discharging any Company's obligations with
respect to the Guarantied Obligations or any other Guarantor's
obligations with respect to this Guaranty. The term "Adjusted Net
Assets" of each Guarantor at any date shall mean the lesser of the
amount by which (x) the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities, but excluding liabilities under this Guaranty,
of such Guarantor at such date and (y) the present fair salable value of
the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts
(after giving effect to all other fixed and contingent liabilities),
excluding debt in respect of this Guaranty, as they become absolute and
matured. All rights for contribution of any Guarantor shall be
subordinated to the prior payment in full of the Guarantied Obligations.
Notwithstanding anything to the contrary contained in this
Guaranty, it is the intention of the Guarantors, as well as you and the
Lenders, that the amount of each Guarantor's obligations hereunder shall
not be in excess of the maximum amount which would be free from
avoidance or recovery by operation of any law (State or Federal)
relating to bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, insolvency, fraudulent transfers and
conveyances or other similar laws (collectively, "Applicable Bankruptcy
Laws"). Accordingly, if (and only if) any Guarantor's obligations under
this Guaranty, or any payment made by any Guarantor hereunder, but for
the limitation set forth above, would be subject to avoidance or
recovery by virtue of the operation or application of any Applicable
Bankruptcy Law in any proceeding involving such Guarantor, then the
amount of such Guarantor's obligations under this Guaranty shall be
limited to the largest amount which, after giving effect to the
operation or application of such Applicable Bankruptcy Law, would not
render such Guarantor's obligations to you and the Lenders hereunder
unenforceable, avoidable, or subject to recovery. The foregoing
provisions are intended solely to preserve the rights of you and the
Lenders against the Guarantors to the maximum extent permitted under
Applicable Bankruptcy Laws, and neither any Company nor any Guarantor
shall have any right or claim under this paragraph until a proceeding is
instituted by or against any Guarantor under Applicable Bankruptcy Laws.
This Guaranty embodies the whole agreement of the parties and may
not be modified except in writing by you and the Guarantors, and no
course of dealing between you or any of the Lenders, on the one hand,
and any of the Guarantors, on the other hand, shall be effective to
change or modify this Guaranty. The failure of you or the Lenders 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 and from
time to time thereafter, and such rights shall be considered as
cumulative rather than alternative. No knowledge of any breach or other
nonobservance by any of the Guarantors of the terms and provisions of
this Guaranty shall constitute a waiver thereof, nor a waiver of any
obligations to be performed by the Guarantors hereunder.
This Guaranty may be assigned by you and the Lenders and shall be
for your benefit and for the benefit of the Lenders, and any assignee or
transferee of you or any of the Lenders, and shall cover any Guaranteed
Obligations owed to you or any of the Lenders (as the case may be) at
the time of assignment or transfer as well as any and all future
Guaranteed Obligations, loans, advances or extensions of credit made to
the Companies by, or otherwise owed by the Companies to, such assignee
or transferee under the terms of the Financing Agreement.
This instrument is executed and given in addition to, and not in
substitution, reduction, replacement, or satisfaction of, any other
endorsements or guarantees of the Guaranteed Obligations, now existing
or hereafter executed by any or all of the Guarantors or others in your
favor.
When used in this Guaranty, all pronouns shall, wherever
applicable, be deemed to include the singular and plural as well as the
masculine, feminine, and neuter genders. This Guaranty shall inure to
the benefit of you and the Lenders, the successors and assigns and any
parent, subsidiary or affiliate of you or any of the Lenders; shall be
binding jointly and severally upon the Guarantors and upon the
respective successors and assigns of each of the Guarantors; and shall
pertain to the Companies and its successors and assigns.
This Guaranty may be executed in any number of counterparts, each
of which when so executed shall be deemed an original and such
counterparts shall together constitute but one and the same document.
This Guaranty shall be governed by and construed in accordance with
the laws of the State of Illinois, U.S.A.
THE GUARANTORS, YOU AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO
- -----------------------------------------------------------------------
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
- ----------------------------------------------------------------
GUARANTY.
- --------
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Guarantors have executed and delivered this
Joint and Several Guaranty Agreement effective as of the date above set
forth.
VISKASE COMPANIES, INC.,
a Delaware corporation
Address: 6855 West 65th Street
Bedford Park, IL 60638
By:
-----------------------------------
Title:
--------------------------------
VISKASE HOLDING CORPORATION,
a Delaware corporation
By:
----------------------------------
Its:
----------------------------------
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,738,000
<SECURITIES> 0
<RECEIVABLES> 49,388,000
<ALLOWANCES> 1,344,000
<INVENTORY> 90,383,000
<CURRENT-ASSETS> 164,174,000
<PP&E> 477,541,000
<DEPRECIATION> 161,574,000
<TOTAL-ASSETS> 519,004,000
<CURRENT-LIABILITIES> 119,336,000
<BONDS> 410,001,000
0
0
<COMMON> 149,000
<OTHER-SE> (79,073,000)
<TOTAL-LIABILITY-AND-EQUITY> 519,004,000
<SALES> 189,165,000
<TOTAL-REVENUES> 189,165,000
<CGS> 142,547,000
<TOTAL-COSTS> 142,547,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 526,000
<INTEREST-EXPENSE> 21,373,000
<INCOME-PRETAX> (20,356,000)
<INCOME-TAX> (947,000)
<INCOME-CONTINUING> (19,409,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,409,000)
<EPS-BASIC> (1.31)
<EPS-DILUTED> (1.31)
</TABLE>
