-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, dYxmq3YzKwdO4osjZqNyk5dnTEpe9QasV7WE9AxzPj5zCUe1qQPNlq7djBQ0Jb+v dQ6V71rBpwdy9bx/kcfjSw== 0000950124-95-002177.txt : 19950721 0000950124-95-002177.hdr.sgml : 19950721 ACCESSION NUMBER: 0000950124-95-002177 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 33 FILED AS OF DATE: 19950720 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRODYNE INDUSTRIES INC CENTRAL INDEX KEY: 0000033073 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 952677354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 033-61161 FILM NUMBER: 95554982 BUSINESS ADDRESS: STREET 1: 701 HARGER RD STE 121 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085718800 FORMER COMPANY: FORMER CONFORMED NAME: MGN INC DATE OF NAME CHANGE: 19790425 S-4 1 FORM S-4 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 20, 1995 REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------ ENVIRODYNE INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 3089 95-2677354 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or Classification Number) Identification Number) organization)
------------------------------ SEE TABLE OF ADDITIONAL REGISTRANTS ------------------------------ ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 190 OAK BROOK, ILLINOIS 60521 (708) 571-8800 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) STEPHEN M. SCHUSTER VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 190 OAK BROOK, ILLINOIS 60521 (708) 571-8800 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ Copy to: DENNIS V. OSIMITZ SIDLEY & AUSTIN ONE FIRST NATIONAL PLAZA CHICAGO, ILLINOIS 60603 (312) 853-7000 ------------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. ------------------------------ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box / / ------------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SECTION 8(A) MAY DETERMINE. CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF TO BE REGISTERED BE REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE - ------------------------------------------------------------------------------------------------------ 12% First Priority Senior Secured Notes due 2000, Series B........ $151,500,000 100% $151,500,000(1) $52,242 - ------------------------------------------------------------------------------------------------------ Floating Rate First Priority Senior Secured Notes due 2000, Series D........................ $8,500,000 100% $8,500,000(1) $2,932 - ------------------------------------------------------------------------------------------------------ Guarantees of Series B Notes and Series D Notes.................. -- -- -- --(2) ====================================================================================================== (1) Estimated pursuant to Rule 457 solely for the purpose of calculating the registration fee. (2) Pursuant to Rule 457(n) no registration fee is payable with respect to the Guarantees. ======================================================================================================
2 - -------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS
- ------------------------------------------------------------------------------------------------- PRIMARY STANDARD I.R.S. STATE OR INDUSTRIAL EMPLOYER OTHER JURISDICTION CLASSIFICATION IDENTIFICATION NAME OF INCORPORATION NUMBER NUMBER - ------------------------------------------------------------------------------------------------- Clear Shield National, Inc. ....... California 3089 95-2744847 - ------------------------------------------------------------------------------------------------- Sandusky Plastics, Inc. ........... Delaware 3089 36-2749566 - ------------------------------------------------------------------------------------------------- Sandusky Plastics of Delaware, Inc. ............................ Delaware 3089 13-3312508 - ------------------------------------------------------------------------------------------------- Viskase Corporation................ Pennsylvania 3081 23-1919506 - ------------------------------------------------------------------------------------------------- Viskase Holding Corporation........ Delaware 3081 95-2761341 - ------------------------------------------------------------------------------------------------- Viskase Sales Corporation.......... Delaware 3081 36-3415851 - -------------------------------------------------------------------------------------------------
ii 3 ENVIRODYNE INDUSTRIES, INC. CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-4
ITEM AND HEADING IN FORM S-4 REGISTRATION STATEMENT LOCATION OR CAPTION IN PROSPECTUS - ------------------------------------------------- -------------------------------------------- 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus.... Outside Front Cover Page; Inside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus............................. Inside Front Cover Page; Outside Back Cover Page 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information............. Prospectus Summary; Risk Factors; The Company; Selected Historical Consolidated Financial Data 4. Terms of the Transaction.................. Prospectus Summary; The Exchange Offer; Description of Notes; Certain Federal Income Tax Considerations 5. Pro Forma Financial Information........... Prospectus Summary; Unaudited Pro Forma Consolidated Financial Data 6. Material Contacts with the Company Being Acquired.................................. N/A 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters........................ Plan of Distribution 8. Interests of Named Experts and Counsel.... Legal Matters; Experts 9. Disclosure of Commission Position on Indemnification of Securities Act Liabilities............................... N/A 10. Information with Respect to S-3 Registrants............................... N/A 11. Incorporation of Certain Information by Reference................................. N/A 12. Information with Respect to S-2 or S-3 Registrants............................... N/A 13. Incorporation of Certain Information by Reference................................. N/A 14. Information with Respect to Registrants Other than S-3 or S-2 Registrants......... Outside Front Cover Page; Available Information; Prospectus Summary; Risk Factors; The Company; The Subsidiary Guarantors; Capitalization; Unaudited Pro Forma Consolidated Financial Data; Selected Historical Consolidated Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business; Management; Certain Transactions 15. Information with Respect to S-3 Companies................................. N/A 16. Information with Respect to S-2 or S-3 Companies................................. N/A 17. Information with Respect to Companies Other than S-2 or S-3 Companies........... N/A 18. Information if Proxies, Consents or Authorizations are to be Solicited........ N/A 19. Information if Proxies, Consents or Authorizations are not to be solicited, or in an Exchange Offer...................... Prospectus Summary; Management; Certain Transactions
iii 4 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. Subject to Completion dated July 20, 1995 PROSPECTUS ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES B, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OF ITS OUTSTANDING 12% FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES A, AND ITS FLOATING RATE FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES D, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OF ITS OUTSTANDING FLOATING RATE FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES C ------------------------------ The Exchange Offer will expire at 5:00 p.m., New York City time on , 1995, unless extended. Envirodyne Industries, Inc., a Delaware corporation ("Envirodyne" or the "Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange (i) $1,000 principal amount of its new 12% First Priority Senior Secured Notes due 2000, Series B (the "New Series B Notes"), for each $1,000 principal amount of its outstanding 12% First Priority Senior Secured Notes due 2000, Series A (the "Old Series A Notes"), of which $151,500,000 aggregate principal amount is outstanding, and (ii) $1,000 principal amount of its new Floating Rate First Priority Senior Secured Notes due 2000, Series D (the "New Series D Notes" and collectively with the New Series B Notes, the "New Notes"), for each $1,000 principal amount of its outstanding Floating Rate First Priority Senior Secured Notes due 2000, Series C (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"), of which $8,500,000 aggregate principal amount is outstanding. The form and terms of the New Notes are the same as the form and terms of the Old Notes, except that the New Notes will have been registered under the Securities Act of 1933, as amended (the "Securities Act"). The New Notes will evidence the same debt as the Old Notes (which they replace) and will be issued under, and entitled to benefits of, the indenture governing the Old Notes dated as of June 20, 1995 (the "Indenture"). All references herein to the "Notes" shall be references to the Old Notes and/or the New Notes, whichever was, is or will be outstanding in the particular context. See "The Exchange Offer" and "Description of Notes." The Company will accept for exchange any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 1995, unless extended by the Company in its sole discretion (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is subject to certain customary conditions. See "The Exchange Offer." Old Notes may be tendered only in integral multiples of $1,000 principal amount. The Old Notes were sold on June 20, 1995 in a transaction not registered under the Securities Act in reliance upon the exemption provided in Section 4(2) of the Securities Act. The New Notes are being offered to satisfy the obligations of the Company under the Exchange and Registration Rights Agreement relating to the Old Notes. See "The Exchange Offer -- Purpose and Effect of the Exchange Offer." New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold or otherwise transferred by the holders thereof (other than any holder which is an affiliate of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distribution of such New Notes. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "The Exchange Offer -- Purpose and Effect of the Exchange Offer" and "Plan of Distribution." The Notes constitute securities for which there is no established trading market. Any Old Notes not tendered and accepted in the Exchange Offer will remain outstanding. The Company does not currently intend to list the New Notes on any securities exchange. To the extent that any Old Notes are tendered and accepted in the Exchange Offer, a holder's ability to sell untendered Old Notes could be adversely affected. No assurances can be given as to the liquidity of the trading market for either the Old Notes or the New Notes. Interest on the New Notes shall accrue from the last June 15 or December 15 (an "Interest Payment Date") on which interest was paid on the Old Notes so surrendered, or, if no interest has been paid on such Old Notes, from June 20, 1995. SEE "RISK FACTORS" FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE NEW NOTES OFFERED HEREBY. ------------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1995 5 NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. Until , 1995 (90 days after commencement of this offering), all dealers effecting transactions in the New Notes, whether or not participating in this offering, may be required to deliver a Prospectus. ------------------ AVAILABLE INFORMATION The Company and the Subsidiary Guarantors (as defined) have filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-4 under the Securities Act for the registration of the New Notes offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain items of which are contained in exhibits and schedules to the Registration Statement as permitted by the rules and regulations of the Commission. For further information with respect to the Company, the Subsidiary Guarantors and the securities offered hereby, reference is made to the Registration Statement, including the exhibits thereto, and financial statements and notes filed as a part thereof. Statements made in this Prospectus concerning the contents of any document referred to herein are not necessarily complete. With respect to each such document filed with the Commission as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. The Company is subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information filed by the Company with the Commission may be inspected at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices located at the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained from the public reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. As long as the Company is subject to such periodic reporting and informational requirements, it will furnish all reports and other information required thereby to the Commission and will furnish copies of such reports and other information to the Trustee (as defined). In the event the Company ceases to be required to file periodic reports and other information with the Commission, the Company is required under the Indenture, so long as the Notes remain outstanding, to file with the Commission and distribute to holders of the Notes copies of the financial information that would have been contained in such reports, information and other documents that the Company would have been required to file with the Commission pursuant to the Exchange Act. 2 6 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. As used herein, unless the context otherwise requires, the "Company" refers to Envirodyne Industries, Inc. and its direct and indirect wholly owned subsidiaries. Certain defined terms used throughout this Prospectus have the meanings set forth in "Description of Notes -- Certain Definitions." THE COMPANY Envirodyne Industries, Inc. manufactures food packaging products and foodservice supplies through three primary operating subsidiaries -- Viskase Corporation ("Viskase"), Sandusky Plastics, Inc. (together with Sandusky Plastics of Delaware, Inc., "Sandusky") and Clear Shield National, Inc. ("Clear Shield"). Viskase is the leading producer of cellulosic casings used in preparing and packaging processed meat products and is a major producer of heat shrinkable plastic bags and specialty films for packaging and preserving fresh and processed meat products, poultry and cheeses. The Company is also a leading domestic and international manufacturer of plasticized polyvinyl chloride ("PVC") films, primarily for use in packaging food items. Through Sandusky, the Company is a producer of thermoformed and injection molded plastic containers, used in the packaging of cultured dairy and delicatessen products, and of horticultural trays and inserts. Finally, through Clear Shield, the Company is a major domestic producer of disposable plastic cutlery, drinking straws, custom dining kits and related products. On June 20, 1995, the Company completed the sale to certain institutional investors in a private placement of $160,000,000 aggregate principal amount of Old Notes. The Company used the net proceeds of the offering primarily to repay the Company's $86.1 million domestic term loan facility and reduce the amount of the Company's revolving credit obligations by approximately $68.3 million. See "Use of Proceeds" and "Capitalization." Concurrently with the sale of the Old Notes, the Company entered into a $20 million domestic revolving credit facility (the "Revolving Credit Facility") and a $28 million letter of credit facility (the "Letter of Credit Facility"). The Notes and the obligations under the Revolving Credit Facility and the Letter of Credit Facility are guaranteed by the Company's significant domestic subsidiaries (the "Subsidiary Guarantors") and secured by the following pool of collateral (the "Collateral Pool"): (i) all accounts receivable (including intercompany receivables) and inventory; (ii) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements); (iii) substantially all domestic fixed assets (other than assets subject to a lease agreement with General Electric Capital Corporation); and (iv) a pledge of 100% of the capital stock of the Company's significant domestic subsidiaries and 65% of the capital stock of Viskase, S.A., a subsidiary of the Company organized under the laws of France ("Viskase, S.A."). Such guarantees and security are shared by the holders of the Notes and the holders of the obligations under the Revolving Credit Facility on a pari passu basis pursuant to an intercreditor agreement. Pursuant to such intercreditor agreement, the security interest of the holders of the obligations under the Letter of Credit Facility has priority over all other liens on the Collateral Pool. See "Description of Notes -- Collateral and Security" and "Description of Intercreditor Arrangements." 3 7 THE EXCHANGE OFFER EXCHANGE AND REGISTRATION RIGHTS AGREEMENT.............. The Old Notes were sold in a private placement by the Company on June 20, 1995 to certain institutional investors through The Argosy Securities Group L.P., as placement agent (the "Placement Agent"). In connection therewith, the Company executed and delivered, for the benefit of the holders of the Old Notes, an Exchange and Registration Rights Agreement dated June 20, 1995 (the "Registration Rights Agreement"), which grants the holders of Old Notes certain exchange and registration rights. See "The Exchange Offer -- Termination of Certain Rights." The Exchange Offer is intended to satisfy such rights, which terminate upon the Consummation (as defined) of the Exchange Offer. Therefore, the holders of New Notes will not be entitled to any exchange or registration rights with respect to the New Notes. THE EXCHANGE OFFER............ $1,000 principal amount of New Series B Notes in exchange for each $1,000 principal amount of Old Series A Notes, and $1,000 principal amount of New Series D Notes for each $1,000 principal amount of Old Series C Notes. As of the date hereof, $160,000,000 aggregate principal amount of Old Notes is outstanding, $151,500,000 of which is Old Series A Notes and $8,500,000 of which is Old Series C Notes. The terms of the New Notes are substantially identical in all respects (including principal amount, interest rate and maturity) to the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the New Notes will have been registered under the Securities Act and will not bear legends restricting their transfer. See "The Exchange Offer -- Terms of the Exchange Offer" and "The Exchange Offer -- Procedures for Tendering." Based on an interpretation by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder or beneficial owner thereof (other than any such holder or beneficial owner which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or a "broker" or "dealer" registered under the Exchange Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's or beneficial owner's business and that such holder or beneficial owner has no arrangement or understanding with any person to participate in the distribution of such New Notes. See "The Exchange Offer -- Resales of the New Notes." EXPIRATION DATE............... 5:00 p.m., New York City time, on , 1995, unless the Exchange Offer is extended by the Company in its sole discretion, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. 4 8 CONDITIONS OF THE EXCHANGE OFFER......................... The Exchange Offer is subject to certain customary conditions, which may be waived by the Company. See "The Exchange Offer -- Conditions of the Exchange Offer." PROCEDURES FOR TENDERING OLD NOTES......................... Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Old Notes and any other required documentation to the Exchange Agent (as defined) at the address set forth herein. By executing the Letter of Transmittal, each holder will represent to the Company that, among other things, the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the holder, that neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. See "The Exchange Offer -- Procedures for Tendering." BROKERS OR DEALERS............ Any broker or dealer participating in the Exchange Offer will be required to acknowledge that it will deliver a prospectus in connection with any resales of the New Notes received by it in the Exchange Offer. A broker or dealer registered under the Exchange Act that acquired Old Notes for its own account pursuant to its market-making or other trading activities (other than Old Notes acquired directly from the Company) may participate in the Exchange Offer but may be deemed an underwriter under the Securities Act and, therefore, must deliver a prospectus relating to the New Notes in connection with any resales by it of New Notes acquired by it for its own account in the Exchange Offer; only such brokers or dealers may use this Prospectus in connection with resales of the New Notes. See "Plan of Distribution." SPECIAL PROCEDURES FOR BENEFICIAL OWNERS............. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. See "The Exchange Offer -- Procedures for Tendering." GUARANTEED DELIVERY PROCEDURES.................... Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date, must tender their Notes according to the guaranteed delivery procedures set forth under "The Exchange Offer -- Guaranteed Delivery Procedures." WITHDRAWAL RIGHTS............. Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. 5 9 ACCEPTANCE OF OLD NOTES AND DELIVERY OF NEW NOTES......... Subject to satisfaction or waiver of the conditions of the Exchange Offer set forth under "The Exchange Offer -- Conditions of the Exchange Offer," the Company will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered on the earliest practicable date following the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer." FEDERAL INCOME TAX CONSEQUENCES.................. An exchange of Old Notes for New Notes pursuant to the Exchange Offer should not be treated as a sale, exchange or other taxable event for federal income tax purposes because the New Notes should not be considered to differ materially in kind or extent from the Old Notes. As a result, no material federal income tax consequences should result from an exchange of Old Notes for New Notes pursuant to the Exchange Offer. For federal income tax purposes, a New Note received by a beneficial owner of an Old Note should be treated as a continuation of the Old Note in the hands of such owner. See "Certain Federal Income Tax Consequences." EFFECT ON HOLDERS OF THE OLD NOTES......................... As a result of the making of, and upon acceptance for exchange of all validly tendered Old Notes pursuant to the terms of, the Exchange Offer, the Company will have fulfilled certain of its obligations contained in the Registration Rights Agreement and, accordingly, there will be no increase in the interest rate on the Old Notes pursuant to the applicable terms of the Registration Rights Agreement. Holders of the Old Notes who do not tender their Old Notes will be entitled to all the rights and limitations applicable thereto under the Indenture, dated as of June 20, 1995, (the "Indenture") between the Company and Shawmut Bank Connecticut, National Association, as trustee (the "Trustee"), relating to the Old Notes and the New Notes, and the Registration Rights Agreement, except for any rights under the Indenture or the Registration Rights Agreement which by their terms, terminate or cease to have further effect as a result of the making of, and the acceptance for exchange of all validly tendered Old Notes pursuant to, the Exchange Offer. All untendered Old Notes will continue to be subject to the restrictions on transfer provided for in the Old Notes and in the Indenture. To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered Old Notes could be adversely affected. USE OF PROCEEDS............... There will be no cash proceeds to the Company from the exchange pursuant to the Exchange Offer. See "Use of Proceeds." EXCHANGE AGENT................ Shawmut Bank Connecticut, National Association, as Trustee, is serving as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. 6 10 SUMMARY OF TERMS OF THE NEW NOTES The Exchange Offer relates to $160,000,000 aggregate principal amount of Old Notes, consisting of $151,500,000 of Old Series A Notes and $8,500,000 of Old Series C Notes. The form and terms of the New Notes are the same in all material respects as the Old Notes except that the New Notes will have been registered under the Securities Act and will not bear legends restricting their transfer. The New Notes will evidence the same debt as the Old Notes (which they replace) and will be issued under, and be entitled to the benefits of, the Indenture governing the Old Notes. See "Description of Notes." PRINCIPAL AMOUNT.............. $160,000,000, of which $151,500,000 are New Series B Notes and $8,500,000 are New Series D Notes. MATURITY DATE................. $80,000,000 aggregate principal amount will be subject to a mandatory redemption on June 15, 1999 and the remaining principal amount outstanding will mature on June 15, 2000. INTEREST RATE................. The New Series B Notes will bear interest at a rate of 12% per annum. The New Series D Notes will bear interest at a rate equal to the sum of 5.75% plus the six month London Interbank Offered Rate ("LIBOR"). INTEREST PAYMENT DATES........ June 15 and December 15 of each year, commencing December 15, 1995. Interest on the New Notes will accrue from the last June 15 or December 15 on which interest was paid on the Old Notes, or, if no interest has been paid on the Old Notes, from June 20, 1995. RANKING....................... The Notes are senior secured obligations of Envirodyne, which rank senior to all senior unsecured and subordinated indebtedness of Envirodyne and rank pari passu with all other existing and any permitted future senior secured indebtedness of Envirodyne other than the security interests in favor of the holders of obligations under the Letter of Credit Facility (subject to the respective security interests, if any, held by other lenders). SECURITY; GUARANTEES.......... The Notes are guaranteed by the Company's significant domestic subsidiaries (the "Subsidiary Guarantors") and secured by a collateral pool (the "Collateral Pool") comprised of: (i) all domestic accounts receivable (including intercompany receivables) and inventory; (ii) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements); (iii) substantially all domestic fixed assets (other than assets subject to a lease agreement with General Electric Capital Corporation); and (iv) a senior pledge of 100% of the capital stock of the Company's significant domestic subsidiaries and 65% of the capital stock of Viskase, S.A. Such guarantees and security are shared with lenders under the Revolving Credit Facility on a pari passu basis pursuant to an intercreditor agreement. The security interest of the holders of obligations under the Letter of Credit Facility has priority over all other liens on the Collateral Pool. EXCESS CASH FLOW OFFER........ In the event that the Company has Excess Cash Flow (as defined) in excess of $5 million in any fiscal year, beginning with the fiscal year ending December 28, 1995, the Company will be required to make an offer to purchase Notes from all holders on a pro rata basis in an amount equal to the Excess CF Amount (as defined) at 7 11 a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. OPTIONAL REPAYMENT WITH PREMIUM....................... Commencing immediately, the Notes are redeemable by the Company, at its option, in whole or in part, at a price equal to (i) 100% of the principal amount of the Notes being redeemed, plus (ii) accrued and unpaid interest thereon to the optional redemption date and (iii) the Yield Maintenance Amount (as defined), if any, with respect thereto. CHANGE OF CONTROL............. Upon the occurrence of a Change of Control (as defined), each holder of the Notes will have the right to require the Company to repurchase such holder's Notes at a price equal to 100% of the outstanding principal amount thereof together with interest thereon to the date of purchase and the Yield-Maintenance Amount with respect thereto. CERTAIN COVENANTS............. The Indenture contains covenants that, among other things, limit (i) the incurrence of Indebtedness by the Company and its Subsidiaries, (ii) the payment of Restricted Payments by the Company and its Subsidiaries, (iii) the creation of Liens on any of the Assets of the Company or its Subsidiaries, (iv) the making of certain Investments by the Company and its Subsidiaries (including the Company and its Subsidiaries), (v) certain transactions with affiliates by the Company and its Subsidiaries and (vi) certain mergers, consolidations and sales of assets of the Company or its Subsidiaries. See "Description of Notes -- Certain Covenants." RISK FACTORS See "Risk Factors" for a discussion of certain factors to be considered by prospective investors. 8 12 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following summary financial data of the Company for the periods January 1, 1990 to December 29, 1994; January 1, 1990 to December 31, 1992 for Balance Sheet Data and January 1, 1990 to December 31, 1993 for Statement of Operations (Pre-consummation); and the periods January 1, 1993 to December 29, 1994 for Balance Sheet Data and January 1, 1994 to December 29, 1994 for Statement of Operations (Post-consummation) are derived from the Company's consolidated financial statements audited by Coopers & Lybrand L.L.P., independent accountants. The historical results of operations for the periods ended December 31, 1992 and prior for Balance Sheet Data and December 31, 1993 and prior for Statement of Operations consist of the periods prior to the implementation of the Plan of Reorganization and Fresh Start Reporting, Pre-consummation. Subsequent periods reflect the Fresh Start Reporting that took place upon the implementation of the Plan of Reorganization, Post-consummation. The information below should be read in conjunction with the Consolidated Financial Statements of Envirodyne Industries, Inc. and Subsidiaries and related notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this Prospectus. Results for the interim periods are not necessarily indicative of results for the years as a whole.
POST-CONSUMMATION PRE-CONSUMMATION --------------------------------------- ---------------------------------------------------------------- DECEMBER 30, DECEMBER 27, DECEMBER 28, 1994 JANUARY 1 JANUARY 1 JANUARY 1 1991 1990 JANUARY 1 TO TO TO TO TO TO TO MARCH 30, MARCH 31, DECEMBER 29, DECEMBER 31, DECEMBER 31, DECEMBER 26, DECEMBER 27, 1995(1) 1994 1994(1) 1993(1) 1992 1991 1990 ------------ --------- ------------ ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) (IN THOUSANDS) STATEMENT OF OPERATIONS: Net sales........... $155,824 $ 142,593 $599,029 $ 587,385 $ 575,705 $ 543,969 $ 544,138 Cost of sales....... 113,689 102,119 432,746 416,410 398,876 374,214 368,823 Selling, general and administrative expenses.......... 33,446 30,764 127,063 117,343 109,623 108,256 104,154 Patent infringement settlement income............ 9,457 -------- --------- -------- ---------- ----------- ----------- ----------- Operating Income.... 8,689 9,710 48,677 53,632 67,206 61,499 71,161 Interest expense, net............... 13,370 11,998 49,207 30,259 105,558 101,450 99,898 Minority interest in loss of subsidiary........ 50 50 717 Other income (expense), net.... 591 281 1,668 (5,540) (12,644)(2) (332) 6,563 -------- --------- -------- ---------- ----------- ----------- ----------- Income (loss) before income taxes, reorganization items and extraordinary gain (loss)............ (4,090) (1,957) 1,188 18,550 (50,996) (40,283) (22,174) Reorganization items, net........ 104,745 -------- --------- -------- ---------- ----------- ----------- ----------- Income (loss) before income taxes, and extraordinary gain (loss)............ (4,090) (1,957) 1,188 (86,195) (50,996) (40,283) (22,174) Provision (benefit) for income taxes............. (195) 550 4,800 12,000 (14,000) (11,030) (7,000) -------- --------- -------- ---------- ----------- ----------- ----------- Income (loss) before extraordinary items............. (3,895) (2,507) (3,612) (98,195) (36,996) (29,253) (15,174) Extraordinary gain (loss), net of tax(3)............ 183,784 (2,502) -------- --------- -------- ---------- ----------- ----------- ----------- Net income (loss)... $ (3,895) $ (2,507) $ (3,612) $ 85,589 $ (36,996) $ (31,755) $ (15,174) ======== ========= ======== ========== =========== =========== =========== Per share (loss) before extraordinary gains (loss)...... (.29) (0.19) (.27) (306,859) (115,613) (91,416) (47,419) Per share income (loss) including extraordinary gain (loss)............ (.29) (0.19) (.27) 267,466 (115,613) (99,234) (47,419) OTHER DATA: EBDIAT(4)........... $ 22,585 $ 22,556 $100,064 $ 106,030 $ 116,516 $ 105,613 $ 113,524 Depreciation and amortization under capital lease..... 9,986 9,000 35,775 36,687 33,763 28,994 26,726 Amortization of intangibles and excess reorganization value............. 3,910 3,846 15,612 15,711 15,547 15,120 15,637 Amortization of deferred financing fees and discount.......... 549 362 1,569 2,418 30,820 26,792 24,022 Capital expenditures...... 7,631 7,354 32,566 40,887 29,018 44,938 49,478 Ratio of earnings to fixed charges(5)........ 1.00 1.52 Deficiency in the coverage of fixed charges by earnings before fixed charges..... (4,259) (2,202) (52,200) (41,301) (23,000) BALANCE SHEET DATA: Total assets........ $922,013 $ 885,886 $896,636 $ 867,680 $ 1,026,962 $ 1,086,457 $ 1,062,508 Working capital..... 114,291 98,909 91,727 82,440 (736,643)(6) (708,064)(6) 87,683 Cash and cash equivalents and time deposits..... 7,209 3,937 7,289 7,743 14,062 16,075 29,133 Net property, plant and equipment including those under capital lease............. 472,792 455,172 470,338 455,554 452,401 476,604 421,269 Debt obligations: Short-term debt(7)......... 28,221 18,888 25,798 15,610 40,365 34,937 42,670 Long-term debt reclassified as current......... 758,300 792,557 Long-term debt.... 510,944 500,231 489,358 482,379 12,524 18,833 761,606 Stockholders' equity (deficit)(8)...... 134,010 133,057 135,349 135,000 (83,545) (40,303) (8,275)
- --------------- (1) Due to the implementation of the Plan of Reorganization and Fresh Start Reporting, financial statements including outstanding shares for the new restructured company (effective December 31, 1993) are not comparable to those of the prior years. (2) The 1992 amount includes $3,945 of fees and expenses associated with the renegotiation of debt. (3) Includes an extraordinary gain from the implementation of the Plan of Reorganization in 1993, and an extraordinary loss on debt extinguishment in 1991. (4) "EBDIAT" represents, for any relevant period, net income (loss) (except that extraordinary, unusual and non-recurring gains and losses are excluded) plus (i) net interest expense (including amortization of original issue discount and non-cash interest); (ii) provision for taxes; (iii) depreciation; (iv) amortization; and (v) other expense less other income, all determined in accordance with generally accepted accounting principles. (5) For purposes of these computations, the ratio of earnings to fixed charges has been calculated by dividing earnings by fixed charges. Earnings, as used to compute the ratio, equal the sum of income before income taxes, reorganization items and extraordinary items, and fixed charges excluding capitalized interest. Fixed charges are the total interest expenses including capitalized interest, amortization of debt expense and a rental factor that is representative of an interest factor (estimated to be one third of annual rent expense) on operating leases. (6) Includes $758,300 and $792,557 of long-term debt reclassified as current at December 31, 1992 and December 26, 1991, respectively. (7) Includes current portion of long-term debt. (8) The Company has never paid a cash dividend. 9 13 SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA The table below presents summary unaudited pro forma consolidated statements of operations of the Company for the periods December 30, 1994 to March 30, 1995 and January 1, 1994 to December 29, 1994 as if the Company's issuance of $160 million principal amount of Old Notes and the application of the proceeds thereof had occurred at the start of fiscal year 1994. This summary data should be read in conjunction with the unaudited pro forma financial statements of the Company and the notes thereto appearing elsewhere herein. See "Unaudited Pro Forma Consolidated Financial Data." The unaudited pro forma results of operations do not necessarily indicate either future results or the results that would have occurred if the events described above had occurred on the dates indicated.
DECEMBER 30, 1994 JANUARY 1 TO TO MARCH 30, 1995 DECEMBER 29, 1994 ----------------- ----------------- (IN THOUSANDS) Net sales.................................................... $ 155,824 $ 599,029 Cost of sales................................................ 113,689 432,746 Selling, general and administrative(1)....................... 33,446 117,606 --------- --------- Operating income............................................. 8,689 48,677 Interest expense, net........................................ 14,917 59,268 Other income, net............................................ 591 1,718 --------- --------- Loss before income taxes..................................... (5,637) (8,873) Income tax provision (benefit)............................... (798) 876 --------- --------- Net loss..................................................... $ (4,839) $ (9,749) ========= ========= Pro forma ratio of earnings to fixed charges(2).............. -- -- Pro forma deficiency in the coverage of fixed charges by earnings before fixed charges.............................. (5,806) (9,851)
- --------------- (1) Fiscal year January 1 to December 29, 1994 benefitted from a $9,457 settlement of a patent infringement suit. (2) For purposes of these computations, the ratio of earnings to fixed charges has been calculated by dividing earnings by fixed charges. Earnings, as used to compute the ratio, equal the sum of income before income taxes and fixed charges excluding capitalized interest. Fixed charges are the total interest expenses including capitalized interest, amortization of debt expense and a rental factor that is representative of an interest factor (estimated to be one third of annual rent expense) on operating leases. 10 14 RISK FACTORS Prospective investors should carefully consider the following factors as well as the other information set forth in this Prospectus. HIGH LEVEL OF INDEBTEDNESS; ABILITY TO SERVICE INDEBTEDNESS The Company is highly leveraged. At March 30, 1995, after giving effect to the sale of the Old Notes and the use of the proceeds therefrom, the Company had approximately $531 million of long-term debt. In addition, subject to the restrictions in the Company's debt instruments (including the Indenture), the Company may incur additional indebtedness from time to time to finance acquisitions or capital expenditures or for other purposes. The level of the Company's indebtedness could have important consequences to holders of the Notes, including the following: (i) a substantial portion of the Company's cash flow from operations must be dedicated to debt service and will not be available for other purposes; (ii) the Company's ability to obtain additional financing in the future, as needed, may be limited; (iii) the Company's leveraged position and covenants contained in its debt instruments (including the Indenture) could limit its ability to expand and make capital improvements and acquisitions; and (iv) the Company's level of indebtedness could make it more vulnerable to economic downturns, limit its ability to withstand competitive pressures and limit its flexibility in reacting to changes in the industry and economic conditions generally. The failure of the Company to comply with covenants contained in the Indenture, the instruments governing the Revolving Credit Facility and the Letter of Credit Facility and in the GECC Lease Documents (as defined) would permit the Company's lenders under these instruments to accelerate the maturity of the obligations thereunder and to create cross-defaults permitting acceleration of substantially all of the indebtedness of the Company. The Company anticipates that its operating cash flow will be sufficient to meet its operating expenses and to service its interest payments on the Notes and its other outstanding indebtedness. The Company will be required to satisfy its $80 million mandatory redemption obligation with respect to the Notes in 1999 and to pay the remaining principal amount of the Notes in 2000. Additionally, the Company's 10.25% Senior Notes (the "10.25% Notes"), of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company expects that in order to make these payments it will be required to pursue one or more alternative strategies, such as refinancing its indebtedness, selling additional equity capital, reducing or delaying capital expenditures, or selling assets. There can be no assurance that any of these strategies could be effected on satisfactory terms, if at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." CHANGE OF CONTROL Upon the occurrence of a Change of Control (which includes the acquisition by any person of more than 50% of the Company's Common Stock), each holder of the Notes will have the right to require the Company to repurchase such holder's Notes at a price equal to 100% of the outstanding principal amount thereof, together with interest thereon to the date of purchase and the Yield-Maintenance Amount with respect thereto. In addition, in the event of a change of control (defined in the indenture governing the 10.25% Notes in a manner substantially similar to the Indenture), the holders of the 10.25% Notes will have the right to require the Company to repurchase all of their 10.25% Notes at a purchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase. There can be no assurance that the Company will have, or will have access to, sufficient funds to pay the required purchase price for all Notes and 10.25% Notes tendered by holders under such circumstances. The Company's failure to repurchase the Notes and the 10.25% Notes tendered in connection therewith would constitute an event of default under the Notes, the indenture governing the 10.25% Notes and under certain other debt instruments of the Company. Certain of the events constituting a Change of Control are beyond the control of the Company. As of July 1, 1995, The Malcolm I. Glazer Trust (the "Glazer Trust") beneficially owned approximately 31% of the Company's Common Stock. The Company has been informed that on June 16, 1995 the Glazer Trust entered into a letter of intent with Zapata Corporation ("Zapata") which contemplates 11 15 the sale of all of the Glazer Trust's shares of the Company's Common Stock to Zapata. See "Security Ownership." Zapata has publicly announced its intention to evaluate the possibility of acquiring additional shares or proposing a merger with or acquisition of Envirodyne in the future. LIQUIDITY The Company finances its working capital needs through a combination of cash generated through operations and borrowings under the Revolving Credit Facility. The availability of funds under the Revolving Credit Facility is subject to the Company's compliance with certain covenants (which are substantially similar to those included in the Indenture), to borrowing base limitations measured by accounts receivable and inventory of the Company and to reserves which may be established in the discretion of the lenders. The available borrowing capacity under the Revolving Credit Facility was approximately $16 million at June 29, 1995. EFFECT OF INTERCREDITOR ARRANGEMENTS WITH LENDERS The Company has entered into intercreditor agreements with the lenders under the Revolving Credit Facility and the Letter of Credit Facility and with General Electric Capital Corporation. These intercreditor arrangements provide that with respect to the guarantees by the Subsidiary Guarantors and the Collateral Pool, the lenders under the Letter of Credit Facility will have a right to payment prior to the holders of the Notes and the holders of obligations under the Revolving Credit Facility, who will share such security on a pari passu basis. In addition, the intercreditor arrangements restrict the ability of the holders of the Notes to exercise collateral rights or remedies without the consent of the lenders under the Revolving Credit Facility and the Letter of Credit Facility. See "Description of Intercreditor Arrangements." COMPETITION The Company faces competition in the U.S. and internationally from competitors which may have substantially greater financial and other resources than the Company. See "Business -- Viskase -- Competition." Viscofan, S.A., a Spanish producer which had been barred from competing in the U.S. market since 1985, was allowed to enter the U.S. small diameter casings market in November 1994. The ten year ban was imposed by an administrative law judge who determined that Viscofan had violated certain trade and patent laws by infringing on a valid patent owned by Teepak, Inc. (a U.S. based producer of cellulosic casing), and misappropriating Viskase's trade secrets. Viskase currently competes against Viscofan in markets outside the United States in small diameter casings. The management of Viskase believes that Viskase will experience pricing pressure as a result of Viscofan's entrance into the United States market. LIMITS ON COLLATERAL FOR NOTES; FRAUDULENT CONVEYANCE OR TRANSFER Although the net book value of the Company's assets securing the Notes was in excess of $400 million as of May 31, 1995, there can be no assurance that the proceeds from the sale of the collateral included in the Collateral Pool following a default under the Notes would be sufficient to satisfy the Company's obligations under the Notes. The Notes are an obligation of the Company and are guaranteed by the Subsidiary Guarantors. The Company is a holding company. A substantial amount of the assets of the Company are held by the Subsidiary Guarantors and a substantial amount of the Company's operating revenue is derived from operations of the Subsidiary Guarantors. Accordingly, the Company's ability to make interest and principal payments when due to holders of the Notes substantially depends upon the receipt of sufficient funds from the Subsidiary Guarantors. To the extent that a court were to find that (i) a guarantee was incurred or a security interest in connection therewith was granted by a Subsidiary Guarantor with actual intent to hinder, delay or defraud any present or future creditor of a Subsidiary Guarantor or (ii) such Subsidiary Guarantor did not receive fair consideration or reasonably equivalent value in exchange for issuing its guarantee or granting a security interest in connection with such guarantee and such Subsidiary Guarantor (a) was insolvent on the date that such guarantee was issued or such security interest was granted, (b) was rendered insolvent by reason of the 12 16 issuance of such guarantee or the grant of such security interest, (c) was engaged in business or a transaction or was about to engage in business or a transaction for which the remaining assets of such Subsidiary Guarantor constituted unreasonably small capital, or (d) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, the court could avoid the obligation incurred by a Subsidiary Guarantor pursuant to such guarantee or the security interest granted in connection therewith or potentially subordinate such guarantee to the obligations owed by such Subsidiary Guarantor to its other creditors. There can be no assurance as to what standard a court would apply in order to determine solvency. Any legal challenge of a guarantee on fraudulent conveyance grounds would likely involve, among other things, consideration of the benefits, if any, realized by a Subsidiary Guarantor as a result of the issuance by the Company of the Notes. To the extent any guarantee were avoided as a fraudulent conveyance or held to be unenforceable for any other reason, holders of the Notes would cease to have any claim against such Subsidiary Guarantor in respect of such guarantee and would continue to be creditors of the Company and any Subsidiary Guarantor whose guarantee was not avoided or otherwise held unenforceable. The incurrence by the Company of indebtedness (including the Notes) and the Company's grant of a security interest in connection with such indebtedness may be subject to review under relevant federal and state fraudulent conveyance and similar laws in a bankruptcy or reorganization case or similar insolvency proceeding or a lawsuit by or on behalf of creditors of the Company. Under such laws, if a court were to find that (i) the obligations (including the Notes) were incurred or a security interest in connection therewith was granted by the Company with actual intent to hinder, delay or defraud any present or future creditor of the Company or (ii) the Company did not receive fair consideration or reasonably equivalent value in exchange for incurring its obligations or granting a security interest in connection therewith and the Company either (a) was insolvent at the time of incurring such obligations or granting such security interest, (b) was rendered insolvent by reason of incurring such indebtedness or granting such security interest, (c) was engaged in business or a transaction or was about to engage in business or a transaction for which the remaining assets of the Company constituted unreasonably small capital, or (d) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, the court could avoid such obligations (including the Notes) or the security interest granted in connection therewith or potentially subordinate such obligations (including the Notes) to the obligations owed by the Company to its other creditors. There can be no assurance as to what standard a court would apply in order to determine solvency. To the extent any obligations (including the Notes) were avoided as a fraudulent conveyance or held to be unenforceable for any other reason, holders of the Notes would cease to have any claim against the Company in respect of such obligations and would continue to be creditors of any Subsidiary Guarantor whose guarantee was not avoided or otherwise held unenforceable. RISE IN RAW MATERIAL PRICES The total manufactured cost of the Company's products includes the cost of certain raw materials, particularly certain pulp and resin products. The prices of such raw materials have fluctuated significantly in the past. Significant fluctuations in the price of these raw materials, without a coincident ability to reflect such fluctuations in selling prices, could have a material adverse effect on the Company's results of operations. INTERNATIONAL OPERATIONS International sales and operations may be subject to various risks including, but not limited to, possible unfavorable exchange rate fluctuations, political instability, governmental regulations (including import and export controls), restrictions or currency repatriation, embargoes, labor relations laws and the possibility of governmental expropriation. Viskase's foreign operations generally are subject to taxes on the repatriation of funds. In addition, international operations in certain parts of the world may be subject to international balance of payments difficulties which may raise the possibility of delay or loss in the collection of accounts receivable from sales to customers in those countries. 13 17 LITIGATION; ENVIRONMENTAL REGULATIONS The Company is subject to a variety of litigation claims and environmental regulations, none of which management believes will have a material adverse effect on the Company's results of operations or financial condition. See "Business -- Environmental Regulations" and "-- Legal Proceedings" and Note 11 to the Company's Consolidated Financial Statements. ABSENCE OF PUBLIC MARKET FOR THE NOTES The New Notes are being offered to the holders of the Old Notes. The Old Notes were offered and sold to a small number of institutional investors and are eligible for trading in the Private Offerings, Resale and Trading through Automatic Linkages ("PORTAL") Market. Prior to the Exchange Offer, there has been no market for the New Notes and the Company does not intend to apply for listing of the New Notes on any securities exchange or for quotation through the National Association of Securities Dealers Automated Quotation System. Future trading prices of the New Notes will depend upon many factors including prevailing interest rates, the Company's operating results and the market for similar securities. THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER As a condition to the obligations of the purchasers under the note agreement relating to the offering of the Old Notes (the "Note Agreement"), the Company and certain institutional investors entered into the Registration Rights Agreement on June 20, 1995. Pursuant to the Registration Rights Agreement the Company agreed (i) to file with the Commission a registration statement under the Securities Act with respect to the New Notes within 30 days after the closing of the sale of the Old Notes, (ii) to use its reasonable best efforts to cause such registration statement to become effective under the Securities Act as soon as practicable, but in no event later than 120 days after the Closing Date, and (iii) upon effectiveness of the registration statement, to commence the Exchange Offer and offer to the holders of the Old Notes the opportunity to exchange their Old Notes for a like principal amount of New Notes. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. This Registration Statement is intended to satisfy the Company's obligations under the Registration Rights Agreement and the Note Agreement. Following the Consummation (as defined under "-- Termination of Certain Rights") of the Exchange Offer, holders of Old Notes not tendered will not have any further registration rights or rights to receive certain specified liquidated damages and the Old Notes will continue to be subject to certain restrictions on transfer. See "-- Termination of Certain Rights" and "-- Consequences of Failure to Exchange." Accordingly, the liquidity of the market for the Old Notes could be adversely affected. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept any and all Old Notes validly tendered and not withdrawn prior to the Expiration Date. The Company will issue $1,000 principal amount of New Notes of a series in exchange for each $1,000 principal amount of outstanding Old Notes of the series accepted in the Exchange Offer. Holders may tender some or all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in integral multiples of $1,000 principal amount. The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes except that (i) the New Notes will have been registered under the Securities Act and hence will not bear legends restricting their transfer pursuant to the Securities Act and (ii) holders of New Notes will not be entitled to certain rights of holders of Old Notes under the Registration Rights Agreement which will terminate upon the Consummation of the Exchange Offer. The New Notes will evidence the same debt as the Old Notes (which they replace) and will be issued under, and be entitled to the benefits of, the Indenture governing the Old Notes. 14 18 As of the date of this Prospectus, $160,000,000 aggregate principal amount of the Old Notes was outstanding, $115,000,000 of which was registered in the name of Cede & Co., as nominee for The Depository Trust Company (the "Depository" or "DTC"), and there were approximately 20 beneficial owners. Solely for reasons of administration (and for no other purpose) the Company has fixed the close of business of , 1995 as the record date for the Exchange Offer for purposes of determining the persons to whom this Prospectus and the Letter of Transmittal will be mailed initially. Only a registered holder of Old Notes (or such holder's legal representative or attorney-in-fact) as reflected on the records of the Trustee under the Indenture may participate in the Exchange Offer. There will be no fixed record date for determining registered holders of Old Notes entitled to participate in the Exchange Offer. Holders of Old Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law or the Indenture in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. The Company shall be deemed to have accepted validly tendered Old Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders of Old Notes for the purposes of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be returned (or, in the case of Old Notes tendered by book-entry transfer through DTC, will be credited to an account maintained with DTC), without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. See "-- Procedures for Tendering." Holders who tender Old Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1995, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Company will notify the Exchange Agent of any extension by oral or written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Company reserves the right, in its sole discretion, (i) to delay accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the conditions set forth below under "-- Conditions of the Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (iv) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendments by means of a prospectus supplement that will be distributed to the registered holders of Old Notes, and the Company will extend the Exchange Offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such five to ten business day period. Without limiting the manner in which the Company may choose to make public announcement of any delay, extension, termination or amendment of the Exchange Offer, the Company shall not have an obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. 15 19 PROCEDURES FOR TENDERING Only a registered holder of Old Notes may tender such Old Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Old Notes and any other required documents, to the Exchange Agent at the address set forth below under "-- Exchange Agent" for receipt prior to the Expiration Date; provided, however, that in lieu of the foregoing, a holder may either (i) tender the Old Notes pursuant to the procedure for book-entry tender set forth below, or (ii) comply with the guaranteed delivery procedure set forth below. The tender by a holder will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTION FOR SUCH HOLDERS. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. See "Instruction to Registered Holder from Beneficial Owner" included with the Letter of Transmittal. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined) unless the Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member of one of the following signature guarantee programs: the Securities Transfer Agents Medallion Program (STAMP), the New York Stock Exchange Medallion Signature Program (MSP) and the Stock Exchange Medallion Program (SEMP) (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Old Notes listed therein, such Old Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered holder as such registered holder's name appears on such Old Notes. If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Company, in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any other 16 20 person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not validly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. By tendering, each registered holder will represent to the Company that, among other things, (i) the New Notes to be acquired by the holder and any beneficial owner(s) of Old Notes ("Beneficial Owner(s)") in connection with the Exchange Offer are being acquired by the holder and any Beneficial Owner(s) in the ordinary course of business of the holder and any Beneficial Owner(s), (ii) the holder and each Beneficial Owner are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the New Notes, (iii) the holder and each Beneficial Owner acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and cannot rely on the position of the Staff of the Commission set forth in no-action letters that are discussed herein under "-- Resales of the New Notes", (iv) the holder and each Beneficial Owner understands that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the Commission, and (v) neither the holder nor any Beneficial Owner(s) is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company except as otherwise disclosed to the Company in writing. EXCHANGING BOOK-ENTRY OLD NOTES The Exchange Agent and DTC have confirmed that any financial institution that has an account with DTC (a "Participant") may utilize DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes. The Exchange Agent will request that DTC establish an account with respect to the Old Notes for purposes of the Exchange Offer within two business days after the date of the Exchange Offer. Any Participant may make book-entry delivery of Old Notes by causing DTC to transfer such Old Notes into such Exchange Agent's account in accordance with DTC's ATOP procedures for transfer. However, the exchange for the Old Notes so tendered will only be made after timely confirmation (a "Book-Entry Confirmation") of such book-entry transfer of Old Notes into the Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's Message (as defined) and any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by DTC and received by the Exchange Agent and forming part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from a Participant tendering Old Notes which are the subject of such Book-Entry Confirmation that such Participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Company may enforce such agreement against such Participant. The method of delivery of Old Notes is at the option and risk of the tendering holder and, except as otherwise provided in the Letter of Transmittal, the delivery will be deemed to be made only when actually received by the Exchange Agent. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available, or (ii) who cannot deliver their Old Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date or (iii) who cannot comply with the procedure for book-entry tender on a timely basis, may effect a tender if: (a) The tender is made through an Eligible Institution; (b) Prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or 17 21 hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Old Notes and the principal amount of the Old Notes being tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing the Old Notes and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (c) Such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered Old Notes in proper form for transfer and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within five business days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided herein, Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. To withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers (except in the case of book-entry tenders) and principal amount at maturity (regardless of the means of tendering) of such Old Notes), (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Old Notes register the transfer of such Old Notes into the name of the Depositor withdrawing the tender, and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. If the Old Notes have been tendered pursuant to the procedure for book-entry tender set forth above under "Exchanging Book-Entry Old Notes," a notice of withdrawal must specify, in lieu of certificate numbers, the name and account number at DTC to be credited with the withdrawn Old Notes. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no New Notes will be issued with respect thereto unless the Old Notes so withdrawn are validly retendered. Properly withdrawn Old Notes may be retendered by following one of the procedures described above under "Procedures for Tendering" at any time prior to the Expiration Date. Any Old Notes which have been tendered but which are not accepted for exchange due to rejection of tender or termination of the Exchange Offer, or which have been validly withdrawn, will be returned as soon as practicable to the holder thereof without cost to such holder. CONDITIONS OF THE EXCHANGE OFFER Notwithstanding any other term of the Exchange Offer, the Company shall not be required to accept for exchange, or exchange New Notes for, any Old Notes, and may terminate the Exchange Offer as provided herein before the acceptance of such Old Notes, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company, or any material adverse development has occurred in any existing action or proceeding with respect to the Company or any of its subsidiaries; or 18 22 (b) any change, or any development involving a prospective change, in the business or financial affairs of the Company or any of its subsidiaries has occurred which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company; or (c) any law, statute, rule or regulation is proposed, adopted or enacted, which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company; or (d) any governmental approval has not been obtained, which approval the Company shall, in its sole discretion, deem necessary for the consummation of the Exchange Offer as contemplated hereby. If the Company determines in its sole discretion that any of the conditions are not satisfied, the Company may (i) refuse to accept any Old Notes and return (or, in the case of Old Notes tendered by book-entry transfer through DTC, promptly credit to an account maintained with DTC) all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer and retain all Old Notes tendered prior to the Expiration Date, subject, however, to the rights of holders to withdraw such Old Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all validly tendered Old Notes which have not been withdrawn. If such waiver constitutes a material change to the Exchange Offer, the Company will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered holders, and the Company will extend the Exchange Offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such five to ten business day period. TERMINATION OF CERTAIN RIGHTS Holders of the Old Notes to whom this Exchange Offer is made have special rights under the Registration Rights Agreement that will terminate upon the Consummation of the Exchange Offer. Under the Registration Rights Agreement, the Exchange Offer shall be deemed consummated (the "Consummation") upon the occurrence of (i) the filing and effectiveness under the Securities Act of a registration statement relating to the New Notes to be issued in the Exchange Offer, (ii) the maintenance of such registration statement continuously effective for a period of not less than the minimum period required under applicable federal and state securities law (provided that in no event shall such Exchange Offer remain open and the registration statement relating thereto remain continuously effective, in each case, for less than 30 days), and (iii) the delivery by the Company to the Trustee under the Indenture of New Notes in the same aggregate principal amount as the aggregate principal amount of Old Notes tendered by holders thereof pursuant to the Exchange Offer. Such special rights which will terminate include (a) the right to require the Company to comply with the following: (x) to file with the Commission a registration statement under the Securities Act with respect to the New Notes within 30 days after the closing date of the private placement (the "Closing Date"), (y) to use its reasonable best efforts to cause such registration statement to become effective under the Securities Act as soon as practicable, but in no event later than 120 days after the Closing Date (the "Effectiveness Deadline"), and (z) upon effectiveness of the registration statement, to commence the Exchange Offer and offer to the holders of the Old Notes the opportunity to exchange their Old Notes for a like principal amount at maturity of New Notes; and (b) the right to receive liquidated damages as follows: if the above has not been complied with, commencing on the 121st day after the Closing Date (the "Registration Default Date"), the Company will pay liquidated damages to each holder of Old Notes during the first 90-day period immediately following such Registration Default Date such that the per annum interest rate on the Notes shall increase to a rate that is fifty (50) basis points above the interest rate on the Notes immediately prior to such date and, for each subsequent 90-day period, the per annum interest shall further increase over the rate then in effect by an additional twenty-five (25) basis points. EXCHANGE AGENT Shawmut Bank Connecticut, National Association, has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or the 19 23 Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent at (203) 986-1271 or addressed as follows: By Overnight Courier/Mail/Hand: By Facsimile: Shawmut Bank Connecticut, N.A. Shawmut Bank Connecticut, N.A. Corporate Trust Operations, MSN 224 Attn: Patricia Williams 777 Main Street, Lower Level (203) 986-7908 Hartford, Connecticut 06115 Attn: Patricia Williams FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Company. The principal solicitations are being made by mail; however, additional solicitations may be made by telegraph, telephone or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptance of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company and are estimated in the aggregate to be approximately $ . Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. CONSEQUENCES OF FAILURE TO EXCHANGE The Old Notes which are not exchanged for New Notes pursuant to the Exchange Offer will remain restricted securities under the Securities Act. Accordingly, such Old Notes may be resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A under the Securities Act to a person whom the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A, (iii) in an offshore transaction in accordance with Regulation S under the Securities Act, but only in the case of a transfer that is effected by the delivery to the transferee of Old Notes registered in its name (or its nominee's name) on the books maintained by the registrar of the Old Notes, (iv) pursuant to an exemption from registration in accordance with Rule 144 (if available) or Rule 145 under the Securities Act, (v) in reliance on another exemption from the registration requirements of the Securities Act, but only in the case of a transfer that is effected by the delivery to the transferee of Old Notes registered in its name (or its nominee's name) on the books maintained by the registrar of the Old Notes, and subject to the receipt by the registrar or co-registrar of a certification of the transferor and an opinion (satisfactory to the Company) of counsel (satisfactory to the Company) to the effect that such transfer is in compliance with the Securities Act, or (vi) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Following the Consummation of the Exchange Offer, holders of Old Notes will have no further rights under the Registration Rights Agreement. 20 24 ACCOUNTING TREATMENT The carrying value of the Old Notes is not expected to be materially different from the fair value of the New Notes at the time of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized. The expenses of the Exchange Offer will be amortized over the term of the New Notes. RESALES OF THE NEW NOTES With respect to resales of New Notes, based on an interpretation by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that any holder or beneficial owner (other than a person that is an affiliate of the Company within the meaning of Rule 405 under the Securities Act or a "broker" or "dealer" registered under the Exchange Act) who exchanges Old Notes for New Notes in the ordinary course of business and who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes, will be allowed to resell the New Notes to the public without further registration under the Securities Act and without delivering to the purchasers of the New Notes a prospectus that satisfies the requirements of Section 10 thereof. The Company has not entered into any arrangement or understanding with any person to participate in the distribution of the New Notes and, to management's knowledge, the persons participating in the Exchange Offer are acquiring the New Notes in the ordinary course of business and have not entered into any arrangement or understanding with any person to participate in the distribution of the New Notes. However, if any holder or beneficial owner acquires New Notes in the Exchange Offer for the purpose of distributing or participating in a distribution of the New Notes, such holder or beneficial owner cannot rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (available April 13, 1988) or similar no-action letters or any similar interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction, unless an exemption from registration is otherwise available. A broker or dealer registered under the Exchange Act that acquired Old Notes for its own account pursuant to its market-making or other trading activities (other than Old Notes acquired directly from the Company) may participate in the Exchange Offer but may be deemed to be an underwriter within the meaning of the Securities Act and, therefore, must deliver a prospectus relating to the New Notes in connection with any resales by it of New Notes acquired for its own account in the Exchange Offer. The Company has agreed in the Registration Rights Agreement that this Prospectus (as it may be amended or supplemented by the Company) may be used by brokers and dealers in connection with their resales of the New Notes for a period of six months from the date on which the Registration Statement relating to the New Notes is declared effective. The delivery of the Prospectus by a broker or dealer in connection with its resales of the New Notes does not constitute an admission that such broker or dealer is an "underwriter" under the Securities Act. As contemplated by the above no-action letters and the Registration Rights Agreement, each holder participating in the Exchange Offer is required by the Letter of Transmittal to represent that (i) the New Notes are to be acquired by the holder and any beneficial owners in the ordinary course of business, (ii) the holder and any beneficial owners are not engaging and do not intend to engage in the distribution of the New Notes, (iii) neither the holder nor any beneficial owner is an affiliate of the Company within the meaning of Rule 405 under the Securities Act, and (iv) the holder and each beneficial owner acknowledge that if such holder or beneficial owner participates in the Exchange Offer for the purpose of distributing the New Notes such holder or beneficial owner must comply with the registration and prospectus delivery requirements of the Securities Act and cannot rely on the above no-action letters. See "Plan of Distribution." 21 25 THE COMPANY Envirodyne Industries, Inc. manufactures food packaging products and foodservice supplies through three primary operating subsidiaries -- Viskase Corporation ("Viskase"), Sandusky Plastics, Inc. (together with Sandusky Plastics of Delaware, Inc. "Sandusky") and Clear Shield National, Inc. ("Clear Shield"). Viskase is the leading producer of cellulosic casings used in preparing and packaging processed meat products and is a major producer of heat shrinkable plastic bags and specialty films for packaging and preserving fresh and processed meat products, poultry and cheeses. The Company is also a leading domestic and international manufacturer of plasticized polyvinyl chloride ("PVC") films, primarily for use in packaging food items. Through Sandusky, the Company is a producer of thermoformed and injection molded plastic containers, used in the packaging of cultured dairy and delicatessen products, and of horticultural trays and inserts. Finally, through Clear Shield, the Company is a major domestic producer of disposable plastic cutlery, drinking straws, custom dining kits and related products. Envirodyne Industries, Inc. was incorporated under the laws of the state of Delaware in 1970 and its principal executive offices are located at 701 Harger Road, Suite 190, Oak Brook, Illinois 60521 (tel. 708-571-8800). THE SUBSIDIARY GUARANTORS The Old Notes are and the New Notes will be unconditionally guaranteed, on a secured basis, as to payment of principal, the Yield-Maintenance Amount, if any, and interest, jointly and severally, by the Subsidiary Guarantors, each of which is a direct or indirect wholly-owned subsidiary of the Company. As of the date hereof, the Subsidiary Guarantors are Viskase, Viskase Holding Corporation, Viskase Sales Corporation, Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc. and Clear Shield National, Inc. The Indenture requires the Company to cause future Significant Domestic Subsidiaries (as defined in the Indenture), if any, of the Company to become Subsidiary Guarantors of the Notes. USE OF PROCEEDS The Company will receive no proceeds from the exchange of New Notes for Old Notes. The aggregate proceeds from the sale by the Company of the Notes were $160 million. In addition, concurrently with the sale of the Old Notes, the Company borrowed $4 million under the Revolving Credit Facility. The Company used these funds to (i) repay the Company's $86.1 million domestic term loan facility (the "Bank Term Loan"), (ii) reduce the amount of the Company's revolving credit obligations by $68.3 million and (iii) pay transaction fees and expenses. The following table illustrates the sources and uses of these funds (dollars in thousands): Sources of Proceeds: Sale of Notes................................................ $160,000 Revolving Credit Facility.................................... 4,000 -------- $164,000 ======== Use of Proceeds: Repayment of Bank Term Loan.................................. $ 86,125 Reduction of revolving credit obligations.................... 68,316 General corporate purposes................................... 2,359 Fees and expenses............................................ 7,200 -------- $164,000 ========
22 26 CAPITALIZATION The following table sets forth the unaudited historical capitalization of the Company as of March 30, 1995 and the unaudited pro forma capitalization of the Company as of March 30, 1995 after giving effect to the issuance of $160 million principal amount of Old Notes and the refinancing of the Company's bank debt with the proceeds therefrom.
MARCH 30, 1995 ------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ----------- ----------- (UNAUDITED) (IN THOUSANDS) (UNAUDITED) Current maturity of bank term loan...................... $ 11,100 $ (11,100)(1) Current maturity of Viskase capital lease obligation.... 6,012 $ 6,012 Current maturity of Viskase Limited term loan........... 2,062 2,062 Other................................................... 9,047 (6,199)(2) 2,848 --------- --------- --------- Total short-term debt including current portion of long-term debt........................................ $ 28,221 $ (17,299) $ 10,922 ========= ========= ========= Bank Credit Agreement: Term loan due 1999.................................... $ 77,800 $ (77,800)(1) Revolving loan due 1999............................... 62,112 (62,112)(1) 10.25% Senior Notes Due 2001............................ 219,262 $ 219,262 Old Notes............................................... 160,000(3) 160,000 Viskase capital lease obligation........................ 141,182 141,182 Viskase Limited term loan............................... 9,279 9,279 Other................................................... 1,309 1,309 --------- --------- --------- Total long-term debt.................................... 510,944 20,088 531,032 --------- --------- --------- Total stockholders' equity (deficit).................... 134,010 (4,243)(4) 129,767 --------- --------- --------- Total capitalization.................................... $ 673,175 $ (1,454) $ 671,721 ========= ========= =========
- --------------- (1) Elimination of prior secured bank debt. (2) Represents outstanding lines of credit eliminated using excess cash from refinancing. (3) Principal amount of Old Notes, consisting of $151,500,000 of Series A Notes and $8,500,000 of Series C Notes. (4) Represents extraordinary loss, net of tax, for write-off of unamortized deferred financing costs related to refinanced debt. 23 27 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA The following unaudited pro forma consolidated statements of operations for periods December 30, 1994 to March 30, 1995 and January 1, 1994 to December 29, 1994 give effect to the Company's issuance of $160 million principal amount of Old Notes used to refinance existing indebtedness and for general corporate purposes as if the transaction had been completed on December 31, 1993. The following unaudited pro forma consolidated balance sheet gives effect to the refinancing as if the refinancing had been completed on March 30, 1995. The pro forma information is based on the historical financial statements of the Company and the adjustments and assumptions described in the accompanying notes to the unaudited pro forma financial statements. The pro forma financial statements should be read in conjunction with the historical consolidated financial statements of the Company, including notes thereto contained elsewhere herein. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 30, 1995 ---------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ----------- ---------- (UNAUDITED) (IN THOUSANDS) (UNAUDITED) ASSETS Current assets: Cash and equivalents..................................... $ 7,209 $ 236(1) $ 7,445 Receivables, net......................................... 89,007 89,007 Inventories.............................................. 124,470 124,470 Other current assets..................................... 30,311 30,311 --------- --------- -------- Total current assets............................. 250,997 236 251,233 Property, plant and equipment, including those under capital lease............................................ 518,958 518,958 Less accumulated depreciation and amortization........... 46,166 46,166 --------- --------- -------- Property, plant and equipment, net......................... 472,792 472,792 Deferred financing costs................................... 9,130 147(2) 9,277 Other assets............................................... 45,842 45,842 Excess reorganization value................................ 143,252 143,252 --------- --------- -------- $ 922,013 $ 383 $922,396 ========= ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease............... $ 28,221 $ (17,299)(4) $ 10,922 Accounts payable......................................... 34,680 34,680 Accrued liabilities...................................... 73,805 4,637(3) 78,442 --------- --------- -------- Total current liabilities........................ 136,706 (12,662) 124,044 Long-term debt including obligation under capital lease.... 510,944 20,088(5) 531,032 Accrued employee benefits.................................. 56,927 56,927 Deferred and noncurrent income taxes....................... 83,426 (2,800)(6) 80,626 Commitments and contingencies Stockholders' equity (deficit): Preferred stock, $.01 par value; none outstanding........ Common stock, $.01 par value; 13,515,000 shares issued and outstanding....................................... 135 135 Paid in capital.......................................... 134,865 134,865 Accumulated (deficit).................................... (7,507) (4,243)(7) (11,750) Cumulative foreign currency translation adjustments...... 6,517 6,517 --------- --------- -------- Total stockholders' equity....................... 134,010 (4,243) 129,767 --------- --------- -------- $ 922,013 $ 383 $922,396 ========= ========= ========
24 28 - --------------- (1) Represents excess cash remaining from refinancing after repayments of existing debt and payment of transaction costs. (2) Represents net change in deferred financing fees:
PRO FORMA ADJUSTMENTS -------------- (IN THOUSANDS) Deferred financing fees and expenses related to Old Notes incurred subsequent to the balance sheet date................................. $ 7,190 Deferred financing related to refinanced debt written off.............. (7,043) -------- Net increase in deferred financing fees................................ $ 147 ========
(3) Represents deferred financing fees and expenses related to the Old Notes incurred subsequent to the balance sheet date, $7,190, less elimination of accrued interest related to refinanced debt, $2,553. (4) Adjustment of short-term debt, including current portion of long-term debt obligations under capital lease, consists of the following: Repayment of Senior Bank Term Loan......................................... $11,100 Excess cash applied to reduce outstanding credit lines..................... 6,199 ------- Total decrease in short-term debt.......................................... $17,299 =======
(5) Adjustment of long-term debt consists of the following:
PRO FORMA ADJUSTMENTS -------------- (IN THOUSANDS) Old Notes.............................................................. $160,000 Repayment of Senior Bank Term Loan..................................... (77,800) Repayment of Senior Bank Revolving Loans............................... (62,112) -------- Net increase in long-term debt......................................... $ 20,088 ========
(6) Approximate tax effect of extraordinary loss on debt refinancing. (7) Represents extraordinary loss, net of tax, for write-off of unamortized deferred financing costs related to refinanced debt. 25 29 UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 30, 1994 TO MARCH 30, 1995 ----------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- ---------- (IN THOUSANDS) NET SALES.............................................. $ 155,824 $ 155,824 Costs and Expense Cost of sales........................................ 113,689 113,689 Selling, general and administrative.................. 29,536 29,536 Amortization of intangibles and excess reorganization value............................................. 3,910 3,910 ---------- ------- ---------- OPERATING INCOME....................................... 8,689 8,689 Interest income...................................... 64 64 Interest expense..................................... 13,434 1,547(1) 14,981 Other income, net.................................... 591 591 ---------- ------- ---------- NET INCOME (LOSS) BEFORE INCOME TAXES.................. (4,090) (1,547) (5,637) Income tax provision (benefit)....................... (195) (603)(2) (798) ---------- ------- ---------- NET (LOSS)............................................. $ (3,895) $ (944) $ (4,839) ========== ======= ========== WEIGHTED AVERAGE COMMON SHARES......................... 13,515,000 13,515,000 ========== ========== PER SHARE AMOUNTS: NET (LOSS)............................................. $ (0.29) $ (0.36) ========== ==========
JANUARY 1 TO DECEMBER 29, 1994 ----------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- ---------- (IN THOUSANDS) NET SALES.............................................. $ 599,029 $ 599,029 Costs and Expense Cost of sales........................................ 432,746 432,746 Selling, general and administrative.................. 111,451 111,451 Patent infringement settlement income................ 9,457 9,457 Amortization of intangibles and excess reorganization value............................................. 15,612 15,612 ---------- ------- ---------- OPERATING INCOME....................................... 48,677 48,677 Interest income...................................... 307 307 Interest expense..................................... 49,514 10,061(1) 59,575 Other income, net.................................... 1,668 1,668 Minority interest in loss of subsidiary.............. 50 50 ---------- ------- ---------- NET INCOME (LOSS) BEFORE INCOME TAXES.................. 1,188 (10,061) (8,873) Income tax provision (benefit)....................... 4,800 (3,924)(2) 876 ---------- ------- ---------- NET (LOSS)............................................. $ (3,612) $(6,137) $ (9,749) ========== ======= ========== WEIGHTED AVERAGE COMMON SHARES......................... 13,500,703 13,500,703 ========== ========== PER SHARE AMOUNTS: NET (LOSS)............................................. $ (0.27) $ (0.72) ========== ==========
26 30 - --------------- (1) Adjustments to increase interest expense based upon pro forma debt capitalization following the issuance of $160 million of Old Notes and repayment of the prior bank debt.
MARCH 30, DECEMBER 29, 1995 1994 --------- ------------ Interest associated with the Old Notes....................... $ 5,160 $ 20,640 Interest associated with the retired Senior Bank Term Loan... (2,384) (7,817) Interest associated with the retired Senior Bank Revolving Loans...................................................... (825) (1,500) Interest associated with elimination of outstanding credit lines...................................................... (404) (1,262) ------- -------- Net increase in interest expense............................. $ 1,547 $ 10,061 ======= ========
Amounts include amortization of deferred financing fees and commitment fees. (2) Reflects income tax effect of the increased interest expense. 27 31 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The following selected historical consolidated financial data of the Company for the periods January 1, 1990 to December 29, 1994; January 1, 1990 to December 31, 1992 for Balance Sheet Data and January 1, 1990 to December 31, 1993 for Statement of Operations (Pre-consummation); and the periods January 1, 1993 to December 29, 1994 for Balance Sheet Data and January 1, 1994 to December 29, 1994 for Statement of Operations (Post-consummation) are derived from the Company's consolidated financial statements audited by Coopers & Lybrand L.L.P., independent accountants. The historical results of operations for the periods ended December 31, 1992 and prior for Balance Sheet Data and December 31, 1993 and prior for Statement of Operations consist of the periods prior to the implementation of the Plan of Reorganization and Fresh Start Reporting, Pre-consummation. Subsequent periods reflect the Fresh Start Reporting that took place upon the implementation of the Plan of Reorganization, Post-consummation. The information below should be read in conjunction with the Consolidated Financial Statements of Envirodyne Industries, Inc. and Subsidiaries and related notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this Prospectus. Results for the interim periods are not necessarily indicative of results for the years as a whole.
POST-CONSUMMATION PRE-CONSUMMATION -------------------------------------- ---------------------------------------------------------- DECEMBER 30, DECEMBER 27, DECEMBER 28, 1994 JANUARY 1 JANUARY 1 JANUARY 1 1991 1990 JANUARY 1 TO TO TO TO TO TO TO MARCH 30, MARCH 31, DECEMBER 29, DECEMBER 31, DECEMBER 31, DECEMBER 26, DECEMBER 27, 1995(1) 1994 1994(1) 1993(1) 1992 1991 1990 ------------ ---------- ------------ ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) (IN THOUSANDS) STATEMENT OF OPERATIONS: Net sales..................... $155,824 $142,593 $599,029 $ 587,385 $ 575,705 $ 543,969 $ 544,138 Cost of sales................. 113,689 102,119 432,746 416,410 398,876 374,214 368,823 Selling, general and administrative expenses...... 33,446 30,764 127,063 117,343 109,623 108,256 104,154 Patent infringement settlement income....................... 9,457 -------- -------- -------- ---------- ---------- ---------- ---------- Operating Income.............. 8,689 9,710 48,677 53,632 67,206 61,499 71,161 Interest expense, net......... 13,370 11,998 49,207 30,259 105,558 101,450 99,898 Minority interest in loss of subsidiary................... 50 50 717 Other income (expense), net... 591 281 1,668 (5,540) (12,644)(2) (332) 6,563 -------- -------- -------- ---------- ---------- ---------- ---------- Income (loss) before income taxes, reorganization items and extraordinary gain (loss)....................... (4,090) (1,957) 1,188 18,550 (50,996) (40,283) (22,174) Reorganizations item, net..... 104,745 -------- -------- -------- ---------- ---------- ---------- ---------- Income (loss) before income taxes, and extraordinary gain (loss)....................... (4,090) (1,957) 1,188 (86,195) (50,996) (40,283) (22,174) Provision (benefit) for income taxes........................ (195) 550 4,800 12,000 (14,000) (11,030) (7,000) -------- -------- -------- ---------- ---------- ---------- ---------- Income (loss) before extraordinary items.......... (3,895) (2,507) (3,612) (98,195) (36,996) (29,253) (15,174) Extraordinary gain (loss), net of tax(3).................... 183,784 (2,502) -------- -------- -------- ---------- ---------- ---------- ---------- Net income (loss)............. $ (3,895) ($ 2,507) $ (3,612) $ 85,589 $ (36,996) $ (31,755) $ (15,174) ======== ======== ======== ========== ========== ========== ========== Per share (loss) before extraordinary gains (loss)... (.29) (0.19) (.27) (306,859) (115,613) (91,416) (47,419) Per share income (loss) including extraordinary gain (loss)....................... (.29) (0.19) (.27) 267,466 (115,613) (99,234) (47,419) OTHER DATA: EBDIAT(4)..................... $ 22,585 22,556 $100,064 $ 106,030 $ 116,516 $ 105,613 $ 113,524 Depreciation and amortization under capital lease.......... 9,986 9,000 35,775 36,687 33,763 28,994 26,726 Amortization of intangibles and excess reorganization value........................ 3,910 3,846 15,612 15,711 15,547 15,120 15,637 Amortization of deferred financing fees and discount..................... 549 362 1,569 2,418 30,820 26,792 24,022 Capital expenditures.......... 7,631 7,354 32,566 40,887 29,018 44,938 49,478 Ratio of earnings to fixed charges(5)................... 1.00 1.52 Deficiency in the coverage of fixed charges by earnings before fixed charges......... (4,259) (2,202) (52,200) (41,301) (23,000) BALANCE SHEET DATA: Total assets.................. $922,013 885,886 $896,636 $ 867,680 $1,026,962 $1,086,457 $1,062,508 Working capital............... 114,291 98,909 91,727 82,440 (736,643)(6) (708,064)(6) 87,683 Cash and cash equivalents and time deposits................ 7,209 3,937 7,289 7,743 14,062 16,075 29,133 Net property, plant and equipment including those under capital lease.......... 472,792 455,172 470,338 455,554 452,401 476,604 421,269 Debt obligations: Short-term debt(7)........... 28,221 18,888 25,798 15,610 40,365 34,937 42,670 Long-term debt reclassified as current................. 758,300 792,557 Long-term debt............... 510,944 500,231 489,358 482,379 12,524 18,833 761,606 Stockholders' equity (deficit)(8)................. 134,010 133,057 135,349 135,000 (83,545) (40,303) (8,275)
- --------------- (1) Due to the implementation of the Plan of Reorganization and Fresh Start Reporting, financial statements including outstanding shares for the new restructured company (effective December 31, 1993) are not comparable to those of the prior years. (2) The 1992 amount includes $3,945 of fees and expenses associated with the renegotiation of debt. (3) Includes an extraordinary gain from the implementation of the Plan of Reorganization in 1993, and an extraordinary loss on debt extinguishment in 1991. (4) "EBDIAT" represents, for any relevant period, net income (loss) (except that extraordinary, unusual and non-recurring gains and losses are excluded) plus (i) net interest expense (including amortization of original issue discount and non-cash interest); (ii) provision for taxes; (iii) depreciation; (iv) amortization; and (v) other expense less other income, all determined in accordance with generally accepted accounting principles. (5) For purposes of these computations, the ratio of earnings to fixed charges has been calculated by dividing earnings by fixed charges. Earnings, as used to compute the ratio, equal the sum of income before income taxes, reorganization items and extraordinary items, and fixed charges excluding capitalized interest. Fixed charges are the total interest expenses including capitalized interest, amortization of debt expense and a rental factor that is representative of an interest factor (estimated to be one third of annual rent expense) on operating leases. (6) Includes $758,300 and $792,557 of long-term debt reclassified as current at December 31, 1992 and December 26, 1991, respectively. (7) Includes current portion of long-term debt. (8) The Company has never paid a cash dividend. 28 32 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's operations include food packaging products (Viskase and Sandusky) and disposable foodservice supplies (Clear Shield). The accompanying management's discussion and analysis of financial condition and results of operations should be read in conjunction with the following table:
THREE MONTHS ENDED DECEMBER 27, ---------------------- JANUARY 1 JANUARY 1, 1991 TO MARCH 30, MARCH 31, TO DECEMBER TO DECEMBER DECEMBER 31, 1995 1994 29, 1994 31, 1993 1992 --------- --------- ------------ ------------ ------------ (IN THOUSANDS) (IN THOUSANDS) (UNAUDITED) Net sales: Food packaging products................ $ 138,596 $ 126,864 $530,179 $522,363 $513,777 Disposable foodservice supplies........ 17,228 15,875 68,996 66,383 62,918 Other and eliminations................. (146) (146) (1,361) (990) --------- --------- -------- -------- -------- $ 155,824 $ 142,593 $599,029 $587,385 $575,705 ========= ======== ======== ======== ======== Operating income: Food packaging products................ $ 8,990 $ 10,153 $ 48,145 $ 53,432 $ 66,949 Disposable foodservice supplies........ 1,264 1,148 6,514 5,223 5,913 Other and eliminations................. (1,565) (1,591) (5,982) (5,023) (5,656) --------- --------- -------- -------- -------- $ 8,689 $ 9,710 $ 48,677 $ 53,632 $ 67,206 ========= ======== ======== ======== ======== Depreciation and amortization under capital lease and amortization of intangibles expense: Food packaging products................ $ 12,768 $ 11,499 $ 47,207 $ 46,715 $ 43,857 Disposable foodservice supplies........ 1,110 1,333 4,125 5,624 5,402 Corporate and other.................... 18 14 55 59 51 --------- --------- -------- -------- -------- $ 13,896 $ 12,846 $ 51,387 $ 52,398 $ 49,310 ========= ======== ======== ======== ======== Capital expenditures: Food packaging products................ $ 6,053 $ 6,638 $ 28,534 $ 37,673 $ 26,618 Disposable foodservice supplies........ 1,578 709 4,012 3,100 2,387 Corporate and other.................... 7 20 114 13 --------- --------- -------- -------- -------- $ 7,631 $ 7,354 $ 32,566 $ 40,887 $ 29,018 ========= ======== ======== ======== ========
RESULTS OF OPERATIONS Three Months Ended March 30, 1995 Compared to the Three Months Ended March 31, 1994 The Company's sales for the first three months of 1995 were $155.8 million, which represented an increase of 9.3% from the first three months of 1994. Net sales at Viskase increased due to the expansion of Latin American sales, selected sales price increases, strong worldwide film sales, combined with the favorable effects of foreign currency translation. Net sales at Clear Shield increased 8.5% from the prior year primarily due to selling price increases. Sandusky sales declined 21.2% due to losing the business of Scott Paper Company ("Scott"), a major purchaser of containers for its premoistened baby wipes, combined with reduced dairy and deli container sales. Operating income for the first three months of 1995 was $8.7 million, which represented a decline of $1 million from the first quarter of 1994. The decline in operating income in 1995 was due to the continued increase in resin prices, price competition in certain foreign markets coupled with additional selling, general 29 33 and administrative expenses resulting from strategic expansions in foreign markets, including Europe, Latin America and Australia and the decline in Sandusky's sales. First quarter 1995 net interest expense totaled $13.4 million, which represented an increase of $1.4 million from the first quarter of 1994. The increase was primarily the result of both increased borrowings and higher rates on the Company's term and revolving loan facilities, combined with additional amortization of deferred financing fees. The tax benefit in the first quarter of 1995 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 non-deductible amortization and foreign losses for which no tax benefit is provided, a benefit of $.2 million was provided on a loss before income taxes of $4.1 million. The U.S. tax benefit was recorded as a reduction of the deferred tax liability, and did not result in a refund of income taxes. Year Ended December 29, 1994 Compared to Prior Periods The Company's 1994 net sales were $599 million, which represented a 2.0% increase over the prior year's sales of $587.4 million. Net sales in 1994 for Viskase increased 2.5% over the prior year due to the impact of increased film sales and foreign currency translation. Sandusky's sales declined 8.1% due to the reduction in the baby wipe container sales partially offset by an increase in dairy and deli container volumes. Clear Shield's net sales increased 3.9% primarily due to the impact of third and fourth quarter price increases combined with some volume increases in the wrapped cutlery and retail product lines. Operating income for 1994 was $48.7 million, which represented a decline of $5.0 million from the prior year. Pro forma operating income for 1993, giving effect to fresh start reporting and the implementation of the Plan of Reorganization with the related financing as if such events had taken place on January 1, 1993, was $54.6 million. The decline in gross margin in 1994 was due to the impact of price competition in dairy and deli containers and in foreign markets, reduced baby wipe container sales and increased resin prices. Operating income in 1994 benefitted from a $9.5 million settlement of a patent infringement suit. Selling, general and administrative expenses in 1994 include $1.6 million of additional patent legal expenses, costs relating to the expansion in Central and South America, additional corporate costs relating to increased insurance and other costs associated with Envirodyne's status as a public company following its emergence from bankruptcy, as well as increased expenditures on research and development. In 1995 another competitor in small diameter casings entered the United States market. Management believes there will be some impact as a result of increased competition in this segment of the market, but has yet to determine its full extent. During 1993, Scott notified Sandusky of its intention to purchase containers from other suppliers, and the change was completed in September 1994. Sandusky closed its Clayton, Delaware facility, which was primarily dedicated to the production of baby wipe containers, in December 1994, and is consolidating its manufacturing operations at its Sandusky, Ohio facility. Net interest expense for 1994 totaled $49.2 million, which represented an increase of $18.9 million from 1993. The 1994 net interest expense includes $22.5 million of interest expense relating to the Company's 10 1/4% senior notes due 2001 (the "10.25% Notes") versus $1.3 million of interest expense for the first six days of 1993 on the Company's 14 1/2% Senior Discount Notes (amortization of discount), 14% Senior Subordinated Debentures, 13 1/2% Subordinated Notes and the 11 1/4% Pay-in-Kind Notes. As of January 7, 1993, interest expense on those debt issues was no longer recorded due to the Envirodyne bankruptcy case. The 1994 net interest expense benefitted from a lower effective interest rate on the Company's domestic term loan and revolving credit facility. Other income (expense) of $1.7 million and $(5.5) million in 1994 and 1993, respectively, included net foreign currency translation gains (losses) of $2.7 million and $(4.6) million, respectively. 30 34 The 1994 and 1993 tax provisions consisted of the provisions on income from the U.S. and foreign subsidiaries. Due to the permanent differences in the U.S. resulting from non-deductible reorganization expenses and amortization and foreign losses for which no tax benefit is provided, a provision of $4.8 million and $12.0 million, respectively, was provided on income (loss) before income taxes and extraordinary items of $1.2 million and $(86.2) million, respectively, for 1994 and 1993. The 1992 period effective tax benefit rate of 27% for income taxes resulted from the benefit of U.S. losses partially offset by the provision related to income from foreign subsidiaries. Domestic cash income taxes paid in 1994, 1993 and 1992 were $1,510,000, $91,000 and $2,027,000, respectively. Foreign cash income taxes paid in 1994, 1993 and 1992 were $3,548,000, $1,063,000 and $3,131,000, respectively. The 1993 reorganization items of $104.7 million consisted of $4.1 million for the write-off of deferred financing fees on the Company's bank credit agreement, $14.9 million for legal, financial advisory and other fees incurred in connection with the Envirodyne bankruptcy case and $85.7 million of adjustment to the fair value of assets and liabilities due to the reorganization and adoption of Fresh Start Reporting (see Note 1 of Notes to Consolidated Financial Statements). Fees and expenses of $3.9 million in 1992 associated with the renegotiation of the Company's debt consisted of legal, financial advisory and other fees. The 1993 extraordinary gain of $183.8 million results from the reorganization cancellation of indebtedness offset by the fair value of debt and equity issued and is net of a tax provision of $8.3 million. For a further discussion, see Note 1 of Notes to Consolidated Financial Statements. The Company's 1993 net sales were $587.4 million, which represented a 2.0% increase over the prior year's sales of $575.7 million. Net sales in 1993 for Viskase were comparable to the prior year. Sandusky's sales increased by 26.3% due to container volume increases resulting from the liquidation of a major competitor offset partially by the effects of intense price competition. Clear Shield's net sales increased 5.5% due to strong volumes across all major product lines offset partially by competitive price conditions. Operating income for 1993 was $53.6 million, which represented a decline of $13.6 million from the prior year. The decline in operating income resulted from intense price competition in containers and large diameter casings as well as price pressure in European, Latin American, Japanese and Canadian markets. The Company also recorded an additional $2 million of before tax expense for postretirement benefits due to the adoption on January 1, 1993 of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." For further discussion, see Note 10 of Notes to Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES On June 20, 1995, the Company completed the sale to certain institutional investors in a private placement of $160,000,000 aggregate principal amount of Old Notes, $151,500,000 of which bears interest at a rate of 12% per annum and $8,500,000 of which bears interest at a rate equal to the sum of 5.75% plus the six month London Interbank Offered Rate. The Company used the net proceeds of the offering primarily to repay the Company's $86.1 million domestic term loan facility and reduce the amount of the Company's revolving credit obligations by $68.3 million. See "Use of Proceeds" and "Capitalization." Concurrently with the sale of the Old Notes, the Company entered into the Revolving Credit Facility and the Letter of Credit Facility. The Notes and the obligations under the Revolving Credit Facility and the Letter of Credit Facility are guaranteed by the Company's significant domestic subsidiaries and secured by the Collateral Pool. Such guarantees and security are shared by the holders of the Notes and the holders of the obligations under the Revolving Credit Facility on a pari passu basis pursuant to an intercreditor agreement. Pursuant to such intercreditor agreement, the security interest of the holders of the obligations under the Letter of Credit Facility has priority over all other liens on the Collateral Pool. See "Description of Notes -- Collateral and Security" and "Description of Intercreditor Arrangements." The Company finances its working capital needs through a combination of cash generated through operations and borrowings under the Revolving Credit Facility. The availability of funds under the Revolving 31 35 Credit Facility is subject to the Company's compliance with certain covenants (which are substantially similar to those included in the Indenture), to borrowing base limitations measured by accounts receivable and inventory of the Company and to reserves which may be established in the discretion of the lenders. The available borrowing capacity under the Revolving Credit Facility was approximately $16 million at June 29, 1995. The Company anticipates that its operating cash flow will be sufficient to meet its operating expenses and to service its interest payments on the Notes and its other outstanding indebtedness. The Company will be required to satisfy its $80 million mandatory redemption obligation with respect to the Notes in 1999 and to pay the remaining principal amount of the Notes in 2000. Additionally, the Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company expects that in order to make these payments it will be required to pursue one or more alternative strategies, such as refinancing its indebtedness, selling additional equity capital, reducing or delaying capital expenditures, or selling assets. There can be no assurance that any of these strategies could be effected on satisfactory terms, if at all. Capital expenditures for the first quarter of 1995 and 1994 totaled $7.6 million and $7.4 million, respectively. Capital expenditures totaled $32.6 million during 1994. This represents an $8.3 million decrease from 1993 capital expenditure levels. The decreased level of capital expenditures in 1994 was principally related to the completion of both the second phase of the European expansion program and initial productive capacity investment program in Brazil during the prior year. In 1995 and future years, capital expenditures are expected to be approximately $30 million annually. The Company acquired the minority shareholder's interest in Viskase's Brazilian subsidiary for $4.2 million during the first quarter of 1994. The Company has spent approximately $12 million to $17 million annually on research and development programs, including product and process development, and on new technology development during each of the past three years, and the 1995 research and development and product introduction expenses are expected to be approximately $16 million. Among the projects included in the current research and development efforts is the application of certain patents and technology recently licensed by Viskase to the manufacture of cellulosic casings. The commercialization of these applications and the related fixed asset expense associated with such commercialization may require substantial financial commitments in future periods. 32 36 BUSINESS Envirodyne Industries, Inc. manufactures food packaging products and foodservice supplies through three primary operating subsidiaries -- Viskase, Sandusky and Clear Shield. Viskase is the leading producer of cellulosic casings used in preparing and packaging processed meat products and is a major producer of heat shrinkable plastic bags and specialty films for packaging and preserving fresh and processed meat products, poultry and cheeses. The Company is also a leading domestic and international manufacturer of plasticized polyvinyl chloride ("PVC") films, primarily for use in packaging food items. Through Sandusky, the Company is a producer of thermoformed and injection molded plastic containers, used in the packaging of cultured dairy and delicatessen products, and of horticultural trays and inserts. Finally, through Clear Shield, the Company is a major domestic producer of disposable plastic cutlery, drinking straws, custom dining kits and related products. On January 7, 1993, Envirodyne and certain of its subsidiaries (collectively, the "Debtors") filed petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the "Bankruptcy Court"). On December 31, 1993, the Debtors consummated a plan of reorganization (the "Plan of Reorganization") and emerged from bankruptcy. For additional information regarding the Plan of Reorganization, see Note 1 of Notes to Consolidated Financial Statements. VISKASE General Viskase developed the basic process for producing cellulosic casings and began commercial production in 1925. Since that time, Viskase has been the leading worldwide producer of cellulosic casings. In 1964 Viskase entered the specialty films business. Since then, it has continued to introduce new specialty films products to customers in the fresh and processed meat, poultry and cheese industries. Viskase also manufactures and sells PVC plastic film for wrapping fresh meats, poultry and other products. Cellulosic Casings Cellulosic casing products are used in the production of processed meat and poultry products, such as hot dogs, salami and bologna. To manufacture these products, meat is stuffed into the casings prior to smoking and cooking. The casings, which are non-edible, serve to hold the shape of the product during these processes. For certain products, such as hot dogs, the casings are removed and discarded prior to retail sale. Casings made of regenerated cellulose were developed by Viskase to replace casings made of animal intestines. Cellulosic casings generally afford greater uniformity, lower cost and greater reliability of supply. The production of regenerated cellulose casings generally involves three principal steps: production of a viscose slurry from wood pulp, extrusion of a continuous tube during the regeneration process, and "shirring" of the final product. Shirring is a highly technical process of folding or compressing the casing in tubular form for subsequent use in high-speed stuffing machines. The production of regenerated cellulose involves a complex and continuous series of chemical and manufacturing processes, and Viskase believes that its facilities and expertise in the manufacturing of extruded cellulose are important factors in maintaining its product quality and operating efficiencies. Viskase's product line includes both NOJAX(R) cellulosic casings for small sausage products such as hot dogs and paper-reinforced cellulosic casings for large sausages, salami, hams and other processed meat products. Reinforced cellulosic casings are known in the meat industry as fibrous casings. Specialty Film Products Since developing a technology for the extrusion of bioriented plastic films in 1964, Viskase has continued to expand its product line of heat shrinkable bags made from its specialty films. These shrinkable bags are sold under the brand name PERFLEX(R). Viskase's shrinkable plastic bags are used by major poultry, fresh and 33 37 processed meat and cheese producers to package and preserve their products during wholesale and retail distribution. Viskase produces single layer and multilayer heat shrinkable plastic bags. Single layer film bags are used primarily to protect fresh and frozen whole turkeys and chickens from moisture loss and handling damage. Multilayer film bags, referred to in the food industry as "barrier bags," are made of layers of coextruded films, each of which contributes a special property. For example, individual layers can provide mechanical strength or can reduce the transmission of moisture, oxygen or ultraviolet light and can protect bagged products, such as fresh meats, from weight loss and spoilage. As part of its service orientation, Viskase also provides graphic art and design services to its customers. Viskase's ability to print on the bags and films directly with designs, illustrations and text in up to eight colors further enhances the appeal of its customers' products. PVC and Other Film Products Viskase manufactures PVC stretch and single layer shrink films under the Filmco(R) brand name, used for wrapping grocery products and for packaging foods. In Europe, Viskase also converts oriented polypropylene films for use in packaging bakery goods and manufactures rigid food packaging materials made from oriented polystyrene. International Operations Viskase has seven manufacturing facilities located outside the continental United States, in Beauvais, France; Thaon, France; Lindsay, Ontario, Canada; Sedgefield, England (Great Britain); Swansea, Wales (Great Britain); Guarulhos, Brazil and Nuevo Laredo, Mexico. The aggregate of domestic exports and net sales of foreign operations represents approximately 42% of Viskase's total net sales. International sales and operations may be subject to various risks including, but not limited to, possible unfavorable exchange rate fluctuations, political instability, governmental regulations (including import and export controls), restrictions on currency repatriation, embargoes, labor relations laws and the possibility of governmental expropriation. Viskase's foreign operations generally are subject to taxes on the repatriation of funds. International operations in certain parts of the world may be subject to international balance of payments difficulties which may raise the possibility of delay or loss in the collection of accounts receivable from sales to customers in those countries. Viskase believes that its allowance for doubtful accounts makes adequate provision for the collectibility of its receivables. Management believes that growth potential exists for many of Viskase's products outside the United States and that Viskase is well positioned to participate in these markets. Sales and Distribution Viskase has a broad base of customers, with no single customer accounting for more than 5% of sales. Viskase sells its products in virtually every country in the world. In the United States, Viskase has a staff of technical sales representatives responsible for sales to fresh meat, processed meat and poultry producers. Approximately 50 distributors market Viskase products to customers in Europe, Africa, Asia, and Latin America. Its products are marketed through its own subsidiaries in the United Kingdom, Germany, France, Italy, Brazil, Mexico and Australia. In the United States, Viskase sells its PVC film products primarily to the retail grocery industry through packaging material distributors, food wholesalers and a direct sales force. Additionally the sales organization is supported by a technical service group. The United Kingdom operation sells directly and through distributors, primarily to the retail grocery and foodservice industries in Europe. 34 38 In the United States, Viskase operates casings service centers in Santa Fe Springs, California; Atlanta, Georgia; and Bensalem, Pennsylvania, as well as service centers within the Chicago, Illinois, and Pauls Valley, Oklahoma, plants. In Europe, Viskase operates casings service centers in Milan, Italy and Pulheim, Germany. Viskase also operates a service center in Brisbane, Australia. These service centers provide finishing, inventory and delivery services to Viskase customers. Competition Viskase is the world's leading producer of cellulosic casings and is a major producer of films. Viskase seeks to maintain a competitive advantage by introducing new products having superior performance characteristics over competitive products, by responding quickly to customer product requirements, by providing customers with assistance in production or formulation problems, by producing niche products to fill particular individual customer requirements, by providing technical support services to its customers and by manufacturing products having outstanding quality and performance. From time to time, Viskase experiences reduced market share or reduced profits due to price competition. Viskase's principal competitors in cellulosic casings are Teepak, Inc. and Viscofan, S.A. (located in Spain). Some of the other important competitors in the cellulosic casings industry are Kalle Niederlassung der Hoechst AG located in Germany; Wolff Walsrode AG, a wholly-owned subsidiary of Bayer AG, located in Germany; Oy Visko AB located in Finland; Celanese Mexicana located in Mexico; and Trificel located in Brazil. In the specialty films area, the largest producer of heat shrinkable bags is the Cryovac Division of W.R. Grace & Company. Cryovac developed heat shrinkable films and a vacuumizing process for applying them in the early 1960's. Cryovac sells bags on a worldwide basis to all segments of the food industry, including meat and poultry producers. American Can Company, a subsidiary of Pechiney Corp., is another competitor in the specialty films area. Management believes that Viskase is in the number two position in the world behind Cryovac in the sale of heat shrinkable bags. In the PVC films area, major competitors in the U.S. and Europe include Borden, Inc., Huntsman Film Products Corporation and Anchor Plastics, which may have substantially greater financial and other resources than those of the Company. Research and Development; Customer Support Viskase's continuing emphasis on research and development is central to its ability to maintain industry leadership. In particular, Viskase focuses on the development of new products that increase customers' operating efficiency, reduce their operating costs and expand their markets. Viskase's projects include development of new processes and products to improve its manufacturing efficiencies. Viskase's research scientists, engineers and technicians are engaged in continuing product and equipment development and also provide direct technical and educational support to its customers. Viskase founded its Food Science and Quality Institute (the "Institute") in 1941 to assist the meat and poultry industry in the development of new food items and more efficient production and packaging methods using Viskase products. The Institute's staff works closely with Viskase's sales and marketing professionals providing responsible, high-quality technical service to, and support of, Viskase customers. The Institute is able to reproduce customers' products and processes in order to help customers to solve their problems and to experiment with new foods and production techniques. The Institute conducts Meat Science Seminars that are attended by Viskase customers and production, research and quality assurance personnel, as well as food scientists from leading academic institutions. Seasonality Historically, domestic sales and profits of Viskase have been seasonal in nature, increasing in the spring and summer months and again near the year-end holiday season. Sales of specialty films to the fresh meat industry and sales outside of the United States follow a relatively stable pattern throughout the year. Sales of 35 39 PVC films experience only minor seasonality with sales generally increasing during the second and third quarters. Raw Materials Raw materials used by Viskase include cellulose (from wood pulp), fibrous paper, petroleum based resins, plasticizers and various other chemicals. Viskase generally purchases its raw materials from a single or small number of suppliers with whom it maintains good relations. Certain primary and alternative sources of supply are located outside the United States. Viskase believes, but there can be no assurance, that adequate alternative sources of supply currently exist for all of Viskase's raw materials or raw material substitutes that Viskase could modify its processes to utilize. SANDUSKY Sandusky is a leading producer of thermoformed and injection molded plastic containers, used in the packaging of cultured dairy and delicatessen products, and of horticultural trays and inserts. Sandusky sells a majority of its products to dairy product manufacturers for packaging items such as yogurt and cottage cheese and to supermarkets for in-store packaging of take-home foods. The containers are normally custom printed in various colors with product identification, company names, logos, nutritional information and universal product codes in accordance with the customers' requirements. Sandusky and its predecessors had been the principal supplier to Scott Paper Company ("Scott") of containers for its premoistened baby wipes. During 1993, Scott notified Sandusky of its intention to purchase containers from other suppliers, and the change was completed in September 1994. Sandusky closed its Clayton, Delaware facility, which was primarily dedicated to the production of baby wipe containers, in December 1994, and is consolidating its manufacturing operations at its Sandusky, Ohio facility. Sandusky sells directly to its dairy and non-food customers through its sales and marketing group. Delicatessen containers and horticultural products are sold both directly and through commissioned brokers. Sandusky markets its products primarily in the northeastern, southern and midwestern regions of the United States. Plastic container sales are somewhat seasonal in nature, with slightly higher delicatessen container sales in late spring and summer and higher dairy sales in the fourth quarter. All of Sandusky's thermoformed and injection molded products are produced at its two Sandusky, Ohio plants. Thermoforming is a process by which plastic resin pellets are melted and extruded into sheet stock, which is then heated and formed into finished containers, lids and trays. Injection molding is a process by which polypropylene and polyethylene pellets are melted and injected at high pressure into precision molds to produce a finished container. The principal raw materials used by Sandusky are prime high impact polystyrene, polypropylene and polyethylene resins, which currently are available from several domestic sources. The dairy and delicatessen containers industry is highly fragmented. Sandusky competes in the manufacture and sale of dairy and delicatessen containers with several domestic manufacturers of thermoformed and injection molded plastic containers. Major competitive factors in the dairy and delicatessen container business are price, quality and customer service. Major competitive factors in the specialized thermoformed container business are price and technical and customer service capabilities. CLEAR SHIELD Clear Shield, headquartered in Wheeling, Illinois, is a major domestic producer of disposable plastic cutlery, drinking straws, custom dining kits and related foodservice products. Clear Shield is one of the largest producers of plastic cutlery and drinking straws in the United States. These products are sold primarily to institutional users, comprising principally major fast-food restaurant chains, schools, and hospitals, and also to consumers through retail outlets. Sales are made under registered trade names including CLEAR SHIELD(R) and CARNIVAL(R). Institutional customers include such leading fast-food chains as McDonald's Corporation, Burger King Corporation, Taco Bell, Hardee's, KFC Restaurants and Pizza Hut. 36 40 Clear Shield's products are produced at plants in Wheeling, Illinois; Leominster, Massachusetts; and Shreveport, Louisiana. Plastic cutlery is made by melting polystyrene or polypropylene beads, which are then injected into specially designed custom molds within high-speed injection molding machines. Drinking straws are made by extruding molten polypropylene through specially designed dies within high-speed extrusion machines. Certain completed products are then specially wrapped using high-speed wrapping machines. Raw materials used in the manufacturing process currently are available from alternative sources. Raw material costs, in particular of polystyrene and polypropylene, are a major portion of Clear Shield's production costs. Although Clear Shield is generally able to pass on most raw material cost increases to customers, there can be a delay which varies by customer and market. Sales are made predominantly in the United States, primarily east of the Rocky Mountains, using Clear Shield's own sales force augmented by a network of non-exclusive, independent sales representatives. The majority of Clear Shield's sales, consisting of bulk and individually packaged products for institutional users, generally is not seasonal. Sales of retail packaged products are seasonal, however, with the highest sales and operating profits historically being achieved in the second and third quarters. While competitive pricing generally is of key importance, Clear Shield also competes by emphasizing responsive service to customers, by maintaining consistent quality in its products and by capitalizing on its efficient and flexible operations. These efficiencies stem largely from proprietary improvements to the manufacturing process, high-volume manufacturing facilities and a flexible work force that enable Clear Shield to produce and ship more than 50 million items per working day. Clear Shield's primary competitors include several major corporations, some of which are larger and better capitalized than Clear Shield and, in some cases, offer a wider product line than Clear Shield. Clear Shield's competitors periodically engage in aggressive price discounting to gain business. Clear Shield believes, however, that such market conditions will not result in any long-term material loss of business for Clear Shield, although its profit margins may be affected from time to time. EMPLOYEES The Company generally maintains productive and amicable relationships with its 4,900 employees worldwide. One of Viskase's domestic plants, located in Loudon, Tennessee, is unionized, and all of its Canadian and European plants have unions. From time to time union organization efforts have occurred at other individual plant locations. Unions represent a total of approximately 1,500 of Viskase's 4,000 employees. None of Clear Shield's approximate 525 employees is represented by a union. Certain of the hourly production personnel of Sandusky's Ohio thermoforming facility are members of a union. TRADEMARKS AND PATENTS Viskase holds patents on many of its major technologies, including those used in its manufacturing processes and the technology embodied in products sold to its customers. Because it believes its ongoing market leadership depends heavily upon its technology, Viskase vigorously protects and defends its patents against infringement by competitors on an international basis. Viskase, as part of its research and development program, has developed and expects to continue to develop new proprietary technology and has licensed proprietary technology from third parties. Management believes these activities will enable Viskase to maintain its competitive position. Viskase also owns numerous trademarks and registered tradenames that are used actively in marketing its products. Viskase periodically licenses its process and product patents to competitors to generate royalty income. The other Company operations also own trademarks and tradenames that are used actively in marketing products. Sandusky has patents on new product developments, but, with the exception of Viskase, patent protection is not currently material to any of the operations as now conducted. 37 41 RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred and, on a consolidated basis, totaled $16,852,000, $15,216,000 and $12,323,000 for 1994, 1993 and 1992, respectively. The majority of such costs are attributable to Viskase's extensive research and development program. Viskase believes it has achieved and maintained its position as a leading producer of cellulosic casings and as a major domestic producer of specialty films for packaging meats through significant expenditures on research and development. The Company expects to continue its research and development efforts. The commercialization of certain of these product and process applications and related capital expenditures to achieve commercialization may require substantial financial commitments in future periods. Should these activities be curtailed or if capital resources are not available to develop its projects, Viskase's ability to maintain its present market share could be materially impaired. ENVIRONMENTAL REGULATIONS In manufacturing its products, the Company employs certain hazardous chemicals and generates toxic and hazardous wastes. The use of these chemicals and the disposal of such waste is subject to stringent regulation by several governmental entities, including the United States Environmental Protection Agency ("USEPA") and similar state, local and foreign environmental control entities. The Company is subject to various environmental, health and safety laws, rules and regulations including those of the United States Occupational Safety and Health Administration and USEPA. These laws, rules and regulations are subject to amendment and to future changes in public policy or interpretation, which may affect the operations of the Company. The Company uses its best reasonable efforts to comply with promulgated laws, rules and regulations and participates in the rulemaking process. For several years prior to 1989, Viskase was involved in regulatory proceedings before the Illinois Pollution Control Board ("IPCB") in which the IPCB sought to adopt air pollution control requirements applicable to emissions of volatile organic material ("VOM") from sources located in the Chicago metropolitan area. The IPCB was required to adopt such regulations pursuant to provisions of the Clean Air Act requiring states to promulgate State Implementation Plans ("SIP's") providing for reduction of VOM emissions. Such regulations must require sources to control their emissions using "reasonably available control technology" ("RACT"). The IPCB ultimately adopted a RACT regulation for Viskase's Chicago facility that did not require installation of additional control technology and did not impose substantial compliance costs with respect to the facility. In addition, the USEPA proposed rules for controlling VOM emissions in the Chicago area on December 27, 1989. Viskase submitted extensive comments in response to the regulatory proposal. Among those comments was that the rules do not constitute RACT with respect to Viskase's Chicago facility. On June 29, 1990, the USEPA promulgated the rules in substantially the same form as had been proposed. For most sources, the "effective date" of the rule was July 30, 1990, and the compliance date was one year thereafter. Although the USEPA stated that the rules would apply to Viskase, it has extended the effective date of the rules for Viskase indefinitely to provide the USEPA with enough time to fully consider the rules as applied to Viskase. In 1991, pursuant to certain amendments to the federal Clean Air Act, the Illinois Environmental Protection Agency ("IEPA") proposed to the IPCB emissions control rules that were virtually identical to the federal regulations. Viskase submitted comments on the proposed rules that pointed out that the IPCB had previously adopted a site-specific rule for Viskase. Therefore, Viskase requested that the IPCB exempt Viskase from the proposed new rules. The IPCB granted Viskase's request and then submitted the proposed rules, which included an exemption for Viskase, to the USEPA for review. The USEPA subsequently commented on the proposed rules, but made no mention of the exemption for Viskase. The IPCB then promulgated the rules, including the exemption for Viskase. The final IPCB rules were submitted to the USEPA for its formal approval as part of the state's SIP. 38 42 During its technical review of the SIP, the USEPA objected to certain provisions of the Illinois rules and requested that the IEPA incorporate revisions. The revised rules, which the IPCB submitted to the USEPA in mid-1993, codify the stay as to the effective date and compliance date of the rules previously granted to Viskase. In late 1994, the USEPA proposed a revision to the federal implementation plan. The proposed USEPA rule would be virtually identical to the site-specific rule applicable to Viskase that was adopted by the IPCB, the only difference relating to monitoring requirements. Viskase believes that it can comply with the USEPA proposed rules, and submitted comments on the proposed rule urging its adoption. Viskase is optimistic that the proposed USEPA rule will be promulgated as proposed, although if the proposed rule is not adopted it is possible that USEPA action might result in significant costs at the Chicago facility or might result in significant changes in the operation of this facility. Management believes that this matter will be resolved without material impact on the Company and does not expect that any such costs or changes associated with the Chicago facility would have a material adverse effect on the consolidated financial statements of the Company. Certain of the Company's facilities are or may become potentially responsible parties with respect to off-site waste disposal facilities. The Economic Development Administration, an agency of the United States Department of Commerce ("EDA"), and the USEPA filed a proof of claim in the Envirodyne bankruptcy case relating to recovery of environmental response costs incurred or to be incurred in connection with certain real property located at 2701 East 106th Street, Chicago, Illinois, the former location (the "Site") of the operations of the subsidiaries of the Company constituting the former steel and mining segment. Navistar International Transportation Corp. ("Navistar Transportation"), which was the previous owner of the Site also filed a proof of claim in the Envirodyne bankruptcy case in an unspecified amount with respect to environmental liabilities at the Site. Envirodyne and Navistar Transportation have negotiated a definitive settlement agreement, subject to final approval by the EDA and USEPA, Bankruptcy Court approval and public comment pursuant to regulations applicable to EDA and USEPA, to settle the claims against Envirodyne through the payment of $5,000 to the USEPA and the issuance of 64,460 shares of Common Stock to Navistar Transportation. In the event that the settlement is not completed, Envirodyne believes that it has valid defenses to the claims and will continue its objections to the claims. To the extent that USEPA, EDA or Navistar Transportation were able to establish liability and damages as to their respective proofs of claim, such parties would receive Common Stock under the Plan of Reorganization in satisfaction of such claims. See Note 1 of Notes to Consolidated Financial Statements. As noted above, new environmental and health and safety laws can impose significant compliance costs, including two forthcoming rules. Under the Clean Air Act Amendments of 1990, various industries, including casings manufacturers, will be required to meet air emissions standards for certain chemicals based on use of the "maximum achievable control technology" ("MACT"). MACT standards for casings manufacture have not yet been proposed or promulgated; therefore, at this time no estimate of the cost of complying with MACT standards can be made. Such rules, however, will likely impose similar costs on all casings manufacturers in the United States. Under the Resource Conservation and Recovery Act ("RCRA"), regulations have been recently proposed that would, in some cases, impose additional effluent limitations on wastewater discharged from wastewater treatment systems employing surface impoundments. In addition, RCRA regulations to be proposed in the future may impose design and/or operating requirements on such impoundments. Two of Viskase's plants use surface impoundments. The Company is currently assessing the potential impact of the proposed regulations. Various state, local and foreign governments have enacted or are considering enacting laws, rules or regulations concerning the disposal of plastic products. While such legislative action has had a minor effect on certain product sales and may have further effect in the future, the Company is not aware of any existing legislative action that it currently expects to have a material adverse effect on the Company. 39 43 PROPERTIES Viskase facilities
LOCATION SQUARE FEET PRIMARY USE -------- ----------- ----------- Manufacturing Facilities Aurora, Ohio..................... 73,000 PVC film production Barceloneta, Puerto Rico......... 156,000 Idle plant facilities held for sale Beauvais, France (a)............. 235,000 Casings production and finishing Centerville, Iowa................ 223,000 Specialty films production and finishing Chicago, Illinois................ 991,000 Casings production, administration and research Guarulhos, Brazil................ 81,000 Specialty films production and casings finishing Huntsville, Alabama.............. 27,000 Idle plant facilities held for sale Kentland, Indiana................ 125,000 Casings finishing Lindsay, Ontario, Canada......... 269,000 Casings finishing and specialty films finishing Loudon, Tennessee................ 250,000 Casings production Nuevo Laredo, Mexico (a)......... 22,000 Casings finishing Osceola, Arkansas................ 223,000 Casings production and finishing Pauls Valley, Oklahoma........... 110,000 Casings finishing, specialty films production and finishing Sedgefield, England.............. 132,000 PVC and rigid OPS production and OPP conversion Swansea, Wales (Great Britain)... 77,000 Specialty films production and finishing Swansea, Wales (a)............... 28,000 Administrative facilities Thaon, France.................... 239,000 Casings production and finishing Service Centers Atlanta, Georgia (a) Bensalem, Pennsylvania Brisbane, Australia (a) Chicago, Illinois Milan, Italy Pauls Valley, Oklahoma Pulheim, Germany (a) Santa Fe Springs, California Headquarters Worldwide: Chicago, Illinois Europe: Paris, France (a)
- ------------------------- (a) Leased. All other properties are owned by the respective company or its subsidiaries. Clear Shield facilities
LOCATION SQUARE FEET PRIMARY USE -------- ----------- ------------ Leominster, Massachusetts........ 135,000 Cutlery, straws and combination kits Shreveport, Louisiana............ 148,000 Cutlery, straws and combination kits Wheeling, Illinois (two plants)....................... 260,000 Cutlery, straws and combination kits; Headquarters
Sandusky facilities
LOCATION SQUARE FEET PRIMARY USE -------- ----------- ------------ Sandusky, Ohio................... 195,000 Manufacturing; Headquarters Sandusky, Ohio................... 31,000 Warehouse Sandusky, Ohio (a)............... 97,000 Warehouse Sandusky, Ohio (a)............... 90,000 Manufacturing Clayton, Delaware (a)............ 81,000 Vacant (lease expires October 1995)
- ------------------------- (a) Leased. All other properties are owned by the respective company or its subsidiaries. 40 44 The Company's headquarters are located in leased facilities in Oak Brook, Illinois. The Company believes that its properties generally are suitable and adequate to satisfy the Company's present and anticipated needs. The United States real property owned by the Company are included in the Collateral Pool. LEGAL PROCEEDINGS Lumpkin Litigation On February 17, 1989, a complaint was filed against Envirodyne in the United States District Court for the Northern District of Illinois ("District Court") by a plaintiff class consisting of former union employees of WSC Corp. ("WSC"). WSC was a wholly-owned subsidiary of EDC Holding Company ("EDC") whose operations consisted of the former steel and mining segment (SMD) of Navistar International Corp. ("Navistar"). EDC, then a wholly-owned subsidiary of Envirodyne, acquired SMD from Navistar in 1977 and transferred the SMD assets to WSC and to other wholly-owned subsidiaries of EDC. In 1980, EDC and WSC filed voluntary bankruptcy petitions and halted operations. The plaintiffs are seeking to recover from Envirodyne certain pension and other benefits allegedly owed by WSC under a collective bargaining agreement to which WSC (but not Envirodyne) was a party. The complaint seeks to hold Envirodyne directly liable for these benefits on an alter ego theory of liability. The plaintiffs seek (1) damages under the WSC 1977-1980 collective bargaining agreement of $80 million to $100 million (less the amount of the plaintiffs' $14.8 million received in settlement of litigation with Navistar), (2) unspecified equitable relief under ERISA Section 502, and (3) other compensatory damages and punitive damages, unspecified in amount, under ERISA Section 502 and Section 301 of the Labor Management Relations Act. After the bankruptcy of EDC and WSC, the same plaintiff class now suing Envirodyne brought suit against Navistar for recovery of the same benefits now claimed against Envirodyne. In determining whether a settlement agreement in the Navistar case released Envirodyne from the liabilities asserted, the United States Court of Appeals for the Seventh Circuit ("Court of Appeals") held that the interpretation of the settlement agreement would require lower court findings of fact with respect to the parties' intent in entering into the settlement agreement. In addition, the Court of Appeals commented on the legal principles that would be applicable to the plaintiffs' alter ego claim. While the Court of Appeals observed that concerns for corporate form should be secondary to the congressional intent of ERISA to provide for pension benefits, the Court proceeded to note that to be successful the plaintiffs must establish the presence of two factors: firstly, that there was a unity of interest and ownership such that the separate corporate identities of Envirodyne and the two subsidiaries no longer existed; and, secondly, that recognition of separate corporate existence would sanction a fraud or promote injustice. The Lumpkin litigation was stayed by the commencement of the Envirodyne bankruptcy case in January 1993. Envirodyne and the plaintiffs are currently participating in a District Court mediation process to attempt to resolve the case. Because the claims relating to the Lumpkin litigation arose prior to the commencement of the Envirodyne bankruptcy case, such claims are subject to the Plan of Reorganization. Accordingly, to the extent that the plaintiffs in the Lumpkin litigation were able to establish liability and damages, the plaintiffs would under the Plan of Reorganization receive Common Stock in satisfaction of such damages. For a description of the amount of Common Stock to which Envirodyne general unsecured creditors were generally entitled, see Note 1 of Notes to Consolidated Financial Statements. Therefore, although the Company denies liability in the Lumpkin litigation, and in the absence of successful mediation or other settlement negotiations will continue to vigorously defend the case, an adverse finding of liability and damages in the case could result in substantial dilution to the holders of the Common Stock. Indemnification Claims Litigation has been initiated with respect to events arising out of the Envirodyne bankruptcy case and the 1989 acquisition of Envirodyne by Emerald Acquisition Corporation ("Emerald") with respect to which, although Envirodyne is not presently a party to such litigation, certain defendants have asserted indemnity rights against Envirodyne. 41 45 In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy, James L. Massey, William Rifkind and Michael Zimmerman, Case No. 93 A 1616, United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, ARTRA Group Incorporated ("ARTRA") alleges breach of fiduciary duty and tortious inference in connection with the negotiation and consummation of the Plan of Reorganization. In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael Zimmerman, Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois, ARTRA alleges negligence, breach of fiduciary duty, fraudulent misrepresentation and deceptive business practices in connection with the 1989 acquisition of Envirodyne by Emerald. The plaintiff seeks damages in the total amount of $136,200,000 plus interest and punitive damages of $408,600,000. D.P. Kelly & Associates, L.P. and Messrs. Kelly, Bobrinskoy, Massey, Rifkind and Zimmerman have asserted common law and contractual rights of indemnity against Envirodyne for attorneys' fees, costs and any ultimate liability relating to the claims set forth in the complaints. Envirodyne is continuing its evaluation of the merits of the indemnification claims against Envirodyne and the underlying claims in the litigation. Upon the undertaking of D.P. Kelly & Associates, L.P. to repay such funds in the event it is ultimately determined that there is no right to indemnity, Envirodyne is advancing funds to D.P. Kelly & Associates, L.P. and Mr. Kelly for the payment of legal fees in the case pending before the Bankruptcy Court. Although the case is in a preliminary stage and the Company is not a party thereto, the Company believes that the plaintiff's claims raise similar factual issues to those raised in the Envirodyne bankruptcy case which, if resolved in a manner similar to that in the Envirodyne bankruptcy case, would render it difficult for the plaintiff to establish liability. Accordingly, the Company believes that the indemnification claims would not have a material adverse effect upon the business or financial position of the Company, even if the claimants were successful in establishing their right to indemnification. Treatment of Untendered Shares Under Plan of Reorganization Certain of Envirodyne's stockholders prior to the acquisition of Envirodyne by Emerald failed to exchange their certificates representing old Envirodyne common stock for the $40 per share cash merger consideration specified by the applicable acquisition agreement. In the Envirodyne bankruptcy case, Envirodyne is seeking to equitably subordinate the interests of the holders of untendered shares, in which event such holders would receive no distribution pursuant to the Plan of Reorganization. The Bankruptcy Court granted Envirodyne's motion for summary judgment to equitably subordinate the holders of untendered shares. The United States District Court for the Northern District of Illinois has affirmed the Bankruptcy Court's summary judgment. If such holders were nonetheless ultimately successful in a further appeal of this matter, Envirodyne believes that the maximum number of shares of Common Stock that it would be required to issue to such claimants is approximately 106,000. 42 46 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The directors and executive officers of the Company are as follows:
NAME AGE POSITION ---- --- -------- Donald P. Kelly........................... 73 Chairman of the Board, President and Chief Executive Officer and Director F. Edward Gustafson....................... 53 Executive Vice President, Chief Operating Officer and Director J. S. Corcoran............................ 52 Executive Vice President and Chief Financial Officer Stephen M. Schuster....................... 39 Vice President, Secretary and General Counsel Gordon S. Donovan......................... 41 Vice President and Treasurer Robert N. Dangremond...................... 52 Director Avram A. Glazer........................... 34 Director Malcolm I. Glazer......................... 66 Director Michael E. Heisley........................ 58 Director Gregory R. Page........................... 43 Director Mark D. Senkpiel.......................... 42 Director
Donald P. Kelly. Mr. Kelly has been Chairman of the Board, President and Chief Executive Officer of the Company since May 1989. Mr. Kelly has also served as President and Chief Executive Officer of D.P. Kelly & Associates, L.P. ("DPK"), a management services and private investment firm, since November 1988. Previously, Mr. Kelly was Chairman of Beatrice Company; Chairman and Chief Executive Officer of E-II Holdings Inc.; Chairman and Chief Executive Officer of BCI Holdings Corporation; President of Kelly, Briggs & Associates; and Chairman, President and Chief Executive Officer of Esmark, Inc. Mr. Kelly has served as a director of the Company since 1989. F. Edward Gustafson. Mr. Gustafson has been Executive Vice President and Chief Operating Officer of the Company since May 1989. Mr. Gustafson was President of Viskase Corporation, a wholly-owned subsidiary of the Company, from February 1990 to August 1994. Mr. Gustafson has also served as Executive Vice President and Chief Operating Officer of DPK since November 1988. Mr. Gustafson previously held the positions of Vice President of Beatrice Companies, Inc.; President of E-II Food Specialties Inc.; Executive Vice President of Beatrice U.S. Food Inc.; and President of the Consumer Healthcare Division of Miles Inc. Mr. Gustafson has served as a director of the Company since 1993. J. S. Corcoran. Mr. Corcoran has been Executive Vice President and Chief Financial Officer of the Company since May 1989. Mr. Corcoran has also served as Executive Vice President and Chief Financial Officer of DPK since November 1988. Stephen M. Schuster. Mr. Schuster has been Vice President, Secretary and General Counsel of the Company since May 1989. Mr. Schuster has also served as Vice President and General Counsel of DPK since January 1989. Gordon S. Donovan. Mr. Donovan has been Treasurer of the Company since November 1989 and was elected as Vice President in May 1995. Robert N. Dangremond. Mr. Dangremond has been a principal with Jay Alix & Associates, a consulting and accounting firm specializing in corporate restructurings and turnaround activities, since August 1989. Mr. Dangremond was Chairman of the Board, President and Chief Executive Officer of AM International, Inc., a provider of graphics arts equipment, supplies and services, from February 1993 to September 1994. From 1981 through 1989, Mr. Dangremond was the Chief Financial Officer and Treasurer of the Leach & 43 47 Garner Company. Mr. Dangremond is also a director of Standard Brands Paint Company, a manufacturer and retailer of paints and related items, Barry's Jewelers, a jewelry retailer, and AM International, Inc. Mr. Dangremond has served as a director of the Company since 1993. Avram A. Glazer. Mr. Avram A. Glazer has been employed by and worked on behalf of, Malcolm I. Glazer and a number of entities owned and controlled by Malcolm I. Glazer, for more than the past nine years, with his principal responsibilities including identifying, implementing, monitoring and disposing of Malcolm I. Glazer's investment interests, including serving as a Vice President of First Allied Corporation ("First Allied"), an investment company, since 1985. He has served as the President and Chief Executive Officer of Zapata Corporation ("Zapata"), a natural gas company, since March 1995. He is also a director of Zapata. He also serves as a director of Houlihan's Restaurant Group, Inc. ("Houlihan's"), a restaurant holding company, and Specialty Equipment Companies, Inc. ("Specialty"), a restaurant equipment manufacturer. Avram A. Glazer is the son of Malcolm I. Glazer, who is a member of the Board of Directors, and has served as a director of the Company since May 1995. Malcolm I. Glazer. Mr. Malcolm I. Glazer has been a self-employed private investor, whose diversified portfolio consists of investments in television broadcasting, restaurants, health care, banking, real estate, stock and corporate bonds, for more than the past nine years. He has been President and Chief Executive Officer of First Allied since 1984. He is Chairman of the Board of Zapata and Chairman of the Board of Houlihan's. He also serves as a director of Specialty. Malcolm I. Glazer is the father of Avram A. Glazer, who is a member of the Board of Directors, and has served as a director of the Company since May 1995. Michael E. Heisley. Mr. Heisley has for more than five years been the Chief Executive Officer of Heico Acquisitions, through which Mr. Heisley has interests in various manufacturing companies. Mr. Heisley is also a director of Capsonic Group, Inc.; Pettibone Corporation; Heico, Inc.; Davis Wire Corp.; Tom's Foods, Inc.; Robertson CECO, Inc.; and Nutri/System, Inc. Mr. Heisley has served as a director of the Company since 1993. Gregory R. Page. Mr. Page has been President of North American Beef Operations of Cargill, Inc., a multi-national trader and processor of foodstuffs and other commodities, since February 1992, and has prior thereto held various other positions with Cargill, Inc. Mr. Page has served as a director of the Company since 1993. Mark D. Senkpiel. Mr. Senkpiel has for more than five years been Investment Director of the Investment Management Division of Allstate Life Insurance Company. Mr. Senkpiel has served as a director of the Company since 1993. On January 7, 1993, Envirodyne and its major domestic subsidiaries filed petitions under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On December 31, 1993, Envirodyne and the debtor subsidiaries consummated a plan of reorganization and emerged from bankruptcy. Mr. Dangremond was appointed Chairman of the Board, President and Chief Executive Officer of AM International, Inc. ("AMI") in connection with turnaround consulting services provided to AMI by Jay Alix & Associates, of which Mr. Dangremond is a principal. On May 17, 1993, AMI filed a petition under Chapter 11 of the Bankruptcy Code. On September 29, 1993, a plan of reorganization was confirmed with respect to AMI. 44 48 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Compensation of Directors. Each director who is not an officer of the Company received an annual retainer of $20,000 in 1994 and a fee of $1,000 for each attended meeting of the Board of Directors. Chairmen of committees of the Board of Directors received an annual retainer of $1,500 in 1994. Directors also received a fee for each attended meeting of a committee of the Board of Directors of $1,000 ($500 in the case of committee meetings occurring immediately before or after meetings of the full Board of Directors). Directors who are officers of the Company do not receive compensation in their capacity as members of the Board of Directors. On May 10, 1995 (the date of the Company's annual meeting of stockholders), each non-employee director of the Company received non-qualified stock options to purchase 2,000 shares of Common Stock at an option exercise price equal to the fair market value of a share of Common Stock on the date of grant in accordance with the terms of the 1993 Stock Option Plan. Pursuant to such Plan, on the date of each subsequent annual meeting of stockholders, non-employee directors will automatically be granted non-qualified options to purchase 1,000 shares of Common Stock at an option exercise price equal to the fair market value of a share of Common Stock on the date of grant. The Board of Directors has established the following standing committees: Audit Committee. The principal responsibilities and authority of the Audit Committee are to review and recommend to the Board of Directors the selection of the Company's independent accountants; to review with the independent accountants the scope and results of the annual audit engagement and the system of internal accounting controls; and to direct and supervise special audit inquiries. The current members of the Audit Committee are Michael E. Heisley, Chairman, and Mark D. Senkpiel. Compensation and Nominating Committee. The principal responsibilities and authority of the Compensation and Nominating Committee are to review and approve certain matters involving executive compensation; to review and approve grants of stock options and stock appreciation rights under the Company's incentive plans; to review and recommend adoption of or revisions to compensation plans and policies; and to review and make recommendations to the Board of Directors regarding such matters as the size and composition of the Board of Directors, criteria for director nominations, director candidates and such other related matters as the Board of Directors may request from time to time. The current members of the Compensation and Nominating Committee are Robert N. Dangremond, Chairman, and Gregory R. Page. The Board of Directors may from time to time establish other committees to assist it in the discharge of its responsibilities. Compensation Committee Interlocks and Insider Participation. The Compensation and Nominating Committee of the Board of Directors consists of Messrs. Dangremond and Page, each of whom is a non-employee director of the Company. Mr. Page is the President of North American Beef Operations of Cargill, Inc. In fiscal 1994, Viskase had sales of $14,779,000 made in the ordinary course and on arm's-length terms to Cargill, Inc. and its affiliates. Cargill Financial Services Corporation is the beneficial owner of 10.1% of the Company's outstanding Common Stock. 45 49 Summary of Cash and Certain Other Compensation of Executive Officers. The Summary Compensation Table below provides certain summary information concerning cash compensation paid by the Company during 1994, 1993 and 1992 for services rendered by the Company's Chief Executive Officer and each of the other executive officers of the Company serving at the end of the last completed fiscal year whose total annual salary and bonus exceeded $100,000 in 1994. For additional information, including a description of the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Company and DPK, see "Certain Relationships and Related Transactions." SUMMARY COMPENSATION TABLE
LONG-TERM ANNUAL COMPENSATION COMPENSATION --------------------------------- AWARDS OTHER ANNUAL ------------ ALL OTHER NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION PRINCIPAL POSITION YEAR ($) ($) $(1) (#)(2) ($)(3) - -------------------------------- ---- ------- ------ ------------ ------------ ------------ Donald P. Kelly................. 1994 450,000 -- 48,125 -- 472 Chairman of the Board, President 1993 450,000 -- -- -- 472 and Chief Executive Officer 1992 450,000 -- 202,771 -- 469 F. Edward Gustafson............. 1994 390,000 -- 61,496 -- 16,203 Executive Vice President and 1993 390,000 -- 110,370 -- 10,976 Chief Operating Officer 1992 390,000 -- 140,503 -- 9,724 J. S. Corcoran.................. 1994 390,000 -- 78,072 -- 472 Executive Vice President 1993 390,000 -- 85,186 -- 472 and Chief Financial Officer 1992 390,000 -- 81,287 -- 469 Stephen M. Schuster............. 1994 151,375 63,261 -- 22,850 6,197 Vice President, Secretary 1993 144,750 47,406 -- -- 6,320 and General Counsel(4) 1992 138,125 46,437 -- -- 6,136
- ------------------------- (1) In 1994 and 1992 Mr. Kelly was reimbursed for personal travel expenses in the amounts of $40,500 and $193,579, respectively. In 1994 and 1993 Mr. Gustafson was reimbursed $33,503 and $31,543, respectively, for payment of income taxes (gross ups) on certain benefits and in 1993 had personal use of a Company auto at an aggregate incremental cost to the Company of $50,000. In 1992 Mr. Gustafson was reimbursed for personal travel expenses in the amount of $86,291. In 1994 Mr. Corcoran was reimbursed $30,092 for payment of income taxes (gross ups) on certain benefits. In 1994 and 1993 Mr. Corcoran had personal use of a Company auto at an aggregate incremental cost to the Company of $30,861 and $33,000, respectively. Mr. Corcoran was reimbursed for personal travel expenses in the amounts of $30,780 and $33,870 in 1993 and 1992, respectively. (2) Incentive stock options were granted on May 27, 1994 under the 1993 Stock Option Plan. (3) All Other Compensation consists primarily of the Company's contributions pursuant to defined contribution plans. In 1994, Mr. Gustafson and Mr. Schuster received $12,750 and $5,963, respectively, with respect to such Company contributions. (4) Mr. Schuster is eligible for payments under the Envirodyne Management Incentive Plan. Bonus payments are determined based upon the Company's overall financial performance and the individual's performance. Cash bonuses under the Management Incentive Plan are earned with respect to the year indicated and paid in the following year. 46 50 Stock Option Grants. The following table provides information concerning the grant of stock options to Mr. Schuster under the Company's 1993 Stock Option Plan during fiscal 1994. Messrs. Kelly, Gustafson and Corcoran are not eligible to participate in the 1993 Stock Option Plan. No stock appreciation rights ("SARs") have been granted under the 1993 Stock Option Plan. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED PERCENT OF ANNUAL NUMBER OF TOTAL RATES OF STOCK PRICE SECURITIES OPTIONS APPRECIATION FOR UNDERLYING GRANTED TO OPTION OPTIONS EMPLOYEES EXERCISE OR TERM(3) GRANTED IN FISCAL BASE PRICE EXPIRATION -------------------- NAME (#)(1) YEAR ($/SHARE)(2) DATE 5%($) 10%($) - ----------------------------- ---------- ---------- ------------ ---------- ------ ------- Stephen M. Schuster.......... 22,850 5.7% 5.0625 05/27/04 72,749 184,361
- ------------------------- (1) This grant provided that one-third of the options would become exercisable on the first anniversary of the date of grant and an additional one-third of the options would become exercisable on the second and third anniversaries, respectively, of the date of grant, subject to the acceleration of exercisability upon the occurrence of certain events. Such an acceleration event occurred in November 1994. (2) Exercise price is equal to the market value of the Common Stock on the grant date, calculated as the average of the closing bid and asked prices on such date as reported on the National Association of Securities Dealers Automated Quotation System. (3) The potential realizable value is based on the term of the option at the date of grant (10 years). It is calculated by assuming that the stock price on the date of grant appreciates at the indicated annual rate, compounded annually for the entire term, and that the option is exercised and sold on the last day of the option term for the appreciated stock price. These amounts represent certain assumed rates of appreciation only. Actual gains, if any, on stock option exercises and on the sale of shares of Common Stock acquired upon exercise are dependent on the future performance of the Common Stock and overall stock market conditions. There can be no assurance that the amounts reflected in this table will be achieved. Stock Option Exercises and Holdings. The following table provides information concerning the exercise of options by Mr. Schuster during the last fiscal year and the value of unexercised options held as of December 29, 1994. Messrs. Kelly, Gustafson and Corcoran are not eligible to participate in the 1993 Stock Option Plan. No SARs have been granted under the 1993 Stock Option Plan. AGGREGATED OPTION EXERCISES IN 1994 AND DECEMBER 29, 1994 OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF SHARES UNEXERCISED UNEXERCISED ACQUIRED OPTIONS AT OPTIONS AT ON VALUE 12/29/94(#) 12/29/94($) EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/ NAME (#) ($) UNEXERCISABLE(1) UNEXERCISABLE - --------------------------------------------- -------- -------- ---------------- ------------- Stephen M. Schuster.......................... -- -- -0-/22,850 -0-/-0-
- ------------------------- (1) The grant of these options provided that one-third of the options would become exercisable on the first anniversary of the date of grant and an additional one-third of the options would become exercisable on the second and third anniversaries, respectively, of the date of grant, subject to the acceleration of exercisability upon the occurrence of certain events. Such an acceleration event occurred in November 1994. Upon approval of the 1993 Stock Option Plan by the stockholders of the Company in May 1995, these options became exercisable. 47 51 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS DPK currently provides corporate management services to the Company under the Amended Management Services Agreement. The initial term of the Amended Management Services Agreement expires December 31, 1995. After the initial term, the Amended Management Services Agreement extends for successive one-year periods unless otherwise canceled upon one year's prior notice. The Amended Management Services Agreement may be terminated at any time by the Company with a severance payment equal to 12 months' compensation thereunder. The Amended Management Services Agreement provides for the payment of $2,000,000, payable in management fees and salaries, the reimbursement of expenses and the payment of an annual bonus of up to $1,000,000 tied to the Company's earnings in comparison to the projections set forth in the disclosure statement relating to the Plan of Reorganization. For each of fiscal 1994, 1993 and 1992, the Company paid DPK $770,000 for management services. In each of these years, Messrs. Kelly, Gustafson and Corcoran, executive officers and limited partners in DPK, received directly from the Company combined annual salaries of $1,230,000 as executive officers of the Company. In fiscal 1994, 1993 and 1992, the Company made payments of $560,000, $354,000 and $681,000, respectively, to an affiliate of DPK for the use of a jet aircraft on an as-needed basis. The usage charge is based upon an hourly rate comparable to that which would be charged by a non-affiliated company for use of a chartered corporate aircraft. During fiscal 1994, 1993 and 1992, the Company purchased products in the ordinary course and on arm's-length terms from affiliates of DPK in the amounts of $1,367,000, $941,000 and $285,000, respectively. During fiscal 1994, 1993 and 1992, the Company sublet office space from DPK for which it paid $151,000, $150,000 and $150,000, respectively, in rent. The rent is comparable to that which would be charged to a non-affiliated company for use of this office space. In connection with the litigation described under "Business -- Legal Proceedings -- Indemnification Claims," DPK and Mr. Kelly have asserted common law and contractual rights of indemnity against the Company for attorneys' fees, costs and any ultimate liability relating to the claims set forth in the complaints. During fiscal 1994, the Company advanced a total of $118,000 to DPK and Mr. Kelly with respect to the defense costs in the bankruptcy court proceeding described therein, based upon DPK's undertaking to repay such funds in the event it is ultimately determined that DPK is not entitled to indemnification. In fiscal 1994 and 1993, Viskase had sales of $14,779,000 and $13,030,000, respectively, to Cargill, Inc. and its affiliates. Such sales were made in the ordinary course and on arm's-length terms. Cargill Financial Services Corporation is the beneficial owner of 10.1% of the Company's outstanding Common Stock, and Gregory R. Page, President of North American Beef Operations of Cargill, Inc., is a director of the Company. SECURITY OWNERSHIP The following table and notes set forth as of July 1, 1995 the beneficial ownership, as defined by the regulations of the Commission, of Common Stock held by (a) each person or group of persons known to the Company to beneficially own more than 5% of the outstanding shares of Common Stock, (b) each director of the Company, (c) each executive officer of the Company listed in the Summary Compensation Table above and (d) all executive officers and directors of the Company as a group. All information is taken from or based upon ownership filings made by such persons with the Commission or upon information provided by such persons to the Company.
AMOUNT OF NATURE OF BENEFICIAL PERCENT NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS ------------------------------------- ------------------- -------- Malcolm I. Glazer........................................ 4,191,298(1) 31.0% The Malcolm I. Glazer Trust 1482 South Ocean Boulevard Palm Beach, Florida 33480 Donald P. Kelly.......................................... 1,760,665(2)(3) 12.9% 701 Harger Road, Suite 190 Oak Brook, Illinois 60521
48 52
AMOUNT OF NATURE OF BENEFICIAL PERCENT NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS - --------------------------------------------------------- ------------------- -------- IDS Financial Corporation................................ 1,514,825(4) 11.2% IDS Tower 10 Minneapolis, Minnesota 55440 Cargill Financial Services Corporation................... 1,363,343(5) 10.1% 6000 Clearwater Drive Minnetonka, Minnesota 55343 F. Edward Gustafson...................................... 1,087,066(3)(6) 8.0% 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 J. S. Corcoran........................................... 1,007,752(3)(7) 7.5% 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 James D. Bennett......................................... 973,529(8) 7.2% Restructuring Capital Associates L.P. 450 Park Avenue New York, New York 10022 Robert N. Dangremond..................................... 4,000 * Avram A. Glazer.......................................... 2,000 * Michael E. Heisley....................................... 2,000 * Gregory R. Page.......................................... 4,000 * Stephen M. Schuster...................................... 39,944(9) * Mark D. Senkpiel......................................... 4,000 * All directors and executive officers of the Company as a group (11 persons)................................ 6,094,267(1)(2)(3) (6)(7)(9)(10) 44.6%
- ------------------------- * Less than 1% (1) The shares are owned by the Malcolm I. Glazer Trust (the "Glazer Trust"), with respect to which Mr. Glazer is the sole trustee and, during his lifetime, the sole beneficiary. The Company has been informed that on June 16, 1995, the Glazer Trust entered into a letter of intent ("Letter of Intent") with Zapata Corporation ("Zapata") which contemplates the sale of all of the Glazer Trust's 4,189,298 shares of Common Stock of the Company to Zapata. Malcolm I. Glazer is Chairman of Zapata's Board of Directors and Avram A. Glazer is the Chief Executive Officer and a director of Zapata. The transaction contemplated by the Letter of Intent is subject to the execution of a definitive purchase agreement which will include customary conditions. The transaction is also subject to the approval of a special committee of disinterested directors formed by Zapata's Board of Directors to evaluate the transaction and the receipt of a fairness opinion from an investment banking firm that the transaction is fair and reasonable to Zapata and its stockholders from a financial point of view. (2) The ownership indicated includes 181,266 shares owned by Mr. Kelly directly and 462,012 shares owned by 701 Partners L.P., an Illinois limited partnership of which Mr. Kelly is the general partner. The address of 701 Partners L.P. is 701 Harger Road, Suite 190, Oak Brook, Illinois 60521. 701 Partners also owns 111,658 warrants ("Warrants") to purchase Common Stock at an exercise price of $17.25 per share, which are assumed to have been exercised for purposes of disclosing the ownership indicated. (3) The ownership indicated includes 62,434 shares owned by D.P. Kelly & Associates, L.P. ("DPK") of which Messrs. Corcoran, Gustafson and Kelly are principals and officers. The general partner of DPK is C&G Management Company, Inc. ("C&G Management"), which is owned by Messrs. Corcoran, Gustafson and Kelly. The address of DPK and C&G Management is 701 Harger Road, Suite 190, Oak 49 53 Brook, Illinois 60521. DPK also owns 4,105 Warrants, which are assumed to have been exercised for purposes of disclosing the ownership indicated. The ownership indicated includes 939,190 shares owned by Volk Enterprises, Inc. ("Volk"), whose address is 1230-1232 South Avenue, Turlock, California 95380. Volk is controlled by Volk Holdings L.P. ("Volk Holdings"), whose general partner is Wexford Partners I L.P. ("Wexford Partners"). The general partner of Wexford Partners is Wexford Corporation ("Wexford Corp."), which is owned by Messrs. Corcoran, Gustafson and Kelly. The address for each of Volk Holdings, Wexford Partners and Wexford Corp. is 701 Harger Road, Suite 190, Oak Brook, Illinois 60521. (4) American Express Company ("American Express"), whose address is American Express Tower, World Financial Center, New York, New York 10285, is the parent of IDS Financial Corporation ("IDS Financial") and may therefore be deemed to be the beneficial owner of securities owned by IDS Financial. American Express disclaims ownership of the Common Stock owned by IDS Financial. The ownership indicated includes 727,116 shares owned by IDS Extra Income Fund, Inc., whose address is IDS Tower 10, Minneapolis, Minnesota 55440. IDS Extra Income Fund, Inc. is advised by IDS Financial. (5) The ownership indicated includes 931,678 shares owned by Cargill Financial Services Corporation ("CFSC"), 318,053 shares owned by Minnetonka Limited Fund, L.P. ("MLFLP") and 113,612 shares owned by GAM-CARGILL Minnetonka Fund Inc. ("GAM"). A subsidiary of CFSC acts as the general partner of MLFLP and as the investment advisor to GAM. (6) The ownership indicated includes 46,224 shares owned directly by Mr. Gustafson and 23,619 shares owned by Mr. Gustafson's spouse. Mr. Gustafson also owns 11,494 Warrants, which are assumed to have been exercised for purposes of disclosing the ownership indicated. (7) The ownership indicated includes 1,367 shares owned directly by Mr. Corcoran. Mr. Corcoran also owns 656 Warrants, which are assumed to have been exercised for purposes of disclosing the ownership indicated. (8) The ownership indicated includes 738,184 shares owned by Bennett Restructuring Fund, L.P., whose address is 450 Park Avenue, New York, New York 10022, and 235,345 shares held by managed accounts over which Mr. Bennett and Restructuring Capital Associates, L.P. ("RCA") have investment discretion. RCA is the general partner of Bennett Restructuring Fund, L.P. The general partner of RCA is Bennett Capital Corporation, of which Mr. Bennett is the sole shareholder. (9) The ownership indicated includes 15,094 shares owned directly by Mr. Schuster and 2,000 shares owned by Mr. Schuster's spouse. Mr. Schuster has been granted 22,850 options under the Company's 1993 Stock Option Plan, all of which are currently exercisable. (10) The ownership indicated includes currently exercisable options to purchase an aggregate of 12,000 shares of Common Stock held by the non-employee directors of the Company. 50 54 DESCRIPTION OF NOTES GENERAL The Old Notes have been, and the New Notes will be, issued pursuant to an indenture (the "Indenture") dated as of June 20, 1995 between the Company and Shawmut Bank Connecticut, National Association, as trustee (the "Trustee"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect on the date of the Indenture. The following summary of certain provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture. The definitions of certain terms used in the Indenture and in the following summary are set forth below under "-- Certain Definitions." Capitalized terms used herein, unless otherwise defined, have the meanings given them in the Indenture. RANKING The Notes are senior secured obligations of Envirodyne, which rank senior to all senior unsecured and subordinated indebtedness of Envirodyne and rank pari passu with all other existing and any permitted future senior secured indebtedness of Envirodyne other then the security interests in favor of the holders of obligations under the Letter of Credit Facility (subject to the respective security interests, if any, held by other lenders). PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount at any time to $160,000,000. The stated maturity of the Notes is June 15, 2000. The New Series B Notes (to be exchanged for outstanding Old Series A Notes) will be limited in aggregate principal amount to $151,500,000, and the New Series D Notes (to be exchanged for outstanding Old Series C Notes) will be limited in aggregate principal amount to $8,500,000. The Old Series A Notes and New Series B Notes will bear interest at the rate of 12% per annum, and the Old Series C Notes and New Series D Notes will bear interest at the LIBOR Rate. Interest on the Securities will accrue from June 20, 1995, or from the most recent date on which interest has been paid or duly provided for, and be payable on December 15 and June 15 of each year, commencing December 15, 1995. The Company will pay interest on overdue principal at the Default Rate. In addition, the Company will pay interest on overdue installments of interest and on overdue payments of the Yield Maintenance Amount at the Default Rate. FORM OF NOTES Upon issuance, except as provided below, each series of Notes will be represented by a Global Note. Each Global Note will be deposited with, or on behalf of, the Depository and registered in the name of Cede & Co. as nominee of the Depository. Notwithstanding the foregoing, any purchaser that is not a "Qualified Institutional Buyer" under Rule 144A under the Securities Act will receive the Notes in certificated form and will not be able to trade such securities through the Depository until the Notes are sold to a Qualified Institutional Buyer. If (i) the Depository is at any time unwilling or unable to continue as Depository and a successor depositary is not appointed by the Company within 90 days or (ii) an Event of Default has occurred and is continuing under the Indenture, then upon surrender of each Global Note, Notes in certificated form will be issued to each such person that the Depository or its nominee identifies as the beneficial owner of the related Notes. In addition, subject to certain conditions, any person having a beneficial interest in any Global Note may, upon request to the Trustee, exchange that beneficial interest for Notes in certificated form. Upon any such issuance, the Trustee is required to register such Notes in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof) in fully registered form. To the extent Notes in definitive form are issued, such Notes will be issued in denominations of $1,000 and integral multiples thereof. Upon the issuance of each Global Note, the Depository will credit, on its book-entry registration and transfer system, the respective principal amounts of the Notes represented by each Global Note to the 51 55 accounts of institutions that have accounts with the Depository ("Participants"). Ownership of beneficial interests in each Global Note will be limited to Participants or persons that hold interests through Participants. Ownership of beneficial interests in each Global Note will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depository with respect to Participants' interests or by Participants or by persons that hold through Participants with respect to beneficial owners' interests. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Those ownership limits and laws may impair the ability to transfer beneficial interests in each Global Note. Principal and interest payments on Notes registered in the name of the Depository or its nominee will be made to the Depository or its nominee, as the case may be, as the registered owner of the Global Note representing such Notes. The Company expects that the Depository, upon receipt of any payment of principal or interest in respect of a Global Note, will immediately credit Participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of the Depository. The Company also expects that payments by Participants to owners of beneficial interests in each Global Note held through such Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of those Participants. None of the Company, the Trustee, any paying agent or any registrar for the Notes will have any responsibility or liability for any aspect of the records relating to or payment made on account of beneficial ownership interests in each Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Depository Trust Company, New York, New York (the "Depository" or "DTC"), will be the initial Depository with respect to the Notes. DTC has advised the Company that it is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its Participants and to facilitate the clearance and settlement of securities transactions among its Participants in such securities through electronic book-entry changes in accounts of the Participants, thereby eliminating the need for physical movement of securities certificates. DTC's Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by DTC only through Participants. So long as the Depository, or its nominee, is a holder of the Global Note, the Depository or its nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indenture and such Global Note. Except as set forth above, owners of beneficial interests in such Global Note will not be entitled to have Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Notes or such Global Note and will not be considered the owners or holders thereof under the Indenture or such Global Note. Accordingly, each person owning a beneficial interest in a Global Note must rely on the procedures of the Depository and, if such person is not a Participant, on the procedures of the Participant through which such person directly or indirectly owns its interest, to exercise any rights of a holder under the Indenture or each Global Note. DTC has informed the Company that under existing DTC policies and industry practices, if the Company requests any action of holders, or if any owner of a beneficial interest in a Global Note desires to give any notice or take any action that a holder is entitled to give or take under the Indenture or a Global Note, DTC would authorize and cooperate with each Participant to whose account any portion of the Notes represented by a Global Note is credited on DTC's books and records to give such notice or take such action. Any person owning a beneficial interest in such Global Note that is not a Participant must rely on any contractual arrangements it has directly, or indirectly through its immediate financial intermediary, with a Participant to give such notice or take such action. 52 56 GUARANTEES The Company's obligations under the Notes will be guaranteed on a secured basis by each Subsidiary Guarantor. The guarantees of the Notes by each Subsidiary Guarantor (the "Guarantees") will rank pari passu in right of payment with the guarantee by such guarantor of all obligations under the Revolving Credit Agreement and will rank junior in right of payment with the guarantee by such guarantor of all obligations under the Letter of Credit Agreement. The Guaranty Agreement provides that in the event of a sale or disposition of a Subsidiary Guarantor (or all or substantially all of its assets) to an entity which is not a Subsidiary of the Company, such Subsidiary Guarantor shall be released and relieved of its obligations under the Guarantee; provided that such sale or disposition is otherwise in compliance with the terms of the Indenture. COLLATERAL AND SECURITY Pursuant to the Collateral Documents, the Company and the Subsidiary Guarantors have pledged to the Collateral Agent, for its benefit and the benefit of the Holders of the Notes, the holders of obligations under the Revolving Credit Agreement and the Letter of Credit Agreement, each of the following assets of the Company and the Subsidiary Guarantors: (a) substantially all domestic fixed assets (other than assets subject to the GECC Lease Documents), (b) all domestic accounts receivable, (c) all items of equipment and fixtures, (d) all inventory, (e) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements), (f) all capital stock of the Company's Significant Domestic Subsidiaries and 65% of the capital stock of Viskase, S.A., and (g) all proceeds of the foregoing. The Holders of the Notes will share any proceeds of the foregoing collateral on a pari passu basis with the holders of obligations under the Revolving Credit Agreement pursuant to an intercreditor agreement. Pursuant to such intercreditor agreement, the holders of obligations under the Letter of Credit Agreement will have priority over all other liens on such collateral. See "Description of Intercreditor Arrangements." No appraisals of any of the Collateral have been prepared by or on behalf of the Company or in connection with the sale of the New Notes. However, the net book value of assets included in the Collateral as of May 31, 1995 was in excess of $400 million. There can be no assurance that the proceeds of any sale of the Collateral in whole pursuant to the Indenture and the Collateral Documents following an Event of Default would be sufficient to satisfy payments due on the Notes. In addition, the ability of the Holders of Notes to realize upon the Collateral may be subject to certain Bankruptcy Law limitations in the event of a bankruptcy. See "-- Certain Bankruptcy Limitations." The release of any Collateral from the terms of the Collateral Documents will not be deemed to impair the security under the Indenture in contravention of the provisions thereof if and to the extent the Collateral is released pursuant to the Collateral Documents. In connection with the release of Collateral, the Trustee shall determine whether it has received all documentation required by Section 314(d) of the Trust Indenture Act to permit such release. CERTAIN BANKRUPTCY LIMITATIONS The right of the Collateral Agent, as agent for the holders of the Consolidated Secured Debt (including the Notes), to repossess and dispose of the Collateral upon the occurrence of an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against the Company or a Subsidiary Guarantor prior to the Collateral Agent having repossessed and disposed of the Collateral. Under Bankruptcy Law, secured creditors such as the holders of the Consolidated Secured Debt are prohibited from repossessing their security from a debtor in a bankruptcy case, or potentially from disposing of security repossessed from such debtor, without bankruptcy court approval. Moreover, Bankruptcy Law permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments; provided that the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but it is generally construed to protect the value of the secured creditor's interest in the collateral as of the date of the 53 57 commencement of the bankruptcy proceeding and may include interim cash payments or the granting of replacement liens, if and at such times as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay or any use or other disposition of the collateral by the debtor during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term "adequate protection" and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could vacate the automatic stay and ultimately repossess or dispose of the Collateral or whether or to what extent Holders of the Notes would be compensated for any diminution in the value of the Collateral during the bankruptcy proceeding through the requirement of "adequate protection." MANDATORY REDEMPTION The Company is required to redeem, on June 15, 1999 (the "Mandatory Redemption Date"), Securities in the principal amount of $80,000,000 (or, if less, the aggregate principal amount of all Securities then outstanding) at a price (the "Mandatory Redemption Price") equal to 100% of the principal amount thereof plus accrued and unpaid interest to the Mandatory Redemption Date. The Mandatory Redemption Price will be due and payable on June 15, 1999. OPTIONAL REDEMPTION The Company may redeem (an "Optional Redemption") all or any portion of the Securities at any time after the Effective Date at a price (the "Optional Redemption Price") equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the Optional Redemption Date and plus the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. If less than all of the outstanding Securities are to be redeemed, the principal amount so redeemed will be allocated to all Securities at the time outstanding in proportion to the respective outstanding principal amounts thereof. In any proration, the Company will, in good faith, make such adjustments, reallocations and eliminations as shall be necessary to the end that the principal amount of Securities so prorated shall be $1,000 or a multiple thereof, by increasing or decreasing or eliminating the amount which would be allocable to any Holder on the basis of exact proportion by an amount not exceeding $1,000. At least 30 but not more than 60 days before a date fixed for redemption, the Company will give a notice of redemption to each Holder whose Securities are to be redeemed. The notice shall identify the Securities to be redeemed and will state, among other things, (a) the aggregate principal amount to be redeemed, the amount of accrued interest, if any, thereon to be paid and whether a Yield-Maintenance Amount is to be paid; and (b) if any Security is being redeemed in part, the portion of the principal amount (equal to $1,000 or any integral multiple thereof) of such Security to be redeemed and that, on or after the date fixed for redemption, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued. On and after any redemption date, interest will cease to accrue on the Notes or part thereof called redemption as long as the Company has deposited with the paying agent funds in satisfaction of the redemption price pursuant to the Indenture. OFFERS TO PURCHASE FOLLOWING CHANGE OF CONTROL AND EXCESS CASH FLOW. Upon the occurrence of a Change of Control, each Holder of a Security shall have the right to have such Security repurchased by the Company on the terms and conditions precedent set forth in the Indenture. The Company shall, within 25 days following the date of the consummation of a transaction resulting in a Change of Control, mail an offer with respect to an offer to purchase all outstanding Securities at a purchase price equal to 100% of the outstanding principal amount thereof together with interest thereon to the date of purchase and the Yield-Maintenance Amount with respect thereto; provided, however, that installments of interest whose Stated Maturity is on or prior to the purchase date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant record dates according to the terms of the Securities. Each Holder shall be entitled to tender all or any portion of the Securities owned by such Holder 54 58 pursuant to the offer to purchase. The Company shall cause the purchase date to be not less than five (5) Business Days prior to the "Purchase Date" (as such term is defined in the 10.25% Notes Indenture) and any other purchase date that may arise with respect to the repurchase or repayment of any debt instruments following a Change of Control or other change in control, other than debt instruments constituting Consolidated Senior Debt. In the event that the Company has Excess Cash Flow in excess of $5,000,000 in any fiscal year of the Company, beginning with the fiscal year of the Company ending in December 1995, the Company shall make an offer to purchase Securities having an aggregate outstanding principal amount equal to the Excess CF Amount relating to such Excess Cash Flow in such fiscal year, and, no later than April 15 of the year immediately following such fiscal year of the Company in which Excess Cash Flow exceeds $5,000,000, mail an offer to each Holder to purchase such outstanding principal amount of Securities at a purchase price equal to 100% of the outstanding principal amount thereof together with interest accrued thereon to the purchase date therefor; provided, however, that installments of interest whose Stated Maturity is on or prior to such purchase date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant record dates according to the terms of the Securities; provided, further, that no such offer shall be made if, at the time of mailing such offer, a Default or an Event of Default exists or would exist after giving effect to the transactions contemplated by such offer (assuming such offer were fully subscribed); provided, still further, that the Company, at its option, may reduce the principal amount of Securities it must purchase by the principal amount of Securities acquired by the Company in the open market prior to the purchase date applicable to such purchase if (i) such previously acquired Securities are retired prior to such purchase date, (ii) no such previously acquired Security has theretofore been used as a credit by the Company or otherwise to satisfy any obligations of the Company (including, without limitation, the obligation of the Company pursuant to this covenant), and (iii) the Company delivers an officers' certificate to the Trustee and each Holder to the effect set forth in clauses (i) and (ii) above not less than ten (10) Business Days prior to the applicable purchase date. To the extent that an offer to purchase is not fully subscribed, the Company may retain the unutilized amount of such Excess CF Amount for general corporate purposes in accordance with the terms of the Indenture. To the extent that an offer to purchase is over-subscribed, the principal amount of the Securities to be purchased shall be allocated on a pro rata basis in proportion to the relative principal amounts as to which the offer was accepted, and in connection with such proration the Company shall, in good faith, make such adjustments, reallocations and eliminations as shall be necessary to maintain the Securities in integral multiples of $1,000. On the purchase date in each of the foregoing offers, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the offer, (ii) deposit with the paying agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust) money sufficient to pay the purchase price of all Securities or portions thereof so accepted and (iii) deliver or cause to be delivered to the Trustee all Securities so accepted together with an officers' certificate stating the Securities or portions thereof accepted for payment by the Company. The paying agent shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security or Securities equal in principal amount to any unpurchased portion of the Security surrendered as requested by the Holder. Any Security not accepted for payment shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the offer to purchase on or as soon as practicable after the purchase date. Prior to the time required for the mailing of an offer with respect to the foregoing, the Company will in good faith (i) seek to obtain any required consent under the GECC Lease Documents so as to permit the making of the offer to purchase and the purchase of Securities, or (ii) repay all or a portion of the Indebtedness under the GECC Lease Documents to the extent necessary (including, if necessary payment in full of such Indebtedness and payment of any prepayment premiums, fees, expenses or penalties) to permit the making of the offer to purchase and the purchase of Securities without such consent. If any such offer to purchase is made, the Company covenants that it shall (and if applicable shall cause its Subsidiaries to) comply with all applicable tender offer rules and regulations under all state and Federal 55 59 securities laws, including, but not limited to, Section 14(e) under the Exchange Act and Rule 14e-1 thereunder. CERTAIN COVENANTS Consolidated Tangible Net Worth. The Company covenants that it will not cause or permit Consolidated Tangible Net Worth, at any time: (i) During each "Clause (i) Test Period" (as defined below) occurring during the period commencing on the Effective Date and ending on December 28, 1995, to be less than an amount (the "Clause (i) Amount") equal to (1) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (i) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (i) Test Period; where "Clause (i) Test Period" means, at any time, the period (taken as one accounting period) commencing on March 31, 1995 and ending on the then most recently ended fiscal quarter of the Company; (ii) During each "Clause (ii) Test Period" (as defined below) occurring during the period commencing on December 29, 1995 and ending on December 26, 1996, to be less than an amount (the "Clause (ii) Amount") equal to (1) the greater of (X) the Clause (i) Amount at December 28, 1995, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (ii) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (ii) Test Period; where "Clause (ii) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 29, 1995 and ending on the then most recently ended fiscal quarter of the Company; (iii) During each "Clause (iii) Test Period" (as defined below) occurring during the period commencing on December 27, 1996 and ending on December 25, 1997, to be less than an amount (the "Clause (iii) Amount") equal to (1) the greater of (X) the Clause (ii) Amount at December 26, 1996, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iii) Test Period (or zero in the case of a deficit), and (Y) $1,250,000 multiplied by the number of the Company's fiscal quarters that have ended during such Clause (iii) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iii) Test Period; where "Clause (iii) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 27, 1996 and ending on the then most recently ended fiscal quarter of the Company; (iv) During each "Clause (iv) Test Period" (as defined below) occurring during the period commencing on December 26, 1997 and ending on December 31, 1998, to be less than an amount (the "Clause (iv) Amount") equal to (1) the greater of (X) the Clause (iii) Amount at December 25, 1997, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iv) Test Period (or zero in the case of a deficit), and (Y) $2,500,000 multiplied by the number of the Company's fiscal quarters, at the time of determination, that have ended during such Clause (iv) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iv) Test Period; where "Clause (iv) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 26, 1997 and ending on the then most recently ended fiscal quarter of the Company; and (v) During each "Clause (v) Test Period" (as defined below) occurring after January 1, 1999 and thereafter, to be less than an amount equal to (1) the greater of (X) the Clause (iv) Amount at December 31, 1998, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (v) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by 56 60 the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (v) Test Period; where "Clause (v) Test Period" means, at any time, the period (taken as one accounting period) commencing on January 1, 1999 and ending on the then most recently ended fiscal quarter of the Company. Fixed Charge Coverage Ratio. The Company covenants that it will not cause or permit the ratio of (i) Consolidated Cash Flow for the twelve month period ending at the end of any fiscal quarter of the Company to (ii) Consolidated Fixed Charges for each such twelve month period to be less than the ratio set forth below for the period set forth below in which such fiscal quarter ends:
RATIO PERIOD - ------ ---------------------------------------------- 1.45:1 Effective Date through December 28, 1995 1.50:1 December 29, 1995 through December 26, 1996 1.55:1 December 27, 1996 and thereafter.
Limitation on Restricted Payments and Restricted Investments. The Company covenants that it will not, and will not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Company or its Subsidiaries or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or its Subsidiaries, other than dividends, distributions or payments payable or made solely in shares of Capital Stock in the Company of the same class held by such holders (other than Redeemable Stock) or in options, warrants or other rights to purchase such shares; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Company or any Subsidiary; (iii) make any principal payment on, or purchase, redeem, repurchase, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value, prior to any stated or scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory redemption payment, any Restricted Debt (the foregoing actions, set forth in clauses (i) through (iii) being referred to as "Restricted Payments"); or (iv) make any Investment (the foregoing action being referred to as a "Restricted Investment"); unless at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed Restricted Payment or proposed Restricted Investment: (1) no Default or Event of Default exists or would exist; and (2) (i) the aggregate amount expended for all Restricted Payments subsequent to March 30, 1995, plus (ii) the aggregate amount expended for all Restricted Investments made subsequent to March 30, 1995, does not exceed the sum of: (A) 50% (or minus 100% in the event of a deficit) of Consolidated Net Income calculated on a cumulative basis for the period commencing on March 31, 1995 and continuing through the last day of the Company's fiscal quarter immediately preceding the Company's fiscal quarter in which the Restricted Payment or Restricted Investment, as the case may be, is proposed to be made; plus (B) the aggregate net cash proceeds received by the Company (i) from the issuance or sale (other than to a Subsidiary of the Company), after the Effective Date, of Capital Stock in the Company (other than Redeemable Stock), (ii) upon conversion after the Effective Date of any Debt of the Company that is, by its original terms, convertible into Capital Stock (other than Redeemable Stock) in the Company (with the aggregate net cash proceeds being deemed to be the principal amount of the Debt so converted), or (iii) from the exercise for cash after the Effective Date of any options, warrants or other rights to acquire Capital Stock (other than Redeemable Stock) in the Company; plus (C) $10,000,000; provided, however, that in no event may Restricted Payments made subsequent to March 30, 1995 exceed the sum of the amounts described in clause (A) and (B) above plus $5,000,000. 57 61 Notwithstanding the foregoing, the following will not be prohibited: (1)(A) the payment by any Subsidiary of the Company of dividends or other distributions to the Company or a Wholly Owned Subsidiary of the Company or the redemption or repurchase by any such Subsidiary of any Capital Stock in such Subsidiary owned by the Company or a Wholly Owned Subsidiary of the Company, or (B) the payment of pro rata dividends to holders of minority interests in the Capital Stock in a Subsidiary of the Company; provided, however, that, in the case of clause (B) no Default or Event or Default has occurred and is continuing or would occur as a result thereof; (2)(A) consummation of the 10.25% Notes Exchange, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; and (B) consummation of the exchange of Series B Securities for Series A Securities, and Series D Securities for Series C Securities, as contemplated by the Registration Rights Agreement and (C) consummation of an exchange of Subsequent Second Priority Notes solely for Second Priority Notes; (3) certain approved Investments in the amounts existing on the Effective Date; (4) Investments by the Company in Wholly Owned Subsidiaries of the Company having lines of business that are substantially similar or materially related to the Company's lines of business existing on the Effective Date, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; (5) Investments in Cash Equivalents; (6) the acquisition, redemption or retirement of Capital Stock in the Company solely in exchange for (A) Capital Stock in the Company of the same class as the Capital Stock that is being acquired, redeemed or retired or (B) Common Stock of the Company; and (7) the acquisition, redemption or retirement of Debt of the Company or its Subsidiaries (A) which is subordinated in right of payment to the Securities solely in exchange for Common Stock in the Company, or (B) as part of a refinancing thereof permitted by the Indenture. Limitation on Indebtedness. The Company covenants that it will not, and will not permit any of its Subsidiaries to, directly or indirectly permit to exist, create, incur, issue, assume, guaranty or otherwise become liable with respect to, extend the maturity of or become responsible for the payment of, any Debt (including, without limitation, any Acquired Debt) other than: (i) Debt of the Company evidenced by the Securities; (ii) Debt of the Company evidenced by the 10.25% Notes; (iii) Debt of the Company evidenced by the Second Priority Notes and the Subsequent Second Priority Notes, provided, however, that: (1) the aggregate principal amount of the Second Priority Notes and the Subsequent Second Priority Notes do not at any time exceed $50,000,000, (2) such Second Priority Notes and Subsequent Second Priority Notes have terms substantially identical to the 10.25% Notes and in any event no less favorable to the Company than those set forth in the 10.25% Notes and the 10.25% Notes Indenture (provided, however, that the Second Priority Notes and Subsequent Second Priority Notes may be secured by Liens that are Permitted Liens described in clause (xi) of the definition of Permitted Liens and the final maturity thereof may be prior to the final maturity of the 10.25% Notes, subject to clause (3) below), (3) the final maturity of such Second Priority Notes and Subsequent Second Priority Notes is not prior to June 15, 2000, and (4) without limiting the foregoing clause (3), such Second Priority Notes and Subsequent Second Priority Notes will not have any scheduled principal installment or other principal payments due until after the final maturity of the Securities; (iv) Debt of the Company under the Revolving Credit Agreement (including any refinancings thereof), provided, that the aggregate principal amount of such Debt does not at any time exceed $35,000,000; 58 62 (v) Debt of the Company or any of its Subsidiaries under the Letter of Credit Agreement (and any refinancing thereof), provided the aggregate amount of such Debt does not exceed $28,000,000 at any time; (vi) Debt of the Company and certain Subsidiaries of the Company under the GECC Lease Documents (including any refinancings thereof) in an aggregate principal amount not to exceed the principal amount thereof outstanding as of the Effective Date less any scheduled amortization after the Effective Date of such Indebtedness when actually paid by the Company or its Subsidiaries; provided, however, that no refinancing of such Debt under the GECC Lease Documents will be permitted unless: (1) such refinancing Debt will have an Average Life at the time such refinancing is incurred that is equal to or greater than the Average Life of the Debt to be refinanced, (2) such refinancing Debt will be in a principal amount not in excess of the principal amount of the Debt to be refinanced (including the amount (if any), up to $10,000,000, by which the Stipulated Loss Value exceeds the then outstanding principal amount of the Debt to be refinanced); (vii) Debt evidenced by guaranties made by the Company's Subsidiaries of the Debt described in clauses (i), (iii), (iv) and (v) above; (viii) Debt of the Company or any of its Subsidiaries under Currency Agreements and Interest Rate Agreements; provided, that such Currency Agreements and Interest Rate Agreements do not increase the outstanding Debt of the Company other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Debt of a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company; (x) approved Debt of the Company's Subsidiaries existing on the Effective Date; (xi) other Debt of a Subsidiary of the Company that directly refinances any Debt of such Subsidiary described in the immediately foregoing clause (x); provided, however, that (1) the principal amount of such refinancing Debt does not exceed the principal amount of the Debt to be refinanced, (2) the terms of such refinancing Debt are, in all material respects, no less favorable to such Subsidiary than the terms of the Debt to be refinanced and (3) without limiting the foregoing clause (2) no refinancing Debt may be secured to any greater extent than is the Debt to be refinanced; provided, further, that notwithstanding clause (1) above, the aggregate principal amount of Debt refinancing existing lines of credit of the Company's Subsidiaries may equal up to $10,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time any such refinancing Debt is incurred); (xii) Debt of the Company or any of its Subsidiaries (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, or (B) arising under guarantees incurred in the ordinary course of business (and not in connection with the borrowing of money) with respect to suppliers, licensees, franchisees or customers of the Company or such Subsidiary; (xiii) other Debt of the Company and the Company's Subsidiaries (including, without limitation, Purchase Money Indebtedness and Acquired Debt); provided, however, that the aggregate outstanding principal amount thereof will at no time exceed $15,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time such Debt is incurred); provided, further, that the aggregate outstanding amount of Purchase Money Indebtedness to be incurred in connection with the purchase of any Property will not exceed 90% of the cash purchase price to be paid for such Property; and (xiv) other Debt of the Company (not secured by any Lien); provided, however, that at no time will (1) Consolidated Senior Debt be more than 52.5% of Consolidated Total Capitalization, or (2) Consolidated Debt be more than 85% of Consolidated Total Capitalization. 59 63 Limitation on Liens. The Company covenants that it will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur or permit to exist any Lien of any nature whatsoever on any of its properties (including, without limitation, Capital Stock), whether owned on the Effective Date or thereafter acquired, other than Permitted Liens. Limitation on Company Mergers, Consolidations, and Sales. The Company covenants that it will not merge or consolidate with any other Person or, directly or indirectly, Transfer, all or substantially all of its Property in a single transaction or series of related transactions, unless in any such case: (i) at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed merger, consolidation or Transfer, no Default or Event of Default exists or would exist after giving effect thereto; (ii) in the event that the Company is to consolidate with or merge into another Person, or to Transfer all or substantially all of its Property to another Person, such Person will be a corporation organized and validly existing under the laws of a State of the United States of America or the District of Columbia and will expressly assume in writing all obligations of the Company under all credit documents to which the Company is a party pursuant to such written agreements and instruments as the Trustee may request (which will include an indenture supplemental to the Indenture) and which in each case will be in form and substance satisfactory to the Trustee; and (iii) the Company has delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger or Transfer (and if a supplemental indenture is required, such supplemental indenture) complies with this covenant and that all conditions precedent with respect thereto have been completely satisfied. Upon any consolidation of the Company with, or merger of the Company with or into, any other Person or any Transfer of all or substantially all of the Property of the Company in accordance with this covenant, the entity formed by or surviving such transaction will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person will be relieved of all obligations and covenants under the Indenture and the Securities. Limitation on Certain Asset Sales and Subsidiary Mergers. The Company covenants that (i) it will not, and will not permit any of its Subsidiaries to, directly or indirectly Transfer any of its Property, and (ii) the Company will not permit any of its Subsidiaries to merge or consolidate with any other Person except: (a) any Wholly Owned Subsidiary of the Company may merge with, or sell all or substantially all of its Property to, the Company or another Wholly Owned Subsidiary of the Company if at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed transaction no Default or Event of Default exists or would exist after giving effect thereto; (b) the Company may Transfer assets (excluding Capital Stock of a Material Subsidiary) to the extent permitted under the "Limitation on Company Mergers, Consolidation, and Sales" covenant; (c) the Company or any such Subsidiary may sell inventory in the ordinary course of business and equipment that is determined to be obsolete in accordance with GAAP or concurrently replaced by equipment (not subject to any Lien other than Permitted Liens) of the same type having a fair market value at least equal to the fair market value of the equipment so replaced; (d) the Company or any such Subsidiary (subject to clause (f) below) may otherwise Transfer Property (excluding Capital Stock of a Material Subsidiary), and any such Subsidiary (subject to 60 64 clause (f) below) may consummate a Transfer by Merger; provided that after giving effect thereto (1) the Percentage of Total Assets Transferred in any fiscal year of the Company (excluding assets described in clauses (a) and (c) above) will not exceed 10%; and (2) the Percentage of Total Assets Transferred (excluding assets described in clauses (a) and (c) above) at any time after the Effective Date on a cumulative basis will not exceed 15%; and (e) the Company or any Subsidiary of the Company (subject to clause (f) below) may Transfer other Property (not constituting Capital Stock of any Material Subsidiary), and any Subsidiary of the Company (subject to clause (f) below) may consummate other Transfers by Merger if: (1) at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed Transfer of Property or Transfer by Merger (as the case may be) no Default or Event of Default exists or would exist; (2) the consideration to be paid to the Company or such Subsidiary (as the case may be) is at least equal to the fair market value of the assets to be Transferred (or, in the case of a Transfer by Merger, the fair market value of the Subsidiary subject thereto), in each case as reasonably determined by the Board of Directors; and (3) the proceeds from such Transfer of Property or Transfer by Merger (net of (X) reasonable expenses incurred by the Company or the Subsidiary (as the case may be) incidental thereto, (Y) the amount of any taxes (reasonably determined by the Company in good faith) owing by the Company or such Subsidiary (as the case may be) as a result thereof, and (Z) any mandatory repayment of permitted Debt (if any) secured by a Permitted Lien on the Property being Transferred that is prior to the Lien securing the Consolidated Secured Debt) are immediately applied to redeem the Securities and otherwise repay the other Consolidated Secured Debt outstanding at such time, such application of proceeds to be made pro rata to the holders of the Consolidated Secured Debt based on the then outstanding principal amount of each such holder's holding of Consolidated Secured Debt (or, in the case of the Lender, the Revolving Loan Commitment) in proportion to the aggregate amount of Consolidated Secured Debt then outstanding (or, in the case of the Lender, the Revolving Loan Commitment); provided, however, that such redemption or repayment pursuant to this clause (3) will be deferred until the amount of proceeds to be so redeemed and otherwise repaid equals or exceeds $5,000,000, with any such lesser amounts not used for redemption or repayment to be aggregated with proceeds subsequently received from Transfers to be utilized for redemption or repayment at such point as such aggregate amount equals or exceeds $5,000,000. The Company will make each redemption required under clause (e)(3) above on a date (the "Transfer Redemption Date") which is the first Business Day next following the 30th day after the date of the Transfer or Transfer by Merger giving rise thereto (such date of Transfer or Merger by Transfer, the "Transfer Date"). If less than all of the outstanding Securities are to be redeemed under clause (e)(3) above, the principal amount so redeemed will be allocated to all Securities at the time outstanding in proportion to the respective outstanding principal amounts thereof. The redemption price for each Security (or portion thereof) redeemed under clause (e)(3) above (the "Transfer Redemption Price") will equal 100% of the principal amount thereof plus the Yield-Maintenance Amount, if any, with respect thereto. The Company will give written notice on the Transfer Date of such redemption to the Trustee and all Holders. (f) Notwithstanding anything to the contrary, the Company will not permit any Material Subsidiary, directly or indirectly, to Transfer all or substantially all of its assets in a single transaction or series of related transactions or merge or consolidate with any Person other than as permitted under clause (a) above. 61 65 Limitation on Payment Restrictions Affecting Subsidiaries. The Company covenants that it will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction which by its terms expressly restricts the ability of any Subsidiary of the Company to: (a) pay dividends or make any other distributions on the Capital Stock in such Subsidiary or any other interest or participation in, or measured by, its profits owned by, or pay any Debt owed to, the Company or any such Subsidiary, (b) make any loans or advances to the Company or any such Subsidiary or (c) transfer any of its Property to the Company or to any such Subsidiary, except for (i) such encumbrances or restrictions existing under or by reason of any encumbrance or restriction existing by reason of applicable law; (ii) such encumbrances or restrictions existing and approved on the Effective Date; (iii) such encumbrances or restrictions as may exist under refinancing Debt permitted under the Indenture; provided, however, that any such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary than the encumbrances or restrictions included in the Debt to be refinanced; (iv) such encumbrances or restrictions as may exist under any Acquired Debt at the time incurred by the Company or such Subsidiary; provided, however, that such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary as the then existing most onerous such encumbrances and restrictions applicable to the Company or such Subsidiary; (v) the provisions of any lease governing a leasehold interest or of any supply, license or other agreement entered into in the ordinary course of business of the Company or any Subsidiary that restrict in a customary manner transfer, subleasing or assignment; and (vi) any restrictions with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition. Transactions with Affiliates. The Company covenants that it will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, any purchase, sale or exchange of Property, the making of any Investment, the giving of any guarantee or the rendering of any service), with any Affiliate of the Company or of any Subsidiary of the Company unless the terms of such transaction or series of related transactions are no less favorable to the Company or such Subsidiary, as the case may be, than those that might be obtained at the time of such transaction from a Person who is not such an Affiliate; provided, however, that in addition to the foregoing, any such transaction (or series of related transactions), other than certain exempted transactions, that has a fair market value to the Company or such Subsidiary of $10,000,000 or more will be deemed to be on terms no less favorable to the Company or such Subsidiary than those obtainable at the time of the transaction from a Person who is not such an Affiliate only if the Board of Directors of the Company receives and delivers to the Trustee, prior to such transaction, a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Company or such Subsidiary from a financial point of view. The provisions set forth above will not apply to (i) the payment of fees, salaries or other amounts to DPK in accordance with the express terms of the Management Agreement, provided, however, that the aggregate amount of all such fees, salaries and other amounts will not exceed $5,000,000 (determined without regard to the value of options to purchase the Company's Common Stock) in the aggregate in any consecutive twelve month period, (ii) any transaction between the Company and any of its Wholly Owned Subsidiaries, (iii) the payment of reasonable and customary fees (including options to purchase the Company's Common Stock) to directors of the Company or any of the Subsidiaries of the Company who are not employees of the Company or any Subsidiary of the Company as the same may be deemed advisable or appropriate by the Board of Directors, or (iv) loans or advances to officers, members of the Board of Directors and employees of the Company or any of its Subsidiaries for travel, entertainment or moving and other relocation expenses made in the ordinary course of business of the Company and its Subsidiaries as the same may be deemed advisable or appropriate by the Board of Directors. 62 66 Limitations on the Sale of Stock and Debt of Subsidiaries. The Company covenants that it will not, and will not permit any of its Subsidiaries to, sell or otherwise dispose of, or part with control of, any Capital Stock (other than directors' qualifying shares or nominee shares) or Indebtedness of any Subsidiary of the Company, except to the Company or a Wholly Owned Subsidiary of the Company, and except that all Capital Stock and Indebtedness of any such Subsidiary may be sold as an entirety provided that (a) at the time of such sale, such Subsidiary will not own, directly or indirectly, any Capital Stock or Indebtedness of any other Subsidiary (unless all of the Capital Stock and Indebtedness of such other Subsidiary are simultaneously being sold), and (b) such sale would be permitted by the "Limitation on Company Mergers, Consolidations, and Sales" covenant and the "Limitation on Certain Asset Sales and Subsidiary Mergers" covenant. Limitation on Issuance and Sale of Capital Stock of Subsidiaries. The Company covenants that it will not (a) permit any Subsidiary of the Company to issue or sell any Capital Stock in such Subsidiary other than to the Company or a Wholly Owned Subsidiary of the Company or (b) permit any Person other than the Company or a Wholly Owned Subsidiary of the Company to hold any Capital Stock issued after the Effective Date in any Subsidiary of the Company; provided, however, that the Company or any Subsidiary of the Company may sell Common Stock to the extent permitted under the "Limitation on Certain Asset Sales and Subsidiary Mergers" covenant; provided, further, that this covenant will not be deemed to prohibit the Company or any Subsidiary of the Company from making any Investment (including, without limitation, Investments in a Person such that after giving effect thereto such Person may be a less than wholly owned Subsidiary of the Company) permitted by the "Restricted Payments" covenant. EVENTS OF DEFAULT Events of Default under the Indenture include the following: (a) the Company defaults in the payment of any principal of, or Yield-Maintenance Amount with respect to, any Security when the same will become due, either by the terms thereof or otherwise as provided in the Indenture or any note purchase agreement relating thereto; or (b) the Company defaults in the payment of any interest on any Security for more than 5 Business Days after the date due; or (c) the Company or any Subsidiary of the Company defaults (whether as primary obligor or as guarantor or other surety) in any payment of principal of or interest on the 10.25% Notes, the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), any loan under the Revolving Credit Agreement, any reimbursement obligations under the Letter of Credit Agreement, any Capital Lease Obligation under the GECC Lease Documents or any other obligation for money borrowed (or any Capital Lease Obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or any obligation under notes payable or drafts accepted representing extensions of credit or any obligation to pay or reimburse any Person for any amount paid under any letter of credit, any proposal, bid, performance or other bond, or under any indemnity agreement) beyond any period of grace provided with respect thereto, or the Company or any such Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such obligation is created (or if any other event thereunder or under any such agreement will occur and be continuing) and the effect of such failure or other event is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause, such obligation to become due (or to be repurchased by the Company or any such Subsidiary) prior to any stated maturity, provided that, except in respect of the Revolving Credit Agreement, the Letter of Credit Agreement and the GECC Lease Documents, the aggregate amount of all obligations as to which such a payment default will occur and be continuing or such a failure or other event causing or permitting acceleration (or resale to the Company or any Subsidiary) will occur and be continuing exceeds $5,000,000; or 63 67 (d) any representation or warranty made by the Company or any Subsidiary of the Company or any Responsible Officer thereof in any writing or statement furnished in connection with or pursuant to the Indenture, the Securities or any other credit document will be false in any material respect on the date as of which made; or (e) the Company fails to observe or perform its obligation to purchase Securities following a Change of Control or in the event the Company has Excess Cash Flow or the Company fails to observe any negative covenant contained in the Indenture; or (f) the Company fails to observe or perform any covenant, condition or agreement on the part of the Company to be observed or performed pursuant to the terms of the Indenture or the Securities (other than a covenant, condition or agreement which is specifically dealt with elsewhere as an Event of Default), and such failure continues for 30 days after any Responsible Officer of the Company learns thereof; or (g) the Company or any Material Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or (h) any decree or order for relief in respect of the Company or any Material Subsidiary is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; or (i) the Company or any Material Subsidiary petitions or applies to any tribunal for, or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of the Company or any Material Subsidiary, or of any substantial part of its assets or commences a voluntary case under the Bankruptcy Law of any jurisdiction or any proceedings relating to the Company or any such Material Subsidiary under the Bankruptcy Law of any jurisdiction; or (j) any such petition or application is filed, or any such proceedings are commenced, against the Company or any Material Subsidiary and the Company or such Material Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (k) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary decreeing the dissolution of the Company or any such Material Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (l) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary of the Company decreeing a split-up of the Company or such Material Subsidiary, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (m) one or more judgments or orders in an aggregate amount in excess of $5,000,000 (net of cash proceeds actually received by, or paid on behalf of, the Company with respect to such judgments or orders) are rendered against the Company or any Subsidiary of the Company and, within 60 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged; or (n) the occurrence of any "Event of Default" (as defined in any Credit Document other than the Indenture) or the breach of any covenant, warranty or agreement set forth in any Credit Document (other than the Indenture or the Securities), which Event of Default or breach continues beyond any period of grace therein provided; or (o) the Guaranty Agreement will fail to remain in full force or effect or any action will be taken to discontinue or to assert the invalidity or unenforceability or the Guaranty Agreement, or any guarantor 64 68 thereunder will fail to comply with any of the terms or provisions of the Guaranty Agreement or denies that it has any further liability under the Guaranty Agreement, or gives notice to such effect; or (p) the Collateral Agent will cease to possess at any time a valid, first priority (subject to Permitted Liens) perfected Lien in and on any of the Collateral (other than Collateral having a de minimis value); or (q) certain defaults relating to ERISA; then (1) if such event is an Event of Default specified in clause (h), (i) or (j) above with respect to the Company, all of the Securities at the time outstanding will automatically become immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Amount, if any, with respect to such Security, without presentment, demand, protest or notice of any kind, all of which are waived by the Company, (2) if such event is an Event of Default specified in clause (a) or clause (b) above, any Holder of a Security at any time such Event of Default is continuing, at its option, by notice in writing to the Company, may declare all or any part of the Securities owned by such Holder to be, and all such Securities will thereupon be and become, forthwith due and payable at par together with interest accrued thereon, without presentment, demand, protest or notice of any kind, all of which are waived by the Company, and (3) if such event is an Event of Default other than an Event of Default specified in clause (h), (i) or (j) above with respect to the Company, the Required Holders may at their option, or the Trustee will upon the written request of the Required Holders, by notice in writing to the Company, declare all of the Securities to be, and all of the Securities will thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Amount, if any, with respect to each Security, without presentment, demand, protest or other notice of any kind, all of which are waived by the Company. TERMINATION OF COMPANY'S OBLIGATIONS The Company may terminate, and will be discharged from, all its obligations under the Securities and the provisions of the Indenture (except as to (i) rights of registrations of transfer, substitution and exchange of Securities), (ii) rights of Holders to receive payments of principal and interest and Yield-Maintenance Amount (if any) on the Securities, (iii) the rights, obligations and immunities of the Trustee under the Indenture and (iv) certain other specified provisions of the Indenture) when all Securities previously authenticated and delivered (other than mutilated, destroyed, lost or stolen Securities which have been replaced or paid or Securities for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company have been delivered to the Trustee for cancellation and the Company) has paid to all Holders all sums payable by it under the Securities and the provisions of the Indenture. REPORTS The Company will file with the Trustee within 15 days after it files them with the Commission copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which the Company files with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company will continue to file with the Commission and the Trustee on the same timely basis such reports, information and other documents as the Company would file if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company and any other obligor on the Securities also will comply with the other provisions of Trust Indenture Act Section 314(a). So long as Securities representing 5% or more of the aggregate principal amount of Securities issued under the Indenture remain outstanding, the Company will cause an annual report to stockholders and quarterly or other financial reports furnished by it to stockholders, excluding internal management reports and distributions to stockholders in their capacity as directors or officers of the Company, to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Securities maintained by the Registrar, in each case at the time of such furnishing to stockholders. If the Company is not required to furnish annual or quarterly reports to its stockholders pursuant to the Exchange Act at any time during which 65 69 Securities representing 5% or more of the aggregate principal amount of Securities issued hereunder are outstanding, the Company will cause its consolidated financial statements, including any notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," comparable to that which would have been required to appear in annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act to be so filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Securities maintained by the Registrar within 105 days after the end of each fiscal year and within 60 days after the end of each of the Company's first three fiscal quarters in each fiscal year. TRANSFER AND EXCHANGE A holder may transfer or exchange Notes in accordance with the Indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered holder of a Note will be treated as the owner of such Note for all purposes. See "Form of Notes" above. AMENDMENT, SUPPLEMENT AND WAIVER The Indenture will provide that without the consent of any holder of Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for the assumption of the Company's obligations to holders of the Notes in the case of a merger or consolidation, to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to evidence the acceptance of appointment by a successor trustee. In addition, the Indenture or the Notes may be amended or supplemented with the consent of the holders of a majority in principal amount of the Notes then outstanding (subject to the terms of the Intercreditor Agreement), provided that no modification or supplement of the Indenture may be made that would (a) reduce the amount of Securities whose Holders must consent to an amendment or waiver of any provision of the Indenture; (b) reduce the rate of or change the method of calculation, the time for payment or the manner of payment of interest or Yield-Maintenance Amount on any Security; (c) reduce the principal of or change the Stated Maturity of any Security, or change the date on which any Security may be subject to redemption or reduce the Redemption Price therefor; (d) make any Security payable in money other than that stated in the Security; (e) make any change in the "Change of Control" or " Excess Cash Flow" covenants or the definitions of "Change of Control" or "Excess Cash Flow"; (f) waive a Default in the payment of the principal of, interest on or redemption payment under any Security; or (g) affect the rankings or with respect to the Collateral, the priority of the Securities, in each case in a manner adverse to the Holders. Any existing Default or compliance with any provision of the Indenture or the Notes may be waived (other than a continuing Default or Event of Default in the payment of the principal or interest and Yield-Maintenance Amount (if any) on any Note) with the consent of the holders of a majority in principal amount of the then outstanding Notes (subject to the terms of the Intercreditor Agreement). CONCERNING THE TRUSTEE The holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. 66 70 CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a complete description of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means Debt of a Person existing on or prior to the time at which such Person became a Subsidiary and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary. "Affiliate" of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Securities of such specified Person, or (iii) of which 10% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. "Agent" means any Registrar, Paying Agent or Co-Registrar. "Average Life" means, as of any date, with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (x) the numbers of years from such date to the dates of each successive scheduled principal payment (including any sinking fund or mandatory redemption payment requirements) of such debt security multiplied by (y) the amount of such principal payment by (ii) the sum of all such principal payments. "BTCC" means BT Commercial Corporation, a Delaware corporation, and its successors and permitted assigns. "Bankruptcy Law" means Title 11, U.S. code or any similar Federal, state or foreign law for the relief of debtors. "Board of Directors" of any corporation means the board of directors of such corporation or any duly authorized committee of the board of directors of such corporation. "Business Day" means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City or Hartford, Connecticut are required or authorized to be closed. "Called Principal" means, with respect to any Security, the principal of such Security that is to be redeemed or prepaid (as the case may be) pursuant to the "Change of Control" covenant, the redemption obligations following a Transfer of Property equal to $5,000,000 or more or an optional redemption, or is declared to be immediately due and payable pursuant to an Event of Default, as the context requires. "Capital Lease Obligation" means, at any time, the amount of the liability with respect to a lease that would be required at such time to be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "Capital Stock" in any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. "Cash Equivalents" means: (i) debt instruments, with maturities of one year or less from the date of acquisition, issued by the government of the United States of America or any agency thereof (if fully guaranteed or insured by the government of the United States of America), (ii) certificates of deposit, with maturities of one year or less from the date of acquisition, of any commercial bank incorporated under the laws of the United States of America having a combined capital, surplus and undivided profits of not less than $100,000,000, (iii) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., and (iv) tax exempt floating rate tender bonds, as to which payments of principal, interest and other charges may be made at the option of the holder upon not more than one week's notice which are payable upon tender or any default from the proceeds of an unconditional and irrevocable letter of credit issued by a United States office of any commercial bank all of whose long-term debt securities are rated at least AA by Standard & Poor's Corporation or Aa by Moody's Investors Service, Inc. 67 71 "Change of Control" means the occurrence of any of the following events (whether or not approved by the Board of Directors of the Company or otherwise permitted by the terms of the Indenture): (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), or any Affiliate of any such person, is or becomes a "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall also be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Common Stock of the Company or such other amount of Voting Securities to provide the ability to elect, directly or indirectly, a majority of the members of the Board of Directors of the Company; (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new or replacement directors whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; (iii) any direct or indirect Transfer (in one transaction or a series of related transactions) of all or substantially all of the consolidated assets of the Company and its Subsidiaries to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or any Affiliate of any such person; or (iv) the approval by the Company or its shareholders of any plan of liquidation; or (v) any event constituting a "Change of Control" in respect of 10.25% Notes, the Revolving Credit Agreement, the Second Priority Notes or the Subsequent Second Priority Notes. "Collateral" means all the real, personal and mixed property made, or intended or purported to be made, subject to a Lien pursuant to the Collateral Documents. "Collateral Agent" means BTCC, in its capacity as collateral agent under the Intercreditor Agreement and the other Collateral Documents, and any successor thereto. "Collateral Documents" means, collectively, the Guaranty Agreement, Pledge Agreement, Intercreditor Agreement, Intellectual Property Pledge Agreement, Mortgage, Security Agreement, and all other instruments or documents now or hereafter granting (or purporting to grant) Liens on property of the Company or any of its Subsidiaries to the Collateral Agent, for the benefit of the "Secured Parties" (as defined in the Intercreditor Agreement). "Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalent (however designated) of Capital Stock in such Person which is not preferred as to the payment of dividends or the distribution of assets on any voluntary or involuntary liquidation over shares of any other class of Capital Stock in such Person. "Company" means Envirodyne Industries, Inc. unless and until a successor of Envirodyne Industries, Inc. replaces it pursuant to the Indenture, and thereafter means such successor. "Consolidated Cash Flow" means, for any period, Consolidated Net Income for such period, (A) increased by the sum of (i) Consolidated Fixed Charges for such period, other than interest capitalized by the Company and its Subsidiaries during such period, (ii) income tax expense of the Company and its Subsidiaries, on a consolidated basis, for such period (other than income tax expense attributable to sales or other dispositions of assets (other than sales of inventory in the ordinary course of business)), (iii) depreciation expense of the Company and its Subsidiaries, on a consolidated basis, for such period, (iv) amortization expense of the Company and its Subsidiaries, on a consolidated basis, for such period, and (v) other non-cash items reducing Consolidated Net Income minus non-cash items increasing Consolidated Net Income for such period, and (B) decreased by any revenues received or accrued by the Company or any of its Subsidiaries from any other Person (other than the Company or any of its Subsidiaries) in respect of any Investment for such period, all as determined in accordance with GAAP. "Consolidated Debt" means the aggregate amount of Debt of the Company and its Subsidiaries, on a consolidated basis, determined in accordance with GAAP. 68 72 "Consolidated Fixed Charges" means, for any period, (A) the sum of, without duplication, (i) the aggregate amount of interest expense of the Company and its Subsidiaries during such period (including, without limitation, all commissions, discounts and other fees and charges owed by the Company and its Subsidiaries with respect to letters of credit and bankers' acceptances or similar financing facilities and the net costs associated with Interest Rate Agreements and Currency Agreements of the Company and its Subsidiaries) paid, accrued or scheduled to be paid or accrued during such period, including interest expense not required to be paid in cash (including any amortization of original issue debt discount), all determined in accordance with GAAP, plus all interest capitalized by the Company and its Subsidiaries during such period, (ii) the aggregate amount of the interest expense component of rentals in respect of Capital Lease Obligations paid or accrued by the Company and its Subsidiaries during such period, determined in accordance with GAAP, (iii) the aggregate amount of all operating lease expense of the Company and its Subsidiaries during such period, determined in accordance with GAAP, and (iv) to the extent any interest payment obligation of any other Person is guaranteed by the Company or any of its Subsidiaries (other than guarantees relating to obligations of customers of the Company or any of its Subsidiaries that are made in the ordinary course of business consistent with past practices of the Company or its Subsidiaries), the aggregate amount of interest paid or accrued by such Person in accordance with GAAP during such period attributable to any such interest payment obligation, less (B) to the extent included in (A) above, amortization or write-off of deferred financing costs by the Company and its Subsidiaries during such period; in each case after elimination of intercompany accounts among the Company and its Subsidiaries and as determined in accordance with GAAP. "Consolidated Intangible Assets" means, as at any date, (i) the amount of all write-ups in the book value of any asset resulting from the revaluation thereof and all write-ups in excess of the cost of assets acquired, plus (ii) the amount of all unamortized original issue discount, unamortized debt expense, goodwill, patents, trademarks, service marks, trade names, copyrights, organization and development expense and other intangible assets, in each case as would be taken into account in preparing a consolidated balance sheet of the Company and its subsidiaries on a consolidated basis as at such date in accordance with GAAP. "Consolidated Net Income" means, for any period, the aggregate net income (or net loss, as the case may be) of the Company and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom, without duplication, (i) gains and losses from the sale or other disposition of assets (other than sales of inventory in the ordinary course) or reserves relating thereto, (ii) items classified as extraordinary or nonrecurring (including, without limitation, any gains from any exchange of debt securities) and gains (but not losses) from discontinued operations, (iii) the income (or loss) of any Joint Venture, except to the extent of the amount of cash dividends or other distributions in respect of Capital Stock therein actually paid during such period to the Company or any of its Subsidiaries by such Joint Venture out of funds legally available therefor (or, in the case of a loss, to the extent such loss is funded by the Company or any such Subsidiary during such period), (iv) except to the extent includable pursuant to clause (iii), the income (or loss) of any other Person accrued or attributable to any period prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or such other Person's Property (or a portion thereof) is acquired by such Person or any of its Restricted Subsidiaries, and (v) non-cash items decreasing or increasing Consolidated Net Income arising out of currency translation effects. "Consolidated Net Worth" means Net Worth without giving effect to any purchase accounting adjustments if Consolidated Net Worth is being determined in connection with any merger, consolidation or other acquisition of, or by, the Company or any of its Subsidiaries. "Consolidated Secured Debt" means, collectively, the outstanding principal balance of the Debt evidenced by the Securities, the 10.25% Notes, the Second Priority Notes and the Subsequent Second Priority Notes, if any, in an aggregate principal amount of up to $50,000,000 and under the Revolving Credit Agreement and the outstanding amount of unpaid reimbursement obligations for drawn letters of credit with respect to the Debt under the Letter of Credit Agreement. 69 73 "Consolidated Senior Debt" means, at any time, all Consolidated Debt at such time, other than the then outstanding principal amount of: (i) the 10.25% Notes, (ii) the Second Priority Notes, (iii) the Subsequent Second Priority Notes, (iv) Debt of any Subsidiary of the Company payable to the Company or any Wholly Owned Subsidiary of the Company, and (v) Debt of the Company that is not secured by a Lien or that is junior in right of payment, and subordinate to, the Securities, which Debt matures after the Stated Maturity of the Securities, and has no principal payments scheduled until, a date which is at least six (6) months after the maturity date of the Securities. "Consolidated Tangible Net Worth" means, at any time, Consolidated Net Worth at such time, less Consolidated Intangible Assets at such time. "Consolidated Total Capitalization" means, at any time, the sum of: (i) Consolidated Net Worth at such time, plus (ii) Consolidated Debt. "Credit Documents" means, collectively, the Indenture, the Securities, the Note Agreement, the Collateral Documents and all other agreements, instruments and documents (including, without limitation, security agreements, loan agreements, notes, guarantees, mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust, subordination agreements, pledges, powers of attorney, consents, assignments, intercreditor agreements, mortgagee waivers, reimbursement agreements, contracts, notices, leases, financing statements and all other written items) relating in any way to the aforementioned agreements and instruments. "Currency Agreement" of any Person means any foreign exchange contract, currency swap agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values (as opposed to being used in any way for speculative trading purposes). "Current Debt" means, with respect to any Person, all Indebtedness of such Person for borrowed money which by its terms or by the terms of any instrument or agreement relating thereto matures on demand or within one year from the date of the creation thereof and is not directly or indirectly renewable or extendible at the option of the debtor to a date more than one year from the date of the creation thereof, provided that Indebtedness for borrowed money outstanding under a revolving credit or similar agreement which obligates the lender or lenders to extend credit over a period of more than one year shall constitute Funded Debt and not Current Debt, even though such Indebtedness by its terms matures on demand or within one year from the date of the creation thereof. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official appointed under any Bankruptcy Law. "Debt" means Current Debt and Funded Debt. "Default" means any event which through the passage of time, the giving of notice or both would mature into an Event of Default. "Default Rate" means a rate per annum from time to time equal to the greater of (i) 14.00%, and (ii) the LIBOR Rate plus 2.00%. "Depository" means, with respect to any Security issuable or issued in the form of one or more Global Securities, the Person designated as Depository by the Company in or pursuant to the Indenture, which Person must be, to the extent required by applicable law or regulation, a clearing agency registered under the Exchange Act, and, if so provided with respect to any Security, any successor to such Person. If at any time there is more than one such Person, "Depository" shall mean, with respect to any Securities, the qualifying entity which has been appointed with respect to such Securities. Unless and until otherwise designated by the Company to the Trustee, the Depository shall be The Depository Trust Company. "Discounted Value" means, with respect to the Called Principal of any Security, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with 70 74 accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Securities is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Domestic Subsidiary" means any Subsidiary organized under the laws of any state of the United States of America or the District of Columbia. "DPK" means D.P. Kelly & Associates, L.P., a Delaware limited partnership, and its successors and assigns. "Effective Date" means June 20, 1995. "Excess CF Amount" means, as to any Excess Cash Flow in any fiscal year of the Company, the aggregate amount of such Excess Cash Flow, less any repayments of Debt under the Revolving Credit Agreement required to be made pursuant to the terms of such Revolving Credit Agreement; provided, however, that the amount of any such required repayment shall not exceed the Revolver Pro Rata Share of the aggregate amount of such Excess Cash Flow. "Excess Cash Flow" means, for any period, the Company's Consolidated Cash Flow, less the sum of (i) consolidated cash interest expense (including the interest portion of any payments associated with Capital Lease Obligations) of the Company during such period, (ii) consolidated capital expenditures of the Company during such period, (iii) principal payments on indebtedness (including the principal portion of any Capital Lease Obligations) of the Company made or paid during such period, (iv) additions (reductions) to Working Capital of the Company during such period, (v) consolidated income tax expense of the Company that is actually paid during such period, and (vi) $15,000,000, all determined on a consolidated basis in accordance with GAAP. "Funded Debt" means, with respect to any Person, all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendable at the option of the debtor to a date more than one year (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from, the date of the creation thereof. "GAAP" means, at any date, United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are applicable to the circumstances as of the date of determination. "GECC" means General Electric Capital Corporation, a New York corporation, and its successors and assigns. "GECC Intercreditor Agreement" means that certain GECC Intercreditor Agreement, dated as of the Effective Date, among the Collateral Agent, GECC, Shawmut Bank Connecticut, National Association, as Owner Trustee, and the Company, as amended, supplemented or otherwise modified from time to time. "GECC Lease Documents" means (i) the Lease Agreement dated as of December 18, 1990 between The Connecticut National Bank (now known as Shawmut Bank Connecticut, National Association; "TCNB"), Owner Trustee, as lessor and Viskase Corporation, as lessee, (ii) the Participation Agreement dated as of December 18, 1990 among Viskase Corporation, the Company, GECC and TCNB and (iii) the related instruments and agreements with respect thereto, in each case as the same may have heretofore been or may hereinafter be amended, modified, restated, renewed or extended or refinanced from time to time. "Global Security" means a Security issued in global form. "Guaranty Agreement" means that certain Guaranty Agreement, dated as of the Effective Date, made by each Significant Domestic Subsidiary in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. 71 75 "Guarantee" means, with respect to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or non-furnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guarantee shall be equal to the outstanding principal amount of the obligation guaranteed or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited. "Holder" means any Person in whose name a Security is registered on the Registrar's books. "Indebtedness" means, with respect to any Person, without duplication, (i) all items (excluding items of contingency reserves or of reserves for deferred income taxes) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as of the date on which Indebtedness is to be determined, (ii) all indebtedness secured by any Lien on any property or asset owned or held by such Person subject thereto, whether or not the indebtedness secured thereby shall have been assumed, (iii) all indebtedness of others with respect to which such Person has become liable by way of a Guarantee (including, without limitation, all obligations of such Person with respect to surety bonds, bank acceptances, and letters of credit and other similar obligations), (iv) all obligations of such Person in respect of Currency Agreements or Interest Rate Agreements and (v) the maximum fixed repurchase price of any Redeemable Stock. For purposes of the preceding sentence, the maximum fixed repurchase price of any Redeemable Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Stock as if such Redeemable Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture; provided, that if such Redeemable Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Stock. "Intellectual Property Pledge Agreement" means, collectively, each Intellectual Property Security Agreement made at any time by the Company or any Subsidiary of the Company, respectively, in favor of the Collateral Agent, as amended, supplemented or modified from time to time. "Intercreditor Agreement" means that certain Intercreditor and Collateral Agency Agreement, dated as of the Effective Date, by and among the Lender, the Trustee, and BTCC, individually and as Collateral Agent and agent for the Letter of Credit Lenders, as the same may be amended, amended and restated, supplemented or modified from time to time. "Interest Rate Agreement" of any Person means any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or fixed rate of interest on a notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount and shall include, without limitation, any interest rate swap agreement, interest rate cap, floor or collar agreement, option or futures contract or other similar agreements or arrangements, designed to protect such Person or any of its Subsidiaries from fluctuations in interest rates (as opposed to being used in any way for speculative trading purposes). "Investment" means, as to any investing Person, any direct or indirect advance, loan (other than extensions of trade credit on commercially reasonable terms in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person or any of its Subsidiaries in accordance 72 76 with GAAP) or other extension of credit, guarantee or capital contribution to, or any acquisition by, such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person. In determining the amount of any Investment involving a transfer of Property, such Property shall be valued at its fair market value at the time of such transfer, and such fair market value shall be determined in good faith by the Board of Directors of the investing Person, whose determination in such regard shall be conclusive. "Joint Venture" of a Person means any Person in which the investing Person has a joint or shared equity interest but which is not a Subsidiary of such investing Person. "Lender" means, collectively, The Prudential Insurance Company of America, as lender under the Revolving Credit Agreement and all other lenders (if any) that exist under the Revolving Credit Agreement from time to time. "Letter of Credit Agreement" means the Credit Agreement, dated as of the Effective Date, between the Letter of Credit Lenders, BTCC, as agent for the Letter of Credit Lenders, and the Company, as amended, supplemented or otherwise modified from time to time. "Letter of Credit Lenders" means the financial institutions party to the Letter of Credit Agreement as "Lenders" from time to time. "LIBOR Business Day" means a day of the year on which dealings are carried on in the London interbank market and banks are open for business in London and not required or authorized to close in New York City. "LIBOR Rate" means (i) for any Rate Period, the sum of 5.75% plus the six month London Interbank Offered Rate at 11:00 A.M. (London time) two LIBOR Business Days prior to Rate Day, for U.S. dollar deposits in the London interbank market as such rate is reported on page 3750 by Telerate -- The Financial Information Network published by Telerate Systems Incorporated (Telerate), or its successor company; or (ii) if Telerate shall cease to report such rates on a regular basis, the LIBOR Rate shall mean, for any Rate Period, the sum of 5.75% plus the rate determined by the Trustee to be the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates quoted to the Trustee by the Reference Banks two LIBOR Business Days prior to Rate Day, for U.S. dollar deposits in the London interbank market. "Lien" means any mortgage, pledge, lien, charge, security interest, conditional sale or other title retention agreement (including, without limitation, any Capital Lease Obligations in the nature thereof) or other encumbrance of any kind or description, including, without limitation, any agreement to give or grant a Lien. "Management Agreement" means the Management Services Agreement dated as of December 4, 1991 between the Company and DPK, as the same was amended and restated by the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Company and DPK and as the same may from time to time, hereafter be amended, modified or restated upon the good faith approval, pursuant to duly adopted resolutions, of a majority of members of the Company's Board of Directors who are not Affiliates of DPK. "Material Subsidiary" means (a) any Subsidiary of the Company if (i) the total assets of such Subsidiary (and its Subsidiaries) exceed 10% of the total assets of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, or (ii) the revenues (or losses, as the case may be) of such Subsidiary (and its Subsidiaries) for the four consecutive fiscal quarters of such Subsidiary most recently ended (determined on a consolidated basis in accordance with GAAP and whether or not such Person was a Subsidiary of the Company during all or any part of the fiscal period of the Company referred to below) exceed an amount equal to 10% of the revenues (or losses, as the case may be) of the Company and its Subsidiaries for the four consecutive fiscal quarters of the Company most recently ended (determined on a consolidated basis in accordance with GAAP), and (b) in any event each of (i) Sandusky Plastics of Delaware, Inc., a Delaware corporation; (ii) Sandusky Plastics, Inc., a Delaware corporation; (iii) Viskase Corporation, a Pennsylvania corporation; (iv) Clear Shield National, Inc., a California corporation; (v) Viskase Holding Corporation, a Delaware corporation; (vi) Viskase Sales Corporation, a Delaware corporation; and (vii) Viskase S.A. 73 77 "Mortgage" means, collectively, any or all of the mortgages, deeds of trust or other security instruments now or hereafter granting (or purporting to grant) Liens on the real property or leasehold estates or on any other real property or leasehold estates of the Company or its Subsidiaries to the Collateral Agent, as they may be amended, supplemented or otherwise modified from time to time. "Net Worth" means as of any date the aggregate amount of the capital, surplus and retained earnings of the Company and its Subsidiaries as would be shown on a consolidated balance sheet of the Company and its Subsidiaries prepared as of such date in accordance with GAAP (and excluding minority interests); provided that capital and surplus attributable to Redeemable Stock and accumulated translation adjustments shall be excluded. "Percentage of Total Assets Transferred" means, with respect to each asset Transferred pursuant to the terms of the Indenture (including assets transferred pursuant to a Transfer by Merger), the ratio (expressed as a percentage) of (i) the greater of such asset's fair market value or the net book value of such assets on the date of Transfer to (ii) the book value of the consolidated assets of the Company and its Subsidiaries as of the last day of the fiscal quarter of the Company immediately preceding the day of Transfer. "Permitted Liens" in respect of any Person means (i) pledges or deposits made by such Person under workers' compensation, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or operating leases to which such Person is a party, or deposits to secure statutory or regulatory obligations of such Person or deposits of cash or U.S. Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (ii) Liens arising by operation of law such as carriers', warehousemen's and mechanics' Liens, in each case arising in the ordinary course of business and with respect to amounts not yet due or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens for taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iv) Liens evidenced by the Capitalized Lease Obligations under GECC Lease Documents and Liens securing Debt of the Company or its Subsidiaries permitted under the Indenture for refinancing the Debt under the GECC Lease Documents; provided, however, that in connection with any such refinancing any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (v) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its Property which were not incurred in connection with Debt or other extensions of credit and which do not in the aggregate materially adversely affect the value of said Property or materially impair the use of such Property in the operation of the business of such Person; (vi) Liens in favor of the Collateral Agent to secure Debt evidenced by the Securities, Debt under the Revolving Credit Agreement and the Letter of Credit Agreement and any related guaranties; (vii) certain other Liens existing on the Effective Date; (viii) Liens arising out of judgments or awards against such Person not giving rise to an Event of Default with respect to which such Person is diligently prosecuting an appeal or other proceedings for review; (ix) Liens to secure certain refinancing Debt; provided, however, that any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (x) Liens to secure Purchase Money Indebtedness and Acquired Debt (to the extent such Liens attach prior to or at the time of incurrence of such Debt); (xi) Liens to secure the Debt (if any) evidenced by the Second Priority Notes and the Subsequent Second Priority Notes in an aggregate principal amount not to exceed $50,000,000; provided, however, that (a) the Lien securing such Debt is granted only to the Collateral Agent and made subject to the terms of the Intercreditor Agreement, and (b) the intercreditor Agreement is amended to the reasonable satisfaction of the Collateral Agent to add the Second Priority Notes Trustee as a party thereto, and to provide for such matters incidental thereto as the Collateral Agent may reasonably require; and 74 78 (xii) Liens securing Debt of Wholly Owned Subsidiaries of the Company to the Company or another such Wholly Owned Subsidiary. "Person" means any individual, partnership, corporation, limited liability company, venture, joint venture, unincorporated organization, joint-stock company, trust or any government or agency or political subdivision thereof or other entity of any kind. "Pledge Agreement" means, collectively, each Pledge Agreement made at any time by the Company or any Subsidiary of the Company in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. "Property" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other Person. "Purchase Money Indebtedness" means, as to any Person, the Debt of such Person incurred and owing in respect of all or part of the purchase price of Property purchased where such Debt is fully secured by the Property purchased. "Rate Day" means for each Rate Period the first day of such Rate Period; provided, however, that if such day is not a LIBOR Business Day, then the next LIBOR Business Day succeeding the first day of such Rate Period. "Rate Period" means the period during which the LIBOR Rate remains in effect and unchanged. For purposes of the Indenture, the Rate Period shall begin on the fifteenth day of each June and December of each year, commencing with June 15, 1995. "Redeemable Stock" means, with respect to any Person, any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable by contract or otherwise, is or upon the happening of an event or the passage of time would be, required to be redeemed or is redeemable at the option of the holder thereof at any time prior to the Stated Maturity of the principal of the Securities, or, at the option of the holder thereof, is convertible into or exchangeable for debt securities maturing at any time prior to the Stated Maturity of the principal of the Securities. "Registered Exchange Offer" means the offer to exchange the Series B Securities for all of the outstanding Series A Securities and the Series D Securities for all of the outstanding Series C Securities, in each case in accordance with the Registration Rights Agreement. "Registration Rights Agreement" means the Exchange and Registration Rights Agreement by and between the Company and the Holders party thereto, relating to the Securities and dated the Effective Date, as amended, supplemented or otherwise modified from time to time. "Reinvestment Yield" means, with respect to the Called Principal of any Security, 1.0% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" on the Telerate Service (or such other display as may replace Page 678 on the Telerate Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between reported yields. "Remaining Average Life" means, with respect to the Called Principal of any Security, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the 75 79 sum of the products obtained by multiplying (a) each Remaining Scheduled Payment of such Called Principal (but not of interest thereon) by (b) the number of years (calculated to the nearest one-twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Security, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date. "Restricted Debt" means all Consolidated Debt other than Consolidated Senior Debt. "Required Holders" means the Holder or Holders of at least a majority of the aggregate principal amount of the Securities from time to time outstanding (without giving effect to any Securities owned of record by the Company or any of its Affiliates). "Responsible Officer" means, with respect to any corporation, the chief executive officer, chief operating officer, chief financial officer, treasurer, or chief accounting officer of such corporation or any other officer of such corporation involved principally in its financial administration or its controllership function. "Revolving Credit Agreement" means that certain Revolving Credit Agreement, dated as of the Effective Date between the Company and The Prudential Insurance Company of America, as amended, supplemented or otherwise modified from time to time or as replaced pursuant to a refinancing thereof. "Revolving Loan Commitment" means, at any time, the aggregate principal amount which may be borrowed under the Revolving Loan Agreement at such time (determined without giving effect to any suspension or termination of the Lender's obligation to make loans thereunder upon the occurrence of a default or an "Event of Default" thereunder). "Sale and Leaseback Transaction" means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold by such Person or a Subsidiary of such Person and thereafter leased back from the purchaser thereof by such Person or one of the Subsidiaries of such Person. "Second Priority Notes" means the debt securities which may be issued by the Company under an indenture (the "Second Priority Notes Indenture") pursuant to the 10.25% Note Exchange. "Second Priority Notes Indenture" has the meaning given to such term in the definition of Second Priority Notes. "Second Priority Notes Trustee" means trustee for the Second Priority Notes and Subsequent Second Priority Notes, respectively (in such capacity) and each successor thereto in such capacity. "Security Agreement" means, collectively, each Security Agreement made at any time by the Company or any Subsidiary of the Company in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. "Securities" means the outstanding Series A Securities, Series B Securities, Series C Securities or Series D Securities, as the case may be. "Series A Securities" means the 12% First Priority Senior Secured Notes due 2000, Series A, being issued pursuant to the Indenture. "Series B Securities" means the 12% First Priority Senior Secured Notes due 2000, Series B (the terms of which are identical to the Series A Securities except that the Series B Securities shall be registered under the Securities Act, and shall not contain the restrictive legend on the face of the form of the Series A Securities), to be issued in exchange for the Series A Securities pursuant to the Exchange Offer. "Series C Securities" means the Floating Rate First Priority Senior Secured Notes due 2000, Series C, being issued pursuant to the Indenture. 76 80 "Series D Securities" means the Floating Rate First Priority Senior Secured Notes due 2000, Series D (the terms of which are identical to the Series C Securities except that the Series D Securities shall be registered under the Securities Act, and shall not contain the restrictive legend on the face of the form of the Series C Securities), to be issued in exchange for the Series C Securities pursuant to the Exchange Offer. "Settlement Date" means, with respect to the Called Principal of any Security, the date on which such Called Principal is to be redeemed or prepaid (as the case may be) pursuant to the "Change of Control" covenant, the redemption obligations following a Transfer of Property equal to $5,000,000 or more or an optional redemption, or is declared to be immediately due and payable pursuant to an Event of Default, as the context requires. "Significant Domestic Subsidiary" means each Domestic Subsidiary that, at any time, is a Material Subsidiary. "Stated Maturity" when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. "Stipulated Loss Value" means the Stipulated Loss Value, as defined in the GECC Lease Documents (as such GECC Lease Documents are in effect on the Effective Date.) "Subsequent Second Priority Notes" means any and all debt securities issued by the Company under an indenture in exchange for Second Priority Notes and having terms identical to the Second Priority Notes and otherwise being the same as the Second Priority Notes except that such debt securities are registered under the Securities Act. "Subsequent Securities" means, collectively, any and all Series B Securities and Series D Securities issued by the Company. "Subsidiary" means, with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. "Subsidiary Guarantor" means (i) each of the Significant Domestic Subsidiaries existing on the Effective Date, and (ii) each of the Company's other Subsidiaries which becomes a guarantor of the Securities. "10.25% Note Exchange" means an exchange by the Company pursuant to which the Company issues Second Priority Notes in an aggregate face amount of not more than $50,000,000 in exchange for 10.25% Notes pursuant to an exchange ratio (based on aggregate face amount) of no greater than 1:1. "10.25% Notes" means, collectively, the 10.25% Senior Notes due 2001 issued by the Company pursuant to the 10.25% Notes Indenture. "10.25% Notes Indenture" means that certain Indenture, dated as of December 31, 1993, between the Company and Bankers Trust Company, as trustee, as amended, supplemented or otherwise modified from time to time. "Transfer" means any sale, exchange, conveyance, lease, transfer or other disposition. "Transfer by Merger" means, with respect to any Subsidiary of the Company, a merger or consolidation of such Subsidiary with another Person such that after giving effect thereto the surviving entity is no longer a Subsidiary of the Company. 77 81 "Voting Securities" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, under ordinary circumstances and in the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). "Wholly Owned Subsidiary" of a Person means any Subsidiary of such Person 100% of the total capital stock of which, other than directors' qualifying shares, is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person. "Working Capital" means, current assets less current liabilities where current assets equals accounts receivable, inventory and other current assets (excluding cash and cash equivalents) and current liabilities equals accounts payable and accrued liabilities (both excluding accrued interest payable, accrued income taxes payable and any payables related to capital expenditures), all as reflected on the Company's consolidated financial statements prepared in accordance with GAAP. "Yield-Maintenance Amount" means, with respect to any Security, an amount equal to the excess, if any, of the Discounted Value of the Called Principal of such Security over the sum of (i) such Called Principal plus (ii) interest accrued thereon as of (including interest due on) the Settlement Date with respect to such Called Principal. The Yield-Maintenance Amount shall in no event be less than zero. The Yield-Maintenance Amount shall be calculated for purposes of the Series C Securities and Series D Securities as if interest on such Securities accrues at the same per annum rate as interest accrues on the Series A Securities and Series B Securities. DESCRIPTION OF INTERCREDITOR ARRANGEMENTS In the event of a default under the Revolving Credit Agreement, the Letter of Credit Agreement or the Indenture, collateral rights or remedies cannot be exercised without the consent of the "Requisite Working Capital Lenders" (as defined below) and Holders of 35% of the Notes; provided, however, that following a "Serious Default" (as defined below), the Requisite Working Capital Lenders may unilaterally commence "Enforcement" (as defined below) after provision of notice to the Trustee under the Indenture and the passage of ninety days. If the Requisite Working Capital Lenders, after the passage of such 90 day period and at any time thereafter prior to the passage of 180 days, exercise their unilateral enforcement rights without the consent of Holders of 35% of the Notes, then the Requisite Working Capital Lenders are solely responsible for indemnifying the Collateral Agent, the Holders of the Notes and any other lenders not joining in such enforcement action against any liability, costs or expenses incurred by any of them in connection with such Enforcement. The term "Requisite Working Capital Lenders" means (i) at any time commitments are outstanding under the Letter of Credit Agreement, letters of credit are issued and outstanding under the Letter of Credit Agreement or the Company has any payment obligations owing under the Letter of Credit Agreement, the holders of the majority of the sum of (a) the commitments under the Letter of Credit Agreement and (b) the outstanding reimbursement obligations and other payment obligations under the Letter of Credit Agreement, and (ii) at any other time, the holders of a majority of the revolving loans made under the Revolving Credit Agreement. The term "Serious Default" means an event of default under the Revolving Credit Agreement or the Letter of Credit Agreement resulting from (i) a payment default under either such agreement, or (ii) a violation by the Company of the any of the negative covenants or of any of the other default provisions in either such agreement. The term "Enforcement" means (i) the exercise of any remedial provisions under the Indenture, the Letter of Credit Agreement or the Revolving Credit Agreement or the termination of any commitments to lend thereunder, (ii) the exercise of enforcement remedies by the Collateral Agent, or (iii) the commencement by or against the Company or any Subsidiary Guarantor, of any bankruptcy proceeding. 78 82 The Letter of Credit Lenders have agreed (i) not to increase the facility provided under the Letter of Credit Agreement to the Company above $28,000,000 and (ii) not to amend, modify or waive any default provision (other than waivers of default provisions neither relating to payment defaults or breaches of negative covenants), negative covenant or material economic terms (such defaults, covenants and material economic terms being collectively referred to hereinafter as the "Specified Provisions") of the Letter of Credit Agreement without the written consent of the lenders under the Revolving Credit Agreement and of Holders of 35% of the Notes. The lenders under the Revolving Credit Agreement have agreed not to make revolving loans in excess of an aggregate of $35,000,000 at any one time outstanding or to amend, modify or waive any Specified Provision in the Revolving Credit Agreement without the written consent of the agent under the Letter of Credit Agreement and Holders of 35% of the Notes. The Trustee under the Indenture has agreed not to amend, modify or waive any Specified Provision in the Indenture without the written consent of the Requisite Working Capital Lenders. Amounts received by the Collateral Agent or by any holder of the Notes or the holders of indebtedness outstanding under the Letter of Credit Agreement or the Revolving Credit Agreement (including amounts received in connection with the exercise of setoff or similar rights) after Enforcement has occurred are in relevant part applied to obligations of the Company in the following order of priority: (i) first, to reimburse the Collateral Agent for all costs, expenses and indemnities incurred in connection with the performance of its duties as Collateral Agent; (ii) second, to pay any outstanding obligations under the Letter of Credit Agreement; (iii) third, to reimburse the Trustee under the Indenture for all costs, expenses and indemnities owing to it under the Indenture; (iv) fourth, to pay on a pari passu basis, interest and unpaid prepayment premium due under the Revolving Credit Agreement and with respect to the Notes; (v) fifth, to pay on a pari passu basis, principal due under the Revolving Credit Agreement and with respect to the Notes; and (vi) sixth, to pay on a pari passu basis, all other amounts outstanding under the Revolving Credit Agreement and with respect to the Notes. Pursuant to the Intercreditor Agreement, the Collateral Agent on behalf of the holders of the Notes and the lenders under the Letter of Credit Agreement and the Revolving Credit Agreement have entered into an Intercreditor Agreement with General Electric Capital Corporation, as Owner Participant ("GECC"), and Shawmut Bank Connecticut, National Association, as Owner Trustee (the "GECC Intercreditor Agreement"). The GECC Intercreditor Agreement permits the Collateral Agent to cure certain payment and nonpayment defaults which may arise under the lease agreements relating to the plants subject thereto. In the event GECC repossesses any of such plants, it must cooperate with the collateral agent to utilize such plants to convert any inventory consisting of work in process into finished goods inventory. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a summary of certain material United States federal income tax consequences of acquiring, holding and disposing of the New Notes. The summary is based upon the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), existing and proposed Treasury regulations, administrative pronouncements and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their particular circumstances or to certain types of investors subject to special treatment under the federal income tax laws (for example, dealers in securities, tax-exempt organizations and insurance companies). This summary does not discuss the federal income tax consequences to a beneficial owner of a Note who, for United States federal income tax purposes, is a non-resident alien individual, a 79 83 foreign corporation, a foreign partnership or a foreign estate or trust. Furthermore, this summary does not discuss the consequences to an investor under state, local or foreign tax laws. Prospective investors are advised to consult their own tax advisors regarding the federal, state, local and other tax considerations of holding and disposing of the New Notes. The following summary assumes that holders of the New Notes will hold them as "capital assets" within the meaning of Section 1221 of the Code. The discussion is not binding on the courts or the Internal Revenue Service ("IRS"). The Company has not sought and will not seek any rulings from the IRS with respect to the positions of the Company discussed herein. There can be no assurance that the IRS will not take a different position concerning the tax consequences of holding and disposing of the New Notes. The Exchange An exchange of Old Notes for New Notes pursuant to the Exchange Offer should not be treated as a sale, exchange or other taxable event for federal income tax purposes because the New Notes should not be considered to differ materially in kind or extent from the Old Notes. As a result, no material federal income tax consequences should result from an exchange of Old Notes for New Notes pursuant to the Exchange Offer. For federal income tax purposes, a New Note received by a beneficial owner of an Old Note should be treated as a continuation of the Old Note in the hands of such owner. Stated Interest A beneficial owner of a New Note (a "Holder") will generally be required to report as ordinary income for federal income tax purposes interest received or accrued on the New Note in accordance with the Holder's method of tax accounting. Market Discount and Bond Premium A subsequent purchaser of a Note will be treated as having acquired a Note at a "market discount" to the extent that such purchaser's tax basis in the Note is less than (by more than a specified de minimis amount) the Note's outstanding principal amount at the time of purchase. A Holder in whose hands a Note has market discount generally will be required to treat as ordinary income any gain recognized on the sale, exchange, redemption or other disposition of, or any full or partial principal payment on, the Note to the extent of accrued market discount. In general, market discount accrues on a ratable basis, although a Holder of a Note may elect to accrue market discount on a constant-yield basis. A Holder of a Note having market discount may be required to defer the deduction of all or a portion of the interest on any indebtedness incurred or maintained to purchase or carry the Note generally until the Note is disposed of in a taxable transaction. A Holder of a Note having market discount may elect to include market discount in income as it accrues, in which case the foregoing market discount rules would not apply. The election generally applies to all market discount bonds acquired by the electing Holder on or after the first day of the first year of election and is generally irrevocable without the consent of the IRS. A subsequent purchaser of a Note will be treated as having acquired a Note with "bond premium" to the extent that such purchaser's tax basis in the Note (exclusive of any amount attributable to accrued and unpaid interest) exceeds the Note's outstanding principal amount at the time of purchase. A Holder may elect to amortize bond premium. In general, in the case of debt instruments, such as the Notes, that are callable prior to maturity, the amortizable bond premium will be determined with reference to the amount payable on maturity or, if it results in a smaller amortization of premium attributable to the period through the earlier call date, with reference to the amount payable on the earlier call date (with adjustments to the amortization of bond premium attributable to periods after the call date). The application of that rule is not entirely clear in the case of debt instruments, such as the Notes, that are callable on each day during their term. If bond premium is amortized, the amount of interest which must be included in the Holder's income during a period will be reduced by the portion of the premium allocable to such period. The election to amortize bond 80 84 premium generally applies to all debt instruments held by the Holder at the beginning of the year of election or acquired thereafter. Sale, Exchange or Redemption of Notes Upon the sale, redemption or other disposition of a Note, a Holder will recognize gain or loss equal to the difference between the amount of sale or redemption proceeds (exclusive of proceeds attributable to accrued but unpaid interest) and the Holder's adjusted tax basis in the Note. Proceeds attributable to accrued but unpaid interest will be treated as interest income to the extent not previously taken into income by a Holder. A Holder's adjusted tax basis generally will equal the Holder's purchase price for the Note increased by any market discount previously included in income by such Holder with respect to such Note, and decreased by the aggregate amount of principal previously received and any bond premium previously amortized by such Holder with respect to such Note. Generally, any gain or loss recognized by a Holder of a Note upon a sale, redemption or other disposition of the Note will be capital gain or loss, except as described under "Market Discount and Bond Premium," above. Such capital gain or loss will be long-term capital gain or loss provided the Note has been held for more than one year. Backup Withholding A Holder of a Note may be subject to backup withholding at the rate of 31 percent with respect to interest and premium paid on the Notes and gross proceeds from the sale of a Note, unless such Holder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact or (b) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A Holder of a Note who does not provide the Company with the Holder's correct taxpayer identification number may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the Holder's tax liability. THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS NOT TAX ADVICE. ACCORDINGLY, EACH PERSON CONSIDERING THE ACQUISITION OF NEW NOTES SHOULD CONSULT A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO HIM, HER OR IT OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS AND OF CHANGES IN APPLICABLE TAX LAWS. PLAN OF DISTRIBUTION Prior to the Offering, there was no market for any of the Notes and the Company does not intend to apply for the listing of any of its securities on any national securities exchange or for their quotation through the NASDAQ system. The Old Notes are eligible for trading in the Private Offerings, Resales and Trading through Automatic Linkages ("PORTAL") market. There can be no assurance that an active trading market will develop for, or as to the liquidity of, any of the Notes. With respect to resales of New Notes, based on an interpretation by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that any holder or beneficial owner (other than a person that is an affiliate of the Company within the meaning of Rule 405 under the Securities Act or a "broker" or "dealer" registered under the Exchange Act) who exchanges Old Notes for New Notes in the ordinary course of business and who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes, will be allowed to resell the New Notes to the public without further registration under the Securities Act and without delivering to the purchasers of the New Notes a prospectus that satisfies the requirements of Section 10 thereof. However, if any holder or beneficial owner acquires New Notes in the Exchange Offer for the purpose of distributing or participating in a distribution of the New Notes, such holder or beneficial owner cannot rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (available April 13, 1988) or similar no-action letters or any similar interpretive letters and must comply with the 81 85 registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction, unless an exemption from registration is otherwise available. As contemplated by the above no-action letters and the Registration Rights Agreement, each holder accepting the Exchange Offer is required to represent to the Company in the Letter of Transmittal that (i) the New Notes are to be acquired by the holder and any beneficial owners in the ordinary course of business, (ii) the holder and any beneficial owners are not engaging and do not intend to engage in the distribution of the New Notes, (iii) neither the holder nor any beneficial owner is an affiliate of the Company within the meaning of Rule 405 under the Securities Act, and (iv) the holder and each beneficial owner acknowledge that if such holder or beneficial owner participates in the Exchange Offer for the purpose of distributing the New Notes, such holder or beneficial owner must comply with the registration and prospectus delivery requirements of the Securities Act and cannot rely on the above no-action letters. Any broker or dealer registered under the Exchange Act (each a "Broker-Dealer") who holds Old Notes that were acquired for its own account as a result of market-making activities or other trading activities (other than Old Notes acquired directly from the Company), may exchange such Old Notes for New Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed an underwriter within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the New Notes received by it in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of this Prospectus. Any Broker-Dealer participating in the Exchange Offer will be required to acknowledge that it will deliver a prospectus in connection with any resales of New Notes received by it in the Exchange Offer. However only Broker-Dealers who exchange Old Notes that were acquired for their own account as a result of market-making activities or other trading activities (other than Old Notes acquired directly from the Company), may use this Prospectus to satisfy the prospectus delivery requirements of the Securities Act. The delivery by a Broker-Dealer of a prospectus in connection with resales of New Notes shall not be deemed to be an admission by such Broker- Dealer that it is an underwriter within the meaning of the Securities Act. LEGAL MATTERS Certain legal matters will be passed upon for the Company and the Subsidiary Guarantors by Stephen M. Schuster, Esq., Oak Brook, Illinois. Mr. Schuster beneficially owns 39,944 shares of Common Stock of the Company (which includes options to purchase 22,850 shares and 2,000 shares owned by Mr. Schuster's spouse). EXPERTS The consolidated balance sheets as of December 29, 1994 and December 31, 1993 and the consolidated statements of operations, stockholders' equity (deficit) and cash flows for the period January 1 to December 29, 1994 (Post-Consummation); the period January 1 to December 31, 1993 (Pre-Consummation) and the period December 27, 1991 to December 31, 1992 (Pre-Consummation) included in this Prospectus, have been included herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 82 86 INDEX TO FINANCIAL STATEMENTS UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheets at March 30, 1995 (unaudited) and December 29, 1994...... F-2 Unaudited consolidated statements of operations for the three months ended March 30, 1995 and March 31, 1994............................................................ F-3 Unaudited consolidated statements of cash flows for the three months ended March 30, 1995 and March 31, 1994............................................................ F-4 Notes to consolidated financial statements........................................... F-5 CONSOLIDATED FINANCIAL STATEMENTS Report of independent accountants.................................................... F-16 Consolidated balance sheets at December 29, 1994 and December 31, 1993............... F-17 Consolidated statements of operations for the years ended December 29, 1994, December 31, 1993 and December 31, 1992..................................................... F-18 Consolidated statements of stockholders' equity (deficit) for the years ended December 29, 1994, December 31, 1993, December 31, 1992 and December 26, 1991...... F-19 Consolidated statements of cash flows for the years ended December 29, 1994, December 31, 1993 and December 31, 1992..................................................... F-20 Notes to consolidated financial statements........................................... F-21
F-1 87 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MARCH 30, DECEMBER 29, 1995 1994 --------- ------------- (UNAUDITED) (IN THOUSANDS) ASSETS Current assets: Cash and equivalents................................................ $ 7,209 $ 7,289 Receivables, net.................................................... 89,007 86,868 Inventories......................................................... 124,470 110,483 Other current assets................................................ 30,311 19,466 --------- --------- Total current assets........................................ 250,997 224,106 Property, plant and equipment, including those under capital lease.... 518,958 506,099 Less accumulated depreciation and amortization...................... 46,166 35,761 --------- --------- Property, plant and equipment, net.................................. 472,792 470,338 Deferred financing costs.............................................. 9,130 9,143 Other assets.......................................................... 45,842 47,181 Excess reorganization value........................................... 143,252 145,868 --------- --------- $ 922,013 $ 896,636 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease................................... $ 28,221 $ 25,798 Accounts payable.................................................... 34,680 34,335 Accrued liabilities................................................. 73,805 72,246 --------- --------- Total current liabilities................................... 136,706 132,379 Long-term debt including obligation under capital lease............... 510,944 489,358 Accrued employee benefits............................................. 56,927 56,217 Deferred and noncurrent income taxes.................................. 83,426 83,333 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding................... Common stock, $.01 par value; 13,515,000 shares issued and outstanding...................................................... 135 135 Paid in capital..................................................... 134,865 134,865 Accumulated (deficit)............................................... (7,507) (3,612) Cumulative foreign currency translation adjustments................. 6,517 3,961 --------- --------- Total stockholders' equity.................................. 134,010 135,349 --------- --------- $ 922,013 $ 896,636 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. F-2 88 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED ------------------------- MARCH 30, MARCH 31, 1995 1994 ---------- ---------- (IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES AND PER SHARE AMOUNTS) NET SALES..................................................... $ 155,824 $ 142,593 COSTS AND EXPENSES Cost of sales................................................. 113,689 102,119 Selling, general and administrative........................... 29,536 26,918 Amortization of intangibles and excess reorganization value... 3,910 3,846 ---------- ---------- OPERATING INCOME.............................................. 8,689 9,710 Interest income............................................... 64 61 Interest expense.............................................. 13,434 12,059 Other income, net............................................. 591 281 Minority interest in loss of subsidiary....................... 50 ---------- ---------- (LOSS) BEFORE INCOME TAXES.................................... (4,090) (1,957) Income tax provision (benefit)................................ (195) 550 ---------- ---------- NET (LOSS).................................................... $ (3,895) $ (2,507) ========== ========== WEIGHTED AVERAGE COMMON SHARES................................ 13,515,000 13,500,000 PER SHARE AMOUNTS: NET (LOSS).................................................... $ (.29) $ (.19) ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. F-3 89 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED ----------------------- MARCH 30, MARCH 31, 1995 1994 --------- --------- (IN THOUSANDS) Cash flows from operating activities: Net (loss)........................................................... $(3,895) $(2,507) Adjustments to reconcile net (loss) to net cash provided by operating activities: Depreciation and amortization under capital lease................. 9,986 9,000 Amortization of intangibles and excess reorganization value....... 3,910 3,846 Amortization of deferred financing fees and discount.............. 549 362 Decrease in deferred and noncurrent income taxes.................. (907) (936) Foreign currency transaction gain................................. (1,586) (837) Changes in operating assets and liabilities: Increase in accounts receivable................................. (438) (7,798) Increase in inventories......................................... (12,192) (7,719) Increase in other current assets................................ (10,615) (9,529) Increase in accounts payable and accrued liabilities............ 254 1,954 Other........................................................... 398 949 ------- ------- Total adjustments............................................ (10,641) (10,708) ------- ------- Net cash used in operating activities........................... (14,536) (13,215) Cash flows from investing activities: Capital expenditures................................................. (7,631) (7,354) Proceeds from sale of property, plant and equipment.................. 20 Purchase of minority interest in subsidiary.......................... (4,200) ------- ------- Net cash (used in) investing activities......................... (7,631) (11,534) Cash flows from financing activities: Proceeds from revolving loan and long-term borrowings................ 42,249 25,836 Deferred financing costs............................................. (464) (10) Repayment of revolving loan, long-term borrowings and capital lease obligations....................................................... (19,973) (5,058) ------- ------- Net cash provided by financing activities....................... 21,812 20,768 Effect of currency exchange rate changes on cash....................... 275 175 ------- ------- Net decrease in cash and equivalents................................... (80) (3,806) Cash and equivalents at beginning of period............................ 7,289 7,743 ------- ------- Cash, restricted cash and equivalents at end of period................. $ 7,209 $ 3,937 ======= ======= - ------------------------------------------------------------------------------------------------ Supplemental cash flow information: Interest paid........................................................ $16,330 $16,420 Income taxes paid.................................................... $ 1,045 $ 479
The accompanying notes are an integral part of the consolidated financial statements. F-4 90 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. CHAPTER 11 REORGANIZATION PROCEEDINGS On January 6, 1993, a group of bondholders filed an involuntary petition for reorganization of Envirodyne Industries, Inc. under Chapter 11 of the U.S. Bankruptcy Code. On January 7, 1993 Viskase Corporation, Viskase Sales Corporation, Viskase Holding Corporation, Clear Shield National, Inc., Sandusky Plastics of Delaware, Inc., Sandusky Plastics, Inc. and Envirodyne Finance Company each filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the Bankruptcy Court). On December 17, 1993, the Bankruptcy Court confirmed the First Amended Joint Plan of Reorganization as twice modified (Plan of Reorganization) with respect to Envirodyne Industries, Inc. (Envirodyne) and certain of its subsidiaries. The Plan of Reorganization was consummated and Envirodyne and certain of its subsidiaries emerged from Chapter 11 on December 31, 1993 (Effective Date). For accounting purposes, the Plan of Reorganization was deemed to be effective as of December 31, 1993. The Plan of Reorganization provided for the initial issuance of approximately 13,500,000 shares of Envirodyne common stock, warrants to purchase an additional 1,500,000 shares (subject to adjustment) and $219,262,000 principal amount of 10 1/4% Senior Notes Due 2001 (10 1/4% Notes). Holders of allowed general unsecured claims of Envirodyne (as opposed to subsidiaries of Envirodyne) became entitled to receive 32.28 shares of common stock for each $500 amount of their prepetition claims, or a total of 8,070 shares of common stock, representing .06% of the common stock initially issued pursuant to the Plan of Reorganization. These claims totaled approximately $125,000. If the allowed amount of general unsecured claims of Envirodyne exceeds $125,000, for example upon the resolution of disputed claims, additional shares of common stock will have to be issued to the holders of allowed general unsecured claims of Envirodyne in order to provide equitable allocation of value among Envirodyne's unsecured creditors under the Plan of Reorganization. Such additional shares of common stock would be distributed with respect to allowed general unsecured claims of Envirodyne as follows: (i) approximately 2.58 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $125,000 and $25,000,000; (ii) approximately 5.61 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $25,000,000 and $50,000,000; (iii) approximately 9.22 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $50,000,000 and $75,000,000; and (iv) approximately 13.58 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $75,000,000 and $100,000,000. Refer to Note 5 for a discussion of disputed claims which, if determined adversely to Envirodyne, would result in the issuance of common stock. The Company accounted for the reorganization using the principles of fresh start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." Accordingly, all assets and liabilities were restated to reflect their reorganization value. A reorganization value of the Company's equity of $135,000,000 was based on the consideration of many factors and various valuation methods, including discounted cash flows, comparable multiples of earnings and other applicable measurements and valuation techniques believed by management and its financial advisors to be representative of the Company's business and industry. The excess of the reorganization value over the fair value of net assets and liabilities has been reported as excess reorganization value and is being amortized over a fifteen-year period. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) Principles of Consolidation The consolidated financial statements include the accounts of Envirodyne and its subsidiaries. F-5 91 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 3. INVENTORIES Inventories consisted of:
MARCH 30, DECEMBER 29, 1995 1994 --------- ------------ (IN THOUSANDS) Raw materials................................................ $ 24,077 $ 20,358 Work in process.............................................. 41,732 37,613 Finished products............................................ 58,661 52,512 --------- -------- $ 124,470 $110,483 ========= ========
Approximately 54% of the inventories at March 30, 1995 were valued at Last-In, First-Out (LIFO). These LIFO values exceeded current manufacturing cost by approximately $4.4 million at March 30, 1995. 4. DEBT OBLIGATIONS As described in Note 1, Chapter 11 Reorganization Proceedings, Envirodyne and certain of its domestic Subsidiaries emerged from Chapter 11 on December 31, 1993. The $219,262,000 principal amount of 10 1/4% Notes were issued pursuant to an Indenture dated as of December 31, 1993 (10 1/4% Note Indenture) between Envirodyne and Bankers Trust Company, as Trustee. The 10 1/4% Notes are the unsecured senior obligations of Envirodyne, bear interest at the rate of 10 1/4% per annum, payable on each June 1 and December 1, and mature on December 1, 2001. The 10 1/4% Notes are redeemable, in whole or from time to time in part, at the option of Envirodyne, at the percentages of principal amount specified below plus accrued and unpaid interest to the redemption date, if the 10 1/4% Notes are redeemed during the 12-month period commencing on January 1 of the following years:
YEAR PERCENTAGE ---- ---------- 1995...................................................................... 105% 1996...................................................................... 104% 1997...................................................................... 103% 1998...................................................................... 102% 1999...................................................................... 101% 2000 and thereafter....................................................... 100%
The 10 1/4% Note Indenture contains covenants with respect to Envirodyne and its subsidiaries limiting (subject to a number of important qualifications), among other things, (i) the ability to pay dividends on or redeem or repurchase capital stock, (ii) the incurrence of indebtedness, (iii) certain affiliate transactions and (iv) the ability of the Company to consolidate with or merge with or into another entity or to dispose of substantially all its assets. In connection with the consummation of the Plan of Reorganization, Envirodyne and certain of its subsidiaries (Borrowers) entered into a Credit Agreement dated December 31, 1993 (Credit Agreement) with the lenders party thereto (Lenders) and with Bank of America Illinois (formerly Continental Bank N.A.), Citibank International PLC and Citicorp North America, Inc., as agents for the Lenders. The Credit Agreement provides for a $195,000,000 facility, consisting of a $100,000,000 domestic term loan facility, a $65,000,000 domestic revolving credit facility (which includes a $27,000,000 domestic letter of credit facility) and a $30,000,000 amortizing multicurrency revolving credit facility (which includes a $3,000,000 multicurrency letter of credit facility). The commitment under the amortizing multicurrency revolver was $27,300,000 at March 30, 1995. The initial borrowings under the Credit Agreement were used (i) to pay indebtedness under the Postpetition Credit Agreement dated as of February 5, 1993 among the Debtors, the lenders party F-6 92 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) thereto (DIP Lenders) and Continental Bank N.A., as agent for the DIP Lenders, (ii) to pay indebtedness under certain foreign credit facilities, (iii) to pay the claims of subsidiary trade creditors under the Plan of Reorganization and (iv) to pay certain fees and expenses relating to the Plan of Reorganization and the Credit Agreement. Obligations under the Credit Agreement are collateralized by substantially all of the assets of Envirodyne and its domestic subsidiaries and by the pledge of the capital stock of substantially all of Envirodyne's subsidiaries. Availability of funds under the Credit Agreement is subject to a borrowing base measured by certain assets of Envirodyne and its subsidiaries. The available borrowing capacity under the Credit Agreement was approximately $11 million at March 30, 1995. Borrowings under the domestic term loan facility and the domestic revolving credit facility bear interest, at the Company's election, at a rate per annum equal to (i) the Bank of America Illinois base rate plus 1.5% or (ii) the Eurodollar rate plus 2.75%, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The domestic term loan facility terminates on December 31, 1999 and is subject to quarterly repayments of principal as follows:
CALENDAR QUARTERLY TOTAL REPAYMENT YEAR REPAYMENT AMOUNT FOR CALENDAR YEAR - -------- ---------------- ------------------ 1995................................................... $2,775,000 $11,100,000 1996................................................... 4,075,000 16,300,000 1997................................................... 4,450,000 17,800,000 1998................................................... 4,625,000 18,500,000 1999................................................... 6,300,000 25,200,000
The domestic revolving credit facility expires on December 31, 1999, with a commitment fee of 0.5% per annum on the unused portion of the commitment. The domestic letter of credit facility expires December 16, 1999, with fees on the outstanding amount of the domestic letters of credit of 0.25% per annum to the issuers and 2.5% per annum to the domestic Lenders, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The multicurrency revolving credit facility permits borrowings in U.S. Dollars, German Marks, French Francs or Pounds Sterling at an interest rate per annum equal to the applicable Eurocurrency rate plus 2.75%, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The multicurrency revolving credit facility expires on December 31, 1999 and the commitments thereunder are subject to mandatory quarterly reductions as follows:
CALENDAR QUARTERLY TOTAL REDUCTION YEAR COMMITMENT REDUCTION FOR CALENDAR YEAR - -------- --------------------- ----------------- 1995................................................ $ 500,000 $2,000,000 1996................................................ 950,000 3,800,000 1997................................................ 1,075,000 4,300,000 1998................................................ 1,150,000 4,600,000 1999................................................ 775,000 3,100,000
There is a commitment fee of 0.5% per annum on the unused portion of the multicurrency revolving credit facility. The multicurrency letter of credit facility expires December 16, 1999, with fees on the outstanding amount of the multicurrency letters of credit of 0.25% per annum to the issuers and 2.5% per annum to the multicurrency Lenders, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. Envirodyne's obligations under the Credit Agreement bear interest at rates that are expected to fluctuate over time. Envirodyne is required under the Credit Agreement to enter into interest rate protection agreements F-7 93 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) with respect to a significant portion of the amounts outstanding from time to time thereunder. Envirodyne has entered into $50 million of interest rate protection agreements that cap the Company's LIBOR interest component (excludes spread) at an average rate of 6.50% until January 1997. The fair value of interest rate cap agreements is estimated by obtaining quotes from banks. At March 30, 1995, the carrying amount and estimated fair value of interest rate cap agreements were $1,021,000 and $353,000, respectively. The Borrowers have made certain representations and have agreed to certain covenants that restrict the operations of the Borrowers and their subsidiaries' businesses. Among other things, the Borrowers may not, with limited exceptions, place liens on their properties or assets, incur additional indebtedness, make dividend or other distributions on capital stock, make investments (other than cash equivalent investments), merge or consolidate with any other person, dispose of assets outside the ordinary course of business or exceed stated levels of capital expenditures. The Credit Agreement also contains a number of financial covenants, including covenants relating to cash flow, interest and fixed charge coverage ratios, net worth and debt to cash flow levels. Unless cured within any applicable grace period, events of default include failure to pay principal, interest or other amounts due to the Lenders, a material breach of a representation or warranty, certain events related to employee benefit plans, certain events of bankruptcy or insolvency, defaults on other indebtedness having a principal amount in the aggregate in excess of $5,000,000, failure to discharge judgments in an amount in excess of $5,000,000, a change of control (as defined) and failure to comply with covenants, including the financial covenants described above. The Company and the Lenders entered into an amendment of the Credit Agreement as of January 24, 1995 easing certain financial covenants and permanently waiving the event of default arising from the ownership by the Malcolm I. Glazer Trust (Trust) of more than 30% of the Company's Common Stock, provided that the Trust's ownership does not later exceed 49% of the Company's outstanding Common Stock. The Company is currently in compliance with the terms of the Credit Agreement, including the financial covenants. Outstanding short-term and long-term debt consisted of:
MARCH 30, DECEMBER 29, 1995 1994 --------- ------------- (IN THOUSANDS) Short-term debt, current maturity of long-term debt, and capital lease obligation: Current maturity of Bank Term Loan (9.3%)................... $ 11,100 $ 11,100 Current maturity of Viskase Capital Lease Obligation........ 6,012 5,450 Current maturity of Viskase Limited Term Loan (5.9%)........ 2,062 1,882 Other....................................................... 9,047 7,366 -------- -------- Total short-term debt............................... $ 28,221 $ 25,798 ======== ======== Long-term debt: Bank Credit Agreement: Term Loan due 1999 (9.3%)................................... $ 77,800 $ 80,575 Revolving Loan due 1999 (8.9%).............................. 62,112 32,524 10.25% Senior Notes due 2001................................ 219,262 219,262 Viskase Capital Lease Obligation............................ 141,182 147,194 Viskase Limited Term Loan (5.9%)............................ 9,279 8,466 Other....................................................... 1,309 1,337 -------- -------- Total long-term debt................................ $510,944 $489,358 ======== ========
F-8 94 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The fair value of the Company's debt obligation (excluding capital lease obligation) is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for the debt of the same remaining maturities. At March 30, 1995, the carrying amount and estimated fair value of debt obligations (excluding capital lease obligation) were $391,971 and $352,504, respectively. On December 28, 1990, Viskase and GECC entered into a sale and leaseback transaction. The sale and leaseback of assets included the production and finishing equipment at Viskase's four domestic casing production and finishing facilities. The facilities are located in Chicago, Illinois; Loudon, Tennessee; Osceola, Arkansas and Kentland, Indiana. Viskase, as the Lessee under the relevant agreements, will continue to operate all of the facilities. The lease has been accounted for as a capital lease. The principal terms of the sale and leaseback transaction include: (a) a 15 year basic lease term (plus selected renewals at Viskase's option); (b) annual rent payments in advance beginning in February 1991; and (c) a fixed price purchase option at the end of the basic 15 year term and fair market purchase options at the end of the basic term and each renewal term. Further, the Lease Documents contain covenants requiring maintenance by the Company of certain financial ratios and restricting the Company's ability to pay dividends, make payments to affiliates, make investments and incur indebtedness. Annual rental payments under the Lease will be approximately $19.2 million through 1997, $21.4 million in 1998 and $23.5 million through the end of the basic 15-year term. Viskase is required to provide credit support consisting of a standby letter of credit in an amount up to one year's rent through at least 1997. This credit support can be reduced up to $4,000,000 currently if the Company achieves and maintains certain financial ratios. As of March 30, 1995, the Company had met the required financial ratios and the letter of credit has been reduced by $4,000,000. The letter can be further reduced in 1997 or eliminated after 1998 if the Company achieves and maintains certain financial ratios. Envirodyne and its other principal subsidiaries guaranteed the obligations of Viskase under the Lease. The following is a schedule of minimum future lease payments under the capital lease together with the present value of the net minimum lease payments as of March 30, 1995:
YEAR ENDING DECEMBER (000'S) -------------------- -------- 1996...................................................................... $ 19,227 1997...................................................................... 19,227 1998...................................................................... 21,363 1999...................................................................... 23,499 2000...................................................................... 23,499 Thereafter................................................................ 117,495 -------- Net minimum lease payments................................................ 224,310 Less: Amount representing interest............................................ (77,116) -------- $147,194 ========
The 1995 rental payment of $19,227,000 was paid on February 28, 1995. Principal payments under the capital lease obligation for the years ended 1995 through 1999 range from approximately $5 million to $13 million. 5. CONTINGENCIES A class action lawsuit by former employees of subsidiary corporations comprising most of the Company's former steel and mining division (SMD) was pending as of the commencement of the bankruptcy case in which the plaintiffs are seeking substantial damages. The Company and the plaintiffs are currently F-9 95 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) participating in a mediation process to attempt to resolve the case. Envirodyne denies liability and in the absence of successful mediation or other settlement negotiations will continue to vigorously defend these claims. However, inasmuch as the Plan of Reorganization provides for the issuance of common stock with respect to prepetition Envirodyne general unsecured claims (refer to Note 1), an adverse finding of liability and damages could result in substantial dilution to the holders of the common stock. Litigation has been initiated with respect to events arising out of the bankruptcy cases and the 1989 acquisition of Envirodyne by Emerald Acquisition Corporation (Emerald) with respect to which, although Envirodyne is not presently a party to such litigation, certain defendants have asserted indemnity rights against Envirodyne. In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy, James L. Massey, William Rifkind and Michael Zimmerman, Case No. 93 A 1616, United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (Bankruptcy Court), ARTRA Group Incorporated (ARTRA) alleges breach of fiduciary duty and tortious inference in connection with the negotiation and consummation of the Plan of Reorganization. In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael Zimmerman, Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial Circuit, County of DuPage, State of Illinois, ARTRA alleges negligence, breach of fiduciary duty, fraudulent misrepresentation and deceptive business practices in connection with the 1989 acquisition of Envirodyne by Emerald. The plaintiff seeks damages in the total amount of $136,200,000 plus interest and punitive damages of $408,600,000. D.P. Kelly & Associates, L.P. and Messrs. Kelly, Bobrinskoy, Massey, Rifkind and Zimmerman have asserted common law and contractual rights of indemnity against Envirodyne for attorneys' fees, costs and any ultimate liability relating to the claims set forth in the complaints. Upon the undertaking of D.P. Kelly & Associates, L.P. to repay such funds in the event it is ultimately determined that there is no right to indemnity, Envirodyne is advancing funds to D.P. Kelly & Associates, L.P. and Mr. Kelly for the payment of legal fees in the case pending before the Bankruptcy Court. Although the case is in a preliminary stage and the Company is not a party thereto, the Company believes that the plaintiff's claims raise similar factual issues to those raised in the bankruptcy cases which, if adjudicated in a manner similar to that in the bankruptcy cases, would render it difficult for the plaintiff to establish liability. Accordingly, the Company believes that the indemnification claims would not have a material adverse effect upon the business or financial position of the Company, even if the claimants were ultimately successful in establishing their right to indemnification. In the Envirodyne bankruptcy case the United States Environmental Protection Agency (USEPA), the Economic Development Authority (EDA), and Navistar International Transportation Corp. (Navistar Transportation) filed proofs of claim with respect to unreimbursed environmental response costs at the location of the former SMD operations. The parties have agreed in principle, subject to the negotiation of a definitive settlement agreement, Bankruptcy Court approval and public comment pursuant to regulations applicable to EDA and USEPA, to settle the claims against Envirodyne through the payment of $5,000 to the USEPA and the issuance of 64,460 shares of common stock to Navistar Transportation. In the event that the settlement is not completed, Envirodyne believes that it has valid defenses to the claims and will continue its objections to the claims. To the extent that USEPA, EDA or Navistar Transportation were able to establish liability and damages as to their respective proofs of claim, such parties would receive Common Stock under the Plan of Reorganization in satisfaction of their claims. Certain of Envirodyne's stockholders prior to the acquisition of Envirodyne by Emerald failed to exchange their certificates representing old Envirodyne common stock for the $40 per share cash merger consideration specified by the applicable acquisition agreement. In the Envirodyne bankruptcy case, Envirodyne is seeking to equitably subordinate the interests of the holders of untendered shares, in which event such holders would receive no distribution pursuant to the Plan of Reorganization. The Bankruptcy Court granted Envirodyne's motion for summary judgment to equitably subordinate the holders of untendered shares. Certain holders have appealed the summary judgment to the United States District Court for the F-10 96 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Northern District of Illinois. If such holders were ultimately successful, Envirodyne believes that the maximum number of shares of common stock that it would be required to issue to such claimants is approximately 106,000. In August 1993, Clear Shield National, Inc. received a subpoena from the Antitrust Division of the United States Department of Justice relating to a grand jury investigation of the disposable plastic cutlery industry. Clear Shield National, Inc. has cooperated fully with the investigation. The Company and its subsidiaries are involved in various legal proceedings arising out of its business and other environmental matters, none of which is expected to have a material adverse effect upon its results of operations, cash flows or financial position. 6. SUBSIDIARY GUARANTORS On June 20, 1995, Envirodyne completed the sale of $160,000,000 aggregate principal amount of senior secured notes to certain institutional investors in a private placement. The senior secured notes were issued pursuant to an indenture dated June 20, 1995 (Indenture) and consist of (i) $151,500,000 of 12% Senior Secured Notes due 2000 and (ii) $8,500,000 of Floating Rate Senior Secured Notes due 2000 (collectively, the Notes). Envirodyne used the net proceeds of the offering primarily to (i) repay the Company's $86,125,000 domestic term loan, (ii) repay the $68,316,000 of obligations under the Company's domestic and foreign revolver and (iii) pay transaction fees and expenses. Concurrently with the June 20, 1995 placement, Envirodyne entered into a new $20,000,000 domestic revolving credit facility (Revolving Credit Facility) and a new $28,000,000 letter of credit facility (Letter of Credit Facility). Envirodyne's payment obligations under the Notes are fully and unconditionally guaranteed on a joint and several basis (collectively, the "Subsidiary Guarantees") by Viskase Corporation, Viskase Holding Corporation, Viskase Sales Corporation, Clear Shield National, Inc., Sandusky Plastics, Inc. and Sandusky Plastics of Delaware, Inc., each a direct or indirect or indirect wholly-owned subsidiary of the Envirodyne and each a "Guarantor." These subsidiaries represent substantially all of the operations of Envirodyne conducted in the United States. The other subsidiaries of Envirodyne generally are foreign subsidiaries or otherwise related to foreign operations. The obligations of each Guarantor under its Subsidiary Guarantee will be the senior obligation of such Guarantor, and shall be secured, subject to certain permitted liens, by substantially all of the domestic assets of the Guarantor and, in the case of Viskase Holding Corporation, by a pledge of 65% of the capital stock of Viskase S.A. The Subsidiary Guarantees and security are shared with the lenders under Envirodyne's revolving credit facility on a pari passu basis and are subject to the priority interest of the holders of obligations under the Envirodyne's letter of credit facility, each pursuant to an intercreditor agreement. In accordance with previous positions taken by the Commission, the following consolidating condensed financial data illustrate the composition of the combined Guarantors. Separate complete financial statements of the respective Guarantors would not provide additional material information that would be useful in assessing the financial composition of the Guarantors. No single Guarantor has any significant legal restrictions on the ability of investors or creditors to obtain access to its assets in the event of a default on the Subsidiary Guarantor other than its subordination to senior indebtedness described above. Investments in subsidiaries are accounted for by the parent on the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are therefore reflected in the parent's investment accounts and earnings. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. F-11 97 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING BALANCE SHEETS MARCH 30, 1995
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS(1) TOTAL --------- ------------ ------------ --------------- ------------ (IN THOUSANDS) ASSETS Current assets: Cash and equivalents........... $ 2,816 $ 2,814 $ 1,579 $ 7,209 Receivables, net............... 67,895 52,691 $ (31,579) 89,007 Inventories.................... 74,214 52,185 (1,929) 124,470 Other current assets........... 1,261 22,373 6,677 30,311 --------- -------- -------- --------- -------- Total current assets... 4,077 167,296 113,132 (33,508) 250,997 Property, plant and equipment including those under capital lease.......................... 189 372,954 145,815 518,958 Less accumulated depreciation and amortization............ 73 33,854 12,239 46,166 --------- -------- -------- --------- -------- Property, plant and equipment, net............................ 116 339,100 133,576 472,792 Deferred financing costs......... 8,031 1,099 9,130 Other assets..................... 44,301 1,541 45,842 Investment in subsidiaries....... 83,178 91,994 (175,172) Excess reorganization value...... 94,372 48,880 143,252 --------- -------- -------- --------- -------- $ 95,402 $737,063 $298,228 $(208,680) $922,013 ========= ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease............... $ 11,100 $ 8,260 $ 8,861 $ 28,221 Accounts payable............... 526 22,030 43,703 $ (31,579) 34,680 Accrued liabilities............ 16,932 31,527 25,346 73,805 --------- -------- -------- --------- -------- Total current liabilities.......... 28,558 61,817 77,910 (31,579) 136,706 Long-term debt including obligations under capital lease.......................... 338,562 141,846 30,536 510,944 Accrued employee benefits........ 52,835 4,092 56,927 Deferred and noncurrent income taxes.......................... 24,688 34,700 24,038 83,426 Other long-term liabilities(2)... (430,416) 404,765 25,706 (55) Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding..... Common stock, $.01 par value; 13,515,000 shares issued and outstanding................. 135 3 32,738 (32,741) 135 Paid in capital................ 134,865 41,119 56,968 (98,087) 134,865 Accumulated earnings (deficit)................... (7,507) (22) 44,171 (44,149) (7,507) Cumulative foreign currency translation adjustments..... 6,517 2,069 (2,069) 6,517 --------- -------- -------- --------- -------- Total stockholders' equity............... 134,010 41,100 135,946 (177,046) 134,010 --------- -------- -------- --------- -------- $ 95,402 $737,063 $298,228 $(208,680) $922,013 ========= ======== ======== ========= ========
- ------------------------- (1) Includes elimination of intercompany receivables, payables, loans and investment accounts. (2) Includes intercompany loans. F-12 98 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 30, 1995
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------- ------------ ------------ ------------ ------------ (IN THOUSANDS) NET SALES............................. $102,289 $ 62,520 $ (8,985) $155,824 COSTS AND EXPENSES Cost of sales....................... 75,069 47,637 (9,017) 113,689 Selling, general and administrative................... $ 1,573 17,354 10,609 29,536 Amortization of intangibles and excess reorganization value...... 3,066 844 3,910 ------- -------- -------- -------- -------- OPERATING INCOME (LOSS)............... (1,573) 6,800 3,430 32 8,689 Interest income..................... 25 39 64 Interest expense.................... 9,084 3,492 858 13,434 Intercompany interest expense (income)......................... (9,352) 8,502 850 Management fees (income)............ (1,850) 1,558 292 Other expense (income), net......... (2,152) (43) 1,604 (591) Equity Loss (income) in subsidiary....................... 5,540 (5,540) ------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES..... (2,843) (6,684) (135) 5,572 (4,090) Income tax provision (benefit)...... 1,052 (1,868) 621 (195) ------- -------- -------- -------- -------- NET INCOME (LOSS)..................... $(3,895) $ (4,816) $ (756) $ 5,572 $ (3,895) ======= ======== ======== ======== ========
CONSOLIDATING CASH FLOWS FOR THREE MONTHS ENDED MARCH 30, 1995
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------- ------------ ------------ ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities................ $(8,338) $ 12,237 $(18,435) $(14,536) Cash flows from investing activities: Capital expenditures................ (5,826) (1,805) (7,631) ------- -------- -------- --------- -------- Net cash (used in) investing activities..................... (5,826) (1,805) (7,631) Cash flows from financing activities: Proceeds from revolving loan and long term borrowings............. 13,900 28,349 42,249 Deferred financing costs............ (464) (464) Repayment of revolving loan, long-term borrowings and capital lease obligations................ (2,837) (5,450) (11,686) (19,973) ------- -------- -------- --------- -------- Net cash provided by financing activities.................. 10,599 (5,450) 16,663 21,812 Effect of currency exchange rate changes on cash..................... 275 275 ------- -------- -------- --------- -------- Net increase (decrease) in cash and cash equivalents.................... 2,261 961 (3,302) (80) Cash and cash equivalents at beginning of period........................... 555 1,853 4,881 7,289 ------- -------- -------- --------- -------- Cash and cash equivalents at end of period.............................. $ 2,816 $ 2,814 $ 1,579 $ 7,209 ======= ======== ======== ========= ========
F-13 99 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1994
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------- ------------ ------------ ------------ ------------ (IN THOUSANDS) NET SALES............................. $ 98,360 $ 50,351 $ (6,118) $142,593 COSTS AND EXPENSES Cost of sales....................... 70,601 37,412 (5,894) 102,119 Selling, general and administrative................... $ 1,618 17,614 7,686 26,918 Amortization of intangibles and excess reorganization value...... 3,700 146 3,846 ------- -------- -------- -------- -------- OPERATING INCOME (LOSS)............... (1,618) 6,445 5,107 (224) 9,710 Interest income..................... 2 9 50 61 Interest expense.................... 7,669 3,538 852 12,059 Intercompany interest expense (income)......................... (6,793) 5,669 1,124 Management fees (income)............ (1,850) 1,615 235 Other expense (income), net......... (806) 120 405 (281) Equity loss (income) in subsidiary....................... 2,520 (2,520) Minority interest in subsidiary..... 50 50 ------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES..... (2,356) (4,488) 2,541 2,346 (1,957) Income tax provision (benefit)...... 151 (799) 1,198 550 ------- -------- -------- -------- -------- NET INCOME (LOSS)..................... $(2,507) $ (3,689) $ 1,343 $ 2,346 $ (2,507) ======= ======== ======== ======== ========
F-14 100 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING CASH FLOWS FOR THREE MONTHS ENDED MARCH 31, 1994
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities............... $(23,752) $ 13,360 $ (2,823) $(13,215) Cash flows from investing activities: Capital expenditures............... (7) (4,444) (2,903) (7,354) Proceeds from sales of property, plant and equipment............. 20 20 Purchase of minority interest in subsidiary...................... (4,200) (4,200) -------- --------- --------- --------- --------- Net cash (used in) investing activities................. (7) (8,624) (2,903) (11,534) Cash flows from financing activities: Proceeds from revolving loan and long term borrowings............ 21,325 4,511 25,836 Deferred financing costs........... (10) (10) Repayment of revolving loan, long-term borrowings and capital lease obligations............... (4,998) (60) (5,058) -------- --------- --------- --------- --------- Net cash provided by (used in) financing activities....... 21,315 (4,998) 4,451 20,768 Effect of currency exchange rate changes on cash.................... 175 175 -------- --------- --------- --------- --------- Net (decrease) in cash and cash equivalents........................ (2,444) (262) (1,100) (3,806) Cash and cash equivalents at beginning of period................ 930 1,922 4,891 7,743 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period............................. $ (1,514) $ 1,660 $ 3,791 $ 3,937 ======== ========= ========= ========= =========
F-15 101 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors Envirodyne Industries, Inc. We have audited the consolidated financial statements and the financial statement schedules of Envirodyne Industries, Inc. and Subsidiaries. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1 to the consolidated financial statements, on December 31, 1993, the Company completed a comprehensive financial restructuring through the implementation of reorganization under Chapter 11 of the United States Bankruptcy Code and applied fresh start reporting. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Envirodyne Industries, Inc. and Subsidiaries as of December 29, 1994 and December 31, 1993, and the consolidated results of their operations and their cash flows for the period January 1 to December 29, 1994 (Post-consummation) and January 1 to December 31, 1993 and December 27, 1991 to December 31, 1992 (Pre-consummation), in conformity with generally accepted accounting principles. In addition, in our opinion the schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Chicago, Illinois March 15, 1995, (except with respect to the matters discussed in Note 20, as to which the date is July 19, 1995) F-16 102 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) ASSETS Current assets: Cash and equivalents........................................ $ 7,289 $ 7,743 Receivables, net............................................ 86,868 72,516 Inventories................................................. 110,483 98,824 Other current assets........................................ 19,466 17,538 -------- -------- Total current assets................................. 224,106 196,621 Property, plant and equipment, including those under capital lease....................................................... 506,099 455,554 Less accumulated depreciation and amortization.............. 35,761 -------- -------- Property, plant and equipment, net.......................... 470,338 455,554 Deferred financing costs....................................... 9,143 8,989 Other assets................................................... 47,181 50,765 Excess reorganization value.................................... 145,868 155,751 -------- -------- $896,636 $867,680 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease........................ $ 25,798 $ 15,610 Accounts payable............................................ 34,335 37,524 Accrued liabilities......................................... 72,246 61,047 -------- -------- Total current liabilities............................ 132,379 114,181 Long-term debt including obligation under capital lease........ 489,358 482,379 Accrued employee benefits...................................... 56,217 53,622 Deferred and noncurrent income taxes........................... 83,333 78,565 Minority interest in consolidated subsidiary................... 3,933 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 13,515,000 shares issued and outstanding at December 29, 1994, and 13,500,000 shares at December 31, 1993....... 135 135 Paid in capital............................................. 134,865 134,865 Accumulated (deficit)....................................... (3,612) Cumulative foreign currency translation adjustments......... 3,961 -------- -------- Total stockholders' equity........................... 135,349 135,000 -------- -------- $896,636 $867,680 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. F-17 103 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES AND PER SHARE AMOUNTS) NET SALES.......................................... $599,029 $ 587,385 $ 575,705 COSTS AND EXPENSES Cost of sales.................................... 432,746 416,410 398,876 Selling, general and administrative.............. 111,451 101,632 94,076 Patent infringement settlement income............ 9,457 Amortization of intangibles and excess reorganization value.......................... 15,612 15,711 15,547 -------- ---------- ---------- OPERATING INCOME................................... 48,677 53,632 67,206 Interest income.................................. 307 931 964 Interest expense................................. 49,514 31,190 106,522 Other expense (income), net...................... (1,668) 5,540 8,699 Fees and expenses associated with renegotiation of debt....................................... 3,945 Minority interest in loss of subsidiary.......... 50 717 -------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES, REORGANIZATION ITEMS AND EXTRAORDINARY ITEMS.................... 1,188 18,550 (50,996) Reorganization items, net........................ 104,745 -------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS 1,188 (86,195) (50,996) Income tax provision (benefit)................... 4,800 12,000 (14,000) -------- ---------- ---------- (LOSS) BEFORE EXTRAORDINARY ITEMS.................. (3,612) (98,195) (36,996) Extraordinary gain, net of tax................... 183,784 -------- ---------- ---------- NET INCOME (LOSS).................................. $ (3,612) $ 85,589 $ (36,996) ======== ========== ========== WEIGHTED AVERAGE COMMON SHARES..................... 13,500,703 320 320 ========== ========== ========== PER SHARE AMOUNTS: (LOSS) BEFORE EXTRAORDINARY ITEMS.................. $(.27) $ (306,859) $ (115,613) ===== ========== ========== NET INCOME (LOSS).................................. $(.27) $ 267,466 $ (115,613) ===== ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. F-18 104 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
CUMULATIVE RETAINED FOREIGN CURRENCY TOTAL COMMON PAID IN EARNINGS TRANSLATION STOCKHOLDERS' STOCK CAPITAL (DEFICIT) ADJUSTMENTS EQUITY (DEFICIT) ------ -------- --------- ---------------- ---------------- (IN THOUSANDS) Balance December 26, 1991....... $ 1 $ 12,900 $ (61,780) $ 8,576 $(40,303) Net (loss)...................... (36,996) (36,996) Translation adjustments......... (6,246) (6,246) ----- -------- --------- -------- -------- Balance December 31, 1992....... 1 12,900 (98,776) 2,330 (83,545) Net income...................... 85,589 85,589 Translation adjustments......... (2,044) (2,044) Cancellation of preconsummation Common Stock.................. (1) (12,900) (12,901) Elimination of accumulated deficit and cumulative foreign currency translation adjustments................... 13,187 (286) 12,901 ----- -------- --------- -------- -------- $ 0 $ 0 $ 0 $ 0 $ 0 - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Issuance of new Common Stock.... $135 $134,865 $135,000 ----- -------- -------- Balance December 31, 1993....... 135 134,865 135,000 Net (loss)...................... $ (3,612) (3,612) Translation adjustments......... $ 3,961 3,961 ----- -------- --------- -------- -------- Balance December 29, 1994....... $135 $134,865 $ (3,612) $ 3,961 $135,349 ===== ======== ========= ======== ========
Due to the implementation of the Plan of Reorganization and Fresh Start Reporting, the stockholders' equity at and subsequent to December 31, 1993 is not comparable to the prior years. (Refer to Note 1 of Notes to Consolidated Financial Statements.) The accompanying notes are an integral part of the consolidated financial statements. F-19 105 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS) Cash flows from operating activities: (Loss) before extraordinary gain..................... $ (3,612) $ (98,195) $(36,996) Extraordinary gain................................... 183,784 -------- ---------- -------- Net income (loss).................................... (3,612) 85,589 (36,996) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization under capital lease........................................... 35,775 36,687 33,763 Amortization of intangibles and excess reorganization value............................ 15,612 15,711 15,547 Amortization of deferred financing fees and discount........................................ 1,569 2,418 30,820 Increase (decrease) in deferred and noncurrent income taxes.................................... (52) 9,547 (14,994) Foreign currency transaction loss (gain).......... (3,465) 3,380 5,089 Loss (gain) on sales of property, plant and equipment....................................... (9) 650 2,089 Reorganization items and fresh start reporting.... (79,039) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable...... (11,257) (1,319) 1,747 Decrease (increase) in inventories.............. (10,548) 4,163 6,527 Decrease (increase) in other current assets..... (1,607) (2,152) 1,137 Increase in accounts payable and accrued liabilities.................................. 3,774 15,894 41,130 Other........................................... (2,894) 672 2,564 -------- ---------- -------- Total adjustments................................. 26,898 6,612 125,419 -------- ---------- -------- Net cash provided by operating activities before reorganization expense....................... 23,286 92,201 88,423 Net cash used for reorganization items................. (14,929) Cash flows from investing activities: Capital expenditures (32,566) (40,887) (29,018) Proceeds from sale of property, plant and equipment......................................... 359 124 173 Investments and advances to affiliated companies..... (4,990) Purchase of minority interest in subsidiary.......... (4,200) Proceeds from sale of time deposits in Puerto Rico... 6,600 -------- ---------- -------- Net cash (used in) investing activities......... (36,407) (40,763) (27,235) Cash flows from financing activities: Proceeds from revolving loan and long-term borrowings........................................ 37,668 106,003 3 Deferred financing costs............................. (1,608) (9,779) (12) Repayment of revolving loan, long-term borrowings and capital lease obligations......................... (22,617) (138,736) (57,439) -------- ---------- -------- Net cash provided by (used in) financing activities................................... 13,443 (42,512) (57,448) Effect of currency exchange rate changes on cash....... (776) (316) 847 -------- ---------- -------- Net increase (decrease) in cash and cash equivalents... (454) (6,319) 4,587 Cash and cash equivalents at beginning of period....... 7,743 14,062 9,475 -------- ---------- -------- Cash and cash equivalents at end of period............. $ 7,289 $ 7,743 $ 14,062 ======== ========== ======== - ---------------------------------------------------------------------------------------------------- Supplemental cash flow information: Interest paid........................................ $ 43,484 $ 28,001 $ 31,461 Income taxes paid.................................... $ 5,058 $ 1,154 $ 5,158
The accompanying notes are an integral part of the consolidated financial statements. F-20 106 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. CHAPTER 11 REORGANIZATION PROCEEDINGS On January 6, 1993, a group of bondholders filed an involuntary petition for reorganization of Envirodyne Industries, Inc. under Chapter 11 of the U.S. Bankruptcy Code. On January 7, 1993 Viskase Corporation, Viskase Sales Corporation, Viskase Holding Corporation, Clear Shield National, Inc., Sandusky Plastics of Delaware, Inc., Sandusky Plastics, Inc. and Envirodyne Finance Company each filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the Bankruptcy Court). On December 17, 1993, the Bankruptcy Court confirmed the First Amended Joint Plan of Reorganization as twice modified (Plan of Reorganization) with respect to Envirodyne Industries, Inc. (Envirodyne) and certain of its subsidiaries. The Plan of Reorganization was consummated and Envirodyne and certain of its subsidiaries emerged from Chapter 11 on December 31, 1993 (Effective Date). For accounting purposes, the Plan of Reorganization was deemed to be effective as of December 31, 1993. Pursuant to the Plan of Reorganization, Envirodyne's shares of common stock that were outstanding prior to the effective date were canceled. Emerald Acquisition Corporation, the sole stockholder of Envirodyne prior to the consummation of the bankruptcy, received no distribution pursuant to the Plan of Reorganization. The Plan of Reorganization provided for the initial issuance of approximately 13,500,000 new shares of Envirodyne common stock (subject to adjustment), warrants to purchase an additional 1,500,000 shares and distributions to major creditors as follows: -- Holders of the Envirodyne's former Senior Discount Notes Due 1997 (14.5%) (Old Discount Notes) with an accreted value as of January 6, 1993 of $200,838,211 became entitled to receive a pro rata portion of $219,262,000 principal amount of 10 1/4% Senior Notes Due 2001 (10 1/4% Notes). -- Holders of Envirodyne's former $200,000,000 principal amount of 14% Senior Subordinated Debentures Due 2001 (Old 14% Debentures), with accrued but unpaid interest through January 6, 1993 of $42,812,000 became entitled to receive a pro rata portion of 12,142,737 shares of the Envirodyne common stock, par value $.01 per share, representing in the aggregate approximately 89.95% of the common stock initially issued pursuant to the Plan of Reorganization. -- Holders of the Envirodyne's former $91,350,000 principal amount of 13 1/2% Subordinated Notes Due 1996 (Old 13 1/2% Notes), with accrued but unpaid interest through January 6, 1993 of $13,603,842 became entitled to receive a pro rata portion of (i) 903,625 shares of Envirodyne common stock, representing in the aggregate approximately 6.69% of the common stock initially issued pursuant to the Plan of Reorganization, and (ii) warrants (Warrants) to purchase 1,500,000 shares of common stock. The Warrants were issued pursuant to a Warrant Agreement dated as of December 31, 1993 between Envirodyne and Bankers Trust Company, as Warrant Agent. The Warrants are exercisable at any time until December 31, 1998 at an exercise price of $17.25 per share. The number of shares of common stock for which a Warrant is exercisable, and the exercise price of the Warrants, are subject to adjustment upon the occurrence of certain events. In addition, holders of Old 13 1/2% Notes, other than Salomon Brothers Inc (Salomon Brothers) and certain of its affiliates, who elected to grant a limited release to Salomon Brothers and its affiliates pursuant to the Plan of Reorganization, of all claims arising out of the 1989 leveraged buyout acquisition of Envirodyne, the Old 13 1/2% Notes or Envirodyne, were entitled to share ratably in 445,928 shares of common stock, representing in the aggregate approximately 3.30% of the common stock initially issued pursuant to the Plan of Reorganization. -- Holders of allowed general unsecured claims of Envirodyne (as opposed to subsidiaries of Envirodyne) became entitled to receive 32.28 shares of common stock for each $500 amount of their prepetition claims, or a total of 8,070 shares of common stock, representing .06% of the common stock initially issued pursuant to the Plan of Reorganization. These claims totaled approximately $125,000. F-21 107 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) If the allowed amount of general unsecured claims of Envirodyne exceeds $125,000, for example upon the resolution of disputed claims, additional shares of common stock will have to be issued to the holders of allowed general unsecured claims of Envirodyne in order to provide equitable allocation of value among Envirodyne's unsecured creditors under the Plan of Reorganization. Such additional shares of common stock would be distributed with respect to allowed general unsecured claims of Envirodyne as follows: (i) approximately 2.58 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $125,000 and $25,000,000; (ii) approximately 5.61 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $25,000,000 and $50,000,000; (iii) approximately 9.22 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $50,000,000 and $75,000,000; and (iv) approximately 13.58 additional shares per $500 in claims in the event allowed general unsecured claims of Envirodyne are between $75,000,000 and $100,000,000. Refer to Note 11 for a discussion of disputed claims which, if determined adversely to Envirodyne, would result in the issuance of common stock. -- Holders of Envirodyne subsidiary allowed trade claims were paid in full. -- Salomon Brothers Holding Company Inc 11.25% Pay-in-Kind Notes issued by Envirodyne with an accreted value as of January 6, 1993 of $5,658,000 were canceled. The contracts constituting the sale and leaseback transaction with General Electric Capital Corporation were assumed by the relevant Envirodyne subsidiaries under the Plan of Reorganization with minor changes thereto. The Chapter 11 filing was related only to the Company's domestic operations and did not include the foreign subsidiaries and various inactive domestic subsidiaries. The Company accounted for the reorganization using the principles of fresh start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." Accordingly, all assets and liabilities have been restated to reflect their reorganization value, which approximates fair value. The reorganization value of the Company's equity of $135,000,000 was based on the consideration of many factors and various valuation methods, including discounted cash flows, comparable multiples of earnings and other applicable measurements and valuation techniques believed by management and its financial advisors to be representative of the Company's business and industry. The excess of the reorganization value over the fair value of net assets and liabilities is reported as excess reorganization value and is being amortized over a fifteen-year period. F-22 108 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The reorganization and the adoption of Fresh Start Reporting resulted in the following adjustments to the Company's Consolidated Statement of Operations for the period January 1 to December 31, 1993:
INCOME (EXPENSE) --------- Reorganization Items - --------------------------------------------------------------------------------- Legal, financial advisory and other fees associated with the Chapter 11 proceedings.................................................................... $ (14,929) Write-off of deferred financing fees associated with the Bank Credit Agreement... (4,071) Write-off of existing excess investment over net assets acquired, net of excess reorganization value recorded, and fair market value adjustments to assets and liabilities.................................................................... (85,745) --------- $(104,745) ========= Extraordinary Gain - --------------------------------------------------------------------------------- Accreted value of the Old Discount Notes less unamortized deferred financing..... $ 197,379 Principal amount of Old 14% Debentures plus accrued interest less unamortized deferred financing............................................................. 237,125 Principal amount of Old 13 1/2% Notes plus accrued interest less unamortized deferred financing............................................................. 103,918 Accreted value of 11 1/4% Pay-in-Kind Notes due to Related Party................. 5,658 Envirodyne untendered shares..................................................... 2,176 Envirodyne general unsecured creditors allowed claims............................ 90 Principal amount of 10 1/4% Notes exchanged for Old Discount Notes............... (219,262) Fair value of equity exchanged for Old 14% Debentures, Old 13 1/2% Notes and Envirodyne unsecured claims.................................................... (135,000) --------- Extraordinary gain before tax provision.......................................... 192,084 Tax provision on extraordinary gain (refer to Note 13)......................... 8,300 --------- Extraordinary gain net of taxes.................................................. $ 183,784 =========
F-23 109 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Had the Fresh Start reporting and the Plan of Reorganization been implemented with the related financing at the beginning of 1993, the pro forma Envirodyne consolidated statement of operations would have been as follows: (IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES AND PER SHARE AMOUNTS)
PRO FORMA JANUARY 1 TO DECEMBER 31, 1993 ----------------- (UNAUDITED) Net sales.................................................................. $587,385 Cost of sales............................................................ 415,498 Selling, general and administrative...................................... 101,632 Amortization of intangibles and excess reorganization cost............... 15,612 -------- Operating income........................................................... 54,643 Interest income.......................................................... 931 Interest expense......................................................... 51,198 Other expense (income), net.............................................. 5,540 Minority interest in loss of subsidiary.................................. 717 -------- Income before income taxes................................................. (447) Income tax provision..................................................... 6,140 -------- Net (loss)................................................................. $ (6,587) ======== Weighted average common shares............................................. 13,500,703 Net (loss) per share....................................................... $(.49) =====
The pro forma information reflects the changes in interest cost and depreciation and amortization due to the implementation of the Plan of Reorganization and Fresh Start Reporting. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PRESENTATION Effective in 1990 Envirodyne adopted a 52/53 week fiscal year ending on the last Thursday of December. The 1993 financial statements include December 31, 1993 in order to present the effect of the consummation of the Plan of Reorganization. (B) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Envirodyne Industries, Inc. and its subsidiaries (the Company). Reclassifications have been made to the prior year's financial statement to conform to the 1994 presentation. (C) CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers cash equivalents to consist of all highly liquid debt investments purchased with an initial maturity of approximately three months or less. Due to the short-term nature of these instruments, the carrying values approximate the fair market value. Cash F-24 110 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) equivalents include $821,000 and $1,757,000 of short-term investments at December 29, 1994 and December 31, 1993, respectively. (D) INVENTORIES Domestic inventories are valued primarily at the lower of last-in, first-out (LIFO) cost or market. Remaining amounts, primarily foreign, are valued at the lower of first-in, first-out (FIFO) cost or market. (E) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from 3 to 32 years. Upon retirement or other disposition, cost and related accumulated depreciation are removed from the accounts, and any gain or loss is included in results of operations. Effective December 31, 1993 and in conjunction with the Fresh Start Reporting, property, plant and equipment was reported at the estimated fair value (refer to Note 1). (F) DEFERRED FINANCING COSTS Deferred financing costs are amortized on a straight-line basis over the expected term of the related debt agreement. (G) PATENTS Patents are amortized on the straight-line method over an estimated average useful life of ten years. (H) EXCESS REORGANIZATION VALUE AND EXCESS INVESTMENT OVER NET ASSETS ACQUIRED, NET Excess reorganization value is amortized on the straight-line method over 15 years. Cost in excess of net assets acquired, net was amortized on a straight-line method over 40 years in fiscal years 1993 and 1992. The Company continues to evaluate the recoverability of excess reorganization value based on projected and discounted cash flows of the operating business units. (I) PENSIONS The North American operations of Viskase and the Company's operations in Europe have defined benefit retirement plans covering substantially all salaried and full time hourly employees. Pension cost is computed using the projected unit credit method. The Company's funding policy is consistent with funding requirements of the applicable federal and foreign laws and regulations. (J) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The North American operations of Viskase have postretirement health care and life insurance benefits. Effective January 1, 1993, postretirement benefits other than pensions are accounted for in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." Prior year's financial statements were accounted for using the pay-as-you-go method. F-25 111 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (K) POSTEMPLOYMENT BENEFITS Effective December 31, 1993 and in conjunction with the Fresh Start Reporting, the Company adopted SFAS No. 112 "Employers Accounting for Postemployment Benefits." The impact of adopting SFAS No. 112 was not material. (L) INCOME TAXES Income taxes were accounted for in accordance with SFAS No. 109 for the years ended December 29, 1994 and December 31, 1993. (M) NET INCOME (LOSS) PER SHARE Net income (loss) per share of common stock is based upon the weighted average number of shares of common stock outstanding during the year. No effect has been given to options outstanding under the Company's stock option plans and warrants issued pursuant to the Plan of Reorganization as their effect is anti-dilutive. (N) REVENUE RECOGNITION Sales to customers are recorded at the time of shipment net of discounts and allowances. (O) FOREIGN CURRENCY CONTRACTS The Company has entered into forward foreign exchange contracts to hedge certain foreign currency transactions on a continuing basis for periods consistent with its committed foreign currency exposures. The effect of this practice is to minimize the effect of foreign exchange rate movements on the Company's operating results. The Company's hedging activities do not subject the Company to exchange rate risk because gains and losses on these contracts offset losses and gains on the transactions being hedged. The cash flows from forward contracts accounted for as hedges of identifiable transactions or events are classified consistent with the cash flows from the transactions or events being hedged. 3. RECEIVABLES Receivables consisted primarily of trade accounts receivable and were net of allowances for doubtful accounts of $2,136,000 and $2,872,000 at December 29, 1994, and at December 31, 1993, respectively. 4. INVENTORIES Inventories consisted of:
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Raw materials.................................................... $ 20,358 $ 17,477 Work in process.................................................. 37,613 34,158 Finished products................................................ 52,512 47,189 -------- -------- $110,483 $ 98,824 ======== ========
Approximately 55% and 60% of the Company's inventories at December 29, 1994, and December 31, 1993, respectively, were valued at LIFO. These LIFO values exceeded current manufacturing cost by approximately $7,000,000 and $11,000,000 at December 29, 1994, and December 31, 1993, respectively. F-26 112 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. PROPERTY, PLANT AND EQUIPMENT
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Property, plant and equipment: Land and improvements.......................................... $ 15,930 $ 15,288 Buildings and improvements..................................... 76,202 60,867 Machinery and equipment........................................ 256,621 213,099 Construction in progress....................................... 20,178 29,132 Capital lease: Machinery and equipment........................................ 137,168 137,168 -------- -------- $506,099 $455,554 ======== ========
Maintenance and repairs charged to costs and expenses for 1994, 1993, and 1992 aggregated $33,045,000, $32,636,000 and $31,747,000, respectively. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from 3 to 32 years. 6. OTHER ASSETS Other assets were comprised of:
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Patents.......................................................... $ 50,000 $ 50,000 Less accumulated amortization.................................. 5,000 -------- -------- Patents, net................................................ 45,000 50,000 Other............................................................ 2,181 765 -------- -------- $ 47,181 $ 50,765 ======== ========
Patents are amortized on the straight-line method over an estimated average useful life of ten years. 7. ACCRUED LIABILITIES Accrued liabilities were comprised of:
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Compensation and employee benefits............................... $ 33,521 $ 30,712 Taxes, other than on income...................................... 6,454 4,956 Accrued interest................................................. 3,630 235 Accrued volume and sales discounts............................... 11,958 9,309 Accrued reorganization fees and expenses......................... 3,167 7,011 Other............................................................ 13,516 8,824 ------------ ------------ $ 72,246 $ 61,047 ========== ==========
F-27 113 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. DEBT OBLIGATIONS As described in Note 1, Chapter 11 Reorganization Proceedings, Envirodyne and certain of its domestic Subsidiaries emerged from Chapter 11 on December 31, 1993. The $219,262,000 principal amount of 10 1/4% Notes were issued pursuant to an Indenture dated as of December 31, 1993 (10 1/4% Note Indenture) between Envirodyne and Bankers Trust Company, as Trustee. The 10 1/4% Notes are the unsecured senior obligations of Envirodyne, bear interest at the rate of 10 1/4% per annum, payable on each June 1 and December 1, and mature on December 1, 2001. The 10 1/4% Notes are redeemable, in whole or from time to time in part, at the option of Envirodyne, at the percentages of principal amount specified below plus accrued and unpaid interest to the redemption date, if the 10 1/4% Notes are redeemed during the 12-month period commencing on January 1 of the following years:
YEAR PERCENTAGE ---------------------------------------------------------- ----------- 1995...................................................... 105% 1996...................................................... 104% 1997...................................................... 103% 1998...................................................... 102% 1999...................................................... 101% 2000 and thereafter....................................... 100%
The 10 1/4% Note Indenture contains covenants with respect to Envirodyne and its subsidiaries limiting (subject to a number of important qualifications), among other things, (i) the ability to pay dividends on or redeem or repurchase capital stock, (ii) the incurrence of indebtedness, (iii) certain affiliate transactions and (iv) the ability of the Company to consolidate with or merge with or into another entity or to dispose of substantially all its assets. In connection with the consummation of the Plan of Reorganization, Envirodyne and certain of its subsidiaries (Borrowers) entered into a Credit Agreement dated December 31, 1993 (Credit Agreement) with the lenders party thereto (Lenders) and with Bank of America Illinois (formerly Continental Bank N.A.), Citibank International PLC and Citicorp North America, Inc., as agents for the Lenders. The Credit Agreement provides for a $195,000,000 facility, consisting of a $100,000,000 domestic term loan facility, a $65,000,000 domestic revolving credit facility (which includes a $27,000,000 domestic letter of credit facility) and a $30,000,000 amortizing multicurrency revolving credit facility (which includes a $3,000,000 multicurrency letter of credit facility). The commitment under the amortizing multicurrency revolver was $27,800,000 at December 29, 1994. The initial borrowings under the Credit Agreement were used (i) to pay indebtedness under the Postpetition Credit Agreement dated as of February 5, 1993 among the Debtors, the lenders party thereto (DIP Lenders) and Continental Bank N.A., as agent for the DIP Lenders, (ii) to pay indebtedness under certain foreign credit facilities, (iii) to pay the claims of subsidiary trade creditors under the Plan of Reorganization and (iv) to pay certain fees and expenses relating to the Plan of Reorganization and the Credit Agreement. Obligations under the Credit Agreement are collateralized by substantially all of the assets of Envirodyne and its domestic subsidiaries and by the pledge of the capital stock of substantially all of Envirodyne's subsidiaries. Availability of funds under the Credit Agreement is subject to a borrowing base measured by certain assets of Envirodyne and its subsidiaries. The available borrowing capacity under the Credit Agreement was approximately $41 million at December 29, 1994. F-28 114 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Borrowings under the domestic term loan facility and the domestic revolving credit facility bear interest, at the Company's election, at a rate per annum equal to (i) the Bank of America Illinois base rate plus 1.5% or (ii) the Eurodollar rate plus 2.75%, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The domestic term loan facility terminates on December 31, 1999 and is subject to quarterly repayments of principal as follows:
QUARTERLY TOTAL REPAYMENT CALENDAR YEAR REPAYMENT AMOUNT FOR CALENDAR YEAR ---------------------------------- ---------------- ----------------- 1995.............................. $2,775,000 $11,100,000 1996.............................. 4,075,000 16,300,000 1997.............................. 4,450,000 17,800,000 1998.............................. 4,625,000 18,500,000 1999.............................. 6,300,000 25,200,000
The domestic revolving credit facility expires on December 31, 1999, with a commitment fee of 0.5% per annum on the unused portion of the commitment. The domestic letter of credit facility expires December 16, 1999, with fees on the outstanding amount of the domestic letters of credit of 0.25% per annum to the issuers and 2.5% per annum to the domestic Lenders, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The multicurrency revolving credit facility permits borrowings in U.S. Dollars, German Marks, French Francs or Pounds Sterling at an interest rate per annum equal to the applicable Eurocurrency rate plus 2.75%, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. The multicurrency revolving credit facility expires on December 31, 1999 and the commitments thereunder are subject to mandatory quarterly reductions as follows:
QUARTERLY TOTAL REDUCTION CALENDAR YEAR COMMITMENT REDUCTION FOR CALENDAR YEAR ------------------------------- -------------------- ----------------- 1995........................... $ 500,000 $2,000,000 1996........................... 950,000 3,800,000 1997........................... 1,075,000 4,300,000 1998........................... 1,150,000 4,600,000 1999........................... 775,000 3,100,000
There is a commitment fee of 0.5% per annum on the unused portion of the multicurrency revolving credit facility. The multicurrency letter of credit facility expires December 16, 1999, with fees on the outstanding amount of the multicurrency letters of credit of 0.25% per annum to the issuers and 2.5% per annum to the multicurrency Lenders, subject to step downs of up to 0.5% if the Company meets certain debt and interest coverage tests. Envirodyne's obligations under the Credit Agreement bear interest at rates that are expected to fluctuate over time. Envirodyne is required under the Credit Agreement to enter into interest rate protection agreements with respect to a significant portion of the amounts outstanding from time to time thereunder. Envirodyne has entered into $50 million of interest rate protection agreements that cap the Company's LIBOR interest component (excludes spread) at an average rate of 6.50% until January 1997. The fair value of interest rate cap agreements is estimated by obtaining quotes from banks. At December 29, 1994, the carrying amount and estimated fair value of interest rate cap agreements were $1,174,000 and $1,432,000, respectively. The Borrowers have made certain representations and have agreed to certain covenants that restrict the operations of the Borrowers and their subsidiaries' businesses. Among other things, the Borrowers may not, with limited exceptions, place liens on their properties or assets, incur additional indebtedness, make dividend F-29 115 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) or other distributions on capital stock, make investments (other than cash equivalent investments), merge or consolidate with any other person, dispose of assets outside the ordinary course of business or exceed stated levels of capital expenditures. The Credit Agreement also contains a number of financial covenants, including covenants relating to cash flow, interest and fixed charge coverage ratios, net worth and debt to cash flow levels. Unless cured within any applicable grace period, events of default include failure to pay principal, interest or other amounts due to the Lenders, a material breach of a representation or warranty, certain events related to employee benefit plans, certain events of bankruptcy or insolvency, defaults on other indebtedness having a principal amount in the aggregate in excess of $5,000,000, failure to discharge judgments in an amount in excess of $5,000,000, a change of control (as defined) and failure to comply with covenants, including the financial covenants described above. The Company and the Lenders entered into an amendment of the Credit Agreement as of January 24, 1995 easing certain financial covenants and permanently waiving the event of default arising from the ownership by the Malcolm I. Glazer Trust (Trust) of more than 30% of the Company's Common Stock, provided that the Trust's ownership does not later exceed 49% of the Company's outstanding Common Stock. The Company is currently in compliance with the terms of the Credit Agreement, including the financial covenants. Outstanding short-term and long-term debt consisted of:
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Short-term debt, current maturity of long-term debt, and capital lease obligation: Current maturity of Bank Term Loan (8.0%)...................... $ 11,100 $ 8,325 Current maturity of Viskase Capital Lease Obligation........... 5,450 4,940 Current maturity of Viskase Limited Term Loan (5.9%)........... 1,882 1,679 Other.......................................................... 7,366 666 -------- -------- Total short-term debt.......................................... $ 25,798 $ 15,610 ======== ======== Long-term debt: Bank Credit Agreement: Term Loan due 1999 (8.0%)................................... $ 80,575 $ 91,675 Revolving Loan due 1999 (8.9%).............................. 32,524 5,999 10.25% Senior Notes due 2001................................... 219,262 219,262 Viskase Capital Lease Obligation............................... 147,194 152,644 Viskase Limited Term Loan (5.9%)............................... 8,466 9,233 Other.......................................................... 1,337 3,566 -------- -------- Total long-term debt........................................... $489,358 $482,379 ======== ========
The fair value of the Company's debt obligation (excluding capital lease obligation) is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for the debt of the same remaining maturities. At December 29, 1994, the carrying amount and estimated fair value of debt obligations (excluding capital lease obligation) were $362,512 and $298,926, respectively. On December 28, 1990, Viskase and GECC entered into a sale and leaseback transaction. The sale and leaseback of assets included the production and finishing equipment at Viskase's four domestic casing F-30 116 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) production and finishing facilities. The facilities are located in Chicago, Illinois; Loudon, Tennessee; Osceola, Arkansas and Kentland, Indiana. Viskase, as the Lessee under the relevant agreements, will continue to operate all of the facilities. The lease has been accounted for as a capital lease. The principal terms of the sale and leaseback transaction include: (a) a 15 year basic lease term (plus selected renewals at Viskase's option); (b) annual rent payments in advance beginning in February 1991; and (c) a fixed price purchase option at the end of the basic 15 year term and fair market purchase options at the end of the basic term and each renewal term. Further, the Lease Documents contain covenants requiring maintenance by the Company of certain financial ratios and restricting the Company's ability to pay dividends, make payments to affiliates, make investments and incur indebtedness. Annual rental payments under the Lease will be approximately $19.2 million through 1997, $21.4 million in 1998 and $23.5 million through the end of the basic 15-year term. Viskase is required to provide credit support consisting of a standby letter of credit in an amount up to one year's rent through at least 1997. This credit support can be reduced up to $4,000,000 currently if the Company achieves and maintains certain financial ratios. As of December 29, 1994, the Company had met the required financial ratios and the letter of credit has been reduced by $4,000,000. The letter can be further reduced in 1997 or eliminated after 1998 if the Company achieves and maintains certain financial ratios. Envirodyne and its other principal subsidiaries guaranteed the obligations of Viskase under the Lease. The following is a schedule of minimum future lease payments under the capital lease together with the present value of the net minimum lease payments as of December 29, 1994:
YEAR ENDING DECEMBER (000'S) -------------------------------------------------------- -------- 1995.................................................... $ 19,227 1996.................................................... 19,227 1997.................................................... 19,227 1998.................................................... 21,363 1999.................................................... 23,499 Thereafter.............................................. 140,994 -------- Net minimum lease payments.............................. 243,537 Less: Amount representing interest............................ (90,893) -------- $152,644 ========
The 1995 rental payment of $19,227,000 was paid on February 28, 1995. Principal payments under the capital lease obligation for the years ended 1995 through 1999 range from approximately $5 million to $13 million. Aggregate maturities of remaining long-term debt for each of the next five fiscal years are (in thousands):
TOTAL ------- 1995..................................................... $20,897 1996..................................................... 23,258 1997..................................................... 26,305 1998..................................................... 34,870 1999..................................................... 33,982
F-31 117 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 9. OPERATING LEASES The Company has operating lease agreements for machinery, equipment and facilities. The majority of the facilities leases require the Company to pay maintenance, insurance and real estate taxes. Future minimum lease payments for operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 29, 1994, are (in thousands): 1995...................................................... $4,748 1996...................................................... 2,876 1997...................................................... 1,175 1998...................................................... 747 1999...................................................... 287 Total thereafter.......................................... ------ Total minimum lease payments.............................. $9,833 ======
Total rent expense during 1994, 1993 and 1992 amounted to $5,982,000, $5,401,000, and $5,673,000, respectively. 10. RETIREMENT PLANS The Company and its subsidiaries have defined contribution and defined benefit plans varying by country and subsidiary. At December 29, 1994, the North American operations of Viskase maintained several non-contributory defined benefit retirement plans. The Viskase plans cover substantially all salaried and full-time hourly employees, and benefits are based on final average compensation and years of credited service. As of the Viskase acquisition date, the former owner assumed the liability for the accumulated benefit obligation under its plans. The effect of expected future compensation increases on benefits accrued is recorded as a liability on the Company's consolidated balance sheet. PENSIONS -- NORTH AMERICA: Net pension cost for the Viskase North American plans consisted of:
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS) Service cost -- benefits earned during the year..... $ 3,662 $ 3,186 $ 3,031 Interest cost on projected benefit obligation....... 4,249 4,000 3,578 Actual (gain) loss on plan assets................... 874 (2,306) (1,168) Net amortization and deferral....................... (3,696) (74) (1,026) ------- ------- ------- Net pension cost.................................... $ 5,089 $ 4,806 $ 4,415 ======= ======= =======
F-32 118 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amounts included in the consolidated balance sheet for the North American plans of Viskase were:
DECEMBER 29, DECEMBER 31, 1994 1993 ------------ ------------ (IN THOUSANDS) Actuarial present value of benefit obligation: Vested benefits................................................ $39,165 $34,233 Nonvested benefits............................................. 4,316 3,369 ------- ------- Accumulated benefit obligation................................... 43,481 37,602 Effect of projected future compensation increases................ 16,651 23,896 ------- ------- Projected benefit obligation..................................... 60,132 61,498 Plan assets at fair value, primarily listed stocks and investment grade corporate bonds.......................................... 33,678 31,736 ------- ------- Amount underfunded............................................... 26,454 29,762 Unrecognized gain (loss)......................................... 3,778 Unrecognized prior service costs................................. 71 ------- ------- Accrued liability included in consolidated balance sheet......... $30,303 $29,762 ======= ======= Assumed discount rate............................................ 8.0% 7.0% Assumed long-term compensation factor............................ 5.0% 4.5% Assumed long-term return on plan assets.......................... 8.5% 8.0%
SAVINGS PLANS: The Company also has defined contribution savings and similar plans, which vary by subsidiary, and, accordingly, are available to substantially all full-time U.S. employees not covered by collective bargaining agreements. The Company's aggregate contributions to these plans are based on eligible employee contributions and certain other factors. The Company expense for these plans was $2,109,000, $2,026,000 and $2,001,000 in 1994, 1993, and 1992, respectively. INTERNATIONAL PLANS: The Company maintains various pension and statutory separation pay plans for its European employees. The expense for these plans in 1994, 1993 and 1992 was $1,043,000, $864,000 and $515,000, respectively. As of their most recent valuation dates, in plans where vested benefits exceeded plan assets, the actuarially computed value of vested benefits exceeded those plans' assets by approximately $1,902,000; conversely, plan assets exceeded the vested benefits in certain other plans by approximately $1,708,000. OTHER POSTRETIREMENT BENEFITS: The Company provides postretirement health care and life insurance benefits to Viskase's North American employees. The Company does not fund postretirement health care and life benefits in advance, and has the right to modify these plans in the future. F-33 119 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Effective January 1, 1993, the company adopted the provisions of SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS No. 106 requires that the expected cost of these benefits must be charged to expense during the years that the employee renders service. In connection with the 1989 acquisition of the Company, an accrual of $15,000,000 had been recorded for the estimated postretirement benefits liability at the acquisition date. On January 1, 1993, an additional liability and transition obligation was recorded. Fresh Start accounting results in the write-off of the transition obligation and statement of the liability for postretirement health care and life insurance benefits at fair value. Net periodic postretirement benefit cost for 1994 and 1993 includes the following components:
MEDICAL LIFE TOTAL ----------------- --------------- ----------------- 1994 1993 1994 1993 1994 1993 ------- ------- ------ ------ ------- ------- (IN THOUSANDS) Components of net periodic postretirement benefit cost: Service cost -- benefits earned during the current year...................... $ 511 $ 417 $ 176 $ 176 $ 687 $ 593 Interest cost -- on accumulated postretirement benefit obligation..... 1,208 1,150 442 437 1,650 1,587 Amortization of unrecognized transition obligation............................ 142 53 195 ------- ------- ------ ------ ------- ------- Net periodic benefit cost................ $ 1,719 $ 1,709 $ 618 $ 666 $ 2,337 $ 2,375 ======= ======= ====== ====== ======= ======= Actuarial present value of benefit obligations: Retirees................................. $ 6,836 $ 6,488 $2,184 $2,170 $ 9,020 $ 8,658 Fully eligible active participants....... 2,238 2,358 2,435 2,586 4,673 4,944 Other active participants................ 7,660 8,075 1,612 1,767 9,272 9,842 ------- ------- ------ ------ ------- ------- Total................................. 16,734 16,921 6,231 6,523 22,965 23,444 Unrecognized gains....................... 979 581 1,560 ------- ------- ------ ------ ------- ------- Accumulated postretirement benefit obligation............................... $17,713 $16,921 $6,812 $6,523 $24,525 $23,444 ======= ======= ====== ====== ======= ======= Assumed discount rate.............................. 8.00% Assumed medical trend rate......................... 11.00% in 1995 decreasing to 6.50% in 2004 Assumed long-term compensation factor.............. 5.00%
The postretirement benefit obligation was determined by application of the terms of the various plans, together with relevant actuarial assumptions. The effect of a 1% annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation at December 29, 1994 and December 31, 1993 by $198,000 and $215,000, respectively, and the service and interest cost components for 1994 and 1993 by a total of $22,000 and $13,000, respectively. 11. CONTINGENCIES A class action lawsuit by former employees of subsidiary corporations comprising most of the Company's former steel and mining division (SMD) was pending as of the commencement of the bankruptcy case in which the plaintiffs are seeking substantial damages. The Company and the plaintiffs are currently participating in a mediation process to attempt to resolve the case. Envirodyne denies liability and in the absence of successful mediation or other settlement negotiations will continue to vigorously defend these claims. However, inasmuch as the Plan of Reorganization provides for the issuance of common stock with respect to prepetition Envirodyne general unsecured claims (refer to Note 1), an adverse finding of liability and damages could result in substantial dilution to the holders of the common stock. F-34 120 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Litigation has been initiated with respect to events arising out of the bankruptcy cases and the 1989 acquisition of Envirodyne by Emerald with respect to which, although Envirodyne is not presently a party to such litigation, certain defendants have asserted indemnity rights against Envirodyne. In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy, James L. Massey, William Rifkind and Michael Zimmerman, Case No. 93 A 1616, United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (Bankruptcy Court), ARTRA Group Incorporated (ARTRA) alleges breach of fiduciary duty and tortious inference in connection with the negotiation and consummation of the Plan of Reorganization. In ARTRA Group Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael Zimmerman, Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial Circuit, County of DuPage, State of Illinois, ARTRA alleges negligence, breach of fiduciary duty, fraudulent misrepresentation and deceptive business practices in connection with the 1989 acquisition of Envirodyne by Emerald. The plaintiff seeks damages in the total amount of $136,200,000 plus interest and punitive damages of $408,600,000. D.P. Kelly & Associates, L.P. and Messrs. Kelly, Bobrinskoy, Massey, Rifkind and Zimmerman have asserted common law and contractual rights of indemnity against Envirodyne for attorneys' fees, costs and any ultimate liability relating to the claims set forth in the complaints. Upon the undertaking of D.P. Kelly & Associates, L.P. to repay such funds in the event it is ultimately determined that there is no right to indemnity, Envirodyne is advancing funds to D.P. Kelly & Associates, L.P. and Mr. Kelly for the payment of legal fees in the case pending before the Bankruptcy Court. Although the case is in a preliminary stage and the Company is not a party thereto, the Company believes that the plaintiff's claims raise similar factual issues to those raised in the bankruptcy cases which, if adjudicated in a manner similar to that in the bankruptcy cases, would render it difficult for the plaintiff to establish liability. Accordingly, the Company believes that the indemnification claims would not have a material adverse effect upon the business or financial position of the Company, even if the claimants were ultimately successful in establishing their right to indemnification. In the Envirodyne bankruptcy case the United States Environmental Protection Agency (USEPA), the Economic Development Authority (EDA), and Navistar International Transportation Corp. (Navistar Transportation) filed proofs of claim with respect to unreimbursed environmental response costs at the location of the former SMD operations. The parties have agreed in principle, subject to the negotiation of a definitive settlement agreement, Bankruptcy Court approval and public comment pursuant to regulations applicable to EDA and USEPA, to settle the claims against Envirodyne through the payment of $5,000 to the USEPA and the issuance of 64,460 shares of common stock to Navistar Transportation. In the event that the settlement is not completed, Envirodyne believes that it has valid defenses to the claims and will continue its objections to the claims. To the extent that USEPA, EDA or Navistar Transportation were able to establish liability and damages as to their respective proofs of claim, such parties would receive Common Stock under the Plan of Reorganization in satisfaction of their claims. Certain of Envirodyne's stockholders prior to the acquisition of Envirodyne by Emerald failed to exchange their certificates representing old Envirodyne common stock for the $40 per share cash merger consideration specified by the applicable acquisition agreement. In the Envirodyne bankruptcy case, Envirodyne is seeking to equitably subordinate the interests of the holders of untendered shares, in which event such holders would receive no distribution pursuant to the Plan of Reorganization. The Bankruptcy Court granted Envirodyne's motion for summary judgment to equitably subordinate the holders of untendered shares. Certain holders have appealed the summary judgment to the United States District Court for the Northern District of Illinois. If such holders were ultimately successful, Envirodyne believes that the maximum number of shares of common stock that it would be required to issue to such claimants is approximately 106,000. F-35 121 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In August 1993, Clear Shield National, Inc. received a subpoena from the Antitrust Division of the United States Department of Justice relating to a grand jury investigation of the disposable plastic cutlery industry. Clear Shield National, Inc. has cooperated fully with the investigation. The Company and its subsidiaries are involved in various legal proceedings arising out of its business and other environmental matters, none of which is expected to have a material adverse effect upon its results of operations, cash flows or financial position. 12. CAPITAL STOCK, PAID IN CAPITAL, AND WARRANTS Authorized shares of preferred stock ($.01 par value per share) and common stock ($.01 par value per share) for the reorganized Envirodyne are 25,000,000 shares and 50,000,000 shares, respectively. 13,515,000 shares of common stock were issued and outstanding as of December 29, 1994. In accordance with the Plan of Reorganization, an additional 15,000 shares of common stock were issued to the general unsecured creditors of Envirodyne during 1994. (Refer to Note 1.) Prior to the December 31, 1993 reorganization, the authorized shares of preferred stock and common stock were 1,000 shares and 320 shares, respectively. Envirodyne issued 1,500,000 warrants pursuant to the Plan of Reorganization. Each warrant is exercisable at any time until December 31, 1998 for one share of common stock at an exercise price of $17.25 per share. The exercise price and the number of shares of common stock for which a warrant is exercisable are subject to adjustment upon the occurrence of certain events. The Plan of Reorganization provides for the issuance of common stock to general unsecured creditors of Envirodyne. As of the date hereof, certain parties have made claims as general unsecured creditors of Envirodyne the allowance of which Envirodyne has denied. To the extent that such parties are successful in establishing the allowance of their claims, they would be entitled to receive common stock in satisfaction of such claims, which would result in dilution to the existing holders of the common stock. (Refer to Note 11.) 13. INCOME TAXES The provision (benefit) for income taxes consisted of:
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS) Current: Federal........................................... $ 200 Foreign........................................... 4,652 $ 2,453 $ 994 State and local................................... ------ ------- -------- 4,852 2,453 994 ------ ------- -------- Deferred: Federal........................................... (194) 17,188 (13,206) Foreign........................................... 128 (1,434) 174 State and local................................... 14 2,093 (1,962) ------ ------- -------- (52) 17,847 (14,994) ------ ------- -------- $4,800 $20,300 $(14,000) ====== ======= ========
F-36 122 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The income tax expense for the 1993 period was allocated between loss before extraordinary gain for $12,000,000 and to the extraordinary gain for $8,300,000. A reconciliation from the statutory federal tax rate to the consolidated effective tax rate follows:
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ Statutory federal tax rate.......................... 35.0% 35.0% (34.0)% Increase (decrease) in tax rate due to: State and local taxes net of related federal tax benefit........................................ .8 1.3 (2.5) Net effect of taxes relating to foreign operations..................................... 140.3 1.5 1.6 Intangibles amortization.......................... 214.1 2.3 5.8 U.S. alternative minimum tax Non-taxable debt discharge income, fresh start accounting and other bankruptcy related expenses....................................... (22.9) Tax rate changes.................................. 1.7 Other............................................. 13.8 .3 1.7 ----- ----- ----- Consolidated effective tax rate..................... 404.0% 19.2% (27.4)% ===== ===== =====
Temporary differences and carryforwards which give rise to a significant portion of deferred tax assets and liabilities for 1994 are as follows:
TEMPORARY DIFFERENCE TAX EFFECTED ----------------------------- ----------------------------- DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX ASSETS LIABILITIES ASSETS LIABILITIES ------------ ------------ ------------ ------------ Depreciation basis differences......... $319,256 $120,418 Inventory basis differences............ 31,456 12,268 Intangible basis differences........... 40,226 15,688 Lease transaction...................... $152,644 $59,531 Pension and healthcare................. 53,589 20,936 Reserves............................... 23,579 9,196 Foreign exchange and other............. 8,806 71,255 3,128 27,750 -------- -------- ------- -------- $238,618 $462,193 $92,791 $176,124 ======== ======== ======= ========
At December 29, 1994, the Company had $11,066,000 of undistributed earnings of foreign subsidiaries considered permanently invested for which deferred taxes have not been provided. At December 29, 1994, the Company had federal income tax net operating loss carryforwards of approximately $36 million. Such losses will expire in the year 2008, if not previously utilized. In addition the Company has alternative minimum tax credit carryforwards of $3.5 million. Alternative minimum tax credits have an indefinite carryforward period. Significant limitations on the utilization of the net operating loss carryforwards and the alternative minimum tax credit carryforwards exist under federal income tax rules and thus these carryforwards have not been recognized for financial statement purposes due to these limitations. Domestic earnings or (losses) after extraordinary gain or loss and before income taxes were approximately $(7,705,000), $107,622,000 and $(50,300,000) in 1994, 1993 and 1992, respectively. Foreign earnings or (losses) before income taxes were approximately $8,893,000, $(1,733,000) and $(700,000) in 1994, 1993 and 1992, respectively. F-37 123 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company joins in filing a U.S. consolidated federal income tax return including all of its domestic subsidiaries. 14. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred and totaled $16,852,000, $15,216,000 and $12,323,000, for 1994, 1993, and 1992, respectively. 15. RELATED PARTY TRANSACTIONS During each of 1994, 1993 and 1992, the Company paid DPK $770,000 for management services. In fiscal 1994, 1993 and 1992, the Company made payments of approximately $560,000, $354,000 and $681,000, respectively, to an affiliate of DPK for the use of a jet aircraft on an as-needed basis. During fiscal 1994, 1993, and 1992, the Company purchased product and services from affiliates of DPK in the amounts of approximately $1,367,000, $941,000 and $285,000, respectively. During fiscal 1994, 1993, and 1992, the Company sublet office space from DPK for which it paid approximately $151,000, $150,000 and $150,000, respectively, in rent. During fiscal 1994, the Company advanced funds to and made payments on behalf of DPK and Donald P. Kelly in the amount of $118,000 for legal fees related to the litigation involving ARTRA GROUP Incorporated (refer to Note 11). F-38 124 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 16. BUSINESS SEGMENT INFORMATION AND GEOGRAPHIC AREA INFORMATION Envirodyne primarily manufactures and sells polymeric food casings and plastic packaging films and containers (food packaging products) and disposable foodservice supplies. The Company's operations are primarily in North America and Europe. Intercompany sales and charges (including royalties) have been reflected as appropriate in the following information. Other income for 1994, 1993, and 1992 includes net foreign exchange transaction gains (losses) of approximately $2,707,000, $(4,631,000), and $(7,568,000), respectively. BUSINESS SEGMENT INFORMATION
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS) Net sales: Food packaging products.............................. $530,179 $522,363 $ 513,777 Disposable foodservice supplies...................... 68,996 66,383 62,918 Other and eliminations............................... (146) (1,361) (990) -------- -------- ---------- $599,029 $587,385 $ 575,705 ======== ======== ========== Earnings before income taxes: Operating income: Food packaging products.............................. $ 48,145 $ 53,432 $ 66,949 Disposable foodservice supplies...................... 6,514 5,223 5,913 Unallocated expenses, net -- primarily corporate..... (5,982) (5,023) (5,656) -------- -------- ---------- 48,677 53,632 67,206 Interest expense, net.................................. 49,207 30,259 105,558 Other expense (income), net............................ (1,668) 5,540 8,699 Fees and expenses associated with renegotiation of debt................................................. 3,945 Minority interest in loss of subsidiary................ 50 717 -------- -------- ---------- $ 1,188 $ 18,550 $ (50,996) ======== ======== ========== Identifiable assets: Food packaging products.............................. $814,731 $790,125 $ 911,834 Disposable foodservice supplies...................... 71,530 64,879 89,753 Corporate and other, primarily cash equivalents...... 10,375 12,676 25,375 -------- -------- ---------- $896,636 $867,680 $1,026,962 ======== ======== ========== Depreciation and amortization under capital lease and amortization of intangibles expense: Food packaging products.............................. $ 47,207 $ 46,715 $ 43,857 Disposable foodservice supplies...................... 4,125 5,624 5,402 Corporate and other.................................. 55 59 51 -------- -------- ---------- $ 51,387 $ 52,398 $ 49,310 ======== ======== ========== Capital expenditures: Food packaging products.............................. $ 28,534 $ 37,673 $ 26,618 Disposable foodservice supplies...................... 4,012 3,100 2,387 Corporate and other.................................. 20 114 13 -------- -------- ---------- $ 32,566 $ 40,887 $ 29,018 ======== ======== ==========
F-39 125 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) GEOGRAPHIC AREA INFORMATION
JANUARY 1, JANUARY 1, DECEMBER 27, TO TO 1991 TO DECEMBER 29, DECEMBER 31, DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ (IN THOUSANDS) Net sales: North/South American operations...................... $423,049 $426,644 $ 409,831 European operations.................................. 184,395 164,717 171,844 Other and eliminations............................... (8,415) (3,976) (5,970) -------- -------- ---------- $599,029 $587,385 $ 575,705 ======== ======== ========== Operating profit: North/South American operations...................... $ 28,124 $ 37,495 $ 48,263 European operations.................................. 20,553 16,137 18,943 -------- -------- ---------- $ 48,677 $ 53,632 $ 67,206 ======== ======== ========== Identifiable assets: North/South American operations...................... $667,358 $669,240 $ 804,203 European operations.................................. 229,278 198,440 222,759 -------- -------- ---------- $896,636 $867,680 $1,026,962 ======== ======== ==========
The total assets and net assets of foreign businesses were approximately $275,067 and $106,662 at December 29, 1994. 17. QUARTERLY DATA (UNAUDITED) Quarterly financial information for 1994 is as follows (in thousands, except for per share amounts):
FIRST SECOND THIRD FOURTH FISCAL 1994 QUARTER QUARTER QUARTER QUARTER ANNUAL - ----------- -------- -------- -------- -------- -------- Net Sales.............................. $142,593 $150,788 $151,883 $153,765 $599,029 Operating Income....................... 9,710 18,739 9,755 10,473 48,677 Net income (loss)...................... (2,507) 3,448 (3,261) (1,292) (3,612) Net income (loss) per share............ (0.19) 0.26 (0.24) (0.10) (0.27)
The second quarter operating income benefitted from a $9.5 million settlement of a patent infringement suit. Net income (loss) per share amounts are computed independently for each of the quarters presented using weighted average shares outstanding during each quarter. F-40 126 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 18. STOCK OPTIONS At December 29, 1994, the Company had outstanding options under the 1993 Stock Option Plan. Options were issued to certain employees to purchase shares at not less than the fair market value of the shares on the grant date. The plan options generally vest in three equal annual amounts beginning one year from the grant date and expire ten years from the grant date. Stock option activity for the year ended December 29, 1994, was:
NUMBER OF OPTION OPTION PRICE SHARES PER SHARE --------- ------------ Outstanding, December 31, 1993..................................... 0 -- Granted.......................................................... 402,020 $5.06 Exercised........................................................ -- -- Terminated....................................................... (13,100) 5.06 ------- Outstanding, December 29, 1994..................................... 388,920 5.06 =======
At December 29, 1994, none of the option grants were exercisable because the grants are conditioned upon the approval of the 1993 Stock Option Plan by the Company's stockholders at the 1995 annual meeting. 19. FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying value and estimated fair value as of December 29, 1994 of the Company's financial instruments. (Refer to Notes 2 and 8.)
CARRYING ESTIMATED VALUE FAIR VALUE -------- ---------- (IN THOUSANDS) Assets: Cash and equivalents............................................... $ 7,289 $ 7,289 Foreign currency contracts......................................... 4,614 4,649 Interest rate agreements........................................... 1,174 1,432 Liabilities: Long-term debt (excluding capital lease)........................... 362,512 298,926
20. SUBSEQUENT EVENT On June 20, 1995, Envirodyne completed the sale of $160,000,000 aggregate principal amount of senior secured notes to certain institutional investors in a private placement. The senior secured notes were issued pursuant to an indenture dated June 20, 1995 (Indenture) and consist of (i) $151,500,000 of 12% Senior Secured Notes due 2000 and (ii) $8,500,000 of Floating Rate Senior Secured Notes due 2000 (collectively, the Notes). Envirodyne used the net proceeds of the offering primarily to (i) repay the Company's $86,125,000 domestic term loan, (ii) repay the $68,316,000 of obligations under the Company's domestic and foreign revolver and (iii) pay transaction fees and expenses. Concurrently with the June 20, 1995 placement, Envirodyne entered into a new $20,000,000 domestic revolving credit facility (Revolving Credit Facility) and a new $28,000,000 letter of credit facility (Letter of Credit Facility). The $151,500,000 tranche of Notes bear interest at a rate of 12% per annum and the $8,500,000 tranche bears interest at a rate equal to the six month London Interbank Offered Rate (LIBOR) plus 575 basis points. The initial interest rate on the floating rate tranche was approximately 11.7%. The interest rate on the floating F-41 127 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) rate tranche is reset semi-annually on June 15 and December 15. Interest on the Notes is payable each June 15 and December 15, commencing December 15, 1995. On June 15, 1999, $80,000,000 of the aggregate principal amount of the Notes is subject to a mandatory redemption. The remaining principal amount outstanding will mature on June 15, 2000. In the event the Company has Excess Cash Flow (as defined) in excess of $5,000,000 in any fiscal year, beginning with fiscal 1995, the Company will be required to make an offer to purchase Notes together with any borrowed money obligations outstanding under the Revolving Credit Facility, on a pro rata basis, in an amount equal to the Excess Cash Flow at a purchase price of 100% plus any accrued interest to the date of purchase. The Notes are redeemable, in whole or from time to time in part, at Envirodyne's option, at the greater of (i) the outstanding principal amount or (ii) the present value of the expected future cash flows from the Notes discounted at a rate equal to the Treasury Note yield corresponding closest to the remaining average life of the Notes at the time of prepayment plus 100 basis points. The Indenture contains covenants with respect to Envirodyne and its subsidiaries limiting (subject to a number of important qualifications), among other things, (i) the ability to pay dividends or redeem or repurchase common stock, (ii) the incurrence of indebtedness, (iii) the creation of liens, (iv) certain affiliate transactions and (v) the ability to consolidate with or merge into another entity and to dispose of assets. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to the three month London Interbank Offered Rate (LIBOR) on the first day of each calendar quarter plus 300 basis points. The Revolving Credit Facility expires on June 20, 1998. The Letter of Credit Facility expires on June 20, 1998, with fees on the outstanding amount of letters of credit equal to 2.0% per annum and an issuance fee of 0.5% on the face amount of the letter of credit. There is a commitment fee of 0.5% per annum on the unused portion of the Letter of Credit Facility. Envirodyne's payment obligations under the Notes are fully and unconditionally guaranteed on a joint and several basis (collectively, the "Subsidiary Guarantees") by Viskase Corporation, Viskase Holding Corporation, Viskase Sales Corporation, Clear Shield National, Inc., Sandusky Plastics, Inc. and Sandusky Plastics of Delaware, Inc., each a direct or indirect wholly-owned subsidiary of Envirodyne and each a "Guarantor." These subsidiaries represent substantially all of the operations of Envirodyne conducted in the United States. The remaining subsidiaries of Envirodyne generally are foreign subsidiaries or otherwise relate to foreign operations. The obligations of each Guarantor under its Subsidiary Guarantee are the senior obligation of such Guarantor, and are collateralized, subject to certain permitted liens, by substantially all of the domestic assets of the Guarantor and, in the case of Viskase Holding Corporation, by a pledge of 65% of the capital stock of Viskase S.A. The Subsidiary Guarantees and security are shared with the lenders under the Revolving Credit Agreement on a pari passu basis and are subject to the priority interest of the holders of obligations under the Letter of Credit Facility, each pursuant to an intercreditor agreement. In accordance with previous positions taken by the Commission, the following consolidating condensed financial data illustrate the composition of the combined Guarantors. Separate complete financial statements of the respective Guarantors would not provide additional material information that would be useful in assessing the financial composition of the Guarantors. No single Guarantor has any significant legal restrictions on the ability of investors or creditors to obtain access to its assets in the event of a default on the Subsidiary Guarantor other than its subordination to senior indebtedness described above. Investments in subsidiaries are accounted for by the parent on the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are therefore reflected in the parent's investment accounts and earnings. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. F-42 128 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING BALANCE SHEETS DECEMBER 29, 1994
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS(1) TOTAL --------- ------------ ------------ --------------- ------------ (IN THOUSANDS) ASSETS Current assets: Cash and equivalents........... $ 555 $ 1,853 $ 4,881 $ 7,289 Receivables, net............... 63,949 49,378 $ (26,459) 86,868 Inventories.................... 68,719 43,725 (1,961) 110,483 Other current assets........... 181 12,999 6,286 19,466 --------- -------- -------- --------- -------- Total current assets... 736 147,520 104,270 (28,420) 224,106 Property, plant and equipment, including those under capital lease.......................... 189 367,880 138,030 506,099 Less accumulated depreciation and amortization............ 55 26,739 8,967 35,761 --------- -------- -------- --------- -------- Property, plant and equipment, net......................... 134 341,141 129,063 470,338 Deferred financing costs......... 8,062 1,081 9,143 Other assets..................... 45,757 1,424 47,181 Investment in subsidiaries....... 85,056 93,843 (178,899) Excess reorganization value..................... 95,945 49,923 145,868 --------- -------- -------- --------- -------- $ 93,988 $724,206 $285,761 $(207,319) $896,636 ========= ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease............... $ 11,100 $ 7,720 $ 6,978 $ 25,798 Accounts payable............... 726 20,162 39,906 $ (26,459) 34,335 Accrued liabilities............ 10,254 36,634 25,358 72,246 --------- -------- -------- --------- -------- Total current liabilities.......... 22,080 64,516 72,242 (26,459) 132,379 Long-term debt including obligations under capital lease.......................... 327,437 147,898 14,023 489,358 Accrued employee benefits........ 52,248 3,969 56,217 Deferred and noncurrent income taxes.......................... 22,486 37,723 23,124 83,333 Other long-term liabilities(2)... (413,364) 373,031 40,333 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding..... Common stock, $.01 par value; 13,515,000 shares issued and outstanding................. 135 4 32,608 (32,612) 135 Paid in capital................ 134,865 43,992 55,023 (99,015) 134,865 Accumulated earnings (deficit)................... (3,612) 4,794 44,927 (49,721) (3,612) Cumulative foreign currency translation adjustments..... 3,961 (488) 488 3,961 --------- -------- -------- --------- -------- Total stockholders' equity............... 135,349 48,790 132,070 (180,860) 135,349 --------- -------- -------- --------- -------- $ 93,988 $724,206 $285,761 $(207,319) $896,636 ========= ======== ======== ========= ========
- ------------------------- (1) Includes elimination of intercompany receivables, payables, loans and investment accounts. (2) Includes intercompany loans. F-43 129 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 29, 1994
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ ------------ ------------ (IN THOUSANDS) NET SALES................................ $406,988 $220,787 $(28,746) $599,029 COSTS AND EXPENSES Cost of sales.......................... 295,506 165,877 (28,637) 432,746 Selling, general and administrative.... $ 6,015 71,092 34,344 111,451 Patent infringement settlement income.............................. 9,457 9,457 Amortization of intangibles and excess reorganization value................ 12,266 3,346 15,612 -------- -------- -------- -------- -------- OPERATING INCOME (LOSS).................. (6,015) 37,581 17,220 (109) 48,677 Interest income........................ 13 46 248 307 Interest expense....................... 31,937 14,124 3,453 49,514 Intercompany interest expense (income)............................ (35,077) 31,170 3,907 Management fees (income)............... (7,400) 6,544 856 Other expense (income), net............ (3,448) (143) 6,632 (4,709) (1,668) Equity loss (income) in subsidiary..... 8,392 (8,392) Minority interest in subsidiary........ 50 50 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES........ (406) (14,068) 2,620 13,042 1,188 Income tax provision (benefit)......... 3,206 (3,186) 4,780 4,800 -------- -------- -------- -------- -------- NET INCOME (LOSS)........................ $ (3,612) $(10,882) $ (2,160) $ 13,042 $ (3,612) ======== ======== ======== ======== ========
F-44 130 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 29, 1994
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ --------------- ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities................. $(18,022) $ 30,738 $ 10,570 $ 23,286 Cash flows from investing activities: Capital expenditures................. (20) (21,666) (10,880) (32,566) Proceeds from sales of property, plant and equipment............... 239 120 359 Purchase of minority interest in subsidiary........................ (4,200) (4,200) -------- --------- -------- ----------- --------- Net cash (used in) investing activities...................... (20) (25,627) (10,760) (36,407) Cash flows from financing activities: Proceeds from revolving loan and long term borrowings................... 27,600 10,068 37,668 Deferred financing costs............. (1,608) (1,608) Repayment of revolving loan, long-term borrowings and capital lease obligations................. (8,325) (5,180) (9,112) (22,617) -------- --------- -------- ----------- --------- Net cash provided by (used in) financing activities............ 17,667 (5,180) 956 13,443 Effect of currency exchange rate changes on cash...................... (776) (776) -------- --------- -------- ----------- --------- Net (decrease) in cash and cash equivalents..................... (375) (69) (10) (454) Cash and cash equivalents at beginning of period.................. 930 1,922 4,891 7,743 -------- --------- -------- ----------- --------- Cash and cash equivalents at end of period........................ $ 555 $ 1,853 $ 4,881 $ 7,289 ======== ========= ======== =========== =========
F-45 131 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING BALANCE SHEETS DECEMBER 31, 1993
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS(1) TOTAL -------- ------------ ------------ --------------- ------------ (IN THOUSANDS) ASSETS Current assets: Cash and equivalents............ $ 930 $ 1,922 $ 4,891 $ 7,743 Receivables, net................ 47,611 35,364 $ (10,459) 72,516 Inventories..................... 68,225 32,301 (1,702) 98,824 Other current assets............ 33 12,762 4,743 17,538 -------- --------- --------- --------- -------- Total current assets.... 963 130,520 77,299 (12,161) 196,621 Property, plant and equipment including those under capital lease........................... 168 347,829 107,557 455,554 Less accumulated depreciation and amortization............. -------- --------- --------- --------- -------- Property, plant and equipment, net............................. 168 347,829 107,557 455,554 Deferred financing costs.......... 8,916 73 8,989 Other assets...................... 50,513 252 50,765 Investment in subsidiaries........ 411,609 84,409 (496,018) Excess reorganization value....... 109,001 46,750 155,751 -------- --------- --------- --------- -------- $421,656 $722,272 $231,931 $(508,179) $867,680 ======== ========= ========== ========= ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease................ $ 8,325 $ 5,180 $ 2,105 $ 15,610 Accounts payable................ 2,835 22,726 22,422 $ (10,459) 37,524 Accrued liabilities............. 11,525 32,466 17,056 61,047 -------- --------- --------- --------- -------- Total current liabilities........... 22,685 60,372 41,583 (10,459) 114,181 Long-term debt including obligations under capital lease........................... 310,937 155,618 15,824 482,379 Accrued employee benefits......... 50,909 2,713 53,622 Deferred and noncurrent income taxes........................... 18,310 41,427 18,828 78,565 Minority interest in consolidated subsidiary...................... 3,933 3,933 Other long-term liabilities(2).... (65,276) 8,411 56,944 (79) Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding............. Common stock, $.01 par value; 13,500,000 shares issued and outstanding.................. 135 4 16,830 (16,834) 135 Paid in capital................. 134,865 389,855 36,522 (426,377) 134,865 Accumulated earnings (deficit).................... 15,676 47,087 (62,763) Cumulative foreign currency translation adjustments...... (4,400) 4,400 -------- --------- --------- --------- -------- Total stockholders' equity................ 135,000 405,535 96,039 (501,574) 135,000 -------- --------- --------- --------- -------- $421,656 $722,272 $231,931 $(508,179) $867,680 ======== ======== ======== ========= ========
- ------------------------- (1) Includes elimination of intercompany receivables, payables and investment accounts. (2) Includes intercompany loans. F-46 132 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ ------------ ------------ (IN THOUSANDS) NET SALES............................ $408,872 $195,291 $(16,778) $587,385 COSTS AND EXPENSES Cost of sales...................... 283,743 149,412 (16,745) 416,410 Selling, general and administrative.................. $ 5,021 65,992 30,619 101,632 Amortization of intangibles and excess reorganization value..... 13,170 2,541 15,711 -------- -------- -------- -------- -------- OPERATING INCOME (LOSS).............. (5,021) 45,967 12,719 (33) 53,632 Interest income.................... 1 20 910 931 Interest expense................... 10,388 14,589 6,213 31,190 Intercompany interest expense (income)........................ (21,970) 61,416 (39,446) Management fees (income)........... (7,600) 6,748 852 Other expense (income), net........ 3,432 (86) 17,404 (15,210) 5,540 Minority interest in subsidiary.... 717 717 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES, REORGANIZATION ITEMS AND EXTRAORDINARY ITEM................. 10,730 (35,963) 28,606 15,177 18,550 Reorganization items, net.......... 92,745 12,000 104,745 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM................. (82,015) (47,963) 28,606 15,177 (86,195) Income tax provision (benefit)..... (1,430) (4,442) 17,872 12,000 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............................... (80,585) (43,521) 10,734 15,177 (98,195) Extraordinary gain, net of tax..... 183,784 183,784 -------- -------- -------- -------- -------- NET INCOME (LOSS).................... $103,199 $(43,521) $ 10,734 $ 15,177 $ 85,589 ======== ========= ======== ======== ========
F-47 133 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1993
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL --------- ------------ ------------ ------------ ------------ (IN THOUSANDS) Net cash provided by operating activities before reorganization expense........................... $ 15,732 $ 44,359 $ 32,110 $ 92,201 Net cash used for reorganization items............................. (2,929) (12,000) (14,929) Cash flows from investing activities: Capital expenditures.............. (114) (27,289) (13,484) (40,887) Proceeds from sales of property, plant and equipment............ 4 120 124 --------- -------- -------- -------- ---------- Net cash (used in) investing activities................ (114) (27,285) (13,364) (40,763) Cash flows from financing activities: Proceeds from revolving loan and long term borrowings........... 100,000 6,003 106,003 Deferred financing costs.......... (8,659) (1,120) (9,779) Repayment of revolving loan, long-term borrowings and capital lease obligations.............. (103,100) (4,698) (30,938) (138,736) --------- -------- -------- -------- ---------- Net cash provided by (used in) financing activities................ (11,759) (4,698) (26,055) (42,512) Effect of currency exchange rate changes on cash................... (316) (316) --------- -------- -------- -------- ---------- Net increase (decrease) in cash and cash equivalents.................. 930 376 (7,625) (6,319) Cash and cash equivalents at beginning of period............... 1,546 12,516 14,062 --------- -------- -------- -------- ---------- Cash and cash equivalents at end of period............................ $ 930 $ 1,922 $ 4,891 $ 7,743 ========= ======== ======== ======== ==========
F-48 134 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1992
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ ------------ ------------ (IN THOUSANDS) NET SALES............................ $401,066 $192,425 $(17,786) $575,705 COSTS AND EXPENSES Cost of sales........................ 275,200 141,925 (18,249) 398,876 Selling, general and administrative..................... $ 5,620 59,489 28,967 94,076 Amortization of intangibles and excess reorganization value........ 13,219 2,328 15,547 -------- -------- -------- -------- -------- OPERATING INCOME (LOSS).............. (5,620) 53,158 19,205 463 67,206 Interest income...................... 224 740 964 Interest expense..................... 83,856 14,919 7,747 106,522 Intercompany interest expense (income)........................... (25,853) 65,473 (39,620) Management fees (income)............. (7,190) 6,319 871 Other expense (income), net.......... 3,257 122 5,320 8,699 Fees and expenses associated with renegotiation of debt.............. (115) 4,060 3,945 Equity loss (income) in subsidiary... (331) 331 -------- -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES.... (59,244) (37,511) 45,627 132 (50,996) Income tax provision (benefit)....... (22,248) (9,756) 18,004 (14,000) -------- -------- -------- -------- -------- NET INCOME (LOSS).................... $(36,996) $(27,755) $ 27,623 $ 132 $(36,996) ======== ======== ======== ======== ========
F-49 135 ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1992
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL -------- ------------ ------------ ------------ ------------ (IN THOUSANDS) Net cash provided by operating activities......................... $ 45,231 $ 25,846 $ 17,346 $ 88,423 Cash flows from investing activities: Capital expenditures............... (13) (20,839) (8,166) (29,018) Proceeds from sales of property, plant and equipment............. 173 173 Investments and advances to affiliated companies............ (4,990) (4,990) Proceeds from sale of time deposits in Puerto Rico.................. 6,600 6,600 -------- --------- --------- --------- --------- Net cash (used in) investing activities................. (13) (19,229) (7,993) (27,235) Cash flows from financing activities: Proceeds from revolving loan and long term borrowings............ 3 3 Deferred financing costs........... (12) (12) Repayment of revolving loan, long-term borrowings and capital lease obligations............... (45,400) (4,904) (7,135) (57,439) -------- --------- --------- --------- --------- Net cash provided by (used in) financing activities....... (45,400) (4,916) (7,132) (57,448) Effect of currency exchange rate changes on cash.................... 847 847 -------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents................... (182) 1,701 3,068 4,587 Cash and cash equivalents at beginning of period................ 182 (155) 9,448 9,475 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period............................. $ -- $ 1,546 $ 12,516 $ 14,062 ======== ========= ========= ========= =========
F-50 136 - ------------------------------------------------------ - ------------------------------------------------------ NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information................... 2 Prospectus Summary...................... 3 Risk Factors............................ 11 The Exchange Offer...................... 14 The Company............................. 22 The Subsidiary Guarantors............... 22 Use of Proceeds......................... 22 Capitalization.......................... 23 Unaudited Pro Forma Consolidated Financial Data........................ 24 Selected Historical Consolidated Financial Data........................ 28 Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 29 Business................................ 33 Management.............................. 43 Summary Compensation Table.............. 46 Certain Transactions.................... 48 Security Ownership...................... 48 Description of Notes.................... 51 Description of Intercreditor Arrangements.......................... 78 Certain Federal Income Tax Consequences.......................... 79 Plan of Distribution.................... 81 Legal Matters........................... 82 Experts................................. 82 Index of Financial Statements........... F-1
Until , 1995, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a Prospectus. This is in addition to the obligations of dealers to deliver a Prospectus when acting as Underwriters and with respect to their unsold allotment or subscriptions. - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES B, FOR ANY AND ALL OF ITS OUTSTANDING 12% FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES A, AND ITS FLOATING RATE FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES D, FOR ANY AND ALL OF ITS OUTSTANDING FLOATING RATE FIRST PRIORITY SENIOR SECURED NOTES DUE 2000, SERIES C -------------------- PROSPECTUS -------------------- , 1995 - ------------------------------------------------------ - ------------------------------------------------------ 137 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Envirodyne's Restated Certificate of Incorporation, as amended ("Certificate of Incorporation"), provides that, to the fullest extent permitted by the Delaware General Corporation Law (the "DGCL"), as the same exists or may be amended, a director of Envirodyne shall not be liable to Envirodyne or its stockholders for monetary damages for a breach of fiduciary duty as a director. In accordance with Section 102(b)(7) of the DGCL, no director of Envirodyne shall be personally liable to Envirodyne or its stockholders for monetary damages for breach of fiduciary duty as a director except for (i) breach of the director's duty of loyalty to Envirodyne or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) unlawful payment of dividends under Section 174 of the DGCL or (iv) transactions from which the director derives an improper personal benefit. Under Envirodyne's By-laws, Envirodyne may maintain insurance on behalf of any person who is a director, officer, employee or agent of Envirodyne or of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person in such capacity, whether or not Envirodyne would have the power to indemnify such person against such liability under the provisions of the DGCL. The certificate of incorporation and by-laws of each of Sandusky Plastics of Delaware, Inc., a Delaware corporation, and Viskase Holding Corporation, a Delaware corporation, allow for the indemnification of officers and directors to the fullest extent permitted by the DGCL. Sandusky Plastics, Inc. and Viskase Sales Corporation are incorporated under the laws of the state of Delaware. Reference is made to Section 145 of the DGCL, which provides for indemnification of directors and officers in certain circumstances. The by-laws of Viskase Corporation, a Pennsylvania corporation, provide for the indemnification of officers and directors to the fullest extent permitted by the laws of the Commonwealth of Pennsylvania. Reference is made to Sections 1741 through 1750 of the Pennsylvania Business Corporation Law, which provides for indemnification of directors and officers in certain circumstances. Clear Shield National, Inc. is incorporated under the laws of the state of California. Reference is made to Section 317 of the California General Corporation Law, which provides for indemnification of directors and officers in certain circumstances. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits 2.1 Debtors First Amended Joint Plan of Reorganization as Twice Modified dated December 15, 1993 of Envirodyne Industries, Inc. and certain of its subsidiaries (incorporated herein by reference to Exhibit 2 to Form 8-K filed January 19, 1994 of Envirodyne Industries, Inc.) 3.1 Amended and Restated Certificate of Incorporation of Envirodyne Industries, Inc. (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed January 19, 1994, of Envirodyne Industries, Inc.) 3.2 Amended and Restated By-Laws of Envirodyne Industries, Inc. (incorporated herein by reference to Exhibit 3.2 to Form 8-K filed February 21, 1995 of Envirodyne Industries, Inc.) 3.3 Articles of Incorporation of Clear Shield National, Inc. 3.4 By-laws of Clear Shield National, Inc. 3.5 Certificate of Incorporation of Sandusky Plastics, Inc. 3.6 By-Laws of Sandusky Plastics, Inc. 3.7 Certificate of Incorporation of Sandusky Plastics of Delaware, Inc.
II-1 138 3.8 By-Laws of Sandusky Plastics of Delaware, Inc. 3.9 Articles of Incorporation of Viskase Corporation 3.10 By-Laws of Viskase Corporation 3.11 Certificate of Incorporation of Viskase Holding Corporation 3.12 By-Laws of Viskase Holding Corporation 3.13 Certificate of Incorporation of Viskase Sales Corporation 3.14 By-Laws of Viskase Sales Corporation 4.1 Indenture dated as of December 31, 1993 between Envirodyne Industries, Inc. and Bankers Trust Company, as Trustee, relating to the 10 1/4% Note Due 2001 (incorporated herein by reference to Exhibit 4.1 to Form 8-K filed January 19, 1994 of Envirodyne Industries, Inc.) 4.2 Warrant Agreement dated as of December 31, 1993 between Envirodyne Industries, Inc. and Bankers Trust Company, as Warrant Agent, relating to the Warrants to Purchase Common Stock of Envirodyne Industries, Inc., including form of Warrant to Purchase Common Stock (incorporated herein by reference to Exhibit 4.2 to Form 8-K filed January 19, 1994 of Envirodyne Industries, Inc.) 4.3 Indenture dated as of June 20, 1995 (the "Indenture") between Envirodyne Industries, Inc. and Shawmut Bank Connecticut, National Association, as Trustee 4.4 Forms of the Notes issued pursuant to the Indenture (included in Exhibit 4.3 of this Registration Statement) 4.5 Exchange and Registration Rights Agreement dated as of June 20, 1995 between Envirodyne Industries, Inc. and the purchasers of the Notes 4.6 Guaranty Agreement, dated as of June 20, 1995, made by Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation, in favor of BT Commercial Corporation, as Collateral Agent. 5.1 Opinion of Stephen M. Schuster, Esq. 8.1 Opinion of Sidley & Austin 10.1 Participation Agreement dated as of December 18, 1990 among Viskase Corporation, as Lessee, Envirodyne Industries, Inc., as Guarantor, General Electric Capital Corporation, as Owner Participant, and The Connecticut National Bank, as Owner Trustee (incorporated herein by reference to Exhibit 10.24 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.) 10.2 Lease Agreement dated as of December 18, 1990 between The Connecticut National Bank, Owner Trustee, as Lessor and Viskase Corporation, as Lessee (incorporated herein by reference to Exhibit 10.25 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.) 10.3 Appendix A; Definitions relating to the Participation Agreement, the Lease and the Ground Lease (incorporated herein by reference to Exhibit 10.26 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.) 10.4 Ground Lease dated as of December 18, 1990 between Viskase Corporation, as Ground Lessor, and The Connecticut National Bank, as Ground Lessee (incorporated herein by reference to Exhibit 10.27 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.) 10.5 Guaranty Agreement dated as of December 18, 1990, among Envirodyne Industries, Inc.; Clear Shield National, Inc.; Sandusky Plastics of Delaware, Inc.; Viskase Sales Corporation, all as Guarantors; The Connecticut National Bank, as Owner Trustee; and General Electric Capital Corporation, as Owner Participant (incorporated herein by reference to Exhibit 10.28 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.)
II-2 139 10.6 Trust Agreement dated as of December 18, 1990 between General Electric Capital Corporation, as Owner Participant, and The Connecticut National Bank, as Owner Trustee (incorporated herein by reference to Exhibit 10.29 to Form 8-K, filed January 22, 1991, of Envirodyne Industries, Inc.) 10.7 Amended and Restated Management Services Agreement Dated December 31, 1993 between Envirodyne Industries, Inc. and D.P. Kelly and Associates, L.P. (incorporated herein by reference to Exhibit 99.2 to Form 8-K filed January 19, 1994 of Envirodyne Industries, Inc.) 10.8 Envirodyne Industries, Inc. 1993 Stock Option Plan (incorporated herein by reference to Appendix A to the Proxy Statement dated April 7, 1995 of Envirodyne Industries, Inc.) 10.9 Envirodyne Industries, Inc. Corporate Office Management Incentive Plan for Fiscal Year 1994 (incorporated herein by reference to Exhibit 10.11 to Envirodyne Industries, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 29, 1994) 10.10 Note Agreement, dated as of June 20, 1995, between Envirodyne Industries, Inc. and each of the purchasers identified therein 10.11 Letter Agreement, dated as of June 20, 1995, between Envirodyne Industries, Inc. and certain purchasers of the Notes 10.12 Revolving Credit Agreement, dated as of June 20, 1995, between Envirodyne Industries, Inc. and The Prudential Insurance Company of America 10.13 Credit Agreement, dated as of June 20, 1995, among Envirodyne Industries, Inc., the lenders identified therein and BT Commercial Corporation, as Agent 10.14 Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995, among BT Commercial Corporation, The Prudential Insurance Company of America, Shawmut Bank Connecticut, National Association, and certain other parties identified therein 10.15 GECC Intercreditor Agreement, dated as of June 20, 1995, among BT Commercial Corporation, General Electric Capital Corporation, Shawmut Bank Connecticut, National Association, Envirodyne Industries, Inc. and Viskase Corporation 11.1 Statement re Computation of Per Share Earnings (incorporated herein by reference to Exhibit 11.1 to Envirodyne Industries, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 29, 1994). 12.1 Statement re Computation of Ratios 21.1 Subsidiaries of Envirodyne Industries, Inc. 23.1 Consent of Coopers & Lybrand L.L.P. 23.2 Consent of Stephen M. Schuster, Esq. (contained in his opinion filed as Exhibit 5.1 to this Registration Statement) 23.3 Consent of Sidley & Austin (contained in the opinion filed as Exhibit 8.1 to this Registration Statement) 24.1 Powers of Attorney 25 Statement of Eligibility of Trustee, Shawmut Bank Connecticut, National Association, on Form T-1 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery 99.3 Form of Letter from Registered Holders to Clients 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
II-3 140 (b) Financial Statement Schedules The following financial statement schedules are included as part of this Registration Statement immediately following the signature page: Schedule II -- Valuation and Qualifying Accounts Schedule IX -- Short-Term Borrowings All other schedules are omitted because they are not applicable or not required or because the required information is shown in the financial statements or notes thereto. ITEM 22. UNDERTAKINGS (a) Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended (the "Act"), and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b)(1) The undersigned Registrants hereby undertake as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The Registrants undertake that every prospectus: (i) that is filed pursuant to paragraph (1) immediately preceding, of (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) The undersigned Registrants hereby undertake: (1) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (2) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not subject of and included in the Registration Statement when it became effective. II-4 141 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, ENVIRODYNE INDUSTRIES, INC., a Delaware corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. ENVIRODYNE INDUSTRIES, INC. By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------ ------------------------------------------ * * - ------------------------------------------ ------------------------------------------ Donald P. Kelly F. Edward Gustafson Chairman of the Board, President, Chief Director Executive Officer and Director (Principal Executive Officer) J. S. CORCORAN * - ------------------------------------------ ------------------------------------------ J. S. Corcoran Michael E. Heisley Executive Vice President and Director Chief Financial Officer (Principal Financial and Accounting Officer) * * - ------------------------------------------ ------------------------------------------ Robert N. Dangremond Gregory R. Page Director Director * * - ------------------------------------------ ------------------------------------------ Avram A. Glazer Mark D. Senkpiel Director Director By: STEPHEN M. SCHUSTER * - ------------------------------------------ ------------------------------------------ Stephen M. Schuster Malcolm I. Glazer Attorney-in-Fact Director
II-5 142 Pursuant to the requirements of the Securities Act of 1933, as amended, CLEAR SHIELD NATIONAL, INC., a California corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. CLEAR SHIELD NATIONAL, INC. By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------ ------------------------------------------ * * - ------------------------------------------ ------------------------------------------ Denis H. Davidson F. Edward Gustafson President and Director Director (Principal Executive Officer) * STEPHEN M. SCHUSTER - ------------------------------------------ ------------------------------------------ Sandra L. Musachia Stephen M. Schuster Vice President -- Finance Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER - ------------------------------------------ Stephen M. Schuster Attorney-in-Fact
II-6 143 Pursuant to the requirements of the Securities Act of 1933, as amended, SANDUSKY PLASTICS, INC., a Delaware corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. SANDUSKY PLASTICS, INC. By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------- ------------------------------------------- * * - ------------------------------------------- ------------------------------------------- J. Robert Tino F. Edward Gustafson President and Director Director (Principal Executive Officer) * STEPHEN M. SCHUSTER - ------------------------------------------- ------------------------------------------- George E. Collins Stephen M. Schuster Vice President -- Finance Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER - ------------------------------------------- Stephen M. Schuster Attorney-in-Fact
II-7 144 Pursuant to the requirements of the Securities Act of 1933, as amended, SANDUSKY PLASTICS OF DELAWARE, INC., a Delaware corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. SANDUSKY PLASTICS OF DELAWARE, INC. By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------- ------------------------------------------- * * - ------------------------------------------- ------------------------------------------- J. Robert Tino F. Edward Gustafson President and Director Director (Principal Executive Officer) * STEPHEN M. SCHUSTER - ------------------------------------------- ------------------------------------------- George E. Collins Stephen M. Schuster Vice President -- Finance Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER - ------------------------------------------- Stephen M. Schuster Attorney-in-Fact
II-8 145 Pursuant to the requirements of the Securities Act of 1933, as amended, VISKASE CORPORATION, a Pennsylvania corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. VISKASE CORPORATION By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------- ------------------------------------------- * * - ------------------------------------------- ------------------------------------------- Dean A. Mefford Donald P. Kelly President Director (Principal Executive Officer) * J. S. CORCORAN - ------------------------------------------- ------------------------------------------- Terry L. Wood J. S. Corcoran Treasurer Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER * - ------------------------------------------- ------------------------------------------- Stephen M. Schuster F. Edward Gustafson Attorney-in-Fact Director STEPHEN M. SCHUSTER ------------------------------------------- Stephen M. Schuster Director
II-9 146 Pursuant to the requirements of the Securities Act of 1933, as amended, VISKASE HOLDING CORPORATION, a Delaware corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. VISKASE HOLDING CORPORATION By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------- ------------------------------------------- * * - ------------------------------------------- ------------------------------------------- Dean A. Mefford F. Edward Gustafson President and Director Director (Principal Executive Officer) * STEPHEN M. SCHUSTER - ------------------------------------------- ------------------------------------------- Terry L. Wood Stephen M. Schuster Treasurer Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER - ------------------------------------------- Stephen M. Schuster Attorney-in-Fact
II-10 147 Pursuant to the requirements of the Securities Act of 1933, as amended, VISKASE SALES CORPORATION, a Delaware corporation, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Village of Oak Brook, Illinois on July 18, 1995. VISKASE SALES CORPORATION By: J. S. CORCORAN ------------------------------------ J. S. Corcoran Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on the 18th day of July, 1995 by the following persons in the capacities indicated.
SIGNATURE AND TITLE SIGNATURE AND TITLE - ------------------------------------------- ------------------------------------------- * * - ------------------------------------------- ------------------------------------------- Dean A. Mefford F. Edward Gustafson President and Director Director (Principal Executive Officer) * * - ------------------------------------------- ------------------------------------------- Terry L. Wood Joseph J. Schulte Treasurer Director (Principal Financial and Accounting Officer) By: STEPHEN M. SCHUSTER - ------------------------------------------- Stephen M. Schuster Attorney-in-Fact
II-11 148 SCHEDULE II ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT PROVISION BALANCE BEGINNING CHARGED TO AT END DESCRIPTION OF PERIOD EXPENSE WRITE-OFFS RECOVERIES OTHER(1) OF PERIOD - ------------------------------------ ---------- ---------- ---------- ---------- -------- --------- (IN THOUSANDS) 1994 for the year ended December 29 Allowance for doubtful accounts... $2,872 $ 939 $ (1,824) $ 21 $ 128 $ 2,136 1993 for the year ended December 31 Allowance for doubtful accounts... 2,175 1,166 (334) 70 (205) 2,872 1992 for the year ended December 31 Allowance for doubtful accounts... 1,999 817 (473) 15 (183) 2,175 1994 for the year ended December 29 Reserve for obsolete and slow moving inventory.................. 5,425 2,936 (3,123) 115 5,353 1993 for the year ended December 31 Reserve for obsolete and slow moving inventory.................. 3,178 4,973 (2,660) (66) 5,425 1992 for the year ended December 31 Reserve for obsolete and slow moving inventory.................. 3,116 2,607 (2,426) (12) (107) 3,178
- --------------- (1) Foreign currency translation. II-12 149 SCHEDULE IX ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES SHORT-TERM BORROWINGS FOR THE FISCAL YEARS ENDED DECEMBER 29, 1994, DECEMBER 31, 1993 AND DECEMBER 31, 1992
YEAR END MAXIMUM AVERAGE WEIGHTED WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING THE DURING THE SHORT-TERM BORROWINGS(1)(5) OF PERIOD RATE PERIOD PERIOD(2) PERIOD(3) - --------------------------------- --------- -------- ----------- ----------- ------------- (DOLLARS IN THOUSANDS) 1994 European facilities(4)...... $ 4,901 7.14% $ 5,703 $ 2,612 9.53% 1993 European facilities(4)...... $ 242 9.50% $ 5,641 $ 4,121 10.29% 1992 European facilities(4)...... $ 4,194 10.15% $ 7,854 $ 5,854 10.47%
- --------------- (1) Reference is made to Note 8 of Notes to Consolidated Financial Statements for a discussion of general terms of short-term borrowings. (2) Average amount outstanding during the period is based on month end balances. (3) Weighted average interest rate during the period is based on interest expense applicable to average amounts outstanding during the period. (4) Consists of seven working capital facilities of the Company's European subsidiaries, which individually and in the aggregate are immaterial. (5) The above schedule does not include long-term debt reclassified to current. II-13 EX-3.3 2 ARTICLE OF INCORP. - CLEAR SHIELD NAT'L INC. 1 EXHIBIT 3.3 ARTICLES OF INCORPORATION OF GENERAL UTILITY SYSTEMS CORPORATION KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, have this day associated ourselves together for the purpose of forming a corporation under the Corporation Code of the State of California, AND THAT WE HEREBY CERTIFY: ARTICLE 1 - NAME The name of the corporation is: GENERAL UTILITY SYSTEMS CORPORATION. ARTICLE II - PURPOSES The specific business, in which the corporation is to engage, is the manufacturing, marketing, licensing, and installing of underground conduits, and related products. That in addition to the specific business in which the corporation is to engage, the corporation shall be empowered to be engaged generally in the business of: (a) To manufacture, buy, sell, assemble and distribute any and all products, wares or merchandise connected with, or unrelated to, the aforementioned specific purpose for which the corporation is to be formed. (b) To carry on any business whatsoever which this corporation may deem proper or convenient in connection with any of the other purposes of which may be calculated directly or indirectly to promote the interest of this corporation, or to enhance the value of its property. (c) To purchase, acquire, own, hold, use, lease, sell, exchange, subdivide, mortgage, improve, cultivate, develop, maintain, construct, operate, and generally deal in any and all real estate, improved or unimproved, wheresoever situated, either in California, other states of the United States, the District of Columbia, and territories and possessions of the United States and in foreign countries. -1- 2 (d) To purchase, acquire, take hold, own, use and enjoy, and to sell, lease, transfer, pledge, mortgage, convey, grant, assign or otherwise dispose of, and generally to invest, trade, deal in and with oil royalties, mineral rights of all kinds, mineral bearing lands and hydrocarbon products of all kinds, oil, gas and mineral leases, and all rights and interests therein, and in general products of the earth and deposits, both subsoil and surface, of every nature and description. (e) To enter into, make, perform and carry out contracts of very kind for any lawful purpose without limit as to amount, with any person, firm, association or corporation, municipality, country, parish, state, territory, government (foreign or domestic) or other municipal or governmental subdivision. (f) To become a partner (either general or limited or both) and to enter into agreements of partnership, with one or more other persons or corporations, for the purpose of carrying on any business whatsoever which this corporation may deem proper or convenient in connection with any of the purposes herein set forth or otherwise, or with may be calculated, directly or indirectly, to promote the interest of this corporation or to enhance the value of its property or business. (g) To acquire, by purchase or otherwise, the goodwill, business, property rights, franchises and assets of every kind, with or without undertaking, either wholly or in part, the liabilities of any person, firm, association or corporation; and to acquire any property or business as a going concern or otherwise, (a) by purchase of the assets thereof wholly or in part, (b) by acquisition of the shares or any part thereof, or (c) in any other manner; and to pay for the same in cash or in the shares or bonds or other evidences of indebtedness of this corporation, or otherwise; to hold, maintain and operate, or in any manner dispose of the whole or any part of the goodwill, business, rights and property so acquired, and to conduct, in any lawful manner, the whole or any part of any business so acquired; and to exercise all the powers necessary or convenient in and about the management of such business. (h) To take, purchase and otherwise acquire, own, hold, use, sell, assign, transfer, exchange, lease, mortgage, convey in trust, pledge, hypothecate, grant licenses in respect of and otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, and government, state, territorial, country and municipal grants and concessions of every character which this corporation may deem advantageous in the prosecution of its business or in the maintenance, operation, development or extension of its properties. -2- 3 (i) To subscribe or cause to be subscribed for, and to take, purchase and otherwise acquire, own, hold, use, sell, assign, transfer, exchange, distribute and otherwise dispose of the whole or any part of the shares of the capital stock, bonds, coupons, mortgages, deeds of trust, debentures, securities, notes, goodwill, assets and properties of any and every kind, or any part thereof of any other corporation, association, firm, partnership, or other business entity, now or hereafter existing to exercise all of the rights, powers and privileges of ownership of every kind and description, including the right to vote thereon, with power to designate some person or persons for that purpose from time to time, and to the same extent as natural persons might or could do. (j) To borrow and lend money, and to endorse, guarantee, co-sign evidences of indebtedness or other securities. (k) To issue bonds, notes, debentures, or other obligations of this corporation from time to time for any of the objects or purposes of this corporation, and to secure the same by mortgage, deed of trust, pledge or otherwise acquire its own bonds, debentures or other evidences of its indebtedness or obligations; to purchase, hold, sell, and transfer the shares of its own capital stock to the extent and in the manner provided by the laws of the State of California as the same are now in force or may be hereafter amended. (l) To conduct and carry on, directly or indirectly, research, development and promotional or experimental activities, and to promote or aid financially or otherwise, any person, firm or corporation engaged in such activities, or any of them. (m) To carry on any business whatsoever, either as principal, agent or partner, which this corporation may deem proper or convenient in connection with any of the foregoing purposes or otherwise, or which may be calculated directly or indirectly to promote the interests of this corporation or to enhance the value of its property or business; and to conduct its business in this State, in other states, in the District of Columbia, in the territories and possessions of the United States, and in foreign countries. (n) To have and to exercise all the powers conferred by the laws of California upon corporations formed under the laws pursuant to and under which this corporation is formed, as such laws are now in effect or may at any time hereafter be amended. The foregoing statement of purposes shall be construed as a statement of both purposes and powers, and the purposes and powers stated in each clause shall, except where otherwise expressed, be in nowise limited or restricted by any reference to or inference from the terms or provisions of any other clause, but shall be regarded as independent purposes and powers. -3- 4 ARTICLE III - PRINCIPAL OFFICE The county in the State of California where the principal office for the transaction of business of the corporation is to be located in Los Angeles County. ARTICLE IV - DIRECTORS (a) The number of directors of this corporation shall be three (3). (b) First Directors: The names and addresses of the persons who are appointed as First Directors are: Names Addresses Mark Lindsey 1314 Durant Street Santa Ana, California Joseph Hendricks 15712 Williams Street Tustin, California W. Mike McCray 13791 Judy Ann Lane Santa Ana, California (c) The number of directors of the corporation set forth in clause (a) of this Article IV shall constitute the authorized number of directors until changed by an amendment to these Articles of Incorporation or by a By-Law duly adopted or by the written consent of the holders of a majority of the then outstanding shares of stock of the corporation. (such By-Law may either fix the exact number or may state that the number shall not be less than a stated minimum (which in no case shall be less than five (5) nor more than a stated maximum (which in no case shall exceed said stated minimum by more than three (3), and in the event that the By-Laws provide for such an indefinite number of directors, the exact number of directors shall be fixed within the limits specified in the By-Laws, by a By-Law or amendment thereof duly adopted by the shareholders or by the Board of Directors. ARTICLE V - CAPITALIZATION The total number of shares which the corporation is authorized to issue is One Hundred Thousand (100,000). The aggregate par value of said shares is One Hundred Thousand Dollars ($100,000.00) and the par value of each share is One Dollar ($1.00). This article can be amended only by the vote or written consent of Fifty-One percent (51%) of the outstanding shares. -4- 5 ARTICLE VI - ASSESSMENT OF SHARES There shall be no power to levy any assessment upon any shares of stock of this corporation. ARTICLE VII - PRE-EMPTIVE RIGHTS Each shareholder or subscriber to shares of this corporation shall be entitled to full-preemptive right or preferential rights as such rights have been heretofore defined as common law, to purchase and/or subscribe for his proportionate part of any shares which may be issued at any future time by this corporation. IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws of the State of California, we, the undersigned, constituting the incorporators of this corporation, and including all of the persons named herein as the first directors have executed these Articles of Incorporation this 9th day of November, 1971. /s/ Mark Lindsey -------------------------- /s/ Joseph Hendricks -------------------------- /s/ W. Mike McCray -------------------------- STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On this 9th day of November, 1971, before me, a Notary Public in and for said County and State, residing therein, duly commissioned and sworn, personally appeared Mark Lindsey, Joseph Hendricks, and W. Mike McCray known to me to be the persons whose names are subscribed to the foregoing Articles of Incorporation, and who are also named therein as directors, and each duly acknowledged to me that they executed the same. IN WITNESS WHEREOF, I have hereunto affixed my hand and official seal. /s/ Barb Ellenck -------------------------- Notary Public in and for said County and State (Seal) -5- 6 NAME CHANGE TO: COMPOSITE MATERIALS, INC. CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF GENERAL UTILITY SYSTEMS CORPORATION GERALD A. MARXMAN and FRANK J. KOCSIS certify: 1. That they are the Vice President and Secretary, respectively, of GENERAL UTILITY SYSTEMS CORPORATION, a California corporation. 2. That pursuant to Section 814.5 of the California Corporations Code and the By-Laws of the corporation by unanimous written consent that the board of directors of said corporation adopted the following resolution: "RESOLVED: that Article I of the Articles of Incorporation of this corporation be amended to read as follows: 'The name of the corporation is COMPOSITE MATERIALS, INC.'" 3. That the sole shareholder has adopted said amendment by written consent. That the wording of the amended article, as set forth in the shareholder's written consent, is the same as set forth in the directors' resolution in Paragraph 2 above. 4. That the number of shares represented by written consent is 100. That the total number of shares entitled to vote on or consent to the amendment is 100. /s/ Gerald A. Marxman -------------------------- Vice President /s/ Frank J. Kocsis -------------------------- Secretary Each of the undersigned declares under penalty of perjury that the matters set forth in the foregoing certificate are true and correct. Executed at Los Angeles, California, on February 26, 1974. /s/ Gerald A. Marxman /s/ Frank J. Kocsis - --------------------------- ---------------------------- 7 NAME CHANGED TO: CMI-LIQUIDATING CORP. CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION GERALD MARXMAN and MAXINE H. LINDE, certify: 1. That they are the President and the Secretary respectively of Composite Materials, Inc., a California corporation. 2. That by unanimous written consent of the Board of Directors of this corporation on July 26, 1976, the following resolution was adopted by the directors: "RESOLVED: That Article I of the Articles of Incorporation of this corporation be amended to read as follows: 'The name of this corporation is CMI-LIQUIDATING CORP.'" This consent action is taken under authority of Section 11, Article II of the Company's By-Laws. 3. That the shareholders have adopted said amendment by written consent. That the wording of the amended Article as set forth in the shareholders' written consent is the same as that set forth in the Directors' resolution referred to in Paragraph 2 above. 4. That the number of shares represented by written consent is 100 shares of Common Stock. That the total number of shares entitled to vote on or consent to the amendment is 100 shares of Common Stock. /s/ GERALD MARXMAN -------------------------- /s/ MAXINE H. LINDE -------------------------- Each of the undersigned declares under penalty of perjury that the matters set forth in the foregoing certificate are true and correct. Executed at Los Angeles, California, on July 26, 1976. /s/ Gerald A. Marxman /s/ Maxine H. Linde - ------------------------- ------------------------ 8 AGREEMENT OF MERGER BETWEEN OLI, INC. ENVIRODYNE PRODUCTS CORP. AND CMI-LIQUIDATING CORP. This Agreement of Merger is entered into and between CMI-LIQUIDATING CORP., a California corporation (herein sometimes the "Surviving Corporation") and OLI, INC., a Minnesota corporation and ENVIRODYNE PRODUCTS CORP., a California corporation (herein sometimes called the "Merging Corporations"). (1) Merging Corporations shall be merged into Surviving Corporation without amendment to the articles of the Surviving Corporation. (2) The manner and basis of converting the outstanding shares of the capital stock of the merging corporation shall be as follows: Inasmuch as a sole stockholder owns all of the issued and outstanding stock of the merging corporations and the surviving corporation, forthwith upon the merger becoming effective, all of the issued and outstanding shares of the capital stock of the merging corporations shall be surrendered and canceled, no shares of the surviving corporation shall be issued in exchange therefor. (3) The outstanding shares of the Surviving Corporation shall remain outstanding and are not affected by the merger. (4) Merging Corporations shall from time to time, as and when requested by the Surviving Corporation, execute and deliver all such documents and instruments and take all such action necessary or desirable to evidence or carry out this merger. (5) The effect of the merger and the effective date of the merger, are as prescribed by law. -1- 9 IN WITNESS WHEREOF the parties have executed this Agreement of Merger on December 14, 1981. OLI, INC. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY R. BURESH -------------------------- Secretary ENVIRODYNE PRODUCTS CORP. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY R. BURESH -------------------------- Secretary CMI-LIQUIDATING CORP. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY R. BURESH -------------------------- Secretary -2- 10 CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER Maxine H. Linde and Jeffrey J. Buresh, certify that: (1) They are the President and Secretary respectively, of OLI, INC., a Minnesota corporation. (2) The principal terms of the Agreement of Merger in the form attached were duly adopted by the Board of Directors of the corporation. (3) The Agreement of Merger was approved by the holders of 100% of the outstanding shares of the corporation. The total number of shares issued is 1,000. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their knowledge. Executed at Chicago, Illinois on this 14th day of December, 1981 /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary 11 CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER Maxine H. Linde and Jeffrey J. Buresh, certify that: (1) They are the President and Secretary respectively, of ENVIRODYNE PRODUCTS CORP., a California corporation. (2) The principal terms of the Agreement of Merger in the form attached were duly adopted by the Board of Directors of the corporation. (3) The Agreement of Merger was approved by the holders of 100% of the outstanding shares of the corporation. The total number of shares issued is 500. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their knowledge. Executed at Chicago, Illinois on this 14th day of December, 1981. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary 12 CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER Maxine H. Linde and Jeffrey J. Buresh, certify that: (1) They are the President and Secretary respectively, of CMI-LIQUIDATING CORP., a California corporation. (2) The principal terms of the Agreement of Merger in the form attached were duly adopted by the Board of Directors of the corporation. (3) The Agreement of Merger was entitled to be and was approved by the Board of Directors alone under the provisions of section 1201 of the Corporations Code. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their knowledge. Executed at Chicago, Illinois on this 14th day of December, 1981. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary 13 NAME CHANGE TO: CLEAR SHIELD NATIONAL, INC. AGREEMENT OF MERGER BETWEEN CLEAR SHIELD NATIONAL, INC. AND CMI-LIQUIDATING CORP. This Agreement of Merger is entered into and between CLEAR SHIELD NATIONAL, INC., an Illinois corporation (herein sometimes the "Merging Corporation") and CMI-LIQUIDATING CORP., a California corporation (herein sometimes called the "Surviving Corporation"). (1) Merging Corporation shall be merged into Surviving Corporation. (2) Article I of the surviving corporation shall be amended to read as follows: The name of this corporation is CLEAR SHIELD NATIONAL, INC. (3) The manner and basis of converting the outstanding shares of the capital stock of the merging corporation shall be as follows: Inasmuch as a sole stockholder owns all of the issued and outstanding stock of the merging corporation and the surviving corporation, forthwith upon the merger becoming effective, all of the issued and outstanding shares of the capital stock of the merging corporation shall be surrendered and canceled, no shares of the surviving corporation shall be issued in exchange therefor. (4) The outstanding shares of the Surviving Corporation shall remain outstanding and are not affected by the merger. (5) Merging Corporation shall from time to time, as and when requested by the Surviving Corporation, execute and deliver all such documents and instruments and take all such action necessary or desirable to evidence or carry out this merger. (6) The effect of the merger and the effective date of the merger, are as prescribed by law. -1- 14 IN WITNESS WHEREOF the parties have executed this Agreement of Merger on September 5th, 1984. CLEAR SHIELD NATIONAL, INC. /s/ ROGER W. CAPPELLO -------------------------- President /s/ WILLIAM DOLATOWSKI -------------------------- Secretary CMI-LIQUIDATING CORP. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY R. BURESH -------------------------- Secretary -2- 15 CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER Roger W. Cappello and William Dolatowski, certify that: (1) They are the President and Secretary respectively, of CLEAR SHIELD NATIONAL, INC., an Illinois corporation. (2) The principal terms of the Agreement of Merger in the form attached were duly adopted by the Board of Directors of the corporation. (3) The Agreement of Merger was entitled to be and was approved by the Board of Directors alone under the provisions of section 1201 of the Corporations Code. /s/ ROGER W. CAPPELLO -------------------------- President /s/ WILLIAM DOLATOWSKI -------------------------- Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their knowledge. Executed at Wheeling, Illinois on this 5th day of September, 1984. /s/ ROGER W. CAPPELLO -------------------------- President /s/ WILLIAM DOLATOWSKI -------------------------- Secretary 16 CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER Maxine H. Linde and Jeffrey J. Buresh, certify that: (1) They are the President and Secretary respectively, of CMI-LIQUIDATING CORP., a California corporation. (2) The principal terms of the Agreement of Merger in the form attached were duly adopted by the Board of Directors of the corporation. (3) The Agreement of Merger was entitled to be and was approved by the Board of Directors alone under the provisions of section 1201 of the Corporations Code. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their knowledge. Executed at Chicago, Illinois on this 4th day of September, 1984. /s/ MAXINE H. LINDE -------------------------- President /s/ JEFFREY J. BURESH -------------------------- Secretary EX-3.4 3 BY LAWS - CLEAR SHIELD NAT'L INC. 1 EXHIBIT 3.4 CLEAR SHIELD NATIONAL, INC. BYLAWS ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE.--The Registered office shall be established and maintained at 1175 South Wheeling Road, Wheeling, Illinois 60093, and DENIS H. DAVIDSON the registered agent of this corporation in charge thereof. SECTION 2. OTHER OFFICES.--The corporation may establish other offices, either within or without the State of Illinois, at such place or places as the Board of Directors from time to time may designate or the business of the corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders shall be held at Chicago, Illinois, on the first Monday of June of each year, commencing with 1983, at the hour stated in the notice, or said meetings may be held at such time and place, within or without the State of Illinois, as the Board of Directors by resolution shall determine, and as set forth in the notice of the meeting. If the date of the annual meeting shall fall on a legal holiday of the state in which the meeting is to be held, the meeting shall be held on the next succeeding business day. At each such annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. SPECIAL MEETINGS.--Special meetings of the stockholders, for any purpose or purposes, may be called by the President or the Secretary, or by resolution of the Board of Directors, and may be held at such time and place as shall be stated in the notice of the meeting. SECTION 3. NOTICE OF MEETINGS.--Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given as it appears on the records of the corporation, not less than ten (10) nor more than fifty (50) days prior to the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all of the stockholders entitled to vote thereat. 2 SECTION 4. VOTING.--Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation, the provisions of these Bylaws, and the laws of the State of Illinois, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three (3) years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for Directors and the vote upon any question before the meeting shall be by written ballot. All elections for Directors be decided by plurality vote; all other questions shall be decided by majority vote, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Illinois. A complete list of the stockholders entitled to vote at a meeting, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the registered office of the corporation in the StVate of Illinois. The list shall also be produced and kept available at the time and place of the meeting, during the entire time thereof, and may be inspected by any stockholder or his proxy who may be present. SECTION 5. QUORUM.--Except as otherwise required by law, by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation issued and outstanding and entitled to vote shall constitute a quorum at all meetings of stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present either in person or by proxy, shall have power to adjourn the meeting, from time to time, without notice other than an announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. ACTION WITHOUT MEETING.--Any action to be taken by the stockholders may be taken without a meeting if, prior to such action, all stockholders entitled to vote thereon shall consent to the action by a writing filed with the records of the meeting of stockholders, and such consent shall be treated for all purposes as a vote at a meeting. 3 ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM.--The number of Directors shall be three (3). The Directors shall be elected at the annual meeting of stockholders, and each Director shall be elected to serve until his successor shall be elected and shall have qualified. Directors need not be stockholders. SECTION 2. QUORUM.--Majority of the Directors shall constitute a quorum for the transaction of business. If, at any meeting of the Board, there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 3. ELECTION OF OFFICERS.--At the first meeting, or at any subsequent meeting called for that purpose, the Directors shall elect the officers of the corporation, as more specifically set forth in ARTICLE IV of these Bylaws. Such officers shall hold office until the next annual election of officers, or until their successors are elected and shall have qualified. SECTION 4. REGULAR MEETINGS.--Regular meetings of the Directors may be held, without notice, at such places and times as from time to time shall be determined by resolution of the Board of Directors. SECTION 5. SPECIAL MEETINGS. Special meetings of the Directors may be called by the President, or by the Secretary on the written request of any two Directors on at least two (2) hours' notice to each Director. SECTION 6. PLACE OF MEETINGS.--The Directors may hold their meetings at such places as from time to time may be determined by resolution of the Board. SECTION 7. ACTION WITHOUT MEETING.--Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if, prior to such action, a written consent thereto is signed by all members of the Board and such written consent is filed with the minutes of proceedings of the Board. SECTION 8. POWERS.--The Board of Directors shall exercise all of the powers of the corporation, except such as are by law, by the Articles of Incorporation, or by these Bylaws conferred upon or reserved to the stockholders. 4 SECTION 9. COMPENSATION.--Directors shall not receive any stated salary for their services as Directors but, by resolution of the Board, a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV OFFICERS SECTION 1. OFFICERS.--The officers shall be elected at the first meeting of the Board of Directors after each annual meeting of stockholders. The Directors shall elect a President, a Secretary and a Treasurer; they may also elect one or more Vice President, and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be a Director. Any one person may hold two or more offices, except those of President and Secretary. However, any person holding two or more offices shall not sign any instrument in the capacity of more than one office. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold office for such terms and shall exercise such powers and perform such duties as from time to time shall be determined by the Board of Directors. SECTION 2.--PRESIDENT.--The President shall be the chief executive officer of the corporation, and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders, if present thereat, and at all meetings of the Board of Directors. He shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the executive thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and he shall cause the corporate seal to be affixed to any instrument requiring it, and when so affixed the seal shall be attested by the Secretary or the Treasurer, or an Assistant Secretary or an Assistant Treasurer. SECTION 3. VICE PRESIDENTS.--Each Vice President shall have such powers and shall perform such duties as shall be assigned to him by the Directors, and, in the absence of the President, or in the event of his inability to act, the Vice Presidents, in the order of their seniority, shall perform the functions of President. SECTION 4. SECRETARY.--The Secretary shall give or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these Bylaws, and, in case of his absence or refusal or neglect so to do, any such notice may 5 be given by any person thereunto directed by the President, the Board of Directors, or the stockholders, upon whose requisition the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have custody of the corporate seal, and shall affix the same to all instruments requiring it, when authorized by the President or the Board of Directors, and shall attest the same. SECTION 5. TREASURER.--The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation. He shall deposit all monies and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements. He shall render to the President and the Board of Directors, at the regular meetings of the Board, or whenever they may request it, an accounting of all his transactions as Treasurer, and of the financial condition of the corporation. SECTION 6. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.--Assistant Secretaries and Assistant Treasurers, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Board of Directors. ARTICLE V RESIGNATIONS: FILLING OF VACANCIES: INCREASE IN NUMBER OF DIRECTORS: REMOVAL FROM OFFICE SECTION 1. RESIGNATIONS.--Any Director or officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 2. FILLING OF VACANCIES.--If the office of any officer or Director becomes vacant, the remaining Directors in office, although less than a quorum, may appoint, by a majority vote, any qualified person to fill such vacancy, who shall hold office for the unexpired term of his predecessor, or until his successor shall be duly chosen and shall have qualified. Any vacancy occurring by reason of an increase in the number of Directors may be filled by action of a majority of the entire Board, for the term of office continuing only until the next 6 election of Directors by the stockholders, or it may be filled by the affirmative vote at an election of Directors. SECTION 3. INCREASE IN NUMBER OF DIRECTORS.--The number of Directors may be increased at any time by the affirmative vote of a majority of the entire Board, or by the affirmative vote of a majority in interest of the stockholders, at a special meeting called for that purpose, and, by like vote, pursuant to SECTION 2 above, the additional Directors may be chosen at such meeting to hold office until the next annual election or until their successors are elected and shall have qualified. SECTION 4. REMOVAL.--At a meeting of stockholders expressly called for such purpose, any or all of the members of the Board of Directors may be removed, with or without cause, by vote of the holders of a majority of the shares then entitled to vote at an election of Directors, and said stockholders may elect, at the meeting called for the purpose of removal, a successor or successors to fill any resulting vacancies for the unexpired terms of the removed Directors. Any officer elected or appointed by the Board of Directors may be removed by a majority vote of the entire Board whenever, in its judgment, the best interests of the corporation will be served thereby. ARTICLE VI CAPITAL STOCK SECTION 1. CERTIFICATES OF STOCK.--Certificates of stock, numbered, and sealed with the seal of the corporation, and signed by the President or a Vice President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, shall be issued to each stockholder certifying to the number of shares owned by him in the corporation. When such certificates are countersigned by (1) a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. LOST CERTIFICATES.--A new certificate of stock may be issued in place of any certificate theretofore issued by the corporation and alleged to have been lost or destroyed, and the Directors may, at their discretion, request the owner of the lost or destroyed certificates, or his legal representative, to give the corporation a bond, in such sum at they may direct, but not exceeding double the value of the stock, to indemnify the 7 corporation against any claim that may be made against it on account of the alleged loss of any such certificate. SECTION 3. TRANSFER OF SHARES.-- The shares of stock of the corporation shall be transferable pursuant to the provisions of the Uniform Commercial Code. SECTION 4. DETERMINATION OF STOCKHOLDERS OF RECORD.--In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS.--Subject to the provisions of the Articles of Incorporation and the laws of the State of Illinois, the Board of Directors, at any regular or special meeting, may declare dividends upon the capital stock of the corporation, as and when they may deem expedient. ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 1. CORPORATE SEAL.--The Board of Directors shall adopt and may alter a common seal of the corporation. Said seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words: "CORPORATE SEAL ILLINOIS." If may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced. SECTION 2. FISCAL YEAR.--The fiscal year of the corporation shall be a calendar year. SECTION 3. CHECKS, DRAFTS, NOTES.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. CORPORATE RECORDS.--The corporation shall keep correct and complete books of account and minutes of the proceedings of its stockholders and Directors, as well as an 8 original stock ledger or list of stockholders, containing the names and addresses of the stockholder, the number of shares held by them and the date of issuance of said certificates of stock. Any stockholder of record, in person or by attorney or other agent, upon written demand under oath stating the purpose thereof, shall have the right, during the usual hours for business, to inspect for any proper purpose the books and records of the corporation, as well as its stock ledger and/or list of stockholders, and to make copies or extracts therefrom. Such demand under oath shall be directed to the corporation at its registered office in the State of Illinois or at its principal place of business. SECTION 5. NOTICE AND WAIVER OF NOTICE.--Whenever, pursuant to the laws of the State of Illinois or these Bylaws, any notice is required to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Any notice required to be given may be waived, in writing, by the person or persons entitled to such notice, whether before or after the time stated therein. ARTICLE VIII AMENDMENTS SECTION 1. AMENDMENTS OF BYLAWS.--These Bylaws may be altered or repealed, and Bylaws may be made at any annual meeting of stockholder, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat; or by the affirmative vote of a majority of the entire Board of Directors, at any regular meeting of the Board, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. EX-3.5 4 CERTIFICATE OF INCORP. - SANDUSKY PLASTICS, INC. 1 EXHIBIT 3.5 AGREEMENT OF MERGER OF SANDUSKY PLASTICS, INC. (a Delaware corporation) AND ENVIRODYNE WN CORP. (a Delaware corporation) AGREEMENT OF MERGER approved on December 29, 1988, by Sandusky Plastics, Inc. a business corporation of the State of Delaware, and by resolution adopted by its Board of Directors on said day, and approved on December 29, 1988, by Envirodyne WN Corp., a business corporation of the State of Delaware, and by resolution adopted by its Board of Directors on said date. WHEREAS, Sandusky Plastics, Inc. is a business corporation of the State of Delaware with its registered office therein located at 1013 Lancaster Pike, City of Wilmington, County of New Castle; and WHEREAS, the total number of shares of stock which Sandusky Plastics, Inc. has authority to issue is 3,000, all of which are of one class and of a par value of $.01 each; and WHEREAS, Envirodyne WN Corp. is a business corporation of the State of Delaware with its registered office therein located at 229 South State Street, City of Dover, County of Kent; and WHEREAS, the total number of shares of stock which Envirodyne WN Corp. has authority to issue is 50,000, all of which are of one class and of a par value of $1.00 each; and WHEREAS, Sandusky Plastics, Inc. and Envirodyne WN Corp. and the respective Boards of Directors thereof deem it advisable and to the advantage, welfare and best interests of said corporations and their respective stockholders to merge Sandusky Plastics, Inc. with and into Envirodyne WN Corp. pursuant to the provisions of the General Corporation Law of the State of Delaware upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual agreement of the parties hereto, being thereunto duly approved by a resolution adopted by the Board of Directors of Sandusky Plastics, Inc. and duly approved by a resolution adopted by the Board of Directors of Envirodyne WN Corp. the Agreement of Merger and the terms and conditions thereof and the mode of carrying the same into effect, together with any provisions required or permitted to be set forth therein, are hereby determined and agreed upon as hereinafter in this Agreement set forth. 2 1. Sandusky Plastics, Inc. and Envirodyne WN Corp. shall, pursuant to the provisions of the General Corporation Law of the State of Delaware, be merged with and into a single corporation, to wit, Envirodyne WN Corp., which shall be the surviving corporation from and after the effective time of the merger, and which is sometimes hereinafter referred to as the "surviving corporation", and which shall continue to exist as said surviving corporation under the name Sandusky Plastics, Inc. pursuant to the provisions of the General Corporation Law of the State of Delaware. The separate existence of Sandusky Plastics, Inc., which is hereinafter sometimes referred to as the "terminating corporation", shall cease at the said effective time in accordance with the provisions of said General Corporation Law of the State of Delaware. 2. The Certificate of Incorporation of the surviving corporation, as now in force and effect, shall continue to be the Certificate of Incorporation of said surviving corporation except that Article I thereof, relating to the name of the corporation is hereby amended and changed so as to read as follows at the effective time of the merger: "The name of the corporation is SANDUSKY PLASTICS, INC." and said Certificate of Incorporation as herein amended and changed shall continue in full force and effect until further amended and changed int he manner prescribed by the provisions of the General Corporation Law of the State of Delaware. 3. The present by-laws of the surviving corporation will be the by-laws of said surviving corporation and will continue in full force and effect until changed, altered or amended as therein provided and in the manner prescribed by the provisions of the General Corporation Law of the State of Delaware. 4. The directors and officers in office of the surviving corporation at the effective time of the merger shall be the members of the first Board of Directors and the first officers of the surviving corporation, all of whom shall hold their directorships and offices until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the by-laws of the surviving corporation. 5. Each issued share of the terminating corporation shall, at the effective time of the merger, be retired and not converted into any shares of the surviving corporation. The issued shares of the surviving corporation shall not be converted or exchanged in any manner, but each said share which is issued as of the effective time of the merger shall continue to represent one issued share of the surviving corporation. 3 6. In the event that this Agreement of Merger shall have been fully adopted upon behalf of the terminating corporation and of the surviving corporation in accordance with the provisions of the General Corporation Law of the State of Delaware, the said corporations agree that they will cause to be executed and filed and recorded any document or documents prescribed by the laws of the State of Delaware, and that they will cause to be performed all necessary acts within the state of Delaware and elsewhere to effectuate the merger herein provided for. 7. The Board of Directors and the proper officers of the terminating corporation and of the surviving corporation are hereby authorized, empowered and directed to do any and all acts and things, and to make, execute, deliver, file and record any and all instruments, papers and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this Agreement of Merger or of the merger herein provided for. IN WITNESS WHEREOF, this Agreement of Merger is hereby signed and attested upon behalf of each of the constituent corporations parties thereto. Dated: December 29, 1988 SANDUSKY PLASTICS, INC. By: ---------------------------- Thomas J. Aylward, President Attest: - --------------------------- Maxine H. Linde Assistant Secretary Dated: December 29, 1988 ENVIRODYNE WN CORP. By: ---------------------------- Maxine H. Linde, President Attest: - ----------------------------- Lawrence C. Henry Secretary 4 CERTIFICATE OF ASSISTANT SECRETARY OF SANDUSKY PLASTICS, INC. The undersigned, being the Assistant Secretary of Sandusky Plastics, Inc., does hereby certify that the sole stockholder of all the outstanding stock of said corporation consented in writing, pursuant to the provisions of Section 228 of the General Corporation Law of the State of Delaware, to the adoption of the foregoing Agreement of Merger. Dated: December 29, 1988 ---------------------------- Maxine H. Linde 5 CERTIFICATE OF ASSISTANT SECRETARY OF ENVIRODYNE WN CORP. The undersigned, being the Assistant Secretary of Envirodyne WN Corp., does hereby certify that the sole stockholder of all the outstanding stock of said corporation consented in writing, pursuant to the provisions of Section 228 of the General Corporation Law of the State of Delaware, to the adoption of the foregoing Agreement of Merger. Dated: December 29, 1988 ---------------------------- Lawrence C. Henry 6 CERTIFICATE OF MERGER OF INTERNATIONAL LINCOLN CORP. INTO ENVIRODYNE WN CORP. The undersigned corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the name and state of incorporation of each of the constituent corporations of the merger is as follows: Name State of Incorporation INTERNATIONAL LINCOLN CORP. Delaware ENVIRODYNE WN CORP. Delaware SECOND: That an agreement of merger between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of sub-section (c) of section 251 of the General Corporation Law of the State of Delaware. THIRD: The name of the surviving corporation of the merger is ENVIRODYNE WN CORP. FOURTH: That the Certificate of Incorporation of ENVIRODYNE WN CORP. shall become the Certificate of Incorporation of the surviving corporation without change. FIFTH: That the executed agreement of merger is on file at the principal place of business of the surviving corporation. The address of the principal place of business of the surviving 7 corporation is 1180 South Beverly Drive, Suite 601, Los Angeles, California 90035. SIXTH: That a copy of the agreement of merger will be furnished by the surviving corporation, on request and without cost to any stockholder of any constituent corporation. SEVENTH: This Certificate of Merger shall be effective on April 4, 1975. ENVIRODYNE WN CORP. By: ---------------------------- President ATTEST: By: ------------------------ Secretary (Corporate Seal) 8 CERTIFICATE OF INCORPORATION OF ENVIRODYNE WN CORP. 1. The name of the corporation is ENVIRODYNE WN CORP. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is fifty thousand (50,000) and the par value of each of such shares is One Dollar ($1.00) amounting in the aggregate to fifty Thousand Dollars ($50,000.00) 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS B. A. Pennington 100 West Tenth Street Wilmington, Delaware 19801 W. J. Reif 100 West Tenth Street Wilmington, Delaware 19801 R. F. Andrews 100 West Tenth Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly 9 authorized to make, alter or repeal the by-laws of the corporation. 8. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 to Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders of class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of 10 this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. 9. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 12th day of February, 1975. B. A. Pennington ---------------------------- W. J. Reif ---------------------------- R. F. Andrews ---------------------------- EX-3.6 5 BY LAWS - SANDUSKY PLASTICS 1 EXHIBIT 3.6 ENVIRODYNE WN CORP. BY-LAWS ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Los Angeles, State of California, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings of stockholders, commencing with the year 1973, shall be held on the first Monday of June if not a legal holiday, and if a legal holiday, than on the next secular day following, at 10:30 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less then ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a 2 period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of stockholders, for any purpose of purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. 3 Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be three. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, than an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as 4 are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors. Section 7. Special meetings of the board of directors may be called by the president on one day's notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors. Section 8. At all meetings of the board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all the members of the board of directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes or proceedings of the board or committee. COMMITTEES OF DIRECTORS 5 Section 10. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in 6 the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute all bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof 7 shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice- presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The secretary shall attend all meetings of the board of directors and all meetings of stockholders and record all the proceedings of the meetings of the corporation and the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the 8 board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or 9 his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction on its books. FIXING THE RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of 10 incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon by the board of directors by the certificate of incorporation, at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special 11 meeting. EX-3.7 6 CERT. OF INCORPORATION - SANDUSKY PLASTICS 1 EXHIBIT 3.7 CERTIFICATE OF INCORPORATION OF SANDUSKY PLASTICS OF DELAWARE, INC. THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the provisions of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY as follows: FIRST: The name of the corporation (hereinafter referred to as the "Corporation") is SANDUSKY PLASTICS OF DELAWARE, INC. SECOND: The registered office of the Corporation in the State of Delaware is to be located at 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent is The Corporation Trust Company, whose address is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware. THIRD: The nature of the business of the Corporation and the purposes to be promoted by it are as follows: 1. To engage in the production, marketing, purchase, sale, trading and brokering of various plastics and plastics products, including, without limitation, the taking of all actions and the conduct of all activities necessary or desirable in relations thereto. 2. To do everything necessary, proper, advisable or convenient for the accomplishment of any of the purposes or for attainment of any of the objects or the furtherance of any of the powers herein set forth and to do every other act and thing incidental thereto or connected therewith, provided the same be not forbidden by the laws of the State of Delaware. 3. In general, to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware; and to do any and all of the acts and things herein set forth to the same extent as natural persons could do, and in any part of the world, as principal, factor, agent, contractor, trustee or otherwise in conjunction with any person, entity, syndicate, partnership, association or corporation, governmental, municipal or public authority, domestic or foreign; to establish and maintain offices and agencies and to exercise all or any of its corporate powers and rights throughout the world. 2 The foregoing clauses of this Article THIRD shall be construed as powers as well as objects and purposes. The matters expressed in each clause shall, unless herein otherwise expressly provided, be in no wise limited by reference or to inference from the terms of any other clause, but shall be regarded as independent objects, purposes and powers, and the enumeration of specific objects, purposes and powers shall not be construed to the limit or restrict in any manner the meaning of general terms or the general powers of the Corporation; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature; provided, however, that nothing herein contained shall be construed as authorizing the Corporation to carry on the business of constructing, maintaining, or operating public utilities in the State of Delaware or elsewhere; and provided further, however, that the Corporation shall not carry on any business or exercise any power in any state, territory or country which, under the laws thereof, the Corporation may not lawfully carry on or exercise. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is One Hundred (100) shares of Common Stock, or the par value of $.10 per share. FIFTH: The name and mailing address of the incorporator of the Corporation is as follows: Name Mailing Address Ambrose M. Richardson Gray & Richardson 50 Rockefeller Plaza Suite 830 New York, New York 10020 SIXTH: (a) Subject to the provisions of the General Corporation Law of the State of Delaware, the number of directors of the Corporation shall be determined as provided by the By-Laws. 3 (b) The election of directors need not be by written ballot. SEVENTH: All corporate powers of the Corporation shall be exercised by the Board of Directors consisting of not less than one (1) nor more than three (3) members. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered. 1. To make, alter or repeal the By-laws of the Corporation, except as may be otherwise provided with respect to one or more of the By-laws by resolution of the stockholders in making, altering, amending or repealing such By-law or By-laws. 2. By a suitable By-law or by a resolution passed by a majority of the whole membership of the Board, to designate two or more of their number to name or names as may be determined from time to time by resolution of the Board of Directors, which such resolution or resolutions or in the By-laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. 3. To determine, whether any and, if any, what part of the net profits of the Corporation or of its capital surplus shall be declared in dividends and paid to the stockholders, and to direct and determine the use and disposition of any such net profits or of any such surplus or of any net assets in excess of capital. 4. To determine, from time to time, to the extent now or hereinafter permitted by the laws of the State of Delaware, whether and to what extent, and at what times and places and under what conditions and regulations, the accounts and books of the Corporation or any of them shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account, book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless otherwise authorized by resolution of the Board of Directors. 5. From time to time, to the extent now or hereafter permitted by the laws of the State of Delaware, to sell, lease, exchange or otherwise dispose of any part of the property and assets of this Corporation which the Board of Directors deems it expedient and for the best interests of the 4 Corporation to dispose of, or disadvantageous to continue to own, without assets of the stockholders by vote or otherwise; and, pursuant to the affirmative vote of the holders of a majority of stock issued and outstanding having voting power, given at a stockholders' meeting duly called for that purpose, the Board of Directors shall have power and authority pursuant to action (whether a regular or special meeting and whether or not notice of such purpose shall have been given prior to such meeting), to sell, lease or exchange all of the property and assets of the Corporation, including, if the Board of Directors shall so desire, its goodwill and its corporate franchises, for such consideration and upon such terms and conditions as the Board of Directors deem expedient and for the best interests of the Corporation. 6. To remove at any time, for cause or without cause, any officer or employee of the Corporation, or to confer such power on any committee or officer, provided, however, that any officer elected or appointed by the Board of Directors may be removed only by the affirmative vote of a majority of the Board of Directors then in office. 7. Without the assent or vote of the stockholders, to authorize the issue obligations of the Corporation, secured and unsecured, to include therein such provisions as to redeemability, convertibility or otherwise, as the Board of Directors may determine, and to authorize the mortgaging or pledging, as security therefor, of any property of the Corporation, real or personal, including after-acquired property. 8. To set apart out of any funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve or reserves, to make such other provisions, if any, as are deemed necessary or advisable for working capital, for additions, improvements and betterments to plant and equipment, for expansion of the Corporation's business (including the acquisition of real and personal property for the purpose) and for any other purposes of the Corporation, and from time to time to authorize the use of the surplus of the Corporation for the purpose of acquiring any of the capital stock of the Corporation. 9. From time to time, to offer for subscription, or otherwise to issue or sell, or to grant options for the subscription to or purchase of, any or all of the authorized stock of the Corporation, for such consideration (including the cancellation of accrued and unpaid dividends on outstanding preferred stock of the Corporation) as the Board of Directors may determine, without the assent or vote of the stockholders and at the time of such issue and sale, or at the time of granting of such options, to specify in dollars the part of the consideration received on such issue and sale which shall be capital, and which shall be surplus, respectively; provided, however, that as to any shares having a par value the amount of the part of such consideration so 5 determined to be capital need be only equal to the aggregate par value of such shares. 10. Subject to the provisions of the statutes of the State of Delaware, to exercise any and all other powers, in addition to the powers expressly conferred by law and by this Certificate of Incorporation, which may be conferred upon it by the Corporation through appropriate By-law provisions. EIGHTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Operation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. NINTH: The Corporation shall have the power to indemnify any director, officer, employee or agent of the Corporation or any person who served at the request of the Corporation as a director, 6 officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the extent permitted by the General Corporation Law of the State of Delaware. TENTH: Both the stockholders and the directors shall have power to hold their meetings, if the By-laws so provide, and keep the books, documents and papers of the Corporation, outside of the State of Delaware and to have one or more offices within or without the State of Delaware, at such places as may be from time to time designated by the By-laws or by resolution of the stockholders or the directors, except as otherwise required by the laws of the State of Delaware. ELEVENTH: If so determined by the Board of Directors, the Corporation may from time to time receive money or other property as a contribution to surplus, which contribution may consist of an undivided part of money or other property. Against any surplus there may be charged from time to time any losses incurred by the Corporation or any items or debt or bond or stock discount and expense. Such surplus may also be reduced from time to time by dividends or by transfer to capital or to some other appropriate account, and the amount of capital may be increased from time to time by the capitalization of surplus or net profits without the issuance of additional shares. TWELFTH: The Corporation reserves the right to create any preferred or special stocks or to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation in the manner now or hereafter prescribed by the laws of the State of Delaware, and all right and interests of the stockholders of the Corporation are granted subject to these reservations. 7 IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATE OF INCORPORATION on the 2nd day of July, 1985, and does hereby affirm the statements contained herein as true under penalties of perjury. ---------------------------- Ambrose M. Richardson As Incorporator 50 Rockefeller Plaza New York, New York 10020 STATE OF NEW YORK ) : SS.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on this 2nd day of July 1985, personally appeared before me, Barbara J. Tutino, a Notary Public in and for the County and State aforesaid, Ambrose M. Richardson, being the party to the foregoing Certificate of Incorporation, known to me personally to be such, and I having first made known to him the contents of said Certificate, did acknowledge said Certificate of Incorporation to be his act and deed, and the facts therein stated are truly set forth. Given under my hand and seal of office the day and year aforesaid. -------------------------------- Notary Public Barbara J. Tutino Notary Public, State of New York No. 30-4706864 Qualified in Nassau County Term Expires March 30, 1987 EX-3.8 7 BY LAWS - SANDUSKY PLASTICS OF DELAWARE 1 EXHIBIT 3.8 SANDUSKY PLASTICS OF DELAWARE, INC. BYLAWS ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the UNITED STATES CORPORATION COMPANY, located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent, State of Delaware, and said UNITED STATES CORPORATION COMPANY shall be the registered agent of the corporation thereof. SECTION 2. OTHER OFFICES. The corporation may establish other offices, either within or without the State of Delaware, at such place or places as the Board of Directors, from time to time, may designate or the business of the corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders shall be held on the first Monday of June each year, commencing with 1989, at such time as shall be stated in the notice, or said meetings may be held at such time and place, either within or without the State of Delaware, as the Board of Directors by resolution shall determine, and as set forth in the notice of the meeting. If the date of the annual meeting shall fall on a legal holiday of the state in which the meeting is to be held, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, may be called by the President or the Secretary, or by resolution of the Board of Directors, and may be held at such time and place as shall be stated in the notice of the meeting. 1 2 SECTION 3. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat, at his address as it appears on the records of the corporation, not less than ten (10) nor more than fifty (50) days prior to the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all of the stockholders entitled to vote thereat. SECTION 4. VOTING. Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation, the provisions of these Bylaws, and the laws of the State of Delaware, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three (3) years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for Directors and the vote upon any question before the meeting shall be by written ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at a meeting, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholders, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the registered office of the corporation in the State of Delaware. The list shall also be produced and kept available at the time and place of the meeting, during the entire time thereof, and may be inspected by any stockholder or his proxy who may be present. SECTION 5. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation issued and outstanding and entitled to vote shall constitute a quorum at all meetings of stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present either in person or by proxy, shall have power to adjourn the meeting, from time to time, without notice other than an announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed 2 3 shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. ACTION WITHOUT MEETING. Any action to be taken by the stockholders may be taken without a meeting if, prior to such action, all stockholders entitled to vote thereon shall consent to the action by a writing filed with the records of the meetings of stockholders, and such consent shall be treated for all purposes as a vote at a meeting. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM. The number of Directors, to be determined by the Board of Directors, shall be not less than three (3) nor more than five (5), until changed by amendment of these Bylaws. The Directors shall be elected at the annual meeting of stockholders, and each Director shall be elected to serve until his successor shall be elected and shall have qualified. The Directors need not be stockholders. SECTION 2. QUORUM. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 3. ELECTION OF OFFICERS. The Directors shall elect the officers of the corporation annually, as more specifically set forth in ARTICLE V of these Bylaws. Such officers shall hold office until the next annual election of officers, or until their successors are elected and shall have qualified. SECTION 4. REGULAR MEETINGS. Regular meetings of the Directors may be held, without notice, at such places and times as from time to time shall be determined by resolution of the Board of Directors. SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the President, or by the Secretary on the written request of any two Directors on at least two (2) days' notice to each Director. SECTION 6. PLACE OF MEETINGS. The Directors may hold their meetings, and have one or more offices outside the State of 3 4 Delaware, at such places as from time to time may be determined by resolution of the Board. SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or any committees thereof, may be taken without a meeting if, prior to such action, a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. SECTION 8. POWERS. The Board of Directors shall exercise all of the powers of the corporation, except such as are by law, by the Certificate of Incorporation, or by these Bylaws conferred upon or reserved to the stockholders. SECTION 9. COMPENSATION. Directors shall not receive any stated salary for their service as Directors or as members of committees, but, by resolution of the Board, a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV COMMITTEES SECTION 1. The Board of Directors may, by resolution or resolutions passed by a majority of the entire Board, designate an executive committee and one or more other committees, each committee to consist of two or more Directors of the corporation, which, to the extent provided in said resolution or resolutions, or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business of the corporation between meetings of the Board. SECTION 2. Committee shall keep regular minutes of their proceedings, and report the same to the Board of Directors when required. 4 5 ARTICLE V OFFICERS SECTION 1. OFFICERS. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting of stockholders. The directors shall elect a President, a Secretary and a Treasurer; they may also elect a Chairman of the Board, a Vice-Chairman of the Board, one or more Vice-Presidents, and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation, with the exception of the Chairman of the Board and the Vice-Chairman of the Board, need be a Director. Any one person may hold two or more offices, except those of President and Secretary. However, any person holding two or more offices shall not sign any instrument in the capacity of more than one office. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold office for such terms and shall exercise such powers and perform such duties as from time to time shall be determined by the Board of Directors. SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if one is elected, shall preside at all meetings of the Board of Directors, and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 2.5. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board, if one is elected, shall have such powers and shall perform such duties as from time to time may be assigned to him by the Board of Directors, and, in the absence of the Chairman, or in the event of his inability to act, the Vice-Chairman shall perform the functions of the Chairman of the Board. SECTION 3. PRESIDENT. The President shall be the chief executive officer of the corporation, and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders, if present thereat, and, in the absence or non-election of the Chairman of the Board, at all meetings of the Board of Directors. He shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and he shall cause the corporate seal to be affixed to any instrument requiring it, and when so affixed the seal shall be attested by the Secretary or the Treasurer, or an Assistant Secretary or an Assistant Treasurer. SECTION 4. VICE-PRESIDENTS. Each Vice-President shall 5 6 have such powers and shall perform such duties as shall be assigned to him by the Directors, and, in the absence of the President, or in the event of his inability to act, the Vice-Presidents, in the order of their seniority, shall perform the functions of the President. SECTION 5. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these Bylaws, and, in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, the Board of Directors, or the stockholders, upon whose requisition the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have custody of the corporate seal, and shall affix the same to all instruments requiring it, when authorized by the President or the Board of Directors, and shall attest the same. SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements. He shall render to the President and the Board of Directors, at the regular meetings of the Board, or whenever they may request it, an accounting of all his transactions as Treasurer, and of the financial condition of the corporation. If required by the Board of Directors, the Treasurer shall give the corporation a bond for the faithful discharge of his duties, in such amount and with such surety as the Board shall prescribe. SECTION 7. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries and Assistant Treasurers, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Board of Directors. ARTICLE VI 6 7 RESIGNATIONS; FILLING OF VACANCIES; INCREASE IN NUMBER OF DIRECTORS; REMOVAL FROM OFFICE SECTION 1. RESIGNATIONS. Any Director, member of a committee, or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 2. FILLING OF VACANCIES. If the office of any officer, Director or member of a committee becomes vacant, the remaining Directors in office, although less than a quorum may appoint, by a majority vote, any qualified person to fill such vacancy, who shall hold office for the unexpired term of his predecessor, or until his successor shall be duly chosen and shall have qualified. Any vacancy occurring by reason of an increase in the number of Directors may be filled by action of a majority of the entire Board, for the term of office continuing only until the next election of Directors by the stockholders, or it may be filled by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of Directors. SECTION 3. INCREASE IN NUMBER OF DIRECTORS. The number of Directors may be increased at any time by the affirmative vote of a majority of the entire Board, or by the affirmative vote of a majority in interest of the stockholders, at a special meeting called for that purpose, and, by like vote, pursuant to SECTION 2 above, the additional Directors may be chosen at such meeting to hold office until the next annual election or until their successors are elected and shall have qualified. SECTION 4. REMOVAL. At a meeting of stockholders expressly called for such purpose, any or all of the members of the Board of Directors may be removed, with or without cause, by vote of the holders of a majority of the shares then entitled to vote at an election of Directors, and said stockholders may elect, at the meeting called for the purpose of removal, a successor or successors to fill any resulting vacancies for the unexpired terms of the removed Directors. Any officer, agent or member of a committee, elected or appointed by the Board of Directors, may be removed by a majority vote of the entire Board whenever, in its judgment, the best interests of the corporation will be served thereby. ARTICLE VII 7 8 CAPITAL STOCK SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, numbered, and sealed with the seal of the corporation, and signed by the Chairman of the Board of Directors or the Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, shall be issued to each stockholder certifying to the number of shares owned by him in the corporation. When such certificates are countersigned by (1) a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in place of any certificate theretofore issued by the corporation and alleged to have been lost or destroyed, and the Directors may, at their discretion, request the owner of the lost or destroyed certificates, or his legal representative, to give the corporation a bond, in such sum as they may direct, but not exceeding double the value of the stock to indemnify the corporation against any claim that may be made against it on account of the alleged loss of such certificate. SECTION 3. TRANSFER OF SHARES. Pursuant to the provisions of the Uniform Commercial Code. SECTION 4. DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days prior to the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS. Subject to the provisions of the 8 9 Certificate of Incorporation and the laws of the State of Delaware, the Board of Directors, at any regular or special meeting, may declare dividends upon the capital stock of the corporation, as and when they may deem expedient. ARTICLE VIII MISCELLANEOUS PROVISIONS SECTION 1. CORPORATE SEAL. The Board of Directors shall adopt and may alter a common seal of the corporation. Said seal shall be circular in form and shall contain the name of the corporation, the year of its creation, and the words: "CORPORATE SEAL DELAWARE". It may be used by causing it or a facsimile thereof to be impressed, affixed, or otherwise reproduced. SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall end on December 31st. SECTION 3. CHECKS, DRAFTS, NOTES. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. CORPORATE RECORDS. The corporation shall keep correct and complete books of account and minutes of the proceedings of its stockholders and Directors, as well as an original stock ledger or list of stockholders, containing the names and addresses of the stockholders, the number of shares held by them, and the date of issuance of said certificates of stock. Any stockholder of record, in person or my attorney or other agent, upon written demand under oath stating the purpose thereof, shall have the right, during the usual hours for business, to inspect for any proper purpose the books and records of the corporation, as well as its stock ledger and/or list of stockholders, and to make copies or extracts therefrom. Such demand under oath shall be directed to the corporation at its registered office in the State of Delaware of at its principal place of business. SECTION 5. NOTICE AND WAIVER OF NOTICE. Whenever, pursuant to the laws of the State of Delaware or these Bylaws, any notice is required to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such 9 10 mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Any notice required to be given may be waived, in writing, by the person or persons entitled to such notice, whether before or after the time stated therein. ARTICLE IX AMENDMENTS SECTION 1. AMENDMENTS OF BYLAWS. These Bylaws may be altered or repealed, and Bylaws may be made at any annual meeting of stockholders, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat; or by the affirmative vote of a majority of the entire Board of Directors, at any regular meeting of the Board, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. 10 EX-3.9 8 ARTICLES OF INCORP. - VISKASE CORP. 1 EXHIBIT 3.9 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF STATE CORPORATION BUREAU In compliance with the requirements of section 806 of the Business Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. Section 18061, the undersigned corporation, desiring to amend its Articles, does hereby certify that 1. The name of the Corporation is: ENVIRODYNE PLANALOG, INC. 2. The location and post office address of the initial registered office of the corporation in this Commonwealth is: 123 South Broad Street, Philadelphia, Pennsylvania 19109, c/o C T Corporation System, County of Philadelphia 3. The corporation is incorporated under the Business Corporation Law of the Commonwealth of Pennsylvania for the following purpose or purposes: To manufacture equipment for displaying critical path networks; to provide consulting services in the project management field; to design total project management systems; and to organize and conduct management training seminars and work shops. In general, to engage in any lawful activity for which corporations may be organized under the Pennsylvania Business Corporation Law. 4. The term for which the corporation is to exist is: Perpetual 5. The aggregate number of shares which the corporation shall have authority to issue is: One thousand (1,000) shares of common stock of the par value of One Dollar ($1.00) each, amounting in the aggregate value of One Thousand Dollars ($1,000.00). 6. The name(s) and post office address(es) of each incorporator(s) is (are): Name Address Number and class of shares George Lewis 123 S. Broad St., Phila., PA 19109 3 7. The director may make, alter, amend and repeal the by-laws subject to the power of the shareholders to change such action. 2 IN TESTIMONY WHEREOF, the undersigned corporation has (have) signed and sealed these Articles of Incorporation this 28th day of February, 1974. By: /s/ George Lewis ---------------------- 3 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF STATE CORPORATION BUREAU In compliance with the requirements of section 806 of the Business Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. Section 18061, the undersigned corporation, desiring to amend its Articles, does hereby certify that 1. The name of the Corporation is: ENVIRODYNE PLANALOG, INC. 2. The location of its registered office in this Commonwealth is (the Department of State is hereby authorized to correct the following statement to conform to the records of the Department): 140 MILL CREEK ROAD, GLADWYNE, PENNSYLVANIA 19035 3. The statute by or under which it was incorporated is: PENNSYLVANIA BUSINESS CORPORATION LAW 4. The date of its incorporation is: 3/1/74 5. (Check, and if appropriate, complete one of the following): [ ] The meeting of the shareholders of the corporation at which the amendment was adopted was held at the time and place and pursuant to the kind and period of notice herein stated. Time: The ______ day of ______________, 19__. Place: _____________________________________________________ Kind and period of notice:__________________________________ [X] The amendment was adopted by a consent in writing, setting forth the action so taken, signed by all of the shareholders entitled to vote thereon and filed with the Secretary of the corporation. 6. At the time of the action of shareholders: (a) The total number of shares outstanding was: n/a (b) The number of shares entitled to vote was: n/a 7. In the action taken by the shareholders: 4 (a) The number of shares voted in favor of the amendment was: n/a (b) The number of shares voted against the amendment was: n/a 8. The amendment adopted by the shareholders, set forth in full, as follows: "1. The name of the corporation is VISKASE CORPORATION" IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of Amendment to be signed by a duly authorized officer and its corporate seal, duly attested by another such officer, to be hereunto affixed this 14th day of January, 1986. By: /s/ Lawrence L. Henry ----------------------- President Attest: Maxine H. Linde ------------------ Secretary (Corporate Seal) EX-3.10 9 BY LAWS - VISKASE CORP. 1 EXHIBIT 3.10 VISKASE CORPORATION AMENDED AND RESTATED BY-LAWS ARTICLE I OFFICES Section 1. The registered office shall be located in the City of Philadelphia, Commonwealth of Pennsylvania. Section 2. The corporation may also have offices at such other places both within and without the Commonwealth of Pennsylvania as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETING OF SHAREHOLDERS Section 1. All meetings of the shareholders shall be held at such place within or without the Commonwealth, as may be from time to time fixed or determined by the board of directors. One or more shareholders may participate in a meeting of the shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting may hear each other. Section 2. An annual meeting of the shareholders, commencing with the year 1974, shall be held at such time and date as the board of directors may determine or on the first Monday of June if not a legal holiday and, if a legal holiday, then on the next secular day following at 10:00 A.M., when they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. 2 Section 3. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the articles of incorporation, may be called at any time by the chairman of the board of directors, the president, or a majority of the board of directors, or the holders of not less than one-fifth of all the shares issued and outstanding and entitled to vote at the particular meeting, upon written request delivered to the secretary of the corporation. Such request shall state the purpose or purposes of the proposed meeting. Upon receipt of any such request, it shall be the duty of the secretary to call a special meeting of the shareholders to be held at such time, not more than sixty days thereafter, as the secretary may fix. If the secretary shall neglect to issue such call, the person or persons making the request may issue the call. Section 4. Written notice of every meeting of the shareholders, specifying the place, date and hour and the general nature of the business of the meeting, shall be served upon or mailed, postage prepaid, at least five days prior to the meeting, unless a greater period of notice is required by statute, to each shareholder entitled to vote thereat. Section 5. The officer having charge of the transfer books for shares of the corporation shall prepare and make, at least five days before each meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order with the address and the number of shares held -2- 3 by each, which list shall be kept on file at the registered office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. Section 6. Business transacted at all special meetings of shareholders shall be limited to the purposes stated in the notice. Section 7. The holders of a majority of the issued and outstanding shares entitled to vote, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by statute or by the articles of incorporation or by these by-laws. If, however, any meeting of shareholders cannot be organized because a quorum has not attended, the shareholders entitled to vote thereat, present in person or by proxy, shall have power, except as otherwise provided by statute, to adjourn the meeting to such time and place as they may determine, but in the case of any meeting called for the election of directors such meeting may be adjourned only from day to day or for such longer periods not exceeding fifteen days each as the holders of a majority of the shares present in person or by proxy shall direct, and those who attend the second of such adjourned meetings, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing directors. At any -3- 4 adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 8. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the shares having voting powers, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the articles of incorporation or of these by-laws, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 9. Each shareholder shall at every meeting of the shareholders be entitled to one vote in person or by proxy for each share having voting power held by such shareholder, but no proxy shall be voted on after three years from its date, unless coupled with an interest, and, except where the transfer books of the corporation have been closed or a date has been fixed as a record date for the determination of its shareholders entitled to vote, transferees of shares which are transferred on the books of the corporation within ten days next preceding the date of such meeting shall not be entitled to vote at such meeting. Section 10. In advance of any meeting of shareholders, the board of directors may appoint judges of election, who need not be shareholders, to act at such meeting or any adjournment thereof. If judges of election be not so appointed, the chairman of any such -4- 5 meeting may and, on the request of any shareholder or his proxy, shall make such appointment at a meeting. The number of judges shall be one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares present and entitled to vote shall determine whether one or three judges are to be appointed. No person who is a candidate for office shall act as a judge. The judges of election shall do all such acts as may be proper to conduct the election or vote with fairness to all shareholders, and shall make a written report of any matter determined by them and execute a certificate of any fact found by them, if requested by the chairman of the meeting or any shareholder or his proxy. If there be three judges of election the decision, act or certificate of a majority, shall be effective in all respects as the decision, act or certificate of all. Section 11. Any action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders who would be entitled to vote at a meeting for such purpose and shall be filed with the secretary of the corporation. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be four (4). The directors shall be elected at the annual meeting of the shareholders, except as provided in -5- 6 Section 2 of this article, and each director shall hold office until his successor is elected and qualified. Directors need not be shareholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled by a majority of the remaining directors, though less than a quorum and each person so elected shall be a director until his successor is elected by the shareholders, who may make such election at the next annual meeting of the shareholders or at any special meeting duly called for that purpose and held prior thereto. Section 3. The business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the articles of incorporation or by these by-laws directed or required to be exercised and done by the shareholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the Commonwealth of Pennsylvania. One or more directors may participate in a meeting of the board or of a committee of the board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. -6- 7 Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the shareholders at the meeting at which such directors were elected and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a majority of the whole board shall be present. In the event of the failure of the shareholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the shareholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for such meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of at least a majority of the board at a duly convened meeting, or by unanimous written consent. Section 7. Special meetings of the board may be called by the chairman of the board of directors or the president on one (1) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the chairman of the board of directors, the president or the secretary in like manner and on like notice on the written request of two directors. -7- 8 Section 8. At all meetings of the board a majority of the directors in office shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the directors present at a meeting at which a quorum is present shall be the acts of the board of directors, except as may be otherwise specifically provided by statute or by the articles of incorporation. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. If all the directors shall severally or collectively consent in writing to any action to be taken by the corporation, such action shall be as valid a corporate action as though it had been authorized at a meeting of the board of directors. COMMITTEES Section 10. The board of directors may, by resolution adopted by a majority of the whole board, designate one or more committees, each committee to consist to two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee to the extent provided in such resolution or in these by-laws, shall have and exercise the authority of the board of directors in the management of the business and affairs of the -8- 9 corporation. In the absence or disqualification of any member of such committee or committees, the members or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member. The committees shall keep regular minutes of the proceedings and report the same to the board when required. COMPENSATION OF DIRECTORS Section 11. Directors as such shall not receive any stated salary for their services but, by resolution of the board, a fixed sum, and expenses of attendance if any, may be allowed for attendance at each regular or special meeting of the board or at meetings of the executive committee; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE IV NOTICES Section 1. Notices to directors and shareholders shall be in writing and delivered personally or mailed to the directors or shareholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram. -9- 10 Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the articles of incorporation or of these by-laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a chairman of the board of directors, a president, a vice-president, a secretary and a treasurer. The chairman of the board of directors, the president and the secretary shall be natural persons of full age; the treasurer may be a corporation but, if a natural person, shall be of full age. The board of directors may also choose additional vice-presidents and one or more assistant secretaries and assistant treasurers. Any two of the aforesaid offices may be held by the same person. Section 2. The board of directors, immediately after each annual meeting of shareholders, shall elect a chairman of the board of directors, who shall be a director, and a president, a vice-president, a secretary and a treasurer, each of whom may, but need not be a director. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their -10- 11 offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE CHAIRMAN OF THE BOARD OF DIRECTORS Section 6. The chairman of the board of directors shall preside at all meetings of the stockholders and of the board of directors. Except where by law the signature of the president is required, the chairman of the board of directors shall possess the same power as the president to sign all contracts, certificates and other instruments of the corporation which may be authorized by the board of directors. During the absence or disability of the president, the chairman of the board of directors shall exercise all the powers and discharge all the duties of the president. The chairman of the board of directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these by-laws or by the board of directors. -11- 12 THE PRESIDENT Section 7. The president shall, subject to the control of the board of directors and the chairman of the board of directors, be the chief executive officer of the corporation, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 8. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 9. The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors, shall, in the absence or disability of the president and the chairman of the board of directors, perform the duties and exercise the powers of the president, and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARIES Section 10. The secretary shall attend all meetings of the board of directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the -12- 13 board of directors in a book to be kept for that purpose and shall perform like duties for the executive committee when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation and, when authorized by the board of directors, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of an assistant secretary. Section 11. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 12. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 13. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers -13- 14 for such disbursements, and shall render to the chairman of the board of directors and the president and to the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 14. If required by the board of directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 15. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES OF SHARES Section 1. The certificates of shares of the corporation shall be numbered and registered in a share register as they are issued. They shall exhibit the name of the registered holder and the number and class of shares and the series, if any, represented -14- 15 thereby and the par value of each share or a statement that such shares are without par value as the case may be. If more than one class of shares is authorized, the certificate shall state that the corporation will furnish to any shareholder, upon request and without charge a full or summary statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued, and the variations thereof between the shares of each series, and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series. Section 2. Every share certificate shall be signed by the chairman of the board of directors, the president or a vice-president and the secretary or an assistant secretary or the treasurer or an assistant treasurer and shall be sealed with the corporate seal which may be facsimile, engraved or printed. Section 3. Where a certificate is signed by a transfer agent or an assistant transfer agent or a registrar, the signature of any such chairman of the board of directors, president, vice-president, secretary, assistant secretary, treasurer or assistant treasurer may be facsimile. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates have been delivered by the corporation, such certificate or certificates may -15- 16 nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. LOST CERTIFICATES Section 4. The board of directors shall direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, destroyed or wrongfully taken, upon the making of an affidavit of that fact by the person claiming the share certificate to be lost, destroyed or wrongfully taken. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, destroyed or wrongfully taken certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate or certificates alleged to have been lost, destroyed or wrongfully taken. TRANSFERS OF SHARES Section 5. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or -16- 17 authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. CLOSING OF TRANSFER BOOKS Section 6. The board of directors may fix a time, not more than fifty days, prior to the date of any meeting of shareholders or the date fixed for the payment of any dividend or distribution or the date for the allotment of rights or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting or entitled to receive payment of any such dividend or distribution or to receive any such allotment of rights or to exercise the rights with respect to any such change, conversion or exchange of shares. In such case only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after any record date so fixed. The board of directors may close the books of the corporation against transfers of shares during the whole or any part of such period and in such case written or printed notice thereof shall be mailed at least ten days before the closing thereof to each shareholder of record at the -17- 18 address appearing on the records of the corporation or supplied by him to the corporation for the purpose of notice. REGISTERED SHAREHOLDERS Section 7. The corporation shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, and shall not be liable for any registration or transfer of shares which are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with actual knowledge that a fiduciary or nominee of a fiduciary is committing a breach of trust in requesting such registration or transfer, or with knowledge of such facts that its participation therein amounts to bad faith. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the shares of the corporation, subject to the provisions of the articles of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in its shares, subject to the provisions of the articles of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends -18- 19 such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. FINANCIAL REPORT TO SHAREHOLDERS Section 3. The directors shall not be required to send, or cause to be sent, to the shareholders, a financial report as of the closing date of the preceding fiscal year. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Pennsylvania." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. -19- 20 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed by a majority vote of the shareholders entitled to vote thereon at any regular or special meeting duly convened after notice to the shareholders of that purpose or by a majority vote of the members of the board of directors at any regular or special meeting duly convened after notice to the directors of that purpose, subject always to the power of the shareholders to change such action by the directors. ARTICLE IX INDEMNIFICATION Section 1. This corporation shall indemnify its officers, directors and employees to the fullest extent permitted by the laws of the Commonwealth of Pennsylvania. -20- EX-3.11 10 CERTIFICATE OF INCORP. 1 EXHIBIT 3.11 CERTIFICATE OF OWNERSHIP AND MERGER of VISKASE HOLDING CORPORATION (a California corporation) into CHARLEY & COMPANY (a Delaware corporation) It is hereby certified that: 1. Viskase Holding Corporation (hereinafter called the "Corporation") is a corporation of the State of California, the laws of which permit a merger of a corporation of that jurisdiction with a corporation of another jurisdiction. 2. The Corporation, as the owner of all of the outstanding shares of the stock of Charley & Company, hereby merges itself into Charley & Company, a corporation of the State of Delaware. 3. The following is a copy of the resolutions adopted on the 14th day of April, 1987, by the Board of Directors of the Corporation to merge the Corporation into Charley & Company: RESOLVED that this Corporation be reincorporated in the State of Delaware by merging itself into Charley & Company, which shall be the surviving Corporation in a transaction qualifying as a reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code, pursuant to the laws of the State of California and the State of Delaware as hereinafter provided, so that the separate existence of this Corporation shall cease as soon as the merger shall become effective, and thereupon this Corporation and Charley & Company will become a single corporation named Viskase Holding Corporation, which shall continue to exist under, and be governed by, the laws of the State of Delaware. RESOLVED that the terms and conditions of the proposed merger are as follows: (a) From and after the effective time of the merger, all of the estate property, rights, privileges, powers, and Franchises of this Corporation shall become vested in and be held by Charley & Company as fully and entirely and without change or diminution as the same were before held and enjoyed by this Corporation, and Charley & Company shall assume all of the obligations of this Corporation. 2 (b) No pro rata issuance of the shares of stock of Charley & Company which are owned by this Corporation immediately prior to the effective time of the merger shall be made, and such shares shall be surrendered and extinguished. (c) Each share of common stock, $1.00 par value, of this Corporation which shall be issued and outstanding immediately prior to the effective time of the merger shall be converted into one issued and outstanding share of common stock, $1.00 par value, of Charley & Company, and, from and after the effective time of the merger, the holder of all of said issued and outstanding shares of common stock of this Corporation shall automatically be and become the holder of shares of Charley & Company upon the basis above specified, whether or not certificates representing said shares are then issued and delivered. (d) After the effective time of the merger, the holder of record of the outstanding certificate or certificates theretofore representing common stock of this Corporation may surrender the same to Charley & Company or its office in Delaware, and such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing an equal number of shares of common stock of Charley & Company. Until so surrendered, each outstanding certificate which prior to the effective time of the merger represented one or more shares of common stock of this Corporation shall be deemed for all corporate purposes to evidence ownership of an equal number of shares of common stock of Charley & Company. (e) From and after the effective time of the merger, the Certificate of Incorporation and the By-Laws of Charley & Company shall be the Certificate of Incorporation and the By-Laws of Charley & Company as in effect immediately prior to such effective time, except that the name of Charley & Company shall be changed to Viskase Holding Corporation. (f) The members of the Board of Directors and officers of Charley & Company shall be the members of the Board of Directors and the corresponding officers of Charley & Company immediately before the effective time of the merger. (g) From and after the effective time of the merger, the assets and liabilities of this Corporation and of Charley & Company shall be entered on the books of Charley & Company at the amounts at which they shall be carried at such time on the respective books of this Corporation and of Charley & Company, subject to such inter-corporate adjustments or eliminations, if any, as 3 may be required to give effect to the merger; and, subject to such action as may be taken by the Board of Directors of Charley & Company, in accordance with generally accepted accounting principles, the capital and surplus of Charley & Company shall be equal to the capital and surplus of this Corporation and of Charley & Company. 4. The proposed merger herein certified has been approved in writing by the holder of all of the outstanding stock entitled to vote of the Corporation in accordance with the provisions of Section 228 of the General Corporation Law of Delaware. Signed and attested to on April 14, 1987. /s/ Nancy L. Erdle -------------------------------------- President, Viskase Holding Corporation Attest: /s/ Maxine H. Linde - ------------------------------------------------ Assistant Secretary, Viskase Holding Corporation 4 CERTIFICATE OF INCORPORATION OF CHARLEY & COMPANY The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that: FIRST: The name of the corporation (hereinafter called the "Corporation") is CHARLEY & COMPANY SECOND: The address, including street, number, city, and county of the registered office of the corporation in the State of Delaware is 229 South State Street, City of Dover, County of Kent; and the name of the registered agent of the corporation in the State of Delaware as such address is United States Corporation Company. THIRD: The nature of the business and of the purposes to be conducted and promoted by the corporation, which shall be in addition to the authority of the corporation to conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of delaware, is as follows: To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of its property and assets, or any interest therein, wherever situated. To engage generally in the real estate business as principal, agent, broker, and in any lawful capacity, and generally to take, lease, purchase, or otherwise acquire, and to own, use, hold, sell, convey, exchange, lease, mortgage, work, clear, improve, develop, divide, and otherwise handle, manage, operate, deal in and dispose of real estate, real property, lands, multiple-dwelling structures, houses, buildings and other works and any interest or right therein; to take, lease, purchase or 5 otherwise handle, and deal in and dispose of, as principal, agent, broker, and in any lawful capacity, such personal property, chattels, chattels real, rights, easements, privileges, choses in action, notes, bonds, mortgages, and securities as may lawfully be acquired, held, or disposed of; and to acquire, purchase, sell, assign, transfer, dispose of, and generally deal in and with as principal, agent, broker, and in any lawful capacity, mortgages and other interests in real, personal, and mixed properties; to carry on a general construction, contracting, building, and realty management business as principal, agent, representative, contractor, subcontractor, and in any other lawful capacity. To carry on a general mercantile, industrial, investing, and trading business in all its branches; to devise, invent, manufacture, fabricate, assemble, install, service, maintain, alter, buy, sell, import, export, license as licensor or licensee, lease as lessor or lessee, distribute, job, enter into, negotiate, execute, acquire, and assign contracts in respect of, acquire, receive, grant, and assign licensing arrangements, options, franchises, and other rights in respect of, and generally deal in and with, at wholesale and retail, as principal, and as sales, business, special or general agent, representative, broker, factor, merchant, distributor, jobber, advisor, and in any other lawful capacity, goods, wares, merchandise, commodities, and unimproved, improved, finished, processed, and other real, personal, and mixed property of any and all kinds, together with the components, resultants, and by-products thereof. To apply for, register, obtain, purchase, lease, take licenses in respect of or otherwise acquire, and to hold, own, use, operate, develop, enjoy, turn to account, grant licenses and immunities in respect of, manufacture under and to introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in any manner deal with and contract with reference to: (a) inventions, devices, formulae, processes and any improvements and modifications thereof; (b) letters patent, patent rights, patented processes, copyrights, designs, and similar rights, trade-marks, trade names, trade symbols and other indications of origin and ownership granted by or recognized under the laws of the United States of America, the District of Columbia, any state or subdivision thereof, and any commonwealth, territory, 6 possession, dependency, colony, possession, agency or instrumentality of the United States of America and of any foreign country, and all rights connected therewith or appertaining thereunto; (c) franchises, licenses, grants and concessions. To guarantee, purchase, take, receive, subscribe for, and otherwise acquire, own, hold, use, and otherwise employ, sell, lease, exchange, transfer, and otherwise dispose of, mortgage, lend, pledge, and otherwise deal in and with, securities (which term, for the purpose of this Article THIRD, includes, without limitation of the generality thereof, any shares of stock, bonds, debentures, notes, mortgages, other obligations, and any certificates, receipts or other instruments representing rights to receive, purchase or subscribe for the same, or representing any other rights or interests therein or in any property or assets) of any persons, domestic and foreign firms, associations, and corporations, and by any government or agency or instrumentality thereof; to make payment therefor in any lawful manner; and, while owner of any such securities, to exercise any and all rights, powers and privileges in respect thereof, including the right to vote. To make, enter into, perform and carry out contracts of every kind and description with any person, firm, association, corporation or government or agency or instrumentality thereof. To acquire by purchase, exchange or otherwise, all, or any part of, or any interest in, the properties, assets, business and good will of any one or more persons, firms, associations or corporations heretofore or hereafter engaged in any business for which a corporation may now or hereafter be organized under the laws of the State of Delaware; to pay for the same in cash, property or its own or other securities; to hold, operate, reorganize, liquidate, sell or in any manner dispose of the whole or any part thereof; and in connection therewith, to assume or guarantee performance of any liabilities, obligations or contracts of such persons, firms, associations or corporations, and to conduct the whole or any part of any business thus acquired. To lend money in furtherance of its corporate purposes and to invest and reinvest its funds from time to time to such extent, to such persons, firms, associations, corporations, governments or agencies or instrumentalities thereof, and on such terms and on such 7 security, of any, as the Board of Directors of the corporation may determine. To make contracts of guaranty and suretyship of all kinds and endorse or guarantee the payment of principal, interest or dividends upon, and to guarantee the performance of sinking fund or other obligations of, any securities, and to guarantee in any way permitted by law the performance of any of the contracts or other undertakings in which the corporation may otherwise be or become interested, of any persons, firm, association, corporation, government or agency or instrumentality thereof, or of any other combination, organization or entity whatsoever. To borrow money without limit as to amount and at such rates of interest as it may determine; from time to time to issue and sell its own securities, including its shares of stock, notes, bonds, debentures, and other obligations, in such amounts, on such terms and conditions, for such purposes and for such prices, now or hereafter permitted by the laws of the State of Delaware and by this certificate of incorporation, as the Board of Directors of the corporation may determine; and to secure any of its obligations by mortgage, pledge or other encumbrance of all or any of its property, franchises and income. To be a promoter or manager of other corporations of any type or kind; and to participate with others in any corporation, partnership, limited partnership, joint venture, or other association of any kind, or in any transaction, undertaking or arrangement which the corporation would have power to conduct by itself, whether or not such participation involves sharing or delegation of control with or to others. To draw, make, accept, endorse, discount, execute, and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments and evidences of indebtedness whether secured by mortgage or otherwise, as well as to secure the same by mortgage or otherwise, so far as may be permitted by the laws of the State of Delaware. To purchase, receive, take, reacquire or otherwise acquire, own and hold, sell, lend, exchange, reissue, transfer or otherwise dispose of, pledge, use, cancel, and otherwise deal in and with its own shares and its other securities from time to time to such an extent and in such manner and upon such terms as the Board of Directors of the corporation shall determine; provided that the corporation shall not use its funds or property for the purchase of its own shares of capital stock when 8 its capital is impaired or when such use would cause any impairment of its capital, except to the extent permitted by law. To organize, as an incorporator, or cause to be organized under the laws of the State of Delaware, or of any other State of the United States of America, or of the District of Columbia, or of any commonwealth, territory, dependency, colony, possession, agency, or instrumentality of the United States of America, or of any foreign country, a corporation or corporations may be organized, and to dissolve, wind up, liquidate, merge or consolidate any such corporation or corporations or to cause the same to be dissolved, wound up, liquidated, merged or consolidated. To conduct its business, promote its purposes, and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all States of the United States of America, in the District of Columbia, and in any or all commonwealths, territories, dependencies, colonies, possessions, agencies, or instrumentalities of the United States of America and of foreign governments. To promote and exercise all or any part of the foregoing purposes and powers in any and all parts of the world, and to conduct its business in all or any of its branches as principal, agent, broker, factor, contractor, and in any other lawful capacity, either alone or through or in conjunction with any corporations, associations, partnerships, firms, trustees, syndicates, individuals, organizations, and other entities in any part of the world, and, in conducting its business and promoting any of its purposes, to maintain offices, branches and agencies in any part of the world, to make and perform any contracts and to do any acts and things, and to carry on any business, and to exercise any powers and privileges suitable, convenient, or proper for the conduct, promotion, and attainment of any of the business and purposes herein specified or which at any time may be incidental thereto or may appear conducive to or expedient for the accomplishment of any of such business and purposes and which might be engaged in or carried on by a corporation incorporated or organized under the General Corporation Law of the State of Delaware, and to have and exercise all of the powers conferred by the laws of the State of Delaware upon corporations incorporated or organized under the General Corporation Law of the State of Delaware. The foregoing provisions of this Article THIRD shall be construed both as purposes and powers and each as an independent purpose and power. The foregoing enumeration of specific purposes 9 and powers shall not be held to limit or restrict in any manner the purposes and powers of the corporation, and the purposes and powers herein specified shall, except when otherwise provided in this Article THIRD, be in no wise limited or restricted by reference to, or inference from, the terms of any provision of this or any other Article of this certificate of incorporation; provided, that the corporation shall not conduct any business, promote any purpose, or exercise any power or privilege within or without the State of Delaware which, under the laws thereof, the corporation may not lawfully conduct, promote, or exercise. FOURTH: The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000). The par value of each of such shares is One Dollar ($1.00). All such shares are of one class and are shares of Common Stock. FIFTH: The name and mailing address of the incorporator are as follows: NAME MAILING ADDRESS T.M. Bonovich 229 South State Street, Dover, Delaware 19901 SIXTH: The corporation is to have perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. EIGHTH: For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and regulation of the powers of the 10 corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the By-Laws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other By-Laws of the corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the By-Laws of the corporation may be exercised by the Board of Directors of the corporation; provided, however, that any provision for the classification of directors of the corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial By-Law or in a By-Law adopted by the stockholders entitled to vote of the corporation unless provisions for such classification shall be set forth in this certificate of incorporation. 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the right to vote at, any meeting of stockholders. Whenever the corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the certificate of incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of Section 242 of the General Corporation Law of the State of Delaware shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. 11 TENTH: The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ELEVENTH: From time to time any of the provisions of this certificate of incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the corporation by this certificate of incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on April 1, 1987. s/s T. M. Bonovich ------------------- Incorporator EX-3.12 11 BY LAWS - VISKASE HOLDING CORP. 1 EXHIBIT 3.12 (CHARLEY & COMPANY) VISKASE HOLDING CORPORATION BYLAWS ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the UNITED STATES CORPORATION COMPANY, located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent, State of Delaware, and said UNITED STATES CORPORATION COMPANY shall be the registered agent of the corporation thereof. SECTION 2. OTHER OFFICES. The corporation may establish other offices, either within or without the State of Delaware, at such place or places as the Board of Directors, from time to time, may designate or the business of the corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders shall be held on the first Monday of June each year, at such time as shall be stated in the notice, or said meetings may be held at such time and place, either within or without the State of Delaware, as the Board of Directors by resolution shall determine, and as set forth in the notice of the meeting. If the date of the annual meeting shall fall on a legal holiday of the state in which the meeting is to be held, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, may be called by the President or the Secretary, or by resolution of the Board of Directors, and may be held at such time and place as shall be stated in the notice of the meeting. 1 2 SECTION 3. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat, at his address as it appears on the records of the corporation, not less than ten (10) nor more than fifty (50) days prior to the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all of the stockholders entitled to vote thereat. SECTION 4. VOTING. Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation, the provisions of these Bylaws, and the laws of the State of Delaware, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three (3) years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for Directors and the vote upon any question before the meeting shall be by written ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at a meeting, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholders, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the registered office of the corporation in the State of Delaware. The list shall also be produced and kept available at the time and place of the meeting, during the entire time thereof, and may be inspected by any stockholder or his proxy who may be present. SECTION 5. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation issued and outstanding and entitled to vote shall constitute a quorum at all meetings of stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present either in person or by proxy, shall have power to adjourn the meeting, from time to time, without notice other than an announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed 2 3 shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. ACTION WITHOUT MEETING. Any action to be taken by the stockholders may be taken without a meeting if, prior to such action, all stockholders entitled to vote thereon shall consent to the action by a writing filed with the records of the meetings of stockholders, and such consent shall be treated for all purposes as a vote at a meeting. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM. The number of Directors, to be determined by the Board of Directors, shall be not less than three (3) nor more than five (5), until changed by amendment of these Bylaws. The number of initial Directors shall be three (3). The Directors shall be elected at the annual meeting of stockholders, and each Director shall be elected to serve until his successor shall be elected and shall have qualified. The Directors need not be stockholders. SECTION 2. QUORUM. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 3. FIRST MEETING. The newly elected Directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or writing of all the directors. SECTION 4. ELECTION OF OFFICERS. At the first meeting, or at any subsequent meeting called for that purpose, the Directors shall elect the officers of the corporation, as more specifically set forth in ARTICLE V of these Bylaws. Such officers shall hold office until the next annual election of officers, or until their successors are elected and shall have qualified. SECTION 5. REGULAR MEETINGS. Regular meetings of the Directors may be held, without notice, at such places and times as from time to time shall be determined by resolution of the Board of Directors. SECTION 6. SPECIAL MEETINGS. Special meetings of the 3 4 Board of Directors may be called by the President, or by the Secretary on the written request of any two Directors on at least two (2) days' notice to each Director. SECTION 7. PLACE OF MEETINGS. The Directors may hold their meetings, and have one or more offices outside the State of Delaware, at such places as from time to time may be determined by resolution of the Board. SECTION 8. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or any committees thereof, may be taken without a meeting if, prior to such action, a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. SECTION 9. POWERS. The Board of Directors shall exercise all of the powers of the corporation, except such as are by law, by the Certificate of Incorporation, or by these Bylaws conferred upon or reserved to the stockholders. SECTION 10. COMPENSATION. Directors shall not receive any stated salary for their service as Directors or as members of committees, but, by resolution of the Board, a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV COMMITTEES SECTION 1. The Board of Directors may, by resolution or resolutions passed by a majority of the entire Board, designate an executive committee and one or more other committees, each committee to consist of two or more Directors of the corporation, which, to the extent provided in said resolution or resolutions, or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business of the corporation between meetings of the Board. SECTION 2. Committee shall keep regular minutes of their proceedings, and report the same to the Board of Directors when required. ARTICLE V 4 5 OFFICERS SECTION 1. OFFICERS. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting of stockholders. The directors shall elect a President, a Secretary and a Treasurer; they may also elect a Chairman of the Board, a Vice-Chairman of the Board, one or more Vice-Presidents, and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation, with the exception of the Chairman of the Board and the Vice-Chairman of the Board, need be a Director. Any one person may hold two or more offices, except those of President and Secretary. However, any person holding two or more offices shall not sign any instrument in the capacity of more than one office. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold office for such terms and shall exercise such powers and perform such duties as from time to time shall be determined by the Board of Directors. SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if one is elected, shall preside at all meetings of the Board of Directors, and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 2.5. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board, if one is elected, shall have such powers and shall perform such duties as from time to time may be assigned to him by the Board of Directors, and, in the absence of the Chairman, or in the event of his inability to act, the Vice-Chairman shall perform the functions of the Chairman of the Board. SECTION 3. PRESIDENT. The President shall be the chief executive officer of the corporation, and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders, if present thereat, and, in the absence or non-election of the Chairman of the Board, at all meetings of the Board of Directors. He shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and he shall cause the corporate seal to be affixed to any instrument requiring it, and when so affixed the seal shall be attested by the Secretary or the Treasurer, or an Assistant Secretary or an Assistant Treasurer. SECTION 4. VICE-PRESIDENTS. Each Vice-President shall have such powers and shall perform such duties as shall be assigned 5 6 to him by the Directors, and, in the absence of the President, or in the event of his inability to act, the Vice-Presidents, in the order of their seniority, shall perform the functions of the President. SECTION 5. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these Bylaws, and, in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, the Board of Directors, or the stockholders, upon whose requisition the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have custody of the corporate seal, and shall affix the same to all instruments requiring it, when authorized by the President or the Board of Directors, and shall attest the same. SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements. He shall render to the President and the Board of Directors, at the regular meetings of the Board, or whenever they may request it, an accounting of all his transactions as Treasurer, and of the financial condition of the corporation. If required by the Board of Directors, the Treasurer shall give the corporation a bond for the faithful discharge of his duties, in such amount and with such surety as the Board shall prescribe. SECTION 7. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries and Assistant Treasurers, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Board of Directors. ARTICLE VI 6 7 RESIGNATIONS; FILLING OF VACANCIES; INCREASE IN NUMBER OF DIRECTORS; REMOVAL FROM OFFICE SECTION 1. RESIGNATIONS. Any Director, member of a committee, or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 2. FILLING OF VACANCIES. If the office of any officer, Director or member of a committee becomes vacant, the remaining Directors in office, although less than a quorum may appoint, by a majority vote, any qualified person to fill such vacancy, who shall hold office for the unexpired term of his predecessor, or until his successor shall be duly chosen and shall have qualified. Any vacancy occurring by reason of an increase in the number of Directors may be filled by action of a majority of the entire Board, for the term of office continuing only until the next election of Directors by the stockholders, or it may be filled by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of Directors. SECTION 3. INCREASE IN NUMBER OF DIRECTORS. The number of Directors may be increased at any time by the affirmative vote of a majority of the entire Board, or by the affirmative vote of a majority in interest of the stockholders, at a special meeting called for that purpose, and, by like vote, pursuant to SECTION 2 above, the additional Directors may be chosen at such meeting to hold office until the next annual election or until their successors are elected and shall have qualified. SECTION 4. REMOVAL. At a meeting of stockholders expressly called for such purpose, any or all of the members of the Board of Directors may be removed, with or without cause, by vote of the holders of a majority of the shares then entitled to vote at an election of Directors, and said stockholders may elect, at the meeting called for the purpose of removal, a successor or successors to fill any resulting vacancies for the unexpired terms of the removed Directors. Any officer, agent or member of a committee, elected or appointed by the Board of Directors, may be removed by a majority vote of the entire Board whenever, in its judgment, the best interests of the corporation will be served thereby. ARTICLE VII 7 8 CAPITAL STOCK SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, numbered, and sealed with the seal of the corporation, and signed by the Chairman of the Board of Directors or the Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, shall be issued to each stockholder certifying to the number of shares owned by him in the corporation. When such certificates are countersigned by (1) a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in place of any certificate theretofore issued by the corporation and alleged to have been lost or destroyed, and the Directors may, at their discretion, request the owner of the lost or destroyed certificates, or his legal representative, to give the corporation a bond, in such sum as they may direct, but not exceeding double the value of the stock to indemnify the corporation against any claim that may be made against it on account of the alleged loss of such certificate. SECTION 3. TRANSFER OF SHARES. Pursuant to the provisions of the Uniform Commercial Code. SECTION 4. DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days prior to the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS. Subject to the provisions of the 8 9 Certificate of Incorporation and the laws of the State of Delaware, the Board of Directors, at any regular or special meeting, may declare dividends upon the capital stock of the corporation, as and when they may deem expedient. ARTICLE VIII MISCELLANEOUS PROVISIONS SECTION 1. CORPORATE SEAL. The Board of Directors shall adopt and may alter a common seal of the corporation. Said seal shall be circular in form and shall contain the name of the corporation, the year of its creation, and the words: "CORPORATE SEAL DELAWARE". It may be used by causing it or a facsimile thereof to be impressed, affixed, or otherwise reproduced. SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall end on December 31st. SECTION 3. CHECKS, DRAFTS, NOTES. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. CORPORATE RECORDS. The corporation shall keep correct and complete books of account and minutes of the proceedings of its stockholders and Directors, as well as an original stock ledger or list of stockholders, containing the names and addresses of the stockholders, the number of shares held by them, and the date of issuance of said certificates of stock. Any stockholder of record, in person or my attorney or other agent, upon written demand under oath stating the purpose thereof, shall have the right, during the usual hours for business, to inspect for any proper purpose the books and records of the corporation, as well as its stock ledger and/or list of stockholders, and to make copies or extracts therefrom. Such demand under oath shall be directed to the corporation at its registered office in the State of Delaware of at its principal place of business. SECTION 5. NOTICE AND WAIVER OF NOTICE. Whenever, pursuant to the laws of the State of Delaware or these Bylaws, any notice is required to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such 9 10 mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Any notice required to be given may be waived, in writing, by the person or persons entitled to such notice, whether before or after the time stated therein. ARTICLE IX AMENDMENTS SECTION 1. AMENDMENTS OF BYLAWS. These Bylaws may be altered or repealed, and Bylaws may be made at any annual meeting of stockholders, or at any special meeting thereof it notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat; or by the affirmative vote of a majority of the entire Board of Directors, at any regular meeting of the Board, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. 10 EX-3.13 12 CERTIFICATE OF INCORP. - VISKASE SALES CORP. 1 EXHIBIT 3.13 CERTIFICATE OF INCORPORATION OF VISKASE SALES CORPORATION THE UNDERSIGNED, in order to form a corporation for the purpose hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, does hereby certify as follows: FIRST: The name of the Corporation is VISKASE SALES CORPORATION SECOND: The registered office of the corporation is to be located at 306 South State Street, in the City of Dover, in the County of Kent, in the State of Delaware. The name of its registered agent at that address is the UNITED STATES CORPORATION COMPANY. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of stock which the corporation is authorized to issue is One Thousand (1,000), Common; and the par value of each of such shares is One Dollar ($1.00). FIFTH: The name and address of the Incorporator are as follows: C. Baclet 6430 Sunset Boulevard, Suite 1218 Los Angeles, California 90028 SIXTH: The corporation is to have perpetual existence. SEVENTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and 2 regulation of the powers of the Corporation and of its directors and stockholders. (1) The number of directors of the Corporation shall be such as from time to time shall be fixed by, or in the manner provided in the By-laws. Election of directors need not be by ballot unless the By-laws so provide. (2) The Board of Directors shall have power without the assent or vote of the stockholders to make, alter, amend, change, add to or repeal the By-laws of the Corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the Corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends. (3) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attach because of directors' interest, or for any other reason. (4) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate, and to any By-laws from time to time made by the stockholders; provided, however, that no By-laws so made shall invalidate any prior act of the directors which would have been valid if such By-law had not been made. EIGHTH: The Corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them 3 and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware, may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of this Corporation, as the case may be, and also on this Corporation. TENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. IN WITNESS WHEREOF, I have hereunto set my hand and seal. ------------------------- C. Bacelet, Incorporator 4 PLAN AND AGREEMENT OF MERGER OF FILMCO INDUSTRIES, INC. (a Utah corporation) with and into VISKASE SALES CORPORATION (a Delaware corporation) Pursuant to Section 252 of the General Corporation Law of the State of Delaware This Plan and Agreement of Agreement of Merger entered into as of December 27, 1990 by and between VISKASE SALES CORPORATION, a Delaware corporation ("VSC") and FILMCO INDUSTRIES, INC., a Utah corporation ("Filmco"). Filmco desires to merge with and into VSC in accordance with the corporate laws of the States of Delaware and Utah and in accordance with an Agreement and Plan of Reorganization among Viskase Corporation, a Pennsylvania corporation ("Viskase"), VSC and Filmco of even date herewith (the "Plan of Reorganization") and this Plan and Agreement of Merger (the "Merger Agreement"). The transaction described in this Merger Agreement is referred to as the "Merger". VSC is a business corporation organized under the laws of the State of Delaware with its registered office therein located at 32 Loockerman Square, Suite L-100, city of Dover, county of Kent. VSC has the authority to issue its One Thousand (1,000) shares of common stock having par value of $1.00 per share, One Thousand (1,000) shares of which are issued and outstanding, all of which shares are owned beneficially and of record by Viskase. Filmco is a business corporation organized under the laws of the State of Utah with its registered office therein located at 600 Deseret Plaza, 15 East First South, city of Salt Lake City, county of Salt Lake. Filmco has authority to issue Three Hundred Thousand (300,000) shares of common Stock having a par value of $1.00 per share, One Thousand (1,000) shares of which are issued and outstanding (individually, a "Filmco Share" or collectively the "Filmco Shares"). The Business Corporation Act of the State of Utah, as amended ("Utah Act") permits a merger of a business corporation of the State of Utah with and into a business corporation of another jurisdiction. The General Corporation Law of the State of Delaware, as amended ("Delaware Corporate Law") permits a merger of a business corporation of another jurisdiction with and into a business corporation of the State of Delaware. 5 The respective Boards of Directors of Viskase, VSC and Filmco deem the Merger advisable and in the best interests of each corporation and their respective shareholders. The respective Boards of Directors of VSC and Filmco have, by unanimous consent, duly adopted, approved and executed and delivered the Plan Reorganization and the Merger Agreement. The respective Boards of Directors of VSC and Filmco have directed that this Merger Agreement be submitted to VSC's and Filmco's shareholders for adoption and approval, and recommend to their shareholders that this Merger Agreement be adopted and approved pursuant to the provisions of Delaware Corporate Law and the Utah Act and upon the terms and provisions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, agreements and provisions hereinafter contained, the parties hereto do hereby prescribe the terms and conditions of said Merger and the mode of carrying the same into effect as follows: 1. Filmco and VSC shall, pursuant to the provisions of the Utah Act and the provisions of Delaware Corporate law, be merged with and into a single corporation, to wit, VSC, which shall be the surviving corporation from and after the Effective Time (as hereinafter defined) and which is sometimes hereinafter referred to as the "surviving corporation", and which shall continue to exist as the surviving corporation under its present name of "Viskase Sales Corporation" pursuant to the provisions of Delaware Corporate Law. The separate existence of Filmco, which is sometimes hereinafter referred to as the "terminating corporation" shall cease at the Effective Time in accordance with the provisions of the Utah Act. The surviving corporation shall be governed by and shall have all the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities of a corporation organized under the Delaware Corporate Law. 2. At the Effective Time, the present Certificate of Incorporation of VSC shall be the Certificate of Incorporation of the surviving corporation and will continue in full force and effect until changed, altered or amended as therein provided and in the manner prescribed by the provisions of Delaware Corporate Law. 3. At the Effective Time, the present by-laws of VSC shall be the by-laws of the surviving corporation and will continue in full force and effect until changed, altered or amended as therein provided and in the manner prescribed by the provisions of Delaware Corporate Law. 4. The directors and officers in office of VSC at the Effective Time shall be the members of the first Board of Directors and the first officers of the surviving corporation, all of whom shall hold their directorships and offices until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the by-laws of the surviving corporation. 6 5. At the Effective Time of the Merger: (A) Each twenty-five (25) Filmco Shares which are outstanding immediately prior to the Effective Time of the Merger shall be converted into the right to receive two (2) shares of common stock of Viskase, par value $1.00 per share. (B) Each share of VSC common stock issued and outstanding prior to the Effective Time shall not be converted or exchanged, and each such share, by virtue of the Merger, shall continue to be the issued and outstanding common stock of the surviving corporation. (C) After the Effective Time each holder of an outstanding certificate or certificates representing Filmco Shares shall surrender the same to the surviving corporation. 6. At the Effective Time all the property, rights, privileges, franchises, patents, trademarks, licenses, registrations and other assets of every kind and description of Filmco and VSC shall be transferred to, vested in and devolve upon the surviving corporation and shall be effectively the property of the surviving corporation as they were of Filmco and VSC and being subject to all of the restrictions, disabilities and duties of each of such corporations so merged; but all rights of creditors and all liens upon the property of either of Filmco and VSC shall be preserved and unimpaired, and all debts, liabilities and duties of Filmco and VSC shall thenceforth attach to the surviving corporation and may be enforced against it to the same extent as if the debts, liabilities and duties had been incurred or contracted by the surviving corporation. 7. If, at any time after the Effective Time of the Merger, the surviving corporation shall determine that any further assignments or assurances or any other acts are necessary or desirable to vest, perfect or confirm, of record or otherwise, in the surviving corporation its rights, title or interest in, to, or under any of the rights, properties or assets of Filmco or VSC acquired or to be acquired by the surviving corporation as a result of, or in connection with, the Merger, or to otherwise carry out the purposes of this Merger Agreement, then VSC and Filmco and their respective officers and directors shall be deemed to have granted to the surviving corporation an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect, or confirm title to and possession of such rights, properties, or assets in the surviving corporation and to otherwise carry out the purposes of this Merger Agreement. The proper officers and directors of the surviving corporation are fully authorized in the name of VSC and Filmco or otherwise to take any and all such action as may be contemplated in this paragraph. 7 8. The surviving corporation hereby (i) agrees that it may be served with process in the state of Utah in any proceeding for the enforcement of any obligation of Filmco and in any proceeding for the enforcement of the rights of a dissenting shareholder of Filmco against the surviving corporation; (ii) irrevocably appoints the director of the Division of Corporations and Commercial Code of Utah as its agent to accept service of process in any such proceeding; and (iii) agrees that it will promptly pay to dissenting shareholders of Filmco the amount, if any, to which they shall be entitled under the provisions of the Utah Act with respect to the rights of dissenting shareholders. 9. The mode of carrying the Merger into effect is as follows: (A) This Merger Agreement having been approved by at least a majority vote of the members of the Board of Directors of both Filmco and VSC, shall be executed and acknowledged by their respective presidents or vice-presidents and attested to by their respective secretaries and assistant secretaries. (B) This Merger Agreement; having been duly executed and acknowledged, shall be submitted to the shareholder of each corporation who shall approve this Merger Agreement the fact of which approval shall be set forth in a certificate attached to this Merger Agreement by the secretary or assistant secretary of each corporation. (C) This Merger Agreement having been duly adopted and certified, Articles of Merger shall be filed with and on forms prescribed by the Utah Secretary of State in accordance with the Utah Act and this Merger Agreement shall be filed with the Delaware Secretary of State in accordance with Delaware Corporate Law and upon certification of the same by the Delaware Secretary of State, such certificate shall be filed for record in the office of the recorder of deeds or the like of the county in which the registered office VSC is located. 10. The Board of Directors and the proper officers of the terminating corporation and of the surviving corporation are hereby authorized, empowered and directed to do any and all acts and things, and to make, execute, deliver, file and record any and all instruments, papers and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this Merger Agreement or of the Merger. 11. As used in this Merger Agreement "Effective Time" and the time of the Merger provided for herein shall become effective in the States of Utah and Delaware shall be January 2, 1991. 12. Anything herein or elsewhere to the contrary notwithstanding this Merger Agreement and the Merger contemplated herein may be terminated or abandoned by the board of directors of either corporation for any reason at any time prior to the filing 8 thereof with the Delaware Secretary of State or at any time prior to the filing of the Articles of Merger with the Utah Secretary of State. IN WITNESS WHEREOF, this Plan and Agreement of Merger is hereby executed on behalf of the parties hereto as of the date first written above. FILMCO INDUSTRIES, INC., a Utah corporation By: -------------------------- Stephen M. Schuster, Vice President ATTEST: - ------------------------ Gordon S. Donovan, Assistant Secretary VISKASE SALES CORPORATION, a Delaware corporation By: -------------------------- Stephen M. Schuster, Vice President ATTEST: - ------------------------- Gordon S. Donovan, Assistant Secretary 9 CERTIFICATION OF PLAN AND AGREEMENT OF MERGER VISKASE SALES CORPORATION I, Gordon S. Donovan, being the duly elected and qualified Assistant Secretary of Viskase Sales Corporation, a Delaware corporation ("VSC"), do hereby certify that the holder of all of the outstanding shares of VSC dispensed with a meeting and vote of the shareholder, and the sole shareholder entitled to vote consented in writing, pursuant to the provisions of Section 228 of the General Corporation Law of the State of Delaware, to the adoption and approval of the foregoing Plan and Agreement of Merger. IN WITNESS WHEREOF, I have executed this instrument as of December 27, 1990. VISKASE SALES CORPORATION -------------------------- Gordon S. Donovan Assistant Secretary 10 CERTIFICATION OF PLAN AND AGREEMENT OF MERGER FILMCO INDUSTRIES, INC. I, Gordon S. Donovan, being the duly elected and qualified Assistant Secretary of Filmco Industries, Inc., a Utah corporation ("Filmco"), do hereby certify that the holder of all of the outstanding shares of Filmco dispensed with a meeting and vote of the shareholder, and the sole shareholder entitled to vote consented in writing, pursuant to the provisions of Section 16-10-138 of the Utah Business Corporation Act, to the adoption and approval of the foregoing Plan and Agreement of Merger. IN WITNESS WHEREOF, I have executed this instrument as of December 27, 1990. VISKASE SALES CORPORATION -------------------------- Gordon S. Donovan Assistant Secretary EX-3.14 13 BY LAWS - VISKASE SALES CORP. 1 EXHIBIT 3.14 VISKASE SALES CORPORATION BYLAWS ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the UNITED STATES CORPORATION COMPANY, located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent, State of Delaware, and said UNITED STATES CORPORATION COMPANY shall be the registered agent of the corporation thereof. SECTION 2. OTHER OFFICES. The corporation may establish other offices, either within or without the State of Delaware, at such place or places as the Board of Directors, from time to time, may designate or the business of the corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders shall be held on the first Monday of June each year, commencing with 1986, at such time as shall be stated in the notice, or said meetings may be held at such time and place, either within or without the State of Delaware, as the Board of Directors by resolution shall determine, and as set forth in the notice of the meeting. If the date of the annual meeting shall fall on a legal holiday of the state in which the meeting is to be held, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, may be called by the President or the Secretary, or by resolution of the Board of Directors, and may be held at such time and place as shall be stated in the notice of the meeting. SECTION 3. NOTICE OF MEETINGS. Written notice, stating 1 2 the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat, at his address as it appears on the records of the corporation, not less than ten (10) nor more than fifty (50) days prior to the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all of the stockholders entitled to vote thereat. SECTION 4. VOTING. Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation, the provisions of these Bylaws, and the laws of the State of Delaware, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three (3) years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for Directors and the vote upon any question before the meeting shall be by written ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at a meeting, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholders, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the registered office of the corporation in the State of Delaware. The list shall also be produced and kept available at the time and place of the meeting, during the entire time thereof, and may be inspected by any stockholder or his proxy who may be present. SECTION 5. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation issued and outstanding and entitled to vote shall constitute a quorum at all meetings of stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present either in person or by proxy, shall have power to adjourn the meeting, from time to time, without notice other than an announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. 2 3 SECTION 6. ACTION WITHOUT MEETING. Any action to be taken by the stockholders may be taken without a meeting if, prior to such action, all stockholders entitled to vote thereon shall consent to the action by a writing filed with the records of the meetings of stockholders, and such consent shall be treated for all purposes as a vote at a meeting. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM. The number of Directors, to be determined by the Board of Directors, shall be not less than three (3) nor more than five (5), until changed by amendment of these Bylaws. The number of initial Directors shall be three (3). The Directors shall be elected at the annual meeting of stockholders, and each Director shall be elected to serve until his successor shall be elected and shall have qualified. The Directors need not be stockholders. SECTION 2. QUORUM. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 3. FIRST MEETING. The newly elected Directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or writing of all the directors. SECTION 4. ELECTION OF OFFICERS. At the first meeting, or at any subsequent meeting called for that purpose, the Directors shall elect the officers of the corporation, as more specifically set forth in ARTICLE V of these Bylaws. Such officers shall hold office until the next annual election of officers, or until their successors are elected and shall have qualified. SECTION 5. REGULAR MEETINGS. Regular meetings of the Directors may be held, without notice, at such places and times as from time to time shall be determined by resolution of the Board of Directors. SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the President, or by the 3 4 Secretary on the written request of any two Directors on at least two (2) days' notice to each Director. SECTION 7. PLACE OF MEETINGS. The Directors may hold their meetings, and have one or more offices outside the State of Delaware, at such places as from time to time may be determined by resolution of the Board. SECTION 8. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or any committees thereof, may be taken without a meeting if, prior to such action, a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. SECTION 9. POWERS. The Board of Directors shall exercise all of the powers of the corporation, except such as are by law, by the Certificate of Incorporation, or by these Bylaws conferred upon or reserved to the stockholders. SECTION 10. COMPENSATION. Directors shall not receive any stated salary for their service as Directors or as members of committees, but, by resolution of the Board, a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV COMMITTEES SECTION 1. The Board of Directors may, by resolution or resolutions passed by a majority of the entire Board, designate an executive committee and one or more other committees, each committee to consist of two or more Directors of the corporation, which, to the extent provided in said resolution or resolutions, or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business of the corporation between meetings of the Board. SECTION 2. Committee shall keep regular minutes of their proceedings, and report the same to the Board of Directors when required. ARTICLE V 4 5 OFFICERS SECTION 1. OFFICERS. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting of stockholders. The directors shall elect a President, a Secretary and a Treasurer; they may also elect a Chairman of the Board, a Vice-Chairman of the Board, one or more Vice-Presidents, and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation, with the exception of the Chairman of the Board and the Vice-Chairman of the Board, need be a Director. Any one person may hold two or more offices, except those of President and Secretary. However, any person holding two or more offices shall not sign any instrument in the capacity of more than one office. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold office for such terms and shall exercise such powers and perform such duties as from time to time shall be determined by the Board of Directors. SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if one is elected, shall preside at all meetings of the Board of Directors, and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 2.5. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board, if one is elected, shall have such powers and shall perform such duties as from time to time may be assigned to him by the Board of Directors, and, in the absence of the Chairman, or in the event of his inability to act, the Vice-Chairman shall perform the functions of the Chairman of the Board. SECTION 3. PRESIDENT. The President shall be the chief executive officer of the corporation, and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders, if present thereat, and, in the absence or non-election of the Chairman of the Board, at all meetings of the Board of Directors. He shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and he shall cause the corporate seal to be affixed to any instrument requiring it, and when so affixed the seal shall be attested by the Secretary or the Treasurer, or an Assistant Secretary or an Assistant Treasurer. SECTION 4. VICE-PRESIDENTS. Each Vice-President shall have such powers and shall perform such duties as shall be assigned 5 6 to him by the Directors, and, in the absence of the President, or in the event of his inability to act, the Vice-Presidents, in the order of their seniority, shall perform the functions of the President. SECTION 5. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these Bylaws, and, in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, the Board of Directors, or the stockholders, upon whose requisition the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have custody of the corporate seal, and shall affix the same to all instruments requiring it, when authorized by the President or the Board of Directors, and shall attest the same. SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements. He shall render to the President and the Board of Directors, at the regular meetings of the Board, or whenever they may request it, an accounting of all his transactions as Treasurer, and of the financial condition of the corporation. If required by the Board of Directors, the Treasurer shall give the corporation a bond for the faithful discharge of his duties, in such amount and with such surety as the Board shall prescribe. SECTION 7. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries and Assistant Treasurers, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Board of Directors. ARTICLE VI 6 7 RESIGNATIONS; FILLING OF VACANCIES; INCREASE IN NUMBER OF DIRECTORS; REMOVAL FROM OFFICE SECTION 1. RESIGNATIONS. Any Director, member of a committee, or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 2. FILLING OF VACANCIES. If the office of any officer, Director or member of a committee becomes vacant, the remaining Directors in office, although less than a quorum may appoint, by a majority vote, any qualified person to fill such vacancy, who shall hold office for the unexpired term of his predecessor, or until his successor shall be duly chosen and shall have qualified. Any vacancy occurring by reason of an increase in the number of Directors may be filled by action of a majority of the entire Board, for the term of office continuing only until the next election of Directors by the stockholders, or it may be filled by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of Directors. SECTION 3. INCREASE IN NUMBER OF DIRECTORS. The number of Directors may be increased at any time by the affirmative vote of a majority of the entire Board, or by the affirmative vote of a majority in interest of the stockholders, at a special meeting called for that purpose, and, by like vote, pursuant to SECTION 2 above, the additional Directors may be chosen at such meeting to hold office until the next annual election or until their successors are elected and shall have qualified. SECTION 4. REMOVAL. At a meeting of stockholders expressly called for such purpose, any or all of the members of the Board of Directors may be removed, with or without cause, by vote of the holders of a majority of the shares then entitled to vote at an election of Directors, and said stockholders may elect, at the meeting called for the purpose of removal, a successor or successors to fill any resulting vacancies for the unexpired terms of the removed Directors. Any officer, agent or member of a committee, elected or appointed by the Board of Directors, may be removed by a majority vote of the entire Board whenever, in its judgment, the best interests of the corporation will be served thereby. ARTICLE VII 7 8 CAPITAL STOCK SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, numbered, and sealed with the seal of the corporation, and signed by the Chairman of the Board of Directors or the Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, shall be issued to each stockholder certifying to the number of shares owned by him in the corporation. When such certificates are countersigned by (1) a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in place of any certificate theretofore issued by the corporation and alleged to have been lost or destroyed, and the Directors may, at their discretion, request the owner of the lost or destroyed certificates, or his legal representative, to give the corporation a bond, in such sum as they may direct, but not exceeding double the value of the stock to indemnify the corporation against any claim that may be made against it on account of the alleged loss of such certificate. SECTION 3. TRANSFER OF SHARES. Pursuant to the provisions of the Uniform Commercial Code. SECTION 4. DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days prior to the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS. Subject to the provisions of the 8 9 Certificate of Incorporation and the laws of the State of Delaware, the Board of Directors, at any regular or special meeting, may declare dividends upon the capital stock of the corporation, as and when they may deem expedient. ARTICLE VIII MISCELLANEOUS PROVISIONS SECTION 1. CORPORATE SEAL. The Board of Directors shall adopt and may alter a common seal of the corporation. Said seal shall be circular in form and shall contain the name of the corporation, the year of its creation, and the words: "CORPORATE SEAL DELAWARE". It may be used by causing it or a facsimile thereof to be impressed, affixed, or otherwise reproduced. SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall end on December 31st. SECTION 3. CHECKS, DRAFTS, NOTES. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. CORPORATE RECORDS. The corporation shall keep correct and complete books of account and minutes of the proceedings of its stockholders and Directors, as well as an original stock ledger or list of stockholders, containing the names and addresses of the stockholders, the number of shares held by them, and the date of issuance of said certificates of stock. Any stockholder of record, in person or my attorney or other agent, upon written demand under oath stating the purpose thereof, shall have the right, during the usual hours for business, to inspect for any proper purpose the books and records of the corporation, as well as its stock ledger and/or list of stockholders, and to make copies or extracts therefrom. Such demand under oath shall be directed to the corporation at its registered office in the State of Delaware of at its principal place of business. SECTION 5. NOTICE AND WAIVER OF NOTICE. Whenever, pursuant to the laws of the State of Delaware or these Bylaws, any notice is required to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such 9 10 mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Any notice required to be given may be waived, in writing, by the person or persons entitled to such notice, whether before or after the time stated therein. ARTICLE IX AMENDMENTS SECTION 1. AMENDMENTS OF BYLAWS. These Bylaws may be altered or repealed, and Bylaws may be made at any annual meeting of stockholders, or at any special meeting thereof it notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat; or by the affirmative vote of a majority of the entire Board of Directors, at any regular meeting of the Board, or at any special meeting thereof if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. 10 EX-4.3 14 INDENTURE DATED JUNE 20, 1995 - ENVIRODYNE/SHAWMUT 1 EXHIBIT 4.3 ENVIRODYNE INDUSTRIES, INC. And Shawmut Bank Connecticut, National Association, As Trustee INDENTURE Dated as of June 20, 1995 $160,000,000 First Priority Senior Secured Notes Due 2000 2 CROSS-REFERENCE TABLE*/
Trust Indenture Reference Act Section Section - ------------------------------------------------------------- 310(a)(1)........................................ 6.10 (a)(2)........................................ 6.10 (a)(3)........................................ N.A. (a)(4)........................................ N.A. (a)(5)........................................ 6.10 (b)........................................... 6.08, 6.10, 12.02 (c)........................................... N.A. 311(a)........................................... 6.11 (b)........................................... 6.11 (c)........................................... N.A. 312(a)........................................... 2.05 (b)........................................... 12.03 (c)........................................... 12.03 313(a)........................................... 6.06 (b)(1)........................................ N.A. (b)(2)........................................ 6.06 (c)........................................... 6.05, 6.06, 12.02 (d)........................................... 6.06 314(a)........................................... 3.02 (b)........................................... N.A. ---- (c)(1)........................................ 12.04 (c)(2)........................................ 12.04 (c)(3)........................................ 12.04 (d)........................................... 11.03 (e)........................................... 12.05 (f)........................................... N.A. 315(a)........................................... 6.01 (b)........................................... 6.05 (c)........................................... 6.01(a) (d)........................................... 5.06, 6.01(c) (e)........................................... 5.12, 6.08 316(a)(last sentence)............................ 2.09 (a)(1)(A)..................................... 5.06 (a)(1)(B)..................................... 5.05 (a)(2)........................................ N.A. (b)........................................... 5.08 (c)........................................... 8.07 317(a)(1)........................................ 5.09 (a)(2)........................................ 5.10 (b)........................................... 2.04 318(a)........................................... 12.01 318(c)........................................... 12.01
N.A. means not applicable _________________ */ This Cross-Reference Table shall not for any purposes be deemed a part of this Indenture. 3 TABLE OF CONTENTS*/
Page ---- ARTICLE 1 - DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. Accounting Principles, Terms and Determinations . . . . . . . . . . . . . . . . . . . . 27 SECTION 1.03. Yield-Maintenance Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 1.04. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . 29 SECTION 1.05. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE 2 - THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 2.02. Execution and Authentication; Aggregate Principal Amount . . . . . . . . . . . . . . . 30 SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 2.07. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 2.12. Overdue Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 2.14. Book-Entry Provisions for Global Securities . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 2.15. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 2.16. Certificates setting forth LIBOR Rate and Yield-Maintenance Amount. . . . . . . . . . . 40 ARTICLE 3 - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 3.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 3.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 3.03. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 3.04. Conduct of Business; Maintenance of Existence; Compliance with Laws . . . . . . . . . . 43 SECTION 3.05. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 3.06. Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 3.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 3.08. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 3.09. Offers to Purchase Following Change of Control and Excess Cash Flow . . . . . . . . . . 45 SECTION 3.11 GECC Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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Page ---- ARTICLE 4 - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 4.01. Certain Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 4.02. Limitation on Restricted Payments and Restricted Investments . . . . . . . . . . . . 51 SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 4.04. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 4.05. Limitation on Company Mergers, Consolidations, and Sales . . . . . . . . . . . . . . 55 SECTION 4.06. Limitation on Certain Asset Sales and Subsidiary Mergers . . . . . . . . . . . . . . 56 SECTION 4.07. Limitation on Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . 59 SECTION 4.08. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 4.09. Limitations on the Sale of Stock and Debt of Subsidiaries . . . . . . . . . . . . . . 60 SECTION 4.10. Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 4.11. Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 4.12. Pension Plan Funding Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 4.13. Limitation on Issuance and Sale of Capital Stock of Subsidiaries . . . . . . . . . . 61 SECTION 4.14. Limitation on Fiscal Year Change . . . . . . . . . . . . . . . . . . . . . . . . . . 62 ARTICLE 5 - DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 5.01. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 5.02. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 5.03. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 5.04. Notice of Acceleration or Rescission . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 5.05. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 5.06. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 5.07 Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 5.08. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 5.09. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 5.10. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 5.11. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 5.12. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 ARTICLE 6 - TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 6.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 6.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 6.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 SECTION 6.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 6.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
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Page ---- SECTION 6.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 SECTION 6.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 77 ARTICLE 7 - DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 7.01. Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 7.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 7.03. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 7.04. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 ARTICLE 8 - AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 SECTION 8.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 SECTION 8.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 SECTION 8.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 8.04. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 8.05. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 8.06. Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 8.07. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 ARTICLE 9 - REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 SECTION 9.01. Mandatory and Optional Redemptions; Notice to Trustee . . . . . . . . . . . . . . . . . . . 81 SECTION 9.02. Pro Rata Allocation of the Securities to be Redeemed . . . . . . . . . . . . . . . . . . . 82 SECTION 9.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 9.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 SECTION 9.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 SECTION 9.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 SECTION 9.07. Partial Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 ARTICLE 10 - MEETINGS OF HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 SECTION 10.01. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . . . . . . 84 SECTION 10.02. Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 SECTION 10.03. Call of Meetings by Company or Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 85 SECTION 10.04. Who May Attend and Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION 10.05. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION 10.06. Voting at the Meeting and Record to Be Kept . . . . . . . . . . . . . . . . . . . . . . . . 87 SECTION 10.07. Exercise of Rights of Trustee or Holders May Not Be Hindered or Delayed by Call of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
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Page ---- ARTICLE 11 - CERTAIN COLLATERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 SECTION 11.01. Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 SECTION 11.02. Recording and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 11.03. Certificates of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 11.04. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents . . . . . . 90 ARTICLE 12 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 12.03. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . 91 SECTION 12.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . 92 SECTION 12.05. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . 92 SECTION 12.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.08. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.09. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.10. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.12. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION 12.13. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SECTION 12.14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SECTION 12.15. Table of Contents, Headings, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SECTION 12.16. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SECTION 12.17. Notice of Note Agreement Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 94 SIGNATURES Exhibit A-1 - Form of Series A Security Exhibit A-2 - Form of Series B Security Exhibit A-3 - Form of Series C Security Exhibit A-4 - Form of Series D Security Exhibit B - Form of Legend for Global Securities Exhibit C - Transferee Certificate for Non-QIB Accredited Investors Exhibit D - Transferee Certificate for Transfers Pursuant to Regulation S Exhibit E - Subordination Terms Schedule 4.02 - Schedule of Investments Schedule 4.03 - Schedule of Subsidiary Debt Schedule 4.04 - Schedule of Liens Schedule 4.07 - Schedule of Certain Restrictions
-iv- 7 INDENTURE dated as of June 20, 1995 between ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (the "Company"), and SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION (the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation and issuance of its First Priority Senior Secured Notes Due 2000 (the "Securities") of substantially the tenor and amount set forth in Exhibits A-1, A-2, A-3 and A-4 attached hereto and made a part hereof, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid and binding obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, all in accordance with their respective terms, have been done. NOW, THEREFORE, each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Certain Definitions. As used herein, the following terms shall have the following meanings: "Accountants' Certificate" means a written opinion or verification that complies with Section 12.05 of this Indenture from a nationally recognized firm of independent public accountants acceptable to the Trustee. "Acquired Debt" means Debt of a Person existing on or prior to the time at which such Person became a Subsidiary and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary. "Affiliate" of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Securities of such specified Person, or (iii) of which 10% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. "Agent" means any Registrar, Paying Agent or Co-Registrar. 8 "Agent Members" shall have the meaning given to such term in Section 2.14(a). "Average Life" means, as of any date, with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (x) the numbers of years from such date to the dates of each successive scheduled principal payment (including any sinking fund or mandatory redemption payment requirements) of such debt security multiplied by (y) the amount of such principal payment by (ii) the sum of all such principal payments. "Broad Affiliate" of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 25% or more of any class of the Voting Securities of such specified Person, or (iii) of which 25% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. "BTCC" means BT Commercial Corporation, a Delaware corporation, and its successors and permitted assigns. "Bankruptcy Law" has the meaning given to such term in Section 5.01(h). "Board of Directors" of any corporation means the board of directors of such corporation or any duly authorized committee of the board of directors of such corporation. "Business Day" means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City or Hartford, Connecticut are required or authorized to be closed. "Capital Lease Obligation" means, at any time, the amount of the liability with respect to a lease that would be required at such time to be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "Capital Stock" in any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. "Cash Equivalents" means: (i) debt instruments, with maturities of one year or less from the date of acquisition, issued by the government of the United States of America or any agency thereof (if fully guaranteed or insured by the government of the United States of America), (ii) certificates of deposit, with maturities of one year or less from the date of acquisition, of any commercial bank incorporated under the laws of the United States of -2- 9 America having a combined capital, surplus and undivided profits of not less than $100,000,000, (iii) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., and (iv) tax exempt floating rate tender bonds, as to which payments of principal, interest and other charges may be made at the option of the holder upon not more than one week's notice which are payable upon tender or any default from the proceeds of an unconditional and irrevocable letter of credit issued by a United States office of any commercial bank all of whose long-term debt securities are rated at least AA by Standard & Poor's Corporation or Aa by Moody's Investors Service, Inc. "Change of Control" means the occurrence of any of the following events (whether or not approved by the Board of Directors of the Company or otherwise permitted by the terms of this Indenture): (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), or any Affiliate of any such person, is or becomes a "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall also be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Common Stock of the Company or such other amount of Voting Securities to provide the ability to elect, directly or indirectly, a majority of the members of the Board of Directors of the Company; (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new or replacement directors whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; (iii) any direct or indirect Transfer (in one transaction or a series of related transactions) of all or substantially all of the consolidated assets of the Company and its Subsidiaries to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or any Affiliate of any such person; or (iv) the approval by the Company or its shareholders of any plan of liquidation; or (v) any event constituting a "Change of Control" in respect of 10.25% Notes, the Revolving Credit Agreement, the Second Priority Notes or the Subsequent Second Priority Notes. "Clause (i) Amount" shall have the meaning given to such term in Section 4.01(a)(i). "Clause (i) Test Period" shall have the meaning given to such term in Section 4.01(a)(i). -3- 10 "Clause (ii) Amount" shall have the meaning given to such term in Section 4.01(a)(ii). "Clause (ii) Test Period" shall have the meaning given to such term in Section 4.01(a)(ii). "Clause (iii) Amount" shall have the meaning given to such term in Section 4.01(a)(iii). "Clause (iii) Test Period" shall have the meaning given to such term in Section 4.01(a)(iii). "Clause (iv) Amount" shall have the meaning given to such term in Section 4.01(a)(iv). "Clause (iv) Test Period" shall have the meaning given to such term in Section 4.01(a)(iv). "Clause (v) Test Period" shall have the meaning given to such term in Section 4.01(a)(v). "Collateral" means all the real, personal and mixed property made, or intended or purported to be made, subject to a Lien pursuant to the Collateral Documents. "Collateral Agent" means BTCC, in its capacity as collateral agent under the Intercreditor Agreement and the other Collateral Documents, and any successor thereto. "Collateral Documents" means, collectively, the Guaranty Agreement, Pledge Agreement, Intercreditor Agreement, Intellectual Property Pledge Agreement, Mortgage, Security Agreement, and all other instruments or documents now or hereafter granting (or purporting to grant) Liens on property of the Company or any of its Subsidiaries to the Collateral Agent, for the benefit of the "Secured Parties" (as defined in the Intercreditor Agreement). "Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalent (however designated) of Capital Stock in such Person which is not preferred as to the payment of dividends or the distribution of assets on any voluntary or involuntary liquidation over shares of any other class of Capital Stock in such Person. "Company" means Envirodyne Industries, Inc. unless and until a successor of Envirodyne Industries, Inc. replaces it pursuant to this Indenture, and thereafter means such successor. "Consolidated Cash Flow" means, for any period, Consolidated Net Income for such period, (A) increased by the sum of (i) Consolidated Fixed Charges for such period, other than interest capitalized by the Company and its Subsidiaries during such period, (ii) -4- 11 income tax expense of the Company and its Subsidiaries, on a consolidated basis, for such period (other than income tax expense attributable to sales or other dispositions of assets (other than sales of inventory in the ordinary course of business)), (iii) depreciation expense of the Company and its Subsidiaries, on a consolidated basis, for such period, (iv) amortization expense of the Company and its Subsidiaries, on a consolidated basis, for such period, and (v) other non-cash items reducing Consolidated Net Income minus non-cash items increasing Consolidated Net Income for such period, and (B) decreased by any revenues received or accrued by the Company or any of its Subsidiaries from any other Person (other than the Company or any of its Subsidiaries) in respect of any Investment for such period, all as determined in accordance with GAAP. "Consolidated Debt" means the aggregate amount of Debt of the Company and its Subsidiaries, on a consolidated basis, determined in accordance with GAAP. "Consolidated Fixed Charges" means, for any period, (A) the sum of, without duplication, (i) the aggregate amount of interest expense of the Company and its Subsidiaries during such period (including, without limitation, all commissions, discounts and other fees and charges owed by the Company and its Subsidiaries with respect to letters of credit and bankers' acceptances or similar financing facilities and the net costs associated with Interest Rate Agreements and Currency Agreements of the Company and its Subsidiaries) paid, accrued or scheduled to be paid or accrued during such period, including interest expense not required to be paid in cash (including any amortization of original issue debt discount), all determined in accordance with GAAP, plus all interest capitalized by the Company and its Subsidiaries during such period, (ii) the aggregate amount of the interest expense component of rentals in respect of Capital Lease Obligations paid or accrued by the Company and its Subsidiaries during such period, determined in accordance with GAAP, (iii) the aggregate amount of all operating lease expense of the Company and its Subsidiaries during such period, determined in accordance with GAAP, and (iv) to the extent any interest payment obligation of any other Person is guaranteed by the Company or any of its Subsidiaries (other than guarantees relating to obligations of customers of the Company or any of its Subsidiaries that are made in the ordinary course of business consistent with past practices of the Company or its Subsidiaries), the aggregate amount of interest paid or accrued by such Person in accordance with GAAP during such period attributable to any such interest payment obligation, less (B) to the extent included in (A) above, amortization or write-off of deferred financing costs by the Company and its Subsidiaries during such period; in each case after elimination of intercompany accounts among the Company and its Subsidiaries and as determined in accordance with GAAP. -5- 12 "Consolidated Intangible Assets" means, as at any date, (i) the amount of all write-ups in the book value of any asset resulting from the revaluation thereof and all write-ups in excess of the cost of assets acquired, plus (ii) the amount of all unamortized original issue discount, unamortized debt expense, goodwill, patents, trademarks, service marks, trade names, copyrights, organization and development expense and other intangible assets, in each case as would be taken into account in preparing a consolidated balance sheet of the Company and its subsidiaries on a consolidated basis as at such date in accordance with GAAP. "Consolidated Net Income" means, for any period, the aggregate net income (or net loss, as the case may be) of the Company and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom, without duplication, (i) gains and losses from the sale or other disposition of assets (other than sales of inventory in the ordinary course) or reserves relating thereto, (ii) items classified as extraordinary or nonrecurring (including, without limitation, any gains from any exchange of debt securities) and gains (but not losses) from discontinued operations, (iii) the income (or loss) of any Joint Venture, except to the extent of the amount of cash dividends or other distributions in respect of Capital Stock therein actually paid during such period to the Company or any of its Subsidiaries by such Joint Venture out of funds legally available therefor (or, in the case of a loss, to the extent such loss is funded by the Company or any such Subsidiary during such period), (iv) except to the extent includable pursuant to clause (iii), the income (or loss) of any other Person accrued or attributable to any period prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or such other Person's Property (or a portion thereof) is acquired by such Person or any of its Restricted Subsidiaries, and (v) non-cash items decreasing or increasing Consolidated Net Income arising out of currency translation effects. "Consolidated Net Worth" means Net Worth without giving effect to any purchase accounting adjustments if Consolidated Net Worth is being determined in connection with any merger, consolidation or other acquisition of, or by, the Company or any of its Subsidiaries. "Consolidated Secured Debt" means, collectively, the outstanding principal balance of the Debt described in Sections 4.03(a)(i) and (a)(iv) and the outstanding amount of unpaid reimbursement obligations for drawn letters of credit with respect to the Debt described in Section 4.03(a)(v). "Consolidated Senior Debt" means, at any time, all Consolidated Debt at such time, other than the then outstanding principal -6- 13 amount of: (i) the 10.25% Notes, (ii) the Second Priority Notes, (iii) the Subsequent Second Priority Notes, (iv) Debt of any Subsidiary of the Company payable to the Company or any Wholly Owned Subsidiary of the Company, and (v) Debt of the Company that is not secured by a Lien or that is junior in right of payment, and subordinate to, the Securities pursuant to subordination terms in the form of Exhibit E hereto, which Debt matures after the Stated Maturity of the Securities, and has no principal payments scheduled until, a date which is at least six (6) months after the maturity date of the Securities. "Consolidated Tangible Net Worth" means, at any time, Consolidated Net Worth at such time, less Consolidated Intangible Assets at such time. "Consolidated Total Capitalization" means, at any time, the sum of: (i) Consolidated Net Worth at such time, plus (ii) Consolidated Debt. "Control" means (except as otherwise specifically provided herein) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing. "Control Group" means a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Company is a member, any group of corporations or entities under common control with the Company within the meaning of Section 414(c) of the Internal Revenue Code of which the Company is a member or any affiliated service group within the meaning of Section 414(m) of the Internal Revenue Code of which the Company is a member. "Corporate Trust Office" means the Corporate Trust Office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which on the date hereof is the address of the Trustee specified in Section 12.02. "Credit Documents" means, collectively, this Indenture, the Securities, the Note Agreement, the Collateral Documents and all other agreements, instruments and documents (including, without limitation, security agreements, loan agreements, notes, guarantees, mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust, subordination agreements, pledges, powers of attorney, consents, assignments, intercreditor agreements, mortgagee waivers, reimbursement agreements, contracts, notices, leases, financing statements and all other written items) relating in any way to the aforementioned agreements and instruments. -7- 14 "Currency Agreement" of any Person means any foreign exchange contract, currency swap agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values (as opposed to being used in any way for speculative trading purposes). "Current Debt" means, with respect to any Person, all Indebtedness of such Person for borrowed money which by its terms or by the terms of any instrument or agreement relating thereto matures on demand or within one year from the date of the creation thereof and is not directly or indirectly renewable or extendible at the option of the debtor to a date more than one year from the date of the creation thereof, provided that Indebtedness for borrowed money outstanding under a revolving credit or similar agreement which obligates the lender or lenders to extend credit over a period of more than one year shall constitute Funded Debt and not Current Debt, even though such Indebtedness by its terms matures on demand or within one year from the date of the creation thereof. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official appointed under any Bankruptcy Law. "Debt" shall mean Current Debt and Funded Debt. "Default" means any event which through the passage of time, the giving of notice or both would mature into an Event of Default. "Default Rate" means a rate per annum from time to time equal to the greater of (i) 14.00%, and (ii) the LIBOR Rate plus 2.00%. "Depository" means, with respect to any Security issuable or issued in the form of one or more Global Securities, the Person designated as Depository by the Company in or pursuant to this Indenture, which Person must be, to the extent required by applicable law or regulation, a clearing agency registered under the Exchange Act, and, if so provided with respect to any Security, any successor to such Person. If at any time there is more than one such Person, "Depository" shall mean, with respect to any Securities, the qualifying entity which has been appointed with respect to such Securities. Unless and until otherwise designated by the Company to the Trustee, the Depository shall be The Depository Trust Company. "Domestic Subsidiary" means any Subsidiary organized under the laws of any state of the United States of America or the District of Columbia. "DPK" means D.P. Kelly & Associates, L.P., a Delaware limited partnership, and its successors and assigns. -8- 15 "Effective Date" means the date of this Indenture. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder. "Event of Default" means the occurrence of any event described in Section 5.01. "Excess CF Amount" means, as to any Excess Cash Flow in any fiscal year of the Company, the aggregate amount of such Excess Cash Flow, less any repayments of Debt under the Revolving Credit Agreement required to be made pursuant to the terms of such Revolving Credit Agreement; provided, however, that the amount of any such required repayment shall not exceed the Revolver Pro Rata Share of the aggregate amount of such Excess Cash Flow. "Excess Cash Flow" means, for any period, the Company's Consolidated Cash Flow, less the sum of (i) consolidated cash interest expense (including the interest portion of any payments associated with Capital Lease Obligations) of the Company during such period, (ii) consolidated capital expenditures of the Company during such period, (iii) principal payments on indebtedness (including the principal portion of any Capital Lease Obligations) of the Company made or paid during such period, (iv) additions (reductions) to Working Capital of the Company during such period, (v) consolidated income tax expense of the Company that is actually paid during such period, and (vi) $15,000,000, all determined on a consolidated basis in accordance with GAAP. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "Exempted Transactions" means (i) transactions with Cargill Financial Services and its Affiliates (collectively, "Cargill") so long as Cargill is not a Broad Affiliate of the Company; (ii) transactions with Reliance Insurance Co. and its Affiliates (collectively, "Reliance") so long as Reliance is not a Broad -9- 16 Affiliate of the Company; (iii) purchases of turkey timers from Volk Enterprises, Inc. and (iv) purchases of chemicals from Weskem-Hall, Inc. "Fiscal Year Change" shall have the meaning given to such term in Section 4.14. "Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary. "Funded Debt" means, with respect to any Person, all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendable at the option of the debtor to a date more than one year (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from, the date of the creation thereof. "GAAP" means, at any date, United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are applicable to the circumstances as of the date of determination. "GECC" means General Electric Capital Corporation, a New York corporation, and its successors and assigns. "GECC Intercreditor Agreement" means that certain GECC Intercreditor Agreement, dated as of the Effective Date, among the Collateral Agent, GECC, Shawmut Bank Connecticut, National Association, as Owner Trustee, and the Company, as amended, supplemented or otherwise modified from time to time. "GECC Lease Documents" means (i) the Lease Agreement dated as of December 18, 1990 between The Connecticut National Bank (now known as Shawmut Bank Connecticut, National Association; "TCNB"), Owner Trustee, as lessor and Viskase Corporation, as lessee, (ii) the Participation Agreement dated as of December 18, 1990 among Viskase Corporation, the Company, GECC and TCNB and (iii) the related instruments and agreements with respect thereto, in each case as the same may have heretofore been or may hereinafter be amended, modified, restated, renewed or extended or refinanced from time to time. "Global Security" means a Security issued in global form. -10- 17 "Guaranty Agreement" means that certain Guaranty Agreement, dated as of the Effective Date, made by each Significant Domestic Subsidiary in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. "Guarantee" shall mean, with respect to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or non-furnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guarantee shall be equal to the outstanding principal amount of the obligation guaranteed or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited. "Holder" means any Person in whose name a Security is registered on the Registrar's books. "Indebtedness" means, with respect to any Person, without duplication, (i) all items (excluding items of contingency reserves or of reserves for deferred income taxes) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as of the date on which Indebtedness is to be determined, (ii) all indebtedness secured by any Lien on any property or asset owned or held by such Person subject thereto, whether or not the indebtedness secured thereby shall have been assumed, (iii) all indebtedness of others with respect to which such Person has become liable by way of a Guarantee (including, without limitation, all obligations of such Person with respect to surety bonds, bank acceptances, and letters of credit and other similar obligations), (iv) all obligations of such Person in respect of Currency Agreements or Interest Rate Agreements and (v) the maximum fixed repurchase price of any Redeemable Stock. For purposes of the preceding sentence, the maximum fixed repurchase price of any Redeemable Stock that does -11- 18 not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Stock as if such Redeemable Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture; provided, that if such Redeemable Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Stock. "Indenture" means this Indenture as originally executed and as it may from time to time be amended or supplemented by one or more supplemental indentures hereto entered into pursuant to the applicable provisions hereof. "Initial Purchasers" means each Person listed on the Purchaser Schedule attached to the Note Agreement on the Effective Date. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Intellectual Property Pledge Agreement" means, collectively, each Intellectual Property Security Agreement made at any time by the Company or any Subsidiary of the Company, respectively, in favor of the Collateral Agent, as amended, supplemented or modified from time to time. "Intercreditor Agreement" means that certain Intercreditor and Collateral Agency Agreement, dated as of the Effective Date, by and among the Lender, the Trustee, and BTCC, individually and as Collateral Agent and agent for the Letter of Credit Lenders, as the same may be amended, amended and restated, supplemented or modified from time to time. "Interest Rate Agreement" of any Person means any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or fixed rate of interest on a notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount and shall include, without limitation, any interest rate swap agreement, interest rate cap, floor or collar agreement, option or futures contract or other similar agreements or arrangements, designed to protect such Person or any of its Subsidiaries from fluctuations in interest rates (as opposed to being used in any way for speculative trading purposes). "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder. "Investment" means, as to any investing Person, any direct or indirect advance, loan (other than extensions of trade credit on -12- 19 commercially reasonable terms in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person or any of its Subsidiaries in accordance with GAAP) or other extension of credit, guarantee or capital contribution to, or any acquisition by, such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person. In determining the amount of any Investment involving a transfer of Property, such Property shall be valued at its fair market value at the time of such transfer, and such fair market value shall be determined in good faith by the Board of Directors of the investing Person, whose determination in such regard shall be conclusive. "Joint Venture" of a Person means any Person in which the investing Person has a joint or shared equity interest but which is not a Subsidiary of such investing Person. "Lender" shall mean, collectively, The Prudential Insurance Company of America, as lender under the Revolving Credit Agreement and all other lenders (if any) that exist under the Revolving Credit Agreement from time to time. "Letter of Credit Agreement" means the Credit Agreement, dated as of the Effective Date, between the Letter of Credit Lenders, BTCC, as agent for the Letter of Credit Lenders, and the Company, as amended, supplemented or otherwise modified from time to time. "Letter of Credit Lenders" means the financial institutions party to the Letter of Credit Agreement as "Lenders" from time to time. "LIBOR Business Day" means a day of the year on which dealings are carried on in the London interbank market and banks are open for business in London and not required or authorized to close in New York City. "LIBOR Rate" means (i) for any Rate Period, the sum of 5.75% plus the six month London Interbank Offered Rate at 11:00 A.M. (London time) two LIBOR Business Days prior to Rate Day, for U.S. dollar deposits in the London interbank market as such rate is reported on page 3750 by Telerate - The Financial Information Network published by Telerate Systems Incorporated (Telerate), or its successor company; or (ii) if Telerate shall cease to report such rates on a regular basis, the LIBOR Rate shall mean, for any Rate Period, the sum of 5.75% plus the rate determined by the Trustee to be the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates quoted to the Trustee by the Reference Banks two LIBOR Business Days prior to Rate Day, for U.S.dollar deposits in the London interbank market. "Lien" means any mortgage, pledge, lien, charge, security interest, conditional sale or other title retention agreement -13- 20 (including, without limitation, any Capital Lease Obligations in the nature thereof) or other encumbrance of any kind or description, including, without limitation, any agreement to give or grant a Lien. "Management Agreement" means the Management Services Agreement dated as of December 4, 1991 between the Company and DPK, as the same was amended and restated by the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Company and DPK and as the same may from time to time, hereafter be amended, modified or restated upon the good faith approval, pursuant to duly adopted resolutions, of a majority of members of the Company's Board of Directors who are not Affiliates of DPK. "Mandatory Redemption Date" has the meaning given to such term in Section 9.01(a). "Material Adverse Effect" means a material adverse effect on (i) the consolidated financial condition, operations, business or prospects of the Company and its Subsidiaries (taken as a whole), (ii) the ability of the Company or any of its Subsidiaries to perform its obligations under any of the Credit Documents, or (iii) the validity or enforceability of any of the Credit Documents. "Material Subsidiary" means (a) any Subsidiary of the Company if (i) the total assets of such Subsidiary (and its Subsidiaries) exceed 10% of the total assets of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, or (ii) the revenues (or losses, as the case may be) of such Subsidiary (and its Subsidiaries) for the four consecutive fiscal quarters of such Subsidiary most recently ended (determined on a consolidated basis in accordance with GAAP and whether or not such Person was a Subsidiary of the Company during all or any part of the fiscal period of the Company referred to below) exceed an amount equal to 10% of the revenues (or losses, as the case may be) of the Company and its Subsidiaries for the four consecutive fiscal quarters of the Company most recently ended (determined on a consolidated basis in accordance with GAAP), and (b) in any event each of (i) Sandusky Plastics of Delaware, Inc., a Delaware corporation; (ii) Sandusky Plastics, Inc., a Delaware corporation; (iii) Viskase Corporation, a Pennsylvania corporation; (iv) Clear Shield National, Inc., a California corporation; (v) Viskase Holding Corporation, a Delaware corporation; and (vi) Viskase Sales Corporation, a Delaware corporation and (vii) Viskase S.A. "Mortgage" means, collectively, any or all of the mortgages, deeds of trust or other security instruments now or hereafter granting (or purporting to grant) Liens on the real property or leasehold estates or on any other real property or leasehold -14- 21 estates of the Company or its Subsidiaries to the Collateral Agent, as they may be amended, supplemented or otherwise modified from time to time. "Multiemployer Plan" means any Plan which is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA). "Net Worth" means as of any date the aggregate amount of the capital, surplus and retained earnings of the Company and its Subsidiaries as would be shown on a consolidated balance sheet of the Company and its Subsidiaries prepared as of such date in accordance with GAAP (and excluding minority interests); provided that capital and surplus attributable to Redeemable Stock and accumulated translation adjustments shall be excluded. "Non-U.S. Person" means any Person that is not a "U.S. Person" as such term is defined in Regulation S. "Note Agreement" means the Note Agreement, dated as of the Effective Date, between the Company and each Initial Purchaser, as amended, supplemented or otherwise modified from time to time. "Offer to Purchase" means a written offer (the "Offer") sent by the Company by first class mail, postage prepaid, to each Holder on the date of the Offer offering to purchase up to the principal amount of Securities specified in such Offer at the purchase price specified in such Offer ("Purchase Price"). Unless otherwise required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase which shall be, subject to any contrary requirements of applicable law or this Indenture, not less than 30 days or more than 60 days after the date of such Offer and a settlement date (the "Purchase Date") for the purchase of Securities within five Business Days after the Expiration Date. The Company shall notify the Trustee at least 15 Business Days (or such shorter period as is acceptable to the Trustee) prior to the mailing of the Offer of the Company's obligation to make an Offer to Purchase, and the Offer shall be mailed by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The Offer shall contain information concerning the business of the Company and its Subsidiaries which the Company in good faith believes will enable such Holders to make an informed decision with respect to the Offer to Purchase (which at a minimum will include (i) a description of material developments in the Company's business subsequent to the date of the latest of financial statements delivered to the Holders pursuant to Section 3.02, (ii) if applicable, appropriate pro forma financial information concerning the Offer to Purchase and the events requiring the Company to make the Offer to Purchase, and (iii) any other information required by applicable law to be included therein). The Offer shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Offer to Purchase. The Offer shall also state: -15- 22 (1) the Section of this Indenture pursuant to which the Offer to Purchase is being made; (2) the Expiration Date and the Purchase Date; (3) the aggregate principal amount of the outstanding Securities offered to be purchased by the Company pursuant to the Offer to Purchase (the "Purchase Amount"); (4) the Purchase Price to be paid by the Company for each of the Securities accepted for payment; (5) that the Holder may tender all or any portion of the Securities registered in the name of such Holder; (6) the instructions that Holders must follow in order to tender their Securities; (7) that interest on any Security not tendered or tendered but not purchased by the Company pursuant to the Offer to Purchase will continue to accrue; (8) that on the Purchase Date the Purchase Price will become due and payable upon each Security accepted for payment pursuant to the Offer to Purchase and that upon payment in full of the Purchase Price on the Purchase Date interest thereon shall cease to accrue; (9) that each Holder electing to tender a Security pursuant to the Offer to Purchase will be required to surrender such Security (except to the extent otherwise set forth in paragraph 7A of the Note Agreement) at the place or places specified in the Offer prior to the close of business on the Expiration Date (such Security being, if the Company (or its Paying Agent) so requires, duly endorsed by, or accompanied by a written instrument of transfer duly executed by, the Holder thereof or his attorney duly authorized in writing and, if reasonably requested, bearing appropriate signature guarantees); (10) that Holders will be entitled to withdraw all or any portion of the Securities tendered if the Company (or its Paying Agent) receives, not later than the close of business on the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security the Holder tendered, the certificate number of the Security the Holder tendered and a statement that such Holder is withdrawing all or a portion of such tender; (11) that (a) if Securities with an aggregate principal amount less than or equal to the Purchase Amount are duly -16- 23 tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase all such Securities and (b) if Securities with an aggregate principal amount in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase Securities having an aggregate principal amount equal to the Purchase Amount on a pro rata basis; and (12) that in the case of any Holder whose Security is purchased only in part the Company shall execute, and the Trustee shall authenticate and deliver to such Holder without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Security so tendered. "Officers' Certificate" of any corporation means a certificate delivered to the Trustee that complies with Section 12.05 of this Indenture and that is signed by two Responsible Officers of such corporation, or by a Responsible Officer of such corporation and by the Secretary or any Assistant Secretary or any Assistant Treasurer of such corporation. "Offshore Physical Securities" shall have the meaning given to such term in Section 2.02. "Opinion of Counsel" means a written opinion that complies with Section 12.05 of this Indenture from legal counsel who is reasonably acceptable to the Trustee. Such legal counsel may be an employee of or counsel to the Company or the Trustee. "Optional Redemption Date" has the meaning given to such term in Section 9.01(b)(ii). "Optional Redemption Price" has the meaning given to such term in Section 9.01(b)(i). "Pension Benefit Guaranty Corporation" means the Pension Benefit Guaranty Corporation under ERISA (and any successor thereto). "Paying Agent" has the meaning given such term in Section 2.03 of this Indenture. "Percentage of Total Assets Transferred" means, with respect to each asset Transferred pursuant to clause (d) of Section 4.06 (including assets transferred pursuant to a Transfer by Merger), the ratio (expressed as a percentage) of (i) the greater of such asset's fair market value or the net book value of such assets on the date of Transfer to (ii) the book value of the consolidated assets of the Company and its Subsidiaries as of the last day of the fiscal quarter of the Company immediately preceding the day of Transfer. -17- 24 "Permitted Liens" in respect of any Person shall mean (i) pledges or deposits made by such Person under workers' compensation, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or operating leases to which such Person is a party, or deposits to secure statutory or regulatory obligations of such Person or deposits of cash or U.S. Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (ii) Liens arising by operation of law such as carriers', warehousemen's and mechanics' Liens, in each case arising in the ordinary course of business and with respect to amounts not yet due or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens for taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iv) Liens evidenced by the Capitalized Lease Obligations under GECC Lease Documents and Liens securing Debt of the Company or its Subsidiaries permitted under Section 4.03(a)(vi) for refinancing the Debt under the GECC Lease Documents; provided, however, that in connection with any such refinancing any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (v) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its Property which were not incurred in connection with Debt or other extensions of credit and which do not in the aggregate materially adversely affect the value of said Property or materially impair the use of such Property in the operation of the business of such Person; (vi) Liens in favor of the Collateral Agent to secure Debt permitted under Sections 4.03(a)(i), (iv), (v), and (vii); (vii) Liens existing on the Effective Date and described on Schedule 4.04 hereto; (viii) Liens arising out of judgments or awards against such Person not giving rise to an Event of Default under Section 5.01(m) (but without limiting Section 5.01(p)) with respect to which such Person is diligently prosecuting an appeal or other proceedings for review; (ix) Liens to secure Debt permitted under Section 4.03(a)(xi); provided, however, that any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (x) Liens to secure Debt permitted under Section 4.03(a)(xiii) (to the extent such Liens attach prior to or at the time of incurrence of such Debt); (xi) Liens to secure the Debt (if any) permitted under Section 4.03(a)(iii); provided, -18- 25 however, that (a) the Lien securing such Debt is granted only to the Collateral Agent and made subject to the terms of the Intercreditor Agreement, and (b) the Intercreditor Agreement is amended to the reasonable satisfaction of the Collateral Agent to add the Second Priority Notes Trustee as a party thereto, and to provide for such matters incidental thereto as the Collateral Agent may reasonably require; and (xii) Liens securing Debt of Wholly Owned Subsidiaries of the Company to the Company or another such Wholly Owned Subsidiary permitted under Section 4.03(a)(ix). "Person" means any individual, partnership, corporation, limited liability company, venture, joint venture, unincorporated organization, joint-stock company, trust or any government or agency or political subdivision thereof or other entity of any kind. "Physical Securities" shall have the meaning given to such term in Section 2.02. "Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any member of the Control Group. "Pledge Agreement" means, collectively, each Pledge Agreement made at any time by the Company or any Subsidiary of the Company in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. "Private Placement Legend" means the legend initially set forth on the Securities in the form set forth on Exhibit A-1. "Property" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other Person. "Purchase Date" shall have the meaning given to such term in the definition of Offer to Purchase. "Purchase Amount" has the meaning given to such term in the definition of Offer to Purchase. "Purchase Money Indebtedness" means, as to any Person, the Debt of such Person incurred and owing in respect of all or part of the purchase price of Property purchased where such Debt is fully secured by the Property purchased. "Purchase Price" shall have the meaning given to such term in the definition of Offer to Purchase. -19- 26 "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A under the Securities Act. "Qualified Plan" means any Plan, other than a Multiemployer Plan, which is intended to meet the qualification requirements of Section 401(a) of the Internal Revenue Code. "Rate Day" means for each Rate Period the first day of such Rate Period; provided, however, that if such day is not a LIBOR Business Day, then the next LIBOR Business Day succeeding the first day of such Rate Period. "Rate Period" means the period during which the LIBOR Rate remains in effect and unchanged. For purposes of this Indenture, the Rate Period shall begin on the fifteenth day of each June and December of each year, commencing with June 15, 1995. "Redeemable Stock" means, with respect to any Person, any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable by contract or otherwise, is or upon the happening of an event or the passage of time would be, required to be redeemed or is redeemable at the option of the holder thereof at any time prior to the Stated Maturity of the principal of the Securities, or, at the option of the holder thereof, is convertible into or exchangeable for debt securities maturing at any time prior to the Stated Maturity of the principal of the Securities. "Redemption Date" means the Mandatory Redemption Date, the Optional Redemption Date or the Transfer Redemption Date, as the case may be. "Redemption Price" means the Mandatory Redemption Price, Optional Redemption Price or Transfer Redemption Price, as the case may be. "Reference Banks" means Morgan Guaranty Trust Company of New York, Citibank, N.A. and The Chase Manhattan Bank (National Association). "Registered Exchange Offer" means the offer to exchange the Series B Securities for all of the outstanding Series A Securities and the Series D Securities for all of the outstanding Series C Securities, in each case in accordance with the Registration Rights Agreement. "Registrar" has the meaning given to such term in Section 2.03. "Registration Rights Agreement" means the Exchange and Registration Rights Agreement by and between the Company and the -20- 27 Holders party thereto, relating to the Securities and dated the Effective Date, as amended, supplemented or otherwise modified from time to time. "Regulation S" means Regulation S under the Securities Act. "Restricted Debt" means all Consolidated Debt other than Consolidated Senior Debt. "Required Holders" means the Holder or Holders of at least a majority of the aggregate principal amount of the Securities from time to time outstanding (without giving effect to any Securities owned of record by the Company or any of its Affiliates). "Responsible Officer" means, with respect to any corporation, the chief executive officer, chief operating officer, chief financial officer, treasurer, or chief accounting officer of such corporation or any other officer of such corporation involved principally in its financial administration or its controllership function. "Restricted Investment" shall have the meaning given to such term in Section 4.02(a). "Restricted Payments" shall have the meaning given to such term in Section 4.02(a). "Restricted Security" shall have the meaning given to such term in Rule 144. "Revolver Pro Rata Share" means, as to any requirement to make an Offer to Purchase under Section 3.09, the percentage obtained by dividing (i) the amount of the Revolving Loan Commitment in effect on the date the Company first sends such Offer to Purchase, by (ii) the sum of (a) the amount of such Revolving Loan Commitment in effect on such date, and (b) the aggregate principal amount of the Securities outstanding on such date. "Revolving Credit Agreement" means that certain Revolving Credit Agreement, dated as of the Effective Date between the Company and The Prudential Insurance Company of America, as amended, supplemented or otherwise modified from time to time or as replaced pursuant to a refinancing thereof permitted under Section 4.03. "Revolving Loan Commitment" means, at any time, the aggregate principal amount which may be borrowed under the Revolving Loan Agreement at such time (determined without giving effect to any suspension or termination of the Lender's obligation to make loans thereunder upon the occurrence of a default or an "Event of Default" thereunder). -21- 28 "Rule 144" means Rule 144 promulgated by the SEC under the Securities Act and as in effect from time to time. "Rule 144A" means Rule 144A promulgated by the SEC under the Securities Act and as in effect from time to time. "Sale and Leaseback Transaction" means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold by such Person or a Subsidiary of such Person and thereafter leased back from the purchaser thereof by such Person or one of the Subsidiaries of such Person. "SEC" means the Securities and Exchange Commission, as from time to time constituted, or any similar agency then having jurisdiction to enforce the Securities Act. "Second Priority Notes" means the debt securities which may be issued by the Company under an indenture (the "Second Priority Notes Indenture") pursuant to the 10.25% Note Exchange. "Second Priority Notes Indenture" has the meaning given to such term in the definition of Second Priority Notes. "Second Priority Notes Trustee" means trustee for the Second Priority Notes and Subsequent Second Priority Notes, respectively (in such capacity) and each successor thereto in such capacity. "Security Agreement" means, collectively, each Security Agreement made at any time by the Company or any Subsidiary of the Company in favor of the Collateral Agent, as amended, supplemented or otherwise modified from time to time. "Securities" has the meaning set forth in the first recital paragraph of this Indenture. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "Series A Securities" means the 12% First Priority Senior Secured Notes due 2000, Series A, being issued pursuant to this Indenture. "Series B Securities" means the 12% First Priority Senior Secured Notes due 2000, Series B (the terms of which are identical to the Series A Securities except that the Series B Securities shall be registered under the Securities Act, and shall not contain the restrictive legend on the face of the form of the Series A Securities), to be issued in exchange for the Series A Securities pursuant to the Registered Exchange Offer and this Indenture. -22- 29 "Series C Securities" means the Floating Rate First Priority Senior Secured Notes due 2000, Series C, being issued pursuant to this Indenture. "Series D Securities" means the Floating Rate First Priority Senior Secured Notes due 2000, Series D (the terms of which are identical to the Series C Securities except that the Series D Securities shall be registered under the Securities Act, and shall not contain the restrictive legend on the face of the form of the Series C Securities), to be issued in exchange for the Series C Securities pursuant to the Registered Exchange Offer and this Indenture. "Significant Domestic Subsidiary" means each Domestic Subsidiary that, at any time, is a Material Subsidiary. "Stated Maturity" when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. "Stipulated Loss Value" means the Stipulated Loss Value, as defined in the GECC Lease Documents (as such GECC Lease Documents are in effect on the Effective Date.) "Subsequent Second Priority Notes" means any and all debt securities issued by the Company under an indenture in exchange for Second Priority Notes and having terms identical to the Second Priority Notes and otherwise being the same as the Second Priority Notes except that such debt securities are registered under the Securities Act. "Subsequent Securities" means, collectively, any and all Series B Securities and Series D Securities issued by the Company. "Subsidiary" means, with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. -23- 30 "Subsidiary Guarantor" means (i) each of the Significant Domestic Subsidiaries existing on the Effective Date, and (ii) each of the Company's other Subsidiaries which becomes a guarantor of the Securities pursuant to Section 3.05. "10.25% Note Exchange" means an exchange by the Company pursuant to which the Company issues Second Priority Notes in an aggregate face amount of not more than $50,000,000 in exchange for 10.25% Notes pursuant to an exchange ratio (based on aggregate face amount) of no greater than 1:1. "10.25% Notes" means, collectively, the 10.25% Senior Notes due 2001 issued by the Company pursuant to the 10.25% Notes Indenture. "10.25% Notes Indenture" means that certain Indenture, dated as of December 31, 1993, between the Company and Bankers Trust Company, as trustee, as amended, supplemented or otherwise modified from time to time. "Termination Event" means any one or more of the following event or events which, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect: (i) A reportable event as defined in Section 4043 of ERISA and regulations issued thereunder for which the 30 day notice requirement has not been waived occurs with respect to any Title IV Plan other than those described in Sections 4043(c)(9) and (11) of ERISA (or PBGC Regulation Sections 2615.23 or 2615.22); (ii) There occurs (a) the complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) by the Company or any member of the Control Group from any Multiemployer Plan, or (b) the receipt by the Company or any member of the Control Group of a demand from any Multiemployer Plan for withdrawal liability (as defined in Section 4201 of ERISA); (iii) The Company or any member of the Control Group files, or is reasonably expected to file, a notice of intent to terminate any Title IV Plan or adopts a plan amendment that constitutes a termination of any Title IV Plan, under Section 4041 of ERISA; (iv) There occurs any action causing the termination of any Multiemployer Plan under Section 4041A of ERISA; (v) Any other event or condition occurs that is reasonably expected to constitute grounds under Sections 4041A or -24- 31 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or any Multiemployer Plan; (vi) The Pension Benefit Guaranty Corporation shall have notified the Company or any member of the Control Group that a Plan may become a subject of any proceedings under Section 4042 of ERISA to terminate or appoint a trustee to administer the Plan, or any such proceedings are instituted; (vii) An accumulated funding deficiency (as defined in Section 302 of ERISA or Section 412 of the Code) exists with respect to any Title IV Plan on the last day of any plan year; (viii) A waiver of the minimum funding standards of ERISA or the Code, or any extension of any amortization period related to such a waiver, is sought by or granted to, the Company or any member of the Control Group, under Section 412 of the Code; (ix) The Company or any member of the Control Group shall have incurred, or is reasonably expected to incur, any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans; (x) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of any Title IV Plan, as determined by such Plan's independent actuaries; (xi) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of all Title IV Plans, as determined by such Plans' independent actuaries; or (xii) The Company or any member of the Control Group establishes or amends any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any member of the Control Group. "TIA" means the Trust Indenture Act of 1939 as in effect on the date of execution of this Indenture, except as provided in Section 8.03 of this Indenture. "Title IV Plan" means any Qualified Plan that is a defined benefit plan (as defined in Section 3(35) of ERISA) and is subject to Title IV of ERISA. "Transfer" means any sale, exchange, conveyance, lease, transfer or other disposition. -25- 32 "Transfer by Merger" means, with respect to any Subsidiary of the Company, a merger or consolidation of such Subsidiary with another Person such that after giving effect thereto the surviving entity is no longer a Subsidiary of the Company. "Transfer Redemption Date" has the meaning given to such term in Section 4.06(e)(3). "Transfer Redemption Price" has the meaning given such term in Section 4.06(e)(3). "Trustee" means the Person named as such in this Indenture until a successor replaces such Person in accordance with the terms of this Indenture, and thereafter means such successor. "Trust Officer", when used with respect to the Trustee, means any officer assigned to and working in the corporate trust department of the Trustee (or any successor group) of the Trustee, including, without limitation, any vice president, assistant vice president, assistant secretary, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers who shall, in any case, be responsible for the administration of this document or have familiarity with it, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred at the Corporate Trust Office because of his or her knowledge of and familiarity with the particular subject. "U.S. Government Obligations" means (i) any direct non-callable obligation of, or obligation guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged and which is not callable at the issuer's option, and (ii) any depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "U.S. Physical Securities" shall have the meaning given to such term in Section 2.02. "Voting Securities" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, under ordinary circumstances and in -26- 33 the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). "Wholly Owned Subsidiary" of a Person means any Subsidiary of such Person 100% of the total capital stock of which, other than directors' qualifying shares, is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person. "Working Capital" means, current assets less current liabilities where current assets equals accounts receivable, inventory and other current assets (excluding cash and cash equivalents) and current liabilities equals accounts payable and accrued liabilities (both excluding accrued interest payable, accrued income taxes payable and any payables related to capital expenditures), all as reflected on the Company's consolidated financial statements prepared in accordance with GAAP. SECTION 1.02. Accounting Principles, Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the most recent audited consolidated financial statements of the Company and its Subsidiaries. SECTION 1.03. Yield-Maintenance Terms. "Called Principal" shall mean, with respect to any Security, the principal of such Security that is to be redeemed or prepaid (as the case may be) pursuant to Section 3.09(a), Section 4.06(e)(3) or Section 9.01(b), or is declared to be immediately due and payable pursuant to Section 5.01, as the context requires. "Discounted Value" shall mean, with respect to the Called Principal of any Security, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Securities is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" shall mean, with respect to the Called Principal of any Security, 1.0% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" -27- 34 on the Telerate Service (or such other display as may replace Page 678 on the Telerate Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between reported yields. "Remaining Average Life" shall mean, with respect to the Called Principal of any Security, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) each Remaining Scheduled Payment of such Called Principal (but not of interest thereon) by (b) the number of years (calculated to the nearest one- twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" shall mean, with respect to the Called Principal of any Security, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date. "Settlement Date" shall mean, with respect to the Called Principal of any Security, the date on which such Called Principal is to be redeemed or prepaid (as the case may be) pursuant to Section 3.09(a), Section 4.06(e)(3) or Section 9.01(b), or is declared to be immediately due and payable pursuant to Section 5.01, as the context requires. "Yield-Maintenance Amount" shall mean, with respect to any Security, an amount equal to the excess, if any, of the Discounted Value of the Called Principal of such Security over the sum of (i) such Called Principal plus (ii) interest accrued thereon as of (including interest due on) the Settlement Date with respect to such Called Principal. The Yield-Maintenance Amount shall in no event be less than zero. The Yield-Maintenance Amount shall be calculated for purposes of the Series C Securities and Series D Securities as if interest on such Securities accrues at the same per annum rate as interest accrues on the Series A Securities and Series B Securities. -28- 35 SECTION 1.04. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Holder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the indenture securities means the Company or the Surviving Corporation, as the case may be, or any other obligor on the Securities. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.05. Rules of Construction. Unless the context otherwise requires: (a) a term defined in this Article has the meaning in this Indenture assigned to it in this Article; (b) except as otherwise set forth in this Indenture, an accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP in effect on the date of this Indenture; (c) "or" is not exclusive; (d) words in the singular include the plural, and words in the plural include the singular; (e) provisions apply to successive events and transactions; (f) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (g) reference herein to any Article or Section refers to such Article or Section hereof. -29- 36 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating. (a) The Series A Securities, Series B Securities, Series C Securities and Series D Securities shall be generally designated the Company's First Priority Senior Secured Notes Due 2000. Their stated maturity shall be June 15, 2000. The Series A Securities and Series B Securities shall bear interest at the rate of 12% per annum, and the Series C Securities and Series D Securities shall bear interest at the LIBOR Rate. Interest on the Securities shall accrue from June 20, 1995, or from the most recent date on which interest has been paid or duly provided for, and be payable on December 15 and June 15 of each year, commencing December 15, 1995, and at the Stated Maturity of the principal of the Securities (or such earlier date on which such principal shall become due hereunder), until the principal thereof is paid or duly provided for. The Series A Securities, Series B Securities, Series C Securities and Series D Securities (and the Trustee's certificate of authentication with respect thereto) shall be substantially in the form of Exhibits A-1, A-2, A-3 and A-4, respectively, attached hereto and hereby expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, usage or agreements to which the Company is a party and such appropriate insertions, omissions, substitutions and other variations as are permitted by this Indenture. The Company shall furnish any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication. (b) The terms and provisions contained in the Securities shall constitute, and are hereby expressly made, a part of this Indenture, and to the extent applicable the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. (c) The interest rate on each Security shall automatically be increased (and, if applicable, thereafter automatically decreased but in any event not below the original rate of interest therein) as and to the extent required pursuant to the terms of Section 6 of the Registration Rights Agreement, notwithstanding anything to the contrary elsewhere in this Indenture or the Securities. SECTION 2.02. Execution and Authentication; Aggregate Principal Amount. The Securities shall be signed for the Company by the Company's President or a Vice President and shall be attested by the Company's Secretary or an Assistant Secretary, in each case by -30- 37 manual or facsimile signature. The Company's seal may be reproduced or imprinted on the Securities by facsimile or otherwise. If a Person whose signature is on a Security no longer holds his office at the time the Security is authenticated, the Security shall nevertheless be valid. A Security shall not be valid until executed and issued by the Company and authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate Series A Securities for original issue in the aggregate principal amount of up to $151,500,000, and shall authenticate Series C Securities for original issue in the aggregate principal amount of up to $8,500,000,in each case upon receipt of a written order of the Company in the form of an Officers' Certificate. In addition, on or prior to the date of the Registered Exchange Offer, the Trustee or an authenticating agent shall authenticate Series B Securities to be issued at the time of the Registered Exchange Offer in the aggregate principal amount of up to $151,500,000, and shall authenticate Series D Securities to be issued at the time of the Registered Exchange Offer in the aggregate principal amount of up to $8,500,000, in each case upon receipt of a written order of the Company signed by a Responsible Officer of the Company. In each case, the Officers' Certificate shall specify the amount of Securities to be authenticated and the date on which the Securities are to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed $160,000,000, except as provided in Section 2.07. Upon receipt of a written order of the Company in the form of an Officers' Certificate, the Trustee shall authenticate Securities in substitution of Securities originally issued to reflect any name change of the Company. Securities offered and sold in reliance on Rule 144A may, at the option of the Company but subject to the terms of Rule 144A, be issued initially in the form of one or more permanent Global Securities in registered form deposited with the Trustee, as custodian for the Depository. The aggregate principal amount of any Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. Securities offered and sold in offshore transactions in reliance on Regulation S may, at the option of the Company but subject to the terms of Regulation S, be issued in the form of certificated Securities in registered form (the "Offshore Physical Securities"). Securities offered and sold in reliance on any other exemption from registration under the Securities Act other than as described in the preceding paragraph shall be issued, and Securities offered and sold in reliance on Rule 144A may, at the option -31- 38 of the Company but subject to Rule 144A and all other applicable laws and regulations, be issued, in the form of certificated Securities in registered form (the "U.S. Physical Securities"). The Offshore Physical Securities and the U.S. Physical Securities are sometimes collectively herein referred to as the "Physical Securities." The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities, which authenticating agent shall be compensated by the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so, except with regard to the original issuance of the Securities. Except as provided in the preceding sentence, each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. At all reasonable times, the Securities register shall be open to inspection by the Trustee. The Company may appoint one or more co-Registrars and one or more additional Paying Agents. The term "Paying Agent" includes any additional Paying Agent. The Company, any Subsidiary of the Company or any of their respective Affiliates may act as Paying Agent, Registrar or co-Registrar. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall implement the provisions of this Indenture that relate to such Agent. The Company may change or add any Paying Agent, Registrar or co-Registrar without notice to any Holder, but only upon notice given to the Trustee of such change or addition and of the address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent. -32- 39 SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree that such Paying Agent will: (a) hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest and Yield-Maintenance Amount (if any) on the Securities (whether such money has been paid to it by the Company or any other obligor on the Securities) until such sums shall be paid to Holders or otherwise disposed of as herein provided; (b) give the Trustee notice of any Default by the Company (or any other obligor on the Securities) in making any such payment; and (c) at any time during the continuance of any such Default, upon the written request of the Trustee, to forthwith pay to the Trustee all sums so held in trust by such Paying Agent and account for any funds disbursed. If the Company, any Subsidiary of the Company or any of their respective Affiliates acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund for the benefit of Holders. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company and each other obligor on the Securities shall furnish to the Trustee not less than ten Business Days before each interest payment date and at such other times as the Trustee may request in writing all information in the possession or control of the Company or any Paying Agent as to the names and addresses of Holders, in such form and as of such date as the Trustee may reasonably require. The Trustee and the Registrar may rely on the accuracy of such list as the same may be amended from time to time. SECTION 2.06. Transfer and Exchange. Securities may be transferred or exchanged only on the Securities register maintained pursuant to Section 2.03. Prior to due presentment of a Security for registration of transfer, the Holder of any Securities, as shown on such Securities register, shall be deemed the absolute owner thereof for all purposes, and none of the Company, the Trustee, or any agent of the Company or -33- 40 the Trustee shall be affected by any notice to the contrary, and payment of or on account of the principal or interest with respect to such Securities shall be made only to or in accordance with the written order of such Holder or of his attorney duly authorized in writing. All such payments shall satisfy and discharge the liabilities upon such Securities to the extent of the amounts so paid. When Securities are presented to the Registrar or a co-Registrar with a request to register a transfer or make an exchange for an equal principal amount of Securities of other denominations, the Registrar or co-Registrar shall register the transfer or make the exchange if its requirements therefor are met; provided, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in a form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Company shall execute and issue and the Trustee shall authenticate Securities at the Registrar's request. No service charge to the Holder shall be made for any registration of transfer or exchange, but the Company may require from the transferring or exchanging Holder payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charges payable upon transfers or exchanges pursuant to Sections 2.10, 3.09, 4.06, 8.05, 9.01 or 9.06 hereof). All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. The Company shall not be required to and, without the prior written consent of the Company, the Registrar shall not be required to, register the transfer or exchange of (i) any Securities selected for redemption under Section 9.02 hereof and (ii) any Securities during a period commencing 15 days prior to the date of any selection of Securities for redemption under Section 9.02 and ending at the close of business on such date of selection. SECTION 2.07. Replacement Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If the Company and the Trustee receive evidence to their satisfaction that a Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the Company's and the -34- 41 Trustee's requirements are met and in the absence of notice to the Company or the Trustee that the Security has been acquired by a bona fide purchaser. If required by the Trustee or the Company, such Holder shall provide an indemnity bond sufficient in the judgment of both the Company and the Trustee to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Security is replaced. The Company may charge the Holder who obtains a replacement Security pursuant to this Section 2.07 for the Company's and the Trustee's expenses in replacing such Security. Every replacement Security issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies against the Company and the Trustee with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Notwithstanding the foregoing, the provisions of this Section 2.07 shall be, and hereby are, superseded by the provisions of paragraph 7F of the Note Agreement to the extent inconsistent herewith. SECTION 2.08. Outstanding Securities. The Securities outstanding at any time are all the Securities executed on behalf of the Company and authenticated by the Trustee except for those cancelled by the Trustee, those delivered to the Trustee for cancellation and those described in this Section as not outstanding. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If Securities are considered paid under Section 3.01, they cease to be outstanding and interest on them ceases to accrue. Except as and to the extent provided in Section 2.09, a Security does not cease to be outstanding because the Company, any of its Subsidiaries or any of their respective Affiliates holds the Security. SECTION 2.09. Treasury Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any request, demand, -35- 42 authorization, notice, direction, amendment, supplement, waiver or consent, Securities owned of record or beneficially by the Company or any Affiliate of the Company or any other obligor on the Securities or any Affiliate thereof shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, notice, direction, amendment, supplement, waiver or consent, only Securities which the Trustee knows are so owned shall be considered as though they are not outstanding. The Trustee may require an Officers' Certificate listing the Securities owned by the Company and its Affiliates. SECTION 2.10. Temporary Securities. Until definitive Securities are ready for delivery, the Company may execute and issue, and the Trustee shall authenticate upon written order of the Company signed by two Responsible Officers, temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company and the Trustee consider appropriate for temporary Securities. Without unreasonable delay, the Company shall execute and issue, and the Trustee shall authenticate, definitive Securities in exchange for temporary Securities. Until such exchange, such temporary Securities shall be entitled to the same rights, benefits and privileges as the definitive Securities. SECTION 2.11. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and the Trustee shall destroy cancelled Securities in accordance with its customary procedures and deliver a certificate of such destruction to the Company. Subject to Section 2.07, the Company may not issue new Securities to replace Securities that it has paid or that have been delivered to the Trustee for cancellation. If the Company or any Subsidiary of the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. SECTION 2.12. Overdue Interest. If the Company fails to make a payment of interest on the Securities when due by the terms thereof, it shall pay interest on such overdue installments of interest thereafter in any lawful manner to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Securities -36- 43 and in Section 3.01. The Company shall promptly fix such special record date and special payment date after consultation with and notice to the Trustee. At least 15 days before the special record date, the Company shall give Holders notice that states the special record date, related payment date and amount of such interest to be paid. SECTION 2.13. CUSIP Number. The Company in issuing the Securities may use a "CUSIP" number and, if so, the Company shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Securities and that reliance may be placed only on the other identification numbers printed on the Securities. The Company shall promptly notify the Trustee of any change in the CUSIP number. SECTION 2.14. Book-Entry Provisions for Global Securities. (a) The Global Securities initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit B. Members of, or participants in, the Depository ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Security, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (b) Transfers of Global Securities shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Securities may be transferred or exchanged for Physical Securities in accordance with the rules and procedures of the Depository and the provisions of Section 2.15. In addition, Physical Securities shall be transferred to all beneficial owners in exchange for their beneficial interests in Global Securities if (i) the Depository notifies the Company that it is unwilling or unable to continue -37- 44 as Depository for any Global Security and a successor depositary is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depository to issue Physical Securities. (c) In connection with any transfer or exchange of a portion of the beneficial interest in any Global Security to beneficial owners pursuant to clause (b), the Registrar shall (if one or more Physical Securities are to be issued) reflect on its books and records the date and a decrease in the principal amount of the Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Securities of like tenor and amount. (d) In connection with the transfer of Global Securities as an entirety to beneficial owners pursuant to paragraph (b), the Global Securities shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Securities, an equal aggregate principal amount of Physical Securities of authorized denominations. (e) Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Security pursuant to paragraph (b) or (c) shall, except as otherwise provided by paragraphs (a) (i) (x) and (c) of Section 2.15, bear the legend regarding transfer restrictions applicable to the Physical Securities set forth in Exhibit A-1. (f) The Holder of any Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. SECTION 2.15. Special Transfer Provisions. (a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Security constituting a Restricted Security to any Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person: (i) the Registrar shall register the transfer of any Security constituting a Restricted Security, whether or not such Security bears the Private Placement Legend, if -38- 45 (x) in the case of a transfer to any Non-U.S.Person, the requested transfer is after July 31, 1995 or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S. Person, the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto; and (ii) if the proposed transferor is an Agent Member holding a beneficial interest in a Global Security, upon receipt by the Registrar of (x) the certificate, if any, required by paragraph (i) above and (y) instructions given in accordance with the Depository's and the Registrar's procedures, whereupon (a) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding Physical Securities) a decrease in the principal amount of a Global Security in an amount equal to the principal amount of the beneficial interest in a Global Security to be transferred, and (b) the Issuer shall execute and the Trustee shall authenticate and deliver one or more Physical Securities of like tenor and amount. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Security constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): (i) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Security stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Security stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and -39- 46 (ii) if the proposed transferee is an Agent Member, and the Securities to be transferred consist of Physical Securities which after transfer are to be evidenced by an interest in the Global Security, upon receipt by the Registrar of instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security in an amount equal to the principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Securities so transferred. (c) Private Placement Legend. Upon the transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar shall deliver only Securities that bear the Private Placement Legend unless (i) the circumstances contemplated by paragraph (a) (i) (x) of this Section 2.15 exist, (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Security has been sold pursuant to an effective registration statement under the Securities Act. (d) General. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.14 or this Section 2.15. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. SECTION 2.16. Certificates setting forth LIBOR Rate and Yield-Maintenance Amount. (a) The Company shall, on the Effective Date and each Rate Day thereafter, provide the Trustee with an Officers' Certificate setting forth the LIBOR Rate determined in accordance with clause (i) of the definition thereof (which determination shall be deemed to be conclusive absent manifest error). -40- 47 The Company shall promptly notify the Trustee after any Responsible Officer learns that Telerate has ceased to report the LIBOR Rate on a regular basis. (b) In the event that any Yield-Maintenance Amount is payable by the Company, the Company shall deliver to the Trustee and each Holder to whom such payment is to be made, on or before the date payment thereof is due, an Officers' Certificate setting forth in reasonable detail the Company's calculation of such Yield-Maintenance Amount (which calculation shall not be deemed to be conclusive to the Trustee or to any Holder to whom such Yield-Maintenance Amount is to be paid without the Trustee's or such Holder's prior written consent thereto). ARTICLE 3 AFFIRMATIVE COVENANTS SECTION 3.01. Payment of Securities. The Company shall punctually pay, or cause to be paid, the principal of and interest and Yield-Maintenance Amount (if any) on the Securities on the dates and in the manner provided in this Indenture and in the Securities. Except to the extent otherwise set forth in paragraph 7A of the Note Agreement, any payment of principal (including any redemption or other purchase of Securities pursuant to Sections 3.09, 4.06(e)(3), or 9.01), interest and Yield-Maintenance Amount (if any) shall be considered paid on the date due if the Paying Agent holds on or prior to 10:00 A.M. on that date money in accordance with this Indenture designated in trust for and sufficient to make such payment and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the Default Rate. In addition, the Company shall pay interest on overdue installments of interest and on overdue payments of the Yield-Maintenance Amount at the Default Rate, to the extent lawful. SECTION 3.02. SEC Reports. The Company shall file with the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company files with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the SEC and the Trustee on the same timely basis such reports, information and other documents as the Company would file if the Company were subject to the -41- 48 requirements of Section 13 or 15(d) of the Exchange Act. The Company and any other obligor on the Securities also shall comply with the other provisions of TIA Section 314(a). So long as Securities representing 5% or more of the aggregate principal amount of Securities issued hereunder remain outstanding, the Company shall cause an annual report to stockholders and quarterly or other financial reports furnished by it to stockholders, excluding internal management reports and distributions to stockholders in their capacity as directors or officers of the Company, to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Securities maintained by the Registrar, in each case at the time of such furnishing to stockholders. If the Company is not required to furnish annual or quarterly reports to its stockholders pursuant to the Exchange Act at any time during which Securities representing 5% or more of the aggregate principal amount of Securities issued hereunder are outstanding, the Company shall cause its consolidated financial statements, including any notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," comparable to that which would have been required to appear in annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act to be so filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Securities maintained by the Registrar within 105 days after the end of each fiscal year and within 60 days after the end of each of the Company's first three fiscal quarters in each fiscal year. SECTION 3.03. Compliance Certificate. The Company shall deliver to the Trustee, within 60 days after the end of each of the first three quarters of each of the Company's fiscal years and within 105 days after the end of each of the Company's fiscal years, an Officers' Certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company stating that a review of the activities of the Company and its Subsidiaries during the preceding quarter or fiscal year (as the case may be) has been made under the supervision of the signing Persons with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Person signing such certificate, that to the best of his knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he may have knowledge) and that to the best of his knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest on the Securities are prohibited. -42- 49 The Company shall, so long as any of the Securities are outstanding, deliver to the Trustee, forthwith upon becoming aware of (i) any Default or Event of Default or (ii) any default, event of default or other failure to perform under any agreement, mortgage, indenture or instrument referred to in clause (c) of Section 5.01, an Officers' Certificate specifying such Default, Event of Default, default or event of default. SECTION 3.04. Conduct of Business; Maintenance of Existence; Compliance with Laws. The Company covenants that the Company and its Subsidiaries shall (a) continue to engage primarily in the material lines of business (as determined by the Company in its reasonable discretion) which the Company and its Subsidiaries operate, respectively, as of the Effective Date, (b) preserve, renew and keep in full force and effect the corporate existence, and all material rights, privileges, franchises, permits and licenses of the Company and its Subsidiaries, respectively, provided, however, that (i) this clause (b) shall not prohibit a merger otherwise permitted pursuant to the terms hereof and (ii) neither the Company nor any of its Subsidiaries shall be required to preserve any such right or franchise or its corporate existence if the loss thereof is not and will not be adverse in any material respect to the Holders, and (c) comply in all material respects with all applicable laws, ordinances, rules, regulations and other requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA) except to the extent that noncompliance could not reasonably be expected to have a Material Adverse Effect. SECTION 3.05. Guaranties. The Company covenants that, effective upon any Person becoming a Significant Domestic Subsidiary, the Company shall cause such Person to become and continue as a party to the Guaranty Agreement and the Security Agreement and to execute and deliver all such agreements, instruments, documents, financing statements, mortgages, deeds of trust, leasehold mortgages and other written matter, and take such further action, as the Collateral Agent or the Required Holders may request in order to obtain a valid and perfected first priority Lien on all (or all but a de minimis amount of) such Person's Property (subject only to Permitted Liens). SECTION 3.06. Maintenance of Property; Insurance. (a) The Company shall, and shall cause each of its Subsidiaries to, maintain its Property in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, -43- 50 that nothing in this Section shall prevent the Company or any of its Subsidiaries from discontinuing the operation and maintenance of any of its Property if such discontinuance is desirable in the conduct of its business and not disadvantageous in any material respect to the Holders; provided, further, that nothing in this Section shall prevent the Company or any of its Subsidiaries from discontinuing or disposing of any of its Property to the extent otherwise permitted by Section 4.06 hereof. (b) The Company shall insure and keep insured, and shall cause each Subsidiary to insure and keep insured, with financially sound and reputable insurers, so much of their respective Property and in such amounts as is usually and customarily insured by companies engaged in similar businesses with respect to Property of a similar character, and, in any event, as is required under the Security Agreement with respect to maintenance of insurance. SECTION 3.07. Taxes. The Company shall, and shall cause each of its Subsidiaries to, pay or cause to be paid all license fees, bonding premiums and related taxes and charges, and shall pay or cause to be paid all of such Person's real and personal property taxes, assessments and charges and all of such Person's franchise, income, unemployment, use, excise, old age benefit, withholding, sales and other taxes and other governmental charges assessed against such Person, or payable by such Person, in each case when due and in such manner as to prevent any penalty from accruing or any Lien from attaching to its property (other than Liens for taxes not yet due and payable), provided that such Person shall have the right to contest in good faith, by an appropriate proceeding promptly initiated and diligently conducted, the validity, amount or imposition of any such tax, assessment or charge, and during the pendency of such good faith contest to delay or refuse payment thereof if such Person establishes adequate reserves to cover such contested taxes, assessments or charges. SECTION 3.08. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) where Securities may be surrendered for registration of transfer or exchange or for presentation for payment. The Company shall give prompt notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee as set forth in Section 12.02 of this Indenture. -44- 51 The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain an office or agency in the Borough of Manhattan, City of New York, for such purposes. The Company shall give prompt notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates Shawmut Trust Company of New York, c/o First Chicago Trust Company of New York, 14 Wall Street, 8th Floor, Window No. 2, New York, NY 10005 as the office of the Company to be maintained in accordance with this Section 3.08 of this Indenture. SECTION 3.09. Offers to Purchase Following Change of Control and Excess Cash Flow. (a) Upon the occurrence of a Change of Control, each Holder of a Security shall have the right to have such Security repurchased by the Company on the terms and conditions precedent set forth in this Section 3.09. The Company shall, within 25 days following the date of the consummation of a transaction resulting in a Change of Control, mail an Offer with respect to an Offer to Purchase all outstanding Securities at a purchase price equal to 100% of the outstanding principal amount thereof together with interest thereon to the date of purchase and the Yield-Maintenance Amount with respect thereto; provided, however, that installments of interest whose Stated Maturity is on or prior to the Purchase Date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant record dates according to the terms of the Securities. Each Holder shall be entitled to tender all or any portion of the Securities owned by such Holder pursuant to the Offer to Purchase. The Company shall cause the Purchase Date to be not less than five (5) Business Days prior to the "Purchase Date" (as such term is defined in the 10.25% Notes Indenture) and any other purchase date that may arise with respect to the repurchase or repayment of any debt instruments following a Change of Control or other change in control, other than debt instruments constituting Consolidated Senior Debt. (b) In the event that the Company has Excess Cash Flow in excess of $5,000,000 in any fiscal year of the Company, beginning with the fiscal year of the Company ending in December 1995, the Company shall make an Offer to Purchase Securities having an aggregate outstanding principal amount equal to the Excess CF Amount relating to such Excess Cash Flow in such fiscal year, and, no later than April 15 of the year immediately following such fiscal year of the Company in which Excess Cash Flow exceeds $5,000,000, mail an Offer to each Holder to purchase such outstand- -45- 52 ing principal amount of Securities at a purchase price equal to 100% of the outstanding principal amount thereof together with interest accrued thereon to the Purchase Date therefor; provided, however, that installments of interest whose Stated Maturity is on or prior to such Purchase Date shall be payable to the Holders of such Securities, registered as such at the close of business on the relevant record dates according to the terms of the Securities; provided, further, that no such Offer shall be made if, at the time of mailing such Offer, a Default or an Event of Default exists or would exist after giving effect to the transactions contemplated by such Offer (assuming such Offer were fully subscribed); provided, still further, that the Company, at its option, may reduce the principal amount of Securities it must purchase pursuant to this Section 3.09(b) by the principal amount of Securities acquired by the Company in the open market prior to the Purchase Date applicable to such purchase if (i) such previously acquired Securities are retired prior to such Purchase Date, (ii) no such previously acquired Security has theretofore been used as a credit by the Company or otherwise to satisfy any obligations of the Company (including, without limitation, the obligation of the Company under this Section 3.09(b)), and (iii) the Company delivers an Officers' Certificate to the Trustee and each Holder to the effect set forth in clauses (i) and (ii) above not less than ten (10) Business Days prior to the applicable Purchase Date. To the extent that an Offer to Purchase pursuant to this Section is not fully subscribed, the Company may retain the unutilized amount of such Excess CF Amount for general corporate purposes in accordance with the terms of this Indenture. To the extent that an Offer to Purchase pursuant to this Section 3.09(b) is over-subscribed, the principal amount of the Securities to be purchased shall be allocated on a pro rata basis in proportion to the relative principal amounts as to which the Offer was accepted, and in connection with such proration the Company shall, in good faith, make such adjustments, reallocations and eliminations as shall be necessary to maintain the Securities in integral multiples of $1,000. (c) The Company shall perform its obligations specified in each Offer for each Offer to Purchase. On the Purchase Date in each such Offer, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 3.10) money sufficient to pay the Purchase Price of all Securities or portions thereof so accepted and (iii) deliver or cause to be delivered to the Trustee all Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security or Securities equal in principal amount to any unpurchased portion of the Security surrendered as requested by -46- 53 the Holder. Notwithstanding the foregoing terms of this clause (c), payments to be made with respect to Securities issued pursuant to the Note Agreement shall be made in accordance with paragraph 7A of the Note Agreement. Any Security not accepted for payment shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Offer to Purchase on or as soon as practicable after the Purchase Date. (d) Prior to the time required for the mailing of an Offer with respect to an Offer to Purchase pursuant to clause (a) and (b) above, the Company will in good faith (i) seek to obtain any required consent under the GECC Lease Documents so as to permit the making of the Offer to Purchase and the purchase of Securities pursuant to this section, or (ii) repay all or a portion of the Indebtedness under the GECC Lease Documents to the extent necessary (including, if necessary payment in full of such Indebtedness and payment of any prepayment premiums, fees, expenses or penalties) to permit the making of the Offer to Purchase and the purchase of Securities pursuant to clause (a) or (b) of this Section without such consent. Following compliance by the Company with the requirements of the foregoing sentence, the Company shall, within the time required for the mailing of an Offer with respect to an Offer to Purchase pursuant to clause (a), mail such Offer. (e) If any Offer to Purchase is made pursuant to this Section, the Company covenants that it shall (and if applicable shall cause its Subsidiaries to) comply with all applicable tender offer rules and regulations under all state and Federal securities laws, including, but not limited to, Section 14(e) under the Exchange Act and Rule 14e-1 thereunder. SECTION 3.10. Money for Security Payments to be Held in Trust. If the Company, any Subsidiary of the Company or any of their respective Affiliates shall at any time act as its own Paying Agent, such Paying Agent shall, on or before each due date of the principal of, interest on or Yield-Maintenance Amount with respect to the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal or interest so becoming due until such sum shall be paid to such Persons or otherwise disposed of as herein provided, and shall promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it shall, on or prior to each date for the payment of the principal of or interest on the Securities, deposit with a Paying Agent in immediately available funds a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such payments; and, unless such Paying Agent is the Trustee, the Company shall promptly notify the Trustee of its action or failure so to act. -47- 54 For the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, the Company may at any time pay, or direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent, as the case may be, shall be released from all further liability with respect to such money. SECTION 3.11 GECC Closing Documents. The Company shall take such actions as may be reasonably necessary or appropriate to satisfy promptly the conditions precedent set forth in the GECC Intercreditor Agreement. SECTION 3.12. Further Actions -- Collateral. The Company shall, and shall cause each of its Subsidiaries that are a party to any Collateral Document to, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Property, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to such Property, which the Required Holders or the Collateral Agent reasonably deems appropriate or advisable to perfect, preserve, protect or enforce the Lien of the Collateral Agent in such Property (and, to the extent so deemed to be appropriate or advisable, to create such a Lien with respect to Property acquired by the Company or any such Subsidiary after the Effective Date). Without limiting the foregoing, the Company and each such Subsidiary shall, at its own expense with respect to any real estate acquired by it after the Effective Date, concurrently with such acquisition execute, deliver and provide to the Collateral Agent such Mortgages and other documents as the Required Holders or the Collateral Agent may reasonably deem appropriate or advisable to create a first priority (subject to Permitted Liens) valid and perfected Lien in such Property in favor of the Collateral Agent. ARTICLE 4 NEGATIVE COVENANTS SECTION 4.01. Certain Financial Covenants. (a) Consolidated Tangible Net Worth. The Company covenants that it will not cause or permit Consolidated Tangible Net Worth, at any time: -48- 55 (i) During each "Clause (i) Test Period" (as defined below) occurring during the period commencing on the Effective Date and ending on December 28, 1995, to be less than an amount (the "Clause (i) Amount") equal to (1) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (i) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (i) Test Period; where "Clause (i) Test Period" means, at any time, the period (taken as one accounting period) commencing on March 31, 1995 and ending on the then most recently ended fiscal quarter of the Company; (ii) During each "Clause (ii) Test Period" (as defined below) occurring during the period commencing on December 29, 1995 and ending on December 26, 1996, to be less than an amount (the "Clause (ii) Amount") equal to (1) the greater of (X) the Clause (i) Amount at December 28, 1995, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (ii) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (ii) Test Period; where "Clause (ii) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 29, 1995 and ending on the then most recently ended fiscal quarter of the Company; (iii) During each "Clause (iii) Test Period" (as defined below) occurring during the period commencing on December 27, 1996 and ending on December 25, 1997, to be less than an amount (the "Clause (iii) Amount") equal to (1) the greater of (X) the Clause (ii) Amount at December 26, 1996, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iii) Test Period (or zero in the case of a deficit), and (Y) $1,250,000 multiplied by the number of the Company's fiscal quarters that have ended during such Clause (iii) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iii) Test Period; where "Clause (iii) Test Period" means, at any time, the period (taken as a one accounting period) commencing on December 27, 1996 and ending on the then most recently ended fiscal quarter of the Company; (iv) During each "Clause (iv) Test Period" (as defined below) occurring during the period commencing on December 26, -49- 56 1997 and ending on December 31, 1998, to be less than an amount (the "Clause (iv) Amount") equal to (1) the greater of (X) the Clause (iii) Amount at December 25, 1997, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iv) Test Period (or zero in the case of a deficit), and (Y) $2,500,000 multiplied by the number of the Company's fiscal quarters, at the time of determination, that have ended during such Clause (iv) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iv) Test Period; where "Clause (iv) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 26, 1997 and ending on the then most recently ended fiscal quarter of the Company; and (v) During each "Clause (v) Test Period" (as defined below) occurring after January 1, 1999 and thereafter, to be less than an amount equal to (1) the greater of (X) the Clause (iv) Amount at December 31, 1998, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (v) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (v) Test Period; where "Clause (v) Test Period" means, at any time, the period (taken as one accounting period) commencing on January 1, 1999 and ending on the then most recently ended fiscal quarter of the Company. (b) Fixed Charge Coverage Ratio. The Company covenants that it will not cause or permit the ratio of (i) Consolidated Cash Flow for the twelve month period ending at the end of any fiscal quarter of the Company to (ii) Consolidated Fixed Charges for each such twelve month period to be less than the ratio set forth below for the period set forth below in which such fiscal quarter ends: Ratio Period 1.45:1 Effective Date through December 28, 1995 1.50:1 December 29, 1995 through December 26, 1996 1.55:1 December 27, 1996 and thereafter. -50- 57 SECTION 4.02. Limitation on Restricted Payments and Restricted Investments. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Company or its Subsidiaries or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or its Subsidiaries, other than dividends, distributions or payments payable or made solely in shares of Capital Stock in the Company of the same class held by such holders (other than Redeemable Stock) or in options, warrants or other rights to purchase such shares; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Company or any Subsidiary; (iii) make any principal payment on, or purchase, redeem, repurchase, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value, prior to any stated or scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory redemption payment, any Restricted Debt (the foregoing actions, set forth in clauses (i) through (iii) being referred to as "Restricted Payments"); or (iv) make any Investment (the foregoing action being referred to as a "Restricted Investment"); unless at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed Restricted Payment or proposed Restricted Investment:: (1) no Default or Event of Default exists or would exist; and (2) (i) the aggregate amount expended for all Restricted Payments subsequent to March 30, 1995, plus (ii) the aggregate amount expended for all Restricted Investments made subsequent to March 30, 1995, does not exceed the sum of: (A) 50% (or minus 100% in the event of a deficit) of Consolidated Net Income calculated on a cumulative basis for the period commencing on March 31, 1995 and continuing through the last day of the Company's fiscal quarter immediately preceding the Company's fiscal quarter in which the Restricted Payment or Restricted Investment, as the case may be, is proposed to be made; plus (B) the aggregate net cash proceeds received by the Company (i) from the issuance or sale (other than to a Subsidiary of the Company), after the Effective Date, of Capital Stock in the Company (other than Redeemable Stock), (ii) upon conversion after the Effective Date of any Debt of the Company that is, by its original terms, convertible into -51- 58 Capital Stock (other than Redeemable Stock) in the Company (with the aggregate net cash proceeds being deemed to be the principal amount of the Debt so converted), or (iii) from the exercise for cash after the Effective Date of any options, warrants or other rights to acquire Capital Stock (other than Redeemable Stock) in the Company; plus (C) $10,000,000; provided, however, that in no event may Restricted Payments made subsequent to March 30, 1995 exceed the sum of the amounts described in clause (A) and (B) above plus $5,000,000. (b) Notwithstanding clause (a) above, the provisions of this Section shall not prohibit: (i) (A) the payment by any Subsidiary of the Company of dividends or other distributions to the Company or a Wholly Owned Subsidiary of the Company or the redemption or repurchase by any such Subsidiary of any Capital Stock in such Subsidiary owned by the Company or a Wholly Owned Subsidiary of the Company, or (B) the payment of pro rata dividends to holders of minority interests in the Capital Stock in a Subsidiary of the Company; provided, however, that, in the case of clause (B) no Default or Event or Default has occurred and is continuing or would occur as a result thereof; (ii) (a) consummation of the 10.25% Notes Exchange, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; and (b) consummation of the exchange of Series B Securities for Series A Securities, and Series D Securities for Series C Securities, as contemplated by the Registration Rights Agreement and (c) consummation of an exchange of Subsequent Second Priority Notes solely for Second Priority Notes; (iii) Investments in the amounts existing on the date hereof and specifically described on Schedule 4.02 attached hereto; (iv) Investments (subject to Section 3.05) by the Company in Wholly Owned Subsidiaries of the Company having lines of business that are substantially similar or materially related to the Company's lines of business existing on the Effective Date, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; (v) Investments in Cash Equivalents; (vi) the acquisition, redemption or retirement of Capital Stock in the Company solely in exchange for (A) Capital Stock -52- 59 in the Company of the same class as the Capital Stock that is being acquired, redeemed or retired or (B) Common Stock of the Company; and (vii) the acquisition, redemption or retirement of Debt of the Company or its Subsidiaries (A) which is subordinated in right of payment to the Securities solely in exchange for Common Stock in the Company, or (B) as part of a refinancing thereof permitted by Section 4.03(a)(xi). (c) Notwithstanding clause (b) above, the payments described in clause (b) (i) (B) above shall be included in any calculation of the sum of the amount of Restricted Payments. SECTION 4.03. Limitation on Indebtedness. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly permit to exist, create, incur, issue, assume, guaranty or otherwise become liable with respect to, extend the maturity of or become responsible for the payment of, any Debt (including, without limitation, any Acquired Debt) other than: (i) Debt of the Company evidenced by the Securities; (ii) Debt of the Company evidenced by the 10.25% Notes; (iii) Debt of the Company evidenced by the Second Priority Notes and the Subsequent Second Priority Notes, provided, however, that: (1) the aggregate principal amount of the Second Priority Notes and the Subsequent Second Priority Notes do not at any time exceed $50,000,000, (2) such Second Priority Notes and Subsequent Second Priority Notes have terms substantially identical to the 10.25% Notes and in any event no less favorable to the Company than those set forth in the 10.25% Notes and the 10.25% Notes Indenture (provided, however, that the Second Priority Notes and Subsequent Second Priority Notes may be secured by Liens that are Permitted Liens described in clause (xi) of the definition of Permitted Liens and the final maturity thereof may be prior to the final maturity of the 10.25% Notes, subject to clause (3) below), (3) the final maturity of such Second Priority Notes and Subsequent Second Priority Notes is not prior to June 15, 2000, and (4) without limiting the foregoing clause (3), such Second Priority Notes and Subsequent Second Priority Notes shall not have any scheduled principal installment or other principal payments due until after the final maturity of the Securities; (iv) Debt of the Company under the Revolving Credit Agreement (including any refinancings thereof), provided, that the aggregate principal amount of such Debt does not at any time exceed $35,000,000; -53- 60 (v) Debt of the Company or any of its Subsidiaries under the Letter of Credit Agreement (and any refinancing thereof), provided the aggregate amount of such Debt does not exceed $28,000,000 at any time; (vi) Debt of the Company and certain Subsidiaries of the Company under the GECC Lease Documents (including any refinancings thereof) in an aggregate principal amount not to exceed the principal amount thereof outstanding as of the Effective Date less any scheduled amortization after the Effective Date of such Indebtedness when actually paid by the Company or its Subsidiaries; provided, however, that no refinancing of such Debt under the GECC Lease Documents shall be permitted unless: (1) such refinancing Debt shall have an Average Life at the time such refinancing is incurred that is equal to or greater than the Average Life of the Debt to be refinanced, (2) such refinancing Debt shall be in a principal amount not in excess of the principal amount of the Debt to be refinanced (including the amount (if any), up to $10,000,000, by which the Stipulated Loss Value exceeds the then outstanding principal amount of the Debt to be refinanced); (vii) Debt evidenced by guaranties made by the Company's Subsidiaries of the Debt described in clauses (i), (iii), (iv) and (v) of this Section; (viii) Debt of the Company or any of its Subsidiaries under Currency Agreements and Interest Rate Agreements; provided, that such Currency Agreements and Interest Rate Agreements do not increase the outstanding Debt of the Company other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Debt of a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company; (x) Debt of the Company's Subsidiaries existing on the Effective Date and described on Schedule 4.03 hereto; (xi) other Debt of a Subsidiary of the Company that directly refinances any Debt of such Subsidiary described in the immediately foregoing clause (x); provided, however, that (1) the principal amount of such refinancing Debt does not exceed the principal amount of the Debt to be refinanced, (2) the terms of such refinancing Debt are, in all material respects, no less favorable to such Subsidiary than the terms of the Debt to be refinanced and (3) without limiting the foregoing clause (2) no refinancing Debt may be secured to any greater extent than is the Debt to be refinanced; provided, further, that notwithstanding clause (1) above, the aggregate principal amount of Debt refinancing existing lines of credit -54- 61 of the Company's Subsidiaries may equal up to $10,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time any such refinancing Debt is incurred). (xii) Debt of the Company or any of its Subsidiaries (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, or (B) arising under guarantees incurred in the ordinary course of business (and not in connection with the borrowing of money) with respect to suppliers, licensees, franchisees or customers of the Company or such Subsidiary; (xiii) other Debt of the Company and the Company's Subsidiaries (including, without limitation, Purchase Money Indebtedness and Acquired Debt); provided, however, that the aggregate outstanding principal amount thereof shall at no time exceed $15,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time such Debt is incurred); provided, further, that the aggregate outstanding amount of Purchase Money Indebtedness to be incurred in connection with the purchase of any Property shall not exceed 90% of the cash purchase price to be paid for such Property; and (xiv) other Debt of the Company (not secured by any Lien); provided, however, that at no time shall (1) Consolidated Senior Debt be more than 52.5% of Consolidated Total Capitalization, or (2) Consolidated Debt be more than 85% of Consolidated Total Capitalization. (b) For purposes of determining any particular amount of Debt under this Section, Guarantees of (or obligations with respect to letters of credit supporting) Debt otherwise included in the determination of such amount shall not also be included. SECTION 4.04. Limitation on Liens. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur or permit to exist any Lien of any nature whatsoever on any of its properties (including, without limitation, Capital Stock), whether owned on the Effective Date or thereafter acquired, other than Permitted Liens. SECTION 4.05. Limitation on Company Mergers, Consolidations, and Sales. (a) The Company covenants that it shall not merge or consolidate with any other Person or, directly or indirectly, Transfer, -55- 62 all or substantially all of its Property in a single transaction or series of related transactions, unless in any such case: (i) at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed merger, consolidation or Transfer, no Default or Event of Default exists or would exist after giving effect thereto; (ii) in the event that the Company is to consolidate with or merge into another Person, or to Transfer all or substantially all of its Property to another Person, such Person shall be a corporation organized and validly existing under the laws of a State of the United States of America or the District of Columbia and shall expressly assume in writing all obligations of the Company under all Credit Documents to which the Company is a party pursuant to such written agreements and instruments as the Trustee may request (which shall include an indenture supplemental to this Indenture) and which in each case shall be in form and substance satisfactory to the Trustee; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or Transfer (and if a supplemental indenture is required, such supplemental indenture) complies with this Section and that all conditions precedent herein provided for with respect thereto have been completely satisfied. (b) Upon any consolidation of the Company with, or merger of the Company with or into, any other Person or any Transfer of all or substantially all of the Property of the Company in accordance with this Section, the entity formed by or surviving such transaction shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. SECTION 4.06. Limitation on Certain Asset Sales and Subsidiary Mergers. Without limiting Section 4.05 above, the Company covenants that (i) it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly Transfer any of its Property, and (ii) the Company shall not permit any of its Subsidiaries to merge or consolidate with any other Person except: (a) any Wholly Owned Subsidiary of the Company may merge with, or sell all or substantially all of its Property to, the Company or another Wholly Owned Subsidiary of the Company if at -56- 63 the time of and immediately after giving effect to (determined on a pro forma basis) such proposed transaction no Default or Event of Default exists or would exist after giving effect thereto; (b) the Company may Transfer assets (excluding Capital Stock of a Material Subsidiary) to the extent permitted under Section 4.05 and may issue and sell its Capital Stock subject to Section 3.09(a); (c) the Company or any such Subsidiary may sell inventory in the ordinary course of business and equipment that is determined to be obsolete in accordance with GAAP or concurrently replaced by equipment (not subject to any Lien other than Permitted Liens) of the same type having a fair market value at least equal to the fair market value of the equipment so replaced; (d) the Company or any such Subsidiary (subject to clause (f) below) may otherwise Transfer Property (excluding Capital Stock of a Material Subsidiary), and any such Subsidiary (subject to clause (f) below) may consummate a Transfer by Merger; provided that after giving effect thereto (1) the Percentage of Total Assets Transferred in any fiscal year of the Company (excluding assets described in clauses (a) and (c) above) shall not exceed 10%; and (2) the Percentage of Total Assets Transferred (excluding assets described in clauses (a) and (c) above) at any time after the Effective Date on a cumulative basis shall not exceed 15%; and (e) the Company or any Subsidiary of the Company (subject to clause (f) below) may Transfer other Property (not constituting Capital Stock of any Material Subsidiary), and any Subsidiary of the Company (subject to clause (f) below) may consummate other Transfers by Merger if: (1) at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed Transfer of Property or Transfer by Merger (as the case may be) no Default or Event of Default exists or would exist; (2) the consideration to be paid to the Company or such Subsidiary (as the case may be) is at least equal to the fair market value of the assets to be Transferred (or, in the case of a Transfer by Merger, the fair market value of the Subsidiary subject thereto), in each case as reasonably determined by the Board of Directors; and (3) the proceeds from such Transfer of Property or Transfer by Merger (net of (X) reasonable expenses incurred by the Company or the Subsidiary (as the case may be) incidental thereto, (Y) the amount of any taxes (reasonably determined by -57- 64 the Company in good faith) owing by the Company or such Subsidiary (as the case may be) as a result thereof, and (Z) any mandatory repayment of permitted Debt (if any) secured by a Permitted Lien on the Property being Transferred that is prior to the Lien securing the Consolidated Secured Debt) are immediately applied to redeem the Securities and otherwise repay the other Consolidated Secured Debt outstanding at such time, such application of proceeds to be made pro rata to the holders of the Consolidated Secured Debt based on the then outstanding principal amount of each such holder's holding of Consolidated Secured Debt (or, in the case of the Lender, the Revolving Loan Commitment) in proportion to the aggregate amount of Consolidated Secured Debt then outstanding (or, in the case of the Lender, the Revolving Loan Commitment); provided, however, that such redemption or repayment pursuant to this clause (3) shall be deferred until the amount of proceeds to be so redeemed and otherwise repaid equals or exceeds $5,000,000, with any such lesser amounts not used for redemption or repayment to be aggregated with proceeds subsequently received from Transfers to be utilized for redemption or repayment at such point as such aggregate amount equals or exceeds $5,000,000. The Company shall make each redemption required under Section 4.06(e)(3) on a date (the "Transfer Redemption Date") which is the first Business Day next following the 30th day after the date of the Transfer or Transfer by Merger giving rise thereto (such date of Transfer or Merger by Transfer, the "Transfer Date"). If less than all of the outstanding Securities are to be redeemed under Section 4.06(e)(3), the principal amount so redeemed shall be allocated to all Securities at the time outstanding in proportion to the respective outstanding principal amounts thereof. The redemption price for each Security (or portion thereof) redeemed under Section 4.06(e)(3) (the "Transfer Redemption Price") shall equal 100% of the principal amount thereof plus the Yield-Maintenance Amount, if any, with respect thereto. The Company shall give written notice on the Transfer Date of such redemption to the Trustee and all Holders. Such notice shall include all of the information specified in Section 9.03(1) through (8) and a description of the material terms of the Transfer or Transfer by Merger giving rise to such redemption notice. Redemption under Section 4.06(e)(3) shall be subject to the provisions of Sections 9.04, 9.05, 9.06 and 9.07; provided, however, that the Company shall, on the Transfer Date, irrevocably deposit with the Paying Agent for the benefit of the Holders the amount of the proceeds to be applied to redeem Securities pursuant to Section 4.06(e)(3). (f) Notwithstanding anything to the contrary in this Section 4.06, the Company shall not permit any Material Subsidiary, directly or indirectly, to Transfer all or substan- -58- 65 tially all of its assets in a single transaction or series of related transactions or merge or consolidate with any Person other than as permitted under Section 4.06(a). SECTION 4.07. Limitation on Payment Restrictions Affecting Subsidiaries. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction which by its terms expressly restricts the ability of any Subsidiary of the Company to: (a) pay dividends or make any other distributions on the Capital Stock in such Subsidiary or any other interest or participation in, or measured by, its profits owned by, or pay any Debt owed to, the Company or any such Subsidiary, (b) make any loans or advances to the Company or any such Subsidiary or (c) transfer any of its Property to the Company or to any such Subsidiary, except for (i) such encumbrances or restrictions existing under or by reason of any encumbrance or restriction existing by reason of applicable law; (ii) such encumbrances or restrictions existing on the Effective Date and described in reasonable detail on Schedule 4.07 hereto, including, without limitation, any encumbrances or restrictions under Debt of the Company or any of its Subsidiaries listed on Schedule 4.03; (iii) such encumbrances or restrictions as may exist under refinancing Debt permitted under Section 4.03(xi); provided, however, that any such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary than the encumbrances or restrictions included in the Debt to be refinanced; (iv) such encumbrances or restrictions as may exist under any Acquired Debt at the time incurred by the Company or such Subsidiary; provided, however, that such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary as the then existing most onerous such encumbrances and restrictions applicable to the Company or such Subsidiary; (v) the provisions of any lease governing a leasehold interest or of any supply, license or other agreement entered into in the ordinary course of business of the Company or any Subsidiary that restrict in a customary manner transfer, subleasing or assignment; and (vi) any restrictions with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition. SECTION 4.08. Transactions with Affiliates. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, any purchase, sale or exchange of Property, the making of any Investment, the giving of any guarantee or the rendering of any service), with any Affiliate -59- 66 of the Company or of any Subsidiary of the Company unless the terms of such transaction or series of related transactions are no less favorable to the Company or such Subsidiary, as the case may be, than those that might be obtained at the time of such transaction from a Person who is not such an Affiliate; provided, however, that in addition to the foregoing, any such transaction (or series of related transactions), other than Exempted Transactions, that has a fair market value to the Company or such Subsidiary of $10,000,000 or more shall be deemed to be on terms no less favorable to the Company or such Subsidiary than those obtainable at the time of the transaction from a Person who is not such an Affiliate only if the Board of Directors of the Company receives and delivers to the Trustee, prior to such transaction, a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Company or such Subsidiary from a financial point of view. (b) The provisions set forth in clause (a) above shall not apply to (i) the payment of fees, salaries or other amounts to DPK in accordance with the express terms of the Management Agreement, provided, however, that the aggregate amount of all such fees, salaries and other amounts shall not exceed $5,000,000 (determined without regard to the value of options to purchase the Company's Common Stock) in the aggregate in any consecutive twelve month period, (ii) any transaction between the Company and any of its Wholly Owned Subsidiaries, (iii) the payment of reasonable and customary fees (including options to purchase the Company's Common Stock) to directors of the Company or any of the Subsidiaries of the Company who are not employees of the Company or any Subsidiary of the Company as the same may be deemed advisable or appropriate by the Board of Directors, or (iv) loans or advances to officers, members of the Board of Directors and employees of the Company or any of its Subsidiaries for travel, entertainment or moving and other relocation expenses made in the ordinary course of business of the Company and its Subsidiaries as the same may be deemed advisable or appropriate by the Board of Directors. SECTION 4.09. Limitations on the Sale of Stock and Debt of Subsidiaries. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, sell or otherwise dispose of, or part with control of, any Capital Stock (other than directors' qualifying shares or nominee shares) or Indebtedness of any Subsidiary of the Company, except to the Company or a Wholly Owned Subsidiary of the Company, and except that all Capital Stock and Indebtedness of any such Subsidiary may be sold as an entirety provided that (a) at the time of such sale, such Subsidiary shall not own, directly or indirectly, any Capital Stock or Indebtedness of any other Subsidiary (unless all of the Capital Stock and Indebtedness of such other Subsidiary are simultaneously being sold), and (b) such sale would be permitted by Section 4.05 and 4.06. -60- 67 SECTION 4.10. Sale and Lease-Back Transactions. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, enter into any arrangement with any Person providing for the leasing by the Company or such Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company or such Subsidiary. SECTION 4.11. Sale or Discount of Receivables. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable. SECTION 4.12. Pension Plan Funding Deficiency. The Company covenants that it shall not, and shall not permit any member of the Control Group to, on and after the Effective Date (a) incur or permit to exist any accumulated funding deficiency within the meaning of Section 302(a)(2) of ERISA or Section 412(a) of the Code, or (b) incur any liability (other than for premiums due but not yet paid) to the Pension Benefit Guaranty Corporation, in either case in connection with any Title IV Plan to which contributions are made by the Company or any member of the Control Group after the Effective Date and which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. SECTION 4.13. Limitation on Issuance and Sale of Capital Stock of Subsidiaries. The Company covenants that it shall not (a) permit any Subsidiary of the Company to issue or sell any Capital Stock in such Subsidiary other than to the Company or a Wholly Owned Subsidiary of the Company or (b) permit any Person other than the Company or a Wholly Owned Subsidiary of the Company to hold any Capital Stock issued after the Effective Date in any Subsidiary of the Company; provided, however, that the Company or any Subsidiary of the Company may sell Common Stock to the extent permitted under Section 4.06; provided, further, that this Section 4.13 shall not be deemed to prohibit the Company or any Subsidiary of the Company from making any Investment (including, without limitation, Investments in a Person such that after giving effect thereto such Person may be a less than wholly owned Subsidiary of the Company) permitted by Section 4.02. -61- 68 SECTION 4.14. Limitation on Fiscal Year Changes. The Company covenants that it shall not change its fiscal year end from the last Thursday in each December of each year nor shall it make any change to its corresponding fiscal quarter end; provided, however, that the Company may make a one time change in its fiscal year end to December 31 of each year (a "Fiscal Year Change") so long as (i) its fiscal quarter end is concurrently changed to the last day of each calendar quarter and (ii) the Company gives not less than 5 Business Days prior notice thereof to the Trustee, each Holder and the Collateral Agent. Upon and after the effectiveness of the Fiscal Year Change (if any) and as to all periods after (but not before) such Fiscal Year Change: (a) the references in Section 4.01(a) to "December 25," "December 26," "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31;" and (b) the references in Section 4.01(b) to "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31." ARTICLE 5 DEFAULTS AND REMEDIES SECTION 5.01. Acceleration. If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise): (a) the Company defaults in the payment of any principal of, or Yield-Maintenance Amount with respect to, any Security when the same shall become due, either by the terms thereof or otherwise as provided in this Indenture (pursuant to Sections 3.09(a), 3.09(b), 4.06(e)(3), 9.01(a), 9.01(b) or otherwise) or any note purchase agreement relating thereto; or (b) the Company defaults in the payment of any interest on any Security (including, without limitation, payment of any increase in interest pursuant to Section 2.01(c)) for more than 5 Business Days after the date due; or (c) the Company or any Subsidiary of the Company defaults (whether as primary obligor or as guarantor or other surety) in any payment of principal of or interest on the 10.25% Notes, the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), any loan under the Revolving Credit Agreement, any reimbursement obligations under the Letter of Credit Agreement, any Capital Lease Obligation under the GECC Lease Documents or any other obligation for money borrowed (or -62- 69 any Capital Lease Obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or any obligation under notes payable or drafts accepted representing extensions of credit or any obligation to pay or reimburse any Person for any amount paid under any letter of credit, any proposal, bid, performance or other bond, or under any indemnity agreement) beyond any period of grace provided with respect thereto, or the Company or any such Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such obligation is created (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause, such obligation to become due (or to be repurchased by the Company or any such Subsidiary) prior to any stated maturity, provided that, except in respect of the Revolving Credit Agreement, the Letter of Credit Agreement and the GECC Lease Documents, the aggregate amount of all obligations as to which such a payment default shall occur and be continuing or such a failure or other event causing or permitting acceleration (or resale to the Company or any Subsidiary) shall occur and be continuing exceeds $5,000,000; or (d) any representation or warranty made by the Company or any Subsidiary of the Company or any Responsible Officer thereof in any writing or statement furnished in connection with or pursuant to this Indenture, the Securities or any other Credit Document shall be false in any material respect on the date as of which made; or (e) the Company fails to observe or perform any covenant, condition or agreement contained in Article 4 or Sections 3.09 or 3.10; or (f) the Company fails to observe or perform any covenant, condition or agreement on the part of the Company to be observed or performed pursuant to the terms of this Indenture or the Securities (other than a covenant, condition or agreement which is specifically dealt with elsewhere in this Section), and such failure continues for 30 days after any Responsible Officer of the Company learns thereof; or (g) the Company or any Material Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or (h) any decree or order for relief in respect of the Company or any Material Subsidiary is entered under any bankruptcy, reorganization, compromise, arrangement, insolven- -63- 70 cy, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; or (i) the Company or any Material Subsidiary petitions or applies to any tribunal for, or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of the Company or any Material Subsidiary, or of any substantial part of its assets or commences a voluntary case under the Bankruptcy Law of any jurisdiction or any proceedings relating to the Company or any such Material Subsidiary under the Bankruptcy Law of any jurisdiction; or (j) any such petition or application is filed, or any such proceedings are commenced, against the Company or any Material Subsidiary and the Company or such Material Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (k) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary decreeing the dissolution of the Company or any such Material Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (l) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary of the Company decreeing a split-up of the Company or such Material Subsidiary, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (m) one or more judgments or orders in an aggregate amount in excess of $5,000,000 (net of cash proceeds actually received by, or paid on behalf of, the Company with respect to such judgments or orders) are rendered against the Company or any Subsidiary of the Company and, within 60 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged; or (n) the occurrence of any "Event of Default" (as defined in any Credit Document other than this Indenture) or the breach of any covenant, warranty or agreement set forth in any Credit Document (other than this Indenture or the Securities), which Event of Default or breach continues beyond any period of grace therein provided; or -64- 71 (o) the Guaranty Agreement shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability or the Guaranty Agreement, or any guarantor thereunder shall fail to comply with any of the terms or provisions of the Guaranty Agreement or denies that it has any further liability under the Guaranty Agreement, or gives notice to such effect; or (p) the Collateral Agent shall cease to possess at any time a valid, first priority (subject to Permitted Liens) perfected Lien in and on any of the Collateral (other than Collateral having a de minimis value); or (q) any Termination Event occurs; then (1) if such event is an Event of Default specified in clause (h), (i) or (j) of this Section with respect to the Company, all of the Securities at the time outstanding shall automatically become immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Amount, if any, with respect to such Security, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company, (2) if such event is an Event of Default specified in clause (a) or clause (b) of this Section, any Holder of a Security at any time such Event of Default is continuing, at its option, by notice in writing to the Company, may declare all or any part of the Securities owned by such Holder to be, and all such Securities shall thereupon be and become, forthwith due and payable at par together with interest accrued thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company, and (3) if such event is an Event of Default other than an Event of Default specified in clause (h), (i) or (j) of this Section with respect to the Company, the Required Holders may at their option, or the Trustee shall upon the written request of the Required Holders, by notice in writing to the Company, declare all of the Securities to be, and all of the Securities shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Amount, if any, with respect to each Security, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company. SECTION 5.02. Other Remedies. Notwithstanding any other provision in this Indenture, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by an action at law, suit in equity or other appropriate proceeding to collect the payment of principal of and/or interest and the Yield-Maintenance Amount on the Securities or to enforce the performance of any provision of the Securities or this Indenture. -65- 72 The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default or a Default shall not impair the right or remedy or constitute a waiver of or acquiescence in such Event of Default or Default. All available remedies are cumulative to the extent permitted by law. SECTION 5.03. Rescission of Acceleration. At any time after any or all of the Securities shall have been declared immediately due and payable pursuant to Section 5.01, the Required Holders may, by notice in writing to the Company and the Trustee, rescind and annul such declaration and its consequences (including without limitation, consequences arising pursuant to the Collateral Documents) if (i) the Company shall have paid all overdue interest on the Securities, the principal of and Yield-Maintenance Amount, if any, payable with respect to any Securities which have become due otherwise than by reason of such declaration, and interest on such overdue interest and overdue principal and Yield-Maintenance Amount at the rate specified in the Securities, (ii) the Company shall not have paid any amounts which have become due solely by reason of such declaration, (iii) all Events of Default and Defaults, other than non-payment of amounts which have become due solely by reason of such declaration, shall have been cured or waived pursuant to Section 5.05, and (iv) no judgment or decree shall have been entered for the payment of any amounts due pursuant to the Securities or this Indenture. No such rescission or annulment shall extend to or affect any subsequent Event of Default or Default or impair any right arising therefrom. SECTION 5.04. Notice of Acceleration or Rescission. Whenever any Security shall be declared immediately due and payable pursuant to Section 5.01 or any such declaration shall be rescinded and annulled pursuant to Section 5.03, the Company shall forthwith give written notice thereof to the Trustee and to each Holder of each Security at the time outstanding. SECTION 5.05. Waiver of Defaults. Subject to Section 5.08 and Section 8.02, holders of not less than a majority in aggregate principal amount of the then outstanding Securities by notice to the Trustee may waive any existing Default or Event of Default and its consequences except a continuing Default or Event of Default in the payment of principal or interest and Yield-Maintenance Amount (if any) on any Security; provided, however, that if under the terms of the Intercreditor Agreement the Trustee has agreed that it will not waive any provision of this Indenture without the consent of the "Requisite Working Capital Lenders" (as defined in the Intercreditor Agreement), no such waiver shall be effective unless and until such -66- 73 consent has been given. When a Default or Event of Default is so waived, it is deemed cured and it ceases to exist, but no such waiver shall extend to any subsequent Default or Event of Default or impair any right consequent thereon. SECTION 5.06. Control by Majority. Holders of a majority in aggregate principal amount of the then outstanding Securities, by notice given to the Trustee, may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it (including, without limitation, taking any action or omitting to take any action under or pursuant to the Intercreditor Agreement or any other Collateral Document). However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of other Holders or would subject the Trustee to personal liability, unless the Trustee is indemnified to its satisfaction against such liability as further provided in Section 6.01(e). The Trustee may take any other action deemed proper by the Trustee and that is not inconsistent with such direction. SECTION 5.07 Limitation on Suits. Except as provided in Section 5.08 and Section 5.01, no Holder (other than a "Significant Holder" (as defined in the Note Agreement)) may pursue any remedy with respect to this Indenture or the Securities unless: (1) such Holder gives to the Trustee written notice of a continuing Event of Default; (2) Holders of not less than a majority in aggregate principal amount of the then outstanding Securities make a request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after the receipt of such request and offer of indemnity; and (5) prior to or during such 60-day period, the Holders of a majority in aggregate principal amount of the then outstanding Securities do not give the Trustee a direction inconsistent with the request. -67- 74 A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 5.08. Rights of Holders to Receive Payment. Subject to the provisions of Section 5.01, and notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, interest on and the Yield-Maintenance Amount (if any) with respect to any Security, on or after the respective due dates expressed in such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 5.09. Collection Suit by Trustee. If an Event of Default specified in clause (a)(1) or (a)(2) of Section 5.01 occurs and is continuing, the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders, the whole amount then due and payable on the Securities for principal and interest and Yield-Maintenance Amount (if any), and interest on any overdue principal and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installment of interest and any Yield-Maintenance Amount, at the Default Rate, and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, in accordance with the preceding paragraph, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Securities for the whole amount of principal and accrued interest and Yield-Maintenance Amount (if any) remaining unpaid on the Securities, together with, to the extent that payment of such interest is lawful, interest on overdue principal and interest on overdue installments of interest and Yield-Maintenance Amount (if any), in each case at the Default Rate, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 5.10. Trustee May File Proofs of Claim. In the case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company (or any other obligor upon the Securities), the Securities or the Property of the Company, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as -68- 75 therein expressed or by acceleration or otherwise, and irrespective of whether the Trustee shall have made any demand on the Company or any other obligor on the Securities for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, to file and prove a claim for the whole amount of principal and interest and Yield-Maintenance Amount (if any) owing and unpaid in respect of the Securities, to file such other papers or documents and to participate as a member, voting or otherwise, of any committee of creditors, as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding. The Trustee is entitled and empowered to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same, and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments, directly to the Holders and to pay to the Trustee any amount due to it for reasonable compensation, expenses, disbursements, advances and other amounts due the Trustee under Section 6.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding, except that the Trustee shall be permitted to participate as a member of any committee of creditors (as set forth in the first paragraph of this Section 5.10). SECTION 5.11. Priorities. If the Trustee collects any money pursuant to this Article 5, it shall pay out the money in the following order: (1) First, to the Trustee for amounts due to it for reasonable compensation, expenses, disbursements, advances and other amounts due to it under Section 6.07; (2) Second, to Holders for amounts due and unpaid on the Securities for principal and interest and Yield-Maintenance Amount (if any), ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and (3) Third, to the Persons entitled thereto. -69- 76 The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 5.11. SECTION 5.12. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted to be taken by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and disbursements, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 5.12 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 5.01 or Section 5.08, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Securities. ARTICLE 6 TRUSTEE SECTION 6.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture but need not verify the accuracy of the contents thereof. (c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: -70- 77 (1) this paragraph shall not limit the effect of paragraph (b) of this Section nor of TIA Section 315(a); (2) the Trustee shall not be liable for any error of judgment made by it in good faith, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to the terms of this Indenture. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to the provisions of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. Notwithstanding anything to the contrary contained elsewhere in this Indenture, the Intercreditor Agreement or any of the Collateral Documents, in the event the Trustee is entitled or required to direct the Collateral Agent to commence an action to foreclose any Mortgage or otherwise exercise its remedies to acquire control or possession of any mortgaged property, the Trustee shall not be required to direct the Collateral Agent to commence any such action or exercise any such remedy if the Trustee has determined in good faith that the Trustee may incur liability under the Environmental Laws as the result of the presence at, or release on or from, the mortgaged property of any toxic or hazardous waste, substance or chemical or any pollutant, contaminant or other substance regulated by any Environmental Law (collectively, "Hazardous Materials") unless the Trustee has received security or indemnity in an amount and in a form all satisfactory to the Trustee in its sole discretion, protecting the Trustee from all such liability. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk any of its own funds or incur any liability other than as expressly assumed by the Trustee hereunder unless it receives indemnity satisfactory to it against loss, liability, cost or expense. (h) Except as otherwise set forth in Article 7, the Trustee or a Paying Agent shall, after deduction of amounts due to it, promptly pay any money received by it to the Holders of the Securities pursuant to the terms of this Indenture. -71- 78 (i) In no event shall the Trustee be required to take any action to preserve or realize on the Collateral unless the Trustee receives indemnity satisfactory to it against costs, expenses and liabilities related thereto. In no event shall the institution serving as Trustee be required to provide any indemnity to the Collateral Agent payable personally by such institution. SECTION 6.02. Rights of Trustee. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. The Trustee may conclusively rely as to the identity and addresses of Holders and other matters contained therein on the register of the Securities maintained by the Registrar pursuant to Section 2.03 and shall not be affected by notice to the contrary. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate and an Opinion of Counsel and may make such other investigation as it deems appropriate. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on any Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its own choosing and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (c) The Trustee may act through Trust Officers and other agents or attorneys and shall not be responsible for the misconduct or negligence of any Trust Officer or other agent or attorney appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, provided that the Trustee's conduct does not constitute negligence or bad faith. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by a Responsible Officer of the Company. SECTION 6.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. The Trustee, however, is subject to Sections 6.10 and 6.11. -72- 79 SECTION 6.04. Trustee's Disclaimer. The Trustee makes no representation as to the legality, validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, or any money paid to the Company or upon the Company's direction under any provision hereof, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement in the Securities other than its authentication or for any statement of the Company in this Indenture. Without limiting the foregoing, the Trustee makes no representation as to the legality, validity or adequacy of any Collateral Documents or as to the creation, perfection or priority of any Lien purported to be granted thereunder. The Trustee shall have no obligation to review the content of any financial statements filed by the Company with the Trustee, including, without limitation, for the purpose of monitoring compliance by the Company with its financial covenants, as to which the Trustee shall have no responsibility. SECTION 6.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give each Holder notice of the Default or Event of Default within 90 days after it occurs, unless such Default or Event of Default shall have been cured or waived. Except in the case of a Default or Event of Default in payment on any Security, the Trustee may withhold notice if and for so long as its Board of Directors, executive committee or a trust committee of its directors and/or Trust Officers in good faith determines that withholding the notice is in the interests of Holders. The notices provided for in this Section 6.05 shall be given in the manner and to the extent provided in TIA Section 313(c). SECTION 6.06. Reports by Trustee to Holders. This Section 6.06 shall not be operative as a part of this Indenture until this Indenture is qualified under the TIA and, until such qualification, this Indenture shall be construed as if this Section 6.06 were not contained therein. Within 60 days after each May 15 following the date of this Indenture, the Trustee shall mail to Holders and the Company a brief report dated as of such date that complies with TIA Section 313 (a); provided, however, that if no event described in TIA Section 313 (a) has occurred within the previous twelve (12) months then no report need be transmitted. The Trustee shall also comply with TIA Section 313(c) and transmit all reports required by TIA Section 313(b). A copy of each such report shall be filed, at the time of its mailing to Holders, with the SEC and each stock exchange, if any, -73- 80 on which the Securities are listed. The Company shall notify the Trustee when the Securities are listed on any stock exchange or any delisting thereof. SECTION 6.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation relating to the trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by it in the performance of its rights and obligations hereunder. Such expenses shall include the reasonable compensation, disbursements and out-of-pocket expenses of the Trustee's Trust Officers, other agents, accountants, experts and counsel. Such expenses shall also include any taxes or other reasonable costs incurred by any trust created under Section 7.01. The Company shall indemnify the Trustee for, and hold it harmless against, any loss or liability or expense incurred by it in connection with the administration of this trust (including any duties pursuant to Section 7.01 hereof) and its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder and any liability, costs or expenses of indemnifying the Collateral Agent pursuant to the Intercreditor Agreement. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section 6.07, the Trustee shall have a Lien prior to the Securities on all money or Property held or collected by the Trustee (including any amounts held pursuant to Section 7.01 hereof), except money or Property held in trust to pay principal of or interest on particular Securities. Such Lien shall survive the satisfaction and discharge of this Indenture. The Company's obligations under this Section 6.07 and any Lien arising hereunder shall survive the resignation or removal of any Trustee, the discharge of the Company's obligations pursuant to Article 7 and/or the termination of this Indenture. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Sections 5.01(h), (i) or (j), such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law. -74- 81 Without limiting the foregoing in any way, the Company shall also indemnify the Trustee for, and hold it harmless against, any loss or liability incurred by the Trustee (including reasonable attorneys' and consultants' fees and court costs) arising from or relating to any Environmental Laws or Hazardous Materials concerning any mortgaged property or any breach or alleged breach by the Company of any representation, warranty or covenant in this Indenture or any Collateral Document relating to environmental matters. SECTION 6.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 6.08. The Trustee may resign at any time. The Holders of a majority in aggregate principal amount of the then outstanding Securities may remove the Trustee by so notifying the Trustee and the Company. If: (1) the Trustee fails or ceases to comply with Section 6.10 after written request by the Company or any Holder who has been a bona fide holder of a Security for at least six months; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its Property; or (4) the Trustee becomes incapable of acting, then, in any such case, (i) the Company, by resolution of the Board of Directors, may remove the Trustee, or (ii) subject to TIA Section 315(e), a Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring -75- 82 Trustee, the Company or the Holders of at least 10% in aggregate principal amount of the then outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. The Company shall give notice to the Holders of each removal or resignation of a Trustee and appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately thereafter, subject to the Lien provided in Section 6.07, the retiring Trustee shall transfer all Property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all of the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall give a notice of its succession to each Holder. Notwithstanding the replacement of the Trustee pursuant to this Section 6.08, the Company's obligations under Section 6.07 hereof shall continue for the benefit of the retiring Trustee in connection with its rights and duties hereunder prior to such replacement. No successor Trustee shall accept its appointment unless it shall be qualified and eligible under this Article. SECTION 6.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee if such successor corporation complies with Section 6.10. SECTION 6.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus of at least $50,000,000. The Trustee is subject to TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee. -76- 83 SECTION 6.11. Preferential Collection of Claims Against Company. This Indenture and Trustee are subject to, and the Trustee shall at all times comply with, TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or has been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 7 DISCHARGE OF INDENTURE SECTION 7.01. Termination of Company's Obligations. The Company may terminate, and shall be discharged from, all its obligations under the Securities and this Indenture (except those obligations of the Company referred to in Sections 6.07, 7.03 and 7.04, which shall survive) when all Securities previously authenticated and delivered (other than mutilated, destroyed, lost or stolen Securities which have been replaced or paid or Securities for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in Section 7.03) have been delivered to the Trustee for cancellation and the Company has paid to all Holders all sums payable by it hereunder and under the Securities. SECTION 7.02. Application of Trust Money. The Paying Agent shall hold in trust all money deposited with it for payment to Holders, and shall apply the deposited money in accordance with this Indenture to the payment of principal of and interest and Yield-Maintenance Amount (if any) on the Securities. SECTION 7.03. Repayment to Company. Subject to applicable laws relating to the escheat of deposits, the Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess money held by them at any time. Subject to applicable laws relating to the escheat of deposits, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest on Securities that remains unclaimed for two years after the date upon which such payment shall have come due; provided, however, that the Trustee or such Paying Agent shall, upon the written request and at the expense of the Company, cause to be published once in a newspaper of general circulation in The City of New York or mailed to each Holder entitled to such money, notice that such money remains unclaimed and that, after a date specified therein, which date shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After -77- 84 payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person. SECTION 7.04. Reinstatement. If the Paying Agent is unable to apply any money in accordance with Sections 7.01 and 7.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 7.01 until such time as the Paying Agent is permitted to apply all such money in accordance with Section 7.01; provided, however, that if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Paying Agent. ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 8.01. Without Consent of Holders. The Company, when duly authorized by a resolution of its Board of Directors, and the Trustee may amend or supplement this Indenture or the Securities for the benefit of the Holders without notice to or consent of any Holder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 4.05; (3) to comply with the requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, as contemplated by Section 12.01 or otherwise; or (4) to evidence the acceptance of appointment by a successor Trustee. Notwithstanding the foregoing, the Company and the Trustee may not amend or supplement this Indenture in any manner that adversely affects the rights of any Holder. After an amendment under this Section becomes effective, the Company shall give Holders a notice briefly describing the amendment. SECTION 8.02. With Consent of Holders. Subject to Section 5.08, the Company, when duly authorized by a resolution of its Board of Directors, and the Trustee may amend -78- 85 this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Securities; provided, however, that if under the terms of the Intercreditor Agreement the Trustee has agreed that it will not amend this Indenture without the consent of the "Requisite Working Capital Lenders" (as defined in the Intercreditor Agreement), no such amendment shall be effective unless and until such consent has been given. Subject to Sections 5.05 and 5.08, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive future compliance in a particular instance by the Company with any provision of this Indenture or the Securities. Notwithstanding the provisions of this Section 8.02, without the written consent of each Holder affected thereby, an amendment or waiver, including a waiver pursuant to Section 5.05, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment or waiver of any provision of this Indenture; (2) reduce the rate of or change the method of calculation, the time for payment or the manner of payment of interest or Yield-Maintenance Amount on any Security; (3) reduce the principal of or change the Stated Maturity of any Security, or change the date on which any Security may be subject to redemption or reduce the Redemption Price therefor; (4) make any Security payable in money other than that stated in the Security; (5) make any change in Sections 3.09(a), 3.09(b), 5.01(2), 5.05 or 5.08 or in this Section 8.02 or the definitions of "Change of Control" or "Excess Cash Flow"; (6) waive a Default in the payment of the principal of, interest on or redemption payment under any Security; or (7) affect the rankings or with respect to the Collateral, the priority of the Securities, in each case in a manner adverse to the Holders. To secure a consent of the Holders under this Section, it shall not be necessary for the Holders to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment or waiver under this Section 8.02 becomes effective, the Company shall give to all Holders affected thereby and to the Trustee a notice briefly describing the amendment or -79- 86 waiver. Any failure by the Company to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Upon the request of the Company accompanied by a copy of a resolution of the Board of Directors of the Company authorizing the execution of any such supplemental indenture and upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture. SECTION 8.03. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities shall be set forth in a supplemental indenture that complies with the TIA as then in effect. SECTION 8.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 8.05. Notation on or Exchange of Securities. Upon the Company's request, the Trustee shall place an appropriate notation (to be provided by the Company) about an amendment or waiver on any Security thereafter authenticated. The Company in exchange for all Securities may execute and issue and the Trustee shall authenticate new Securities that reflect the amendment or waiver. SECTION 8.06. Trustee Protected. The Trustee shall sign all amendments, supplemental indentures and waivers, except that the Trustee need not sign any supplemental indenture that adversely affects its rights. In signing or refusing to sign such amendment, supplemental indenture or waiver, the Trustee shall be entitled to receive and, subject to Section 6.01, shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment, supplemental indenture or waiver is authorized or permitted by this Indenture, that it is not inconsistent herewith, that all conditions precedent to the execution thereof have been met, that it will be valid and binding upon the Company in accordance with its terms and that, after the execution thereof, the Company will not be in Default and no Event of Default will have occurred and be continuing. -80- 87 SECTION 8.07. Record Date. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any supplemental indenture, agreement or instrument or any waiver or any other action by vote or consent authorized or permitted under this Indenture, and shall promptly notify the Trustee of any such record date. If a record date is fixed, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to vote or consent to such supplemental indenture, agreement or instrument or waiver or such other action or to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date. No such vote or consent shall be valid or effective for more than 90 days after such record date. ARTICLE 9 REDEMPTIONS SECTION 9.01. Mandatory and Optional Redemptions; Notice to Trustee. (a) The Company shall redeem, on June 15, 1999 (the "Mandatory Redemption Date"), Securities in the principal amount of $80,000,000 (or, if less, the aggregate principal amount of all Securities then outstanding) at a price (the "Mandatory Redemption Price") equal to 100% of the principal amount thereof plus accrued and unpaid interest to June 15, 1999. The Mandatory Redemption Price shall be due and payable on June 15, 1999. Except to the extent otherwise provided in paragraph 7A of the Note Agreement, upon surrender to the Paying Agent of the Securities to be so redeemed, the Paying Agent shall pay the Holder thereof the Mandatory Redemption Price. (b) (i) The Company may redeem (an "Optional Redemption") all or any portion of the Securities at any time after the Effective Date at a price (the "Optional Redemption Price") equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the Optional Redemption Date and plus the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. Except to the extent otherwise provided in paragraph 7A of the Note Agreement, upon surrender to the Paying Agent of the Securities to be so redeemed, the Paying Agent shall pay the Holder thereof the Optional Redemption Price. (ii) If the Company elects to redeem Securities pursuant to the immediately foregoing paragraph (b) of this Section 9.01, it shall give the Trustee written notice, as set forth below, -81- 88 of the date fixed by the Company for such redemption (the "Optional Redemption Date") and the principal amount of Securities to be redeemed. (iii) The Company shall give notice to the Trustee by an Officers' Certificate certifying resolutions of its Board of Directors authorizing the Optional Redemption and that such redemption is being made in accordance with this Indenture and the Securities. The Company shall give such notice at least 45 days but not more than 60 days before the Optional Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). SECTION 9.02. Pro Rata Allocation of the Securities to be Redeemed. If less than all of the outstanding Securities are to be redeemed under Section 9.01(a) or 9.01(b), the principal amount so redeemed shall be allocated to all Securities at the time outstanding (including, for the purpose of this Section 9.02 only, all Securities purchased on the open market or otherwise purchased, redeemed, acquired or retired by the Company or any of its Subsidiaries or Affiliates other than by redemption pursuant to Sections 4.06, 9.01(a) or (b)) in proportion to the respective outstanding principal amounts thereof. In any proration pursuant to this Section, the Company shall, in good faith, make such adjustments, reallocations and eliminations as shall be necessary to the end that the principal amount of Securities so prorated shall be $1,000 or a multiple thereof, by increasing or decreasing or eliminating the amount which would be allocable to any Holder on the basis of exact proportion by an amount not exceeding $1,000. Provisions of this Indenture that apply to Securities called for redemption shall also apply to portions of Securities called for redemption. SECTION 9.03. Notice of Redemption. At least 30 but not more than 60 days before a Redemption Date, the Company shall give a notice of redemption to each Holder whose Securities are to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the Section of this Indenture pursuant to which such redemption is to be made; (2) the Redemption Date; (3) the aggregate principal amount to be redeemed, the amount of accrued interest, if any, thereon to be paid and whether a Yield-Maintenance Amount is to be paid; -82- 89 (4) the name and address of the Paying Agent; (5) that the Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price, except to the extent otherwise provided in paragraph 7A of the Note Agreement; (6) that, unless the Company defaults in making the redemption payment, interest on the Securities called for redemption ceases to accrue on and after the specified Redemption Date and the only remaining right of the Holders is to receive payment of the Redemption Price upon surrender (except to the extent otherwise provided in paragraph 7A of the Note Agreement to the Trustee or the Paying Agent of the Securities; (7) if any Security is being redeemed in part, the portion of the principal amount (equal to $1,000 or any integral multiple thereof) of such Security to be redeemed and that, on or after the Redemption Date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued; and (8) the CUSIP number of the Securities, if any, pursuant to Section 2.13. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense. In such event, the Company shall provide the Trustee with the information required by clauses (1), (2), (3), (6), (7) and (8) above. SECTION 9.04. Effect of Notice of Redemption. Once notice of redemption is mailed (after the Trustee has received the notice provided for in Section 9.01(d)), the Securities or portion thereof called for redemption become due and payable on the Redemption Date and at the Redemption Price and shall cease to bear interest from and after the Redemption Date (unless the Company shall fail to make payment of the Redemption Price on the Redemption Date). Except to the extent otherwise provided in paragraph 7A of the Note Agreement, upon surrender to the Paying Agent such Securities or portion thereof shall be paid at the Redemption Price to the Redemption Date but interest installments whose maturity is on or prior to the Redemption Date will be payable to the Holder of record at the close of business on the relevant record dates referred to in the Securities. SECTION 9.05. Deposit of Redemption Price. Except to the extent otherwise provided in paragraph 7A of the Note Agreement, on or prior to 10:00 a.m. New York City time, on each Redemption Date, the Company shall deposit with the Trustee or Paying Agent (or if the Company, or a Subsidiary or an Affiliate of -83- 90 the Company, acts as Paying Agent, such Paying Agent shall segregate and hold in a separate trust fund for the sole benefit of the Holders) money, in federal or other immediately available funds, sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than Securities or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation. So long as the Company complies with the preceding paragraph, (or, paragraph 7A of the Note Agreement, as applicable) interest on the Securities or portion thereof to be redeemed on the applicable Redemption Date shall cease to accrue and such Securities or portions thereof shall be deemed not to be entitled to any benefit under this Indenture except to receive payment of the Redemption Price. If any Security called for redemption shall not be so paid upon surrender for redemption because of failure of the Company to comply with the preceding paragraph (or, as applicable, a failure to comply with paragraph 7A of the Note Agreement), interest will be paid from the Redemption Date until such principal is paid on the unpaid principal and, to the extent permitted by law, any unpaid Yield-Maintenance Amount and unpaid interest, in each case at the Default Rate. The Paying Agent shall return to the Company any money not required for making payments required hereunder. SECTION 9.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and issue and the Trustee shall authenticate a new Security equal in principal amount to the unredeemed portion of the Security surrendered. SECTION 9.07. Partial Redemptions. Redemptions made by the Company pursuant to the terms of this Indenture, other than Section 9.01(a), shall not in any way reduce or otherwise limit the aggregate principal amount of the Securities to be redeemed on June 15, 1999 pursuant to Section 9.01(a). The Company may not credit previously acquired Securities to satisfy any of its obligations under Section 9.01(a). ARTICLE 10 MEETINGS OF HOLDERS SECTION 10.01. Purposes for Which Meetings May Be Called. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article 10 for any of the following purposes: (a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee (including, without -84- 91 limitation, in connection with the Intercreditor Agreement), or to waive or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 5; (b) to remove the Trustee or appoint a successor Trustee pursuant to the provisions of Article 6; (c) to consent to an amendment, supplement or waiver pursuant to the provisions of Section 8.02; or (d) to take any other action (i) authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities under any other provision of this Indenture, or authorized or permitted by law or (ii) which the Trustee deems necessary or appropriate in connection with the administration of this Indenture. SECTION 10.02. Manner of Calling Meetings. The Trustee may at any time call a meeting of Holders to take any action specified in Section 10.01, to be held at such time and at such place in The City of New York, New York or elsewhere as the Trustee shall determine. Notice of every meeting of Holders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to the Company and to the Holders at their last addresses as they shall appear on the registration books of the Registrar not less than 10 nor more than 60 days prior to the date fixed for a meeting. Any meeting of Holders shall be valid without notice if the Holders of all Securities then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all Securities outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice. SECTION 10.03. Call of Meetings by Company or Holders. In case at any time the Company, pursuant to a resolution of its Board of Directors, or the Holders of not less than 10% in aggregate principal amount of the Securities then outstanding shall have requested the Trustee to call a meeting of Holders to take any action specified in Section 10.01, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or the Holders of Securities in the amount above specified may determine the time and place in The City of New York, New York or elsewhere for such meeting and may call such meeting for the -85- 92 purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 10.02, or by causing notice thereof to be published at least once in each of two successive calendar weeks (on any Business Day during such week) in a newspaper or newspapers printed in the English language, customarily published at least five days a week of a general circulation in The City of New York, New York, the first such publication to be not less than 10 nor more than 60 days prior to the date fixed for the meeting. SECTION 10.04. Who May Attend and Vote at Meetings. To be entitled to vote at any meeting of Holders, a person shall (a) be a registered Holder of one or more Securities, or (b) be a person appointed by an instrument in writing as proxy for the registered Holder or Holders of Securities. The only persons who shall be entitled to be present or to speak at any meeting of Holders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its respective counsel. SECTION 10.05. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment. Notwithstanding any other provision of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any action by or any meeting of Holders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, aid submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think appropriate. Such regulations may fix a record date and time for determining the Holders of record of Securities entitled to vote at such meeting, in which case those and only those persons who are Holders of Securities at the record date and time so fixed, or their proxies, shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 10.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote. At any meeting each Holder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or -86- 93 represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Securities challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman may adjourn any such meeting if he is unable to determine whether any Holder or proxy shall be entitled to vote at such meeting. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 10.02 or Section 10.03 may be adjourned from time to time by vote of the Holders of a majority in aggregate principal amount of the Securities represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice. SECTION 10.06. Voting at the Meeting and Record to Be Kept. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amount of the Securities voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that such notice was mailed as provided in Section 10.02 or published as provided in Section 10.03. The record shall be signed and verified by the affidavits of the permanent chairman and the secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 10.07. Exercise of Rights of Trustee or Holders May Not Be Hindered or Delayed by Call of Meeting. Nothing contained in this Article 10 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Securities. -87- 94 ARTICLE 11 CERTAIN COLLATERAL MATTERS SECTION 11.01. Collateral Documents. In order to secure the due and punctual payment of the principal of, interest on and Yield-Maintenance Amount (if any) with respect to the Securities when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Securities and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture and the Securities and of the Subsidiary Guarantors under the Guaranty Agreement, according to the terms hereunder or thereunder, the Company and the Subsidiary Guarantors have entered into the Collateral Documents and have made an assignment and pledge of their respective rights, title and interests in and to the Collateral to the Collateral Agent pursuant to the Collateral Documents and provided for the benefit and security of the parties secured under the Collateral Documents to the extent therein provided. Each Holder of a Security, by its acceptance thereof, consents and agrees to the terms of the Collateral Documents and the Intercreditor Agreement (including, without limitation, the provisions providing for foreclosure and release of Collateral and indemnification of the Collateral Agent) as the same may be in effect or may be amended from time to time in accordance with their terms and authorizes and directs the Trustee to enter into, and perform its obligations under, the Intercreditor Agreement. The Company will deliver to the Trustee copies of all documents delivered to the Collateral Agent pursuant to the Collateral Documents, and will do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Collateral Documents and the Collateral Agent to assure and confirm to the Trustee and the Collateral Agent the security interest in the Collateral contemplated hereby, by the Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Securities secured hereby, according to the intent and purposes herein expressed. The Trustee shall promptly (and in any event within one (1) Business Day) foreward to the Collateral Agent any and all instructions received by the Trustee from any Holder for the purpose of being forwarded to the Collateral Agent in connection with the Intercreditor Agreement and matters contemplated thereby (such instructions to be provided to the Collateral Agent in the same manner received by the Trustee (e.g., by facsimile transmission)). -88- 95 SECTION 11.02. Recording and Opinions. With respect to (a) below, promptly after the Effective Date and, with respect to (b) below, upon qualification of this Indenture under the TIA, the Company shall furnish to the Trustee and the Collateral Agent: (a) promptly after the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, the Collateral Documents, the financing statements or other instruments necessary to make effective the lien intended to be created by the Collateral Documents, and reciting with respect to the security interests in the Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such lien effective; and (b) within 30 days after June 1 in each year beginning June 1, 1996, an Opinion of Counsel, dated as of such date, either (i) (1) stating that, in the opinion of such counsel, action has been taken with respect to the recording, registering, filing, re- recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the lien of the Collateral Documents and reciting with respect to the security interests in the Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given and (2) stating that, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements and continuation statements have been executed and filed that are necessary as of such date fully to preserve and protect the rights of the Holders, the Collateral Agent and the Trustee hereunder and under the Collateral Documents with respect to the security interests in the Collateral, or (ii) stating that, in the opinion of such Counsel, no such action is necessary to maintain such lien and assignment. SECTION 11.03. Certificates of the Company. At all times after qualification of this Indenture under the TIA, the Company will furnish to the Trustee: (a) within 15 days after the end of each year ended on December 31, and each calendar quarter ended June 30 in each year beginning with the calendar quarter ending June 30, 1995, a certificate from an officer stating that all dispositions of inventory (as defined in the New York Uniform Commercial Code) and all collections of accounts receivable during such period (other than any such transaction as to which subclauses (i) and -89- 96 (ii) of clause (b) below were complied with) were made in the ordinary course of business or as otherwise permitted herein and that all proceeds therefrom were used by the Company and its Subsidiaries in the ordinary course of its business or otherwise as permitted herein; and (b) prior to each proposed release of Collateral pursuant to the Collateral Documents other than by reason of transactions referred to in the preceding clause (a), (i) all documents required by TIA Section 314(d) and an Opinion of Counsel to the effect that such accompanying documents constitute all documents required by TIA Section 314(d) or (ii) an Opinion of Counsel to the effect that TIA Section 314(d) does not apply to such proposed release of Collateral and no delivery of documents thereunder is required. In connection with clause (i) above, the Trustee may, to the extent permitted by Sections 6.01 and 6.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such instruments. SECTION 11.04. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents. The Trustee is authorized to receive any funds for the benefit of Holders distributed under the Intercreditor Agreement, and to make further distributions of such funds to the Holders according to the provisions of this Indenture. ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision that is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 12.02. Notices. All notices and communications to the Company or the Trustee shall be in writing and shall be duly given if delivered in Person or mailed by first class mail, postage prepaid, to the following addresses or transmitted by the telecopier and confirmed by overnight courier guaranteeing next day delivery: -90- 97 The Company's address is: Envirodyne Industries, Inc. 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 Telephone: (708) 575-2400 Telecopier: (708) 571-0959 Attention: President The Trustee's address is: Shawmut Bank Connecticut, National Association, as Trustee 777 Main Street - MSN 238 Hartford, Connecticut 06115 Attention: Corporate Trust Administration The Company or the Trustee by notice to the other, may designate additional or different addresses for subsequent notices or communications. All notices and communications to a Holder shall be in writing and shall be mailed by first class mail, postage prepaid, to the Holder's address shown on the register kept by the Registrar; provided, that items required under the TIA to be sent to Holders in compliance with TIA Section 313(c) shall be mailed to Holders in compliance with such section. Failure to mail a notice or a communication to a Holder or any defect in any notice given to a Holder shall not affect the sufficiency of such notice with respect to other Holders. If a notice or communication is delivered or mailed to a Holder in the manner provided above within the time prescribed, it is duly given, whether or not the Holder receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities. The Trustee shall comply with the provisions of TIA Section 312(b). The Company, any other obligor on the Securities, the Trustee, the Registrar and any agent of any of them shall have the protection of TIA Section 312(c). -91- 98 SECTION 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or other obligor on the Securities to the Trustee to take any action under this Indenture, the Company or such other obligor shall furnish to the Trustee: (a) an Officers' Certificate reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; (b) an Opinion of Counsel reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with and that such action or inaction is in compliance with applicable law; and (c) other than for the initial request by the Company to the Trustee to authenticate and issue the Securities, an Accountants' Certificate stating that, in the opinion of such accountant, such action may be taken under this Indenture without the occurrence of a Default or Event of Default pursuant to Sections 4.01, 4.02, 4.03, 4.05, and 4.06. SECTION 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an opinion of counsel may rely on Officers' Certificates, Accountants' Certificates or certificates of public officials unless such counsel knows, or in the exercise of reasonable care should know, that the Officers' Certificate, Accountants' Certificate or certificate of public official with respect to such matters is erroneous. -92- 99 SECTION 12.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or any day on which banking institutions in the Borough of Manhattan, City of New York, or Hartford, Connecticut, are not required to be open. If a payment date is a Legal Holiday at the place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 12.08. No Recourse Against Others. The Securities and the obligations of the Company under this Indenture are solely obligations of the Company and no past, present or future officer, director, employee or stockholder, as such, of the Company or any Surviving Corporation shall be liable for any failure by the Company to perform any of its obligations hereunder or pursuant to the Securities. SECTION 12.09. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 12.10. Duplicate Originals. The parties may sign any number of copies of this Indenture. one signed copy is sufficient to prove this Indenture. SECTION 12.11. Governing Law. The internal laws of the State of New York shall govern this Indenture and the Securities without regard to principles of conflicts of law. SECTION 12.12. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. -93- 100 SECTION 12.13. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.14. Severability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.15. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 12.16. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of a Default or an Event of Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by the Trustee or a Holder to prohibit (through equitable action or otherwise) the taking of any action by the Company or a Subsidiary of the Company which would result in any Event of Default or Default. SECTION 12.17. Notice of Note Agreement Amendment, Etc. The Company shall promptly notify the Trustee in writing of any amendment, supplement or other modification to the Note Agreement affecting the rights or obligations of the Trustee under this Indenture and provide to the Trustee, upon its request, a copy of any such amendment, supplement or modification certified in an Officers' Certificate as being a true and complete copy. Without limiting Section 6.02(b), the Company further agrees (i) to provide to the Trustee such information as the Trustee may reasonably request with respect to payments on the Securities to be made directly by the Company pursuant to paragraph 7A of the Note Agreement, and (ii) not to amend, supplement or modify paragraph 7A or paragraph 7F of the Note Agreement to impose obligations upon the Trustee without the Trustee's prior written consent. -94- 101 SIGNATURES ENVIRODYNE INDUSTRIES, INC. Dated: June 20, 1995 By: __________________________ Name: Stephen M. Schuster Title: Vice President Attest: _________________________ Name: Gordon S. Donovan Title: Assistant Secretary SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, as Trustee Dated: June 20, 1995 By: __________________________ Name: Vito J. Iacovazzi Title: Vice President -95- 102 Exhibit A-1 No. __________ $___________ (Face of Security) [FORM OF SERIES A SECURITY] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO ENVIRODYNE INDUSTRIES, INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. A-1-1 103 ENVIRODYNE INDUSTRIES, INC. Incorporated under the laws of the State of Delaware 12% First Priority Senior Secured Note Due 2000, Series A ENVIRODYNE INDUSTRIES, INC. promises to pay to _____________ or registered assigns the principal sum of ___________________ Dollars on June 15, 2000 and to pay interest thereon semi-annually in arrears at the rate of 12% per annum on December 15 and June 15 of each year until the principal hereof is paid or made available for payment. Payment of principal and interest shall be made in the manner and subject to the terms set forth in provisions appearing on the reverse hereof, which provisions, in their entirety, shall for all purposes have the same effect as if set forth at this place. Pursuant to the Guaranty Agreement, the payment of principal of and interest hereon is unconditionally guaranteed by each of the Subsidiary Guarantors. To the extent set forth in the Collateral Documents, payment hereon is secured, on an equal and ratable basis with all other Securities by a valid, perfected security interest in the Collateral, the terms of which security interests are more fully set forth in the Collateral Documents. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereof shall have been signed by or on behalf of the Trustee under the Indenture referred to on the reverse side hereof. IN WITNESS WHEREOF, ENVIRODYNE INDUSTRIES, INC. has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its President or a Vice President and attested by its Secretary or an Assistant Secretary. ENVIRODYNE INDUSTRIES, INC. By ____________________________________ Attest: ___________________________ [SEAL] A-1-2 104 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the First Priority Senior Secured Notes Due 2000 issued under the Indenture mentioned in this Note. Dated: __________________________ _____________________________ as Trustee By __________________________ Authorized Signatory A-1-3 105 (Back of Security) ENVIRODYNE INDUSTRIES, INC. 12% First Priority Senior Secured Note Due 2000, Series A 1. Interest and Principal Payments. ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (the "Company", which term shall include its permitted successors and assigns), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semi-annually in arrears on December 15 and June 15 of each year, commencing December 15, 1995. Interest on the Securities shall accrue from the most recent date on which interest has been paid or, if no interest has been paid, from June 20, 1995. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay the principal amount of this Security on June 15, 2000. The Company shall pay interest on overdue principal at the Default Rate per annum and interest on overdue installments of interest and Yield-Maintenance Amount, to the extent lawful, at the same rate. Interest on the Securities shall automatically be increased (and, if applicable, thereafter automatically decreased but in any event not below the original rate of interest) as and to the extent required pursuant to the terms of Section 6 of the Registration Rights Agreement. 2. Method of Payment. The Company shall pay interest on the Securities (except interest on overdue interest) to the Persons who are registered Holders of Securities at the close of business on the regular record date, which shall be the December 1 and June 1, as the case may be, next preceding the interest payment date even though Securities are cancelled after the record date and on or before the interest payment date. Any such interest not so punctually paid or duly provided for, and any interest payable on such overdue interest (to the extent lawful), shall forthwith cease to be payable to the Holder on such regular record date and shall be payable to the Person in whose name this Security is registered at the close of business on a special record date for the payment of such interest on overdue interest to be fixed by the Company, notice of which shall be given to Holders not less than 15 days prior to such special record date. The Company shall pay principal, Yield-Maintenance Amount (if any), and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal, interest and any Yield-Maintenance Amount by check payable in such money. Payment of principal, interest and any Yield-Maintenance Amount shall be made at the office of the Paying Agent. Holders must surrender Securities to a Paying Agent to A-1-4 106 collect principal payments. However, the Company may mail an interest check to a Holder's address then appearing in the register of Securities maintained by the Registrar pursuant to the Indenture. Notwithstanding the foregoing, (a) the Company shall pay or cause to be paid all amounts payable with respect to Restricted Securities or non-DTC eligible Securities by wire transfer of immediately available federal funds to the account of the Holders of the Securities and (b) the Company shall pay or cause to be paid all amounts payable with respect to Securities issued pursuant to the Note Agreement as provided in the Note Agreement with respect thereto. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company or a Subsidiary of the Company or any Affiliate of any of them may act in any such capacity. 4. Indenture. The Company has issued the Securities under an Indenture dated as of June 20, 1995 (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA and thereafter as in effect on the date the Indenture is qualified under the TIA. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Indenture. 5. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples thereof. A Holder may register, transfer or exchange Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 6. Mandatory and Optional Redemption. (a) The Company may optionally redeem the Securities as a whole or in part from time to time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the Redemption Date and plus an amount equal to the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. A-1-5 107 Notice of such redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed, at his registered address as it shall appear upon the register of Securities maintained by the Registrar. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. On and after the Redemption Date interest ceases to accrue on Securities or portions thereof called for redemption. If less than all the Securities are to be redeemed, the Trustee shall select the particular Securities to be redeemed as set forth in the Indenture. (b) The Securities shall be subject to mandatory redemption as set forth in Section 4.06 and Section 9.01(a) of the Indenture. 7. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as its owner for all purposes. 8. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Securities and any existing Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to comply with Section 4.05 of the Indenture, to maintain qualification of the Indenture under the TIA and to evidence the acceptance of appointment by a successor trustee. 9. Defaults and Remedies. The Securities have the Events of Default set forth in Section 5.01 of the Indenture, which include, among others, default for 5 Business Days or more in payment of interest on the Securities and default in payment of principal when due on the Securities. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least a majority in aggregate principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, all outstanding Securities shall become due and payable immediately without further action or notice. Holders of a majority in aggregate principal amount of the then outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences provided that all A-1-6 108 existing Events of Default have been cured or waived to the extent required in the Indenture and certain other conditions specified in the Indenture are satisfied. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interest. 10. Offers to Purchase. The Company shall be required to make an Offer to Purchase Securities as, and to the extent, set forth in the Indenture. 11. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, its Subsidiaries or their Affiliates, and may otherwise deal with the Company, its Subsidiaries or their Affiliates, as if it were not Trustee. 12. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the Issue of the Securities. 13. Unclaimed Money. If money for the payment of principal of or interest on any Security remains unclaimed for two years after the date on which such payment shall have come due, the Trustee or Paying Agent will pay the money back to the Company at the Company's written request. After that, Holders entitled to this money must look to the Company for payment, unless a law governing abandoned property designates another Person. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, make Restricted Payments or Restricted Investments, create, incur or permit to exist Debt, enter into or permit certain transactions with Affiliates, issue or sell any Capital Stock in a Subsidiary of the Company or make distributions on the Capital Stock of any such Subsidiary to Persons other than the Company or a Wholly Owned Subsidiary of the Company, incur Liens or create encumbrances restricting the ability of Subsidiaries of the Company to distribute, loan or transfer Property to the Company. A-1-7 109 15. Discharge. Subject to the terms of the Indenture, the Indenture will be discharged and cancelled upon the payment of all Securities. In addition, at the option of the Company and upon satisfaction of certain conditions specified in the Indenture, either (a) the Company shall be deemed to have paid and discharged its obligations with respect to the Securities or (b) the Company shall not be required to comply with certain covenants contained in the Indenture or otherwise applicable to the Securities, in each case upon the deposit by the Company with the Trustee in trust for the Holders of the Securities of an amount of funds or obligations issued or guaranteed by the United States of America sufficient to pay and discharge upon the stated maturity thereof the entire Indebtedness evidenced by the Securities, all as provided in the Indenture. 16. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UNIF GIFT MIN ACT (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to Envirodyne Industries, Inc., 701 Harger Road, Oak Brook, Illinois 60521 Attention: Corporate Secretary. A-1-8 110 ASSIGNMENT FORM I or we assign and transfer this Security to ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) ________________________________________________________________________________ (Insert Social Security or other identifying number of assignee) and irrevocably appoint ___________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. In connection with any transfer of this Security occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Security (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) June 20, 1998, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that: [Check One] [ ] (a) this Security is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder. or [ ] (b) this Security is being transferred other than in accordance with (a) above or (c) below and documents are being furnished which comply with the conditions of transfer set forth in this Security and the Indenture. or [ ] (c) this Security is being transferred to the Company. 111 If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.15 of the Indenture shall have been satisfied. Dated:______________________ Signed:_______________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:______________________ _______________________________________________ NOTICE: To be executed by an executive officer -2- 112 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 3.09 of the Indenture, check the box below: Section 3.09 [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount: $ Dated:___________________ Your Signature:________________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 113 Exhibit A-2 (Face of Security) FORM OF SERIES B SECURITY ENVIRODYNE INDUSTRIES, INC. Incorporated under the laws of the State of Delaware 12% First Priority Senior Secured Note Due 2000, Series B ENVIRODYNE INDUSTRIES, INC. promises to pay to _____________ or registered assigns the principal sum of ___________________ Dollars on June 15, 2000 and to pay interest thereon semi-annually in arrears at the rate of 12% per annum on December 15 and June 15 of each year until the principal hereof is paid or made available for payment. Payment of principal and interest shall be made in the manner and subject to the terms set forth in provisions appearing on the reverse hereof, which provisions, in their entirety, shall for all purposes have the same effect as if set forth at this place. Pursuant to the Guaranty Agreement, the payment of principal of and interest hereon is unconditionally guaranteed by each of the Subsidiary Guarantors. To the extent set forth in the Collateral Documents, payment hereon is secured, on an equal and ratable basis with all other Securities by a valid, perfected security interest in the Collateral, the terms of which security interests are more fully set forth in the Collateral Documents. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereof shall have been signed by or on behalf of the Trustee under the Indenture referred to on the reverse side hereof. IN WITNESS WHEREOF, ENVIRODYNE INDUSTRIES, INC. has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its President or a Vice President and attested by its Secretary or an Assistant Secretary. ENVIRODYNE INDUSTRIES, INC. By ____________________________________ Attest: ________________________ [SEAL] A-2-1 114 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the First Priority Senior Secured Notes Due 2000 issued under the Indenture mentioned in this Note. Dated: ___________________ _____________________________ as Trustee By __________________________ Authorized Signatory A-2-2 115 (Back of Security) ENVIRODYNE INDUSTRIES, INC. 12% First Priority Senior Secured Note Due 2000, Series B 1. Interest and Principal Payments. ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (the "Company", which term shall include its permitted successors and assigns), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semi-annually in arrears on December 15 and June 15 of each year, commencing December 15, 1995. Interest on the Securities shall accrue from the most recent date on which interest has been paid or, if no interest has been paid, from June 20, 1995. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay the principal amount of this Security on June 15, 2000. The Company shall pay interest on overdue principal at the Default Rate per annum and interest on overdue installments of interest and Yield-Maintenance Amount, to the extent lawful, at the same rate. 2. Method of Payment. The Company shall pay interest on the Securities (except interest on overdue interest) to the Persons who are registered Holders of Securities at the close of business on the regular record date, which shall be the December 1 and June 1, as the case may be, next preceding the interest payment date even though Securities are cancelled after the record date and on or before the interest payment date. Any such interest not so punctually paid or duly provided for, and any interest payable on such overdue interest (to the extent lawful), shall forthwith cease to be payable to the Holder on such regular record date and shall be payable to the Person in whose name this Security is registered at the close of business on a special record date for the payment of such interest on overdue interest to be fixed by the Company, notice of which shall be given to Holders not less than 15 days prior to such special record date. The Company shall pay principal, Yield-Maintenance Amount (if any), and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal, interest and any Yield-Maintenance Amount by check payable in such money. Payment of principal, interest and any Yield-Maintenance Amount shall be made at the office of the Paying Agent. Holders must surrender Securities to a Paying Agent to collect principal payments. However, the Company may mail an interest check to a Holder's address then appearing in the register of Securities maintained by the Registrar pursuant to the Indenture. Notwithstanding the foregoing, (a) the Company shall pay or cause to be paid all amounts payable with respect to Restricted Securities or non-DTC eligible Securities by wire transfer of A-2-3 116 immediately available federal funds to the account of the Holders of the Securities and (b) the Company shall pay or cause to be paid all amounts payable with respect to Securities issued pursuant to the Note Agreement as provided in the Note Agreement with respect thereto. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company or a Subsidiary of the Company or any Affiliate of any of them may act in any such capacity. 4. Indenture. The Company has issued the Securities under an Indenture dated as of June 20, 1995 (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA and thereafter as in effect on the date the Indenture is qualified under the TIA. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Indenture. 5. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples thereof. A Holder may register, transfer or exchange Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 6. Mandatory and Optional Redemption. (a) The Company may optionally redeem the Securities as a whole or in part from time to time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the Redemption Date and plus an amount equal to the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. Notice of such redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed, at his registered address as it shall appear upon the register of Securities maintained by the Registrar. Securities in denominations larger than $1,000 may be redeemed in part but A-2-4 117 only in whole multiples of $1,000. On and after the Redemption Date interest ceases to accrue on Securities or portions thereof called for redemption. If less than all the Securities are to be redeemed, the Trustee shall select the particular Securities to be redeemed as set forth in the Indenture. (b) The Securities shall be subject to mandatory redemption as set forth in Section 4.06 and Section 9.01(a) of the Indenture. 7. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as its owner for all purposes. 8. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Securities and any existing Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to comply with Section 4.05 of the Indenture, to maintain qualification of the Indenture under the TIA and to evidence the acceptance of appointment by a successor trustee. 9. Defaults and Remedies. The Securities have the Events of Default set forth in Section 5.01 of the Indenture, which include, among others, default for 5 Business Days or more in payment of interest on the Securities and default in payment of principal when due on the Securities. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least a majority in aggregate principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, all outstanding Securities shall become due and payable immediately without further action or notice. Holders of a majority in aggregate principal amount of the then outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences provided that all existing Events of Default have been cured or waived to the extent required in the Indenture and certain other conditions specified in the Indenture are satisfied. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, A-2-5 118 Holders of a majority in aggregate principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interest. 10. Offers to Purchase. The Company shall be required to make an Offer to Purchase Securities as, and to the extent, set forth in the Indenture. 11. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, its Subsidiaries or their Affiliates, and may otherwise deal with the Company, its Subsidiaries or their Affiliates, as if it were not Trustee. 12. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the Issue of the Securities. 13. Unclaimed Money. If money for the payment of principal of or interest on any Security remains unclaimed for two years after the date on which such payment shall have come due, the Trustee or Paying Agent will pay the money back to the Company at the Company's written request. After that, Holders entitled to this money must look to the Company for payment, unless a law governing abandoned property designates another Person. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, make Restricted Payments or Restricted Investments, create, incur or permit to exist Debt, enter into or permit certain transactions with Affiliates, issue or sell any Capital Stock in a Subsidiary of the Company or make distributions on the Capital Stock of any such Subsidiary to Persons other than the Company or a Wholly Owned Subsidiary of the Company, incur Liens or create encumbrances restricting the ability of Subsidiaries of the Company to distribute, loan or transfer Property to the Company. 15. Discharge. Subject to the terms of the Indenture, the Indenture will be discharged and cancelled upon the payment of all Securities. In addition, at the option of the Company and upon satisfaction of certain conditions specified in the Indenture, either (a) the Company shall be deemed to have paid and discharged A-2-6 119 its obligations with respect to the Securities or (b) the Company shall not be required to comply with certain covenants contained in the Indenture or otherwise applicable to the Securities, in each case upon the deposit by the Company with the Trustee in trust for the Holders of the Securities of an amount of funds or obligations issued or guaranteed by the United States of America sufficient to pay and discharge upon the stated maturity thereof the entire Indebtedness evidenced by the Securities, all as provided in the Indenture. 16. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UNIF GIFT MIN ACT (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to Envirodyne Industries, Inc., 701 Harger Road, Oak Brook, Illinois 60521 Attention: Corporate Secretary. A-2-7 120 ASSIGNMENT FORM I or we assign and transfer this Security to ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) ________________________________________________________________________________ (Insert Social Security or other identifying number of assignee) and irrevocably appoint ___________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Dated:_______________________ Signed:___________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 121 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 3.09 of the Indenture, check the box below: Section 3.09 [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount: $ Dated:_________________ Your Signature:__________________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 122 Exhibit A-3 No. __________ $___________ (Face of Security) [FORM OF SERIES C SECURITY] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO ENVIRODYNE INDUSTRIES, INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. A-3-1 123 ENVIRODYNE INDUSTRIES, INC. Incorporated under the laws of the State of Delaware Floating Rate First Priority Senior Secured Note Due 2000, Series C ENVIRODYNE INDUSTRIES, INC. promises to pay to _____________ or registered assigns the principal sum of ___________________ Dollars on June 15, 2000 and to pay interest thereon semi-annually in arrears at the LIBOR Rate per annum on December 15 and June 15 of each year until the principal hereof is paid or made available for payment. Payment of principal and interest shall be made in the manner and subject to the terms set forth in provisions appearing on the reverse hereof, which provisions, in their entirety, shall for all purposes have the same effect as if set forth at this place. Pursuant to the Guaranty Agreement, the payment of principal of and interest hereon is unconditionally guaranteed by each of the Subsidiary Guarantors. To the extent set forth in the Collateral Documents, payment hereon is secured, on an equal and ratable basis with all other Securities by a valid, perfected security interest in the Collateral, the terms of which security interests are more fully set forth in the Collateral Documents. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereof shall have been signed by or on behalf of the Trustee under the Indenture referred to on the reverse side hereof. IN WITNESS WHEREOF, ENVIRODYNE INDUSTRIES, INC. has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its President or a Vice President and attested by its Secretary or an Assistant Secretary. ENVIRODYNE INDUSTRIES, INC. By ___________________________________ Attest: _______________________ [SEAL] A-3-2 124 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the First Priority Senior Secured Notes Due 2000 issued under the Indenture mentioned in this Note. Dated: ______________________ _____________________________ as Trustee By __________________________ Authorized Signatory A-3-3 125 (Back of Security) ENVIRODYNE INDUSTRIES, INC. Floating Rate First Priority Senior Secured Note Due 2000, Series C 1. Interest and Principal Payments. ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (the "Company", which term shall include its permitted successors and assigns), promises to pay interest on the principal amount of this Security at the LIBOR Rate per annum. The Company shall pay interest semi-annually in arrears on December 15 and June 15 of each year, commencing December 15, 1995. Interest on the Securities shall accrue from the most recent date on which interest has been paid or, if no interest has been paid, from June 20, 1995. Interest shall be computed based on the actual days elapsed and a 360-day year. The Company shall pay the principal amount of this Security on June 15, 2000. The Company shall pay interest on overdue principal at the Default Rate per annum and interest on overdue installments of interest and Yield-Maintenance Amount, to the extent lawful, at the same rate. Interest on the Securities shall automatically be increased (and, if applicable, thereafter automatically decreased but in any event not below the rate of interest which would be in effect without regard to the Registration Rights Agreement referred to below) as and to the extent required pursuant to the terms of Section 6 of the Registration Rights Agreement. 2. Method of Payment. The Company shall pay interest on the Securities (except interest on overdue interest) to the Persons who are registered Holders of Securities at the close of business on the regular record date, which shall be the December 1 and June 1, as the case may be, next preceding the interest payment date even though Securities are cancelled after the record date and on or before the interest payment date. Any such interest not so punctually paid or duly provided for, and any interest payable on such overdue interest (to the extent lawful), shall forthwith cease to be payable to the Holder on such regular record date and shall be payable to the Person in whose name this Security is registered at the close of business on a special record date for the payment of such interest on overdue interest to be fixed by the Company, notice of which shall be given to Holders not less than 15 days prior to such special record date. The Company shall pay principal, Yield-Maintenance Amount (if any), and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal, interest and any Yield-Maintenance Amount by check payable in such money. Payment of principal, interest and any A-3-4 126 Yield-Maintenance Amount shall be made at the office of the Paying Agent. Holders must surrender Securities to a Paying Agent to collect principal payments. However, the Company may mail an interest check to a Holder's address then appearing in the register of Securities maintained by the Registrar pursuant to the Indenture. Notwithstanding the foregoing, (a) the Company shall pay or cause to be paid all amounts payable with respect to Restricted Securities or non-DTC eligible Securities by wire transfer of immediately available federal funds to the account of the Holders of the Securities and (b) the Company shall pay or cause to be paid all amounts payable with respect to Securities issued pursuant to the Note Agreement as provided in the Note Agreement with respect thereto. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company or a Subsidiary of the Company or any Affiliate of any of them may act in any such capacity. 4. Indenture. The Company has issued the Securities under an Indenture dated as of June 20, 1995 (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA and thereafter as in effect on the date the Indenture is qualified under the TIA. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Indenture. 5. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples thereof. A Holder may register, transfer or exchange Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 6. Mandatory and Optional Redemption. (a) The Company may optionally redeem the Securities as a whole or in part from time to time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid A-3-5 127 interest to the Redemption Date and plus an amount equal to the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. Notice of such redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed, at his registered address as it shall appear upon the register of Securities maintained by the Registrar. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. On and after the Redemption Date interest ceases to accrue on Securities or portions thereof called for redemption. If less than all the Securities are to be redeemed, the Trustee shall select the particular Securities to be redeemed as set forth in the Indenture. (b) The Securities shall be subject to mandatory redemption as set forth in Section 4.06 and Section 9.01(a) of the Indenture. 7. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as its owner for all purposes. 8. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Securities and any existing Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to comply with Section 4.05 of the Indenture, to maintain qualification of the Indenture under the TIA and to evidence the acceptance of appointment by a successor trustee. 9. Defaults and Remedies. The Securities have the Events of Default set forth in Section 5.01 of the Indenture, which include, among others, default for 5 Business Days or more in payment of interest on the Securities and default in payment of principal when due on the Securities. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least a majority in aggregate principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, all outstanding Securi- A-3-6 128 ties shall become due and payable immediately without further action or notice. Holders of a majority in aggregate principal amount of the then outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences provided that all existing Events of Default have been cured or waived to the extent required in the Indenture and certain other conditions specified in the Indenture are satisfied. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interest. 10. Offers to Purchase. The Company shall be required to make an Offer to Purchase Securities as, and to the extent, set forth in the Indenture. 11. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, its Subsidiaries or their Affiliates, and may otherwise deal with the Company, its Subsidiaries or their Affiliates, as if it were not Trustee. 12. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the Issue of the Securities. 13. Unclaimed Money. If money for the payment of principal of or interest on any Security remains unclaimed for two years after the date on which such payment shall have come due, the Trustee or Paying Agent will pay the money back to the Company at the Company's written request. After that, Holders entitled to this money must look to the Company for payment, unless a law governing abandoned property designates another Person. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, make Restricted Payments or Restricted Investments, create, incur or permit to exist Debt, enter into or permit certain transactions with Affiliates, issue or sell any Capital Stock in a Subsidiary of the Company or make distributions on the Capital Stock of any such Subsidiary to Persons other than A-3-7 129 the Company or a Wholly Owned Subsidiary of the Company, incur Liens or create encumbrances restricting the ability of Subsidiaries of the Company to distribute, loan or transfer Property to the Company. 15. Discharge. Subject to the terms of the Indenture, the Indenture will be discharged and cancelled upon the payment of all Securities. In addition, at the option of the Company and upon satisfaction of certain conditions specified in the Indenture, either (a) the Company shall be deemed to have paid and discharged its obligations with respect to the Securities or (b) the Company shall not be required to comply with certain covenants contained in the Indenture or otherwise applicable to the Securities, in each case upon the deposit by the Company with the Trustee in trust for the Holders of the Securities of an amount of funds or obligations issued or guaranteed by the United States of America sufficient to pay and discharge upon the stated maturity thereof the entire Indebtedness evidenced by the Securities, all as provided in the Indenture. 16. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UNIF GIFT MIN ACT (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to Envirodyne Industries, Inc., 701 Harger Road, Oak Brook, Illinois 60521 Attention: Corporate Secretary. A-3-8 130 ASSIGNMENT FORM I or we assign and transfer this Security to ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) ________________________________________________________________________________ (Insert Social Security or other identifying number of assignee) and irrevocably appoint ___________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. In connection with any transfer of this Security occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Security (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) June 20, 1998, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that: [Check One] [ ] (a) this Security is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder. or [ ] (b) this Security is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Security and the Indenture. or [ ] (c) this Security is being transferred to the Company. 131 If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.15 of the Indenture shall have been satisfied. Dated:_____________________ Signed:_______________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:__________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:_____________________ _______________________________________________ NOTICE: To be executed by an executive officer -2- 132 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 3.09 of the Indenture, check the box below: Section 3.09 [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount: $ Dated:________________________ Your Signature:______________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 133 Exhibit A-4 (Face of Security) FORM OF SERIES D SECURITY ENVIRODYNE INDUSTRIES, INC. Incorporated under the laws of the State of Delaware Floating Rate First Priority Senior Secured Note Due 2000, Series D ENVIRODYNE INDUSTRIES, INC. promises to pay to _____________ or registered assigns the principal sum of ___________________ Dollars on June 15, 2000 and to pay interest thereon semi-annually in arrears at the LIBOR Rate per annum on December 15 and June 15 of each year until the principal hereof is paid or made available for payment. Payment of principal and interest shall be made in the manner and subject to the terms set forth in provisions appearing on the reverse hereof, which provisions, in their entirety, shall for all purposes have the same effect as if set forth at this place. Pursuant to the Guaranty Agreement, the payment of principal of and interest hereon is unconditionally guaranteed by each of the Subsidiary Guarantors. To the extent set forth in the Collateral Documents, payment hereon is secured, on an equal and ratable basis with all other Securities by a valid, perfected security interest in the Collateral, the terms of which security interests are more fully set forth in the Collateral Documents. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereof shall have been signed by or on behalf of the Trustee under the Indenture referred to on the reverse side hereof. IN WITNESS WHEREOF, ENVIRODYNE INDUSTRIES, INC. has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its President or a Vice President and attested by its Secretary or an Assistant Secretary. ENVIRODYNE INDUSTRIES, INC. By ____________________________________ Attest: ________________________ [SEAL] A-4-1 134 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the First Priority Senior Secured Notes Due 2000 issued under the Indenture mentioned in this Note. Dated: __________________ _____________________________ as Trustee By __________________________ Authorized Signatory A-4-2 135 (Back of Security) ENVIRODYNE INDUSTRIES, INC. Floating Rate First Priority Senior Secured Note Due 2000, Series D 1. Interest and Principal Payments. ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (the "Company", which term shall include its permitted successors and assigns), promises to pay interest on the principal amount of this Security at the LIBOR Rate per annum. The Company shall pay interest semi-annually in arrears on December 15 and June 15 of each year, commencing December 15, 1995. Interest on the Securities shall accrue from the most recent date on which interest has been paid or, if no interest has been paid, from June 20, 1995. Interest shall be computed based on the actual days elapsed and a 360-day year. The Company shall pay the principal amount of this Security on June 15, 2000. The Company shall pay interest on overdue principal at the Default Rate per annum and interest on overdue installments of interest and Yield-Maintenance Amount, to the extent lawful, at the same rate. 2. Method of Payment. The Company shall pay interest on the Securities (except interest on overdue interest) to the Persons who are registered Holders of Securities at the close of business on the regular record date, which shall be the December 1 and June 1, as the case may be, next preceding the interest payment date even though Securities are cancelled after the record date and on or before the interest payment date. Any such interest not so punctually paid or duly provided for, and any interest payable on such overdue interest (to the extent lawful), shall forthwith cease to be payable to the Holder on such regular record date and shall be payable to the Person in whose name this Security is registered at the close of business on a special record date for the payment of such interest on overdue interest to be fixed by the Company, notice of which shall be given to Holders not less than 15 days prior to such special record date. The Company shall pay principal, Yield-Maintenance Amount (if any), and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal, interest and any Yield-Maintenance Amount by check payable in such money. Payment of principal, interest and any Yield-Maintenance Amount shall be made at the office of the Paying Agent. Holders must surrender Securities to a Paying Agent to collect principal payments. However, the Company may mail an interest check to a Holder's address then appearing in the register of Securities maintained by the Registrar pursuant to the Indenture. Notwithstanding the foregoing, (a) the Company shall pay or cause to be paid all amounts payable with respect to Restricted A-4-3 136 Securities or non-DTC eligible Securities by wire transfer of immediately available federal funds to the account of the Holders of the Securities and (b) the Company shall pay or cause to be paid all amounts payable with respect to Securities issued pursuant to the Note Agreement as provided in the Note Agreement with respect thereto. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company or a Subsidiary of the Company or any Affiliate of any of them may act in any such capacity. 4. Indenture. The Company has issued the Securities under an Indenture dated as of June 20, 1995 (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA and thereafter as in effect on the date the Indenture is qualified under the TIA. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Indenture. 5. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples thereof. A Holder may register, transfer or exchange Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 6. Mandatory and Optional Redemption. (a) The Company may optionally redeem the Securities as a whole or in part from time to time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the Redemption Date and plus an amount equal to the Yield-Maintenance Amount, if any, with respect to the Securities to be so redeemed. Notice of such redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed, at his registered address as it shall appear upon the register of Securities maintained by the Registrar. Securities A-4-4 137 in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. On and after the Redemption Date interest ceases to accrue on Securities or portions thereof called for redemption. If less than all the Securities are to be redeemed, the Trustee shall select the particular Securities to be redeemed as set forth in the Indenture. (b) The Securities shall be subject to mandatory redemption as set forth in Section 4.06 and Section 9.01(a) of the Indenture. 7. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as its owner for all purposes. 8. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Securities and any existing Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to comply with Section 4.05 of the Indenture, to maintain qualification of the Indenture under the TIA and to evidence the acceptance of appointment by a successor trustee. 9. Defaults and Remedies. The Securities have the Events of Default set forth in Section 5.01 of the Indenture, which include, among others, default for 5 Business Days or more in payment of interest on the Securities and default in payment of principal when due on the Securities. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least a majority in aggregate principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, all outstanding Securities shall become due and payable immediately without further action or notice. Holders of a majority in aggregate principal amount of the then outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences provided that all existing Events of Default have been cured or waived to the extent required in the Indenture and certain other conditions specified in the Indenture are satisfied. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the A-4-5 138 Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interest. 10. Offers to Purchase. The Company shall be required to make an Offer to Purchase Securities as, and to the extent, set forth in the Indenture. 11. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, its Subsidiaries or their Affiliates, and may otherwise deal with the Company, its Subsidiaries or their Affiliates, as if it were not Trustee. 12. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the Issue of the Securities. 13. Unclaimed Money. If money for the payment of principal of or interest on any Security remains unclaimed for two years after the date on which such payment shall have come due, the Trustee or Paying Agent will pay the money back to the Company at the Company's written request. After that, Holders entitled to this money must look to the Company for payment, unless a law governing abandoned property designates another Person. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, make Restricted Payments or Restricted Investments, create, incur or permit to exist Debt, enter into or permit certain transactions with Affiliates, issue or sell any Capital Stock in a Subsidiary of the Company or make distributions on the Capital Stock of any such Subsidiary to Persons other than the Company or a Wholly Owned Subsidiary of the Company, incur Liens or create encumbrances restricting the ability of Subsidiaries of the Company to distribute, loan or transfer Property to the Company. 15. Discharge. Subject to the terms of the Indenture, the Indenture will be discharged and cancelled upon the payment of all Securities. In addition, at the option of the Company and upon satisfaction of certain conditions specified in the Indenture, A-4-6 139 either (a) the Company shall be deemed to have paid and discharged its obligations with respect to the Securities or (b) the Company shall not be required to comply with certain covenants contained in the Indenture or otherwise applicable to the Securities, in each case upon the deposit by the Company with the Trustee in trust for the Holders of the Securities of an amount of funds or obligations issued or guaranteed by the United States of America sufficient to pay and discharge upon the stated maturity thereof the entire Indebtedness evidenced by the Securities, all as provided in the Indenture. 16. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UNIF GIFT MIN ACT (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to Envirodyne Industries, Inc., 701 Harger Road, Oak Brook, Illinois 60521 Attention: Corporate Secretary. A-4-7 140 ASSIGNMENT FORM I or we assign and transfer this Security to ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) ________________________________________________________________________________ (Insert Social Security or other identifying number of assignee) and irrevocably appoint ___________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Dated:__________________ Signed:________________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 141 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 3.09 of the Indenture, check the box below: Section 3.09 [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount: $ Dated:_________________ Your Signature:___________________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) 142 Exhibit B FORM OF LEGEND FOR BOOK-ENTRY SECURITIES Any Global Security authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. 143 Exhibit C Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors [Trustee] __________, ____ Attention: Corporate Trust Department Re: Envirodyne Industries, Inc. (the "Company") First Priority Senior Secured Notes due 2000 (the "Securities") Dear Sirs: In connection with our proposed purchase of $__________ aggregate principal amount of the Securities, we confirm that: 1. We understand that any subsequent transfer of the Securities is subject to certain restrictions and conditions set forth in the Indenture dated as of June 20, 1995 relating to the Securities (the "Indenture") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Securities except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the Securities have not been registered under the Securities Act, and that the Securities may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Securities within three years after the original issuance of the Securities, we will do so only (A) to the Company or any subsidiary thereof, (B) inside the United States to a "qualified institutional buyer" in compliance with Rule 144A under the Securities Act, (C) inside the United States to an "institutional accredited investor" (as defined below) that, prior to such transfer, furnishes to you a signed letter substantially in the form of this letter, (D) outside the United States to a foreign person in compliance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available), or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Securities from us a notice advising such purchaser that resales of the Securities are restricted as stated herein. C-1 144 3. We understand that, on any proposed resale of any Securities, we will be required to furnish to you and the Issuer such certifications, legal opinions and other information as you and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Securities purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Securities purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By:_____________________________________________ Authorized Signature C-2 145 Exhibit D Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S _________, ___ [Trustee] Attention: Corporate Trust Department Re: Envirodyne Industries, Inc. (the "Company") First Priority Senior Secured Notes due 2000 (the "Securities") Dear Sirs: In connection with our proposed sale of $__________ aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and accordingly, we represent that: (1) the offer of the Securities was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act: and (5) we have advised the transferee of the transfer restrictions applicable to the Securities. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal D-1 146 proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:_____________________________________________ Authorized Signature D-2 147 EXHIBIT E FORM OF SUBORDINATION PROVISIONS The indebtedness evidenced by this instrument (including, without limitation, all principal hereof and premium (if any) and interest hereon and all other amounts payable and other liabilities under or in connection with this instrument, collectively, the "Subordinated Debt") is subordinated and subject in right of payment to the prior payment in full of all Senior Debt (as defined below). Each holder of this instrument ("Subordinated Debt Holder") by its acceptance hereof, agrees to and shall be bound by all of the provisions hereof. The subordination provisions set forth herein shall constitute a continuing offer to all persons who become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt, and such holders are hereby obligees hereunder to the same extent as if their names were written herein as such, and they and/or their agent may proceed to enforce such provisions. As used herein, the term "Senior Debt" shall mean all indebtedness, obligations and liabilities of Envirodyne Industries, Inc. (the "Company") arising out of or in connection with (a) the Indenture dated as of June 20, 1995 between the Company and Shawmut Bank Connecticut, National Association, as Trustee (as amended, supplemented or otherwise modified from time to time, the "Indenture") and all "Securities" (as defined in the Indenture), (b) all Credit Documents (as defined in the Indenture), (c) the Letter of Credit Agreement (as defined in the Indenture) and (d) the Revolving Credit Agreement (as defined in the Indenture), and further including, without limitation, all principal, reimbursement obligations, Yield-Maintenance Amount (as defined in the Indenture) and interest on all loans, advances, investments and other extensions of credit made to (or incurred by) the Company under or in connection with any of the agreements, instruments or documents referenced in the foregoing clauses (a) through (d) (collectively, the "Senior Debt Agreements") and any and all renewals, extensions and refinancings thereof (and including any interest accruing subsequent to the commencement of any bankruptcy, insolvency or similar proceedings with respect to the Company ("Post-Petition Interest"). No payment on account of Subordinated Debt shall be made: (i) unless full payment of all amounts then due on all Senior Debt has been indefeasibly made, (ii) if, at the time of such payment or immediately after giving effect thereto, there shall exist any "Event of Default" (as hereafter defined) or (iii) any provision of the Senior Debt Agreements prohibit any such payment for any reason. As used herein, the term "Event of Default" shall mean any "Event of Default" or "Default" as defined in any Senior Debt 148 Agreement or any other default thereunder the occurrence of which would permit the acceleration of the maturity of any Senior Debt thereunder. No Subordinated Debt Holder (or agent or trustee on its behalf) will accelerate the maturity of, or commence any action or proceeding against the Company to recover, all or any part of the Subordinated Debt or join with any creditor, unless the holders of all Senior Debt shall also join, in bringing any proceedings against the Company under any bankruptcy, reorganization, readjustment of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the Federal or any State government unless and until all Senior Debt shall be paid in full. In the event of any liquidation, dissolution or other winding up of the Company, or in the event of any receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement with creditors, whether or not pursuant to bankruptcy laws, sale of all or substantially all of the assets or any other marshalling of the assets and liabilities of the Company, (i) all Senior Debt shall first be paid in full before any Subordinated Debt Holder shall be entitled to receive any moneys, dividends or other assets in any such proceeding, and (ii) each Subordinated Debt Holder will at the request of the Collateral Agent (as defined in the Indenture) file any claim, proof of claim or other instrument of similar character necessary to enforce the obligations of the Company in respect of Subordinated Debt and will hold in trust for the Collateral Agent and pay over to the Collateral Agent, in the form received, to be applied on Senior Debt, any and all moneys, dividends or other assets received in any such proceeding on account of Subordinated Debt, unless and until all Senior Debt (including Post-Petition Interest) shall be paid in full. In the event that a Subordinated Debt Holder shall fail to take such action requested by the Collateral Agent, the Collateral Agent may, as attorney-in-fact for such Subordinated Debt Holder, take such action on behalf of such Subordinated Debt Holder to demand, sue for, collect and receive any and all such moneys, dividends or other assets and give acquittance therefor and to file any claim, proof of claim or other instrument of similar character and to take such other action (including acceptance or rejection of any plan of reorganization or arrangement) in the name of the Collateral Agent or in the name of such Subordinated Debt Holder as the Collateral Agent may deem necessary or advisable; and each Subordinated Debt Holder will execute and deliver to the Collateral Agent such other and further powers of attorney or other instruments as the Collateral Agent may request in order to accomplish the foregoing. The holders of Senior Debt (and any person or entity acting on their behalf (including, without limitation, the Collateral Agent)) may, at any time and from time to time, without the consent of or notice to any Subordinated Debt Holder, without incurring responsi- -4- 149 bility to any Subordinated Debt Holder, and without impairing or releasing any of the rights of any holder of Senior Debt or any of the obligations of any Subordinated Debt Holder: (a) Change the amount, manner, place or terms of payment or change or extend the time of payment of or renew or alter any Senior Debt (or any part thereof including any principal, interest or Yield-Maintenance Amount) or amend, supplement or otherwise modify any Senior Debt Agreement in any manner or enter into or amend, supplement or modify in any manner any other agreement relating to Senior Debt (including provisions restricting or further restricting payments of Subordinated Debt); (b) Sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure, or howsoever securing, any Senior Debt; (c) Release anyone liable in any manner for the payment or collection of any Senior Debt; (d) Exercise or refrain from exercising any rights against the Company and others (including, without limitation, any guarantor and any Subordinated Debt Holder); (e) Apply any sums by whomsoever paid or however realized to any Senior Debt; and (f) Waive, consent to, release, grant any indulgence for, extend, renew, refinance, alter, delay or take (or refrain from taking) any other action with respect to any Senior Debt or any term or condition relating to any Senior Debt Agreement. In the event that a Subordinated Debt Holder shall receive any payment of Subordinated Debt which it is not entitled to receive under the provisions hereof, such holder will hold any amount so received in trust for the benefit of the holders of the Senior Debt and will forthwith turn over such payment to the Collateral Agent for the benefit of the holders of the Senior Debt and for application to the payment of Senior Debt. The subordination provisions contained herein shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of any Senior Debt upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. Each Subordinated Debt Holder by its acceptance hereof authorizes and directs the Company on its behalf to take such further action as may be necessary or appropriate to effectuate the -5- 150 subordination provided herein and appoints the Collateral Agent its attorney-in-fact for any and all such purposes. -6- EX-4.5 15 EXCHANGE AND REG. RIGHTS AGREEMENT 1 EXHIBIT 4.5 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT Envirodyne Industries, Inc. 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 June 20, 1995 To Each of the Purchasers Named in the Purchaser Schedule Attached Hereto (the "Purchasers") Ladies and Gentlemen: Envirodyne Industries, Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the Purchasers, upon the terms set forth in a Note Agreement of even date herewith (the "Note Agreement"), $160,000,000 aggregate principal amount of its 12% First Priority Senior Secured Notes due 2000, Series A, and Floating Rate First Priority Senior Secured Notes due 2000, Series C (the "Notes"). The Notes will be issued pursuant to an indenture (the "Indenture") between the Company and Shawmut Bank Connecticut, N.A., as trustee (the "Trustee"), substantially in the form attached as Exhibit A to the Note Agreement. Capitalized terms used but not specifically defined herein that are defined in the Note Agreement are used herein as so defined. As an inducement to the Purchasers to enter into the Note Agreement and in satisfaction of one of the conditions to the Purchasers' obligations thereunder, the Company agrees with the Purchasers, for the benefit of the Holders of the Notes (including the Purchasers), as follows: 1. Registered Exchange Offer. (a) The Company shall (i) prepare and, as soon as practicable, but in any event within 30 days after the Closing Date, file with the Securities and Exchange Commission (the "Commission") a registration statement of the Company and the Guarantors (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of the Notes to issue and deliver to such Holders, in exchange for the Notes, a like principal amount of 12% First Priority Senior Secured Notes due 2000, Series B, and Floating Rate First Priority Senior Secured Notes due 2000, Series D of the Company (the "Exchange Notes") issued under the Indenture, having such terms and provisions provided for in the Indenture and being in substantially the form set forth therefor in the Indenture, (ii) 2 use its best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 120 days after the Closing Date and (iii) upon the effectiveness of the Exchange Offer Registration Statement, commence the Registered Exchange Offer and cause the same to remain open for such period of time (but not less than 30 days after the date notice of the Registered Exchange Offer is first mailed to the Holders of the Notes), and to be conducted in accordance with such procedures, as may be required by the applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The objective of such Registered Exchange Offer shall be to enable each Holder of Notes electing to exchange Notes for Exchange Notes (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Notes in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Notes) to trade such Exchange Notes from and after their receipt without any limitations or restrictions under the Securities Act or the Exchange Act as a result of the registration requirements thereof and without material restrictions under the securities laws of a substantial proportion of the several states of the United States as a result of the registration requirements thereof. (b) The Company shall indicate in a "Plan of Distribution" section contained in the final prospectus constituting a part of the registration statement relating to the Registered Exchange Offer that any broker or dealer registered under the Exchange Act (each a "Broker-Dealer") who holds Notes that were acquired for its own account as a result of market-making activities or other trading activities (other than Notes acquired directly from the Company), may exchange such Notes for Exchange Notes pursuant to the Registered Exchange Offer; however, such Broker-Dealer may be deemed an "underwriter" within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Act in connection with any resales of the Exchange Notes received by it in the Registered Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the final prospectus contained in the registered statement relating to the Registration Exchange Offer. Such "Plan of Distribution" section also shall state that the delivery by a Broker-Dealer of the final prospectus relating to the Registered Exchange Offer in connection with resales of Exchange Notes shall not be deemed to be an admission by such Broker-Dealer that is an "underwriter" within the meaning of the Act, and shall contain all other information with respect to resales of the Exchange Notes by Broker-Dealers that the Commission may require in connection therewith, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Exchange Notes held by any such Broker-Dealer except to the extent required by the -2- 3 Commission as a result of a change in policy after the date of this Agreement. (c) In connection with such Registered Exchange Offer and the offer and sale of Exchange Notes by Broker-Dealers as contemplated above, the Company shall take such other and further action, including making appropriate filings under state securities laws and delivering such number of final prospectuses relating to the Registered Exchange Offer as any Broker-Dealer proposing to deliver the same in connection with its resales of Exchange Notes may reasonably request, as may be necessary to realize the foregoing objectives. The Company shall cause the Exchange Offer Registration Statement to remain continuously effective for a period of 180 days after the date on which such registration statement is first declared effective, and shall supplement or amend the prospectus contained therein to the extent necessary to permit such prospectus (as supplemented or amended) to be delivered by Broker-Dealers in connection with their resales of Exchange Notes as aforesaid. 2. Senior Notes Shelf Registration. If, (i) the applicable interpretations of the Commission's staff do not permit the Company to effect the Registered Exchange Offer, as contemplated by Section 1 hereof, or (ii) for any reason the Registered Exchange Offer is not consummated within 180 days after the filing of the Exchange Offer Registration Statement, the following provisions shall apply: (a) The Company shall promptly file with the Commission and thereafter shall use its best efforts to cause to be declared effective a registration statement (the "Notes Shelf Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Notes by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Notes Shelf Registration Statement and Rule 415 under the Securities Act (hereafter, a "First Priority Notes Shelf Registration"). (b) The Company agrees to use its best efforts to keep the Notes Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be usable by the Holders of the Notes for a period of three years from the date the Notes Shelf Registration Statement is declared effective by the Commission or such shorter period that will terminate when all the Notes covered by the Notes Shelf Registration Statement have been sold pursuant to the Notes Shelf Registration Statement; provided that the Company shall be deemed not to have used its best efforts to keep the Notes Shelf Registration Statement effective during such period if it voluntarily takes any action that would result in Holders of the Notes covered thereby not being able to offer and sell such Notes during such period, unless such action is required by applicable law, and -3- 4 provided, further, that the Company shall be entitled to postpone for a reasonable period of time the filing or effectiveness of, or suspend the rights of the Holder to make sales pursuant to, the Notes Shelf Registration Statement, if the Company determines in good faith (not including avoidance of the Company's obligations hereunder) that the filing or effectiveness of, or sales pursuant to, the Notes Shelf Registration Statement would impede, delay or interfere with any financing, offer or sale of securities, acquisition, corporate reorganization or other significant transaction involving the Company or require disclosure of material information which the Company has a bona fide business purpose for preserving as confidential, so long as the Company promptly thereafter complies with the requirements of Section 3(h) hereof, if applicable. Any such period during which the Company fails to keep the Notes Shelf Registration Statement effective and usable for offers and sales of Notes is referred to as a "Suspension Period". A Suspension Period shall commence on and include the date that the Company gives notice to the Holders that the Notes Shelf Registration Statement is no longer usable for offers and sales of Notes and shall end on the date when each seller of Notes covered by the Notes Shelf Registration Statement either receives the copies of the supplemented or amended prospectus contemplated by Section 3(h) hereof or is advised in writing by the Company that use of the prospectus may be resumed. Upon notice by the Company to the Holders of a Suspension Period, which notice shall specify the date on which the prohibition, suspension or delay shall end, the Holders covenant to (i) keep the fact of any such notice strictly confidential, (ii) promptly halt any offer, sale, trading or transfer by them or any of their affiliates of any of the Notes pursuant to such Notes Shelf Registration Statement for the duration of the period specified in such notice and (iii) promptly halt any use, publication, dissemination or distribution of the Notes Shelf Registration Statement, each prospectus included therein, and any amendment or supplement thereto by it and any of its affiliates for the duration of the period specified in such notice. If one or more Suspension Periods occur, the three-year time period referenced above shall be extended by the number of days included in each such Suspension Period. (c) Notwithstanding any other provisions of this Agreement to the contrary, the Company will cause the Notes Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Notes Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. -4- 5 3. Registration Procedures. In connection with any Notes Shelf Registration pursuant to Section 2 hereof, and, to the extent applicable, any Registered Exchange Offer pursuant to Section 1 hereof, the following provisions shall apply: (a) The Company shall furnish to the Holders of the Notes, prior to the filing thereof with the Commission, a copy of the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, and each amendment thereof and each supplement, if any, to the prospectus included therein and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as any Holder of the Notes reasonably may propose. (b) The Company shall advise the Holders of the Notes or the Exchange Notes, and, if requested by any such Holder, confirm such advice in writing -- (i) when the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, and any amendment thereto has been filed with the Commission and when the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, or the prospectus included therein or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes or the Exchange Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the making of any changes in the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, or the prospectus in order to make the statements therein not misleading (which advice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made). -5- 6 Each Holder agrees that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in clause (v) of this Section 3(b), such Holder will forthwith discontinue such Holder's disposition of the Notes pursuant to the Notes Shelf Registration Statement until such Holder's receipt of the copies of a supplemented or amended prospectus contemplated by Section 3(h) and, if so directed by the Company, will deliver to the Company all copies, other than permanent file copies, then in such Holder's possession of the prospectus relating to the Notes current at the time of receipt of such notice. (c) The Company will make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, at the earliest possible time. (d) The Company will furnish to each Holder of the Notes or the Exchange Notes included within the coverage of the Registered Exchange Offer or the Notes Shelf Registration, as appropriate, without charge, at least one copy of the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, and any post-effective amendment thereto, including financial statements and schedules, and, if any such Holder so requests in writing, all exhibits (including those incorporated by reference). (e) The Company will deliver to each Holder of Notes or Exchange Notes included within the coverage of the Registered Exchange Offer or the Notes Shelf Registration, as appropriate, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, and any amendment or supplement thereto as such persons may reasonably request; the Company consents to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Notes or the Exchange Notes covered by the prospectus or any amendment or supplement thereto. (f) Prior to any public offering of the Notes or the Exchange Notes pursuant to the Registered Exchange Offer or the Notes Shelf Registration, as the case may be, the Company will register or qualify and cooperate with the Holders of the Notes or the Exchange Notes included therein and their respective counsel in connection with the registration or qualification of such Notes or Exchange Notes for offer and sale under the securities or blue sky laws of such jurisdiction as any Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Notes or the Exchange Notes covered by the Registered Exchange Offer or the Notes Shelf Registration, as -6- 7 the case may be; provided that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (g) The Company will cooperate with the Holders of the Notes or the Exchange Notes to facilitate the timely preparation and delivery of certificates representing the Notes or the Exchange Notes to be sold in the Registered Exchange Offer or the Notes Shelf Registration, as the case may be, free of any restrictive legends and in such denominations and registered in such names as the Holders may request prior to sales of the Notes or the Exchange Notes pursuant to the Registered Exchange Offer or the Notes Shelf Registration, as the case may be. (h) Upon the occurrence of any event contemplated by paragraph (b)(v) above, the Company will prepare a post-effective amendment to the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Notes or the Exchange Notes, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading. (i) Not later than the effective date of the Exchange Offer Registration Statement or the Notes Shelf Registration Statement, as the case may be, the Company will provide a CUSIP number for the Notes or the Exchange Notes, as the case may be, and provide the Trustee with printed certificates for the Notes or Exchange Notes, as the case may be, in a form eligible for deposit with Depositary Trust Company. (j) The Company will use its best efforts to comply with all applicable rules and regulations of the Commission and will make generally available to its security Holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of each of the Registered Exchange Offer or the Notes Shelf Registration, which statements shall cover such 12-month period. (k) The Company will cause the Indenture to be qualified under the Trust Indenture Act. (l) The Company may require each Holder of Notes to be sold pursuant to the Notes Shelf Registration to furnish to the Company such information regarding such Holder and the -7- 8 distribution of such Notes as the Company may from time to time reasonably require for inclusion in the registration statement. 4. Registration Expenses. The Company will bear all expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof and, in the event of a Notes Shelf Registration, will bear or reimburse the Holders of the Notes for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Notes to act as counsel for the Holders of the Notes in connection therewith. 5. Indemnification. (a) Indemnification by Company. In the event of (i) a Notes Shelf Registration, the Company shall indemnify and hold harmless each Holder of Notes and (ii) the Registered Exchange Offer, each Broker-Dealer who holds Exchange Notes acquired for its own account pursuant to the Exchange Offer, and, in any such case, such Holder's officers, directors, employees and Agents and each person who controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being sometimes hereinafter referred to as an "Indemnified Holder") from and against any and all losses, claims, damages, liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Exchange Offer Registration Statement or the Notes Shelf Registration Statement or in any prospectus included therein or in any amendment or supplement thereto or in any preliminary prospectus relating to the Notes Shelf Registration, the Registered Exchange Offer or the delivery by Broker-Dealers who are required to do so of the final prospectus contained in the registration statement relating to the Registered Exchange Offer in connection with their resales of the Exchange Notes, as the case may be, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any such untrue statement or omission or allegation thereof based upon information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage, liability or expense arises out of or is caused by an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if such Holder failed to send or deliver a copy of the final prospectus with or prior to the delivery of written confirmation of the sale of Notes or the Exchange Notes, as the case may be, by such Holder to the person asserting such loss, claim, damage, liability or judgment who purchased Notes or Exchange Notes, as the case may be, that -8- 9 are the subject thereof from such Holder. This indemnity will be in addition to any liability which the Company may otherwise have. The Company will also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each person who controls such persons (within the meaning of Section 15 of the Securities Act of Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders of the Notes or the Exchange Notes, as the case may be, if requested. If any action or proceeding (including any governmental investigation or inquiry) shall be brought or asserted against an Indemnified Holder in respect of which indemnity may be sought from the Company, such Indemnified Holder shall promptly notify the Company in writing, and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Holder and the payment of all reasonable expenses. Such Indemnified Holder shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expense of such Indemnified Holder unless (a) the Company has agreed to pay such fees and expenses or (b) the Company shall have failed to assume the defense of such action or proceeding and to employ counsel reasonably satisfactory to such Indemnified Holder in any such action or proceeding within a reasonable time after notice of commencement of such action or proceeding or (c) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Holder and the Company, and such Indemnified Holder shall have been advised in writing by counsel that there may be one or more legal defenses available to such Indemnified Holder which are different from or additional to those available to the Company (in which case, if such Indemnified Holder notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, the Company shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Holder it being understood, however, that the Company shall not, in substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to local counsel) at any time for such Indemnified Holder and any other Indemnified Holders, which firm shall be designated in writing by such Indemnified Holders and that all such fees and expenses shall be reimbursed as they are incurred). The Company shall not be liable for any settlement of any such action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final, unappealable judgment for the plaintiff in any such action or proceeding, the Company agrees to indemnify and hold harmless such Indemnified Holders -9- 10 from and against any loss or liability by reason of such settlement or judgment. The Company shall not, without the prior written consent of the Indemnified Holder, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Holder is a party and indemnity been sought hereunder by such Indemnified Holder, unless such settlement includes an unconditional release of such Indemnified Holder from all liability on claims that are the subject matter of such proceeding. (b) Indemnification by Holders. In the event of a Notes Shelf Registration, each Holder of Notes selling Notes in the Notes Shelf Registration agrees to indemnify and hold harmless the Company, its directors and officers, employees and agents and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Holder, but only with respect to information relating to such Holder or the distribution furnished in writing by such Holder expressly for use in the Notes Shelf Registration Statement or in any prospectus included therein or any amendment or supplement thereto or any preliminary prospectus relating to the Notes Shelf Registration; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Notes pursuant to the Notes Shelf Registration. If any action or proceeding shall be brought against the Company or its directors, officers, employees or agents or any such controlling person, in respect of which indemnity may be sought against a Holder of Notes, such Holder shall have the rights and duties given the Company and the Company or its directors, officers, employees or agents or such controlling person shall have the rights and duties given to each Holder by Section 5(a) hereof. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such persons specifically for inclusion in any prospectus or registration statement or any amendment or supplement thereto or any preliminary prospectus. (c) Contribution. If the indemnification provided for in this Section 5 is unavailable to an indemnified party under Section 5(a) or Section 5(b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments in such proportion as is appropriate to reflect not only the relative benefits but also -10- 11 the relative fault of the Company on the one hand and of the Indemnified Holder on the other in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Indemnified Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 5(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and the Holders of the Notes and the Exchange Notes agree that it would not be just and equitable if contribution pursuant to this Section 5(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Additional Interest Under Certain Circumstances; Remedies. If any one of the following shall occur for any reason: (i) neither the Exchange Offer Registration Statement nor the Notes Shelf Registration Statement has been filed with the Commission on or prior to 30 days after the Closing Date, (ii) neither the Exchange Offer Registration Statement nor the Notes Shelf Registration Statement has been declared effective under the Securities Act on or prior to 120 days after the Closing Date, (iii) the Company has not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Registered Exchange Offer on or prior to 60 days after the date upon which the Exchange Offer Registration Statement was declared effective under the Securities Act, (iv) the Exchange Offer Registration Statement was declared effective under the Securities Act but ceases to be effective under the Securities Act at any time prior to the time the Exchange Offer is consummated, or (v) the Notes Shelf Registration Statement was declared effective under the Securities Act but ceases to be effective under the Securities Act at any time prior to the third anniversary of the date that the Notes Shelf Registration Statement was declared effective under the Securities Act (any such event described in (i) through (v) being herein called a "Registered Default"), then, as liquidated damages and not as a -11- 12 penalty, the per annum interest rate on the Notes shall be increased as follows. Effective on the date upon which a Registered Default occurs, the per annum interest rate on the Notes shall increase to a rate that is fifty (50) basis points above the interest rate on the Notes in effect immediately prior to such date. In addition, effective on the first day after the end of each 90-day period after the date upon which a Registration Default occurs, the per annum interest rate on the Notes will further increase over the rate then in effect by an additional twenty-five (25) basis points. Notwithstanding the foregoing, at no time shall the maximum aggregate interest rate borne by the Notes exceed the lesser of (i) the interest rate set forth on the face of the Notes plus two hundred (200) basis points per annum or (ii) the maximum lawful rate permitted under applicable usury laws. Effective upon the date upon which such Registration Default is cured, the interest rate on the Notes will revert to the interest rate set forth on the face of the Notes. 7. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Notes (insofar as such matters relate to the Notes) or the Exchange Notes (insofar as such matters relate to the Exchange Notes). (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder of Notes or Exchange Notes, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 7(b), which address initially is, with respect to each Purchaser, the address of such Purchaser as set forth in the Note Agreement; and (2) if to the Company, initially at its address set forth in the Note Agreement. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged by recipient's telecopy operator, if telecopied; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. -12- 13 (c) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of the Notes. (d) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without regard to the conflicts of laws provisions thereof). (g) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Please confirm that the foregoing correctly sets forth the agreement between the Company and you. Very truly yours, ENVIRODYNE INDUSTRIES, INC. By: _________________________ -13- 14 ACCEPTED: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: __________________________ Title:____________________ -14- EX-4.6 16 GUARANTEE AGREEMENT 1 EXHIBIT 4.6 GUARANTY AGREEMENT This Guaranty Agreement (the "Guaranty"), dated as of June 20, 1995, is made by Clear Shield National, Inc., a California corporation, Sandusky Plastics, Inc., a Delaware corporation, Sandusky Plastics of Delaware, Inc., a Delaware corporation, Viskase Holding Corporation, a Delaware corporation, Viskase Sales Corporation, a Delaware corporation, and Viskase Corporation, a Pennsylvania corporation, (each such corporation, together with any other Person becoming a party to this Guaranty pursuant to paragraph 4M, is referred to herein, individually, as a "Guarantor" and, collectively, as the "Guarantors"), in favor of the Collateral Agent on behalf and for the benefit of the Guarantied Parties. RECITALS: WHEREAS, the Guarantors are wholly-owned Subsidiaries of Envirodyne Industries, Inc., a Delaware corporation (the "Company"); and WHEREAS, pursuant to the Revolving Credit Agreement The Prudential Insurance Company of America (in its capacity as revolving credit lender, "Prudential") may from time to time hereafter make Revolving Loans to the Company and as a condition precedent to its willingness to enter into the Revolving Credit Agreement and to extend Revolving Loans, Prudential has requested, among other things, that the Guarantors execute this Guaranty for its benefit and for the benefit of the holders of the Revolving Notes; and WHEREAS, pursuant to the First Priority Note Agreement the Company is issuing the First Priority Notes under the First Priority Notes Indenture and as a condition precedent to their willingness to purchase the First Priority Notes, the purchasers of the First Priority Notes specified in the Purchaser Schedule attached to the First Priority Note Agreement have requested, among other things, that the Guarantors execute this Guaranty for their benefit and for the benefit of other holders of First Priority Notes; and WHEREAS, pursuant to the Letter of Credit Facility Agreement the LC Lenders are issuing or causing to be issued on the date hereof Letters of Credit for the account of the Company and may from time to time hereafter issue or cause to be issued Letters of Credit for the account of the Company and make loans to the Company to fund the Company's reimbursement obligations to the LC Lenders with respect to draws upon such Letters of Credit; and WHEREAS, the Company may issue the Second Priority Notes under the Second Priority Notes Indenture; and 2 WHEREAS, the Company has agreed to offer to exchange the First Priority Exchange Notes issued under the First Priority Notes Indenture for the First Priority Notes and the Company may, if the Second Priority Notes are issued, offer to exchange the Second Priority Exchange Notes, if any, issued under the Second Priority Notes Indenture for the Second Priority Notes; and WHEREAS, pursuant to the Collateral Documents the Loan Parties are granting to the Collateral Agent on behalf and for the benefit of the Secured Parties liens upon and security interests in the Collateral to secure the Guarantied Obligations; and WHEREAS, pursuant to the Intercreditor Agreement the LC Agent, Prudential and the First Priority Indenture Trustee have appointed the Collateral Agent as their agent with respect to the Collateral and this Guaranty; and WHEREAS, the Company has advanced funds to certain of the Guarantors prior to the date hereof and it is contemplated that the Company will be advancing additional funds to the Guarantors, including proceeds received by the Company from the Financing Agreements, and entering into other transactions with the Guarantors; and WHEREAS, all parties acknowledge that the indebtedness and obligations contemplated by the Financing Agreements are being incurred for and will inure to the benefit of the Guarantors; and WHEREAS, in order to induce the Credit Parties to enter into the above contemplated financing arrangements with the Company, the Guarantors have agreed to execute this Guaranty. NOW THEREFORE, for value received, to satisfy one of the conditions precedent to the execution of the Financing Agreements by parties other than the Company, to induce the initial purchasers to purchase the First Priority Notes, Prudential to make any Revolving Loan, the LC Lenders to issue any Letter of Credit, the holders of the Company's 10.25% Notes due 2001 to exchange such notes for the Second Priority Notes, if issued, the holders of the First Priority Notes to exchange such Notes for First Priority Exchange Notes and the holders of the Second Priority Notes, if any, to exchange such Notes for Second Priority Exchange Notes and to induce any other Person to accept the transfer of all or any part of any First Priority Note, First Priority Exchange Note, Revolving Note, Second Priority Note and Second Priority Exchange Note and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Guarantors jointly and severally agrees as follows: 2 3 1. DEFINITIONS. 1A. TERMS DEFINED IN THIS GUARANTY. As used in this Guaranty, the following terms shall have the following meanings. Any plural term that is used herein in the singular shall be taken to mean each entity or item of the defined class and any singular term that is used herein in the plural shall be taken to mean all of the entities or items of the defined class, collectively. "BTCC" shall mean BT Commercial Corporation, a Delaware corporation. "BANKRUPTCY CODE" shall have the meaning ascribed to such term in paragraph 2B. "CAPITAL LEASE OBLIGATION" shall mean, at any time, the amount of the liability with respect to a lease that would be required at such time to be capitalized on a balance sheet of such Person prepared in accordance with generally accepted accounting principles. "CLOSING DAY" shall mean June 20, 1995. "COLLATERAL" shall have the meaning ascribed to such term in the Intercreditor Agreement. "COLLATERAL AGENT" shall mean BTCC, in its capacity as agent for the Guarantied Parties pursuant to the Intercreditor Agreement, together with any successor or replacement agent. "COLLATERAL DOCUMENTS" shall have the meaning ascribed to such term in the Intercreditor Agreement. "CONTROL" shall mean (except as otherwise specifically provided herein) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing. "CREDIT PARTIES" shall mean Prudential, the holders of the Revolving Notes, the LC Agent, the LC Lenders, the First Priority Indenture Trustee, the holders of the First Priority Notes, the holders of the First Priority Exchange Notes, the Second Priority Indenture Trustee, the holders of the Second Priority Notes, the holders of the Second Priority Exchange Notes and the Collateral Agent. "EVENT OF DEFAULT" shall have the meaning ascribed to such term in any Financing Agreement. 3 4 "FINANCING AGREEMENT" shall mean any of the Revolving Credit Agreement, the Letter of Credit Facility Agreement, the First Priority Note Agreement, the First Priority Notes Indenture, the First Priority Registration Rights Agreement, the Second Priority Notes Indenture, the Second Priority Exchange Notes Indenture and the Guarantied Notes. "FIRST PRIORITY EXCHANGE NOTES" shall mean any of the Company's 12% First Priority Senior Secured Exchange Notes due 2000, Series C, or Floating Rate First Priority Senior Secured Exchange Notes due 2000, Series D issued under the First Priority Notes Indenture. "FIRST PRIORITY INDENTURE TRUSTEE" shall mean Shawmut Bank Connecticut, National Association, as trustee under the First Priority Notes Indenture and any successor thereunder. "FIRST PRIORITY NOTES" shall mean the Company's 12% First Priority Senior Secured Notes due 2000, Series A, or Floating Rate First Priority Senior Secured Notes due 2000, Series B issued under the First Priority Notes Indenture. "FIRST PRIORITY NOTE AGREEMENT" shall mean the Note Agreement, dated as of the Closing Day, between the Company and the purchasers identified therein pursuant to which such purchasers are purchasing the First Priority Notes, as amended, restated, supplemented or otherwise modified from time to time. "FIRST PRIORITY NOTES INDENTURE" shall mean the Indenture, dated as of the Closing Day, between the Company and the First Priority Indenture Trustee under which the First Priority Notes and First Priority Exchange Notes are being issued, as amended, restated, supplemented or otherwise modified from time to time. "FIRST PRIORITY REGISTRATION RIGHTS AGREEMENT" shall mean the Exchange and Registration Rights Agreement, dated as of the Closing Day, made by the Company in favor of the purchasers of the First Priority Notes. "GECC INTERCREDITOR AGREEMENT" shall mean the GECC Intercreditor Agreement, dated as of Closing Day, between the Collateral Agent, on behalf of and for the benefit of the Guarantied Parties, and General Electric Credit Corporation, as amended, restated, supplemented or otherwise modified from time to time. "GUARANTIED NOTES" shall mean the Revolving Notes, the First Priority Notes, the First Priority Exchange Notes, the Second Priority Notes, the Second Priority Exchange Notes and any promissory notes evidencing all or any part of the Letter of Credit Obligations (as defined in the Intercreditor Agreement). 4 5 "GUARANTIED OBLIGATIONS" shall mean all indebtedness, obligations (including any obligation to perform) and liabilities existing on the date hereof or arising from time to time hereafter, whether direct or indirect, joint, several or joint and several, actual, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, of the Company and each other Loan Party to any Credit Party evidenced by or arising under, by virtue of or pursuant to the Transaction Documents, including, without limitation: (i) all obligations of any and each Loan Party to pay, reimburse or indemnify the Collateral Agent for all costs and expenses incurred by the Collateral Agent when acting with a good faith belief that its actions are not contrary to the provisions of the Intercreditor Agreement, including in connection with the realization upon or protection of the Collateral or enforcing or defending any lien upon or security interest in the Collateral or any other action taken under or in connection with the Intercreditor Agreement, expenses incurred for legal counsel in connection with the foregoing, and any other costs, expenses or liabilities incurred by the Collateral Agent for which the Collateral Agent is entitled to be reimbursed or indemnified pursuant to the Intercreditor Agreement or any Collateral Document; (ii) all obligations of the Company to reimburse the LC Agent or LC Lenders with respect to any drawing under a Letter of Credit, all loans made by the LC Lenders under the Letter of Credit Facility Agreement to fund the Company's reimbursement obligations with respect to draws under Letters of Credit, all obligations of the Company under Section 9.2(c) of the Letter of Credit Facility Agreement to deposit from time to time cash with the Collateral Agent with respect to the undrawn face amount of all outstanding Letters of Credit, and all of the other present or future indebtedness, liabilities and obligations of the Company now or hereafter owed to the LC Agent or any LC Lender evidenced by or arising under, by virtue of or pursuant to the Letter of Credit Facility Agreement or any Letter of Credit, and all renewals and extensions thereof; (iii) the outstanding principal amount of the Revolving Loans, the outstanding principal amount of the First Priority Notes, the outstanding principal amount of the First Priority Exchange Notes, and all of the other present or future indebtedness, liabilities and obligations of the Company now or hereafter owed to Prudential, the holders of the Revolving Notes, the holders of the First Priority Notes, the holders of the First Priority Exchange Notes or the First Priority Indenture Trustee evidenced by or arising under, by virtue of or pursuant to the Revolving Credit Agreement, the First Priority Note Agreement, the First Priority Notes Indenture, the Revolving Notes, the First Priority Exchange Notes or the First Priority Registration Rights 5 6 Agreement and all renewals and extensions thereof, including, without limitation, all obligations for compensation, reimbursement, indemnity and other amounts payable to the First Priority Indenture Trustee and all interest on the Revolving Loans, the First Priority Notes and the First Priority Exchange Notes and any Yield-Maintenance Amounts; (iv) the outstanding principal amount of the Second Priority Notes, the outstanding principal amount of the Second Priority Exchange Notes, and all of the other future indebtedness, liabilities and obligations of the Company hereafter owed, if any, to the holders of the Second Priority Notes, the holders of the Second Priority Exchange Notes or the Second Priority Indenture Trustee evidenced by or arising under, by virtue of or pursuant to the Second Priority Notes Indenture, the Second Priority Notes or the Second Priority Exchange Notes, and all renewals and extensions thereof, including, without limitation, all obligations for compensation, reimbursement, indemnity and other amounts payable to the Second Priority Indenture Trustee and all interest on the Second Priority Notes and the Second Priority Exchange Notes and any prepayment premiums due with respect to the Second Priority Notes or the Second Priority Exchange Notes; (v) interest on the Guarantied Notes and on all obligations of the Company to reimburse the LC Lenders with respect to any drawing under a Letter of Credit accruing before, during or after any bankruptcy, insolvency reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding, and, if interest ceases to accrue by operation of law by reason of any such proceeding, interest which otherwise would have accrued in the absence of such proceeding; and (vi) all present or future indebtedness, liabilities and obligations of any and each Loan Party now or hereafter owed to any Credit Party arising under, by virtue of or pursuant to the Collateral Documents. "GUARANTIED PARTIES" shall mean Prudential, the LC Agent, the LC Lenders, the First Priority Indenture Trustee, for itself and on behalf of the holders of the First Priority Notes and the First Priority Exchange Notes, the Second Priority Indenture Trustee, if any, for itself and on behalf of the holders of the Second Priority Notes and the Second Priority Exchange Notes, and the Collateral Agent. "GUARANTY" shall have the meaning ascribed to such term in the introductory paragraph hereof. "INTERCREDITOR AGREEMENT" shall mean the Intercreditor and Collateral Agency Agreement, dated as of the Closing Day, between the LC Agent, the Collateral Agent, Prudential and the 6 7 First Priority Indenture Trustee, as amended, restated, supplemented or otherwise modified from time to time. "LC AGENT" shall mean BTCC, in its capacity as agent for itself and the other Lenders from time to time under the Letter of Credit Facility Agreement. "LETTERS OF CREDIT" shall mean the letters of credit issued under the Letter of Credit Facility Agreement. "LETTER OF CREDIT FACILITY AGREEMENT" shall mean the Credit Agreement, dated as of the Closing Day, between the Company, the LC Agent and the LC Lenders, as amended, restated, supplemented or otherwise modified from time to time. "LIEN" shall mean any mortgage, pledge, lien, charge, security interest, conditional sale or other title retention agreement (including, without limitation, Capital Lease Obligations in the nature thereof) or other encumbrance of any kind or description, including, without limitation, any agreement to give or grant a Lien. "LOAN PARTIES" shall mean the Company and the Guarantors. "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. "REVOLVING CREDIT AGREEMENT" shall mean the Revolving Credit Agreement, dated as of the Closing Day, between the Company and Prudential, as amended, restated, supplemented or otherwise modified from time to time. "REVOLVING LOAN" shall have the meaning ascribed to such term in the Revolving Credit Agreement. "REVOLVING NOTE" shall have the meaning ascribed to such term in the Revolving Credit Agreement. "SECOND PRIORITY EXCHANGE NOTES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SECOND PRIORITY INDENTURE TRUSTEE" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SECOND PRIORITY NOTES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SECOND PRIORITY NOTES INDENTURE" shall have the meaning ascribed to such term in the Intercreditor Agreement. 7 8 "SIGNIFICANT HOLDER" shall mean (i) each purchaser of the First Priority Notes identified in the Purchaser Schedule to the First Priority Note Agreement, so long as such purchaser shall hold (or be committed under the First Priority Note Agreement to purchase) any First Priority Note or First Priority Exchange Note or (ii) any "qualified institutional buyer" (as such term is defined in Rule 144A under the Securities Act of 1933, as amended) which is a holder of at least 5% of the aggregate principal amount of the First Priority Notes, the First Priority Exchange Notes, the Second Priority Notes and the Second Priority Exchange Notes from time to time outstanding and which has notified the Company that it is such a holder. "SUBSIDIARY" shall mean, with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. "TRANSACTION DOCUMENTS" shall mean the Collateral Documents, the Financing Agreements, the Intercreditor Agreement and all other agreements, instruments and documents relating to the aforementioned agreements, instruments and documents. "VOTING SECURITIES" means, with respect to any Person, securities of any class or classes of capital stock in such Person entitling the holders thereof, under ordinary circumstances and in the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). "YIELD-MAINTENANCE AMOUNT" shall have the meaning ascribed to such term in the First Priority Notes Indenture. 1B. LEGAL PRINCIPLES, TERMS AND DETERMINATIONS. Any reference herein to any specific citation, section or form of law, statute, rule or regulation shall refer to such new, replacement or analogous citation, section or form should such citation, section or form be modified, amended or replaced. 8 9 2. THE GUARANTY. 2A. GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS. Each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guaranties the full and prompt payment in United States currency when due (whether at maturity, a stated prepayment date or earlier by reason of acceleration or otherwise) and at all times thereafter, and the due and punctual performance, of all Guarantied Obligations. Each Guarantor hereby agrees to pay and to indemnify and save each of the Collateral Agent, the First Priority Indenture Trustee, the Second Priority Indenture Trustee, Prudential, the LC Agent, each LC Lender and any Significant Holder harmless from and against any damage, loss, cost or expense (including attorneys' fees) which such Person may incur or be subject to as a consequence, direct or indirect, of endeavoring to enforce this Guaranty or to collect all or any part of the Guarantied Obligations from, or in pursuing any action against, the Company or any Guarantor or enforcing any rights of any Credit Party in the security for the Guarantied Obligations or the liabilities of any Guarantor hereunder, including, without limitation, the Collateral, and any taxes, fees or penalties which may be paid or payable in connection therewith. This is a continuing guaranty of payment and performance and not of collection. Notwithstanding any provision of this Guaranty, all covenants, obligations, waivers and agreements of the Guarantors under this Guaranty shall be joint and several. Upon an Event of Default, the Collateral Agent may, at its sole election and without notice, proceed directly and at once against any Guarantor to seek and enforce performance of, and to collect and recover, the Guarantied Obligations, or any portion thereof, without first proceeding against the Company, any other Guarantor or any other Person or the Collateral, or any other security for the Guarantied Obligations or for the liability of any such other Person or any Guarantor hereunder. The Credit Parties shall have the exclusive right to determine the application of payments and credits, if any, from any Guarantor, the Company, or from any other Person on account of the Guarantied Obligations or otherwise. This Guaranty and all covenants and agreements of each Guarantor contained herein shall continue in full force and effect and shall not be discharged until such a time as all of the Guarantied Obligations shall be paid or otherwise performed in full and no Credit Party shall have any commitment under any Transaction Document. Notwithstanding anything contained in this paragraph 2A to the contrary, at all times, if any, during which any Guarantor is the obligor hereunder, each Guarantor and by its acceptance hereof the Collateral Agent hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to this Guaranty not constitute a fraudulent transfer or conveyance for purposes of any bankruptcy law, the Uniform 9 10 Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the obligations of each Guarantor under this Guaranty shall be limited to the maximum amount as will result in the obligations of such Guarantor under this Guaranty not constituting such fraudulent transfer or conveyance. 2B. OBLIGATIONS UNCONDITIONAL. The obligations of each Guarantor under this Guaranty shall be continuing, absolute and unconditional, irrespective of (i) the invalidity or unenforceability of any Transaction Document or any provision of any thereof; (ii) the absence of any attempt by any Credit Party to collect the Guarantied Obligations or any portion thereof from the Company, any other guarantor of all or any portion of the Guarantied Obligations or any other Person or other action to enforce the same; (iii) any action taken by any Credit Party whether or not authorized by this Guaranty; (iv) any failure by any Credit Party to acquire, perfect or maintain any security interest or lien in, or take any steps to preserve its rights to, the Collateral or any other security for the Guarantied Obligations or any portion thereof or for the liability of any Guarantor hereunder or the liability of any other guarantor of any or all of the Guarantied Obligations; (v) any defense arising by reason of any disability or other defense (other than a defense of payment, unless the payment on which such defense is based was or is subsequently invalidated, declared to be fraudulent or preferential, otherwise avoided and/or required to be repaid to the Company or any Guarantor, as the case may be, or the estate of any such party, a trustee, receiver or any other Person under any bankruptcy law, state or federal law, common law or equitable cause, in which case there shall be no defense of payment with respect to such payment) of the Company or any other Person liable on the Guarantied Obligations or any portion thereof; (vi) a Credit Party's election, in any proceeding instituted under Chapter 11 of Title 11 of the Federal Bankruptcy Code (11 U.S.C. Section 101 et seq.) (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code; (vii) any borrowing or grant of a security interest to any Credit Party by the Company, as debtor-in-possession, or extension of credit, under Section 364 of the Bankruptcy Code; (viii) the disallowance or avoidance of all or any portion of any Credit Party's claim(s) for repayment of the Guarantied Obligations under the Bankruptcy Code or any similar state law or the avoidance, invalidity or unenforceability of any Lien securing the Guarantied Obligations or the liability of any Guarantor hereunder or of any other guarantor of all or any part of the Guarantied Obligations; (ix) any amendment to, waiver or modification of, or consent, extension, indulgence or other action or inaction under or in respect of any Transaction Document, including, without limitation, any increase in the interest rate on any Guarantied Obligations; (x) any change in any provision of any applicable law or regulation; (xi) any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, binding on or affecting any Guarantor or the 10 11 Company or any of their assets; (xii) the charter or by-laws of any Guarantor or the Company; (xiii) any mortgage, indenture, lease, contract, or other agreement (including without limitation any agreement with stockholders), instrument or undertaking to which any Guarantor or the Company is a party or which purports to be binding on or affect such Person or any of its assets; (xiv) any bankruptcy, insolvency, readjustment, composition, liquidation or similar proceeding with respect to the Company, any other Guarantor or any other guarantor o all or any portion of any Guarantied Obligations or such Persons's propertyand any failure by any Credit Party to file or enforce a claim against the Company or such other Person in any such proceeding; (xv) any failure on the part of the Company for any reason to comply with or perform any of the terms of any other agreement with any Guarantor; or (xvi) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety. 2C. OBLIGATIONS UNIMPAIRED. Each Credit Party is authorized, without demand or notice, which demand and notice are hereby waived, and without discharging or otherwise affecting the obligations of any Guarantor hereunder (which shall remain absolute and unconditional notwithstanding any such action or omission to act), from time to time to (i) renew, extend, accelerate or otherwise change the time for payment of, or other terms relating to, the Guarantied Obligations or any portion thereof, including, without limitation, increasing the interest rate on any Guarantied Obligations, or otherwise modify, amend or change the terms of the Transaction Documents; (ii) accept partial payments on the Guarantied Obligations; (iii) take and hold security for the Guarantied Obligations or any portion thereof or any other liabilities of the Company, the obligations of any Guarantor under this Guaranty and the obligations under any other guaranties and sureties of all or any of the Guarantied Obligations, and exchange, enforce, waive, release, sell, transfer, assign, abandon, fail to perfect, subordinate or otherwise deal with any such security (including, without limitation, the Collateral); (iv) apply such security and direct the order or manner of sale thereof as such Credit Party may determine in its sole discretion; (v) settle, release, compromise, collect or otherwise liquidate the Guarantied Obligations or any portion thereof and any security therefor or guaranty thereof in any manner; (vi) extend additional loans, credit and financial accommodations to the Company or any Guarantor and otherwise create additional Guarantied Obligations; (vii) waive strict compliance with the terms of any Transaction Document and otherwise forbear from asserting such Credit Party's rights and remedies thereunder; (viii) take and hold additional guaranties or sureties and enforce or forbear from enforcing any guaranty or surety of any other guarantor or surety of the Guarantied Obligations, any portion thereof or release or otherwise take any action with respect to any such guarantor or surety; (ix) assign this Guaranty in part or in whole in connection with any assignment of the Guarantied Obligations or any portion thereof; (x) exercise 11 12 or refrain from exercising any rights against the Company or any Guarantor; and (xi) apply any sums, by whomsoever paid or however realized, to the payment of the Guarantied Obligations as such Credit Party in its sole discretion may determine. 2D. WAIVERS OF GUARANTOR. Each Guarantor waives for the benefit of each Credit Party: (i) any right to require any Credit Party, as a condition of payment or performance by such Guarantor or otherwise, to (a) proceed against the Company, any other Guarantor or other guarantor of the Guarantied Obligations or any other Person, (b) proceed against or exhaust the Collateral or any other security given to or held by any Credit Party in connection with the Guarantied Obligations or any other guaranty, or (c) pursue any other remedy available to any Credit Party whatsoever; (ii) any defense arising by reason of (a) the incapacity, lack of authority or any disability or other defense of the Company, including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto, (b) the cessation of the liability of the Company from any cause other than indefeasible payment in full of the Guarantied Obligations, or (c) any act or omission of any Credit Party or any other Person which directly or indirectly, by operation of law or otherwise, results in or aids the discharge or release of the Company or the Collateral or any other security given to or held by any Credit Party in connection with the Guarantied Obligations or any other guaranty; (iii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (iv) any defense based upon any Credit Party's errors or omissions in the administration of the Guarantied Obligations; (v) (a) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of such Guarantor's or any other Guarantor's obligations hereunder, (b) the benefit of any statute of limitations affecting the Guarantied Obligations or such Guarantor's or any other Guarantor's liability hereunder or the enforcement hereof, (c) any rights to set-offs, recoupments and counterclaims, and (d) promptness, diligence and any requirement that any Credit Party protect, maintain, secure, perfect or insure any Lien or any property subject thereto; (vi) notices (a) of nonperformance or dishonor, (b) of acceptance of this Guaranty by such Guarantor or any other 12 13 Guarantor, (c) of default under this Guaranty by any other Guarantor or in respect of the Guarantied Obligations or any other guaranty, (d) of the existence, creation or incurrence of new or additional indebtedness, arising either from additional loans extended to the Company or otherwise, (e) that the principal amount, or any portion thereof, and/or any interest or Yield Maintenance Amount on any document or instrument evidencing all or any part of the Guarantied Obligations is due, (f) of any and all proceedings to collect from the Company, any Guarantor or any other guarantor of all or any part of the Guarantied Obligations, or from any other Person, (g) of exchange, sale, surrender or other handling of the Collateral or any other security or collateral given to any Credit Party to secure payment of the Guarantied Obligations or any guaranty therefor, (h) of renewal, extension or modification of any of the Guarantied Obligations, (i) of assignment, sale or other transfer of any Guarantied Note to another Person, or (j) of any of the matters referred to in paragraph 2B and any right to consent to any thereof; (vii) presentment, demand for payment or performance and protest and notice of protest with respect to the Guarantied Obligations or any guaranty with respect thereto; and (viii) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. Each Guarantor agrees that no Credit Party shall be under any obligation to marshall any assets in favor of any Guarantor or against or in payment of any or all of the Guarantied Obligations. No Guarantor will exercise any rights which it may have acquired by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, or accept any payment on account of such subrogation rights, or any rights of contribution, reimbursement, indemnity, exoneration or any rights or recourse to any security for the Guarantied Obligations or this Guaranty unless at the time of a Guarantor's exercise of any such right there shall have been performed and indefeasibly paid in full all of the Guarantied Obligations and no Credit Party shall have any commitment under any Transaction Document. 2E. REVIVAL. Each Guarantor agrees that, if any payment made by the Company or any other Person is applied to the Guarantied Obligations and is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral or any other security are required to be returned by any Credit Party to the Company or its estate, trustee, receiver or any other Person, including, without limitation, any Guarantor, under any bankruptcy law, state or federal law, common law or equitable 13 14 cause, then, to the extent of such payment or repayment, each Guarantor's liability hereunder (and any Lien or other collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, or, if prior thereto this Guaranty shall have been canceled or surrendered (and if any Lien or other collateral securing such Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Lien or other collateral) shall be reinstated and returned in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any Guarantor in respect of the amount of such payment (or any Lien or other collateral securing such obligation). 2F. OBLIGATION TO KEEP INFORMED. Each Guarantor shall be responsible for keeping itself informed of the financial condition of the Company and any other Persons primarily or secondarily liable on the Guarantied Obligations or any portion thereof, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any portion thereof, and each Guarantor agrees that no Credit Party shall have a duty to advise such Guarantor of information known to such Credit Party regarding such condition or any such circumstance. If any Credit Party, in its discretion, undertakes at any time or from time to time to provide any such information to any Guarantor, such Credit Party shall not be under any obligation (i) to undertake any investigation, whether or not a part of its regular business routine, (ii) to disclose any information which such Credit Party wishes to maintain confidential, or (iii) to make any other or future disclosures of such information or any other information to such or any other Guarantor. 2G. BANKRUPTCY. Upon the commencement by, against or with respect to any Loan Party of any proceeding under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law or for the appointment of a receiver for any Loan Party or its assets, any and all obligations of each Guarantor hereunder shall forthwith become due and payable without notice. 2H. CONTRIBUTION. 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 of each Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Guarantied Obligations or any other Guarantor's obligations with respect to this Guaranty. "Adjusted Net Assets" of each Guarantor at any date shall mean the lesser of the amount by which (x) the 14 15 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. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Guarantor represents, covenants and warrants as follows: 3A. ORGANIZATION, POWER AND AUTHORITY. 3A(1). ORGANIZATION. Such Guarantor is a corporation duly organized and existing in good standing under the laws of the State set forth opposite its name on Schedule 3A(1) and is qualified to do business and in good standing in every jurisdiction where the ownership of its property or the nature of the business conducted by it makes such qualification necessary except where the failure to be qualified or in good standing would not have a material adverse effect on the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole. 3A(2). POWER AND AUTHORITY. Such Guarantor and each Subsidiary of such Guarantor has all requisite power to conduct its business as currently conducted and as currently proposed to be conducted. Such Guarantor has all requisite power to execute, deliver and perform its obligations under this Guaranty and the other Transaction Documents to which it is a party. The execution, delivery and performance of this Guaranty and the other Transaction Documents to which such Guarantor is a party have been duly authorized by all requisite action and this Guaranty and the other Transaction Documents to which such Guarantor is a party have been duly executed and delivered by authorized officers of such Guarantor and are valid obligations of such Guarantor, legally binding upon and enforceable against such Guarantor in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3B. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither such Guarantor nor any of its Subsidiaries is a party to any contract or agreement or subject to any charter or other corporate restriction which materially and adversely affects or impairs the ability of the Company or its Subsidiaries to maintain the operations of the 15 16 Company and its Subsidiaries taken as a whole. Neither the execution nor delivery of this Guaranty or the other Transaction Documents, nor fulfillment of nor compliance with the terms and provisions hereof and of the other Transaction Documents will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien (other than Liens in favor of the Collateral Agent) upon any of the properties or assets of such Guarantor or any of its Subsidiaries pursuant to, the charter or by-laws of such Guarantor or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders of such Guarantor), instrument, order, judgment, decree, statute, law, rule or regulation to which such Guarantor or any of its Subsidiaries is subject. Neither such Guarantor nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing any indebtedness of such Guarantor or such Subsidiary, any agreement relating thereto or any other contract or agreement (including its charter) which limits the amount of, or otherwise imposes restrictions on the incurring of, obligations of such Guarantor of the type to be evidenced by this Guaranty except as set forth in the agreements listed on Schedule 3B hereto. 3C. GOVERNMENTAL CONSENT. Neither the nature of such Guarantor or of any Subsidiary of such Guarantor nor any of their respective businesses or properties, nor any relationship between such Guarantor or any Subsidiary of such Guarantor and any other Person, nor any circumstance in connection with the execution, delivery and performance of this Guaranty is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body (including, without limitation, notifications required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, but excluding routine filings after the date of closing with the Securities and Exchange Commission and/or state Blue Sky authorities) in connection with the execution and delivery of this Guaranty and the other Transaction Documents to which any Guarantor is a party, or fulfillment of or compliance with this Guaranty and the other Transaction Documents other than filings and recordings necessary to perfect the security interests granted the Collateral Agent under the Collateral Documents, all of which have been made. 4. MISCELLANEOUS 4A. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Guaranty contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. This Guaranty shall be for the benefit of the Guarantied Parties and their successors, assigns and participants, and any such successors, assigns and participants shall have the same benefits under this Guaranty as the Guarantied Parties. 16 17 4B. CONSENT TO AMENDMENTS. This Guaranty may be amended, and a Guarantor may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if such Guarantor shall obtain the written consent to such amendment, action or omission to act, of the Collateral Agent. No course of dealing between any Guarantor and the Collateral Agent or any other Credit Party nor any delay in exercising any rights hereunder shall operate as a waiver of any rights of the Collateral Agent. As used herein, the term "this Guaranty" and references thereto shall mean this Guaranty as it may from time to time be amended or supplemented. 4C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein or made in writing by or on behalf of each Guarantor in connection herewith shall survive the execution and delivery of this Guaranty, the transfer of any Guarantied Note or portion thereof or interest therein and the payment of any Guarantied Note or Guarantied Obligation, and may be relied upon by any Person to whom a Guarantied Note or all or any part of any other Guarantied Obligation is transferred, regardless of any investigation made at any time by or on behalf of any Credit Party. Subject to the preceding sentence, this Guaranty and the other Transaction Documents embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. 4D. NOTICES. All written communications provided for hereunder shall be sent by first class mail, nationwide overnight delivery service (with charges prepaid) or facsimile transmission (confirmed by first class mail or nationwide overnight delivery services) and (i) if to the Collateral Agent, addressed to it at 233 South Wacker Drive, Chicago, Illinois 60606, or at such other address as the Collateral Agent shall have specified for it to the Guarantors and (ii) if to the Guarantors, addressed to each of them at 701 Harger Road, Suite 190, Oak Brook, Illinois 60521, Attention: General Counsel, or, if applicable, to the facsimile number (708) 575-2401 or, in each case, at such other address or facsimile number as the Guarantor or the Collateral Agent, as the case may be, shall have specified for it to the other party hereto. 4E. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Guaranty are inserted for convenience only and do not constitute a part of this Guaranty. 4F. SATISFACTION REQUIREMENT. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Guaranty required to be satisfactory to the Collateral Agent, the determination of such satisfaction shall be 17 18 made by the Collateral Agent, in its sole and exclusive judgment (exercised in good faith). 4G. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 4H. COUNTERPARTS. This Guaranty may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one instrument. It shall not be necessary in making proof of this Guaranty to produce or account for more than one such counterpart. 4I. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of an Event of Default or an event which with the passage of time, notice or both would become an Event of Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by the Collateral Agent to prohibit (through equitable action or otherwise) the taking of any action by a Guarantor which would result in any Event of Default or an event which with the passage of time, notice or both would become an Event of Default. 4J. BINDING GUARANTY. When this Guaranty is executed and delivered by a Guarantor and acknowledged and accepted by the Collateral Agent, it shall become a binding agreement by such Guarantor in favor of the Collateral Agent on behalf and for the benefit of the Guarantied Parties. 4K. SEVERABILITY. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 4L. COUNSEL'S OPINION. Each Guarantor hereby directs the Company's counsel referred to in any Transaction Document to deliver the opinions referred to therein, and agrees that the execution of such Transaction Documents will constitute a reconfirmation of such direction. 4M. ADDITIONAL GUARANTORS. Each of the parties hereto agrees that if a Subsidiary of the Company is required to become a party to this Guaranty pursuant to any Transaction Document, such Subsidiary may become a party hereto by delivering to the 18 19 Collateral Agent a Guaranty Amendment, in substantially the form of Annex I hereto, duly executed by such Subsidiary. Each of the parties hereto authorizes the Collateral Agent to attach each such Guaranty Amendment to this Guaranty and agrees that such Subsidiary becoming a party hereto shall not affect any other Guarantor's obligations hereunder. Upon the execution and delivery of such Guaranty Amendment by such Subsidiary, such Subsidiary shall become a "Guarantor" hereunder and all references to "Guarantors" hereunder shall mean and include such Subsidiary. 4N. JURISDICTION, SERVICE OF PROCESS. Each Guarantor irrevocably agrees that any suit, action or proceeding against it with respect to this Guaranty or any Transaction Document may be brought in the courts of New York County in the State of New York or in the U.S. District Court for the Southern District of New York, and each Guarantor accepts for itself, generally and unconditionally, and hereby submits to the non- exclusive jurisdiction of each such court for the purpose of any such suit, action or proceeding. Each Guarantor hereby waives personal service of any and all process upon it and irrevocably agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in any such court may be made upon the Person to whom notices to the Guarantors may be sent under paragraph 4D hereof, and hereby irrevocably appoints such Person as its agent in its name, place and stead to accept on its behalf such service of any and all such writs, process and summonses and each Guarantor hereby irrevocably authorizes and directs such Person to accept such service on its behalf, and agrees that the failure of the such Person to give any notice of any such services of process to any Guarantor shall not impair or affect the validity of such service or of any judgment based upon same. Each Guarantor further irrevocably consents to the service of process in any suit, action or proceeding in said courts by the mailing thereof by the Collateral Agent by registered or certified mail, postage prepaid, to such Guarantor at its address given in paragraph 4D hereof. The foregoing shall not, however, limit the right of the Collateral Agent to serve process in any other manner permitted by law or to commence any suit, action or proceeding or to obtain execution of judgment in any appropriate jurisdiction. Without limiting the foregoing, each Guarantor further agrees that the Collateral Agent may at its option submit any dispute which may arise in connection with this Guaranty or any Transaction Document to any other court having jurisdiction over any Guarantor's property. Each Guarantor irrevocably waives and releases any defense or objection which it may now or hereafter have relating to the institution of any suit, action or proceeding arising out of or relating to this Guaranty or of any Transaction Document brought in the courts of New York County in the State of New York or the U.S. District Court for the Southern District of New York, including without limitation, all defenses or objections relating to service of process, personal jurisdiction and the laying of venue, and each Guarantor further irrevocably waives any defense, objection or claim that any such 19 20 suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 4O. WAIVER OF JURY TRIAL. Each Guarantor and the Collateral 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 or under any of the other Collateral documents. 4P. RELEASE. Upon the sale or other disposition of the assets of a Guarantor, or of all of the capital stock of any Guarantor by any Loan Party, as permitted in accordance with the terms of the Financing Agreements (as amended from time to time) prior to the occurrence of an Event of Default or an event which with the passage of time or giving of notice or both would constitute an Event of Default, (i) the Lien of the Collateral Agent in any such assets sold or otherwise disposed of by a Guarantor shall be automatically released upon such sale and (ii) with respect to any sale or other disposition of all of the capital stock of any Guarantor by a Loan Party, the obligations of such Guarantor under this Agreement shall automatically terminate on the date of such sale or disposition. [signature pages to follow] 20 21 IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed as of the date first above written. CLEAR SHIELD NATIONAL, INC. By:____________________________________ Title:_________________________________ SANDUSKY PLASTICS, INC. By:____________________________________ Title:_________________________________ SANDUSKY PLASTICS OF DELAWARE, INC. By:_____________________________________ Title:__________________________________ VISKASE HOLDING CORPORATION By:_____________________________________ Title:__________________________________ VISKASE SALES CORPORATION By:_____________________________________ Title:__________________________________ VISKASE CORPORATION By:_____________________________________ Title:__________________________________ 22 Acknowledged and agreed to as of the 20th day of June, 1995: BT Commercial Corporation, in its capacity as Collateral Agent By: ______________________________ Title: ____________________________ 23 ANNEX I GUARANTY AMENDMENT This Guaranty Amendment dated as of _____________________, 199_ is delivered pursuant to paragraph 4M of the Guaranty Agreement dated as of June __, 1995 (as amended, restated, modified or supplemented from time to time, the "Guaranty Agreement"), made by Subsidiaries of Envirodyne Industries, Inc. from time to time party thereto in favor of the Collateral Agent on behalf and for the benefit of the Guarantied Parties. Capitalized terms that are used in this Guaranty Amendment and not defined in this Guaranty Amendment shall have the respective meanings ascribed to them in the Guaranty Agreement. The undersigned hereby agrees that this Guaranty Amendment may be attached to the Guaranty Agreement and that, upon the execution and delivery of this Guaranty Amendment as contemplated in said paragraph 4M, the undersigned shall (a) become a "Guarantor" as such term is used in the Guaranty Agreement and any other Transaction Document, and references to "Guarantor" or "Guarantors" as used in the Guaranty Agreement and the other Transaction Documents shall mean and include the undersigned; (b) have all of the obligations and duties of a "Guarantor" under the Guaranty Agreement; and (c) for the benefit of the Collateral Agent and the Guarantied Parties referred to in the Guaranty Agreement, be deemed to have made each of the representations and warranties in paragraph 3 of the Guaranty Agreement with respect to itself and its Subsidiaries. The undersigned is a corporation organized under the law of the State of ________________. IN WITNESS WHEREOF, the undersigned has caused this Guaranty Amendment to be duly executed as of the day and year first above written. [NAME OF NEW GUARANTOR] By______________________________ Title: EX-5.1 17 SCHUSTER OPINION 1 EXHIBIT 5.1 July 18, 1995 Envirodyne Industries, Inc. 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 Re: 12% Series B Senior Secured Notes Due 2000, Floating Rate Series D Senior Secured Notes Due 2000 and Related Guarantees Ladies and Gentlemen: I refer to the Registration Statement on Form S-4 (the "Registration Statement") being filed by Envirodyne Industries, Inc., a Delaware corporation (the "Company"), and by each of Clear Shield National, Inc., a California corporation, Sandusky Plastics, Inc., a Delaware corporation, Sandusky Plastics of Delaware, Inc., a Delaware corporation, Viskase Corporation, a Pennsylvania corporation, Viskase Holding Corporation, a Delaware corporation, and Viskase Sales Corporation, a Delaware corporation (collectively, the "Subsidiary Guarantors"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of (i) $160,000,000 aggregate principal amount of the Company's 12% First Priority Senior Secured Notes due 2000, Series B (the "New Series B Notes"), and its Floating Rate First Priority Senior Secured Notes due 2000, Series D (the "New Series D Notes" and collectively, with the New Series B Notes, the "Debt Securities"), consisting of $151,500,000 of New Series B Notes and $8,500,000 of New Series D Notes, and (ii) the guarantees (the "Guarantees") made by each of the Subsidiary Guarantors in favor of the holders of the Debt Securities. The Debt Securities are to be issued under the Indenture dated as of June 20, 1995 (the "Indenture") between the Company and Shawmut Bank Connecticut, National Association, as trustee (the "Trustee"). The Company intends to offer, upon the terms and subject to the conditions set forth in the Registration Statement, to exchange (1) $1,000 principal amount of New Series B Notes for each $1,000 principal of its outstanding 12% First Priority Senior Secured Notes due 2000, Series A (the "Old Series A Notes"), and (ii) $1,000 principal 2 Envirodyne Industries, Inc. July 18, 1995 Page 2 amount of New Series D Notes for each $1,000 principal amount of its outstanding Floating Rate First Priority Senior Secured Notes due 2000, Series C (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"), of which $160,000,000 aggregate principal amount of Old Notes is outstanding (the "Exchange Offer"). I am familiar with the proceedings to date with respect to the proposed issuance and delivery of the Debt Securities and the Guarantees and have examined such records, documents and questions of law, and satisfied myself as to such matters of fact, as I have considered relevant and necessary as a basis for my opinion. Based on the foregoing, I am of the opinion that: 1. The Company is duly incorporated and validly existing under the laws of the State of Delaware. Each Subsidiary Guarantor is duly incorporated and validly existing under the respective laws of its state of incorporation. 2. All necessary action has been taken by the Company's Board of Directors to authorize the issuance of the Debt Securities and no action by the stockholders of the Company is required. All necessary action has been taken by the Board of Directors of each Subsidiary Guarantor to authorize the issuance of its Guarantee and no action by the stockholders of any Subsidiary Guarantor is required. 3. The Debt Securities issued upon acceptance of the Exchange Offer will be legally issued and binding obligations of the Company and the Guarantees will be legally issued and binding obligations of each Subsidiary Guarantory (except in each case to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended, shall have become effective under the Securities Act and the Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended, and (ii) such Debt Securities shall have been duly executed and authenticated as provided in the Indenture and shall have been duly delivered to the holders of the Old Notes in accordance with the terms and conditions of the Exchange Offer. 3 Envirodyne Industries, Inc. July 18, 1995 Page 3 I do not find it necessary for the purposes of this opinion to cover, and accordingly I express no opinion as to, the application of the securities or blue sky laws of the various states to the offer and exchange of the Debt Securities or the execution and delivery of the Guarantees. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement and to all references to the opinion included in or made a part of the Registration. Very truly yours, Stephen M. Schuster Vice President, Secretary and General Counsel EX-8.1 18 OPINION OF SIDLEY & AUSTIN 1 EXHIBIT 8.1 July 19, 1995 Envirodyne Industries, Inc. 701 Harger Road Suite 190 Oak Brook, Illinois 60521 Ladies and Gentlemen: Reference is made to the Registration Statement on Form S-4 being filed with the Securities and Exchange Commission by Envirodyne Industries, Inc. (the "Company") and certain of the Company's subsidiaries on July 19, 1995, and to the prospectus (the "Prospectus") included in such Registration Statement, relating to the exchange of (i) its outstanding 12% First Priority Senior Secured Notes, Series A, for 12% First Priority Senior Secured Notes, Series B, and (ii) its outstanding Floating Rate First Priority Senior Secured Notes, Series C, for Floating Rate First Priority Senior Secured Notes, Series D. We are counsel to the Company. The statements in the Prospectus under the heading "Certain Federal Income Tax Consequences," to the extent they constitute matters of federal income tax law or legal conclusions with respect thereto, have been prepared or reviewed by us and, in our opinion, are correct in all material respects. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. This opinion is rendered as of the date hereof based on the law and facts in existence on the date hereof, and we do not undertake, and hereby disclaim, any obligation to advise you of any changes in law or fact, whether or not material, which may be brought to our attention at a later date. Very truly yours, Sidley & Austin EX-10.10 19 NOTE AGREEMENT DATED JUNE 20, 1995 1 EXHIBIT 10.10 ================================================================================ ENVIRODYNE INDUSTRIES, INC. $160,000,000 FIRST PRIORITY SENIOR SECURED NOTES DUE 2000 ______________ NOTE AGREEMENT ______________ DATED AS OF JUNE 20, 1995 ================================================================================ 2 TABLE OF CONTENTS (Not Part of Agreement)
Page ---- 1. AUTHORIZATION OF ISSUE OF NOTES; INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3A. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3B. Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3D. Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3D. Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3E. Opinion of Purchasers' Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3F. Opinions of Company's and Guarantors' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 4 3G. Representations and Warranties; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3H. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3I. Structuring Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3J. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3K. Purchase Permitted By Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3L. Consents and Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3M. Payoff Letters; Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3N. Certificates of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3P. Environmental Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3Q. Sale of Notes to Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3R. Letter Agreement Regarding Financial Statements and Certain Other Rights with Certain Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3S. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4A. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4B. Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4C. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4D. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4E. Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4F. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4G. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4H. Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4I. Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 4J. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 4K. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4L. Governmental Consent and Other Third Party Consents . . . . . . . . . . . . . . . . . . . . . . 11 4M. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4N. Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4O. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4P. Regulatory Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4Q. Permits and Other Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4R. Absence of Financing Statements, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4S. Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
i 3 4T. Limitation on Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5. REPRESENTATIONS OF EACH PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5A. Nature of Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5B. Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5C. Independent Credit Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 6. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 6A. Accounting Principles, Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . 21 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7A. Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7B. Issue Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 7C. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 7D. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 7E. Certain Indenture Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7F. Substitution and Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7G. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7H. Survival of Representations and Warranties; Entire Agreement . . . . . . . . . . . . . . . . . . 24 7I. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7J. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7K. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7L. Solicitation of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7M. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7N. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7O. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7P. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7Q. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7R. Severalty of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7S. Jurisdiction, Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PURCHASER SCHEDULE Exhibit A -- Form of Indenture Exhibit B-1 -- Form of Intercreditor Agreement Exhibit B-2 -- Form of GECC Intercreditor Agreement Exhibit C-1 -- Form of Security Agreement Exhibit C-2 -- Form of Intellectual Property Security Agreement Exhibit D-1 -- Form of Mortgage Exhibit D-2 -- Form of Leasehold Mortgage Exhibit E -- Form of Pledge Agreement Exhibit F -- Guaranty Agreement Exhibit G -- Exchange and Registration Rights Agreement Exhibit H-1 -- Form of opinion of Purchaser's Special Counsel Exhibit H-2 -- Form of opinion of Company's Special Counsel Exhibit H-3 -- Form of opinion of Company's Assistant General Counsel Schedule 4A -- Subsidiaries Schedule 4H -- List of Agreements Restricting Indebtedness ii 4 ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 121 OAK BROOK, ILLINOIS 60521 As of June 20, 1995 To Each of the Purchasers Named in the Purchaser Schedule Attached Hereto Ladies and Gentlemen: The undersigned, Envirodyne Industries, Inc., a Delaware corporation (herein called the "Company"), hereby agrees with the purchasers named in the Purchaser Schedule attached hereto (herein called the "Purchasers") as follows: 1. AUTHORIZATION OF ISSUE OF NOTES; INDENTURE. The Company will authorize the issue of the Fixed Rate Notes and the Floating Rate Notes (the "Notes") in the aggregate principal amount of $160,000,000, to be dated the date of issue thereof, to mature June 15, 2000, to bear interest on the unpaid balance thereof from the date thereof until the principal thereof shall have become due and payable (i) in the case of the Fixed Rate Notes, at the rate of 12% per annum and (ii) in the case of the Floating Rate Notes, at the rate specified in the Indenture therefor. The Notes will be issued under an Indenture, dated as of June 20, 1995, from the Company to Shawmut Bank Connecticut, N.A., as Trustee (the "Trustee"), substantially in the form of Exhibit A hereto (as amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "Indenture"). The Notes shall have such terms and provisions provided therefor in the Indenture and shall be substantially in the form set forth therefor in the Indenture. The Notes shall be secured by a valid first priority Lien (subject only to Permitted Liens) in the Collateral and shall be guaranteed by the Guarantors pursuant to the Guaranty Agreement. 2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to each Purchaser, and, subject to the terms and conditions herein set forth, each Purchaser agrees to purchase from the Company, the aggregate principal amount of Fixed Rate Notes or Floating Rate Notes, as the case may be, set forth opposite such Purchaser's name in the Purchaser Schedule at 100% of such aggregate principal amount. The Company will deliver to each Purchaser designated in the Purchaser Schedule to receive Fixed Rate Notes or Floating Rate Notes, as the case may be, in certificated form (the "Certificated Note Purchasers"), one or more Fixed Rate Notes or Floating Rate Notes, as the case may be, registered in such Certificated Note Purchaser's name (or in the name of any nominee designated for such Certificated Note Purchaser 5 in the Purchaser Schedule), evidencing the aggregate principal amount of Fixed Rate Notes or Floating Rate Notes, as the case may be, to be purchased by such Certificated Note Purchaser and in the denomination or denominations specified with respect to such Certificated Note Purchaser in the Purchaser Schedule, against payment of the purchase price thereof by transfer of immediately available funds as required by paragraph 3M hereof or, if there are proceeds in excess of the amounts to be applied as required by paragraph 3M hereof, for credit to the Company's account #73-62560 at Bank of America Illinois, ABA No. 071-0000-39 (the "Company's Account") on the date of closing, which shall be June 20, 1995, or on any other date upon which the Company and the Purchasers may mutually agree (herein called the "Closing" or the "Closing Date"). The Company will issue for the benefit of each Purchaser designated in the Purchaser Schedule to purchase Fixed Rate Notes or Floating Rate Notes, as the case may be, in book-entry form (the "Book-Entry Purchasers"), one fully registered Fixed Rate Note or Floating Rate Note, as the case may be, in the aggregate principal amount of the Fixed Rate Notes or Floating Rate Notes, as the case may be, to be purchased by all of the Book-Entry Purchasers (the "Global Notes"), which will be deposited with the Depository and registered in the name of the Depository or the Depository's nominee. The Depository will credit the account of its participant or persons who hold interests through participants with the principal amount of such Fixed Rate Notes or Floating Rate Notes, as the case may be, to be purchased by such Book-Entry Purchaser, and such participant or person will credit the account of such Book-Entry Purchaser with the principal amount of such Fixed Rate Notes or Floating Rate Notes, as the case may be, to be purchased by such Book-Entry Purchaser against payment of the purchase price thereof by transfer of immediately available funds for credit to the Company's Account on the Closing Date. 3. CONDITIONS OF CLOSING. Each Purchaser's obligation to purchase and pay for the Notes to be purchased by such Purchaser hereunder and under the Indenture is subject to the satisfaction, on or before the Closing Date, of the following conditions: 3A. NOTES. There shall have been delivered to each Certificated Note Purchaser the appropriate Note or Notes, there shall have been delivered to the Depository the Global Notes, each duly completed and executed by the Company, and the credits to the accounts described in paragraph 2 hereof with respect to the Book-Entry Purchasers shall have been made by the participants in the Depository's book-entry system. 3B. DOCUMENTS. Such Purchaser shall have received original counterparts or, if satisfactory to it, certified or other copies of all the following, each duly executed and delivered by the party or parties thereto in form and substance satisfactory to such Purchaser, and on the Closing Date in full force and effect with no event having occurred and being then continuing that would 2 6 constitute a default thereunder or constitute or provide the basis for the termination thereof: (i) The Indenture; (ii) The Intercreditor and Collateral Agency Agreement, of even date herewith, in the form of Exhibit B-1 attached hereto (as amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "Intercreditor Agreement") and the GECC Intercreditor Agreement, of even date herewith, in the form of Exhibit B-2 attached hereto, including the agreements which are exhibits thereto (such GECC Intercreditor Agreement, together with such agreements, as amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "GECC Intercreditor Agreement"); (iii) A Security Agreement made by the Company and by each Significant Domestic Subsidiary in favor of the Collateral Agent in the form of Exhibit C-1 attached hereto, and an Intellectual Property Security Agreement made by the Company and each Guarantor owning any Trademarks, Copyrights, Licenses, Patents or Trade Secrets (each as defined therein) in favor of the Collateral Agent in the form of Exhibit C-2 attached hereto; (iv) A Mortgage made by the Company and each Significant Domestic Subsidiary owning any real estate in favor of the Collateral Agent in the form of Exhibit D-1, attached hereto with respect to each parcel of real estate owned by the Company or any such Guarantor, and a Leasehold Mortgage in favor of the Collateral Agent in the form of Exhibit D-2 attached hereto made by Viskase Corporation with respect to the real estate located at Paul's Valley, Oklahoma; (v) A Pledge Agreement made by the Company and each Significant Domestic Subsidiary in favor of the Collateral Agent in the form of Exhibit E attached hereto; (vi) The Guaranty Agreement made by each Significant Domestic Subsidiary in the form of Exhibit F attached hereto; (vii) Certificates evidencing all securities pledged pursuant to the Pledge Agreement, together with related transfer documents executed in blank, in each case received by the Collateral Agent, all Uniform Commercial Code financing statements perfecting the security interests and other Liens granted to the Collateral Agent, duly filed in all offices that such Purchaser may deem necessary or advisable, and all such other releases, certificates, documents, agreements, recordings and filings as such Purchaser may deem 3 7 necessary or appropriate to establish a valid Lien in favor of the Collateral Agent in the Collateral for the benefit of Secured Parties in accordance with priorities established by the Intercreditor Agreement and all requisite filing or recording fees shall have been duly paid; (viii) The Exchange and Registration Rights Agreement, of even date herewith, made by the Company in favor of the Purchasers in the form of Exhibit G hereto (as the same may be amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "Exchange and Registration Rights Agreement"); and (ix) Such other certificates, documents, agreements, instruments, opinions, filings and other items as such Purchaser may reasonably request. 3D. REVOLVING CREDIT FACILITY. The Revolving Credit Agreement and all certificates, documents and other agreements delivered in connection therewith shall have been duly executed and delivered by the parties thereto, in each case (including without limitation all schedule and exhibits thereto) in form and substance satisfactory to each Purchaser, and on the Closing Date the Revolving Credit Agreement and all such other certificates, documents and agreements shall be in full force and effect, no default or event of default shall exist thereunder, and all conditions to the initial advance of revolving loans shall be satisfied. 3D. LETTER OF CREDIT FACILITY. The Letter of Credit Facility Agreement and all certificates, documents and other agreements delivered in connection therewith shall have been duly executed and delivered by the parties thereto in each case (including without limitation all schedules and exhibits thereto) in form and substance satisfactory to each Purchaser, and on the Closing Date the Letter of Credit Facility Agreement and all such other certificates, documents and agreements shall be in full force and effect, no default of event of default shall exist thereunder, and all conditions to the issuance of letters of credit thereunder shall be satisfied. 3E. OPINION OF PURCHASERS' SPECIAL COUNSEL. Such Purchaser shall have received from Schiff Hardin & Waite, who are acting as special counsel for the Purchasers in connection with the sale of the Notes to the Purchasers hereunder, a favorable opinion satisfactory to such Purchaser in the form of Exhibit H-1 attached hereto. 3F. OPINIONS OF COMPANY'S AND GUARANTORS' COUNSEL. Such Purchaser shall have received from Sidley & Austin, counsel for the Company and the Guarantors, and Thomas A. Monson, Associate General Counsel of the Company, a favorable opinion satisfactory to such Purchaser and substantially in the form of Exhibits H-2 and H-3 4 8 attached hereto, and such Purchaser shall have received from Baker & McKenzie, who are acting as special French counsel for the Company and the Guarantors in connection with this transaction, a favorable opinion satisfactory to such Purchaser as to such matters incident to the matters herein contemplated as such Purchaser may reasonably request. The Company hereby directs such counsel to render such opinions and agrees that the first issuance of any Notes will constitute a reconfirmation of such direction. 3G. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and warranties contained in paragraph 4 shall be true on and as of the Closing Date; the representations and warranties contained in each of the Transaction Documents shall be true and correct on and as of the Closing Date; there shall exist on the Closing Date no Event of Default or Default; and the Company shall have delivered to such Purchaser an Officer's Certificate of the Company and each Guarantor, dated the Closing Date, to each such effect. 3H. NO MATERIAL ADVERSE CHANGE. There shall not have occurred or be threatened (i) any condition, event or act which would materially and adversely affect the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, or the ability of the Company to repay the Notes or to perform under the Transaction Documents to which it is a party, or the ability of any Guarantor to perform under the Transaction Documents to which it is a party, or (ii) since December 29, 1994, a material adverse change to the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, in each case as determined by such Purchaser in its reasonable judgment. 3I. STRUCTURING FEE. On the Closing Date, the Company shall have paid to Prudential the remaining balance of the structuring and processing fee owed to it pursuant to the letter agreement between them dated May 16, 1995. 3J. FEES AND EXPENSES. The Company shall have paid such fees and expenses of the Purchasers' special counsel (including White & Case, who are acting as special French counsel to the Purchasers in connection with this transaction, and Cahill Gordon & Reindel, who are acting as special counsel to the Purchasers other than Prudential in connection with the Intercreditor Agreement and other intercreditor issues) and other consultants as the Purchasers shall have required to be paid on or before the Closing Date. 3K. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment for the Notes to be purchased by such Purchaser on the Closing Date on the terms and conditions herein provided (including the use of the proceeds of such Notes by the Company) shall not violate any applicable law or governmental regulation (including, 5 9 without limitation, Section 5 of the Securities Act or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System) and shall not subject such Purchaser to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation, and such Purchaser shall have received such certificates or other evidence as it may request to establish compliance with this condition. 3L. CONSENTS AND PERSONS. The Company and each Guarantor shall have delivered to such Purchaser on the Closing Date all authorizations, consents or approvals by or notices to or filings with any court or administrative or governmental body or other Person that are required in connection with the execution and delivery of the Transaction Documents, the offering, issuance, sale or delivery of the Notes or fulfillment of or compliance with the terms and provisions hereof or thereof, certified as true and correct and in full force and effect as of the Closing Date by a duly authorized officer of the Company or the Guarantors, as the case may be, or, if no such authorization, consent, approval, notice or filing is required (other than of the Boards of Directors of the Company and the Guarantors), a statement of such officer to such effect. 3M. PAYOFF LETTERS; DISBURSEMENT INSTRUCTIONS. On or before the Closing Date, such Purchaser shall have received (i) a payoff letter satisfactory to such Purchaser indicating the amount of the Indebtedness of the Company or its Subsidiaries owed to the Banks on the Closing Date (or, in the case of the Indebtedness owed by Viskase, S.A., on the date after the Closing Date), specifying wire transfer instructions for the repayment of such Indebtedness and acknowledging that upon the Banks' receipt of funds in the amount set forth in the pay- off letter such Indebtedness will be deemed discharged and fully satisfied, and all security for such Indebtedness shall be released; and (ii) disbursement instructions from the Company, directing that the proceeds of the Notes at least equal to the aggregate amount of Such Indebtedness are to be paid directly to the Banks. 3N. CERTIFICATES OF INSURANCE. The Collateral Agent shall have received (a) a certificate of insurance from an independent insurance broker dated as of the Closing Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise confirming that insurance has been obtained in accordance with the provisions of the Transaction Documents and (b) certified copies of all policies evidencing such insurance, or certificates therefor signed by the insurer or an agent authorized to bind the insurer. 3P. ENVIRONMENTAL ASSESSMENTS. Roy F. Weston, Inc. shall have prepared phase 1 environmental assessments for such Purchaser's benefit with respect to all of the real estate securing the Notes and such assessments shall be in the form and content 6 10 satisfactory to such Purchaser. Further, such Purchaser shall be satisfied with the environmental condition of all of the real property owned or leased by the Company and its Subsidiaries. 3Q. SALE OF NOTES TO OTHER PURCHASERS. The Company shall have sold to the other Purchasers the Notes to be purchased by them at the Closing and shall have received payment in full therefor. 3R. LETTER AGREEMENT REGARDING FINANCIAL STATEMENTS AND CERTAIN OTHER RIGHTS WITH CERTAIN PURCHASERS. The Company shall have executed and delivered to each Purchaser which is an insurance company a letter agreement regarding the delivery of financial statements and other reports, access to information and provision of certain other rights in form satisfactory to such Purchaser. 3S. PROCEEDINGS. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to such Purchaser, and such Purchaser shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request. 4. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents, covenants and warrants as follows: 4A. ORGANIZATION. The Company is a corporation duly organized and existing in good standing under the laws of the State of Delaware and each Subsidiary is duly organized and existing in good standing under the laws of the jurisdiction in which it is incorporated. The Company and each Subsidiary is qualified to do business and in good standing in every jurisdiction where the ownership of their respective properties or the nature of their respective businesses makes such qualification necessary except where the failure to be qualified or in good standing in the aggregate would not reasonably be expected to result in any material adverse effect on the properties or assets, business, condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. As of the Closing Date, the names of the Subsidiaries of the Company, the jurisdiction in which each such Subsidiary is organized, the number of outstanding shares of each class of capital stock of such Subsidiary, the number of shares of each such class owned by the Company, or any Subsidiary of the Company (identified by stock certificate number) and the number of shares of each such class owned by any other Person (identified by stock certificate number), are as set forth in Schedule 4A hereto. 4B. POWER AND AUTHORITY. The Company and each Subsidiary has all requisite corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted. The Company and each Guarantor has the legal capacity and authority to execute, deliver, and perform its obligations 7 11 under the Transaction Documents to which it is a party and the Company has the legal capacity and authority to issue the Notes. All action on the part of the Company and each Guarantor necessary for the authorization, execution, delivery and performance of all obligations of the Company and such Guarantor under the Transaction Documents to which it is a party and the issuance of the Notes by the Company has been taken. The Transaction Documents to which the Company or any Guarantor is a party have been duly executed and delivered by, and are the legal, valid and binding obligations of the Company or such Guarantor, and each such document is enforceable against the Company or such Guarantor in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights in general and by general principles of equity, and each is in full force and effect. 4C. FINANCIAL STATEMENTS. The Company has furnished each Purchaser with the following financial statements, identified by a principal financial officer of the Company: (i) consolidating and consolidated balance sheets of the Company and its Subsidiaries as at the last day in each fiscal year in each of the years 1992 to 1994, inclusive, and consolidating and consolidated statements of operations and cash flows and a consolidated statement of stockholders' equity of the Company and its Subsidiaries for each such year, all certified by Coopers & Lybrand (with respect to the consolidated statements) or prepared by the Company (with respect to the consolidating statements); and (ii) a consolidated balance sheet of the Company and its Subsidiaries as at March 30, 1995 and March 31, 1994 and consolidated statements of operations, stockholders' equity and cash flows for the three-month period ended on each such date, prepared by the Company. Such financial statements (including any related schedules and/or notes) are true and correct in all material respects (subject, as to interim statements, to changes resulting from audits and year-end adjustments), have been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods involved and show all liabilities, direct and contingent, of the Company and its Subsidiaries required to be shown in accordance with such principles. The balance sheets fairly present the condition of the Company and its Subsidiaries as at the dates thereof, and the statements of income, stockholders' equity and cash flows fairly present the results of the operations of the Company and its Subsidiaries and their cash flows for the periods indicated. There has been no material adverse change in the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole since December 29, 1994. 4D. ACTIONS PENDING. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any properties or rights of the Company or any of its Subsidiaries, by 8 12 or before any court, arbitrator or administrative or governmental body which could reasonably be expected to result in any material adverse effect on the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole. 4E. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries has outstanding any Debt except as permitted by Section 3.03 of the Indenture. There exists no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) and, after giving effect to the transaction contemplated by this Agreement, there will exist no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) under the provisions of any instrument evidencing Debt of the Company or any Subsidiary or of any agreement relating thereto. 4F. TITLE TO PROPERTIES. The Company has, and each of its Subsidiaries has, good and indefeasible title to its respective real properties (other than properties which it leases) and good title to all of its other respective properties and assets, including the properties and assets reflected in the balance sheet as at December 29, 1994 referred to in paragraph 4C (other than properties and assets disposed of in the ordinary course of business), subject to no Lien of any kind except Permitted Liens and except the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the Notes as contemplated by paragraph 3M hereof. All leases necessary in any material respect for the conduct of the respective businesses of the Company and its Subsidiaries are valid and subsisting and are in full force and effect. The Company and its Subsidiaries enjoy peaceful and undisturbed possession of all leases necessary in any material respect for the operation of its business, none of which contains any unusual or burdensome provisions which might materially affect or impair the ability of the Company or its Subsidiaries to maintain the operations of the Company and its Subsidiaries (taken as a whole). 4G. TAXES. The Company has and each of its Subsidiaries has filed all federal, state and other income tax returns which are required to be filed (other than such tax returns where the consequence of a failure to file is immaterial), and each has paid all taxes as shown on such returns and on all assessments received by it to the extent that such taxes have become due, except such taxes as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles. 4H. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement or subject to any charter or other corporate restriction which materially and adversely affects or impairs the ability of 9 13 the Company or its Subsidiaries to maintain the operations of the Company and its Subsidiaries (taken as a whole). Neither the execution nor delivery of any of the Transaction Documents, nor the offering, issuance and sale of the Notes, nor fulfillment of nor compliance with the terms and provisions hereof and thereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien (other than Liens in favor of the Collateral Agent) upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders), instrument, order, judgment, decree, statute, law, rule or regulation to which the Company or any of its Subsidiaries is subject. Neither the Company nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other contract or agreement (including its charter) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company or any Subsidiary of the type to be evidenced by the Notes and the Guaranty Agreements except as set forth in Schedule 4H attached hereto. 4I. OFFERING OF NOTES. Neither the Company nor any agent acting on its behalf has, directly or indirectly, offered the Notes or any similar security of the Company for sale to, or solicited any offers to buy the Notes or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with, any Person other than institutional investors, and neither the Company nor any agent acting on its behalf has taken or will take any action which would subject the issuance or sale of the Notes to the provisions of section 5 of the Securities Act or to the registration provisions of any securities or Blue Sky law of any applicable jurisdiction. 4J. USE OF PROCEEDS. Neither the Company nor any Subsidiary owns or has any present intention of acquiring any "margin stock" as defined in Regulations G, T, U or X of the Board of Governors of the Federal Reserve System (herein called "margin stock"). The proceeds of sale of the Notes will be used to refinance the Indebtedness of the Company and its Subsidiaries owed to the Banks as contemplated by paragraph 3M hereof and for other purposes permitted by or not in contravention of any of the provisions of this Agreement and the Indenture. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any Indebtedness which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulations G, T, U or X. Neither the Company 10 14 nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or the Notes to violate Regulations G, T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. 4K. ERISA. No accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any Plan (other than a Multiemployer Plan). No liability to the Pension Benefit Guaranty Corporation has been or is expected by the Company or any ERISA Affiliate to be incurred with respect to any Plan (other than a Multiemployer Plan) by the Company , any Subsidiary or any ERISA Affiliate which is or would be materially adverse to the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole. Neither the Company, any Subsidiary nor any ERISA Affiliate has incurred or presently expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan which is or would be materially adverse to the business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole. The execution and delivery of the Transaction Documents and the issuance and sale of the Notes by the Company to the Purchasers hereunder will be exempt from, or will not involve any transaction which is subject to, the prohibitions of section 406 of ERISA and will not involve any transaction in connection with which a penalty could be imposed under section 502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code. The representation by the Company in the next preceding sentence is made in reliance upon and subject to (1) the accuracy of each Purchaser's representation in paragraph 5B and (2) the assumption, made solely for the purpose of making such representation, that Department of Labor Interpretive Bulletin 75-2 with respect to prohibited transactions remains valid in the circumstances of the transactions contemplated herein. 4L. GOVERNMENTAL CONSENT AND OTHER THIRD PARTY CONSENTS. Neither the nature of the Company or of any Subsidiary, nor any of their respective businesses or properties, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offering, issuance, sale or delivery of the Notes is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body or other Person (other than routine filings after the Closing Date with the Securities and Exchange Commission and/or state Blue Sky authorities) in connection with the execution and delivery of any of the Transaction Documents, the offering, issuance, sale or delivery of the Notes or fulfillment of or compliance with the terms and provisions hereof or thereof, other than (1) filings and recordings necessary to perfect the security interests granted the 11 15 Collateral Agent under the Collateral Documents, all of which have been made, and (2) the filing of a registration statement with the Securities and Exchange Commission under the Securities Act pursuant to the Exchange and Registration Rights Agreement and any filing pursuant to the provisions of any securities or Blue Sky laws of any applicable jurisdiction with respect to the offering of the First Priority Exchange Notes. 4M. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all foreign, federal, state, local and regional statutes, laws, ordinances and judicial or administrative orders, judgments, rulings and regulations relating to protection of the environment except, in any such case, where failure to comply could not reasonably be expected to result in a material adverse effect on the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole. 4N. RULE 144A. The Notes are not of the same class as securities, if any, of the Company listed on a national securities exchange under Section 6 of the Securities Exchange Act of 1934 or quoted in a U.S. automated inter-dealer quotation system. 4O. DISCLOSURE. Neither this Agreement, any Transaction Document, nor any other document, certificate or statement furnished to any Purchaser by or on behalf of the Company or any Subsidiary in connection herewith (including, without limitation, the Memorandum) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. To the knowledge of the Company there is no fact peculiar to the Company or any of its Subsidiaries which materially adversely affects or in the future may (so far as the Company can now foresee) materially adversely affect the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole, and which has not been set forth in this Agreement or in the other documents, certificates and statements furnished to each Purchaser by or on behalf of the Company prior to the date hereof in connection with the transactions contemplated hereby. The financial projections contained in the Memorandum are reasonable based on the assumptions stated therein and the best information available to the officers of the Company (provided that this representation shall not constitute a representation by the Company that any of such projections will be attained). The parties hereto acknowledge that the description of the terms of the financings described in the Memorandum will be superseded by the actual terms therefor as contained in the Transaction Documents and the other documents delivered at the closing hereunder. 12 16 4P. REGULATORY STATUS. Neither the Company nor any Subsidiary is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of Public Utility Act of 1935, as amended, or (iii) a "public utility" within the meaning of the Federal Power Act, as amended. 4Q. PERMITS AND OTHER OPERATING RIGHTS. The Company and each Subsidiary has all such valid and sufficient certificates of convenience and necessity, franchises, licenses, permits, operating rights and other authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other governmental bodies having jurisdiction over such Company or such Subsidiary or any of its respective properties, as are necessary for the ownership, operation and maintenance of its businesses and properties, subject to exceptions and deficiencies which do not materially affect the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole, and such certificates of convenience and necessity, franchises, licenses, permits, operating rights and other authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other governmental bodies having jurisdiction over any such Company or Subsidiary or any of its properties are free from burdensome restrictions or conditions of an unusual character or restrictions or conditions materially adverse to the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries taken as a whole, and neither the Company nor any Subsidiary is in violation of any thereof in any material respect. 4R. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to Permitted Liens and the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the Notes as contemplated by paragraph 3M hereof, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Company or any of the Subsidiaries or any rights relating thereto. 4S. SECURITY INTEREST. As of the Closing Date, all filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken, that are necessary or advisable under applicable law and are required to be made or taken on or prior to the Closing Date under the provisions of this Agreement and the other Collateral Documents to establish the Collateral Agent's security interest in the Collateral. As of the Closing Date, the Collateral and the Collateral Agent's rights with 13 17 respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses (except any such setoff, claim or defense which could not, individually or in the aggregate, materially impair the rights of the Collateral Agent with respect to the Collateral). The Company and each Subsidiary party to any Collateral Document is the owner of the Collateral described therein free from any Lien, except for Permitted Liens and the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the Notes as contemplated by paragraph 3M hereof. 4T. LIMITATION ON RESPONSIBILITY. Neither the Collateral Agent, any Holder of any Note or First Priority Exchange Note nor any other Person for whom the Collateral Agent is acting as agent shall be responsible for: (i) the safekeeping of any Collateral; (ii) any loss or damage to any Collateral; (iii) any diminution in the value of any Collateral; or (iv) any act or default of any carrier, warehouseman, bailee or any other Person. All risk of loss, damage, destruction or diminution in value of the Collateral shall be borne by the Company and its Subsidiaries. The powers conferred on the Collateral Agent, the Holders of the Notes and the First Priority Exchange Notes and such other Persons with respect to the Collateral are solely to protect the interests of the Collateral Agent, the Holders of the Notes and the First Priority Exchange Notes and such other Persons in the Collateral and shall not impose any duty upon the Collateral Agent, the Holders of the Notes and the First Priority Exchange Notes or any such other Person to exercise any such powers. Neither the Collateral Agent, any Holder of any Note or First Priority Exchange Note nor any other such Person have any duty to protect, ensure, collect or realize upon any Collateral or preserve rights in any Collateral against any other Person. The Company releases the Collateral Agent, such other Persons, the Holders of the Notes and the First Priority Exchange Notes from any liability for any act or omission relating to this Agreement or the Collateral Documents other than as a result of gross negligence or willful misconduct. 4U. LOCATIONS OF COLLATERAL. The address of the principal place of business and the chief executive office of the Company and each of the Significant Domestic Subsidiaries is set forth on Schedule II to the Security Agreement executed by such Person. The books and records of the Company and each of the Significant Domestic Subsidiaries and all of their chattel paper and records of Accounts, are maintained exclusively at such locations. There is no location at which the Company or any of the Significant Domestic Subsidiaries has any Collateral other than those locations identified on Schedule II to the Security Agreement executed by such Person. All real property owned or leased by the Company and the Significant Domestic Subsidiaries is described in Exhibit A to the Mortgages executed by such Person, which Schedule sets forth, for each such location, a legal description, common address and, for leased property, the name and mailing address of the record 14 18 owner of such leased property. All of the "Trademarks," "Copyrights," "Licenses" and "Patents" (as each such term is defined in the Intellectual Property Security Agreements) owned or licensed by the Company and each of the Significant Domestic Subsidiaries is set forth on Schedules A, B, C and D, respectively, of the Intellectual Property Security Agreement executed by such Person. 5. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser severally and not jointly represents to the Company and the other Purchasers as follows: 5A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes to be purchased by it hereunder with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act, provided that the disposition of such Purchaser's property shall at all times be and remain within its control. Such Purchaser confirms the representations and agreements concerning transfer restrictions, non-registration of the Notes, and related matters deemed to have been made by such Purchaser's acceptance of the Notes as set forth in the Memorandum. 5B. SOURCE OF FUNDS. At least one of the following statements is an accurate representation as to the source of funds (a "Source") to be used by it to pay the purchase price of the Notes to be purchased by it hereunder: (1) if such Purchaser is an insurance company, the Source does not include assets allocated to any separate account maintained by such Purchaser in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with such Purchaser's fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; or (2) the Source is either (i) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Company in writing pursuant to this paragraph (2), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (3) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" 15 19 (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (a) the identity of such QPAM and (b) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this paragraph (3); or (4) the Source is a governmental plan; or (5) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (5); or (6) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this paragraph 5B, the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA and the "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. 5C. INDEPENDENT CREDIT INVESTIGATION. No Purchaser, nor any of its directors, officers, agents or employees, shall be responsible to any of the other Purchasers for the solvency or financial condition of the Company or any Guarantor, the ability of the Company to repay any of the Notes or the First Priority Exchange Notes or the ability of the Company or any Guarantor to perform its obligations under any Transaction Document, or for the value, sufficiency, existence or ownership of any of the Collateral, the perfection or vesting of any lien or security interest, or the statements of the Company or any Guarantor, oral or written, or for the validity, sufficiency or enforceability of any of the Notes, the First Priority Exchange Notes, this Agreement, any other Transaction Document or any document or agreement executed or delivered in connection with or pursuant to any of the foregoing, or the liens or security interests granted by the Company or any Guarantor to the Collateral Agent in connection therewith. Each Purchaser has entered into this Agreement or its 16 20 respective financial agreements with the Company and the Guarantors based upon its own independent investigation, and makes no warranty or representation to the other Purchasers, nor does it rely upon any representation by any of the other Purchasers, with respect to the matters identified or referred to in this paragraph. 6. DEFINITIONS. For the purpose of this Agreement, the terms defined in the introductory sentence and in paragraphs 1 and 2 shall have the respective meanings specified therein, and the following terms shall have the meanings specified with respect thereto below: "AFFILIATE" shall have the meaning ascribed to such term in the Indenture. "BANKS" shall mean collectively and "Bank" shall mean individually, Bank of America Illinois, Citibank International PLC and CitiCorp North America, Inc., as agents under the Credit Agreement dated December 31, 1993. "BOOK-ENTRY PURCHASERS" shall have the meaning ascribed to such term in paragraph 2 hereof. "CERTIFICATED NOTE PURCHASER" shall have the meaning ascribed to such term in paragraph 2 hereof. "CODE" shall mean the Internal Revenue Code of 1986, as amended. "COLLATERAL" shall have the meaning ascribed to such term in the Intercreditor Agreement. "COLLATERAL AGENT" shall have the meaning ascribed to such term in the Intercreditor Agreement. "COLLATERAL DOCUMENTS" shall have the meaning ascribed to such term in the Intercreditor Agreement. "COMPANY" shall mean Envirodyne Industries, Inc., a Delaware corporation. "DEBT" shall have the meaning ascribed to such term in the Indenture. "DEPOSITORY" shall mean Depository Trust Corporation. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" shall mean any corporation which is a member of the same controlled group of corporations as the Company within the meaning of section 414(b) of the Code, or any trade or 17 21 business which is under common control with the Company within the meaning of section 414(c) of the Code. "EVENT OF DEFAULT" shall mean any of the events specified in Section 4.01 of the Indenture, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "DEFAULT" shall mean any of such events, whether or not any such requirement has been satisfied. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "EXCHANGE AND REGISTRATION RIGHTS AGREEMENT" shall have the meaning ascribed to such term in paragraph 3B hereof. "FIRST PRIORITY EXCHANGE NOTES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "FIXED RATE NOTES" shall mean the Company's 12% First Priority Senior Secured Notes due 2000, Series A, issued pursuant to the Indenture. "FLOATING RATE NOTES" shall mean the Company's Floating Rate First Priority Senior Secured Notes due 2000, Series C, issued pursuant to the Indenture. "GECC INTERCREDITOR AGREEMENT" shall have the meaning ascribed to such term in paragraph 3B hereof. "GLOBAL NOTES" shall have the meaning ascribed to such term in paragraph 2 hereof. "GUARANTY AGREEMENT" shall have the meaning ascribed to such term in the Indenture. "GUARANTORS" shall mean any other Person who shall enter into a Guaranty Agreement from time to time. "HOLDER" shall mean (a) any Person in whose name a Note or a First Priority Exchange Note is registered on the Registrar's books (other than the Depository or the Depository's nominee), or (b) any Person for which a book-entry has been made with respect to any Note or First Priority Exchange Note for such Person's account with the Depository or with a participant of the Depositary or Persons holding interests through such participants (other than any Person who has made such a book-entry with respect to such Note or First Priority Exchange Note for the account of any other Person). "INDEBTEDNESS" shall have the meaning ascribed to such term in the Indenture. 18 22 "INDENTURE" shall have the meaning ascribed to such term in paragraph 1 hereof. "INTERCREDITOR AGREEMENT" shall have the meaning ascribed to such term in paragraph 3B hereof. "LETTER OF CREDIT FACILITY AGREEMENT" shall mean the Credit Agreement dated as of June 20, 1995, among the Company, BT Commercial Corporation, as Agent, and the financial institutions signatory thereto, as the same may be amended, supplemented, modified or replaced from time to time in accordance with the provisions thereof. "LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or otherwise) or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction) or any other type of preferential arrangement for the purpose, or having the effect, of protecting a creditor against loss or securing the payment or performance of an obligation. "MEMORANDUM" shall mean the Private Placement Memorandum, dated February, 1995, as supplemented by the Supplement to Private Placement Memorandum, dated May 16, 1995, and the Final Supplement to Private Placement Memorandum, dated June 5, 1995, taken as a whole. "MORTGAGES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "NOTES" shall have the meaning ascribed to such term in paragraph 1 hereof. "OFFICER'S CERTIFICATE" shall mean, with respect to any corporation, a certificate signed in the name of such corporation by its President, one of its Vice Presidents or its Treasurer. "PERMITTED LIENS" shall have the meaning ascribed to such term in the Indenture. "PERSON" shall have the meaning ascribed to that term in the Indenture. "PLAN" shall mean any "employee pension benefit plan" (as such term is defined in section 3(2) of ERISA) which is or has been 19 23 established or maintained, or to which contributions are or have been made, by the Company or any ERISA Affiliate. "PLEDGE AGREEMENTS" shall have the meaning ascribed to such term in the Intercreditor Agreement. "PRUDENTIAL" shall mean The Prudential Insurance Company of America. "PURCHASERS" shall have the meaning ascribed to such term in the introductory sentence hereof. "REGISTRAR" shall have the meaning ascribed to such term in the Indenture. "RESPONSIBLE OFFICER" shall mean, with respect to any corporation, the chief executive officer, chief operating officer, chief financial officer or chief accounting officer of such corporation or any other officer of such corporation involved principally in its financial administration or its controllership function. "REQUIRED HOLDER(S)" shall mean the Holder or Holders of a majority of the aggregate principal amount of the Notes and the First Priority Exchange Notes from time to time outstanding. "REVOLVING CREDIT AGREEMENT" shall mean the Revolving Credit Agreement, dated as of June 20, 1995, between the Company and Prudential, as the same may be amended, supplemented, modified or replaced from time to time in accordance with the provisions thereof. "SECURED PARTIES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SECURITY AGREEMENTS" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SIGNIFICANT DOMESTIC SUBSIDIARY" shall have the meaning ascribed to that term in the Indenture. "SIGNIFICANT HOLDER" shall mean (i) each Purchaser, so long as such Purchaser shall hold (or be committed under this Agreement to purchase) any Note or First Priority Exchange Note, or (ii) any "qualified institutional buyer" (as such term is defined in Rule 144A under the Securities Act) which is a Holder of at least 5% of the aggregate principal amount of the Notes and the First Priority Exchange Notes from time to time outstanding and which has notified the Company that it is such a Holder. 20 24 "SUBSIDIARY" shall have the meaning ascribed to that term in the Indenture. "TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the Notes, the First Priority Exchange Notes, the Indenture, the Guaranty Agreement, Collateral Documents, the Intercreditor Agreement, the GECC Intercreditor Agreement, the Exchange and Registration Rights Agreement and all other agreements, instruments and documents relating in any way to the aforementioned agreements, instruments and documents. "TRANSFEREE" shall mean any direct or indirect transferee of all or any part of any Note or First Priority Exchange Note. "TRUSTEE" shall have the meaning ascribed to such term in paragraph 1 hereof. "VISKASE, S.A." shall mean Viskase, S.A., a French corporation. "YIELD MAINTENANCE AMOUNT" shall have the meaning ascribed to such term in the Indenture. 6A. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in this Agreement to "generally accepted accounting principles" shall be deemed to refer to generally accepted accounting principles in effect in the United States at the time of application thereof. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with generally accepted accounting principles, applied on a basis consistent with the most recent audited consolidated financial statements of the Company and its Subsidiaries delivered to the Purchasers. If subsequent to the date hereof there should be any change in generally accepted accounting principles which materially affects the financial covenants contained in the Indenture, then, at the request of either any Significant Holder or the Company, the Significant Holders and the Company will negotiate in good faith to cause the Indenture to be amended to revise such covenants so as equitably to reflect such changes to the end that the criteria for evaluating the Company's financial condition and performance will be the same after such changes as they were before such changes. 7. MISCELLANEOUS. 7A. DIRECT PAYMENT. Notwithstanding any provision to the contrary in this Agreement, the Notes, the First Priority Exchange Notes or the Indenture, so long as any Significant Holder, any Affiliate of any Significant Holder or any nominee of any 21 25 Significant Holder or any such Affiliate shall be the Holder of any Note or any First Priority Exchange Note, the Company will pay or cause to be paid all principal, interest, Yield Maintenance Amount or other amounts payable to such Significant Holder, such Affiliate, or such nominee, as the case may be, with respect to any Notes or First Priority Exchange Notes of which such Significant Holder, such Affiliate or such nominee is the Holder, including any amounts payable upon any redemption or purchase thereof pursuant to the Indenture (without any presentment of such Notes or First Priority Exchange Notes and without any notice of such payment being made thereon, except that any Notes or First Priority Exchange Notes registered in the name of any such Holder, such Affiliate or such nominee paid or prepaid in full shall, promptly following receipt of such payment, be surrendered to the Trustee and promptly after such surrender and payment shall be canceled by the Trustee), by 11:30 A.M., New York time, on the date of payment in the manner specified in the Purchaser Schedule attached hereto, or in such other manner or to such other address in the United States of America as may be designated by such Significant Holder, such Affiliate or such nominee in writing to the Company and the Trustee. Each such Significant Holder, Affiliate or nominee agrees that, before disposing of any Notes or First Priority Exchange Notes registered in the name of such Significant Holder, Affiliate or nominee, it will make a notation thereon (or on a schedule attached thereto) of all principal payments previously made thereon and of the date to which interest thereon has been paid. The Company agrees to afford the rights to direct payment under this paragraph 7A to each other Significant Holder which shall deliver to the Company and the Trustee a written request directing that payment with respect thereto be made in the manner specified in such request and which shall have made the same agreement as each Significant Holder has made in this paragraph 7A. 7B. ISSUE TAXES. The Company will pay any and all taxes in connection with the issuance and sale of the Notes or the First Priority Exchange Notes and in connection with any modification of the Notes or the First Priority Exchange Notes, and will save the Purchasers harmless, without limitation as to time, against any and all liability with respect to such taxes. The obligations of the Company under this paragraph 7B shall survive the payment of the Notes and the First Priority Exchange Notes by the Company and the termination of this Agreement. 7C. EXPENSES. The Company agrees, whether or not the transactions contemplated hereby shall be consummated, to pay, and save each Purchaser and any Significant Holder harmless against liability for the payment of, all out-of-pocket expenses arising in connection with such transactions, including (i) all document production and duplication charges and the fees and expenses of Purchasers' special counsel referred to in paragraph 3E and 3J hereof in connection with the negotiation, execution and delivery of the Transaction Documents and the consummation of the 22 26 transactions contemplated hereby and thereby and all document production and duplication charges and fees of any special counsel engaged by such Purchaser or such Significant Holder in connection any subsequent proposed modification of, or proposed consent under, whether or not such proposed modification shall be effected or proposed consent granted, (ii) the costs and expenses, including attorneys' fees, incurred by such Purchaser or such Significant Holder in enforcing (or determining whether or how to enforce or to direct the Collateral Agent to enforce) any rights under any of the Transaction Documents or in responding to any subpoena or other legal process or informal investigative demand issued in connection with any of the Transaction Documents or the transactions contemplated hereby or thereby or by reason of such Purchaser's or such Significant Holder's having acquired any Note or First Priority Exchange Note, including without limitation costs and expenses incurred in any bankruptcy case, but excluding any subpoena, legal process or informal investigation demand issued in connection with an investigation of the practices of such Purchaser or Significant Holder in general, (iii) the costs and expenses, including attorney's fees, of preparing, recording and filing all financing statements, instruments or other documents to create, perfect and totally preserved and protect the Liens granted in the Collateral Documents, (iv) all costs relating to obtaining a private placement number for the Notes and the First Priority Exchange Notes from Standard & Poor's Corporation, and (v) the fees and expenses of the Trustee and its counsel. The obligations of the Company under this paragraph 7C shall survive the transfer of any Note or First Priority Exchange Note or portion thereof or interest therein by any Purchaser or any Transferee and the payment of any Note or First Priority Exchange Note. 7D. CONSENT TO AMENDMENTS. This Agreement may be amended, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Company shall obtain the written consent to such amendment, action or omission to act, of the Required Holder(s) except that, without the written consent of the Holder or Holders of all Notes or First Priority Exchange Notes at the time outstanding, no amendment to this Agreement shall change the proportion of the principal amount of the Notes or First Priority Exchange Notes required with respect to any consent, amendment, waiver or declaration. Each Holder of any Note or First Priority Exchange Note at the time or thereafter outstanding shall be bound by any consent authorized by this paragraph 7D, whether or not such Note or First Priority Exchange Note shall have been marked to indicate such consent, but any Notes or First Priority Exchange Notes issued thereafter may bear a notation referring to any such consent. No course of dealing between the Company and the Holder of any Note or First Priority Exchange Note nor any delay in exercising any rights hereunder or under any Note or First Priority Exchange Note shall operate as a waiver of any rights of any Holder of such Note or First Priority Exchange Note. As used herein and in the Notes or First Priority 23 27 Exchange Notes, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 7E. CERTAIN INDENTURE AMENDMENTS. The Company agrees that, notwithstanding the provisions of Section 8.01(1) of the Indenture, it will not amend or supplement the Indenture pursuant to such Section 8.01(1) unless such amendment or supplement has been approved by Significant Holders holding at least a majority of the aggregate principal amount of the Notes and the First Priority Exchange Notes then held by all Significant Holders. 7F. SUBSTITUTION AND REPLACEMENT. Reference is made to Section 2.07 of the Indenture, which provides for the exchange and substitution of any Note or First Priority Exchange Note which has been mutilated, destroyed, lost or wrongfully taken. Notwithstanding the provisions of the Indenture, the Company agrees that if the mutilated, destroyed, lost or wrongfully taken Note or First Priority Exchange Note was held by any Purchaser, any Affiliate of any Purchaser or any Significant Holder or by any nominee for any Purchaser, any such Affiliate or such Significant Holder, then (a) an affidavit of an officer of such Purchaser, such Affiliate or such Significant Holder, as the case may be, certifying as to the ownership of such mutilated, destroyed, lost or wrongfully taken Note or First Priority Exchange Note at the time of such mutilation, destruction, loss or wrongful taking, together with an unsecured indemnity agreement from such Purchaser, Affiliate or Significant Holder, reasonably satisfactory to the Company, shall be accepted by the Company for the purposes of the Indenture and (b) the Company will make no charge for such substitution or for any expenses incurred for any investigation or otherwise and will pay or reimburse the Trustee for expenses incurred in connection therewith. 7G. PARTICIPATIONS. The Holder of any Note or First Priority Exchange Note may from time to time grant participations in such Note or First Priority Exchange Note to any Person on such terms and conditions as may be determined by such Holder in its sole and absolute discretion, provided that any such participation shall be in a principal amount of at least $100,000 and that such Holder retains the right, in its discretion, to give consents hereunder and under the Indenture (except with respect to matters referred to in Section 8.02(1)-(7) of the Indenture). The Company agrees that each such participant and each Holder of any Note or First Priority Exchange Note may exercise any and all rights of setoff and counterclaim to the fullest extent permitted by law with respect to its interests in the Notes or the First Priority Exchange Notes as fully as if such participant or Holder were a direct lender to the Company. 7H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties of the Company or 24 28 the Purchasers contained herein or made in writing by or on behalf of the Company in connection herewith shall survive the execution and delivery of the Transaction Documents and the exhibits hereto, the transfer by any Purchaser of any Note or First Priority Exchange Note or portion thereof or interest therein and the payment of any Note or First Priority Exchange Note, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of any Purchaser or any Transferee. Subject to the preceding sentence, the Transaction Documents embody the entire agreement and understanding between the Purchasers and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. 7I. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not. 7J. NOTICES. All written communications provided for hereunder shall be sent by first class mail, nationwide overnight delivery service (with charges prepaid) or facsimile transmission (confirmed by first class mail or nationwide overnight delivery service) and (i) if to any Purchaser, addressed to such Purchaser at the address, facsimile number or telephone number, if applicable, specified for such communications in the Purchaser Schedule attached hereto, or at such other address, facsimile number or telephone number as such Purchaser shall have specified to the Company in writing, (ii) if to any other Holder of any Note or First Priority Exchange Note, addressed to such other Holder at such address or facsimile number, if applicable, as such other Holder shall have specified to the Company in writing or, if any such other Holder shall not have so specified an address or facsimile number to the Company, then addressed to such other Holder in care of the last Holder of such Note or First Priority Exchange Note which shall have so specified an address to the Company, and (iii) if to the Company, addressed to it at 701 Harger Road, Suite 190, Oak Brook, Illinois 60521, Attention: General Counsel, or, if applicable, to the facsimile number (708) 575-2401 or at such other address or facsimile number as the Company shall have specified to the Holder of each Note and First Priority Exchange Note in writing. 7K. SATISFACTION REQUIREMENT. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satisfactory to any Purchaser, the Significant Holders or to the Required Holder(s), the determination of such satisfaction shall be made by such Purchaser or the Required Holder(s), as the case may be, in the sole and exclusive judgment (exercised in good faith) of the Person or Persons making such determination. 25 29 7L. SOLICITATION OF HOLDERS. So long as any of the Notes or the First Priority Exchange Notes are owned by any Significant Holder, the Company will not solicit, request or negotiate for or with respect to any proposed amendment or waiver of any of the provisions of this Agreement, the Indenture, the Notes, the First Priority Exchange Notes or any other Transaction Document unless each Holder of the Notes or First Priority Exchange Notes (irrespective of the principal amount of the Notes or First Priority Exchange Notes then owned by it) shall be informed thereof by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information as it may reasonably request to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any amendment or waiver shall be delivered by the Company to each Significant Holder of outstanding Notes or First Priority Exchange Notes forthwith following the date on which the same shall have been executed and delivered by the Holder or Holders of the requisite percentage of outstanding Notes or First Priority Exchange Notes. 7M. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 7N. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7O. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 7P. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 7Q. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of an Event of Default of Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by a Holder or the Holders of the Notes or First Priority Exchange Notes to prohibit (through equitable action 26 30 or otherwise) the taking of any action by the Company or a Subsidiary which would result in the Event of Default or Default. 7R. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are to be several sales, and the obligations of the Purchasers under this Agreement are several obligations. Except as provided in paragraph 3Q, no failure by any Purchaser to perform its obligations under this Agreement shall relieve any other Purchaser or the Company of any of its obligations hereunder, and no Purchaser shall be responsible for the obligations of, or any action taken or omitted by, any other Purchaser hereunder. 7S. JURISDICTION, SERVICE OF PROCESS. The Company irrevocably agrees that any suit, action or proceeding against the Company with respect to this Agreement or any Transaction Document may be brought in the courts of New York County in the State of New York or in the U.S. District Court for the Southern District of New York, and the Company accepts for itself, generally and unconditionally, and hereby submits to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action or proceeding. The Company hereby waives personal service of any and all process upon it and irrevocably agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in any such court may be made upon the Person to whom notices to the Company may be sent under paragraph 7J hereof, and hereby irrevocably appoints such Person as its agent in its name, place and stead to accept on the Company's behalf such service of any and all such writs, process and summonses and the Company hereby irrevocably authorizes and directs such Person to accept such service on its behalf, and agrees that the failure of such Person to give any notice of any such services of process to the Company shall not impair or affect the validity of such service or of any judgment based upon same. The Company further irrevocably consents to the service of process in any suit, action or proceeding in said courts by the mailing thereof by any Holder of any Note or First Priority Exchange Note by registered or certified mail, postage prepaid, to the Company at its address given in paragraph 7J hereof. The foregoing shall not, however, limit the right of any Holder of any Note or First Priority Exchange Note to serve process in any other manner permitted by law or to commence any suit, action or proceeding or to obtain execution of judgment in any appropriate jurisdiction. Without limiting the foregoing, the Company further agrees that any Holder of any Note or First Priority Exchange Note may at its option submit any dispute which may arise in connection with this Agreement or any Transaction Document to any other court having jurisdiction over the Company's property. The Company irrevocably waives any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or of any Transaction Document brought in the courts of New York County in the State of New York or the U.S. District Court for the Southern District of New York, and 27 31 further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. [Balance Of Page Intentionally Left Blank] 28 32 If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterparts of this letter and return the same to the Company, whereupon this letter shall become a binding agreement among the Company and the Purchasers. Very truly yours, ENVIRODYNE INDUSTRIES, INC. By: ________________________________ Title:__________________________ 29 33 The foregoing Agreement is hereby accepted as of the date first above written. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: ________________________________ Title:__________________________ 30 EX-10.11 20 LETTER AGREEMENT 1 EXHIBIT 10.11 Envirodyne Industries, Inc. 701 Harger Road, Suite 190 Oak Brook, Illinois 60521 As of June 20, 1995 To Each of the Insurance Company Purchasers Accepting this Letter Agreement Ladies and Gentlemen: Reference is made to the Note Agreement (the "Note Agreement"), dated as of the date hereof, relating to $160,000,000 principal amount of the First Priority Senior Secured Notes due 2000 of Envirodyne Industries, Inc. (the "Company"). All terms used herein which are defined in the Note Agreement shall have the meanings given in the Note Agreement. Each of you (herein called the "Insurance Company Purchasers") have expressed a willingness to enter into the Note Agreement provided that the Company agrees to provide the Insurance Company Purchasers with certain financial statements and other reports and information, access to information and other rights as the Insurance Company Purchasers believe is customary in a private placement of indebtedness with insurance company investors. Accordingly, to induce the Insurance Company Purchasers to execute the Note Agreement, the Company agrees with the Insurance Company Purchasers as follows: 1. FINANCIAL STATEMENTS AND OTHER REPORTS. The Company covenants that it shall deliver to each Insurance Company Purchaser in duplicate: (a) as soon as practicable and in any event within 45 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year of the Company, an unaudited consolidated statement of operations and statement of cash flows and stockholders' equity of the Company and its Subsidiaries for such quarterly period and for the period from the beginning of the current fiscal year to the end of such quarterly period, and a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarterly period, setting forth in each case in 2 As of June 20, 1995 Page 2 comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and satisfactory in form to the Insurance Company Purchasers and certified as accurate by an authorized financial officer of the Company, subject to changes resulting from normal year-end adjustments; (b) as soon as practicable and in any event within 90 days after the end of each fiscal year of the Company, a consolidating and consolidated statement of operations of the Company and its Subsidiaries for such fiscal year, a consolidated statement of cash flows and stockholders' equity of the Company and its Subsidiaries for such fiscal year, and a consolidating and consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form corresponding consolidated figures from the preceding annual audit, all in reasonable detail and satisfactory in form to the Insurance Company Purchasers and, as to the consolidated statements, reported on by Coopers & Lybrand, or other independent public accountants of recognized international standing selected by the Company and reasonably acceptable to the Insurance Company Purchasers, whose opinion shall be without limitation as to the scope of the audit and shall state that such financial statements present fairly, in all material respects, the financial position of the Company and its Subsidiaries and their results of operations and cash flows and have been prepared in conformity with generally accepted accounting principles, that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and, as to the consolidating statements, certified as accurate by an authorized financial officer of the Company; (c) not later than 45 days after each fiscal year end, beginning with the fiscal year ended December 28, 1995, monthly projections of the financial condition and results of operations of the Company and its Subsidiaries for the next succeeding year and annual projections for the next two (2) succeeding fiscal years thereafter, in each case containing projected consolidated balance sheets, statements of operations, statements of cash flows and statements of changes in shareholders equity. (d) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its public securities holders 3 As of June 20, 1995 Page 3 and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission); (e) promptly upon receipt thereof, a copy of each report submitted to the Company or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company or any such Subsidiary; and (f) with reasonable promptness, such other business or financial data as any Insurance Company Purchaser may reasonably request. Together with each delivery of financial statements required by clauses (a) and (b) above, the Company will deliver to each Insurance Company Purchaser an Officer's Certificate duly signed by an authorized financial officer of the Company demonstrating (with computations in reasonable detail) compliance by the Company and its Subsidiaries with the provisions of Sections 4.01, 4.02, 4.03 and 4.06 of the Indenture and stating that there exists no Event of Default or Default, or, if any Event of Default or Default exists, specifying the nature and period of existence thereof and what action the Company proposes to take with respect thereto. Together with each delivery of financial statements required by clause (b) above, the Company will deliver to each Insurance Company Purchaser a certificate of the public accountants referred to therein stating that, in making the audit necessary to such public accountants' opinion on such financial statements, they have obtained no knowledge of any Event of Default or Default, or, if they have obtained knowledge of any Event of Default or Default, specifying the nature and period of existence thereof. Such accountants, however, shall not be liable to anyone by reason of their failure to obtain knowledge of any Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards. The Company further covenants that immediately after any Responsible Officer of the Company obtains knowledge of an Event of Default or Default, it will deliver to each Insurance Company Purchaser an Officer's Certificate specifying the nature and period of existence thereof and what action the Company proposes to take with respect thereto. 2. INSPECTION OF PROPERTY. The Company covenants that it will permit each Insurance Company Purchaser and its representatives, at its expense as to any period when no Default or Event of Default has occurred and is continuing but at the Company's 4 As of June 20, 1995 Page 4 expense as to any period when a Default or an Event of Default has occurred and is continuing, upon reasonable notice, to visit and inspect any of the properties of the Company and its Subsidiaries, to examine the corporate books and financial records of the Company and its Subsidiaries and make copies thereof or extracts therefrom and to discuss the affairs, finances and accounts of the Company and its Subsidiaries with their respective principal officers and, in the presence of a Responsible Officer of the Company, independent public accountants, all at such reasonable times and as often as such Insurance Company Purchaser may reasonably request. 3. NOTICE OF SUITS, ADVERSE CHANGE IN BUSINESS, ETC. The Company shall, and shall cause each of its Subsidiaries to, as soon as possible, and in any event within five (5) Business Days after any Responsible Officer of such Person learns of the following, give written notice to the Insurance Company Purchasers: (a) of any material proceeding(s) (including, without limitation, litigation, investigations, arbitration or governmental proceedings) being instituted by or against such Person in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign), (b) that such Person's operations are not in full compliance with all requirements of applicable federal, state, local or foreign law, ordinance, rule, regulation or other governmental requirement, except for notices as to matters which either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect (as defined in the Indenture), (c) that, without limiting the foregoing clause (b), such Person is subject to a material federal, state, local or foreign investigation evaluating whether any remedial action is needed to respond to the release of any hazardous or toxic waste, substance or constituent, or other substance into the environment and (d) of any material adverse change in the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole. 4. DISCLOSURE TO OTHER PERSONS. Each Insurance Company Purchaser agrees to use its best efforts to hold in confidence and not disclose any Confidential Information; provided that nothing herein shall prevent any Insurance Company Purchaser from delivering or disclosing (and the Company acknowledges that each Insurance Company Purchaser may deliver or disclose) any financial statements and other documents delivered to it, and any other information disclosed to it (including, but not limited to, Confidential Information), by or on behalf of the Company or any Subsidiary in connection with or pursuant to this agreement or any other Transaction Document to (i) its directors, officers, employees, agents and professional consultants, (ii) any other holder of any Note, (iii) any Person to which it offers to sell 5 As of June 20, 1995 Page 5 any Note or any part thereof, (iv) any Person to which it sells or offers to sell a participation in all or any part of any Note, (v) any Person from which it offers to purchase any security of the Company, (vi) any federal or state regulatory authority having jurisdiction over it, (vii) the National Association of Insurance Commissioners or any similar organization or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (a) to effect compliance with any law, rule, regulation or order applicable to such Insurance Company Purchaser, (b) in response to any subpoena or other legal process, (c) in connection with any litigation to which it is a party or (d) in order to protect its investment in any Note; provided, however, that no Confidential Information shall be disclosed to any Person described in clause (ii), (iii), (iv) or (v) unless such Person has agreed to the provisions of this paragraph 4. "CONFIDENTIAL INFORMATION" shall mean, with respect to any Person, any written information delivered or made available by or on behalf of the Company or any Subsidiary to such Person pursuant to this agreement or any Collateral Document which is clearly marked or labeled as being confidential information, but in no event shall include information (i) which was publicly known or otherwise known to such Person at the time of disclosure, (ii) which subsequently becomes publicly known through no act or omission by such Person, or (iii) which other wise becomes known to such Person, other than through disclosure by or on behalf of the Company or any Subsidiary. 5. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in this agreement to "generally accepted accounting principles" shall be deemed to refer to generally accepted accounting principles in effect in the United States at the time of application thereof. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with generally accepted accounting principles, applied on a basis consistent with the most recent audited consolidated financial statements of the Company and its Subsidiaries delivered to the Insurance Company Purchasers. 6. RETIREMENT OF NOTES. The Company shall not, and shall not permit any of its Subsidiaries or Affiliates to, prepay, otherwise retire, redeem, purchase, or otherwise acquire, directly or indirectly, in whole or in part prior to their stated final maturity (other than by redemption pursuant to Section 4.06 or 9.01 of the Indenture, offer to purchase pursuant to Section 3.09 of the Indenture or upon acceleration of such final maturity pursuant to Article 5 of the Indenture), Notes or First Priority 6 As of June 20, 1995 Page 6 Notes held by any holder of Notes or First Priority Notes unless the Company or such Subsidiary or Affiliate shall have offered to prepay or otherwise retire or purchase or otherwise acquire, as the case may be, the same proportion of the aggregate principal amount of Notes and First Priority Notes held by each Insurance Company Purchaser upon the same terms and conditions. 7. CREDIT DOCUMENT. The Company acknowledges that this agreement constitutes a "Credit Document", as defined in the Indenture. 8. SUCCESSORS AND ASSIGNS. This agreement shall inure to the benefit of the successors and assigns of the Insurance Company Purchasers, provided that (i) any such assignee (together with its Affiliates) shall hold at least 5% of the outstanding principal amount of the Notes, and (ii) such assignee delivers to the Company an agreement to be bound by the provisions of paragraph 4 hereof. This agreement shall bind and inure to the benefit of the successors and assigns of the Company. 9. NOTICES. All written communications provided for hereunder shall be sent in the manner specified in the Note Agreement. 10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 11. SEVERABILITY. Any provision of this agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 12. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this agreement are inserted for convenience only and do not constitute a part of this agreement. 13. COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. It shall not be necessary in making proof of this agreement to produce or account for more than one such counterpart. 7 As of June 20, 1995 Page 7 If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterparts of this letter and return the same to the Company, whereupon this letter shall become a binding agreement among the Company and the Insurance Company Purchasers. Very truly yours, ENVIRODYNE INDUSTRIES, INC. By:__________________________________________ Title:____________________________________ 8 As of June 20, 1995 Page 8 The foregoing Agreement is hereby accepted as of the date first above written. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: _________________________________ Title:______________________________ THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By: _________________________________ Title:______________________________ THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (for the account of Nutmeg) By: _________________________________ Title:______________________________ EX-10.12 21 REVOLVING CREDIT AGREEMENT - JUNE 20, 1995 1 EXHIBIT 10.12 ________________________________________________________________________________ ________________________________________________________________________________ ENVIRODYNE INDUSTRIES, INC. REVOLVING CREDIT AGREEMENT $20,000,000 SENIOR SECURED REVOLVING CREDIT FACILITY Dated as of June 20, 1995 ________________________________________________________________________________ ________________________________________________________________________________ 2 TABLE OF CONTENTS
Page ---- 1. REVOLVING CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1A. REVOLVING LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1B. THE REVOLVING NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1C. PREPAYMENT AT THE COMPANY'S OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1D. REQUIRED PREPAYMENTS; REDUCTION OF REVOLVING LOAN COMMITMENT . . . . . . . . . . . . . . . . . 2 2. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2A. CONDITIONS OF CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2A(1). REVOLVING NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2A(2). DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2A(3). NOTE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2A(4). LETTER OF CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2A(5). OPINION OF PRUDENTIAL'S SPECIAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2A(6). OPINION OF COMPANY'S AND GUARANTORS' COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . 7 2A(7). REPRESENTATIONS AND WARRANTIES; NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2A(9). NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2A(10). FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2A(11). EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2A(12). REVOLVING LOANS PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 8 2A(13). CONSENTS AND PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2A(14). PAYOFF LETTERS; DISBURSEMENT INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2A(15). CERTIFICATES OF INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2A(16). ENVIRONMENTAL ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2A(17). PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2B. CONDITIONS PRECEDENT TO EACH REVOLVING LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . 9 2B(1). REVOLVING LOAN REQUEST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2B(2). REPRESENTATIONS AND WARRANTIES; NO DEFAULT; BORROWING BASE . . . . . . . . . . . . . . . . . . 10 2B(3). REVOLVING LOAN PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 10 2B(4). NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2B(5). LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3A. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3B. INSPECTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3C. CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE; COMPLIANCE WITH LAWS . . . . . . . . . . . . . 13 3D. GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3E. MAINTENANCE OF PROPERTY; INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3F. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3G. NOTICE OF SUITS, ADVERSE CHANGE IN BUSINESS, ETC. . . . . . . . . . . . . . . . . . . . . . . 15 3H. INFORMATION REQUIRED BY RULE 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3I. CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3J. ENVIRONMENTAL INVESTIGATION AND REMEDIATION . . . . . . . . . . . . . . . . . . . . . . . . . 16 3K. GECC CLOSING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3L. FURTHER ACTIONS -- COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-i- 3 4. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4A. CERTAIN FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4B. LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS . . . . . . . . . . . . . . . . . 20 4C. LIMITATION ON INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4D. LIMITATION ON LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4E. LIMITATION ON COMPANY MERGERS, CONSOLIDATIONS, AND SALES . . . . . . . . . . . . . . . . . . . 25 4F. LIMITATION ON CERTAIN ASSET SALES AND SUBSIDIARY MERGERS . . . . . . . . . . . . . . . . . . . 26 4G. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES . . . . . . . . . . . . . . . . . . 28 4H. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 4I. LIMITATIONS ON THE SALE OF STOCK AND DEBT OF SUBSIDIARIES . . . . . . . . . . . . . . . . . . 30 4J. SALE AND LEASE-BACK TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 4K. SALE OR DISCOUNT OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 4L. PENSION PLAN FUNDING DEFICIENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 4M. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF SUBSIDIARIES . . . . . . . . . . . . . . . 30 4N. LIMITATION ON FISCAL YEAR CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 4O. HOSTILE TENDER OFFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5A. ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5B. RESCISSION OF ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 5C. NOTICE OF ACCELERATION OR RESCISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 5D. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 6. REPRESENTATIONS, COVENANTS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 6A. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 6B. POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 6C. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 6D. ACTIONS PENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 6E. OUTSTANDING DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 6F. TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 6G. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6H. CONFLICTING AGREEMENTS AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6I. OFFERING OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6J. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6K. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6L. GOVERNMENTAL CONSENT AND OTHER THIRD PARTY CONSENTS . . . . . . . . . . . . . . . . . . . . . 40 6M. ENVIRONMENTAL COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6N. RULE 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6O. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6P. REGULATORY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6Q. PERMITS AND OTHER OPERATING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6R. ABSENCE OF FINANCING STATEMENTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6S. SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6T. LIMITATION ON PRUDENTIAL'S RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6U. LOCATIONS OF COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-ii- 4 7. REPRESENTATIONS OF PRUDENTIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 7A. NATURE OF PURCHASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 7B. SOURCE OF FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 8. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 8A. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . 70 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 9A. NOTE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 9B. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 9C. CONSENT TO AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 9D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF REVOLVING NOTES; LOST NOTES . . . . . . . . . . 72 9E. PERSONS DEEMED OWNERS; PARTICIPATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 9F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT . . . . . . . . . . . . . . . . 73 9G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 9H. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 9I. SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9J. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9K. INDEPENDENCE OF COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9L. BINDING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9M. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9N. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9O. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9P. DISCLOSURE TO OTHER PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 9Q. JURISDICTION, SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
-iii- 5 LIST OF ATTACHMENTS LENDER SCHEDULE INFORMATION SCHEDULE Exhibit A -- Form of Revolving Agreement Exhibit B-1 -- Form of Intercreditor Agreement Exhibit B-2 -- Form of GECC Intercreditor Agreement Exhibit C-1 -- Form of Security Agreement Exhibit C-2 -- Form of Intellectual Property Security Agreement Exhibit D-1 -- Form of Mortgage Exhibit D-2 -- Form of Leasehold Mortgage Exhibit E -- Form of Pledge Agreement Exhibit F -- Guaranty Agreement Exhibit G -- Exchange and Registration Rights Agreement Exhibit H-1 -- Form of opinion of Purchaser's Special Counsel Exhibit H-2 -- Form of opinion of Company's Special Counsel Exhibit I -- Form of Borrowing Base Certificate Exhibit J -- Form of Revolving Loan Request Exhibit K -- Form of Subordination Terms Exhibit L -- Form of Collateral Access Agreement Schedule 3J -- Remedial Actions Schedule 4B -- Schedule of Investments Schedule 4C -- Schedule of Subsidiary Debt Schedule 4D -- Schedule of Liens Schedule 4G -- Schedule of Certain Restrictions Schedule 6A -- Subsidiaries Schedule 6H -- List of Agreements restricting Debt Schedule 8A -- Schedule of Account Debtors
-iv- 6 ENVIRODYNE INDUSTRIES, INC. 701 Harger Road Suite 190 Oak Brook, Illinois 60521 As of June 20, 1995 The Prudential Insurance Company of America ("Prudential" or the "Lender") c/o Prudential Capital Group Two Prudential Plaza Suite 5600 Chicago, Illinois 60601 Gentlemen: The undersigned, Envirodyne Industries, Inc. (herein called the "Company"), hereby agrees with you as set forth below. Reference is made to paragraph 8 hereof for definitions of capitalized terms used herein. 1. REVOLVING CREDIT FACILITY. 1A. REVOLVING LOANS. Subject to and upon the terms and conditions set forth in this Agreement, Prudential shall lend to the Company from time to time on any LIBOR Business Day during the period (the "Commitment Period") from the Closing Day to the Revolving Loans Termination Date sums (each a "Revolving Loan" and collectively the "Revolving Loans") which in the aggregate principal amount outstanding shall not exceed at any one time the lesser of (a) $20,000,000 (such maximum aggregate amount, as reduced pursuant to paragraph 1D(3) or 4F(e)(3), being herein referred to as the "Revolving Commitment") and (b) the Borrowing Base. Within the limits set forth in the preceding sentence and subject to the terms and conditions herein set forth, the Company may borrow, prepay pursuant to paragraph 1C and reborrow under paragraph 1E. On the Revolving Loans Termination Date no further Revolving Loans shall be made pursuant to this Agreement. The principal amount of each Revolving Loan shall be $500,000 or an integral multiple thereof. 1B. THE REVOLVING NOTE. The Revolving Loans shall be evidenced by a single revolving senior secured promissory note issued by the Company to Prudential in the principal face amount of $20,000,000, to be dated the Closing Day, to mature on or before the Revolving Loans Termination Date, to bear interest on the principal amount from time to time outstanding (a) from the date thereof until the principal thereof shall have become due and payable (whether by acceleration or otherwise) at the LIBOR Rate 7 calculated as provided in paragraph 1H, and (b) after such date until paid at a rate per annum which shall be 2.00% per annum in excess of the LIBOR Rate, calculated as provided in paragraph 1H, and to be substantially in the form of Exhibit A hereto. The terms "Revolving Note" and "Revolving Notes" as used herein shall refer to each Revolving Note delivered pursuant to any provision of this Agreement and each Revolving Note delivered in substitution or exchange therefor. If necessary to evidence any change in the provisions of this Agreement relating to the Revolving Note and agreed to in writing by Prudential and the Company, the Company shall furnish a replacement Revolving Note to Prudential in substitution for, but not in discharge of the liability evidenced by, the prior Revolving Note. Upon issuance of such replacement Revolving Note by the Company, Prudential shall return the previously outstanding Revolving Note to the Company. 1C. PREPAYMENT AT THE COMPANY'S OPTION. The Company shall have the right, upon at least one Business Day's prior written notice, to prepay in whole or in part, in amounts of $100,000 or integral multiples thereof, without premium, prior to the express maturity date thereof, any Revolving Loan on any Business Day. Each notice of a prepayment under this paragraph 1C shall specify the date and the principal amount of the prepayment. 1D. REQUIRED PREPAYMENTS; REDUCTION OF REVOLVING LOAN COMMITMENT. 1D(1). REVOLVING LOANS TERMINATION DATE. The entire outstanding principal amount of, and all accrued and unpaid interest on, the Revolving Loans shall be paid by the Company on the Revolving Loans Termination Date. 1D(2). BORROWING BASE. If at any time the outstanding principal amount of all Revolving Loans exceeds the Borrowing Base at such time, the Company shall forthwith prepay the Revolving Loans then outstanding in an amount equal to such excess, together with accrued but unpaid interest on such excess. 1D(3). EXCESS CASH FLOW. In the event that the Company has Excess Cash Flow in excess of $5,000,000 in any fiscal year of the Company (the "Specified Year"), beginning with the fiscal year of the Company ending in December 1995, the Company covenants that no later than April 15 of the year immediately following the Specified Year it will provide each holder of a Revolving Note and Prudential written notice thereof. The Company shall also deliver to each holder of a Revolving Note and Prudential at the same time as delivered to holders of the First Priority Notes a copy of the Offer to Purchase (as defined in the First Priority Notes Indenture) distributed in accordance with the First Priority Notes Indenture with respect to the Excess Cash Flow in such Specified Year. If at any time (i) prior to five (5) Business Days prior to the Purchase Date (as defined in such Offer to Purchase), or (ii) -2- 8 prior to May 1 of the year immediately following the Specified Year if no Offer to Purchase has been made by April 15 of such year, the Required Holders of the Revolving Notes (a) request in writing that the Company prepay the Revolving Loans in an amount equal to the Revolver Pro Rata Amount (as defined below) the Company shall, not later than the Purchase Date, or if no Offer to Purchase has been made with respect to such Specified Year, not later than May 5 of the year immediately following the Specified Year, prepay the Revolving Loans in an amount equal to the lesser of (1) the Revolver Pro Rata Amount and (2) the outstanding amount of the Revolving Loans on the date of such prepayment, together with interest on the amount prepaid to the date of prepayment, and on the date of any such prepayment the Revolving Loan Commitment in effect on such date shall, at the option of Prudential, automatically be reduced permanently by the Revolver Pro Rata Amount, or (b) provide written notice to the Company that the Revolving Loan Commitment is to be reduced by the Revolver Pro Rata Amount, the Revolving Loan Commitment shall automatically on the first Business Day after such notice be reduced permanently by the Revolver Pro Rata Amount, and if the outstanding principal amount of the Revolving Loans exceeds the Revolving Loan Commitment as so reduced, the Company shall immediately pay to the holders of the Revolving Notes an amount equal to such excess; provided, however, that no payment shall be made under this paragraph 1D(3) if an Event of Default or Default exists or would exist after giving effect to such payment. For purposes hereof, the term "Revolver Pro Rata Amount" shall mean the product of (i) Excess Cash Flow for the Specified Year and (ii) the amount obtained by dividing (a) the amount of the Revolving Loan Commitment in effect on the date the Company first sends the Offer to Purchase relating to such Specified Year, or if no such Offer to Purchase is made by April 15 of the year immediately following the Specified Year, on April 15 of such year by (b) the sum of (1) the amount of the Revolving Loan Commitment in effect on such date, and (2) the aggregate principal amount of the First Priority Notes and First Priority Exchange Notes outstanding on such date. 1E. MANNER OF BORROWINGS. Unless otherwise specifically provided in this Agreement, Prudential shall receive from the Company a Revolving Loan Request at least two Business Day's prior to the date on which the Company proposes to borrow (which shall be a LIBOR Business Day). The principal amount of the proposed Revolving Loan shall be $500,000 or integral multiples thereof. No later than 12:00 P.M. (New York City local time) on the Business Day prior to the date of the proposed Revolving Loan, the Company will deliver to Prudential such documents and papers, if any, as are required under paragraph 2B(5) of this Agreement, which materials shall be delivered to the address set forth on the Information Schedule attached hereto (or to such other place or in such other manner as Prudential may by written notice to the Company designate from time to time). Upon receipt of the notice provided for hereinabove and such other documentation as may be -3- 9 required, in form and substance satisfactory to Prudential, Prudential shall make the proceeds of such Revolving Loan available to the Company on the date of the proposed Revolving Loan designated in said notice by wire transfer for credit to the Company's account #73-62560 at Bank of America, Illinois, ABA #071000039, or to such other account or place as the Company may hereafter designate by written notice to Prudential. No Revolving Loans shall be made after the Revolving Loans Termination Date. 1F. CLOSING AND FACILITY FEES. The Company shall pay to Prudential on the Closing Day a closing fee of $100,000. After the date hereof and prior to the Revolving Loans Termination Date, the Company shall pay to Prudential a facility fee of $50,000 on each annual anniversary date of the Closing Day (the "Facility Fee"), provided, that if such anniversary date is not a Business Day, then the Facility Fee shall be paid on the first Business Day after such anniversary date. 1G. CANCELLATION OF COMMITMENT. The Company shall have the right, upon at least thirty (30) days' prior written notice to Prudential, to cancel in whole the Revolving Commitment (the date specified in such notice for cancellation is referred to herein as the "Revolver Cancellation Date"). Upon cancellation, the outstanding principal amount of all Revolving Loans and all accrued but unpaid interest thereon shall be paid in full and no further Revolving Loans shall be made. 1H. INTEREST PAYMENTS. Interest on the Revolving Loans for any Rate Period shall be payable in arrears by wire transfer on the first Business Day of the following Rate Period and shall be calculated on the basis of actual days outstanding during the Rate Period and on the basis of a year of 360 days. If any interest on any Revolving Loan or any Facility Fee is not paid when due, interest thereon at the default rate applicable to such Revolving Loan specified in paragraph 1B shall be payable from and including the due date until paid. 1I. ILLEGALITY. If it shall become unlawful for United States banks to obtain funds in the London interbank market, or if Prudential is otherwise unable to make or maintain Revolving Loans hereunder utilizing the LIBOR Rate, upon notice by Prudential to the Company the rate of interest per annum on all Revolving Loans shall be the Commercial Paper Rate. 2. CONDITIONS. 2A. CONDITIONS OF CLOSING. Prudential's obligation to make Revolving Loans available to the Company pursuant to paragraph 1A is subject in each case to the satisfaction, on or before the Closing Day, of the following conditions: -4- 10 2A(1). REVOLVING NOTE. There shall have been delivered to Prudential a Revolving Note duly completed and executed by the Company. 2A(2). DOCUMENTS. Prudential shall have received original counterparts or, if satisfactory to it, certified or other copies of all the following, each duly executed and delivered by the party or parties thereto in form and substance satisfactory to Prudential and on the Closing Day in full force and effect with no event having occurred and being then continuing that would constitute a default thereunder or constitute or provide the basis for the termination thereof: (i) The First Priority Notes Indenture; (ii) The Intercreditor and Collateral Agency Agreement, of even date herewith, in the form of Exhibit B-1 attached hereto (as amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "Intercreditor Agreement") and the GECC Intercreditor Agreement, of even date herewith, in the form of Exhibit B-2 attached hereto, including the agreements which are exhibits thereto (such GECC Intercreditor Agreement, together with such agreements, as amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "GECC Intercreditor Agreement"); (iii) A Security Agreement made by the Company and by each Significant Domestic Subsidiary in favor of the Collateral Agent in the form of Exhibit C-1 attached hereto, and an Intellectual Property Security Agreement made by the Company and each Guarantor owning any Trademarks, Copyrights, Licenses, Patents or Trade Secrets (each as defined therein) in favor of the Collateral Agent in the form of Exhibit C-2 attached hereto (together with any other security agreements pursuant to which the Revolving Notes and related obligations are secured and which are entered into as contemplated hereby or by the Intercreditor Agreement, as the same may be amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, collectively called the "Security Agreements" and individually called a "Security Agreement"); (iv) A Mortgage made by the Company and each Significant Domestic Subsidiary owning any real estate in favor of the Collateral Agent in the form of Exhibit D-1 attached hereto with respect to each parcel of real estate owned by the Company or any such Significant Domestic Subsidiary and a Leasehold Mortgage in favor of the Collateral Agent in the form of Exhibit D-2 attached hereto made by Viskase Corporation with respect to the real estate located at Paul's Valley, Oklahoma (together with any other mortgage -5- 11 pursuant to which the Revolving Notes and related obligations are secured and which are entered into as contemplated hereby or by the Intercreditor Agreement, as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof, collectively called the "Mortgages" and individually called a "Mortgage"); (v) A Pledge Agreement made by the Company and each Significant Domestic Subsidiary in favor of the Collateral Agent in the form of Exhibit E attached hereto (together with any other pledge agreements pursuant to which the Revolving Notes and related obligations are secured and which are entered into as contemplated hereby or by the Intercreditor Agreement, as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof, collectively called the "Pledge Agreements" and individually called a "Pledge Agreement"); (vi) The Guaranty Agreement made by each Significant Domestic Subsidiary in the form of Exhibit F attached hereto (together with any other guaranty agreements entered into as contemplated hereby or by the Intercreditor Agreement as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof, collectively called the "Guaranty Agreements" and individually called a "Guaranty Agreement"); (vii) Certificates evidencing all securities pledged pursuant to the Pledge Agreement, together with related transfer documents executed in blank, in each case received by the Collateral Agent, all Uniform Commercial Code financing statements perfecting the security interests and other Liens granted to the Collateral Agent, duly filed in all offices that Prudential may deem necessary or advisable, and all such other releases, certificates, documents, agreements, recordings and filings as Prudential may deem necessary or appropriate to establish a valid Lien in favor of the Collateral Agent in the Collateral for the benefit of the Secured Parties in accordance with priorities established by the Intercreditor Agreement and all requisite filing or recording fees shall have been duly paid; (viii) The Exchange and Registration Rights Agreement, of even date herewith, made by the Company in favor of the purchasers of the First Priority Notes in the form of Exhibit H hereto (as the same may be amended, modified, supplemented or replaced from time to time in accordance with the provisions thereof, the "Exchange and Registration Rights Agreement"); and -6- 12 (ix) Such other certificates, documents, agreements, instruments, opinions, filings and other items as Prudential may reasonably request. 2A(3). NOTE AGREEMENT. The Note Agreement and all certificates, documents and other agreements delivered in connection therewith shall have been duly executed and delivered by the parties thereto, in each case (including without limitation all schedules and exhibits thereto) in form and substance satisfactory to Prudential, and on the Closing Day the Note Agreement and all such other certificates, documents and agreements shall be in full force and effect, no default or event of default shall exist thereunder, and the First Priority Notes shall have been issued thereunder. 2A(4). LETTER OF CREDIT FACILITY. The Letter of Credit Facility Agreement and all certificates, documents and other agreements delivered in connection therewith shall have been duly executed and delivered by the parties thereto in each case (including without limitation all schedules and exhibits thereto) in form and substance satisfactory to Prudential, and on the Closing Day, the Letter of Credit Facility Agreement and all such other certificates, documents and agreements shall be in full force and effect, no default of event of default shall exist thereunder, and all conditions to the issuance of letters of credit thereunder shall be satisfied. 2A(5). OPINION OF PRUDENTIAL'S SPECIAL COUNSEL. Prudential shall have received from Schiff Hardin & Waite, who are acting as special counsel for Prudential in connection with this Agreement, a favorable opinion satisfactory to Prudential in the form of Exhibit H-1 attached hereto. 2A(6). OPINION OF COMPANY'S AND GUARANTORS' COUNSEL. Prudential shall have received from Sidley & Austin, counsel for the Company and the Guarantors, and Thomas A. Monson, Associate General Counsel of the Company, a favorable opinion satisfactory to Prudential and substantially in the form of Exhibit H-2 attached hereto and Prudential shall have received from Baker & McKenzie, who are acting as special French Counsel for the Company and the Guarantors in connection with this transaction, a favorable opinion satisfactory to Prudential as to such matters incident to the matters herein contemplated as Prudential may reasonably request. The Company hereby directs such counsel to render such opinion and agrees that the making of the initial Revolving Loan will constitute a reconfirmation of such direction. 2A(7). REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and warranties contained in paragraph 6 shall be true on and as of the Closing Day; the representations and warranties contained in each of the Transaction Documents shall be true and correct on and as of the Closing Day; there shall exist -7- 13 on the Closing Day no Event of Default or Default; and the Company shall have delivered to Prudential an Officer's Certificate, dated the Closing Day, to each such effect. 2A(8). BORROWING BASE CERTIFICATE. There shall have been delivered to Prudential a completed Borrowing Base Certificate, executed by an Authorized Officer of the Company. 2A(9). NO MATERIAL ADVERSE CHANGE. There shall not have occurred or be threatened (i) any condition, event or act which would materially and adversely affect the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, or the ability of the Company to repay the Revolving Loans or to perform under the Transaction Documents to which it is a party, or the ability of any Guarantor to perform under the Transaction Documents to which it is a party, or (ii) since December 29, 1994, a material adverse change to the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, in each case as determined by Prudential in its reasonable judgment. 2A(10). FEES. On or before the Closing Day, the Company shall have paid to Prudential a closing fee of $100,000. 2A(11). EXPENSES. The Company shall have paid such fees and expenses of Prudential's special counsel (including White & Case, who are acting as special French counsel to Prudential in connection with this transaction) and other consultants as Prudential shall have required to be paid on or before the Closing Day. 2A(12). REVOLVING LOANS PERMITTED BY APPLICABLE LAWS. The making of Revolving Loans on the terms and conditions herein provided (including the use of the proceeds of such Revolving Loans by the Company) shall not violate any applicable law or governmental regulation (including, without limitation, Section 5 of the Securities Act or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System) and shall not subject Prudential to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation, and Prudential shall have received such certificates or other evidence as it may request to establish compliance with this condition. 2A(13). CONSENTS AND PERSONS. The Company and each Guarantor shall have delivered to Prudential on the Closing Day all authorizations, consents or approvals by or notices to or filings with any court or administrative or governmental body or other Person that are required in connection with the execution and delivery of the Transaction Documents, the offering, issuance, sale or delivery of the Revolving Notes, the making of any Revolving Loan or fulfillment of or compliance with the terms and provisions -8- 14 hereof or thereof, certified as true and correct and in full force and effect as of the Closing Day by a duly authorized officer of the Company or the Guarantors, as the case may be, or, if no such authorization, consent, approval, notice or filing is required (other than of the Boards of Directors of the Company and the Guarantors), a statement of such officer to such effect. 2A(14). PAYOFF LETTERS; DISBURSEMENT INSTRUCTIONS. On or before the Closing Day, Prudential shall have received (i) a payoff letter satisfactory to Prudential and the Company indicating the amount of the Indebtedness of the Company and its Subsidiaries owed to the Banks on the Closing Day (or, in the case of the Indebtedness owed by Viskase, S.A., on the date after the Closing Day), specifying wire transfer instructions for the repayment of such Indebtedness and acknowledging that upon the Banks' receipt of funds in the amount set forth in the pay-off letter such Indebtedness will be deemed discharged and fully satisfied, and all security for such Indebtedness shall be released; and (ii) disbursement instructions from the Company, directing that the proceeds of any Revolving Loans are to be paid directly to the Banks. 2A(15). CERTIFICATES OF INSURANCE. The Collateral Agent shall have received (a) a certificate of insurance from an independent insurance broker dated as of the Closing Day, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise confirming that insurance has been obtained in accordance with the provisions of the First Priority Notes Indenture and the Collateral Documents and (b) certified copies of all policies evidencing such insurance, or certificates therefor signed by the insurer or an agent authorized to bind the insurer. 2A(16). ENVIRONMENTAL ASSESSMENTS. Roy F. Weston, Inc. shall have prepared phase 1 environmental assessments for Prudential's benefit with respect to all of the mortgaged real estate securing the Revolving Notes and such assessments shall be in the form and content satisfactory to Prudential. Further, Prudential shall be satisfied with the environmental condition of all of the real property owned or leased by the Company and its Subsidiaries. 2A(17). PROCEEDINGS. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to Prudential, and Prudential shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request. 2B. CONDITIONS PRECEDENT TO EACH REVOLVING LOAN. Prudential's obligation to make each Revolving Loan to the Company is also subject to the satisfaction of the following conditions: -9- 15 2B(1). REVOLVING LOAN REQUEST. The Company shall have delivered to Prudential a Revolving Loan Request in accordance with paragraph 1E. 2B(2). REPRESENTATIONS AND WARRANTIES; NO DEFAULT; BORROWING BASE. The representations and warranties contained in paragraph 6 hereof shall be true and correct on and as of the date of such Revolving Loan; the representations and warranties contained in each of the Transaction Documents shall be true and correct on and as of the date of such Revolving Loan; there shall exist on the date of such Revolving Loan no Default or Event of Default; after giving effect to such Revolving Loan, the aggregate outstanding principal amount of the Revolving Loans shall not exceed the Borrowing Base specified in the certificate most recently delivered pursuant to paragraph 2A(8) or 3A, as the case may be. Each of the giving of the applicable Revolving Loan Request pursuant to paragraph 1E and the acceptance by the Company of the proceeds of such Revolving Loan shall constitute a representation and warranty by the Company to the effect that the conditions set forth in the first sentence of this paragraph have been satisfied on the date of such Revolving Loan. 2B(3). REVOLVING LOAN PERMITTED BY APPLICABLE LAWS. The Revolving Loan (including the use of the proceeds of such Revolving Loan by the Company) shall not violate any applicable law or governmental regulation (including, without limitation, section 5 of the Securities Act or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System) and shall not subject Prudential to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation, and Prudential shall have received such certificates or other evidence as it may request to establish compliance with this condition. 2B(4). NO MATERIAL ADVERSE CHANGE. There shall not have occurred or exist any condition, event or act which could reasonably be expected to result in a material adverse effect on the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, or the ability of the Company to repay the Revolving Loans or to perform under the Transaction Documents to which it is a party, or the ability of any Guarantor to perform under the Transaction Documents to which it is a party. 2B(5). LEGAL MATTERS. Prior to such Revolving Loan, Prudential's counsel shall be satisfied as to all legal matters relating thereto. -10- 16 3. AFFIRMATIVE COVENANTS. 3A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to Prudential: (a) as soon as practicable and in any event within 45 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year of the Company, an unaudited consolidated statement of operations and statement of cash flows and stockholders' equity of the Company and its Subsidiaries for such quarterly period and for the period from the beginning of the current fiscal year to the end of such quarterly period, and a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and satisfactory in form to Prudential and certified as accurate by an authorized financial officer of the Company, subject to changes resulting from normal year-end adjustments; (b) as soon as practicable and in any event within 90 days after the end of each fiscal year of the Company, a consolidating and consolidated statement of operations and statement of cash flows and stockholders' equity of the Company and its Subsidiaries for such fiscal year, and a consolidating and consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form corresponding consolidated figures from the preceding annual audit, all in reasonable detail and satisfactory in form to Prudential and, as to the consolidated statements, audited by Coopers & Lybrand, or other independent public accountants of recognized international standing reasonably selected by the Company and reasonably acceptable to Prudential, whose opinion shall be without limitation as to the scope of the audit and shall state that such financial statements present fairly, in all material respects, the financial position of the Company and its Subsidiaries and their results of operations and cash flows and have been prepared in conformity with generally accepted accounting principles, that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances and, as to the consolidating statements, certified as accurate by an authorized financial officer of the Company; (c) not later than 45 days after each fiscal year end, beginning with the fiscal year ended December 28, 1995, monthly projections of the financial condition and results of operations of the Company and its Subsidiaries for the next -11- 17 succeeding year and annual projections for the next two (2) succeeding fiscal years thereafter, in each case containing projected consolidated balance sheets, statements of operations, statements of cash flows and statements of changes in shareholders equity; (d) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its public securities holders and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission); (e) promptly upon receipt thereof, a copy of each report submitted to the Company or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company or any such Subsidiary; and (f) monthly, within thirty-five (35) days after the last Business Day of each month, and at any other time requested by Prudential, a borrowing base certificate (the "Borrowing Base Certificate"), which shall be: (i) substantially in the form of Exhibit I, detailing the Company's Eligible Accounts Receivable and Eligible Inventory as of the last day of each month, or as of such other date as Prudential may request; and (ii) prepared by or under the supervision of the Company's chief executive officer or chief financial officer and certified by such officer subject only to adjustment upon completion of the normal year-end audit of physical inventory; and each Borrowing Base Certificate shall have attached to it such additional schedules and other information as Prudential may reasonably request, including, without limitation, an aging of Accounts; (g) with reasonable promptness, such other business or financial data as Prudential may reasonably request. Together with each delivery of financial statements required by clauses (a) and (b) above, the Company will deliver to Prudential an Officer's Certificate duly signed by an authorized financial officer of the Company demonstrating (with computations in reasonable detail) compliance by the Company and its Subsidiaries with the provisions of paragraphs 4A, 4B, 4C and 4F hereof and stating that there exists no Event of Default or Default, or, if any Event of Default or Default exists, specifying the nature and period of existence thereof and what action the Company proposes to take with respect thereto. Together with each delivery of financial statements required by clause (b) above, the Company will deliver to Prudential a certificate of the public -12- 18 accountants referred to therein stating that, in making the audit necessary to such public accountants' opinion on such financial statements, they have obtained no knowledge of any Event of Default or Default, or, if they have obtained knowledge of any Event of Default or Default, specifying the nature and period of existence thereof. Such accountants, however, shall not be liable to anyone by reason of their failure to obtain knowledge of any Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards. The Company further covenants that forthwith upon any Responsible Officer of the Company obtaining knowledge of an Event of Default or Default, it will deliver to Prudential an Officer's Certificate specifying the nature and period of existence thereof and what action the Company proposes to take with respect thereto. 3B. INSPECTION OF PROPERTY. The Company covenants that it will permit Prudential and its representatives, at its expense as to any period when no Default or Event of Default has occurred and is continuing but at the Company's expense as to any other period when a Default or an Event of Default has occurred and is continuing, upon reasonable notice, to visit and inspect any of the properties of the Company and its Subsidiaries, to examine the corporate books and financial records of the Company and its Subsidiaries and make copies thereof or extracts therefrom and to discuss the affairs, finances and accounts of the Company and its Subsidiaries with their respective principal officers and, in the presence of a Responsible Officer, independent public accountants, all at such reasonable times and as often as Prudential may reasonably request. 3C. CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE; COMPLIANCE WITH LAWS. The Company covenants that the Company and its Subsidiaries shall (a) continue to engage primarily in the material lines of business (as determined by the Company in its reasonable discretion) which the Company and its Subsidiaries operate, respectively, as of the Closing Day, (b) preserve, renew and keep in full force and effect the corporate existence, and all material rights, privileges, franchises, permits and licenses of the Company and its Subsidiaries, respectively, provided, however, that (i) this clause (b) shall not prohibit a merger otherwise permitted pursuant to the terms hereof and (ii) neither the Company nor any of its Subsidiaries shall be required to preserve any such right or franchise or its existence if the loss thereof is not and will not be adverse in any material respect to Prudential, and (c) comply in all material respects with all applicable laws, ordinances, rules, regulations and other requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA) except where the failure to comply would not result in any material adverse effect on the property or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. -13- 19 3D. GUARANTIES. The Company covenants that, effective upon any Person becoming a Significant Domestic Subsidiary, the Company shall cause such Person to become and continue as a party to the Guaranty Agreement and the Security Agreement and to execute and deliver all such agreements, instruments, documents, financing statements, mortgages, deeds of trust, leasehold mortgages and other written matter, and take such further action, as the Collateral Agent or Prudential may request in order to obtain a valid and perfected first priority Lien on all (or all but a de minimis amount of) such Person's Property (subject only to Permitted Liens). 3E. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Company shall, and shall cause each of its Subsidiaries to, maintain its Property in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this paragraph 3E shall prevent the Company or any of its Subsidiaries from discontinuing the operation and maintenance of any of its Property if such discontinuance is desirable in the conduct of its business and not disadvantageous in any material respect to Prudential, and provided, further that nothing in this paragraph shall prevent the Company or any of its Subsidiaries from discontinuing or disposing of any of its Property to the extent otherwise permitted by paragraph 4F hereof. (b) The Company shall insure and keep insured, and shall cause each Subsidiary to insure and keep insured, with financially sound and reputable insurers, so much of their respective Property and in such amounts as is usually and customarily insured by companies engaged in similar businesses with respect to Property of a similar character. 3F. TAXES. The Company shall, and shall cause each of its Subsidiaries to, pay or cause to be paid all license fees, bonding premiums and related taxes and charges, and shall pay or cause to be paid all of such Person's real and personal property taxes, assessments and charges and all of such Person's franchise, income, unemployment, use, excise, old age benefit, withholding, sales and other taxes and other governmental charges assessed against such Person, or payable by such Person, in each case when due and in such manner as to prevent any penalty from accruing or any Lien from attaching to its property (other than Liens for taxes not yet due and payable), provided that such Person shall have the right to contest in good faith, by an appropriate proceeding promptly initiated and diligently conducted, the validity, amount or imposition of any such tax, assessment or charge, and during the pendency of such good faith contest to delay or refuse payment -14- 20 thereof if (i) such Person establishes adequate reserves to cover such contested taxes, assessments or charges, and (ii) such contest could not reasonably be expected to have a material adverse effect on the property or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. 3G. NOTICE OF SUITS, ADVERSE CHANGE IN BUSINESS, ETC. The Company shall, and shall cause each of its Subsidiaries to, as soon as possible, and in any event within five (5) Business Days after any Responsible Officer of such Person learns of the following, give written notice to Prudential: (a) of any material proceeding(s) (including, without limitation, litigation, investigations, arbitration or governmental proceedings) being instituted or threatened to be instituted by or against such Person in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign), (b) that such Person's operations are not in full compliance with all requirements of applicable federal, state, local or foreign law, ordinance, rule, regulation or other governmental requirement, except for notices as to matters which, either individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, (c) that, without limiting the foregoing clause (b), such Person is subject to a material federal, state, local or foreign investigation evaluating whether any remedial action is needed to respond to the release of any hazardous or toxic waste, substance or constituent, or other substance into the environment and (d) of any material adverse change in the property or assets, business, condition (financial or otherwise), operations or prospects of the Company and its Subsidiaries taken as a whole. 3H. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it will, upon the request of the holder of any Revolving Note, provide such holder, and any qualified institutional buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Revolving Notes, except at such times as the Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph 3H, the term "qualified institutional buyer" shall have the meaning specified in Rule 144A under the Securities Act. 3I. CHANGE OF CONTROL. The Company covenants that within three Business Days after any Responsible Officer of the Company shall obtain knowledge of the occurrence of an event constituting a Change in Control, the Company shall provide each holder of a Revolving Note and Prudential written notice thereof, describing in -15- 21 reasonable detail the facts and circumstances constituting such Change in Control. The Company shall also deliver to each holder of a Revolving Note and Prudential at the same time as delivered to holders of the First Priority Notes a copy of the Offer to Purchase (as defined in the First Priority Notes Indenture) distributed in accordance with the First Priority Notes Indenture with respect to such Change of Control. If at any time (i) prior to five (5) Business Days prior to the Purchase Date (as defined in such Offer to Purchase) with respect to such Change of Control or (ii) prior to sixty (60) days after the date of any Change of Control if no Offer to Purchase has been made within twenty-five (25) days of any such Change of Control, the Required Holders of the Revolving Notes request in writing that the Company purchase such Revolving Notes the Company shall, not later than the Purchase Date, or if no Offer to Purchase has been made with respect to any such Change of Control, not later than the date specified in such notice by the Required Holders, purchase (and each holder thereof shall sell) such Revolving Notes at a purchase price equal to the aggregate outstanding principal amount thereof, together with interest thereon to the date of purchase. No holder of any such Revolving Note shall be required to make any representation or warranty in connection with such sale, other than with respect to its ownership of its Revolving Note. 3J. ENVIRONMENTAL INVESTIGATION AND REMEDIATION. The Company shall, and as necessary shall cause each of its Subsidiaries to, perform the environmental investigation and remediation activities, including preparation of any associated reports (collectively, "Response Activities"), as described in this paragraph. The Response Activities shall be performed in accordance with generally accepted environmental practices, under the direction and supervision of a qualified environmental professional ("QEP"). (a) Within 90 days after the Closing Day, the Company shall, and as necessary shall cause each of its Subsidiaries to, (i) perform the Response Activities described in Schedule 3J hereto with respect to the facilities listed therein, and (ii) provide the Collateral Agent with a written report or reports concerning the Response Activities. The written report(s) shall include the results of any sampling and analytical testing performed as part of the Response Activities, as well as appropriate recommendations by the QEP with respect to further Response Activities, if any, which should be undertaken at each facility listed in Schedule 3J in order to satisfy the requirements of clause (d) of this Section. (b) Within 60 days after completion of the written report(s) described in clause (a) of this Section, the Company shall, and as necessary shall cause each of its Subsidiaries to, prepare and submit to the Collateral Agent a work plan or work plans by which the Company and, as necessary, its Subsidiaries shall implement the -16- 22 recommendations in such report(s) pertaining to further Response Activities. (c) Within 30 days after completion of the work plan(s) described in clause (b) of this Section, the Company shall, and as necessary shall cause each of its Subsidiaries to, commence implementation of the Response Activities provided in the work plan(s) in accordance with the schedule(s) set forth therein. The Company shall, and as necessary shall cause its Subsidiaries to, notify the Collateral Agent in writing no later than five business days after any event which may cause an exceedance of a deadline set forth in any schedule(s) set forth in the work plan(s). Such notification shall describe the anticipated length of the delay, the cause or causes of the delay, the measures taken and to be taken to minimize the delay, and the timetable by which these measures will be implemented. (d) The Company shall, and as necessary shall cause each of its Subsidiaries to, continue to diligently and promptly implement the Response Activities provided in the work plan(s) and any other appropriate remediation activities for as long as is required, consistent with generally accepted environmental practices, to reduce environmental contamination identified as a result of the Response Activities described in Schedule 3J to "Acceptable Levels," as that term is defined herein. For purposes of this paragraph, Acceptable Levels shall mean levels of environmental contamination, remaining at a facility after completion of Response Activities, which: (i) comply with all applicable Environmental Laws; (ii) are otherwise deemed acceptable by the governmental agencies responsible for enforcing such Environmental Laws; or (iii) if subclauses (i) and (ii) do not apply, will not materially impair the value of the facility. The Company shall, and as necessary shall cause each of its Subsidiaries to, implement Response Activities so as to reduce the environmental contamination to Acceptable Levels within the shortest reasonable period of time consistent with generally accepted environmental practices. Upon reducing environmental contamination to Acceptable Levels, the Company shall, and as necessary shall cause its Subsidiaries to, provide the Collateral Agent with a written report or reports setting forth the analytical data or other information demonstrating that Acceptable Levels have been achieved. 3K. GECC CLOSING DOCUMENTS. The Company shall take such actions as may be reasonably necessary or appropriate to satisfy promptly the conditions precedent set forth in the GECC Intercreditor Agreement. -17- 23 3L. FURTHER ACTIONS -- COLLATERAL. The Company shall, and shall cause each of its Subsidiaries that are a party to any Collateral Document to, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Property, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to such Property, which Prudential or the Collateral Agent reasonably deems appropriate or advisable to perfect, preserve, protect or enforce the Lien of the Collateral Agent in such Property (and, to the extent so deemed to be appropriate or advisable, to create such a Lien with respect to Property acquired by the Company or any such Subsidiary after the Closing Day). Without limiting the foregoing the Company and each such Subsidiary shall, at its own expense with respect to any real estate acquired by it after the Closing Day, concurrently with such acquisition execute, deliver and provide to the Collateral Agent such Mortgages and other documents as Prudential or the Collateral Agent may reasonably deem appropriate or advisable to create a first priority (subject to Permitted Liens) valid and perfected Lien in such Property in favor of the Collateral Agent. 4. NEGATIVE COVENANTS. So long as the Revolving Note or amount owing under this Agreement shall remain unpaid or Prudential shall have any commitment hereunder: 4A. CERTAIN FINANCIAL COVENANTS. (a) CONSOLIDATED TANGIBLE NET WORTH. The Company covenants that it will not cause or permit Consolidated Tangible Net Worth, at any time: (i) During each "Clause (i) Test Period" (as defined below) occurring during the period commencing on the Closing Day and ending on December 28, 1995, to be less than an amount (the "Clause (i) Amount") equal to (1) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (i) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (i) Test Period; where "Clause (i) Test Period" means, at any time, the period (taken as one accounting period) commencing on March 31, 1995 and ending on the then most recently ended fiscal quarter of the Company; -18- 24 (ii) During each "Clause (ii) Test Period" (as defined below) occurring during the period commencing on December 29, 1995 and ending on December 26, 1996, to be less than an amount (the "Clause (ii) Amount") equal to (1) the greater of (X) the Clause (i) Amount at December 28, 1995, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (ii) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (ii) Test Period; where "Clause (ii) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 29, 1995 and ending on the then most recently ended fiscal quarter of the Company; (iii) During each "Clause (iii) Test Period" (as defined below) occurring during the period commencing on December 27, 1996 and ending on December 25, 1997, to be less than an amount (the "Clause (iii) Amount") equal to (1) the greater of (X) the Clause (ii) Amount at December 26, 1996, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iii) Test Period (or zero in the case of a deficit), and (Y) $1,250,000 multiplied by the number of the Company's fiscal quarters that have ended during such Clause (iii) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iii) Test Period; where "Clause (iii) Test Period" means, at any time, the period (taken as a one accounting period) commencing on December 27, 1996 and ending on the then most recently ended fiscal quarter of the Company; (iv) During each "Clause (iv) Test Period" (as defined below) occurring during the period commencing on December 26, 1997 and ending on December 31, 1998, to be less than an amount (the "Clause (iv) Amount") equal to (1) the greater of (X) the Clause (iii) Amount at December 25, 1997, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iv) Test Period (or zero in the case of a deficit), and (Y) $2,500,000 multiplied by the number of the Company's fiscal quarters, at the time of determination, that have ended during such Clause (iv) Test Period, plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iv) Test Period; where "Clause (iv) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 26, 1997 and ending -19- 25 on the then most recently ended fiscal quarter of the Company; and (v) During each "Clause (v) Test Period" (as defined below) occurring after January 1, 1999 and thereafter, to be less than an amount equal to (1) the greater of (X) the Clause (iv) Amount at December 31, 1998, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (v) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Company or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (v) Test Period; where "Clause (v) Test Period" means, at any time, the period (taken as one accounting period) commencing on January 1, 1999 and ending on the then most recently ended fiscal quarter of the Company. (b) FIXED CHARGE COVERAGE RATIO. The Company covenants that it will not cause or permit the ratio of (i) Consolidated Cash Flow for the twelve month period ending at the end of any fiscal quarter of the Company to (ii) Consolidated Fixed Charges for each such twelve month period to be less than the ratio set forth below for the period set forth below in which such fiscal quarter ends: Ratio Period ----- ------ 1.45:1 Closing Day through December 28, 1995 1.50:1 December 29, 1995 through December 26, 1996 1.55:1 December 27, 1996 and thereafter. 4B. LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Company or its Subsidiaries or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or its Subsidiaries, other than dividends, distributions or payments payable or made solely in shares of Capital Stock in the Company of the same class held by such holders (other than Redeemable Stock) or in options, warrants or other rights to purchase such shares; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Company or any Subsidiary; (iii) make any principal payment on, or purchase, redeem, repurchase, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value, prior to any -20- 26 stated or scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory redemption payment, any Restricted Debt (the foregoing actions, set forth in clauses (i) through (iii) being referred to as "Restricted Payments"); or (iv) make any Investment (the foregoing action being referred to as a "Restricted Investment"); unless at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed Restricted Payment or proposed Restricted Investment: (1) no Default or Event of Default exists or would exist; and (2) (i) the aggregate amount expended for all Restricted Payments subsequent to March 30, 1995, plus (ii) the aggregate amount expended for all Restricted Investments made subsequent to March 30, 1995, does not exceed the sum of: (A) 50% (or minus 100% in the event of a deficit) of Consolidated Net Income calculated on a cumulative basis for the period commencing on March 31, 1995 and continuing through the last day of the Company's fiscal quarter immediately preceding the Company's fiscal quarter in which the Restricted Payment or Restricted Investment, as the case may be, is proposed to be made; plus (B) the aggregate net cash proceeds received by the Company (i) from the issuance or sale (other than to a Subsidiary of the Company), after the Closing Day, of Capital Stock in the Company (other than Redeemable Stock), (ii) upon conversion after the Closing Day of any Debt of the Company that is, by its original terms, convertible into Capital Stock (other than Redeemable Stock) in the Company (with the aggregate net cash proceeds being deemed to be the principal amount of the Debt so converted), or (iii) from the exercise for cash after the Closing Day of any options, warrants or other rights to acquire Capital Stock (other than Redeemable Stock) in the Company; plus (C) $10,000,000; provided, however, that in no event may Restricted Payments made subsequent to March 30, 1995 exceed the sum of the amounts described in clause (A) and (B) above plus $5,000,000. (b) Notwithstanding clause (a) above, the provisions of this paragraph shall not prohibit: -21- 27 (i) (A) the payment by any Subsidiary of the Company of dividends or other distributions to the Company or a Wholly Owned Subsidiary of the Company or the redemption or repurchase by any such Subsidiary of any Capital Stock in such Subsidiary owned by the Company or a Wholly Owned Subsidiary of the Company, or (B) the payment of pro rata dividends to holders of minority interests in the Capital Stock in a Subsidiary of the Company; provided, however, that, in the case of clause (B) no Default or Event or Default has occurred and is continuing or would occur as a result thereof; (ii) (a) consummation of the 10.25% Notes Exchange, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; and (b) consummation of the exchange of First Priority Exchange Notes for First Priority Notes, as contemplated by the Registration Rights Agreement and (c) consummation of an exchange of Subsequent Second Priority Notes solely for Second Priority Notes; (iii) Investments in the amounts existing on the date hereof and specifically described on Schedule 4B attached hereto; (iv) Investments (subject to paragraph 3D) by the Company in Wholly Owned Subsidiaries of the Company having lines of business that are substantially similar or materially related to the Company's lines of business existing on the Closing Day, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; (v) Investments in Cash Equivalents; (vi) the acquisition, redemption or retirement of Capital Stock in the Company solely in exchange for (A) Capital Stock in the Company of the same class as the Capital Stock that is being acquired, redeemed or retired or (B) Common Stock of the Company; and (vii) the acquisition, redemption or retirement of Debt of the Company or its Subsidiaries (A) which is subordinated in right of payment to the Revolving Notes solely in exchange for Common Stock in the Company, or (B) as part of a refinancing thereof permitted by paragraph 4C(a)(xi). (c) Notwithstanding clause (b) above, the payments described in clause (b) (i) (B) above shall be included in any calculation of the sum of the amount of Restricted Payments. -22- 28 4C. LIMITATION ON INDEBTEDNESS. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly permit to exist, create, incur, issue, assume, guaranty or otherwise become liable with respect to, extend the maturity of or become responsible for the payment of, any Debt (including, without limitation, any Acquired Debt) other than: (i) Debt of the Company evidenced by the First Priority Notes and First Priority Exchange Notes; (ii) Debt of the Company evidenced by the 10.25% Notes; (iii) Debt of the Company evidenced by the Second Priority Notes and the Subsequent Second Priority Notes, provided, however, that: (1) the aggregate principal amount of the Second Priority Notes and the Subsequent Second Priority Notes do not at any time exceed $50,000,000, (2) such Second Priority Notes and Subsequent Second Priority Notes have terms substantially identical to the 10.25% Notes and in any event no less favorable to the Company than those set forth in the 10.25% Notes and the 10.25% Notes Indenture (provided, however, that the Second Priority Notes and Subsequent Second Priority Notes may be secured by Liens that are Permitted Liens described in clause (xi) of the definition of Permitted Liens and the final maturity thereof may be prior to the final maturity of the 10.25% Notes, subject to clause (3) below), (3) the final maturity of such Second Priority Notes and Subsequent Second Priority Notes is not prior to June 15, 2000, and (4) without limiting the foregoing clause (3), such Second Priority Notes and Subsequent Second Priority Notes shall not have any scheduled principal installment or other principal payments due until after the final maturity of the First Priority Notes and First Priority Exchange Notes; (iv) Debt of the Company under this Agreement (including any refinancings hereof), provided, that the aggregate principal amount of such Debt does not at any time exceed $35,000,000; (v) Debt of the Company or its Subsidiaries under the Letter of Credit Facility Agreement (and any refinancing thereof), provided the aggregate amount of such Debt does not exceed $28,000,000 at any time; (vi) Debt of the Company and certain Subsidiaries of the Company under the GECC Lease Documents (including any refinancings thereof) in an aggregate principal amount not to exceed the principal amount thereof outstanding as of the Closing Day less any scheduled amortization after the Closing Day of such Indebtedness when actually paid by the Company or -23- 29 its Subsidiaries; provided, however, that no refinancing of such Debt under the GECC Lease Documents shall be permitted unless: (1) such refinancing Debt shall have an Average Life at the time such refinancing is incurred that is equal to or greater than the Average Life of the Debt to be refinanced, (2) such refinancing Debt shall be in a principal amount not in excess of the principal amount of the Debt to be refinanced (including the amount (if any), up to $10,000,000, by which the Stipulated Loss Value exceeds the then outstanding principal amount of the Debt to be refinanced); (vii) Debt evidenced by guaranties made by the Company's Subsidiaries of the Debt described in clauses (i), (iii), (iv) and (v) of this paragraph; (viii) Debt of the Company or any of its Subsidiaries under Currency Agreements and Interest Rate Agreements; provided, that such Currency Agreements and Interest Rate Agreements do not increase the outstanding Debt of the Company other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Debt of a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company; (x) Debt of the Company's Subsidiaries existing on the Closing Day and described on Schedule 4C hereto; (xi) other Debt of any Subsidiary of the Company that directly refinances any Debt of such Subsidiary described in the immediately foregoing clause (x); provided, however, that (1) the principal amount of such refinancing Debt does not exceed the principal amount of the Debt to be refinanced, (2) the terms of such refinancing Debt are, in all material respects, no less favorable to such Subsidiary than the terms of the Debt to be refinanced and (3) without limiting the foregoing clause (2) no refinancing Debt may be secured to any greater extent than is the Debt to be refinanced; provided, further, that notwithstanding clause (1) above, the aggregate principal amount of Debt refinancing existing lines of credit of the Company's Subsidiaries may equal up to $10,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time any such refinancing Debt is incurred). (xii) Debt of the Company or any of its Subsidiaries (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, or (B) arising under guarantees incurred in the ordinary course of business (and not in connection with the borrowing of money) with -24- 30 respect to suppliers, licensees, franchisees or customers of the Company or such Subsidiary; (xiii) other Debt of the Company and the Company's Subsidiaries (including, without limitations, Purchase Money Indebtedness and Acquired Debt); provided, however, that the aggregate outstanding principal amount thereof shall at no time exceed $15,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Company at the time such Debt is incurred); provided, further, that the aggregate outstanding amount of Purchase Money Indebtedness to be incurred in connection with the purchase of any Property shall not exceed 90% of the cash purchase price to be paid for such Property; and (xiv) other Debt of the Company (not secured by any Lien); provided, however, that at no time shall (1) Consolidated Senior Debt be more than 52.5% of Consolidated Total Capitalization, or (2) Consolidated Debt be more than 85% of Consolidated Total Capitalization. (b) For purposes of determining any particular amount of Debt under this Section, Guarantees of (or obligations with respect to letters of credit supporting) Debt otherwise included in the determination of such amount shall not also be included. 4D. LIMITATION ON LIENS. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur or permit to exist any Lien of any nature whatsoever on any of its properties (including, without limitation, Capital Stock), whether owned on the Closing Day or thereafter acquired, other than Permitted Liens. 4E. LIMITATION ON COMPANY MERGERS, CONSOLIDATIONS, AND SALES. (a) The Company covenants that it shall not merge or consolidate with any other Person or, directly or indirectly, Transfer, all or substantially all of its Property in a single transaction or series of related transactions, unless in any such case: (i) at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed merger, consolidation or Transfer, no Default or Event of Default exists or would exist after giving effect thereto; (ii) in the event that the Company is to consolidate with or merge into another Person, or to Transfer all or substantially all of its Property to another Person, such Person shall be a corporation organized and validly existing under the laws of a State of the United States of America or -25- 31 the District of Columbia and shall expressly assume in writing all obligations of the Company under all Transaction Documents to which the Company is a party pursuant to such written agreements and instruments as Prudential may request and which in each case shall be in form and substance satisfactory to Prudential; and (iii) the Company has delivered to Prudential an Officers' Certificate and an opinion of counsel satisfactory in form and substance to Prudential, each stating that such consolidation, merger or Transfer (and if a supplemental indenture is required, such supplemental indenture) complies with this paragraph and that all conditions precedent herein provided for with respect thereto have been completely satisfied. (b) Upon any consolidation of the Company with, or merger of the Company with or into, any other Person or any Transfer of all or substantially all of the Property of the Company in accordance with this Section, the entity formed by or surviving such transaction shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Agreement and the Revolving Notes. 4F. LIMITATION ON CERTAIN ASSET SALES AND SUBSIDIARY MERGERS. Without limiting paragraph 4E above, the Company covenants that (i) it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly Transfer any of its Property, and (ii) the Company shall not permit any of its Subsidiaries to merge or consolidate with any other Person except: (a) any Wholly Owned Subsidiary of the Company may merge with, or sell all or substantially all of its Property to, the Company or another Wholly Owned Subsidiary of the Company if at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed transaction no Default or Event of Default exists or would exist after giving effect thereto; (b) the Company may Transfer (excluding Capital Stock of Material Subsidiaries) assets to the extent permitted under paragraph 4E and may issue and sell its Capital Stock subject to paragraph 3I; (c) the Company or any such Subsidiary may sell inventory in the ordinary course of business and equipment that is determined to be obsolete in accordance with GAAP or concurrently replaced by equipment (not subject to any lien other than Permitted Liens of the same type having a fair market value at least equal to the fair market value of the equipment so replaced; -26- 32 (d) the Company or any such Subsidiary (subject to clause (f) below) may otherwise Transfer Property (excluding Capital Stock of a Material Subsidiary), and any such Subsidiary (subject to clause (f) below) may consummate a Transfer by Merger; provided that after giving effect thereto (1) the Percentage of Total Assets Transferred in any fiscal year of the Company (excluding assets described in clauses (a) and (c) above shall not exceed 10%; and (2) the Percentage of Total Assets Transferred (excluding assets described in clauses (a) and (c) above) at any time after the Closing Day on a cumulative basis shall not exceed 15%; and (e) the Company or any Subsidiary of the Company (subject to clause (f) below) may Transfer other Property (not constituting Capital Stock of any Material Subsidiary), and any Subsidiary of the Company (subject to clause (f) below) may consummate other Transfers by Merger if: (1) at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed Transfer of Property or Transfer by Merger (as the case may be) no Default or Event of Default exists or would exist; (2) the consideration to be paid to the Company or such Subsidiary (as the case may be) is at least equal to the fair market value of the assets to be Transferred (or, in the case of a Transfer by Merger, the fair market value of the Subsidiary subject thereto), in each case as reasonably determined by the Board of Directors; and (3) the proceeds from such Transfer of Property or Transfer by Merger (net of (X) reasonable expenses incurred by the Company or the Subsidiary (as the case may be) incidental thereto (Y) the amount of any taxes (reasonably determined by the Company in good faith) owing by the Company or such Subsidiary (as the case may be) as a result thereof, and (Z) any mandatory repayment of permitted Debt (if any) secured by a Permitted Lien on the Property being Transferred that is prior to the Lien securing the Consolidated Secured Debt) are immediately applied to redeem the First Priority Notes and First Priority Exchange Notes and otherwise repay the other Consolidated Secured Debt outstanding at such time and with respect to the Revolving Loans the Revolving Loan Commitment shall, at the option of Prudential, automatically be reduced, such application of proceeds and reduction in the Revolving Loan Commitment to be made pro rata to the holders of the Consolidated Secured Debt based on the then outstanding principal amount of each such holder's holding of Consolidated Secured Debt or, in the case of Prudential, the Revolving Loan Commitment, in proportion to the aggregate amount of Consolidated Secured Debt then outstanding or, in the case of Prudential, the Revolving Loan Commitment; provided, however, that no such redemption or repayment pursuant to this clause -27- 33 (3) shall be made unless the amount of proceeds to be so redeemed and otherwise repaid equals or exceeds $5,000,000, with any such lesser amounts not used for redemption or repayment to be aggregated with proceeds subsequently received from Transfers to be utilized for redemption or repayment at such point as such aggregate amount equals or exceeds $5,000,000. The Company shall make each repayment of the Revolving Loans required under paragraph 4F(e)(3) on a date which is the first Business Day next following the 30th day after the date of Transfer or Transfer by Merger giving rise thereto. The Company shall give written notice of such repayment to Prudential. (f) Notwithstanding anything to the contrary in this paragraph 4F, the Company shall not permit any Material Subsidiary, directly or indirectly, to Transfer all or substantially all of its assets in a single transaction or series of related transactions or merge or consolidate with any Person other than as permitted under paragraph 4F(a). 4G. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction which by its terms expressly restricts the ability of any Subsidiary of the Company to: (a) pay dividends or make any other distributions on the Capital Stock in such Subsidiary or any other interest or participation in, or measured by, its profits owned by, or pay any Debt owed to, the Company or any such Subsidiary, (b) make any loans or advances to the Company or any such Subsidiary or (c) transfer any of its Property to the Company or to any such Subsidiary, except for (i) such encumbrances or restrictions existing under or by reason of any encumbrance or restriction existing by reason of applicable law; (ii) such encumbrances or restrictions existing on the Closing Day and described in reasonable detail on Schedule 4G hereto, including, without limitation, any encumbrances or restrictions under Debt of the Company or any of its Subsidiaries listed on Schedule 4C; (iii) such encumbrances or restrictions as may exist under refinancing Debt permitted under paragraph 4C(xi); provided, however, that any such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary than the encumbrances or restrictions included in the Debt to be refinanced; (iv) such encumbrances or restrictions as may exist under any Acquired Debt at the time incurred by the Company or such Subsidiary; provided, however, that such encumbrances or restrictions are, in no material respect, any more onerous to the Company or such Subsidiary as the then existing most onerous such encumbrances and restrictions applicable to the Company or such Subsidiary; (v) the provisions of any lease governing a leasehold interest or of any supply, license or other agreement entered into -28- 34 in the ordinary course of business of the Company or any Restricted Subsidiary that restrict in a customary manner transfer, subleasing or assignment; and (vi) any restrictions with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition. 4H. TRANSACTIONS WITH AFFILIATES. (a) The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, any purchase, sale or exchange of Property, the making of any Investment, the giving of any guarantee or the rendering of any service), with any Affiliate of the Company or of any Subsidiary of the Company unless the terms of such transaction or series of related transactions are no less favorable to the Company or such Subsidiary, as the case may be, than those that might be obtained at the time of such transaction from a Person who is not such an Affiliate; provided, however, that in addition to the foregoing, any such transaction (or series of related transactions), other than "Exempted Transactions," that has a fair market value to the Company or such Subsidiary of $10,000,000 or more shall be deemed to be on terms no less favorable to the Company or such Subsidiary than those obtainable at the time of the transaction from a Person who is not such an Affiliate only if the Board of Directors of the Company receives and delivers to Prudential, prior to such transaction, a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Company or such Subsidiary from a financial point of view. (b) The provisions set forth in clause (a) above shall not apply to (i) the payment of fees, salaries or other amounts to DPK in accordance with the express terms of the Management Agreement, provided, however, that the aggregate amount of all such fees, salaries and other amounts shall not exceed $5,000,000 (determined without regard to the value of options to purchase the Company's Common Stock)in the aggregate in any consecutive twelve month period, (ii) any transaction between the Company and any of its Wholly Owned Subsidiaries, (iii) the payment of reasonable and customary fees (including options to purchase the Company's Common Stock) to directors of the Company or any of the Subsidiaries of the Company who are not employees of the Company or any Subsidiary of the Company as the same may be deemed advisable or appropriate by the Board of Directors, or (iv) loans or advances to officers, members of the Board of Directors and employees of the Company or any of its Subsidiaries for travel, entertainment or moving and other relocation expenses made in the ordinary course of business of the Company and its Subsidiaries as the same may be deemed advisable or appropriate by the Board of Directors. -29- 35 4I. LIMITATIONS ON THE SALE OF STOCK AND DEBT OF SUBSIDIARIES. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, sell or otherwise dispose of, or part with control of, any Capital Stock (other than directors' qualifying shares or nominee shares) or Indebtedness of any Subsidiary of the Company, except to the Company or a Wholly Owned Subsidiary of the Company, and except that all Capital Stock and Indebtedness of any such Subsidiary may be sold as an entirety provided that (a) at the time of such sale, such Subsidiary shall not own, directly or indirectly, any Capital Stock or Indebtedness of any other Subsidiary (unless all of the Capital Stock and Indebtedness of such other Subsidiary are simultaneously being sold and (b) such sale would be permitted by paragraphs 4E and 4F. 4J. SALE AND LEASE-BACK TRANSACTIONS. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, enter into any arrangement with any Person providing for the leasing by the Company or such Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company or such Subsidiary. 4K. SALE OR DISCOUNT OF RECEIVABLES. The Company covenants that it shall not, and shall not permit any of its Subsidiaries to, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable. 4L. PENSION PLAN FUNDING DEFICIENCY. The Company covenants that it shall not, and shall not permit any member of the Control Group to, on or after the Closing Day (a) incur or permit to exist any accumulated funding deficiency within the meaning of Section 302(a)(2) of ERISA or Section 412(a) of the Code, or (b) incur any liability (other than for premiums due but not yet paid) to the Pension Benefit Guaranty Corporation, in either case, in connection with any Title IV Plan which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4M. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF SUBSIDIARIES. The Company covenants that it shall not (a) permit any Subsidiary of the Company to issue or sell any Capital Stock in such Subsidiary other than to the Company or a Wholly Owned Subsidiary of the Company or (b) permit any Person other than the Company or a Wholly Owned Subsidiary of the Company to hold any Capital Stock issued after the Closing Day in any Subsidiary of the Company; provided, however, that the Company or any Subsidiary of the Company may sell Common Stock to the extent permitted under paragraph 4F; provided, further, that this paragraph 4M shall not be deemed to prohibit the Company or any Subsidiary of the Company from making any Investment (including, without limitation, Investments in a Person such that after giving effect thereto such -30- 36 Person may be a less than wholly owned Subsidiary of the Company) permitted by paragraph 4B. 4N. LIMITATION ON FISCAL YEAR CHANGES. The Company covenants that it shall not change its fiscal year end from the last Thursday in each December of each year nor shall it make any change to its corresponding fiscal quarter end; provided, however, that the Company may make a one time change in its fiscal year end to December 31 of each year (a "Fiscal Year Change") so long as (i) its fiscal quarter end is concurrently changed to the last day of each calendar quarter and (ii) the Company gives not less than 5 Business Days prior notice thereof to Prudential and the Collateral Agent. Upon and after the effectiveness of the Fiscal Year Change (if any) and as to all periods after (but not before) such Fiscal Year Change: (a) the references in paragraph 4A(a) to "December 25," "December 26," "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31;" and (b) the references in paragraph 4A(b) to "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31." 4O. HOSTILE TENDER OFFERS. The Company covenants that none of the proceeds of any Revolving Loan will be used to finance directly or indirectly a Hostile Tender Offer. 5. EVENTS OF DEFAULT. 5A. ACCELERATION. If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise): (a) the Company defaults in the payment of any principal of any Revolving Note when the same shall become due, either by the terms thereof or otherwise as provided in this Agreement; or (b) the Company defaults in the payment of any interest on any Revolving Note or any Facility Fee for more than 5 Business Days after the date due; or (c) the Company or any Subsidiary of the Company defaults (whether as primary obligor or as guarantor or other surety) in any payment of principal of or interest on the 10.25% Notes, the First Priority Notes, the First Priority Exchange Notes (if any), the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), any reimbursement obligations under the Letter of Credit Facility Agreement, any Capital Lease Obligation under the GECC Lease Documents or any other obligation for money borrowed (or any Capital Lease Obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued -31- 37 or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or any obligation under notes payable or drafts accepted representing extensions of credit or any obligation to pay or reimburse any Person for any amount paid under any letter of credit, any proposal, bid, performance or other bond, or under any indemnity agreement) beyond any period of grace provided with respect thereto, or the Company or any such Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such obligation is created (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause, such obligation to become due (or to be repurchased by the Company or any such Subsidiary) prior to any stated maturity, provided that, except in respect of the 10.25% Notes, the First Priority Notes, the First Priority Exchange Notes (if any), the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), the reimbursement obligations under the Letter of Credit Facility Agreement and the Capital Lease Obligation under the GECC Lease Document, the aggregate amount of all obligations as to which such a payment default shall occur and be continuing or such a failure or other event causing or permitting acceleration (or resale to the Company or any Subsidiary) shall occur and be continuing exceeds $5,000,000; or (d) any representation or warranty made by the Company or any Subsidiary of the Company or any Responsible Officer thereof in any writing or statement furnished in connection with or pursuant to this Agreement, the Revolving Notes or any other Transaction Document shall be false in any material respect on the date as of which made; or (e) the Company fails to observe or perform any covenant, condition or agreement contained in paragraph 4 or paragraphs 3I or 1D; or (f) any covenant, condition or agreement on the part of the Company to be observed or performed pursuant to the terms of this Agreement or the Revolving Notes (other than a default in the performance, or breach of a covenant, warranty or agreement which is specifically dealt with elsewhere in this Section), and such failure continues for 30 days after any Responsible Officer of the Company learns thereof; or (g) the Company or any Material Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or -32- 38 (h) any decree or order for relief in respect of the Company or any Material Subsidiary is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; or (i) the Company or any Material Subsidiary petitions or applies to any tribunal for, or consents to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of the Company or any Material Subsidiary, or of any substantial part of its assets or commences a voluntary case under the Bankruptcy Law of any jurisdiction or any proceedings relating to the Company or any such Material Subsidiary under the Bankruptcy Law of any jurisdiction; or (j) any such petition or application is filed, or any such proceedings are commenced, against the Company or any Material Subsidiary and the Company or such Material Subsidiary by any act indicates its approval thereof, consents thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (k) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary decreeing the dissolution of the Company or any such Material Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (l) any order, judgment or decree is entered in any proceedings against the Company or any Material Subsidiary of the Company decreeing a split-up of the Company or such Material Subsidiary, and such order, judgment or decree remains unstayed and in effect for more than 60 days; or (m) one or more judgments or orders in an aggregate amount in excess of $5,000,000 (net of cash proceeds actually received by, or paid on behalf of, the Company with respect to such judgments or orders) are rendered against the Company or any Subsidiary of the Company and, within 60 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged; or (n) the occurrence of any "Event of Default" (as defined in any Transaction Document other than this Agreement) or the breach of any covenant, warranty or agreement set forth in any -33- 39 Transaction Document (other than this Agreement or the Revolving Notes), which Event of Default or breach continues beyond any period of grace therein provided; or (o) the Guaranty Agreement shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability or the Guaranty Agreement, or any guarantor thereunder shall fail to comply with any of the terms or provisions of the Guaranty Agreement or denies that it has any further liability under the Guaranty Agreement, or gives notice to such effect; or (p) the Collateral Agent shall cease to possess at any time a valid, first priority (subject to Permitted Liens) perfected Lien in and on any of the Collateral (other than Collateral having a de minimis value); or (q) any Termination Event occurs; then (i) if such event is an Event of Default specified in clause (a) or (b) of this paragraph 5A, the holder of any Revolving Note (other than the Company or any of its Subsidiaries or Affiliates) may at its option, by notice in writing to the Company, declare such Revolving Note to be, and such Revolving Note shall thereupon be and become, immediately due and payable at par together with interest accrued thereon, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company provided, that on the date such Revolving Note is declared due and payable hereunder such holder would have had but for such Event of Default a commitment hereunder to make Revolving Loans of not less than 12.5% of the aggregate Revolving Loan Commitment, (ii) if such event is an Event of Default specified in clauses (h), (i) or (j) of this paragraph 5A with respect to the Company, all of the Revolving Notes at the time outstanding shall automatically become immediately due and payable together with interest accrued thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company, and the obligations of Prudential hereunder to make any Revolving Loans to the Company shall automatically terminate and (iii) with respect to any event constituting an Event of Default hereunder other than an Event of Default specified in clauses (h), (i) or (j) of this paragraph 5A, Prudential may at its option, by notice in writing to the Company terminate all obligations of Prudential hereunder to make any Revolving Loan to the Company and the Required Holders may at their option, by notice in writing to the Company, declare all of the Revolving Notes to be, and all of the Revolving Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company. -34- 40 5B. RESCISSION OF ACCELERATION. At any time after any or all of the Revolving Notes shall have been declared immediately due and payable pursuant to paragraph 5A, the Required Holder(s) may, by notice in writing to the Company, rescind and annul such declaration and its consequences if (i) the Company shall have paid all overdue interest on the Revolving Notes, the principal of and Facility Fees, if any, payable with respect to Revolving Notes which have become due otherwise than by reason of such declaration, and interest on such overdue interest and overdue principal or Facility Fees at the rate specified herein or in Revolving Notes, (ii) the Company shall not have paid any amounts which have become due solely by reason of such declaration, (iii) all Events of Default and Defaults, other than non-payment of amounts which have become due solely by reason of such declaration, shall have been cured or waived pursuant to paragraph 9C, and (iv) no judgment or decree shall have been entered for the payment of any amounts due pursuant to the Revolving Notes, this Agreement or the other Transaction Documents. No such rescission or annulment shall extend to or affect any subsequent Event of Default or Default or impair any right arising therefrom. 5C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Revolving Note shall be declared immediately due and payable pursuant to paragraph 5A or any such declaration shall be rescinded and annulled pursuant to paragraph 5B, the Company shall forthwith give written notice thereof to the holder of each Revolving Note at the time outstanding. 5D. OTHER REMEDIES. If any Event of Default or Default shall occur and be continuing, the holder of any Revolving Note may proceed to protect and enforce its rights under this Agreement, such Revolving Note or any other Transaction Document by exercising such remedies as are available to such holder in respect thereof hereunder, thereunder and under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or any other Transaction Document or in aid of the exercise of any power granted in this Agreement or any other Transaction Document. No remedy conferred in this Agreement or any other Transaction Document upon the holder of any Revolving Note is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or therein or now or hereafter existing at law or in equity or by statute or otherwise. 6. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents, covenants and warrants as follows: 6A. ORGANIZATION. The Company is a corporation duly organized and existing in good standing under the laws of the State of Delaware and each Subsidiary is duly organized and existing in good standing under the laws of the jurisdiction in which it is -35- 41 incorporated. The Company and each Subsidiary is qualified to do business and in good standing in every jurisdiction where the ownership of their respective properties or the nature of their respective businesses makes such qualification necessary except where the failure to be qualified or in good standing in the aggregate would not reasonably be expected to result in any material adverse effect on the properties or assets, business, condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. As of the Closing Day, the names of the Subsidiaries of the Company, the jurisdiction in which each such Subsidiary is organized, the number of outstanding shares of each class of capital stock of such Subsidiary, the number of shares of each such class owned by the Company or a Subsidiary of the Company (identified by stock certificate number) and the number of shares of each such class owned by any other Person (identified by stock certificate number) are as set forth in Schedule 6A hereto. 6B. POWER AND AUTHORITY. The Company and each Subsidiary has all requisite corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted. The Company and each Guarantor has the legal capacity and authority to execute, deliver, and perform its obligations under the Transaction Documents to which it is a party. All action on the part of the Company and each Guarantor necessary for the authorization, execution, delivery and performance of all obligations of the Company and such Guarantor under the Transaction Documents to which it is a party has been taken. The Transaction Documents to which the Company or any Guarantor is a party have been duly executed and delivered by, and are the legal, valid and binding obligations of, the Company or such Guarantor, and each such document is enforceable against the Company or such Guarantor in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights in general and by general principles of equity, and each is in full force and effect. 6C. FINANCIAL STATEMENTS. The Company has furnished Prudential with the following financial statements, identified by a principal financial officer of the Company: (i) consolidating and consolidated balance sheets of the Company and its Subsidiaries as at the last day of the Company's fiscal year in each of the three fiscal years of the Company most recently completed prior to the date as of which this representation is made or repeated to Prudential (other than fiscal years completed within 90 days prior to such date for which financial statements have not been released) and consolidating and consolidated statements of operations and cash flows and a consolidated statement of stockholders' equity of the Company and its Subsidiaries for each such year, all certified by Coopers & Lybrand, other than any consolidating financial statement, which has been certified by an authorized financial officer of the Company; and (ii) a consolidated balance sheet of -36- 42 the Company and its Subsidiaries as at the end of the quarterly period (if any) most recently completed prior to such date (other than the last quarterly period and quarterly periods completed within 45 days prior to such date for which financial statements have not been released) and the comparable quarterly period in the preceding fiscal year and consolidated statements of operations, stockholders equity and cash flows for the periods from the beginning of the fiscal years in which such quarterly periods are included to the end of such quarterly periods, prepared by the Company. Such financial statements (including any related schedules and/or notes) are true and correct in all material respects (subject, as to interim statements, to changes resulting from audits and year-end adjustments), have been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods involved and show all liabilities, direct and contingent, of the Company and its Subsidiaries required to be shown in accordance with such principles. The balance sheets fairly present the condition of the Company and its Subsidiaries as at the dates thereof, and the statements of operations, stockholders' equity and cash flows fairly present the results of the operations of the Company and its Subsidiaries and their cash flows for the periods indicated. There has been no material adverse change in the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, since the end of the most recent fiscal year for which audited financial statements have been furnished. 6D. ACTIONS PENDING. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any properties or rights of the Company or any of its Subsidiaries, by or before any court, arbitrator or administrative or governmental body which might or could reasonably be expected to result in any material adverse effect on the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. 6E. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries has outstanding any Debt except as permitted by paragraph 4C. There exists no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) and, after giving effect to the transaction contemplated by this Agreement, there will exist no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) under the provisions of any instrument evidencing Debt of the Company or any Subsidiary or of any agreement relating thereto. 6F. TITLE TO PROPERTIES. The Company has, and each of its Subsidiaries has, good and indefeasible title to its respective real properties (other than properties which it leases) and good -37- 43 title to all of its other respective properties and assets, including the properties and assets reflected in the most recent audited balance sheet delivered pursuant to paragraph 3A (or, if no audited balance sheet has been delivered, the most recent audited balance sheet referred to in paragraph 6C) (other than properties and assets disposed of in the ordinary course of business), subject to no Lien of any kind except Permitted Liens and except the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the First Priority Notes. All leases necessary in any material respect for the conduct of the respective businesses of the Company and its Subsidiaries are valid and subsisting and are in full force and effect. The Company and its Subsidiaries enjoy peaceful and undisturbed possession of all leases necessary in any material respect for the operation of its business, none of which contains any unusual or burdensome provisions which might materially affect or impair the ability of the Company or its Subsidiaries to maintain the operations of the Company and its Subsidiaries (taken as a whole). 6G. TAXES. The Company has and each of its Subsidiaries has filed all federal, state and other income tax returns which are required to be filed (other than such tax returns where the consequence of a failure to file is immaterial), and each has paid all taxes as shown on such returns and on all assessments received by it to the extent that such taxes have become due, except such taxes as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles. 6H. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement or subject to any charter or other corporate restriction which materially and adversely affects or impairs the ability of the Company or its Subsidiaries to maintain the operations of the Company and its Subsidiaries (taken as a whole). Neither the execution nor delivery of any of the Transaction Documents, nor the offering, issuance and sale of the Revolving Notes, nor the making of any Revolving Loan, nor fulfillment of nor compliance with the terms and provisions hereof and thereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien (other than Liens in favor of the Collateral Agent) upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders), instrument, order, judgment, decree, statute, law, rule or regulation to which the Company or any of its Subsidiaries is subject. Neither the Company nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other contract or agreement -38- 44 (including its charter) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company or any of its Subsidiaries of the type to be evidenced by the Revolving Notes and the Guaranty Agreements except as set forth in Schedule 6H attached hereto. 6I. OFFERING OF NOTES. Neither the Company nor any agent acting on its behalf has, directly or indirectly, offered the Revolving Notes or any similar security of the Company for sale to, or solicited any offers to buy the Revolving Notes or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with, any Person other than institutional investors, and neither the Company nor any agent acting on its behalf has taken or will take any action which would subject the issuance or sale of the Revolving Notes to the provisions of section 5 of the Securities Act or to the registration provisions of any securities or Blue Sky law of any applicable jurisdiction. 6J. USE OF PROCEEDS. Neither the Company nor any Subsidiary owns or has any present intention of acquiring any "margin stock" as defined in Regulations G, T, U or X of the Board of Governors of the Federal Reserve System (herein called "margin stock"). The proceeds of all Revolving Loans will be used for purposes permitted by or not in contravention of any of the provisions of this Agreement. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any Debt which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulations G, T, U or X. Neither the Company nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or the Revolving Notes to violate Regulations G, T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. 6K. ERISA. No accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any Plan (other than a Multiemployer Plan). No liability to the Pension Benefit Guaranty Corporation has been or is expected by the Company or any ERISA Affiliate to be incurred with respect to any Plan (other than a Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which is or would be materially adverse to the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. Neither the Company, any Subsidiary nor any ERISA Affiliate has incurred or presently expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan which is or would be -39- 45 materially adverse to the business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. The execution and delivery of the Transaction Documents and the issuance and sale of the Revolving Notes by the Company to Prudential hereunder will be exempt from, or will not involve any transaction which is subject to, the prohibitions of section 406 of ERISA and will not involve any transaction in connection with which a penalty could be imposed under section 502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code. The representation by the Company in the next preceding sentence is made in reliance upon and subject to (1) the accuracy of Prudential's representation in paragraph 7B and (2) the assumption made solely for the purpose of making such representation that Department of Labor Interpretive Bulletin 75-2 with respect to prohibited transactions remains valid in the circumstances of the transactions contemplated herein. 6L. GOVERNMENTAL CONSENT AND OTHER THIRD PARTY CONSENTS. Neither the nature of the Company or of any Subsidiary, nor any of their respective businesses or properties, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offering, issuance, sale or delivery of the Revolving Notes, the making of any Revolving Loan or the use of proceeds thereof is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body or other Person (other than routine filings after the Closing Day with the Securities and Exchange Commission and/or state Blue Sky authorities) in connection with the execution and delivery of any of the Transaction Documents, the offering, issuance, sale or delivery of the Revolving Notes, the making of any Revolving Loan or fulfillment of or compliance with the terms and provisions hereof or thereof, other than filings and recordings necessary to perfect the security interests granted the Collateral Agent under the Collateral Documents, all of which have been made. 6M. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all foreign, federal, state, local and regional statutes, laws, ordinances and judicial or administrative orders, judgments, rulings and regulations relating to protection of the environment except, in any such case, where failure to comply could not reasonably be expected to result in a material adverse effect on the properties or assets, business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole. 6N. RULE 144A. The Revolving Notes are not of the same class as securities, if any, of the Company listed on a national securities exchange under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. -40- 46 6O. DISCLOSURE. Neither this Agreement, any Transaction Document nor any other document, certificate or statement furnished to Prudential by or on behalf of the Company or any Subsidiary in connection herewith (including, without limitation, the Memorandum) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. To the knowledge of the Company, there is no fact peculiar to the Company or any of its Subsidiaries which materially adversely affects or in the future may (so far as the Company can now foresee) materially adversely affect the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, and which has not been set forth in this Agreement or in the other documents, certificates and statements furnished to Prudential by or on behalf of the Company prior to the date hereof in connection with the transactions contemplated hereby. The financial projections contained in the Memorandum are reasonable based on the assumptions stated therein and the best information available to the officers of the Company (provided that this representation shall not constitute a representation by the Company that any of such projections will be attained). The parties hereto acknowledge that the description of the terms of the financing described in the Memorandum will be superseded by the actual terms therefor as contained in the Transaction Documents and the other documents delivered at the closing hereunder. 6P. REGULATORY STATUS. Neither the Company nor any Subsidiary is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of Public Utility Act of 1935, as amended, or (iii) a "public utility" within the meaning of the Federal Power Act, as amended. 6Q. PERMITS AND OTHER OPERATING RIGHTS. The Company and each Subsidiary has all such valid and sufficient certificates of convenience and necessity, franchises, licenses, permits, operating rights and other authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other governmental bodies having jurisdiction over such Company or such Subsidiary or any of its respective properties, as are necessary for the ownership, operation and maintenance of its businesses and properties, subject to exceptions and deficiencies which do not materially affect the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, and such certificates of convenience and necessity, franchises, licenses, permits, operating rights and other authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other governmental bodies having jurisdiction over the Company or -41- 47 such Subsidiary or any of its properties are free from burdensome restrictions or conditions of an unusual character or restrictions or conditions materially adverse to the property or assets, business, condition (financial or otherwise) or the operations of the Company and its Subsidiaries, taken as a whole, and neither the Company nor any Subsidiary is in violation of any thereof in any material respect. 6R. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to Permitted Liens and the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the First Priority Notes as contemplated by paragraph 2A(14) hereof, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Company or any of the Subsidiaries or any rights relating thereto. 6S. SECURITY INTEREST. All filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken, that are necessary or advisable under applicable law and are required to be made or taken on or prior to the Closing Day under the provisions of this Agreement and the other Collateral Documents to establish the Collateral Agent's security interest in the Collateral. The Collateral and the Collateral Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses (except any such setoff, claim or defense which could not, individually or in the aggregate, materially impair the rights of the Collateral Agent with respect to the Collateral). The Company and each Subsidiary party to any Collateral Document is the owner of the Collateral described therein free from any Lien, except for Permitted Liens and the Liens in favor of the Banks securing the Indebtedness to be paid from the proceeds of the First Priority Notes as contemplated by paragraph 2A(14) hereof. 6T. LIMITATION ON PRUDENTIAL'S RESPONSIBILITY. Neither Prudential, the Collateral Agent nor any other Person for whom the Collateral Agent is acting as agent shall be responsible for: (i) the safekeeping of any Collateral; (ii) any loss or damage to any Collateral; (iii) any diminution in the value of any Collateral; or (iv) any act or default of any carrier, warehouseman, bailee or any other Person. All risk of loss, damage, destruction or diminution in value of the Collateral shall be borne by the Company and its Subsidiaries. The powers conferred on Prudential, the Collateral Agent and such other Persons with respect to the Collateral are solely to protect the interests of Prudential, the Collateral Agent and such other Persons in the Collateral and shall not impose any duty upon Prudential, the Collateral Agent or such other Person to exercise any such powers. Neither Prudential, the Collateral Agent nor such other Person has any duty to protect, ensure, collect or -42- 48 realize upon any Collateral or preserve rights in any Collateral against any other Person. The Company releases Prudential, the Collateral Agent and such other Persons from any liability for any act or omission relating to this Agreement or the Collateral Documents other than as a result of gross negligence or willful misconduct. 6U. LOCATIONS OF COLLATERAL. The address of the principal place of business and the chief executive office of the Company and each of the Significant Domestic Subsidiaries is set forth on Schedule II to the Security Agreement executed by such Person. The books and records of the Company and each of the Significant Domestic Subsidiaries and all of their chattel paper and records of Accounts, are maintained exclusively at such locations. There is no location at which the Company or any of the Significant Domestic Subsidiaries has any Collateral other than those locations identified on Schedule II to the Security Agreement executed by such Person. All real property owned or leased by the Company and the Significant Domestic Subsidiaries is described in Exhibit A to the Mortgages executed by such Person, which Schedule sets forth, for each such location, a legal description, common address and, for leased property, the name and mailing address of the record owner of such leased property. All of the "Trademarks," "Copyrights," "Licenses" and "Patents" (as each such term is defined in the Intellectual Property Security Agreements) owned or licensed by the Company and each of the Significant Domestic Subsidiaries is set forth on Schedules A, B, C and D, respectively, of the Intellectual Property Security Agreement executed by such Person. 7. REPRESENTATIONS OF PRUDENTIAL. Prudential represents as follows: 7A. NATURE OF PURCHASE. Prudential is not acquiring the Revolving Notes to be purchased by it hereunder with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act, provided that the disposition of Prudential's property shall at all times be and remain within its control. 7B. SOURCE OF FUNDS. No part of the funds being used by Prudential to make any Revolving Loan hereunder constitutes assets allocated to any separate account maintained by Prudential in which any employee benefit plan, other than employee benefit plans identified on a list which has been furnished by Prudential to the Company, participates to the extent of 10% or more. For the purpose of this paragraph 7B, the terms "separate account" and "employee benefit plan" shall have the respective meanings specified in section 3 of ERISA. 8. DEFINITIONS. For the purpose of this Agreement, the terms defined in the text of any provision hereof shall have the -43- 49 respective meanings specified therein, and the following terms shall have the meanings specified with respect thereto below: "ACCOUNTS" means "Accounts" as defined in the Security Agreements. "ACQUIRED DEBT" means Debt of a Person existing on or prior to the time at which such Person became a Subsidiary and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary. "AFFILIATE" of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Securities of such specified Person, or (iii) of which 10% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. "AUTHORIZED OFFICER" shall mean in the case of the Company, its chief executive officer, its chief financial officer, any other officer of the Company designated as an "AUTHORIZED OFFICER" of the Company in the Information Schedule attached hereto or any other officer of the Company designated as an "AUTHORIZED OFFICER" of the Company for the purpose of this Agreement in an Officer's Certificate executed by the Company's chief executive officer or chief financial officer and delivered to Prudential. Any action taken under this Agreement or any other Transaction Document on behalf of the Company by any individual who on or after the date of this Agreement shall have been an Authorized Officer of the Company and whom Prudential in good faith believes to be an Authorized Officer of the Company at the time of such action shall be binding on the Company even though such individual shall have ceased to be an Authorized Officer of the Company. "AVERAGE LIFE" means, as of any date, with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (x) the numbers of years from such date to the dates of each successive scheduled principal payment (including any sinking fund or mandatory redemption payment requirements) of such debt security multiplied by (y) the amount of such principal payment by (ii) the sum of all such principal payments. "BTCC" means BT Commercial Corporation, a Delaware corporation, and its successors and permitted assigns. "BANKRUPTCY LAW" has the meaning given to such term in paragraph 5A. "BANKS" shall mean collectively and "BANK" shall mean individually, Bank of America Illinois, Citibank International PLC -44- 50 and Citicorp North America, Inc., as agents under the Credit Agreement dated December 31, 1993. "BOARD OF DIRECTORS" of any corporation means the board of directors of such corporation or any duly authorized committee of the board of directors of such corporation. "BORROWING BASE" means the sum of: (A) ninety percent (90%) of Eligible Accounts Receivable, plus (B) sixty-five percent (65%) of Eligible Inventory, plus (C) cash held by the Collateral Agent in the Cash Collateral Account, minus (D) the undrawn amount of all letters of credit issued under the Letter of Credit Facility Agreement, all reimbursement obligations with respect to any drawing under a letter of credit under such Agreement and all loans made by any Lender (as defined in the Letter of Credit Facility Agreement) to fund the Company's reimbursement obligations with respect to draws under any letters of credit, minus (E) the aggregate amount of reserves, if any, established by Prudential. Prudential, in the exercise of its Permitted Discretion, may (i) establish and increase or decrease reserves against Eligible Accounts Receivable and Eligible Inventory and (ii) impose additional restrictions (or eliminate the same) to the standards of eligibility set forth in the definitions of "Eligible Accounts Receivable" and "Eligible Inventory." "BORROWING BASE CERTIFICATE" has the meaning given such term in paragraph 3A(e). "BROAD AFFILIATE" of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 25% or more of any class of the Voting Securities of such specified Person, or (iii) of which 25% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed. -45- 51 "CAPITAL LEASE OBLIGATION" means, at any time, the amount of the liability with respect to a lease that would be required at such time to be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "CAPITAL STOCK" in any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. "CASH EQUIVALENTS" means: (i) debt instruments, with maturities of one year or less from the date of acquisition, issued by the government of the United States of America or any agency thereof (if fully guaranteed or insured by the government of the United States of America), (ii) certificates of deposit, with maturities of one year or less from the date of acquisition, of any commercial bank incorporated under the laws of the United States of America having a combined capital, surplus and undivided profits of not less than $100,000,000, (iii) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., and (iv) tax exempt floating rate tender bonds, as to which payments of principal, interest and other charges may be made at the option of the holder upon not more than one week's notice which are payable upon tender or any default from the proceeds of an unconditional and irrevocable letter of credit issued by a United States office of any commercial bank all of whose long-term debt securities are rated at least AA by Standard & Poor's Corporation or Aa by Moody's Investor Service. "CHANGE OF CONTROL" means the occurrence of any of the following events (whether or not approved by the Board of Directors of the Company or otherwise permitted by the terms of this Agreement): (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), or any Affiliate of any such person, is or becomes a "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Common Stock of the Company or such other amount of Voting Securities to provide the ability to elect, directly or indirectly, a majority of the members of the Board of Directors of the Company; (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new or replacement directors whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to -46- 52 constitute a majority of the Board of Directors of the Company then in office; (iii) any direct or indirect Transfer (in one transaction or a series of related transactions) of all or substantially all of the consolidated assets of the Company and its Subsidiaries to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or any Affiliate of any such person; (iv) the approval by the Company or its shareholders of any plan of liquidation; or (v) any event constituting a "Change of Control" in respect of the 10.25% Notes, the Second Priority Notes or the Subsequent Second Priority Notes. "CLAUSE (i) AMOUNT" shall have the meaning given to such term in paragraph 4A(a)(i). "CLAUSE (i) TEST PERIOD" shall have the meaning given to such term in paragraph 4A(a)(i). "CLAUSE (ii) AMOUNT" shall have the meaning given to such term in paragraph 4A(a)(ii). "CLAUSE (ii) TEST PERIOD" shall have the meaning given to such term in paragraph 4A(a)(ii). "CLAUSE (iii) AMOUNT" shall have the meaning given to such term in paragraph 4A(a)(iii). "CLAUSE (iii) TEST PERIOD" shall have the meaning given to such term in paragraph 4A(a)(iii). "CLAUSE (iv) AMOUNT" shall have the meaning given to such term in paragraph 4A(a)(iv). "CLAUSE (iv) TEST PERIOD" shall have the meaning given to such term in paragraph 4A(a)(iv). "CLAUSE (v) TEST PERIOD" shall have the meaning given to such term in paragraph 4A(a)(v). "CLOSING DAY" shall mean June 15, 1995. "CODE" means the Internal Revenue Code of 1986 as amended from time to time, and the rules and regulations promulgated thereunder. "COLLATERAL" means all the real, personal and mixed property made, or intended or purported to be made, subject to a Lien pursuant to the Collateral Documents. "COLLATERAL ACCESS AGREEMENT" means any landlord waiver, mortgagee waiver, bailee letter or any similar acknowledgement agreement of any warehouseman or processor in possession of Inventory, substantially in the form of Exhibit L. -47- 53 "COLLATERAL AGENT" means BTCC, in its capacity as collateral agent under the Intercreditor Agreement and the other Collateral Documents, and any successor thereto. "COLLATERAL DOCUMENTS" shall have the meaning ascribed to such term in the Intercreditor Agreement. "COMMERCIAL PAPER RATE" shall mean a rate per annum equal to the sum of (a) 3% plus (b) the yield-adjusted rate ( i.e., the nominal rate increased by the cost of any discount) charged or quoted to Prudential Funding Corporation for dealer-placed, 30-day promissory notes issued by Prudential Funding Corporation on the Rate Day. "COMMITMENT PERIOD" shall have the meaning specified in paragraph 1A hereof. "COMMON STOCK" means, with respect to any Person, any and all shares, interests, participations or other equivalent (however designated) of Capital Stock in such Person which is not preferred as to the payment of dividends or the distribution of assets on any voluntary or involuntary liquidation over shares of any other class of Capital Stock in such Person. "COMPANY" shall have the meaning specified in the introductory paragraph of this Agreement. "CONSOLIDATED CASH FLOW" means, for any period, Consolidated Net Income for such period, (A) increased by the sum of (i) Consolidated Fixed Charges for such period, other than interest capitalized by the Company and its Subsidiaries during such period, (ii) income tax expense of the Company and its Subsidiaries, on a consolidated basis, for such period (other than income tax expense attributable to sales or other dispositions of assets (other than sales of inventory in the ordinary course of business)), (iii) depreciation expense of the Company and its Subsidiaries, on a consolidated basis, for such period, (iv) amortization expense of the Company and its Subsidiaries, on a consolidated basis, for such period, and (v) other non-cash items reducing Consolidated Net Income minus non-cash items increasing Consolidated Net Income for such period, and (B) decreased by any revenues received or accrued by the Company or any of its Subsidiaries from any other Person (other than the Company or any of its Subsidiaries) in respect of any Investment for such period, all as determined in accordance with GAAP. "CONSOLIDATED DEBT" means the aggregate amount of Debt of the Company and its Subsidiaries, on a consolidated basis, determined in accordance with GAAP. "CONSOLIDATED FIXED CHARGES" means, for any period, (A) the sum of, without duplication, (i) the aggregate amount of interest -48- 54 expense of the Company and its Subsidiaries during such period (including, without limitation, all commissions, discounts and other fees and charges owed by the Company and its Subsidiaries with respect to letters of credit and bankers' acceptances or similar financing facilities and the net costs associated with Interest Rate Agreements and Currency Agreements of the Company and its Subsidiaries) paid, accrued or scheduled to be paid or accrued during such period, including interest expense not required to be paid in cash (including any amortization of original issue debt discount), all determined in accordance with GAAP, plus all interest capitalized by the Company and its Subsidiaries during such period, (ii) the aggregate amount of the interest expense component of rentals in respect of Capital Lease Obligations paid or accrued by the Company and its Subsidiaries during such period, determined in accordance with GAAP, (iii) the aggregate amount of all operating lease expense of the Company and its Subsidiaries during such period, determined in accordance with GAAP, and (iv) to the extent any interest payment obligation of any other Person is guaranteed by the Company or any of its Subsidiaries (other than guarantees relating to obligations of customers of the Company or any of its Subsidiaries that are made in the ordinary course of business consistent with past practices of the Company or its Subsidiaries), the aggregate amount of interest paid or accrued by such Person in accordance with GAAP during such period attributable to any such interest payment obligation, less (B) to the extent included in (A) above, amortization or write-off of deferred financing costs by the Company and its Subsidiaries during such period; in each case after elimination of intercompany accounts among the Company and its Subsidiaries and as determined in accordance with GAAP. "CONSOLIDATED INTANGIBLE ASSETS" means, as at any date, (i) the amount of all write-ups in the book value of any asset resulting from the revaluation thereof and all write-ups in excess of the cost of assets acquired, plus (ii) the amount of all unamortized original issue discount, unamortized debt expense, goodwill, patents, trademarks, service marks, trade names, copyrights, organization and development expense and other intangible assets, in each case as would be taken into account in preparing a consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis as at such date in accordance with GAAP. "CONSOLIDATED NET INCOME" means, for any period, the aggregate net income (or net loss, as the case may be) of the Company and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom, without duplication, (i) gains and losses from the sale or other disposition of assets (other than sales of inventory in the ordinary course) or reserves relating thereto, (ii) items classified as extraordinary or nonrecurring (including, without limitation, any gains from any exchange of debt securities) and -49- 55 gains (but not losses) from discontinued operations, (iii) the income (or loss) of any Joint Venture, except to the extent of the amount of cash dividends or other distributions in respect of Capital Stock therein actually paid during such period to the Company or any of its Subsidiaries by such Joint Venture out of funds legally available therefor (or, in the case of a loss, to the extent such loss is funded by the Company or any such Subsidiary during such period), (iv) except to the extent includable pursuant to clause (iii), the income (or loss) of any other Person accrued or attributable to any period prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or such other Person's Property (or a portion thereof) is acquired by such Person or any of its Restricted Subsidiaries, and (v) non-cash items decreasing or increasing Consolidated Net Income arising out of currency translation effects. "CONSOLIDATED NET WORTH" means Net Worth without giving effect to any purchase accounting adjustments if Consolidated Net Worth is being determined in connection with any merger, consolidation or other acquisition of, or by, the Company or any of its Subsidiaries. "CONSOLIDATED SECURED DEBT" means, collectively, the outstanding principal balance of the Debt described in paragraphs 4C(a)(i) and, (a)(iv) and the outstanding amount of unpaid reimbursement obligations for drawn letters of credit with respect to the Debt described in paragraph 4C(a)(v). "CONSOLIDATED SENIOR DEBT" means, at any time, all Consolidated Debt at such time, other than the then outstanding principal amount of: (i) the 10.25% Notes, (ii) the Second Priority Notes, (iii) the Subsequent Second Priority Notes, (iv) Debt of any Subsidiary of the Company payable to the Company or any Wholly Owned Subsidiary of the Company, and (v) Debt of the Company that is not secured by a Lien or that is junior in right of payment, and subordinate to, the Revolving Notes pursuant to subordination terms in the form of Exhibit K hereto, which Debt matures after the third annual anniversary date of the Closing Day, and has no principal payments scheduled until, a date which is at least six (6) months after the third annual anniversary date of the Closing Day. "CONSOLIDATED TANGIBLE NET WORTH" means, at any time, Consolidated Net Worth at such time, less Consolidated Intangible Assets at such time. "CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of: (i) Consolidated Net Worth at such time, plus (ii) Consolidated Debt. "CONTROL" means (except as otherwise specifically provided herein) the possession, directly or indirectly, of the power to -50- 56 direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing. "CONTROL GROUP" means a controlled group of corporations within the meaning of Section 414(b) of the Code of which the Company is a member, any group of corporations or entities under common control with the Company within the meaning of Section 414(c) of the Code of which the Company is a member or any affiliated service group within the meaning of Section 414(m) of the Code of which the Company is a member. "CURRENCY AGREEMENT" of any Person means any foreign exchange contract, currency swap agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values (as opposed to being used in any way for speculative trading purposes). "CURRENT DEBT" means, with respect to any Person, all Indebtedness of such Person for borrowed money which by its terms or by the terms of any instrument or agreement relating thereto matures on demand or within one year from the date of the creation thereof and is not directly or indirectly renewable or extendible at the option of the debtor to a date more than one year from the date of the creation thereof, provided that Indebtedness for borrowed money outstanding under a revolving credit or similar agreement which obligates the lender or lenders to extend credit over a period of more than one year shall constitute Funded Debt and not Current Debt, even though such Indebtedness by its terms matures on demand or within one year from the date of the creation thereof. "DEBT" shall mean Current Debt and Funded Debt. "DEFAULT" means any event which through the passage of time, the giving of notice or both would mature into an Event of Default. "DOMESTIC SUBSIDIARY" means any Subsidiary of the Company organized under the laws of any state of the United States of America or the District of Columbia. "DPK" means D.P. Kelly & Associates, L.P., a Delaware limited partnership, and its successors and assigns. "ELIGIBLE ACCOUNTS RECEIVABLE" means Accounts of the Company and its Significant Domestic Subsidiaries deemed by Prudential in the exercise of its commercially reasonable judgment to be eligible for inclusion in the calculation of the Borrowing Base. In determining the amount to be so included, the face amount of such Accounts shall be reduced by the amount of all returns, discounts, -51- 57 deductions, claims, credits, charges, or other allowances. Unless otherwise approved in writing by Prudential, no Account shall be deemed to be an Eligible Account Receivable if: (a) it arises out of a sale made by the Company or any of its Significant Domestic Subsidiaries to an Affiliate; or (b) it is unpaid more than 60 days after the original payment due date specified in the related invoice or it is unpaid more than 120 days after the initial date of such invoice, based on the Company's reasonable estimate thereof; or (c) it is from the same account debtor or its Affiliate and fifty percent (50%) or more of all Accounts from that account debtor (and its Affiliates) are ineligible under (b) above; or (d) when aggregated with all other Accounts of an account debtor, the Account exceeds fifteen percent (15%) in face value of all Accounts of the Company and its Significant Domestic Subsidiaries on a consolidated basis then outstanding, to the extent of such excess, unless supported by an irrevocable letter of credit satisfactory to Prudential (as to form, substance and issuer) and assigned to and directly drawable by the Collateral Agent excluding, for purposes of the limitation imposed by this paragraph (d), Accounts of the Account Debtors listed on Schedule 8A; or (e) the account debtor for the Account is a creditor of the Company or any of its Significant Domestic Subsidiaries, has or has asserted a right of setoff, has disputed its liability or made any claim with respect to the Account or any other Account which has not been resolved, to the extent of the amount owed by the Company or any of its Significant Domestic Subsidiaries to the account debtor, the amount of such actual or asserted right of setoff, or the amount of such dispute or claim, as the case may be, unless a reduction has already been made to the amount of the Account as a result of the dispute, claim or assertion of set-off rights pursuant to the first sentence of this definition; or (f) the account debtor is (or its assets are) the subject of an Insolvency Event; or (g) the Account is not payable in Dollars or the account debtor for the Account is located outside the continental United States, unless the Account is supported by an irrevocable letter of credit satisfactory to Prudential (as to form, substance and issuer) or the Account is insured as to collectibility and political risk pursuant to a commercial -52- 58 risk insurance policy acceptable to Prudential (as to form, substance and issuer); or (h) the sale to the account debtor is on a bill-and-hold, guarantied sale, sale-and-return, sale on approval or consignment basis or made pursuant to any other written agreement providing for repurchase or return; or (i) Prudential determines by its own credit analysis that collection of the Account is uncertain or the Account may not be paid; or (j) the account debtor is the United States of America or any department, agency or instrumentality thereof, unless the Company or any of its Significant Domestic Subsidiaries duly assigns its rights to payment of such Account to the Collateral Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727 et seq.); or (k) the goods giving rise to such Account have not been shipped and delivered to, or have been rejected by, the account debtor, or the services giving rise to such Account have not been performed and accepted; or (l) the Account does not comply with all laws, rules and regulations of an arbitrator, court or other governmental authority, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board of Governors of the Federal Reserve System; or (m) the Account is subject to any adverse security deposit, progress payment or other similar advance made by or for the benefit of the applicable account debtor; or (n) it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agent or does not otherwise conform to the representations and warranties contained in the Transaction Documents. In addition to the foregoing, Eligible Accounts Receivable shall include such Accounts for which the Company shall request approval and that Prudential approves in advance, in writing, and in its Permitted Discretion, which approval shall not prevent Prudential from time to time from revoking such approval in the exercise of its Permitted Discretion. "ELIGIBLE INVENTORY" means the aggregate amount of Inventory of the Company and its Significant Domestic Subsidiaries deemed by Prudential in the exercise of its commercially reasonable judgement to be eligible for inclusion in the calculation of the Borrowing Base. In determining the amount to be so included, Inventory shall -53- 59 be valued at the lower of cost or market on a basis consistent with the Company's or the Significant Domestic Subsidiary's current and historical accounting practice. Unless otherwise approved in writing by Prudential, no Inventory shall not be deemed Eligible Inventory if: (a) it is not owned solely by the Company or any of its Significant Domestic Subsidiaries or the Company or any of its Significant Domestic Subsidiaries does not have good, valid and marketable title thereto; or (b) it is not located in the United States; or (c) it is not located on property owned by the Company or any of its Significant Domestic Subsidiaries (all such Inventory, the "Off-Site Inventory") and the aggregate value of the Off-Site Inventory exceeds five percent (5%) of the aggregate value of all of the Inventory of the Company and the Significant Domestic Subsidiaries, unless the lessor or the contract warehouseman or other Person that owns the premises, as the case may be, has executed and delivered to Prudential a Collateral Access Agreement in form and substance acceptable to Prudential and such Inventory is segregated or otherwise separately identifiable from goods of others, if any, stored on such premises; or (d) it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agent, except with respect to Inventory stored at sites described in clause (c) above, for Liens for unpaid rent or normal and customary warehousing charges; or (e) it consists of goods returned or rejected by the Company's or any of the Significant Domestic Subsidiaries' customers or goods in transit to third parties (other than to warehouse sites covered by a Collateral Access Agreement); or (f) it is not first-quality finished goods, work-in-process or raw materials, or it is obsolete or slow moving (unless a reserve has been established with respect to obsolete and slow moving equipment that is satisfactory to Prudential), or does not otherwise conform to the representations and warranties contained in the Transaction Documents. In addition to the foregoing, Eligible Inventory shall include such items of the Company's Inventory for which the Company shall request approval and that Prudential approves in advance, in writing, and in its Permitted Discretion, which approval shall not prevent Prudential from time to time from revoking such approval in the exercise of its Permitted Discretion. "ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, -54- 60 judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder. "ERISA AFFILIATE" shall mean any corporation which is a member of the same controlled group of corporations as the Company within the meaning of section 414(b) of the Code, or any trade or business which is under common control with the Company within the meaning of section 414(c) of the Code. "EVENT OF DEFAULT" means the occurrence of any event described in paragraph 5A. "EXCESS CASH FLOW" means, for any period, the Company's Consolidated Cash Flow, less the sum of (i) consolidated cash interest expense (including the interest portion of any payments associated with Capital Lease Obligations) of the Company during such period, (ii) consolidated capital expenditures of the Company during such period, (iii) principal payments on indebtedness (including the principal portion of any Capital Lease Obligations) of the Company made or paid during such period, (iv) additions (reductions) to Working Capital of the Company during such period, (v) consolidated income tax expense of the Company that is actually paid during such period, and (vi) $15,000,000, all determined on a consolidated basis in accordance with GAAP. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "EXCHANGE AND REGISTRATION RIGHTS AGREEMENT" shall have the meaning specified in paragraph 2A(2)(viii). "EXEMPTED TRANSACTIONS" means (i) transactions with Cargill Financial Services and its Affiliates (collectively, "Cargill") so long as Cargill is not a Broad Affiliate of the Company; (ii) transactions with Reliance Insurance Co. and its Affiliates (collectively, "Reliance") so long as Reliance is not a Broad Affiliate of the Company; (iii) purchases of turkey timers from Volk Enterprises, Inc. and (iv) purchases of chemicals from Weskem-Hall, Inc. -55- 61 "FACILITY FEE" shall have the meaning specified in paragraph 1F. "FIRST PRIORITY EXCHANGE NOTES" shall mean any of the Company's 12% First Priority Senior Secured Exchange Notes due 2000, Series B, and Floating Rate First Priority Senior Secured Notes due 2000, Series D issued under the First Priority Notes Indenture. "FIRST PRIORITY NOTES" shall mean any of the Company's 12% First Priority Senior Secured Notes of the Company due 2000, Series A, and Floating Rate First Priority Senior Secured Notes due 2000, Series C, issued under the First Priority Notes Indenture. "FIRST PRIORITY NOTES INDENTURE" shall mean the Indenture, dated as of the Closing Day, between the Company and Shawmut Bank Connecticut, N.A. under which the First Priority Notes and the First Priority Exchange Notes are being issued, as amended, restated, supplemented or otherwise modified from time to time. "FISCAL YEAR CHANGE" shall have the meaning given to such term in paragraph 4N. "FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic Subsidiary. "FUNDED DEBT" means, with respect to any Person, all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendable at the option of the debtor to a date more than one year (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from, the date of the creation thereof. "GAAP" means, at any date, United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are applicable to the circumstances as of the date of determination. "GECC" means General Electric Capital Corporation, a New York corporation, and its successors and assigns. "GECC INTERCREDITOR AGREEMENT" shall have the meaning specified in paragraph 2A(2)(ii). -56- 62 "GECC LEASE DOCUMENTS" means (i) the Lease Agreement dated as of December 18, 1990 between The Connecticut National Bank (now known as Shawmut Bank Connecticut, National Association) ("TCNB"), Owner Trustee, as lessor and Viskase Corporation, as lessee, (ii) the Participation Agreement dated as of December 18, 1990 among Viskase Corporation, the Company, GECC and TCNB and (iii) the related instruments and agreements with respect thereto, in each case as the same may have heretofore been or may hereinafter be amended, modified, restated, renewed or extended or refinanced from time to time. "GUARANTEE" shall mean, with respect to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or non-furnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guarantee shall be equal to the outstanding principal amount of the obligation guaranteed or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited. "GUARANTY AGREEMENT" and "GUARANTY AGREEMENTS" shall have the meanings specified in paragraph 2A(2)(vi). "HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of any Revolving Loan, any offer to purchase, or any purchase of, shares of Capital Stock of any corporation or equity interests in any other entity, or securities convertible into or representing the beneficial ownership of, or rights to acquire, any such shares or equity interests, if such shares, equity interests, securities or rights are of a class which is publicly traded on any securities exchange or in any over-the-counter market, other than purchases of such shares, equity interests, securities or rights representing less than 5% of the equity interests or beneficial ownership of such corporation or other entity for portfolio -57- 63 investment purposes, and such offer or purchase has not been duly approved by the board of directors of such corporation or the equivalent governing body of such other entity prior to the date on which the Company requests such Revolving Loan. "INDEBTEDNESS" means, with respect to any Person, without duplication, (i) all items (excluding items of contingency reserves or of reserves for deferred income taxes) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as of the date on which Indebtedness is to be determined, (ii) all indebtedness secured by any Lien on any property or asset owned or held by such Person subject thereto, whether or not the indebtedness secured thereby shall have been assumed, (iii) all indebtedness of others with respect to which such Person has become liable by way of a Guarantee (including, without limitation, all obligations of such Person with respect to surety bonds, bank acceptances, and letters of credit and other similar obligations), (iv) all obligations of such Person in respect of Currency Agreements or Interest Rate Agreements, and (v) the maximum fixed repurchase price of any Redeemable Stock. For purposes of the preceding sentence, the maximum fixed repurchase price of any Redeemable Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Stock as if such Redeemable Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to this Agreement; provided, that if such Redeemable Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Stock. "INSOLVENCY EVENT" means, with respect to any Person, the occurrence of any of the following: (a) such Person shall be adjudicated insolvent or bankrupt, or generally fail to pay, or admit in writing its inability to pay, its debts as they become due, (b) the voluntary commencement of any proceeding or the filing of any petition under any bankruptcy, insolvency or similar law, (c) the seeking of dissolution or reorganization or the appointment of a receiver, trustee, custodian or liquidator for it or a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors, (d) the filing of any answer admitting the jurisdiction of the court and the material allegations of an involuntary petition filed against it in any bankruptcy, insolvency or similar proceeding, (e) such Person shall make a general assignment for the benefit of its creditors, or shall consent to, or acquiesce in the appointment of, a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business. Insolvency Event shall also mean, with respect to any Person, the occurrence of any of the following: an involuntary proceeding or involuntary petition shall be commenced or filed against such Person under any bankruptcy, insolvency or similar law seeking the dissolution or reorganization of it or the appointment of a receiver, trustee, -58- 64 custodian or liquidator for it or of a substantial part of its property, assets or business, or any writ, judgment, warrant of attachment, execution or similar process shall be issued or levied against a substantial part of its property, assets or business, and such proceedings or petitions shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded, within 60 days after commencement, filing, or levy, as the case may be, or any order for relief shall be entered in any such proceeding. "INTELLECTUAL PROPERTY SECURITY AGREEMENT" means, collectively, each Intellectual Property Security Agreement, made at any time by the Company or any Subsidiary of the Company, respectively, in favor of the Collateral Agent, as amended, supplemented or modified from time to time. "INTERCREDITOR AGREEMENT" shall have the meaning specified in paragraph 2A(2)(ii). "INTEREST RATE AGREEMENT" of any Person means any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or fixed rate of interest on a notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount and shall include, without limitation, any interest rate swap agreement, interest rate cap, floor or collar agreement, option or futures contract or other similar agreements or arrangements, designed to protect such Persons or any of its Subsidiaries from fluctuations in interest rates (as opposed to being used in any way for speculative trading purposes). "INVENTORY" shall mean "Inventory" as defined in the Security Agreements. "INVESTMENT" means, as to any investing Person, any direct or indirect advance, loan (other than extensions of trade credit on commercially reasonable terms in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person or any of its Subsidiaries in accordance with GAAP) or other extension of credit, guarantee or capital contribution to, or any acquisition by, such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person. In determining the amount of any Investment involving a transfer of Property, such Property shall be valued at its fair market value at the time of such transfer, and such fair market value shall be determined in good faith by the Board of Directors of the investing Person, whose determination in such regard shall be conclusive. -59- 65 "JOINT VENTURE" of a Person means any Person in which the investing Person has a joint or shared equity interest but which is not a Subsidiary of such investing Person. "LETTER OF CREDIT FACILITY AGREEMENT" shall mean the Credit Agreement, dated as of the Closing Day, among the Company, BTCC, as agent for those certain financial institutions party to the Letter of Credit Facility Agreement as "Lenders" from time to time and such "Lenders." "LIBOR BUSINESS DAY" shall mean a day of the year on which dealings are carried on in the London interbank market and banks are open for business in London and not required or authorized to close in New York City. "LIBOR RATE" shall mean, for any Rate Period and for any Revolving Loan outstanding during such Rate Period, the sum of 3.00% plus the Three Month London Interbank Offered Rate at 11:00 A.M. (London time) two LIBOR Business Days prior to Rate Day, for U.S. dollar deposits in the London interbank market as such rate is reported on page 3750 by Telerate - The Financial Information Network published by Telerate Systems Incorporated (Telerate), or its successor company. If Telerate shall cease to report such rates on a regular basis, the LIBOR Rate shall mean, for any Rate Period, the sum of 3.00% plus the rate determined by Prudential to be the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates quoted to Prudential by the Reference Banks two LIBOR Business Days prior to Rate Day, for U.S. Dollar deposits in the London interbank market. "LIEN" means any mortgage, pledge, lien, charge, security interest, conditional sale or other title retention agreement (including, without limitation, any Capital Lease Obligations in the nature thereof) or other encumbrance of any kind or description, including, without limitation, any agreement to give or grant a Lien. "MANAGEMENT AGREEMENT" means the Management Services Agreement dated as of December 4, 1991 between the Company and DPK, as the same was amended and restated by the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Company and DPK and as the same may from time to time, hereafter be amended, modified or restated upon the good faith approval, pursuant to duly adopted resolutions, of a majority of members of the Company's Board of Directors of the Company who are not Affiliates of DPK. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the consolidated financial condition, operations, business or prospects of the Company and its Subsidiaries (taken as a whole), (ii) the ability of the Company or any of its Subsidiaries to perform its obligations under any of the Transaction Documents, or -60- 66 (iii) the validity or enforceability of any of the Transaction Documents. "MATERIAL SUBSIDIARY" means (a) any Subsidiary of the Company if (i) the total assets of such Subsidiary (and its Subsidiaries) exceed 10% of the total assets of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, or (ii) the revenues (or losses, as the case may be) of such Subsidiary (and its Subsidiaries) for the four consecutive fiscal quarters of such Subsidiary most recently ended (determined on a consolidated basis in accordance with GAAP and whether or not such Person was a Subsidiary of the Company during all or any part of the fiscal period of the Company referred to below) exceed an amount equal to 10% of the revenues (or losses, as the case may be) of the Company and its Subsidiaries for the four consecutive fiscal quarters of the Company most recently ended (determined on a consolidated basis in accordance with GAAP), and (b) in any event each of (i) Sandusky Plastics of Delaware, Inc., a Delaware corporation; (ii) Sandusky Plastics, Inc., a Delaware corporation; (iii) Viskase Corporation, a Pennsylvania corporation; (iv) Clear Shield National, Inc., a California corporation; (v) Viskase Holding Corporation, a Delaware corporation; and (vi) Viskase Sales Corporation, a Delaware corporation and (vii) Viskase S.A. "MEMORANDUM" shall mean the Private Placement Memorandum, dated February, 1995, as supplemented by the Supplement to Private Placement Memorandum, dated May 16, 1995, and the Final Supplement to Private Placement Memorandum, dated June 5, 1995, taken as a whole. "MORTGAGE" and "MORTGAGES" shall have the meanings specified in paragraph 2A(2)(iv). "MULTIEMPLOYER PLAN" means any Plan which is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA). "NET WORTH" means as of any date the aggregate amount of the capital, surplus and retained earnings of the Company and its Subsidiaries as would be shown on a consolidated balance sheet of the Company and its Subsidiaries prepared as of such date in accordance with GAAP (and excluding minority interests); provided that capital and surplus attributable to Redeemable Stock and accumulated translation adjustments shall be excluded. "NOTE AGREEMENT" shall mean that certain Note Agreement, of even date herewith, among the Company and the purchasers named therein, under which $160,000,000 of First Priority Notes are issued, as amended, restated, supplemented or otherwise modified from time to time. "OFFICER'S CERTIFICATE" shall mean, with respect to any corporation, a certificate signed in the name of such corporation -61- 67 by an Authorized Officer of such corporation that complies with paragraph 9R. "OPINION OF COUNSEL" means a written opinion that complies with paragraph 9R of this Agreement from legal counsel who is reasonably acceptable to Prudential. Such legal counsel may be an employee of or counsel to the Company. "PENSION BENEFIT GUARANTY CORPORATION" means The Pension Benefit Guaranty Corporation under ERISA (or any successor thereto). "PERCENTAGE OF TOTAL ASSETS TRANSFERRED" means, with respect to each asset Transferred pursuant to clause (d) of paragraph 4F (including assets transferred pursuant to a Transfer by Merger), the ratio (expressed as a percentage) of (i) the greater of such asset's fair market value or the net book value of such assets on the date of Transfer to (ii) the book value of its consolidated assets as of the last day of the fiscal quarter of the Company immediately preceding the day of Transfer. "PERMITTED DISCRETION" means Prudential's good faith judgment concerning the risks of lending to the Company, taking into account (i) the liquidation value of Collateral, the priority of the Collateral Agent's Liens therein, and the time and cost of enforcement of such Liens, and (ii) the perceived accuracy of the Company's financial and Collateral reporting. The burden of establishing lack of good faith shall be on the Company. "PERMITTED LIENS" in respect of any Person shall mean (i) pledges or deposits made by such Person under workers' compensation, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or operating leases to which such Person is a party, or deposits to secure statutory or regulatory obligations of such Person or deposits of cash or U.S. Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (ii) Liens arising by operation of law such as carriers', warehousemen's and mechanics' Liens, in each case arising in the ordinary course of business and with respect to amounts not yet due or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens for taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iv) Liens evidenced by the Capital Lease Obligations under GECC Lease Documents and Liens securing Debt of the Company -62- 68 or its Subsidiaries permitted under paragraph 4C(a)(vi) for refinancing the Debt under the GECC Lease Documents; provided, however, that in connection with any such refinancing any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (v) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its Property which were not incurred in connection with Debt or other extensions of credit and which do not in the aggregate materially adversely affect the value of said Property or materially impair the use of such Property in the operation of the business of such Person; (vi) Liens in favor of the Collateral Agent to secure Debt permitted under paragraphs 4C(a)(i), (iv), (v), and (vii); (vii) Liens existing on the Closing Day and described on Schedule 4D hereto; (viii) Liens arising out of judgments or awards against such Person not giving rise to an Event of Default under paragraph 5A(m) (but without limiting paragraph 5A(p)) with respect to which such Person is diligently prosecuting an appeal or other proceedings for review; (ix) Liens to secure Debt permitted under paragraph 4C(a)(xi); provided, however, that any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (x) Liens to secure Debt permitted under paragraph 4C(a)(xiii) (to the extent such Liens attach prior to or at the time of incurrence of such Debt); (xi) Liens to secure the Debt (if any) permitted under paragraph 4C(a)(iii); provided, however, that (a) the Lien securing such Debt is granted only to the Collateral Agent and made subject to the terms of the Intercreditor Agreement, and (b) the Intercreditor Agreement is amended to the reasonable satisfaction of the Collateral Agent to add the Second Priority Notes Trustee as a party thereto and to provide for such matters incidental thereto as the Collateral Agent may reasonably require; and (xii) Liens securing Debt of Wholly Owned Subsidiaries of the Company to the Company or another such Wholly Owned Subsidiary permitted under paragraph 4C(a)(ix). "PERSON" means any individual, partnership, corporation, limited liability company, venture, joint venture, unincorporated organization, joint-stock company, trust or any government or agency or political subdivision thereof or other entity of any kind. "PLAN" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any member of the Control Group. "PLEDGE AGREEMENT" and "PLEDGE AGREEMENTS" shall have the meanings specified in paragraph 2A(2)(v). -63- 69 "PROPERTY" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other Person. "PRUDENTIAL" shall have the meaning specified in the address block on page one. "PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all of the Voting Stock (or equivalent voting securities or interests) of which is owned by Prudential either directly or through Prudential Affiliates. "PURCHASE MONEY INDEBTEDNESS" means, as to any Person, the Debt of such Person incurred and owing in respect of all or part of the purchase price of Property purchased where such Debt is fully secured by the Property purchased. "QUALIFIED PLAN" means any Plan, other than a Multiemployer Plan, which is intended to meet the qualification requirements of Section 401(a) of the Code. "RATE DAY" shall mean for each Rate Period the first day of such Rate Period; provided, however, that if such day is not a LIBOR Business Day, then the next LIBOR Business Day succeeding the first day of such Rate Period. "RATE PERIOD" shall mean the period during which the LIBOR Rate remains in effect and unchanged. For purposes of this Agreement, the Rate Period shall begin on the first day of each calendar quarter (i.e., January 1, April 1, July 1 and October 1 of each year) and shall end on the last day of each such calendar quarter (i.e., March 31, June 30, September 30 and December 31 of each year); provided, however, that if the first day of any calendar quarter is not a Business Day then the Rate Period otherwise beginning on the first day of such calendar quarter (the "Specified Rate Period") shall begin on the first Business Day of such calendar quarter and the Rate Period immediately preceding the Specified Rate Period shall end on the day immediately preceding such first Business Day. "REDEEMABLE STOCK" means, with respect to any Person, any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable by contract or otherwise, is or upon the happening of an event or the passage of time would be, required to be redeemed or is redeemable at the option of the holder thereof at any time prior to the Stated Maturity of the principal of the First Priority Notes or First Priority Exchange Notes, or, at the option of the holder thereof, is convertible into or exchangeable for debt securities maturing at any time prior to the Stated Maturity of the principal of such Notes. -64- 70 "REFERENCE BANKS" shall mean Morgan Guaranty Trust Company of New York, Citibank, N.A. and Chase Manhattan Bank, N.A. "REGISTRATION RIGHTS AGREEMENT" means the Exchange and Registration Rights Agreement by and between the Company and the Persons party thereto, relating to the First Priority Notes and the First Priority Exchange Notes and dated the Closing Day, as amended, supplemented or otherwise modified from time to time. "REGULATION S" means Regulation S under the Securities Act. "REQUIRED HOLDER(S)" shall mean the holder or holders of at least 51% of the aggregate principal amount of the Revolving Notes from time to time outstanding. "RESPONSIBLE OFFICER" shall mean, with respect to any corporation, the chief executive officer, chief operating officer, chief financial officer, treasurer or chief accounting officer of such corporation or any other officer of the corporation involved principally in its financial administration or its controllership function. "RESTRICTED DEBT" means all Consolidated Debt other than Consolidated Senior Debt. "RESTRICTED INVESTMENT" shall have the meaning given to such term in paragraph 4B(a). "RESTRICTED PAYMENTS" shall have the meaning given to such term in paragraph 4B(a). "REVOLVER CANCELLATION DATE" shall have the meaning specified in paragraph 1G. "REVOLVING COMMITMENT" shall have the meaning specified in paragraph 1A. "REVOLVING LOAN" and "REVOLVING LOANS" shall have the meanings specified in paragraph 1A. "REVOLVING LOAN REQUEST" shall mean the Revolving Loan Request in the form of Exhibit J. "REVOLVING LOANS TERMINATION DATE" shall mean the earlier to occur of (i) the date on which all First Priority Notes and First Priority Exchange Notes held by Prudential and any Prudential Affiliate are redeemed, purchased by the Company or any Affiliate, defeased or prepaid in their entirety or required to be so redeemed, purchased, defeased or prepaid, including, without limitation, by automatic acceleration or demand for payment, (ii) the third anniversary of the Closing Day, (iii) the Revolver Cancellation Date and (iv) the date on which the Required Holders -65- 71 require the repurchase of the Revolving Notes pursuant to paragraph 3I. "REVOLVING NOTE" and "REVOLVING NOTES" shall have the meanings specified in paragraph 1B. "RULE 144" means Rule 144 promulgated by the SEC under the Securities Act and as in effect from time to time. "RULE 144A" means Rule 144A promulgated by the SEC under the Securities Act and as in effect from time to time. "SALE AND LEASEBACK TRANSACTION" means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold by such Person or a Subsidiary of such Person and thereafter leased back from the purchaser thereof by such Person or one of the Subsidiaries of such Person. "SEC" means the Securities and Exchange Commission, as from time to time constituted, or any similar agency then having jurisdiction to enforce the Securities Act. "SECOND PRIORITY NOTES" means the debt securities which may be issued by the Company under an indenture (the "Second Priority Notes Indenture") pursuant to the 10.25% Note Exchange. "SECOND PRIORITY NOTES INDENTURE" has the meaning given to such term in the definition of Second Priority Notes. "SECOND PRIORITY NOTES TRUSTEE" means the trustee under the Second Priority Notes Indenture and Subsequent Second Priority Notes, respectively (in such capacity) and each successor thereto in such capacity. "SECURED PARTIES" shall have the meaning ascribed to such term in the Intercreditor Agreement. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "SECURITY AGREEMENT" and "SECURITY AGREEMENTS" shall have the meanings specified in paragraph 2A(2)(iii). "SIGNIFICANT DOMESTIC SUBSIDIARY" means each Domestic Subsidiary that, at any time, is a Material Subsidiary. "STATED MATURITY" when used with respect to any First Priority Note or First Priority Exchange Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable. -66- 72 "STIPULATED LOSS VALUE" means the Stipulated Loss Value, as defined in the GECC Lease Documents (as such GECC Lease Documents are in effect on the Closing Day.) "SUBSEQUENT SECOND PRIORITY NOTES" means any and all debt securities issued by the Company under an indenture in exchange for Second Priority Notes and having terms identical to the Second Priority Notes and otherwise being the same as the Second Priority Notes except that such debt securities are registered under the Securities Act. "SUBSIDIARY" means, with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. "10.25% NOTE EXCHANGE" means an exchange by the Company pursuant to which the Company issues Second Priority Notes in an aggregate face amount of not more than $50,000,000 in exchange for 10.25% Notes pursuant to an exchange ratio (based on aggregate face amount) of no greater than 1:1. "10.25% NOTES" means, collectively, the 10.25% Senior Notes due 2001 issued by the Company pursuant to the 10.25% Notes Indenture. "10.25% NOTES INDENTURE" means that certain Indenture, dated as of December 31, 1993, between the Company and Bankers Trust Company, as trustee, as amended, supplemented or otherwise modified from time to time. "TERMINATION EVENT" means any one or more of the following event or events which, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect: (i) A reportable event as defined in Section 4043 of ERISA and regulations issued thereunder for which the 30 day notice requirement has not been waived occurs with respect to any Title IV Plan other than those described in Sections 4043(c)(9) and (11) of ERISA (or Pension Benefit Guaranty Corporation Regulations Section 2615.22 or 2615.23); (ii) There occurs (a) the complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) by the Company -67- 73 or any member of the Control Group from any Multiemployer Plan, or (b) the receipt by the Company or any member of the Control Group of a demand from any Multiemployer Plan for withdrawal liability (as defined in Section 4201 of ERISA); (iii) The Company or any member of the Control Group files, or is reasonably expected to file, a notice of intent to terminate any Title IV Plan or adopts a plan amendment that constitutes a termination of any Title IV Plan, under Section 4041 of ERISA; (iv) There occurs any action causing the termination of any Multiemployer Plan under Section 4041A of ERISA; (v) Any other event or condition occurs that is reasonably expected to constitute grounds under Sections 4041A or 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or any Multiemployer Plan; (vi) The Pension Benefit Guaranty Corporation shall have notified the Company or any member of the Control Group that a Plan may become a subject of any proceedings under Section 4042 of ERISA to terminate or appoint a trustee to administer the Plan, or any such proceedings are instituted; (vii) An accumulated funding deficiency (as defined in Section 302 of ERISA or Section 412 of the Code) exists with respect to any Title IV Plan on the last day of any plan year; (viii) A waiver of the minimum funding standards of ERISA or the Code, or any extension of any amortization period related to such waiver, is sought by or granted to, the Company or any member of the Control Group, under Section 412 of the Code; (ix) The Company or any member of the Control Group shall have incurred, or is reasonably expected to incur, any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans; (x) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of any Title IV Plan, as determined by such Plan's independent actuaries. (xi) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of all Title IV Plans, as determined by such Plan's independent actuaries; or (xii) The Company or any member of the Control Group establishes or amends any employee welfare benefit plan (as -68- 74 defined in Section 3(1) of ERISA) that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any member of the Control Group. "TITLE IV PLAN" means any Qualified Plan that is a defined benefit plan (as defined in Section 3(35) of ERISA) and is subject to Title IV of ERISA. "TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the Revolving Notes, the Guaranty Agreements, the Security Agreements, the Pledge Agreements, the Mortgages, the Intercreditor Agreement, the GECC Intercreditor Agreement and all other agreements, instruments and documents relating in any way to the aforementioned agreements, instruments and documents. "TRANSFER" means any sale, exchange, conveyance, lease, transfer or other disposition. "TRANSFER BY MERGER" means, with respect to any Subsidiary of the Company, a merger or consolidation of such Subsidiary with another Person such that after giving effect thereto the surviving entity is no longer a Subsidiary. "TRANSFEREE" shall mean any direct or indirect transferee of all or any part of any Revolving Note. "UCC" means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of Illinois. "U.S. GOVERNMENT OBLIGATIONS" means (i) any direct non-callable obligation of, or obligation guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged and which is not callable at the issuer's option, and (ii) any depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "VISKASE, S.A." shall mean Viskase, S.A., a French corporation. "VOTING SECURITIES" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, under ordinary circumstances and in the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). -69- 75 "WHOLLY OWNED SUBSIDIARY" of a Person means any Subsidiary of such Person 100% of the total Capital Stock of which, other than directors' qualifying shares, is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person. "WORKING CAPITAL" means, current assets less current liabilities where current assets equals accounts receivable, inventory and other current assets (excluding cash and cash equivalents) and current liabilities equals accounts payable and accrued liabilities (both excluding accrued interest payable, accrued income taxes payable and any payables related to capital expenditures), all as reflected on the Company's consolidated financial statements prepared in accordance with GAAP. 8A. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in this Agreement to "generally accepted accounting principles" shall be deemed to refer to generally accepted accounting principles in effect in the United States at the time of application thereof. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with generally accepted accounting principles, applied on a basis consistent with the most recent audited consolidated financial statements of the Company and its Subsidiaries delivered to Prudential. If subsequent to the date hereof there should be any change in generally accepted accounting principles which materially affects the financial covenants contained in this Agreement, then, at the request of Prudential or the Company, Prudential and the Company will negotiate in good faith to cause this Agreement to be amended to revise such covenants so as equitably to reflect such changes to the end that the criteria for evaluating the Company's financial condition and performance will be the same after such changes as they were before such changes. 9. MISCELLANEOUS. 9A. NOTE PAYMENTS. The Company agrees that, so long as Prudential shall hold any Revolving Note, it will make payments of principal thereof and interest thereon, and Facility Fees which comply with the terms of this Agreement, by wire transfer of immediately available funds for credit to (i) the account or accounts as specified in the Lender Schedule attached hereto or (ii) such other account or accounts in the United States as Prudential may designate in writing, notwithstanding any contrary provision herein or in any Revolving Note with respect to the place of payment. Each holder of a Revolving Note agrees that, before disposing of any Revolving Note, it will make a notation thereon (or on a schedule attached thereto) of the date to which interest thereon has been paid. The Company agrees to afford the benefits of this paragraph 9A to any Transferee which shall have made the same agreement as you have made in this paragraph 9A. -70- 76 9B. EXPENSES. The Company agrees, whether or not the transactions contemplated hereby shall be consummated, to pay, and save Prudential and any Transferee harmless against liability for the payment of, all out-of-pocket expenses arising in connection with such transactions, including (i) all document production and duplication charges and the fees and expenses of Prudential's special counsel referred to in paragraph 2A(5) hereof in connection with the negotiation, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby and all document production and duplication charges and fees of any special counsel engaged by Prudential or any Transferee in connection with any subsequent proposed modification of, or proposed consent under, this Agreement and the other Transaction Documents, whether or not such proposed modification shall be effected or proposed consent granted, (ii) the costs and expenses, including attorneys' fees, incurred by Prudential or any Transferee in enforcing (or determining whether or how to enforce or in directing the Collateral Agent whether or how to enforce) any rights under this Agreement or the other Transaction Documents (including without limitation to protect, collect, lease, sell, take possession of, release or liquidate any of the Collateral) or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the other Transaction Documents or the transactions contemplated hereby, thereby or by reason of Prudential's or any Transferee's having acquired any Revolving Note, including, without limitation, costs and expenses incurred in any bankruptcy case, but excluding any subpoena, legal process or informal investigation demand issued in connection with an investigation of the practices of Prudential or such Transferee in general, (iii) the costs and expenses, including attorney's fees, of preparing, recording and filing all financing statements, instruments or other documents to create, perfect and totally preserve and protect the Liens granted in the Collateral Documents, and (iv) the fees and expenses of the Collateral Agent and its counsel. The obligations of the Company under this paragraph 9B shall survive the transfer of any Revolving Note or portion thereof or interest therein by Prudential or any Transferee and the payment of any Revolving Note. 9C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Company shall obtain the written consent to such amendment, action or omission to act, of the Required Holder(s) of the Revolving Notes except that, without the written consent of the holders of all of the Revolving Notes at the time outstanding (i) the Revolving Notes may not be amended or the provisions thereof waived to change the maturity thereof, to change or affect the principal thereof, or to change or affect the rate or time of payment of interest, fees or other amounts payable with respect to the Revolving Notes, (ii) no amendment to or waiver of the provisions of this Agreement shall change or affect the provisions of paragraph 5A or this paragraph 9C insofar as such provisions relate to proportions of the principal amount of the Revolving Notes, or -71- 77 the rights of any individual holder of Revolving Notes, required with respect to any declaration of Revolving Notes to be due and payable or with respect to any consent, and (iii) the provisions of paragraph 1 and 2B may not be amended or waived. Each holder of any Revolving Note at the time or thereafter outstanding shall be bound by any consent authorized by this paragraph 9C, whether or not such Revolving Note shall have been marked to indicate such consent, but any Revolving Notes issued thereafter may bear a notation referring to any such consent. No course of dealing between the Company and the holder of any Revolving Note nor any delay in exercising any rights hereunder or under any Revolving Note shall operate as a waiver of any rights of any holder of such Revolving Note. As used herein and in the Revolving Notes, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 9D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF REVOLVING NOTES; LOST NOTES. The Revolving Notes are issuable as registered notes without coupons in denominations of at least $100,000, except as may be necessary to reflect any principal amount not evenly divisible by $100,000. The Company shall keep at its principal office a register in which the Company shall provide for the registration of Revolving Notes and of transfers of Revolving Notes. Upon surrender for registration of transfer of any Revolving Note at the principal office of the Company, the Company shall, at its expense, execute and deliver one or more new Revolving Notes of like tenor and of a like aggregate principal amount, registered in the name of such transferee or transferees. At the option of the holder of any Revolving Note, such Revolving Note may be exchanged for other Revolving Notes of like tenor and of any authorized denominations, of a like aggregate principal amount, upon surrender of the Revolving Note to be exchanged at the principal office of the Company. Whenever any Revolving Notes are so surrendered for registration or transfer or exchange, the Company shall, at its expense, execute and deliver the Revolving Notes which the holder making the exchange is entitled to receive. Every Revolving Note surrendered for exchange shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Revolving Note or such holder's attorney duly authorized in writing. Any Revolving Note or Revolving Notes issued in exchange for any Revolving Note or upon transfer thereof shall carry the rights to unpaid interest and interest to accrue which were carried by the Revolving Note so exchanged or transferred, so that neither gain nor loss of interest shall result from any such transfer or exchange. Upon receipt of written notice from the holder of any Revolving Note of the loss, theft, destruction or mutilation of such Revolving Note and, in the case of any such loss, theft or destruction, upon receipt of such holder's unsecured indemnity agreement, or in the case of any such mutilation upon surrender and cancellation of such Revolving Note, the Company will make and deliver a new Revolving Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Revolving Note. -72- 78 9E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment for registration of transfer, the Company may treat the Person in whose name any Revolving Note is registered as the owner and holder of such Revolving Note for the purpose of receiving payment of principal of and interest on such Revolving Note and for all other purposes whatsoever, whether or not such Revolving Note shall be overdue, and the Company shall not be affected by notice to the contrary. The holder of any Revolving Note may from time to time grant participations in all or any part of such Revolving Note to any Person on such terms and conditions as may be determined by such holder in its sole and absolute discretion, provided that any such participation shall be in a principal amount of at least $100,000 and that such holder retains the right, in its discretion, to give consents hereunder (except with respect to matters referred to in clauses (i), (ii) and (iii) of paragraph 9C). 9F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties of the Company or Prudential contained herein or made in writing by or on behalf of the Company in connection herewith shall survive the execution and delivery of this Agreement and the Revolving Notes, the transfer by Prudential of any Revolving Note or portion thereof or interest therein and the payment of any Revolving Note, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of Prudential or any Transferee. Subject to the preceding sentence, this Agreement, the Revolving Notes and the other Transaction Documents embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. 9G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Agreement and the other Transaction Documents contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not; provided, however, that the Company may not assign its rights or obligations hereunder to any Person. 9H. NOTICES. All written communications provided for hereunder shall be sent by first class mail or telegraphic notice or nationwide overnight delivery service (with charges prepaid) or by hand delivery or telecopy and (i) if to Prudential, addressed as specified for such communications in the Lender Schedule attached hereto or at such other address as Prudential shall have specified to the Company in writing, (ii) if to any other holder of any Revolving Note, addressed to such other holder at such address as such other holder shall have specified to the Company in writing or, if any such other holder shall not have so specified an address to the Company, then addressed to such other holder in care of the last holder of such Revolving Note which shall have so specified an address to the Company, and (iii) if to the Company, addressed to it at 701 Harger Road, Suite 190, Oak Brook, Illinois 60521, -73- 79 Attention: General Counsel, or if applicable to the facsimile number (708) 575-2401 or at such other address or facsimile number as the Company shall have specified to the holder of each Revolving Note in writing. 9I. SATISFACTION REQUIREMENT. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satisfactory to Prudential or to the Required Holder(s), the determination of such satisfaction shall be made by Prudential or the Required Holder(s), as the case may be, in the sole and exclusive judgment (exercised in good faith) of the Person or Persons making such determination. 9J. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 9K. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of a Default or an Event of Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by a holder or the holders of the Revolving Notes to prohibit (through equitable action or otherwise) the taking of any action by the Company or a Subsidiary of the Company which would result in any Event of Default or Default. 9L. BINDING AGREEMENT. When this Agreement is executed and delivered by the Company and Prudential, it shall become a binding agreement between the Company and Prudential. 9M. SEVERABILITY. Any provision of this Agreement or the Revolving Notes which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9N. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 9O. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be an original and constitute one and the same agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 9P. DISCLOSURE TO OTHER PERSONS. Prudential agrees to use its best efforts to hold in confidence and not disclose any -74- 80 Confidential Information; provided that nothing herein shall prevent Prudential from delivering or disclosing (and the Company acknowledges that Prudential may deliver or disclose) any financial statements and other documents delivered to it, and any other information disclosed to it (including, but not limited to, Confidential Information), by or on behalf of the Company or any Subsidiary in connection with or pursuant to this Agreement or any other Transaction Document to (i) its directors, officers, employees, agents and professional consultants, (ii) any other holder of any Revolving Note, (iii) any Person to which it offers to sell any Revolving Note or any part thereof, (iv) any Person to which it sells or offers to sell a participation in all or any part of any Revolving Note, (v) any Person from which it offers to purchase any security of the Company, (vi) any federal or state regulatory authority having jurisdiction over it, (vii) the National Association of Insurance Commissioners or any similar organization or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (a) to effect compliance with any law, rule, regulation or order applicable to Prudential, (b) in response to any subpoena or other legal process, (c) in connection with any litigation to which it is a party or (d) in order to protect its investment in any Revolving Note; provided, however, that no Confidential Information shall be disclosed to any Person described in clause (ii), (iii), (iv) or (v) unless such Person has agreed to the provisions of this paragraph 9P. "CONFIDENTIAL INFORMATION" shall mean, with respect to Prudential, any written information delivered or made available by or on behalf of the Company or any Subsidiary to Prudential pursuant to this Agreement or any Collateral Document which is clearly marked or labeled as being confidential information, but in no event shall include information (i) which was publicly known or otherwise known to Prudential at the time of disclosure, (ii) which subsequently becomes publicly known through no act or omission by Prudential, or (iii) which otherwise becomes known to Prudential, other than through disclosure by or on behalf of the Company or any Subsidiary. 9Q. JURISDICTION, SERVICE OF PROCESS. The Company irrevocably agrees that any suit, action or proceeding against the Company with respect to this Agreement or any Transaction Document may be brought in the courts of New York County in the State of New York or in the U.S. District Court for the Southern District of New York, and the Company accepts for itself, generally and unconditionally, and hereby submits to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action or proceeding. The Company hereby waives personal service of any and all process upon it and irrevocably agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in any such court may be made upon the Person to whom notices to the Company may be sent under paragraph 9H hereof, and hereby irrevocably appoints such Person as its agent in its name, place and stead to accept on the Company's behalf such service of any and all such writs, process and summonses and the Company hereby irrevocably authorizes and directs such Person to -75- 81 accept such service on its behalf, and agrees that the failure of such Person to give any notice of any such services of process to the Company shall not impair or affect the validity of such service or of any judgment based upon same. The Company further irrevocably consents to the service of process in any suit, action or proceeding in said courts by the mailing thereof by Prudential or any holder of any Revolving Note by registered or certified mail, postage prepaid, to the Company at its address given in paragraph 9H hereof. The foregoing shall not, however, limit the right of Prudential or any holder of any Revolving Note to serve process in any other manner permitted by law or to commence any suit, action or proceeding or to obtain execution of judgment in any appropriate jurisdiction. Without limiting the foregoing, the Company further agrees that Prudential or any holder of any Revolving Note may at its option submit any dispute which may arise in connection with this Agreement or any Transaction Document to any other court having jurisdiction over the Company's property. The Company irrevocably waives and releases any defense or objection which it may now or hereafter have relating to the institution of any suit, action or proceeding arising out of or relating to this Agreement or of any Transaction Document brought in the courts of New York County in the State of New York or the U.S. District Court for the Southern District of New York, including, without limitation, all defenses or objections relating to service of process, personal jurisdiction and the laying of venue, and the Company further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. -76- 82 Very Truly Yours, ENVIRODYNE INDUSTRIES, INC. By: ______________________________ Its: _____________________________ The foregoing Agreement is hereby accepted as of the date first above written. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: _________________________ Title: _____________________ 83 LENDER SCHEDULE ENVIRODYNE INDUSTRIES, INC.
Aggregate Face Amount of Revolving Note Notes Denominations ---------- ------------- THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $20,000,000 $20,000,000
(1) All payments on account of Revolving Notes held by such lender shall be made by wire transfer of immediately available funds for credit to: Account No. 050-54-526 Morgan Guaranty Trust Company of New York 23 Wall Street New York, New York 10015 (ABA No.: 021-000-238) Each such wire transfer shall set forth the name of the Company, a reference to "Senior Secured Revolving Note due June 20, 1998, Security No. !INV5116!", and the due date and application (as among principal, interest and facility fees) of the payment being made. (2) Address for all notices relating to payments: The Prudential Insurance Company of America c/o Prudential Capital Group Four Gateway Center 100 Mulberry Street Newark, New Jersey 07102 Attention: Investment Administration Unit Telecopy: (201) 802-7551 84 (3) Address for all other communications and notices (exclusive of requests for Revolving Loans, the address for which appears on the Information Schedule): The Prudential Insurance Company of America c/o Prudential Capital Group Two Prudential Plaza Suite 5600 Chicago, Illinois 60601 Attention: Managing Director Telecopy: (312) 540-4222 (4) Recipient of telephonic prepayment notices: Manager, Asset Management Unit Telephone: (201) 802-6429 Telecopy: (201) 802-7551 (5) Tax Identification No.: 22-1211670 85 INFORMATION SCHEDULE Address for The Prudential Insurance Company of America The Prudential Insurance Company of America c/o Prudential Capital Group Two Prudential Plaza Suite 5600 Chicago, Illinois 60601 Authorized Officers of the Company Name Title ---- ----- Gordon S. Donovan Treasurer J.S. Corcoran Executive Vice President and Chief Financial Officer Stephen M. Schuster Vice President 86 EXHIBIT A [FORM OF REVOLVING NOTE] ENVIRODYNE INDUSTRIES, INC. SENIOR SECURED REVOLVING NOTE No. _____ [Date] $________ FOR VALUE RECEIVED, the undersigned, Envirodyne Industries, Inc. (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to The Prudential Insurance Company of America (the "Lender"), or registered assigns, the principal sum TWENTY MILLION DOLLARS ($20,000,000), or, if less, the aggregate principal amount of all Revolving Loans made by Lender to the Company pursuant to the Agreement referred to below, on or before the Revolving Loans Termination Date. The Company also promises to pay to Lender interest for any Rate Period, computed on the basis of actual days outstanding during such Rate Period and on the basis of a year of 360 days, on the first Business Day of the following Rate Period, on the unpaid principal balance outstanding hereunder, (i) from the date hereof until the principal hereof shall have become due and payable (whether by acceleration or otherwise) at the rate per annum specified in the Agreement, such interest rate to change when and as provided therein, and (ii) after such date until paid at a rate per annum which shall be 2.00% per annum in excess of the rate per annum specified in the foregoing clause (i). Payments of principal of, interest on and any fees payable with respect to this Note are to be made at the main office of Morgan Guaranty Trust Company of New York in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America. This Note is the Revolving Note (herein called the "Note") issued pursuant to a Revolving Credit Agreement, dated as of June __, 1995 (as such Revolving Credit Agreement is amended, supplemented or otherwise modified, the "Agreement"), between the Company and The Prudential Insurance Company of America and is entitled to the benefits thereof. Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Agreement. This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for 87 registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note is secured by certain properties and assets of the Company and its Subsidiaries as set forth in the Collateral Documents and is guaranteed by the Guaranty Agreement. As provided in the Agreement, this Note is subject to mandatory and optional prepayment, in whole or from time to time in part, on the terms specified in the Agreement. In case an Event of Default shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement. THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. ENVIRODYNE INDUSTRIES, INC. By:______________________________ Title: 88 EXHIBIT J [FORM OF REVOLVING LOAN REQUEST] [Date] Manager, Investment Operations Group The Prudential Insurance Company of America 12 Gateway Center 3 Newark, New Jersey 07102 Dear Sir or Madam: The undersigned, Envirodyne Industries, Inc., a Delaware corporation (the "Company"), refers to the Revolving Credit Agreement, dated as of June __, 1995 (as amended, restated, modified or supplemented from time to time, the "Agreement", the terms defined therein being used herein as therein defined), between you and the Company, and hereby requests pursuant to paragraph 1E of the Agreement a Revolving Loan as follows: (i) The LIBOR Business Day of the proposed Revolving Loan is _________________, 19____. (ii) The aggregate amount of the proposed Revolving Loan is $________________. The undersigned hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the date of the proposed Revolving Loan and in connection therewith represents and warrants to you as follows: (A) the representations and warranties contained in paragraph 6 of the Agreement and in the other Transaction Documents are true and correct on and as of the date hereof and will be true and correct upon giving effect to the proposed Revolving Loan and the application of proceeds therefrom, in each case as though made on and as of such date; (B) no event has occurred and is continuing, or would result from such proposed Revolving Loan or from the application of the proceeds therefrom, which does or would constitute a Default or Event of Default; (C) upon giving effect to the Revolving Loan requested herein, the aggregate amount of outstanding Revolving Loans will not exceed the lesser of (i) the Revolving Commitment or (ii) the Borrowing Base specified in the certificate most recently delivered pursuant to paragraph 2A(8) or 3A of the Agreement, as the case may be; and (D) none of the proceeds of the Revolving Loan requested herein will be used to finance directly or indirectly a Hostile Tender Offer. Very truly yours, ENVIRODYNE INDUSTRIES, INC. By:___________________________ Title:________________________ EX-10.13 22 CREDIT AGREEMENT DATED JUNE 20, 1995 1 EXHIBIT 10.13 ================================================================================ CREDIT AGREEMENT $28,000,000 among ENVIRODYNE INDUSTRIES, INC. as Borrower, EACH OF THE FINANCIAL INSTITUTIONS INITIALLY A SIGNATORY HERETO, TOGETHER WITH THOSE ASSIGNEES PURSUANT TO SECTION 11.8 HEREOF, as Lenders, and BT COMMERCIAL CORPORATION, as Agent DATED AS OF JUNE 20, 1995 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 General Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 Other Terms; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE 2. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.1 Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.2 Terms of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.3 Notice of Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.4 Lenders' Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.5 Payments of Amounts Drawn Under Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.6 Payment by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.7 Nature of Issuing Bank's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 2.8 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.9 Agent's Execution of Applications and Other Issuing Bank Documentation; Reliance on Credit Agreement by Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.10 Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE 3. REVOLVING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.2 Borrowing of Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3.3 Notice of Request for Lender Advances . . . . . . . . . . . . . . . . . . . . . . . . 34 3.4 Periodic Settlement of Agent Advances; Interest and Fees; Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.5 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.6 Defaulting Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.1 Interest on Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.2 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.3 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.4 Interest After Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.6 Mandatory Payment; Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . 38 4.7 Maintenance of Loan Account; Statements of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.8 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.9 Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.10 Distribution and Application of Collections and other Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.11 Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 5.1 Conditions Precedent to Initial Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 5.2 Conditions Precedent to all Letters of
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Page ---- Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 ARTICLE 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6.2 Power and Authority; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . 43 6.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.4 Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 6.5 Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 6.6 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 6.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 6.8 Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . 45 6.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 6.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 6.11 Governmental Consent and Other Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 6.12 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 6.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 6.14 Regulatory Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 6.15 Permits and Other Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . 47 6.16 Absence of Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 6.17 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 ARTICLE 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 7.1 Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 7.2 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 7.3 Notification Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 7.4 Corporate Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . 52 7.5 Books and Records; Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 52 7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 7.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 7.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 7.9 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 7.10 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 7.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 ARTICLE 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 8.1 Certain Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 8.2 Limitation on Restricted Payments and Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 8.3 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 8.4 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 8.6 Limitation on Certain Asset Sales and Subsidiary Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 8.7 Limitation on Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 8.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 8.9 Limitations on the Sale of Stock and Debt of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 8.10 Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 66 8.11 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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Page ---- 8.12 Pension Plan Funding Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . 66 8.13 Limitation on Issuance and Sale of Capital Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.14 Limitation on Fiscal Year Changes . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 9.2 Acceleration, Termination of Commitments and Cash Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 9.3 Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 9.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 9.5 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 9.6 Application of Proceeds; Surplus; Deficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 ARTICLE 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 10.1 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 10.2 Nature of Duties of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 10.3 Lack of Reliance on Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 10.4 Certain Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.5 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.6 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.7 BTCC in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.8 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 10.9 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 10.10 Actions with Respect to Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 74 10.11 Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 ARTICLE 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.1 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.2 SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.3 SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.4 JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.5 LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 11.6 Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 11.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 11.8 Assignments and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 11.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 11.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 11.11 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 11.12 Counterparts and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 79 11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 11.14 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 11.15 Entire Agreement; Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 80
iii 5 ANNEXES Annex I - List of Lenders and Commitment Amounts
EXHIBITS Exhibit A - Form of Borrowing Base Certificate Exhibit B - Form of Collateral Access Agreement Exhibit C - Form of Guaranty Agreement Exhibit D - Form of Intellectual Property Security Agreement Exhibit E - Form of Mortgage Exhibit F - Form of Pledge Agreement Exhibit G - Form of Revolving Note Exhibit H - Form of Security Agreement Exhibit I - Form of Letter of Credit Request Exhibit J - Form of Auditors' Privity Letter Exhibit K - Form of Compliance Certificate Exhibit L - Form of Assignment and Assumption Agreement SCHEDULES Schedule A - Closing Document List Schedule B - Disclosure Schedule Schedule C - Permitted Account Concentrations Schedule 8.2 - Permitted Investments Schedule 8.3 - Permitted Debt Schedule 8.4 - Permitted Liens Schedule 8.7 - Permitted Payment Restrictions
iv 6 THIS CREDIT AGREEMENT is entered into as of June 20, 1995, among Envirodyne Industries, Inc., a Delaware corporation (the "Borrower"), each financial institution identified on Annex I (together with its successors and assigns, a "Lender"), and BT COMMERCIAL CORPORATION ("BTCC"), acting in its capacity as agent for the Lenders (the "Agent"). ARTICLE 1. DEFINITIONS. 1.1 General Definitions. Accounts means "Accounts" as defined in the Security Agreements. Acquired Debt means Debt of a Person existing on or prior to the time at which such Person became a Subsidiary and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary. Affiliate of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with such specified Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Securities of such specified Person, or (iii) of which 10% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. Agent Advances has the meaning set forth in Section 3.2. Assignment and Assumption Agreement has the meaning set forth in Section 11.8. Auditors means a nationally recognized firm of independent public accountants selected by the Borrower and satisfactory to the Agent in its sole discretion. For purposes of this Credit Agreement, the firm of Coopers & Lybrand shall be deemed to be satisfactory to the Agent. Average Life means, as of any date, with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (x) the numbers of years from such date to the dates of each successive scheduled principal payment (including any sinking fund or mandatory redemption payment requirements) of such debt security multiplied by (y) the amount of such principal payment by (ii) the sum of all such principal payments. Banks means, collectively, Bank of America Illinois, Citibank International PLC and Citicorp North America, Inc., as agents under the Credit Agreement dated December 31, 1993. Borrower means Envirodyne Industries, Inc. 7 Borrowing Base means the sum of: (A) ninety percent (90%) of Eligible Accounts Receivable, plus (B) sixty-five percent (65%) of Eligible Inventory, plus (C) cash held by the Collateral Agent in the Cash Collateral Account, minus (D) the aggregate amount of reserves, if any, established by the Agent. The Agent, in the exercise of its Permitted Discretion, may (i) establish and increase or decrease reserves against Eligible Accounts Receivable and Eligible Inventory and (ii) impose additional restrictions (or eliminate the same) to the standards of eligibility set forth in the definitions of "Eligible Accounts Receivable" and "Eligible Inventory." Borrowing Base Certificate means the certificate of the Borrower concerning the Borrowing Base to be provided under Section 7.2, substantially in the form of Exhibit A. Broad Affiliate of any specified Person means any other Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such specified Person, (ii) which beneficially owns or holds 25% or more of any class of the Voting Securities of such specified Person, or (iii) of which 25% or more of the Voting Securities is beneficially owned or held by such specified Person or by a Subsidiary of such specified Person. Business Day means any day that is not a Saturday, Sunday or a day on which commercial banks in Chicago, Illinois or New York, New York are required or permitted by law to be closed. Capital Lease Obligation means, at any time, the amount of the liability with respect to a lease that would be required at such time to be capitalized on a balance sheet of such Person prepared in accordance with GAAP. Capital Stock in any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. Cash Collateral Account means the "Special Cash Collateral Account" created pursuant to Section 5(b) of the Collateral Agency Agreement. 2 8 Cash Equivalents means: (i) debt instruments, with maturities of one year or less from the date of acquisition, issued by the government of the United States of America or any agency thereof (if fully guaranteed or insured by the government of the United States of America), (ii) certificates of deposit, with maturities of one year or less from the date of acquisition, of any commercial bank incorporated under the laws of the United States of America having a combined capital, surplus and undivided profits of not less than $100,000,000, (iii) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., and (iv) tax exempt floating rate tender bonds, as to which payments of principal, interest and other charges may be made at the option of the holder upon not more than one week's notice which are payable upon tender or any default from the proceeds of an unconditional and irrevocable letter of credit issued by a United States office of any commercial bank all of whose long-term debt securities are rated at least AA by Standard & Poor's Corporation or Aa by Moody's Investors Service, Inc. Change of Control means the occurrence of any of the following events (whether or not approved by the Board of Directors of the Borrower or otherwise permitted by the terms of this Credit Agreement): (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), or any Affiliate of any such person who is or becomes a "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Common Stock of the Borrower or such other amount of Voting Securities to provide the ability to elect, directly or indirectly, a majority of the members of the Board of Directors of the Borrower; (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new or replacement directors whose election by such Board or whose nomination for election by the shareholders of the Borrower was approved by a vote of a majority of the directors of the Borrower then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office; (iii) any direct or indirect Transfer (in one transaction or a series of related transactions) of all or substantially all of the consolidated assets of the Borrower and its Subsidiaries to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or any Affiliate of any such person; (iv) the approval by the Borrower or its shareholders of any plan of liquidation; or (v) any other event constituting a "change of control" in respect of the 10.25% Notes, the Prudential Revolving Credit Agreement, the First Priority Notes, the 3 9 Subsequent First Priority Notes, the Second Priority Notes or the Subsequent Second Priority Notes. Closing Date means the date of execution and delivery of this Credit Agreement. Closing Document List has the meaning set forth in Section 5.1. Code has the meaning set forth in Section 1.3. Collateral means the Accounts, Inventory and other Property identified as security for the Obligations under the Collateral Documents. Collateral Access Agreement means any landlord waiver, mortgagee waiver, bailee letter or any similar acknowledgement agreement of any warehouseman or processor in possession of Inventory, substantially in the form of Exhibit B. Collateral Agency Agreement means the Intercreditor and Collateral Agency Agreement of even date herewith among the Agent, BTCC, Prudential and the First Priority Notes Indenture Trustee, as modified, amended, extended, restated or supplemented from time to time. Collateral Documents means the Security Agreements, the Intellectual Property Security Agreements, the Pledge Agreements, the Mortgages and all other contracts, instruments and other documents pursuant to which Liens are now or hereafter granted (or purported to be granted) to the Collateral Agent, for the benefit of the "Secured Parties" (as defined in the Collateral Agency Agreement), as any of the foregoing are modified, amended, extended, restated or supplemented from time to time. Collection Account has the meaning set forth in Section 4.9. Collections means all cash, funds, checks, notes, instruments and any other form of remittance tendered by account debtors in payment of Accounts. Commitment of a Lender means its commitment to make Revolving Loans and to participate in Letters of Credit, up to the amount set forth opposite its name on Annex I, as such amount may be reduced from time to time. Common Stock means, with respect to any Person, any and all shares, interests, participation or other equivalent (however designated) of Capital Stock in such Person which is not preferred as to the payment of dividends or the distribution of assets on any voluntary or involuntary liquidation over shares of any other class of Capital Stock in such Person. 4 10 Consolidated Cash Flow means, for any period, Consolidated Net Income for such period, (A) increased by the sum of (i) Consolidated Fixed Charges for such period, other than interest capitalized by the Borrower and its Subsidiaries during such period, (ii) income tax expense of the Borrower and its Subsidiaries, on a consolidated basis, for such period (other than income tax expense attributable to sales or other dispositions of assets (other than sales of inventory in the ordinary course of business)), (iii) depreciation expense of the Borrower and its Subsidiaries, on a consolidated basis, for such period, (iv) amortization expense of the Borrower and its Subsidiaries, on a consolidated basis, for such period, and (v) other non-cash items reducing Consolidated Net Income minus non-cash items increasing Consolidated Net Income for such period, and (B) decreased by any revenues received or accrued by the Borrower or any of its Subsidiaries from any other Person (other than the Borrower or any of its Subsidiaries) in respect of any Investment for such period, all as determined in accordance with GAAP. Consolidated Debt means the aggregate amount of Debt of the Borrower and its Subsidiaries, on a consolidated basis, determined in accordance with GAAP. Consolidated Entity means the Borrower and those of its Subsidiaries consolidated with it for purposes of financial reporting. Consolidated Fixed Charges means, for any period, (A) the sum of, without duplication, (i) the aggregate amount of interest expense of the Borrower and its Subsidiaries during such period (including, without limitation, all commissions, discounts and other fees and charges owed by the Borrower and its Subsidiaries with respect to letters of credit and bankers' acceptances or similar financing facilities and the net costs associated with Interest Rate Agreements and Currency Agreements of the Borrower and its Subsidiaries) paid, accrued or scheduled to be paid or accrued during such period, including interest expense not required to be paid in cash (including any amortization of original issue debt discount), all determined in accordance with GAAP, plus all interest capitalized by the Borrower and its Subsidiaries during such period, (ii) the aggregate amount of the interest expense component of rentals in respect of Capital Lease Obligations paid or accrued by the Borrower and its Subsidiaries during such period, determined in accordance with GAAP, (iii) the aggregate amount of all operating lease expense of the Borrower and its Subsidiaries during such period, determined in accordance with GAAP, and (iv) to the extent any interest payment obligation of any other Person is guaranteed by the Borrower or any of its Subsidiaries (other than guarantees relating to obligations of customers of the Borrower or any of its Subsidiaries that are made in the ordinary course of business consistent with past practices of the Borrower or its 5 11 Subsidiaries), the aggregate amount of interest paid or accrued by such Person in accordance with GAAP during such period attributable to any such interest payment obligation, less (B) to the extent included in (A) above, amortization or write-off of deferred financing costs by the Borrower and its Subsidiaries during such period; in each case after elimination of intercompany accounts among the Borrower and its Subsidiaries and as determined in accordance with GAAP. Consolidated Intangible Assets means, as at any date, (i) the amount of all write-ups in the book value of any asset resulting from the revaluation thereof and all write-ups in excess of the cost of assets acquired, plus (ii) the amount of all unamortized original issue discount, unamortized debt expense, goodwill, patents, trademarks, service marks, trade names, copyrights, organization and development expense and other intangible assets, in each case as would be taken into account in preparing a consolidated balance sheet of the Borrower and its Subsidiaries on a consolidated basis as at such date in accordance with GAAP. Consolidated Net Income means, for any period, the aggregate net income (or net loss, as the case may be) of the Borrower and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom, without duplication, (i) gains and losses from the sale or other disposition of assets (other than sales of inventory in the ordinary course) or reserves relating thereto, (ii) items classified as extraordinary or nonrecurring (including, without limitation, any gains from any exchange of debt securities) and gains (but not losses) from discontinued operations, (iii) the income (or loss) of any Joint Venture, except to the extent of the amount of cash dividends or other distributions in respect of Capital Stock therein actually paid during such period to the Borrower or any of its Subsidiaries by such Joint Venture out of funds legally available therefor (or, in the case of a loss, to the extent the Borrower or any such Subsidiary funds such loss during such period), (iv) except to the extent it may be included pursuant to clause (iii), the income (or loss) of any other Person accrued or attributable to any period prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or such other Person's Property (or a portion thereof) is acquired by such Person or any of its Restricted Subsidiaries, and (v) non-cash items decreasing or increasing Consolidated Net Income arising out of currency translation effects. Consolidated Net Worth means Net Worth without giving effect to any purchase accounting adjustments if Consolidated Net Worth is being determined in connection with any merger, consolidation or other acquisition of, or by, the Borrower or any of its Subsidiaries. 6 12 Consolidated Secured Debt means, collectively, the outstanding principal balance of the Debt described in Sections 8.3(a)(i) and (a)(iv) and the unpaid principal amount of the Revolving Loans and that portion of the Letter of Credit Obligations constituting unreimbursed draws under Letters of Credit for which a Revolving Loan has not yet been funded. Consolidated Senior Debt means, at any time, all Consolidated Debt at such time, other than the then outstanding principal amount of: (i) the 10.25% Notes, (ii) the Second Priority Notes, (iii) the Subsequent Second Priority Notes, (iv) Debt of any Subsidiary of the Borrower payable to the Borrower or any Wholly Owned Subsidiary of the Borrower, and (v) Debt of the Borrower that is not secured by a Lien or that is junior in right of payment, and subordinate to, the Obligations pursuant to subordination terms in form and substance acceptable to the Agent and Lenders, which Debt matures after the maturity date of the First Priority Notes, and has no principal payments scheduled until, a date which is at least six (6) months after the maturity date of the First Priority Notes. Consolidated Tangible Net Worth means, at any time, Consolidated Net Worth at such time, less Consolidated Intangible Assets at such time. Consolidated Total Capitalization means, at any time, the sum of: (i) Consolidated Net Worth at such time, plus (ii) Consolidated Debt. Control means (except as otherwise specifically provided herein) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing. Control Group means a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Borrower is a member, any group of corporations or entities under common control with the Borrower within the meaning of Section 414(c) of the Internal Revenue Code of which the Borrower is a member or any affiliated service group within the meaning of Section 414(m) of the Internal Revenue Code of which the Borrower is a member. Credit Documents means, collectively, this Credit Agreement, the Revolving Notes, each of the Collateral Documents, the Guaranty Agreement and all other documents, agreements, instruments, opinions and certificates now or hereafter executed by the Borrower, a Significant Domestic Subsidiary or any other Credit Party and delivered to the Agent or any Lender in connection herewith or therewith, as modified, amended, extended, restated or supplemented from time to time. 7 13 Credit Parties means, collectively, the Borrower and any other parties to the Credit Documents (except the Lenders, the Agent, the Issuing Bank, the Collateral Agent and issuers of opinions). Currency Agreement of any Person means any foreign exchange contract, currency swap agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values (as opposed to being used in any way for speculative trading purposes). Current Debt means, with respect to any Person, all Indebtedness of such Person for borrowed money which by its terms or by the terms of any instrument or agreement relating thereto matures on demand or within one year from the date of the creation thereof and is not directly or indirectly renewable or extendible at the option of the debtor to a date more than one year from the date of the creation thereof, provided that Indebtedness for borrowed money outstanding under a revolving credit or similar agreement which obligates the lender or lenders to extend credit over a period of more than one year shall constitute Funded Debt and not Current Debt, even though such Indebtedness by its terms matures on demand or within one year from the date of the creation thereof. Debt shall mean Current Debt and Funded Debt. Default means an event, condition or default which with the giving of notice, the passage of time or both would be an Event of Default. Defaulting Lender has the meaning set forth in Section 3.6. Domestic Subsidiary means any Subsidiary of the Borrower organized under the laws of any state of the United States of America or the District of Columbia. DPK means D.P. Kelly & Associates, L.P., a Delaware limited partnership, and its successors and assigns. Eligible Accounts Receivable means Accounts of the Borrower and its Significant Domestic Subsidiaries deemed by the Agent in the exercise of its commercially reasonable judgement to be eligible for inclusion in the calculation of the Borrowing Base. In determining the amount to be so included, the face amount of such Accounts shall be reduced by the amount of all returns, discounts, deductions, claims, credits, charges, or other allowances. Unless otherwise approved in writing by the Agent, no Account shall be deemed to be an Eligible Account Receivable if: (a) it arises out of a sale made by the Borrower or any of its Significant Domestic Subsidiaries to an Affiliate; or 8 14 (b) it is unpaid more than 60 days after the original payment due date specified in the related invoice or it is unpaid more than 120 days after the initial date of such invoice, based on the Borrower's reasonable estimate thereof; or (c) it is from the same account debtor or its Affiliate and fifty percent (50%) or more of all Accounts from that account debtor (and its Affiliates) are ineligible under (b) above; or (d) when aggregated with all other Accounts of an account debtor, the Account exceeds fifteen percent (15%) in face value of all Accounts of the Borrower and its Significant Domestic Subsidiaries on a consolidated basis then outstanding, to the extent of such excess, unless supported by an irrevocable letter of credit satisfactory to the Agent (as to form, substance and issuer) and assigned to and directly drawable by the Collateral Agent excluding, for purposes of the limitation imposed by this paragraph (e), Accounts of the account debtors listed on Schedule C; or (e) the account debtor for the Account is a creditor of the Borrower or any of its Significant Domestic Subsidiaries, has or has asserted a right of setoff, has disputed its liability or made any claim with respect to the Account or any other Account which has not been resolved, to the extent of the amount owed by the Borrower or any of its Significant Domestic Subsidiaries to the account debtor, the amount of such actual or asserted right of setoff, or the amount of such dispute or claim, as the case may be, unless a reduction has already been made to the amount of the Account as a result of the dispute, claim or assertion of set-off rights pursuant to the first sentence of this definition; or (f) the account debtor is (or its assets are) the subject of an Insolvency Event; or (g) the Account is not payable in Dollars or the account debtor for the Account is located outside the continental United States, unless the Account is supported by an irrevocable letter of credit satisfactory to the Agent (as to form, substance and issuer) or the Account is insured as to collectibility and political risk pursuant to a commercial risk insurance policy acceptable to the Agent (as to form, substance and issuer); or (h) the sale to the account debtor is on a bill-and-hold, guarantied sale, sale-and-return, sale on approval or consignment basis or made pursuant to any other written agreement providing for repurchase or return; or 9 15 (i) the Agent determines by its own credit analysis that collection of the Account is uncertain or the Account may not be paid; or (j) the account debtor is the United States of America or any department, agency or instrumentality thereof, unless the Borrower or any of its Significant Domestic Subsidiaries duly assigns its rights to payment of such Account to the Collateral Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section Section 3727 et seq.); or (k) the goods giving rise to such Account have not been shipped and delivered to, or have been rejected by, the account debtor, or the services giving rise to such Account have not been performed and accepted; or (l) the Account does not comply with all Requirements of Law, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board of Governors of the Federal Reserve System; or (m) the Account is subject to any adverse security deposit, progress payment or other similar advance made by or for the benefit of the applicable account debtor; or (n) it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agent or does not otherwise conform to the representations and warranties contained in the Credit Documents. In addition to the foregoing, Eligible Accounts Receivable shall include such Accounts for which the Borrower shall request approval and that the Agent approves in advance, in writing, and in its Permitted Discretion, which approval shall not prevent the Agent from time to time from revoking such approval in the exercise of its Permitted Discretion. Eligible Inventory means the aggregate amount of Inventory of the Borrower and its Significant Domestic Subsidiaries deemed by the Agent in the exercise of its commercially reasonable judgement to be eligible for inclusion in the calculation of the Borrowing Base. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with the Borrower's or the Significant Domestic Subsidiary's current and historical accounting practice. Unless otherwise approved in writing by the Agent, Inventory shall not be deemed Eligible Inventory if: (a) it is not owned solely by the Borrower or any of its Significant Domestic Subsidiaries or the Borrower or any of 10 16 its Significant Domestic Subsidiaries does not have good, valid and marketable title thereto; or (b) it is not located in the United States; or (c) it is not located on property owned by the Borrower or any of its Significant Domestic Subsidiaries (all such Inventory, the "Off-Site Inventory") and the aggregate value of the Off Site Inventory exceeds five percent (5%) of the aggregate value of all of the Inventory of the Borrower and the Significant Domestic Subsidiaries, unless the lessor or the contract warehouseman or other Person that owns the premises, as the case may be, has executed and delivered to the Agent a Collateral Access Agreement in form and substance acceptable to the Agent and such Inventory is segregated or otherwise separately identifiable from goods of others, if any, stored on such premises; or (d) it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agent, except with respect to Inventory stored at sites described in clause (c) above, for Liens for unpaid rent or normal and customary warehousing charges; or (e) it consists of goods returned or rejected by the Borrower's or any of the Significant Domestic Subsidiaries' customers or goods in transit to third parties (other than to warehouse sites covered by a Collateral Access Agreement); or (f) it is not first-quality finished goods, work-in-process or raw materials, or it is obsolete or slow moving (unless a reserve has been established with respect to obsolete and slow moving inventory that is satisfactory to the Agent), or does not otherwise conform to the representations and warranties contained in the Credit Documents. In addition to the foregoing, Eligible Inventory shall include such items of the Borrower's Inventory for which the Borrower shall request approval and that the Agent approves in advance, in writing, and in its Permitted Discretion, which approval shall not prevent the Agent from time to time from revoking such approval in the exercise of its Permitted Discretion. ERISA means the Employee Retirement Income Security Act of 1974, 29 U.S.C. Section Section 1000 et seq., amendments thereto, successor statutes, and regulations or guidance promulgated thereunder. Event(s) of Default has the meaning set forth in Article 9. Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. 11 17 Exempted Transactions means (i) transactions with Cargill Financial Services and its Affiliates (collectively, "Cargill") so long as Cargill is not a Broad Affiliate of the Borrower; (ii) transactions with Reliance Insurance Co. and its Affiliates (collectively, "Reliance") so long as Reliance is not a Broad Affiliate of the Borrower; (iii) purchases of turkey timers from Volk Enterprises, Inc. and (iv) purchasers of chemicals from Weskem-Hall, Inc. Expenses means all reasonable costs and expenses of the Agent incurred in connection with the Credit Documents and the transactions contemplated therein, including, without limitation, (i) the costs of conducting record searches, examining Collateral, opening bank accounts and lockboxes, depositing checks, and receiving and transferring funds (including charges for checks for which there are insufficient funds), (ii) the reasonable fees and expenses of legal counsel and paralegals (including the allocated cost of internal counsel and paralegals), accountants, appraisers and other consultants, experts or advisors retained by the Agent, (iii) the cost of title insurance premiums, real estate survey costs, and fees and taxes in connection with the filing of financing statements, (iv) the costs of preparing and recording Collateral Documents, releases of Collateral, and waivers, amendments, and terminations of any of the Credit Documents, and (v) expenses incurred in order to maintain and protect any of the Collateral in accordance with Sections 7.6 or 10.11. Expenses also means all reasonable costs and expenses (including the reasonable fees and expenses of legal counsel and other professionals) paid or incurred by the Agent and any Lender (i) during the continuance of an Event of Default, (ii) in enforcing or defending its rights under or in respect of this Credit Agreement, the other Credit Documents, the Collateral Agency Agreement or any other document or instrument now or hereafter executed and delivered in connection herewith, (iii) collecting the Loans, (iv) foreclosing or otherwise collecting upon the Collateral or any part thereof and (v) in obtaining any legal, accounting or other advice in connection with any of the foregoing. Expiration Date means the earlier to occur of (a) June 20, 1998, (b) the date on which the First Priority Notes or Subsequent First Priority Notes are prepaid or required to be prepaid in their entirety including, without limitation, by automatic acceleration or demand for repurchase or (c) the date on which the Commitments are terminated pursuant to Section 9.2(b). Federal Funds Rate means, for any period, a fluctuating interest rate per annum for each day during such period 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 so 12 18 published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal Funds brokers of recognized standing selected by the Agent. Fees means, collectively, the Unused Line Fee, the Letter of Credit Fees, the L/C Facing Fee, the Issuing Bank Fees and the fees provided for in that certain letter dated June 5, 1995 between BTCC and the Borrower. Financial Statements means the consolidated and/or consolidating balance sheets, statements of operations, statements of cash flows and statements of changes in shareholder's equity of the Consolidated Entity for the period specified, prepared in accordance with GAAP and consistently with prior practices. First Priority Notes means any of the Series A First Priority Notes and Series B First Priority Notes issued under the First Priority Notes Indenture. First Priority Note Documents means, collectively, the Note Agreement, the First Priority Notes Indenture and all other documents, instruments, agreements, opinions and certificates now or hereafter executed and/or delivered pursuant thereto or in connection therewith or in connection with the sale or exchange of the First Priority Notes, as modified, amended, extended, restated or supplemented from time to time. First Priority Notes Indenture means the Indenture, dated as of June 20, 1995, between the Borrower and the First Priority Notes Indenture Trustee under which the First Priority Notes and the Subsequent First Priority Notes are being issued, as modified, amended, extended, restated or supplemented from time to time. First Priority Notes Indenture Trustee means Shawmut Bank Connecticut, National Association, and any successor or replacement appointed pursuant to the terms of the First Priority Notes Indenture. Fiscal Year Change has the meaning set forth in Section 8.14. Funded Debt means, with respect to any Person, all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendable at the option of the debtor to a date more than one year (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from, the date of the creation thereof. 13 19 GAAP means generally accepted accounting principles in the United States as in effect from time to time. GECC means General Electric Capital Corporation, a New York corporation, and its successors and assigns. GECC Intercreditor Agreements means the intercreditor and subordination agreements among the Collateral Agent, GECC, Shawmut Bank Connecticut, National Association, as Owner Trustee, and the Borrower dated as of June 20, 1995, as amended, extended, restated or supplemented from time to time. GECC Lease Documents means (i) the Lease Agreement dated as of December 18, 1990 between The Connecticut National Bank (now known as Shawmut Bank Connecticut, National Association) ("TCNB"), Owner Trustee, as lessor and Viskase Corporation, as lessee, (ii) the Participation Agreement dated as of December 18, 1990 among Viskase Corporation, the Borrower, GECC and TCNB and (iii) the related instruments and agreements with respect thereto, in each case as the same may have heretofore been or may hereinafter be amended, modified, restated, renewed or extended or refinanced from time to time. Governing Documents means certificates or articles of incorporation, by-laws and other organizational or governing documents. Governmental Authority means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Guarantee shall mean, with respect to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or non-furnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be 14 20 paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guarantee shall be equal to the outstanding principal amount of the obligation guaranteed or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited. Guaranty Agreement means the Guaranty Agreement executed in favor of the Collateral Agent by each Significant Domestic Subsidiary, substantially in the form of Exhibit C, pursuant to which each Significant Domestic Subsidiary agrees to guaranty payment and performance of the Obligations, as amended, restated, supplemented or otherwise modified from time to time. Highest Lawful Rate means, at any given time during which any Obligations shall be outstanding hereunder, the maximum non-usurious interest rate that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations, under the laws of the State of Illinois (or the law of any other jurisdiction whose laws may be mandatorily applicable notwithstanding other provisions of this Credit Agreement and the other Credit Documents), or under applicable federal laws which may presently or hereafter be in effect and which allow a higher maximum non-usurious interest rate than under Illinois (or such other jurisdiction's) law, in any case after taking into account, to the extent permitted by applicable law, any and all relevant payments or charges under this Credit Agreement and any other Credit Documents executed in connection herewith, and any available exemptions, exceptions and exclusions. Indebtedness means, with respect to any Person, without duplication, (i) all items (excluding items of contingency reserves or of reserves for deferred income taxes) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as of the date on which Indebtedness is to be determined, (ii) all indebtedness secured by any Lien on any property or asset owned or held by such Person subject thereto, whether or not the indebtedness secured thereby shall have been assumed, (iii) all indebtedness of others with respect to which such Person has become liable by way of a Guarantee (including, without limitation, all obligations of such Person with respect to surety bonds, bank acceptances, and letters of credit and other similar obligations), (iv) all obligations of such Person in respect of Currency Agreements or Interest Rate Agreements, and (v) the maximum fixed repurchase price of any Redeemable Stock. For purposes of the preceding sentence, the maximum fixed repurchase price of any Redeemable Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Stock as if such Redeemable Stock were repurchased on any date on which Indebtedness shall be required to be determined hereunder; provided, that if such 15 21 Redeemable Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Stock. Insolvency Event means, with respect to any Person, the occurrence of any of the following: (a) such Person shall be adjudicated insolvent or bankrupt, or generally fail to pay, or admit in writing its inability to pay, its debts as they become due, (b) the voluntary commencement of any proceeding or the filing of any petition under any bankruptcy, insolvency or similar law, (c) the seeking of dissolution or reorganization or the appointment of a receiver, trustee, custodian or liquidator for it or a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors, (d) the filing of any answer admitting the jurisdiction of the court and the material allegations of an involuntary petition filed against it in any bankruptcy, insolvency or similar proceeding, (e) such Person shall make a general assignment for the benefit of its creditors, or shall consent to, or acquiesce in the appointment of, a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business. Insolvency Event shall also mean, with respect to any Person, the occurrence of any of the following: an involuntary proceeding or involuntary petition shall be commenced or filed against such Person under any bankruptcy, insolvency or similar law seeking the dissolution or reorganization of it or the appointment of a receiver, trustee, custodian or liquidator for it or of a substantial part of its property, assets or business, or any writ, judgment, warrant of attachment, execution or similar process shall be issued or levied against a substantial part of its property, assets or business, and such proceedings or petitions shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded, within 60 days after commencement, filing, or levy, as the case may be, or any order for relief shall be entered in any such proceeding. Intellectual Property Security Agreements means, collectively, each Intellectual Property Security Agreement executed at any time in favor of the Collateral Agent by the Borrower or any of its Subsidiaries, substantially in the form of Exhibit D, as modified, amended, extended, restated or supplemented from time to time. Interest Rate Agreement of any Person means any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or fixed rate of interest on a notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount and shall include, without limitation, any interest rate swap agreement, interest rate cap, floor or collar agreement, option or futures contract or other similar agreements or arrangements, designed to protect such Persons or any 16 22 of its Subsidiaries from fluctuations in interest rates (as opposed to being used in any way for speculative trading purposes). Internal Revenue Code means the Internal Revenue Code of 1986, amendments thereto, successor statutes, and regulations or guidance promulgated thereunder. Inventory means "Inventory" as defined in the Security Agreements. Investment means, as to any investing Person, any direct or indirect advance, loan (other than extensions of trade credit on commercially reasonable terms in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person or any of its Subsidiaries in accordance with GAAP) or other extension of credit, guarantee or capital contribution to, or any acquisition by, such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person. In determining the amount of any Investment involving a transfer of Property, such Property shall be valued at its fair market value at the time of such transfer, and such fair market value shall be determined in good faith by the Board of Directors of the investing Person, whose determination in such regard shall be conclusive. Issuing Bank means Bankers Trust Company or any Lender or other financial institution that is acceptable to the Agent which may at any time issue or be requested to issue a Letter of Credit for the account of the Borrower. Issuing Bank Fees has the meaning set forth in Section 4.3. Joint Venture of a Person means any Person in which the investing Person has a joint or shared equity interest but which is not a Subsidiary of such investing Person. L/C Facing Fee has the meaning set forth in Section 4.3. Lender Advances has the meaning set forth in Section 3.2. Letter of Credit Fee has the meaning set forth in Section 4.3. Letter of Credit Obligations means the sum of the aggregate undrawn amount of all Letters of Credit outstanding, plus the aggregate amount of all drawings under Letters of Credit for which the Borrower has not reimbursed the Issuing Bank to the extent a Revolving Loan has not been advanced pursuant to Section 3.2 to reimburse the Issuing Bank therefor. Letter of Credit Request has the meaning set forth in Section 3.3. 17 23 Letters of Credit means all letters of credit issued for the account of the Borrower under Article 3 and all amendments, renewals, extensions or replacements thereof. Lien means any mortgage, pledge, lien, charge, security interest, conditional sale or other title retention agreement (including, without limitation, any Capital Lease Obligations in the nature thereof) or other encumbrance of any kind or description, including, without limitation, any agreement to give or grant a Lien. Line of Credit means the aggregate revolving line of credit extended pursuant to this Credit Agreement by the Lenders to the Borrower for Revolving Loans and Letters of Credit, in an amount up to $28,000,000, as such amount may be reduced from time to time. Loan Account has the meaning set forth in Section 4.7. Lockbox Agreements has the meaning set forth in Section 4.9. Lockbox Bank has the meaning set forth in Section 4.9. Lockboxes has the meaning set forth in Section 4.9. Majority Lenders means those Lenders holding in the aggregate more than fifty percent (50%) of the total Commitments, or if the Commitments are terminated, those Lenders owed more than fifty percent (50%) of the Revolving Loans and Letter of Credit Obligations then outstanding. Management Agreement means the Management Services Agreement dated as of December 4, 1991 between the Borrower and DPK, as the same was amended and restated by the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Borrower and DPK and as the same may from time to time hereafter be amended, modified or restated upon the good faith approval, pursuant to duly adopted resolutions, of a majority of members of the Board of Directors of the Borrower who are not Affiliates of DPK. Material Adverse Effect means a material adverse effect on (i) the consolidated financial condition, operations, business or prospects of the Borrower and its Subsidiaries (taken as a whole), (ii) any Credit Party's ability to perform its obligations under the Credit Documents to which it is a party, or (iii) the validity or enforceability of any of the Credit Documents. Material Subsidiary means (a) any Subsidiary of the Borrower if (i) the total assets of such Subsidiary (and its Subsidiaries) exceed 10% of the total assets of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, or (ii) the revenues (or losses, as the case may be) of such 18 24 Subsidiary (and its Subsidiaries) for the four consecutive fiscal quarters of such Subsidiary most recently ended (determined on a consolidated basis in accordance with GAAP and whether or not such Person was a Subsidiary of the Borrower during all or any part of the fiscal period of the Borrower referred to below) exceed an amount equal to 10% of the revenues (or losses, as the case may be) of the Borrower and its Subsidiaries for the four consecutive fiscal quarters of the Borrower most recently ended (determined on a consolidated basis in accordance with GAAP), and (b) in any event each of (i) Sandusky Plastics of Delaware, Inc., a Delaware corporation, (ii) Sandusky Plastics, Inc., a Delaware corporation, (iii) Viskase Corporation, a Pennsylvania corporation, (iv) Clear Shield National, Inc., a California corporation, (v) Viskase Holding Corporation, a Delaware corporation, (vi) Viskase Sales Corporation, a Delaware corporation, and (vii) Viskase, S.A., a French corporation. Mortgages means, collectively, each Mortgage, Deed of Trust, Leasehold Mortgage and Leasehold Deed of Trust executed at any time in favor of the Collateral Agent or in favor of a trustee for the benefit of the Collateral Agent by the Borrower or any of its Subsidiaries, substantially in the form of Exhibit E, as modified, amended, extended, restated or supplemented from time to time. Multiemployer Plan means any Plan which is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). Net Worth means as of any date the aggregate amount of the capital, surplus and retained earnings of the Borrower and its Subsidiaries as would be shown on a consolidated balance sheet of the Borrower and its Subsidiaries prepared as of such date in accordance with GAAP (and excluding minority interests); provided that capital and surplus attributable to Redeemable Stock and accumulated translation adjustments shall be excluded. Note Agreement means that certain Note Agreement, of even date herewith, among the Borrower and the purchasers named therein, under which $160,000,000 of First Priority Notes are issued, as modified, amended, extended, restated or supplemented from time to time. Obligations means the unpaid principal and interest hereunder (including interest accruing on or after the occurrence of an Insolvency Event), reimbursement obligations under Letters of Credit, Fees, Expenses and all other obligations and liabilities of the Borrower to the Agent, the Issuing Bank or to the Lenders under this Credit Agreement, the Revolving Notes, or any other Credit Document. Offering Memorandum means the Private Placement Memorandum for the First Priority Notes dated February 7, 1995, as supplemented by a Supplement to Private Placement Memorandum dated May 16, 1995, 19 25 and as further supplemented by a Final Supplement to Private Placement Memorandum dated June 5, 1995, taken as a whole. Pension Benefit Guaranty Corporation means the Pension Benefit Guaranty Corporation under ERISA (or any successor thereto). Percentage of Total Assets Transferred means, with respect to each asset Transferred pursuant to clause (d) of Section 8.6 (including assets Transferred pursuant to a Transfer by Merger), the ratio (expressed as a percentage) of (a) the greater of such asset's fair market value or the net book value of such assets on the date of Transfer to (b) the book value of the consolidated assets of the Borrower and its Subsidiaries as of the last day of the fiscal quarter of the Borrower immediately preceding the date of Transfer. Permitted Discretion means the Agent's good faith judgment concerning the risks of lending to the Borrower, taking into account (i) the liquidation value of Collateral, the priority of the Collateral Agent's Liens therein, and the time and cost of enforcement of such Liens and (ii) the perceived accuracy of the Borrower's financial and Collateral reporting. The burden of establishing lack of good faith shall be on the Borrower. Permitted Liens in respect of any Person shall mean (i) pledges or deposits made by such Person under workers' compensation, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or operating leases to which such Person is a party, or deposits to secure statutory or regulatory obligations of such Person or deposits of cash or U.S. Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (ii) Liens arising by operation of law such as carriers', warehousemen's and mechanics' Liens, in each case arising in the ordinary course of business and with respect to amounts not yet due or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens for taxes not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iv) Liens evidenced by the Capital Lease Obligations under GECC Lease Documents and Liens securing Debt of the Borrower or its Subsidiaries permitted under Section 8.3(a)(vi) for refinancing the Debt under the GECC Lease Documents; provided, however, that in connection with any such refinancing any such new Lien shall be limited to all or part of the same Property to which 20 26 the original Lien applied; (v) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its Property which were not incurred in connection with Debt or other extensions of credit and which do not in the aggregate materially adversely affect the value of said Property or materially impair the use of such Property in the operation of the business of such Person; (vi) Liens in favor of the Collateral Agent to secure Debt permitted under Sections 8.3(a)(i), (iv), (v) and (vii); (vii) Liens existing on the Closing Date and described on Schedule 8.3 hereto; (viii) Liens arising out of judgments or awards against such Person not giving rise to an Event of Default under Section 9.1(i) (but without limiting Section 9.1(m)) with respect to which such Person is diligently prosecuting an appeal or other proceedings for review; (ix) Liens to secure Debt permitted under Section 8.3(a)(xi); provided, however, that any such new Lien shall be limited to all or part of the same Property to which the original Lien applied; (x) Liens to secure Debt permitted under Section 8.3(a)(xiii) (to the extent such Liens attach prior to or at the time of incurrence of such Debt); (xi) Liens to secure Debt (if any) permitted under Section 8.3(a)(iii); provided, however, that (a) the Lien securing such Debt is granted only to the Collateral Agent and made subject to the Collateral Agency Agreement, and (b) the Collateral Agency Agreement is amended to the reasonable satisfaction of the Collateral Agent, the Agent and the Lenders to add the Second Priority Notes Indenture Trustee as a party thereto, and to provide for such matters incidental thereto as the Collateral Agent, the Agent and the Lenders may reasonably require; and (xii) Liens securing Debt of Wholly-Owned Subsidiaries of the Borrower to the Borrower or another such Wholly-Owned Subsidiary permitted under Section 8.3(a)(ix). Person means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (including any division, agency or department thereof), and its successors, heirs and assigns. Plan means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Borrower or any member of a Control Group. Pledge Agreements means, collectively, each Pledge Agreement executed at any time in favor of the Collateral Agent by the Borrower or any of its Subsidiaries, substantially in the form of Exhibit F, as modified, amended, extended, restated or supplemented from time to time. 21 27 Prime Lending Rate means the rate which Bankers Trust Company announces as its prime lending rate, from time to time. The Prime Lending Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Bankers Trust Company and each of the Lenders may make commercial loans or other loans at rates of interest at, above or below the Prime Lending Rate. Property means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other Person. Proportionate Share of a Lender means a fraction, expressed as a percentage, obtained by dividing its Commitment by the Line of Credit or, if the Commitments are terminated, by dividing its then outstanding Revolving Loans and Letter of Credit participation by the then outstanding aggregate Revolving Loans and Letter of Credit Obligations. Prudential means The Prudential Insurance Company of America. Prudential Revolving Credit Agreement means the Revolving Credit Agreement of even date herewith between Prudential and the Borrower, as modified, amended, extended, restated or supplemented from time to time. Prudential Revolving Credit Documents means, collectively, the Prudential Revolving Credit Agreement and all other documents, instruments, agreements, opinions and certificates now or hereafter executed and/or delivered pursuant thereto or in connection therewith, as modified, amended, extended, restated or supplemented from time to time. Purchase Money Indebtedness means, as to any Person, the Debt of such Person incurred and owing in respect of all or part of the purchase price of Property purchased where such Debt is fully secured by the Property purchased. Qualified Plan means any Plan, other than a Multiemployer Plan, which is intended to meet the qualification requirements of Section 4.01(a) the Internal Revenue Code. Redeemable Stock means, with respect to any Person, any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable by contract or otherwise, is or upon the happening of an event or the passage of time would be, required to be redeemed or is redeemable at the option of the holder thereof at any time prior to the stated maturity of the principal of the First Priority Notes, or, at the option of the holder thereof, is convertible into or exchangeable 22 28 for debt securities maturing at any time prior to the stated maturity of the principal of the First Priority Notes. Register has the meaning set forth in Section 11.8. Registered Exchange Offer means the offer to exchange the Series B First Priority Notes for all of the outstanding Series A First Priority Notes and the Series D First Priority Notes for all of the outstanding Series C First Priority Notes, in each case in accordance with the Registration Rights Agreement. Registration Rights Agreement means the Exchange and Registration Rights Agreement of even date herewith by and between the Borrower and the holders of the First Priority Notes, as modified, amended, extended, restated or supplemented from time to time. Related Transaction Documents means the First Priority Notes Documents, the Second Priority Notes Documents, the Prudential Revolving Credit Facility Documents, the GECC Lease Documents, the Collateral Agency Agreement and the GECC Intercreditor Agreements. Requirement of Law means any law, treaty, rule or regulation or determination of an arbitrator, court or other Governmental Authority. Responsible Officer means, with respect to any corporation, the chief executive officer, chief operating officer, chief financial officer, treasurer or chief accounting officer of such corporation, or any other officer of the corporation involved principally in its financial administration or its controller function. Restricted Debt means all Consolidated Debt other than Consolidated Senior Debt. Restricted Investment shall have the meaning given to such term in Section 8.2. Restricted Payments shall have the meaning given to such term in Section 8.2. Revolving Loans has the meaning set forth in Section 3.1. Revolving Loan Request means each request for a Revolving Loan deemed to be made by the Borrower pursuant to Section 3.3 to provide funds to reimburse the Issuing Bank for a draw under a Letter of Credit. Revolving Note means a promissory note of the Borrower payable to the order of any Lender, substantially in the form of Exhibit G. 23 29 Sale and Leaseback Transaction means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold by such Person or a Subsidiary of such Person and thereafter leased back from the purchaser thereof by such Person or one of the Subsidiaries of such Person. SEC means the Securities and Exchange Commission, as from time to time constituted, or any similar agency then having jurisdiction to enforce the Securities Act. Second Priority Notes means the debt securities which may be issued by the Borrower pursuant to the Second Priority Notes Indenture pursuant to the 10.25% Note Exchange. Second Priority Notes Documents means, collectively, the Second Priority Notes Indenture and all other documents, instruments, agreements, opinions and certificates now or hereafter executed and/or delivered pursuant thereto or in connection therewith or in connection with the sale or exchange of the Second Priority Notes, as modified, amended, extended, restated or supplemented from time to time. Second Priority Notes Indenture means the indenture between the Borrower and the Second Priority Notes Indenture Trustee under which any Second Priority Notes or Subsequent Second Priority Notes are issued, as amended, supplemented or otherwise modified from time to time. Second Priority Notes Indenture Trustee means the trustee for the Second Priority Notes and the Subsequent Second Priority Notes (in such capacity), and each successor thereto in such capacity. Securities Act means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. Security Agreements means, collectively, each Security Agreement executed at any time in favor of the Collateral Agent by the Borrower or any of its Subsidiaries, substantially in the form of Exhibit H, as modified, amended, extended, restated or supplemented from time to time. Series A First Priority Notes means the 12% First Priority Senior Secured Notes due 2000, Series A, being issued pursuant to the First Priority Notes Indenture. Series B First Priority Notes means the 12% First Priority Senior Secured Notes due 2000, Series B (the terms of which are identical to the Series A First Priority Notes except that the Series B First Priority Notes shall be registered under the Securities Act, and shall not contain the restrictive legend appearing on the face of the form of the Series A First Priority 24 30 Notes), to be issued in exchange for the Series A First Priority Notes pursuant to the Registered Exchange Offer and the First Priority Notes Indenture. Series C First Priority Notes means the Floating Rate First Priority Senior Secured Notes due 2000, Series C, being issued pursuant to the First Priority Notes Indenture. Series D First Priority Notes means the Floating Rate First Priority Senior Secured Notes due 2000, Series D (the terms of which are identical to the Series C First Priority Notes except that the Series D First Priority Notes shall be registered under Securities Act and shall not contain the restrictive legend appearing on the face of the form of the Series C First Priority Notes), to be issued in exchange for the Series C First Priority Notes pursuant to the Registered Exchange Offer and the First Priority Notes Indenture. Settlement Date has the meaning set forth in Section 3.4. Settlement Period has the meaning set forth in Section 3.4. Significant Domestic Subsidiary means each Domestic Subsidiary that, at any time, is a Material Subsidiary. Stipulated Loss Value means the "Stipulated Loss Value," as defined in the GECC Lease Documents as in effect on the Closing Date. Subsequent First Priority Notes means any and all debt securities issued by the Borrower in exchange for any First Priority Notes and having terms identical to the First Priority Notes and otherwise being the same as the First Priority Notes except that such debt securities are registered under the Securities Act. Subsequent Second Priority Notes means any and all debt securities issued by the Borrower under an indenture in exchange for any Second Priority Notes and having terms identical to the Second Priority Notes and otherwise being the same as the Second Priority Notes except that such debt securities are registered under the Securities Act. Subsidiary means, with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election 25 31 of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. 10.25% Note Exchange means an exchange by the Borrower pursuant to which the Borrower issues Second Priority Notes in an aggregate face amount of not more than $50,000,000 in exchange for 10.25% Notes pursuant to an exchange ratio (based on aggregate face amount) of no greater than 1:1. 10.25% Notes means, collectively, the 10.25% Senior Notes due 2001 issued by the Borrower pursuant to the 10.25% Notes Indenture. 10.25% Notes Indenture means that certain Indenture, dated as of December 31, 1993, between the Borrower and Bankers Trust Company, as trustee, as amended, supplemented or otherwise modified from time to time. Termination Event means any one or more of the following event of events which, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect: (i) A reportable event as defined in Section 4043 of ERISA and regulations issued thereunder for which the 30 day notice requirement has not been waived occurs with respect to any Title IV Plan other than those described in Sections 4043(c)(9) and (11) of ERISA (or Pension Benefit Guaranty Corporation Regulation Sections 2615.22 or 2615.23); (ii) There occurs (a) the complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) by the Borrower or any member of the Control Group from any Multiemployer Plan, or (b) the receipt by the Borrower or any member of the Control Group of a demand from any Multiemployer Plan for withdrawal liability (as defined in Section 4201 of ERISA); (iii) The Borrower or any member of the Control Group files, or is reasonably expected to file, a notice of intent to terminate any Title IV Plan or adopts a plan amendment that constitutes a termination of any Title IV Plan under Section 4041 of ERISA; (iv) There occurs any action causing the termination of any Multiemployer Plan under Section 4041A of ERISA; (v) Any other event or condition occurs that is reasonably expected to constitute grounds under Sections 4041A or 4042 of ERISA for the termination of, or the appointment of 26 32 a trustee to administer, any Title IV Plan or any Multiemployer Plan; (vi) The Pension Benefit Guaranty Corporation shall have notified the Borrower or any member of the Control Group that a Plan may become a subject to any proceedings under Section 4042 of ERISA to terminate or appoint a trustee to administer the Plan, or any such proceedings are instituted; (vii) An accumulated funding deficiency (as defined in Section 302 of ERISA or Section 412 of the Internal Revenue Code) exists with respect to any Title IV Plan on the last day of any plan year; (viii) A waiver of the minimum funding standards of ERISA or the Internal Revenue Code, or any extension of any amortization period related to such waiver, is sought by or granted to, the Borrower or any member of the Control Group, under Section 412 of the Internal Revenue Code; (ix) The Borrower or any member of the Control Group shall have incurred, or is reasonably expected to incur, any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Internal Revenue Code relating to employee benefit plans; (x) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of any Title IV Plan, as determined by such Plan's independent actuaries; (xi) As of the last day of any plan year, there exists unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) of all Title IV Plans, as determined by such Plans' independent actuaries; or (xii) The Borrower or any member of the Control Group establishes or amends any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides post-employment welfare benefits in a manner that would increase the liability of the Borrower or any member of the Control Group. Title IV Plan means any Qualified Plan that is a defined benefit plan (as defined in Section 3(35) of ERISA) and is subject to Title IV of ERISA. Transfer means any sale, exchange, conveyance, lease, transfer or other disposition. Transfer by Merger means, with respect to any Subsidiary of the Borrower, a merger or consolidation of such Subsidiary with 27 33 another Person such that after giving effect thereto the surviving entity is no longer a Subsidiary of the Borrower. Unused Line Fee has the meaning set forth in Section 4.2. U.S. Government Obligations means (i) any direct non-callable obligation of, or obligation guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged and which is not callable at the issuer's option, and (ii) any depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. Voting Securities means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, under ordinary circumstances and in the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). Wholly Owned Subsidiary of a Person means any Subsidiary of such Person 100% of the total Capital Stock of which, other than directors' qualifying shares, is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person. 1.2 Accounting Terms and Determinations. Unless otherwise defined or specified herein, all accounting terms used in this Credit Agreement shall be construed in accordance with GAAP, applied on a basis consistent in all material respects with the Financial Statements delivered to the Agent on or before the Closing Date. All accounting determinations for purposes of determining compliance with the financial covenants contained in Article 8 shall be made in accordance with GAAP as in effect on the Closing Date and applied on a basis consistent in all material respects with the audited Financial Statements delivered to the Agent on or before the Closing Date. The Financial Statements required to be delivered hereunder from and after the Closing Date, and all financial records, shall be maintained in accordance with GAAP. If GAAP shall change from the basis used in preparing the audited Financial Statements delivered to the Agent on or before the Closing Date, the certificates required to be delivered pursuant to Section 7.1 demonstrating compliance with the covenants contained herein shall include, at the election of the Borrower or upon the request of the Majority Lenders, calculations setting 28 34 forth the adjustments necessary to demonstrate how the Borrower is in compliance with the financial covenants based upon GAAP as in effect on the Closing Date. 1.3 Other Terms; Headings. Terms used herein that are defined in the Uniform Commercial Code in effect in the State of Illinois (the "Code") shall have the meanings given in the Code. Each of the words "hereof," "herein," and "hereunder" refer to this Credit Agreement as a whole. An Event of Default shall "continue" or be "continuing" until such Event of Default has been waived in accordance with Section 11.11 hereof. References to Articles, Sections, Annexes, Schedules, and Exhibits are internal references to this Credit Agreement, and to its attachments, unless otherwise specified. The headings and the Table of Contents are for convenience only and shall not affect the meaning or construction of any provision of this Credit Agreement. ARTICLE 2. LETTERS OF CREDIT. 2.1 Issuance of Letters of Credit. Subject to the terms and conditions hereunder and in reliance on the representations and warranties of the Borrower set forth herein, the Agent shall cause the Issuing Bank to issue Letters of Credit hereunder at the request of the Borrower and for its account on behalf of it or any of the Significant Domestic Subsidiaries, as more specifically described below. The Agent shall not be obligated to cause the Issuing Bank to issue any Letter of Credit if: (a) Issuance of the requested Letter of Credit would cause the sum of the Revolving Loans plus the Letter of Credit Obligations then outstanding to exceed the lesser of (x) the Line of Credit then in effect or (y) the Borrowing Base then in effect; or (b) Issuance of the Letter of Credit is enjoined, restrained or prohibited by any Governmental Authority, any Requirement of Law or any request or directive of any Governmental Authority (whether or not having the force of law) or would impose upon the Agent, any of the Lenders or the Issuing Bank any material restriction, reserve, capital requirement, loss, cost or expense (for which the Agent, such Lender or the Issuing Bank is not otherwise compensated) not in effect or known as of the Closing Date. 2.2 Terms of Letters of Credit. The proposed amount, terms and conditions, and form of each Letter of Credit (and of any drafts or acceptances thereunder) shall be subject to approval by the Issuing Bank. The term of each standby Letter of Credit shall not exceed 360 days, but may be subject to annual renewal. The term of each documentary Letter of Credit shall not exceed 120 days. No Letter of Credit shall have an expiry date later than June 15, 1998. 29 35 2.3 Notice of Issuance. A request for issuance of a Letter of Credit (a "Letter of Credit Request") must be delivered to the Agent in writing in the form of Exhibit I. The Borrower shall specify in each Letter of Credit Request whether the conditions for the issuance of a Letter of Credit specified in Section 5.2 are satisfied. A Letter of Credit Request must be received by the Agent no later than 1:00 P.M. Chicago time at least three (3) Business Days (or such shorter period as may be agreed to by the Issuing Bank) in advance of the proposed date of issuance. The Borrower shall provide to the Agent a list, with specimen signatures, of officers authorized to request Letters of Credit. The Agent is entitled to rely upon such list until it is replaced by the Borrower. 2.4 Lenders' Participation. Immediately upon issuance or amendment of any Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest and participation in all rights and obligations under such Letter of Credit including, without limitation, the Borrower's reimbursement obligation thereunder (other than fees and other amounts owing to the Issuing Bank) in accordance with such Lender's Proportionate Share. 2.5 Payments of Amounts Drawn Under Letters of Credit. The Agent shall notify the Borrower of the receipt of notice from the Issuing Bank that the Issuing Bank has received a draft or other presentation for payment or drawing under a Letter of Credit not later than 11:00 a.m. (Chicago time) on the Business Day immediately prior to the date on which the Issuing Bank intends to honor such drawing. Unless the procedures set forth in Section 9.2(c) shall be applicable or the Borrower shall have reimbursed the Issuing Bank in full for such drawing by 2:00 p.m. (Chicago time) on the Business Day on which the Issuing Bank honors such draw, the Borrower shall be deemed to have concurrently requested Lenders to make a Revolving Loan pursuant to Section 3.1 in the amount of such drawing on the date on which the Issuing Bank honors the drawing, the proceeds of which shall be applied directly by the Agent to reimburse the Issuing Bank for the amount of such drawing. 2.6 Payment by Lenders. If a Revolving Loan is not made in an amount sufficient to reimburse the Issuing Bank in full for the amount of any draw, the Agent shall promptly notify each Lender of the unreimbursed amount of such drawing and of such Lender's respective participation therein. Each Lender shall make available to the Agent, for the account of the Issuing Bank, the amount of its participation in immediately available funds not later than 1:00 P.M. Chicago time on the next Business Day after such Lender receives notice from the Agent of the amount of such Lender's participation in such unreimbursed amount. The obligation of each Lender to deliver to Agent an amount equal to its respective participation shall be absolute and unconditional and such 30 36 remittance shall be made notwithstanding the occurrence or continuation of a Default or an Event of Default or the failure to satisfy any of the conditions set forth in Section 5.2. If any Lender fails to make available to the Agent the amount of such Lender's participation, the Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest at the Federal Funds Rate for the first three Business Days and thereafter at the Prime Lending Rate. For each Letter of Credit, the Agent shall promptly distribute to each Lender which has funded the amount of its participation its Proportionate Share of all payments subsequently received by the Agent from the Borrower in reimbursement of honored drawings. All amount paid by the Issuing Agent with respect to any Letter of Credit that are not immediately repaid with the proceeds of a Revolving Loan or otherwise shall bear interest at the interest rate applicable to Revolving Loans. 2.7 Nature of Issuing Bank's Duties. In determining whether to pay under any Letter of Credit, the Issuing Bank shall be responsible only to determine that the documents and certificates required to be delivered under that Letter of Credit have been delivered and that they comply on their face with the requirements of that Letter of Credit. As among the Borrower, the Issuing Bank and each other Lender, and except to the extent provided in the following sentence, the Borrower assumes all risks of the acts and omissions of the Issuing Bank, or misuse of the Letters of Credit by the respective beneficiaries of such Letters of Credit. Any action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Issuing Bank any liability to the Borrower, the Agent or any Lender. In furtherance and not in limitation of the foregoing, neither the Issuing Agent, the Agent nor any Lender shall be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to demand payment under such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any message, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a payment under any Letter of Credit or of the proceeds thereof; (vii) for the credit of the proceeds of any drawing under any Letter of Credit; and (viii) for 31 37 any consequences arising from causes beyond the control of the Issuing Agent, the Agent or any Lender. 2.8 Obligations Absolute. The obligations of the Borrower to reimburse the Issuing Bank, the Agent and the Lenders for drawings honored under the Letters of Credit and the obligations of the Lenders under Section 2.6 hereof shall be unconditional and irrevocable, without requirement of presentment, demand, protest or other formalities of any kind, and shall be paid strictly in accordance with the terms of this Credit Agreement under all circumstances including the following circumstances: (1) any lack of validity or enforceability of any Letter of Credit or any other agreement; (2) the existence of any claim, set-off, defense or other right which the Borrower, any of its Subsidiaries, any of their Affiliates, the Issuing Agent, the Agent or any Lender may at any time have against a beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such transferee may be acting), the Issuing Agent, the Agent, any Lender or any other Person, whether in connection with this Credit Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower, any of its Subsidiaries, any of their Affiliates and the beneficiary for which the Letter of Credit was procured); (3) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (4) payment by the Issuing Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (5) any other circumstance or happening whatsoever, which is similar to any of the foregoing; or (6) the fact that a Default or an Event of Default shall have occurred and be continuing. 2.9 Agent's Execution of Applications and Other Issuing Bank Documentation; Reliance on Credit Agreement by Issuing Bank. The Agent shall be authorized to execute, deliver and perform on behalf of the Lenders such letter of credit applications, shipping indemnities, letter of credit modifications and consents and other undertakings for the benefit of the Issuing Bank as may be reasonably necessary or appropriate in connection with the issuance or modification of Letters of Credit requested by the Borrower hereunder. The Lenders, the Agent and the Borrower all expressly 32 38 agree that the terms of this Article 3 and various other provisions of this Credit Agreement identifying the Issuing Bank are also intended to benefit the Issuing Bank and the Issuing Bank shall be entitled to enforce the provisions hereof which are for its benefit. 2.10 Additional Payments. If by reason of (a) any change in any Requirement of Law, or any change in the interpretation or application by any Governmental Authority of any Requirement of Law, or (b) compliance by the Issuing Bank or any Lender with any direction, request or requirement (whether or not having the force of law) of any Governmental Authority (or monetary authority) including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect (and any successor thereto): (i) any reserve, deposit or similar requirement is or shall be applicable, imposed or modified in respect of any Letters of Credit issued by the Issuing Bank or participation therein purchased by any Lender; or (ii) there shall be imposed on the Issuing Bank or any Lender any other condition regarding this subsection 2.10, any Letter of Credit or any participation therein; and the result of the foregoing is to directly or indirectly increase the cost to the Issuing Bank or any Lender of issuing, making or maintaining any Letter of Credit or of purchasing or maintaining any participation therein, or to reduce the amount receivable in respect thereof by the Issuing Bank or any Lender, then and in any such case the Agent or such Lender may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify the Borrower, and the Borrower shall pay on demand such amounts as the Agent or such Lender may specify to be necessary to compensate the Issuing Bank or such Lender for such additional cost or reduced receipt, together with interest on such amount from 10 days after the date of such demand until payment in full thereof at a rate equal at all times to the Prime Lending Rate per annum. The determination by the Issuing Bank or any Lender, as the case may be, of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. ARTICLE 3. REVOLVING LOANS. 3.1 Revolving Credit Commitments. Subject to the terms and conditions set forth in this Credit Agreement, on and after the Closing Date and to and excluding the Expiration Date, each Lender severally agrees to make loans and advances to the Borrower 33 39 pursuant to Section 2.5 (the "Revolving Loans") in an amount not to exceed at any time its Proportionate Share of the lesser of the Line of Credit then in effect, and the Borrowing Base then in effect, minus, in each case, the sum of the then outstanding Letter of Credit Obligations (excluding the portion of the Letter of Credit Obligations to be repaid with the Revolving Loan being funded) and the Revolving Loans, for the purpose of reimbursing the Issuing Bank for drawings under Letters of Credit. 3.2 Borrowing of Revolving Loans. It is contemplated that Revolving Loans will be funded directly by the Lenders ("Lender Advances") and, in the circumstances described in Section 3.2(b), by the Agent acting on behalf of the Lenders ("Agent Advances") on the date on which the Issuing Bank honors a draw request under a Letter of Credit. (a) Lender Advances of Revolving Loans. Lender Advances of Revolving Loans shall be made to the extent of each Lender's Proportionate Share of any borrowing deemed to have been requested by the Borrower pursuant to Section 2.5. (b) Agent Advances of Revolving Loans. The Agent is authorized by the Lenders, but is not obligated, to make Agent Advances for any borrowing deemed to have been requested by the Borrower pursuant to Section 2.5 for administrative convenience. Agent Advances shall be subject to periodic settlement with the Lenders under Section 3.5. The Agent may make Agent Advances up to the amount available for borrowing under Section 3.1. (c) Disbursement of Revolving Loans. The proceeds of Revolving Loans shall be transmitted by the Agent directly to the Issuing Bank for reimbursement of draws under Letters of Credit. 3.3 Notice of Request for Lender Advances. Subject to the last sentence of this Section 3.3, the Agent shall give each Lender prompt notice by telephone or facsimile transmission of any borrowing deemed to be requested by the Borrower pursuant to Section 2.5. No later than 3:00 p.m. Chicago time on the date of such a Revolving Loan Request, each Lender shall make available to the Agent at the Agent's address its Proportionate Share of the requested Revolving Loan in immediately available funds. Unless the Agent receives contrary written notice prior to the date of any such borrowing request, it is entitled to assume that each Lender will make available its Proportionate Share of the requested Revolving Loan and in reliance upon that assumption, but without any obligation to do so, may advance such Proportionate Share on behalf of Lenders, without the necessity of giving daily notice to each Lender of each requested Revolving Loan. 34 40 3.4 Periodic Settlement of Agent Advances; Interest and Fees; Statements. (a) The Settlement Date; Allocation of Interest and Fees. The amount of each Lender's Proportionate Share of Revolving Loans shall be computed weekly (or more frequently in the Agent's discretion) and shall be adjusted upward or downward based on all Revolving Loans (including Agent Advances) and repayments received by the Agent as of 5:00 p.m. Chicago time on the last Business Day of the period specified by the Agent (such date, the "Settlement Date"). Interest on the Revolving Loans (including Agent Advances) shall be allocated by the Agent to each Lender in accordance with the Proportionate Share of Revolving Loans actually funded by and repaid to each Lender, and shall accrued from and including the date such Revolving Loans are so advanced and to but excluding the date such Revolving Loans are either repaid by the Borrower or actually settled under this Section. Unused Line Fees shall be allocated by the Agent to each Lender based on each Lender's Proportionate Share. (b) Summary Statements; Settlements. The Agent shall deliver to each of the Lenders promptly after the Settlement Date a summary statement of the account of outstanding Revolving Loans (including Agent Advances) for the period, the amount of repayments received for the period, and the amount allocated to each Lender of the interest and Unused Line Fee for the period. After application of payments under Section 4.10, as reflected on the summary statement: (i) the Agent shall transfer to each Lender its allocated share of interest and Unused Line Fee, and its Proportionate Share of repayments; and (ii) each Lender shall transfer to the Agent, or the Agent shall transfer to each Lender, such amounts as are necessary to insure that, after giving effect to all such transfers, the amount of Revolving Loans made by each Lender shall be equal to such Lender's Proportionate Share of the aggregate amount of Revolving Loans outstanding as of such Settlement Date. If the summary statement requires transfers to be made to the Agent by the Lenders and is received prior to 12:00 noon Chicago time on a Business Day, such transfers shall be made in immediately available funds no later than 3:00 p.m. Chicago time that day; and, if received after 12:00 noon Chicago time, then no later than 3:00 p.m. Chicago time on the next Business Day. The obligation of each Lender to transfer such funds is irrevocable, unconditional and without recourse to or warranty by the Agent. 3.5 Sharing of Payments. If any Lender shall obtain any payment (whether made voluntarily or involuntarily, or through the exercise of any right of set-off, or otherwise) on account of the Revolving Loans made by it or its participation in the Letter of Credit Obligations in excess of its Proportionate Share of payments 35 41 on account of the Revolving Loans or Letter of Credit Obligations obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participation in the Revolving Loans made by them or in their participation in Letters of Credit as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery, together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect to the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 3.5, to the fullest extent permitted by law, may exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 3.6 Defaulting Lenders. (a) A Lender who fails to pay the Agent its Proportionate Share of any Revolving Loans (including Agent Advances) made available by the Agent on such Lender's behalf, or who fails to pay any other amounts owing by it to the Agent, is a "Defaulting Lender." The Agent is entitled to recover from such Defaulting Lender all such amounts owing by such Defaulting Lender on demand. If the Defaulting Lender does not pay such amounts on the Agent's demand, the Agent shall promptly notify the Borrower and the Borrower shall pay such amounts within five Business Days of its receipt of such notice. In addition, the Defaulting Lender or the Borrower shall pay to the Agent for its own account interest on such amount for each day from the date it was made available by the Agent to the Borrower to the date it is recovered by the Agent at a rate per annum equal to (x) the overnight Federal Funds Rate, if paid by the Defaulting Lender, or (y) the then applicable rate of interest calculated under Section 4.1, if paid by the Borrower; plus, in each case, the Expenses and losses, if any, incurred as a result of the Defaulting Lender's failure to perform its obligations. Nothing herein shall be deemed to relieve any Lender of its obligation to fulfill its Commitment hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder, including, without limitation, the right of the Borrower to seek reimbursement from any Defaulting Lender for any amounts paid by the Borrower under clause (y) above on account of such Defaulting Lender's default. 36 42 (b) The failure of any Lender to fund its Proportionate Share of a Revolving Loan shall not relieve any other Lender of its obligation to fund its Proportionate Share of a Revolving Loan. Conversely, no Lender shall be responsible for the failure of another Lender to fund its Proportionate Share of a Revolving Loan. (c) The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by the Borrower to the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Agent. The Agent may hold and, in its discretion, re-lend to the Borrower the amount of all such payments received by it for the account of such Lender. For purposes of voting or consenting to matters with respect to the Credit Documents and the Collateral Agency Agreement and determining Proportionate Shares, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero (-0-). This section shall remain effective with respect to such Lender until (x) the Obligations under this Credit Agreement shall have been declared or shall have become immediately due and payable or (y) the Majority Lenders, the Agent and the Borrower shall have waived such Lender's default in writing. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by the Borrower of its duties and obligations hereunder. ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS. 4.1 Interest on Revolving Loans. Interest on the Revolving Loans shall be payable monthly in arrears, on the first Business Day of each month, at an interest rate per annum equal to the Prime Lending Rate plus two and one-half percent (2.5%) calculated on the net balances owing to the Agent and the Lenders at the close of business each day during such month. The rate hereunder shall change each day the Prime Lending Rate changes. 4.2 Unused Line Fee. The Borrower shall pay to the Agent, for the ratable benefit of the Lenders, a non-refundable fee (the "Unused Line Fee") equal to one-half percent (.5%) per annum of the unused portion of the Line of Credit. The Unused Line Fee shall accrue daily from the Closing Date until the Expiration Date, and shall be due and payable monthly in arrears, on the first Business Day of each month commencing with the month ended July 31, 1995 and on the Expiration Date. 4.3 Letter of Credit Fees. (a) The Agent, for the ratable benefit of the Lenders, shall be entitled to charge to the account of the Borrower on the first Business Day of each month, a fee (the "Letter of Credit Fee"), in 37 43 an amount equal to two percent (2%) per annum of the daily weighted average undrawn amount of Letters of Credit outstanding during the immediately preceding month. In addition, the Agent, for the benefit of the Issuing Bank, shall be entitled to charge to the account of the Borrower on the date of issuance of any standby Letter of Credit, a facing fee equal to one-half percent (.5%) on the initial face amount of each such standby Letter of Credit (the "L/C Facing Fee"). (b) The Agent shall also be entitled to charge to the account of the Borrower, as and when incurred by the Agent or any Lender, the customary charges, fees, costs and expenses charged to the Agent or any Lender for the Borrower's account by the Issuing Bank (the "Issuing Bank Fees") in connection with the issuance, transfer, drawing, amendment or negotiation of any Letters of Credit by the Issuing Bank. Each determination by the Agent of Letter of Credit Fees, L/C Facing Fees, Issuing Bank Fees and other fees, costs and expenses charged under this Section shall be conclusive and binding for all purposes, absent manifest error. 4.4 Interest After Event of Default. From the date of occurrence of an Event of Default until the earlier of the date upon which (i) all Obligations shall have been paid and satisfied in full or (ii) such Event of Default shall have been waived, and upon notice from the Agent or the Lenders, interest on the Revolving Loans shall be payable on demand at a rate per annum equal to the rate then in effect under Section 4.1, plus two percent (2%). 4.5 Expenses. The Borrower shall reimburse the Expenses of the Agent, or any Lender, as the case may be, promptly upon demand. 4.6 Mandatory Payment; Reduction of Commitments. (a) Mandatory Payment. If the aggregate balance of the Revolving Loans and all Letter of Credit Obligations outstanding at any time exceed the Borrowing Base then in effect (such excess amount, the "Out of Formula Amount"), then the Borrower shall, immediately and without the necessity of any demand by the Agent or the Lenders, eliminate such Out of Formula Amount by (i) making a payment to the Agent to reduce the outstanding principal balance of any Revolving Loans in an amount equal to the Out of Formula Amount or (ii) making a payment or otherwise causing to be delivered to the Collateral Agent for deposit in the Cash Collateral Account, pursuant to the terms of the Collateral Agency Agreement, an amount equal to the Out of Formula Amount. If funds remain on deposit with the Collateral Agent after the Out of Formula Amount has been reduced to zero and no Event of Default has occurred and is continuing at such time, such funds shall be released to the Borrower in accordance with the terms of the Collateral Agency Agreement. 38 44 (b) Reduction of Commitments and Line of Credit. On the Expiration Date, the Commitment of each Lender shall automatically reduce to zero and may not be reinstated. The Borrower may reduce or terminate the Line of Credit at any time and from time to time in whole or in part without premium or penalty. Each such reduction must be in an amount not less than $5,000,000 (and in increments of $1,000,000 thereafter). Once reduced, no portion of the Line of Credit may be reinstated. If the Borrower seeks to reduce the Line of Credit to an amount less than $10,000,000, then the Line of Credit shall be reduced to zero. 4.7 Maintenance of Loan Account; Statements of Account. The Agent shall maintain an account on its books in the name of the Borrower (the "Loan Account") in which the Borrower will be charged with all loans and advances made by the Lenders to the Borrower or for the Borrower's account, including the Revolving Loans, and all Letter of Credit Obligations, the Fees, the Expenses and any other Obligations, as and when such payments become due. The Loan Account will be credited with all payments received by the Agent from the Borrower or for the Borrower's account, including all amounts received from the Collateral Agent pursuant to the terms of the Collateral Agency Agreement. After the end of each month, the Agent shall send the Borrower a monthly statement accounting for the charges, loans, advances and other transactions occurring among and between the Agent, the Lenders and the Borrower during that month, provided, however, that the failure of the Agent to send such statement to the Borrower shall not relieve the Borrower of any Obligations. All entries on any such statement shall, thirty (30) days after the same is sent, be presumed to be correct and shall constitute prima facie evidence of the information contained in such statement. The Borrower shall have the express right to rebut such presumption by conclusively demonstrating the existence of an error on the part of the Agent. 4.8 Payment Procedures. Payments of principal, interest, Fees and Expenses shall be made not later than 2:00 P.M. Chicago time on the day when due, in immediately available dollars, to the offices of the Agent, at the address set forth in Section 11.7, or as the Agent may otherwise direct the Borrower. The Borrower hereby authorizes the Agent to charge the Loan Account with the amount of all payments to be made hereunder and under the other Credit Documents, including all Fees and Expenses, as and when such payments become due. The Borrower's obligations to the Lenders with respect to such payments shall be discharged by making such payments to the Agent pursuant to this Section or by the charging of the Loan Account by the Agent. 4.9 Collection of Accounts. The Borrower shall, and shall cause the Significant Domestic Subsidiaries to, at all times maintain lockboxes (the "Lockboxes") and shall instruct all account debtors on the Accounts of the Borrower and the Significant Domestic Subsidiaries to remit all Collections to such Lockboxes. 39 45 The Borrower, the Significant Domestic Subsidiaries, the Collateral Agent and financial institutions selected by the Borrower and acceptable to the Agent (the "Lockbox Banks") shall enter into agreements in form and substance satisfactory to the Agent and the Lenders (the "Lockbox Agreements"), which among other things shall provide for the opening of an account for the deposit of Collections (a "Collection Account") at a Lockbox Bank. All Collections and other amounts received by the Borrower and the Significant Domestic Subsidiaries from any account debtor, in addition to all other cash received by the Borrower and the Significant Domestic Subsidiaries from any other source, shall upon receipt be deposited into a Collection Account. Termination of such arrangements shall also be subject to approval by the Agent. 4.10 Distribution and Application of Collections and other Amounts. All Collections received by the Agent in accordance with the terms of the Lockbox Agreements and the Collateral Agency Agreement shall be credited to the Loan Account, unless an Event of Default has occurred and is continuing, in which case such Collections and other amounts shall be distributed and applied in the following order: first, to the payment of any Fees, Expenses or other Obligations due and payable to the Agent under any of the Credit Documents, including Agent Advances and any other amounts advanced by the Agent on behalf of the Lenders; second, to the payment of any Fees, Expenses or other Obligations due and payable to the Issuing Bank under any of the Credit Documents; third, to the ratable payment of any Fees, Expenses or other Obligations due and payable to the Lenders under any of the Credit Documents other than those Obligations specifically referred to in this Section 4.10; fourth, to the ratable payment of interest due on the Revolving Loans; and fifth, to the ratable payment of principal due on the Revolving Loans. 4.11 Calculations. All calculations of (i) interest hereunder and (ii) Fees, including, without limitation, Unused Line Fees, Letter of Credit Fees, L/C Facing Fees and Issuing Bank Fees, shall be made by the Agent, on the basis of a year of 360 days, or, if such computation would cause the interest and fees chargeable hereunder to exceed the Highest Lawful Rate, 365/366 days, in each case for the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which such interest or Fees are payable. Each determination by the Agent of an interest rate, Fee or other payment hereunder shall be conclusive and binding for all purposes, absent manifest error. ARTICLE 5. CONDITIONS PRECEDENT. 5.1 Conditions Precedent to Initial Letter of Credit. The obligation of the Agent and the Lenders to cause the Issuing Bank to issue the initial Letter of Credit is subject to the satisfaction or waiver of the following conditions precedent: 40 46 (a) Closing Document List. The Agent and the Lenders shall have received each of the agreements, opinions, reports, approvals, consents, certificates and other documents set forth on the closing document list attached hereto as Schedule A (the "Closing Document List"). (b) Material Adverse Change. (i) No event shall have occurred which has had or could reasonably be expected to have a Material Adverse Effect, or (ii) there shall not have occurred a substantial impairment of the financial markets generally that is reasonably likely to materially and adversely affect the transactions contemplated hereby, in each case as determined by the Agent and each Lender in its sole discretion. (c) Fees and Expenses. The Agent and each of the Lenders shall have received payment in full of all Fees and Expenses payable to them on or before the Closing Date. (d) Borrowing Base. The Borrowing Base shall be adequate, in the Agent's sole discretion, for the Borrower's overall business and working capital requirements. (e) Additional Documents. The Credit Parties shall have executed and delivered to the Agent and the Lenders all documents which the Agent determines are reasonably necessary to consummate the transactions contemplated hereby. (f) First Priority Notes. The First Priority Notes shall have been issued and sold pursuant to the First Priority Notes Documents, the respective terms and provisions of which shall be in form and substance satisfactory to the Agent and in any event consistent with the Offering Memorandum and no default or event of default shall exist under the First Priority Notes Indenture. The Borrower shall have received in immediately available funds gross proceeds from the issuance of the First Priority Notes in an aggregate amount not less than $160,000,000. (g) Revolving Credit Facility. The Agent shall have received evidence satisfactory to it that the Prudential Revolving Credit Documents are in full force and effect, the respective terms of which shall be in form and substance satisfactory to the Agent, that no default or event of default shall exist thereunder and that there is available to the Borrower thereunder a revolving line of credit in amount at least equal to $20,000,000. (h) Collateral Agency Agreement. The Collateral Agent, the Agent, BTCC, Prudential and the First Priority Notes Indenture Trustee shall have executed and delivered the Collateral Agency Agreement, which shall be in form and substance satisfactory to the Agent and the Lenders. 41 47 (i) GECC Intercreditor Agreements. The Collateral Agent and GECC shall have executed and delivered the GECC Intercreditor Agreements, which shall be in form and substance satisfactory to the Agent and the Lenders. (j) Certified Related Transaction Documents. The Agent shall have received from the Borrower true, correct and complete copies of each of the First Priority Note Documents, the Second Priority Notes Documents (if any), the Prudential Revolving Credit Documents, the GECC Lease Documents and the DPK Management Agreement. 5.2 Conditions Precedent to all Letters of Credit. The obligation of the Agent and the Lenders to cause the Issuing Bank to issue any requested Letter of Credit is subject to the satisfaction of the conditions precedent set forth below. Each Letter of Credit Request shall constitute a representation and warranty that such conditions are satisfied. (a) All representations and warranties contained in this Credit Agreement and the other Credit Documents shall be true and correct in all material respects on and as of the date of such Letter of Credit Request, as if then made, other than representations and warranties that relate solely to an earlier date; (b) No Default or Event of Default shall have occurred, or would result from the issuance of the requested Letter of Credit, which has not been waived; and (c) No event has occurred which has had or could reasonably be expected to have a Material Adverse Effect. ARTICLE 6. REPRESENTATIONS AND WARRANTIES. To induce the Agent and the Lenders to enter into this Credit Agreement, to induce the Agent and the Lenders to cause the Issuing Bank to issue Letters of Credit and to induce the Lenders to make the Revolving Loans and other financial accommodations described herein, the Borrower hereby represents and warrants to the Agent and the Lenders that the representations and warranties contained in this Article 6 are true, correct and complete. Such representations and warranties, and all other representations and warranties made by the Borrower in any other Credit Documents, shall survive the execution and delivery of this Credit Agreement and such other Credit Documents. 6.1 Organization. The Borrower is a corporation duly organized and existing in good standing under the laws of the State of Delaware and each Subsidiary is duly organized and existing in good standing under the laws of the jurisdiction in which it is 42 48 incorporated. The Borrower and each Subsidiary is qualified to do business and in good standing in every jurisdiction where the ownership of their respective properties or the nature of their respective businesses makes such qualification necessary except where the failure to be qualified or in good standing in the aggregate could not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, the names of the Subsidiaries of the Borrower, the jurisdiction in which each such Subsidiary is organized, the number of outstanding shares of each class of capital stock of such Subsidiary, the number of shares of each such class owned by the Borrower, or any Subsidiary of the Borrower, and the number of shares of each such class owned by any other Person, are as set forth in Schedule B, Part 6.1. 6.2 Power and Authority; Enforceability. The Borrower and each Subsidiary has all requisite corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted. The Borrower and each Significant Domestic Subsidiary has the legal capacity and authority to execute, deliver, and perform its obligations under the Credit Documents to which it is a party. All action on the part of the Borrower and each Significant Domestic Subsidiary necessary for the authorization, execution, delivery and performance of all obligations of the Borrower and such Significant Domestic Subsidiary under the Credit Documents to which it is a party has been taken. The Credit Documents to which the Borrower or any Significant Domestic Subsidiary is a party have been duly executed and delivered by, and are the legal, valid and binding obligations of the Borrower or such Significant Domestic Subsidiary, and each such document is enforceable against the Borrower or such Significant Domestic Subsidiary in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights in general and by general principles of equity, and each is in full force and effect. 6.3 Financial Statements. The Borrower has furnished the Agent with the following financial statements, certified by the chief financial officer of the Borrower: (i) consolidating and consolidated balance sheets of the Borrower and its Subsidiaries as at the last day in each fiscal year in each of the years 1992 to 1994, inclusive, and consolidating and consolidated statements of income and cash flows and a consolidated statement of stockholders' equity of the Borrower and its Subsidiaries for each such year, all certified by Coopers & Lybrand (with respect to the consolidated statements) or prepared by the Borrower (with respect to the consolidating statements); and (ii) a consolidated balance sheet of the Borrower and its Subsidiaries as at March 30, 1995 and March 31, 1994 and consolidated statements of income, stockholders' equity and cash flows for the three-month period ended on each such date, prepared by the Borrower. Such financial statements (including any related schedules and/or notes) are true and correct in all material respects (subject, as to interim statements, to 43 49 changes resulting from audits and year-end adjustments), have been prepared in accordance with GAAP consistently followed throughout the periods involved and show all liabilities, direct and contingent, of the Borrower and its Subsidiaries required to be shown in accordance with GAAP. The balance sheets fairly present the condition of the Borrower and its Subsidiaries as at the dates thereof, and the statements of income, stockholders' equity and cash flows fairly present the results of the operations of the Borrower and its Subsidiaries and their cash flows for the periods indicated. There has been no material adverse change in the properties or assets, business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries taken as a whole since December 29, 1994. 6.4 Actions Pending. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries, or any properties or rights of the Borrower or any of its Subsidiaries, by or before any court, arbitrator or Governmental Authority which could reasonably be expected have a Material Adverse Effect. 6.5 Outstanding Debt. Neither the Borrower nor any of its Subsidiaries has outstanding any Debt except as permitted by Section 8.3. There exists no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) and, after giving effect to the transaction contemplated by this Credit Agreement, the other Credit Documents and each of the Related Transaction Documents, there will exist no default (nor any event which with the passage of time, the giving of notice or both would constitute a default) under the provisions of any instrument evidencing Debt of the Borrower or any Subsidiary or of any agreement relating thereto. 6.6 Title to Properties. The Borrower and each of its Subsidiaries has good and indefeasible title to its respective real property (other than leased real property) and good title to all of its other respective Property, including the Property reflected in the balance sheet as at December 29, 1994 referred to in Section 6.3 (other than Property disposed of in the ordinary course of business), subject to no Lien of any kind except Permitted Liens and Liens in favor of the Banks which will be paid off on the Closing Date. All leases necessary in any material respect for the conduct of the respective businesses of the Borrower and its Subsidiaries are valid and subsisting and are in full force and effect. The Borrower and its Subsidiaries enjoy peaceful and undisturbed possession of all leased property necessary in any material respect for the operation of its business, and none of the leases with respect thereto contains any unusual or burdensome provisions which might materially affect or impair the ability of the Borrower or its Subsidiaries to maintain the operations of the Borrower and its Subsidiaries (taken as a whole). 44 50 6.7 Taxes. The Borrower and each of its Subsidiaries has filed all federal, state and other income tax returns which are required to be filed, (other than such tax returns where the consequence of a failure to file is immaterial), and each has paid all taxes as shown on such returns and on all assessments received by it to the extent that such taxes have become due, except such taxes as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP. 6.8 Conflicting Agreements and Other Matters. Neither the Borrower nor any of its Subsidiaries is a party to any contract or agreement or subject to any charter or other corporate restriction which materially and adversely affects the ability of the Borrower or its Subsidiaries to maintain the operations of the Borrower and its Subsidiaries (taken as a whole). Neither the execution nor delivery of any of the Credit Documents or any of the Related Transaction Documents, nor fulfillment of nor compliance with the terms and provisions hereof and thereof will conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien (other than Liens in favor of the Collateral Agent) upon any of the Property of the Borrower or any of its Subsidiaries pursuant to, the articles of incorporation or by-laws of the Borrower or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders), instrument, order, judgment, decree, statute, law, rule or regulation to which the Borrower or any of its Subsidiaries is subject. Neither the Borrower nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Borrower or such Subsidiary, any agreement relating thereto or any other contract or agreement (including its articles of incorporation or bylaws) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Borrower or any Subsidiary including, without limitation, the Obligations and the obligations of the Significant Domestic Subsidiaries under the Guaranty Agreement, except as set forth in Schedule 8.7. 6.9 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries owns or has any present intention of acquiring any "margin stock" as defined in Regulations G, T, U or X of the Board of Governors of the Federal Reserve System (herein called "margin stock"). None of the proceeds of the Revolving Loans and no Letters of Credit will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any Indebtedness which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulations G, T, U or X. Neither the Borrower nor any agent acting on its behalf has 45 51 taken or will take any action which might cause this Credit Agreement to violate Regulations G, T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. 6.10 ERISA. No accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or not waived, exists with respect to any Plan (other than a Multiemployer Plan). No liability to the Pension Benefit Guaranty Corporation has been or is expected by the Borrower, any of its Subsidiaries or any member of the Control Group to be incurred with respect to any Plan (other than a Multiemployer Plan) by the Borrower, any of its Subsidiaries or any member of the Control Group which is or could reasonably be expected to have a Material Adverse Effect. Neither the Borrower, any of its Subsidiaries nor any member of the Control Group has incurred or presently expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan which is or could reasonably be expected to have a Material Adverse Effect. The execution and delivery of the Credit Documents by each of the Credit Parties will be exempt from, or will not involve any transaction which is subject to, the prohibitions of Section 406 of ERISA and will not involve any transaction in connection with which a penalty could be imposed under Section 502(i) of ERISA or a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code. 6.11 Governmental Consent and Other Third Party Consents. Neither the nature of the Borrower or of any of its Subsidiaries, nor any of their respective businesses or properties, nor any relationship between the Borrower or any of its Subsidiaries and any other Person, nor any circumstance in connection with the financial accommodations contemplated by this Credit Agreement is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or Governmental Authority or other Person in connection with the execution and delivery of any of the Credit Documents, or fulfillment of or compliance with the terms and provisions hereof, other than filings and recordings necessary to perfect the Liens granted to the Collateral Agent under the Collateral Documents, all of which have been made. 6.12 Environmental Compliance. The Borrower and its Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all foreign, federal, state, local and regional statutes, laws, ordinances and judicial or administrative orders, judgments, rulings and regulations relating to protection of the environment except, in any such case, where failure to comply could not reasonably be expected to have a Material Adverse Effect. 46 52 6.13 Disclosure. Neither this Credit Agreement, any other of the Credit Documents, any of the Related Transaction Documents, nor any other document, certificate or statement furnished to the Agent or any of the Lenders by or on behalf of the Borrower or any Subsidiary in connection herewith (including, without limitation, the Offering Memorandum) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. To the knowledge of the Borrower there is no fact peculiar to the Borrower or any of its Subsidiaries which materially adversely affects or in the future may (so far as the Borrower can now foresee) materially adversely affect the properties or assets, business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries, taken as a whole, and which has not been set forth in this Credit Agreement or in the other documents, certificates and statements furnished to the Agent by or on behalf of the Borrower prior to the date hereof in connection with the transactions contemplated hereby. The financial projections contained in the Memorandum are reasonable based on the assumptions stated therein and the best information available to the officers of the Borrower (provided that this representation shall not constitute a representation by the Borrower that any of such projections will be attained). The parties hereto acknowledge that the description of the terms of the financings described in the Offering Memorandum will be superseded by the actual terms therefor as contained in this Credit Agreement and the Related Transaction Documents. 6.14 Regulatory Status. Neither the Borrower nor any of its Subsidiaries is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of Public Utility Act of 1935, as amended, or (iii) a "public utility" within the meaning of the Federal Power Act, as amended. 6.15 Permits and Other Operating Rights. The Borrower and each of its Subsidiaries has all such valid and sufficient certificates of convenience and necessity, franchises, licenses, permits, operating rights and other authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other Governmental Authorities having jurisdiction over such Borrower or such Subsidiary or any of its respective properties, as are necessary for the ownership, operation and maintenance of its businesses and properties, subject to exceptions and deficiencies which do not materially affect the properties or assets, business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries taken as a whole, and such certificates of convenience and necessity, franchises, licenses, permits, operating rights and other 47 53 authorizations from federal, state, foreign, regional, municipal and other local regulatory bodies or administrative agencies or other Governmental Authorities having jurisdiction over the Borrower, any such Subsidiary or any of their Property are free from burdensome restrictions or conditions of an unusual character or restrictions or conditions materially adverse to the properties or assets, business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries taken as a whole, and neither the Borrower nor any Subsidiary is in violation of any thereof in any material respect. 6.16 Absence of Other Liens. Except with respect to Permitted Liens and Liens in favor of the Banks being paid off on the Closing Date, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any Property of the Borrower or any of its Subsidiaries or any rights relating thereto. 6.17 Security Interest. As of the Closing Date, all filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken, that are necessary or advisable under applicable law and are required to be made or taken on or prior to the Closing Date under the provisions of this Credit Agreement and the Collateral Documents to establish the Collateral Agent's security interest in the Collateral. As of the Closing Date, the Collateral and the Collateral Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses (except any such setoff, claim or defense which could not, individually or in the aggregate, materially impair the rights of the Collateral Agent with respect to the Collateral). The Borrower and each of the Significant Domestic Subsidiaries party to any Collateral Document is the owner of the Collateral described therein free from any Lien, except for Permitted Liens and Liens in favor of the Banks being paid off on the Closing Date. 6.18 Locations of Collateral. The address of the principal place of business and the chief executive office of the Borrower and each of the Significant Domestic Subsidiaries is set forth on Schedule II to the Security Agreement executed by such Person. The books and records of the Borrower and each of the Significant Domestic Subsidiaries, and all of their chattel paper and records of Accounts, are maintained exclusively at such locations. There is no location at which the Borrower or any of the Significant Domestic Subsidiaries has any Collateral other than those locations identified on Schedule II to the Security Agreement executed by such Person. All real property owned or leased by the Borrower and the Significant Domestic Subsidiaries is described in Exhibit A to the Mortgages executed by such Person, which Schedule sets forth, for each such location, a legal description, common address and, 48 54 for leased property, the name and mailing address of the record owner of such leased property. All of the "Trademarks," "Copyrights," "Licenses" and "Patents" (as each such term is defined in the Intellectual Property Security Agreements) owned or licensed by the Borrower and each of the Significant Domestic Subsidiaries is set forth on Schedules A, B, C and D, respectively, to the Intellectual Property Security Agreement executed by such Person. ARTICLE 7. AFFIRMATIVE COVENANTS. Until termination of this Credit Agreement and payment and satisfaction of all Obligations due hereunder: 7.1 Financial Reporting. The Borrower shall timely deliver to the Agent and each Lender the following information: (a) Annual Financial Statements. As soon as available, but not later than 90 days after each fiscal year end: (i) the annual audited consolidated and unaudited consolidating Financial Statements of the Consolidated Entity; (ii) a comparison in reasonable detail to the prior year audited consolidated Financial Statements; (iii) the Auditors' opinion concerning the audited consolidated Financial Statements of the Consolidated Entity, which shall be reasonably acceptable to the Agent and the Lenders, shall be without limitation as to the scope of the audit and shall state that such financial statements present fairly, in all material respects, the financial position of the Borrower and its Subsidiaries and their results of operations and cash flows and have been prepared in conformity with GAAP, that the examination of such Auditors in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances; (iv) a certificate of the Auditors stating that in making the audit necessary to the Auditors' opinion on the consolidated Financial Statements, they have obtained no knowledge of any Event of Default or Default, or if they have obtained knowledge of any Event of Default or Default, specifying the nature and period of existence thereof; provided, however, that the Auditors shall not be liable to anyone by reason of their failure to obtain knowledge of any Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards; (v) a narrative discussion of the consolidated financial condition and results of operations and the consolidated liquidity and capital resources of the Consolidated Entity for such fiscal year, prepared by the chief financial officer of the Borrower (which requirement may be satisfied by delivery of the annual report on Form 10-K filed by the Borrower with the SEC and distributed to its stockholders and public debtholders); (vi) a letter substantially in the form of Exhibit J hereto from the Auditors stating that they have been informed that a primary intent of the Borrower was to have the 49 55 professional services that the Auditors provided to the Borrower in preparing their report with respect to the annual audited Financial Statements was to benefit or influence the Lenders and identifying the Lenders as a party that the Borrower has indicated intends to rely on such professional services provided to the Borrower by the Auditors, and (vii) a compliance certificate substantially in the form of Exhibit K with an attached schedule of calculations demonstrating compliance with the financial covenants set forth in Article 8. (b) Monthly and Annual Projections. Not later than 45 days after each fiscal year end, beginning with the fiscal year ended December 28, 1995, monthly projections of the financial condition and results of operations of the Consolidated Entity for the next succeeding year and annual projections for the next two (2) succeeding fiscal years thereafter, in each case containing projected consolidating balance sheets, statements of operations, statements of cash flows and statements of changes in shareholders equity. (c) Quarterly Financial Statements. As soon as available, but not later than 45 days after each end of each of the first three fiscal quarters of each fiscal year: (i) consolidated Financial Statements of the Consolidated Entity as of the fiscal quarter then ended, and for the fiscal year to date; (ii) a comparison in reasonable detail to the consolidated Financial Statements for the corresponding periods of the prior fiscal year; (iii) the certification of the chief executive officer or chief financial officer of the Borrower that such consolidated Financial Statements have been prepared in accordance with GAAP (subject to year-end audit adjustments); (iv) a narrative discussion of the consolidated financial condition and results of operations and the consolidated liquidity and capital resources of the Consolidated Entity for such fiscal quarter and fiscal year to date, prepared by the chief financial officer of the Borrower (which requirement may be satisfied be delivery of the quarterly report on Form 10-Q filed by the Borrower with the SEC and distributed to its stockholders and public debtholders); and (v) a compliance certificate substantially in the form of Exhibit K with an attached schedule of calculations demonstrating compliance with the financial covenants set forth in Article 8. (d) Special Reports. Promptly upon receipt thereof, a copy of each report submitted to the Borrower or any of its Subsidiaries by the Auditors in connection with any annual, interim or special audit made by the Auditors of the books of the Borrower or any of its Subsidiaries. (e) SEC Reports. The Borrower shall provide to the Agent and each Lender within 15 days after it files them with the SEC copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the 50 56 SEC may by rules and regulations prescribe) which the Borrower files with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Borrower is not subject to Section 13 or 15(d) of the Exchange Act, the Borrower shall continue to file with the SEC, the Agent and the Lenders on the same timely basis such reports, information and other documents as the Borrower would file if the Borrower were subject to the requirements of Section 13 or 15(d) of the Exchange Act. 7.2 Collateral Reporting. The Borrower shall timely deliver to the Agent the following certificates and reports: (a) Monthly Borrowing Base Certificates. Monthly, within thirty-five (35) days after the last Business Day of each month, and at any other time requested by the Agent, a borrowing base certificate (the "Borrowing Base Certificate"), which shall be: (i) substantially in the form of Exhibit A, detailing the Borrower's Eligible Accounts Receivable and Eligible Inventory as of the last day of each month, or as of such other date as the Agent may request; and (ii) prepared by or under the supervision of the Borrower's chief executive officer or chief financial officer and certified by such officer subject only to adjustment upon completion of the normal year-end audit of physical inventory. Each Borrowing Base Certificate shall have attached to it such additional schedules and other information as the Agent may reasonably request, including, without limitation, an aging of Accounts. (b) Further Assurances. When requested by the Agent, any further information regarding the Collateral, business affairs and financial condition of the Borrower or any of its Subsidiaries. 7.3 Notification Requirements. The Borrower shall timely give the Agent and each of the Lenders the following notices: (a) Notice of Defaults. Promptly, and in any event within five (5) Business Days after a Responsible Officer of the Borrower or any of its Subsidiaries becomes aware of the occurrence of a Default or Event of Default, a certificate of the chief executive officer or chief financial officer of the Borrower specifying the nature thereof and the Borrower's proposed response thereto, each in reasonable detail. (b) Collateral Matters. At least thirty (30) Business Days prior written notice to the Agent of any change in the location of any Collateral or in the location of the chief executive office or place of business of the Borrower or any of its Subsidiaries from the locations specified in the Security Agreement to which it is a party. At least twenty (20) Business Days prior to any such change, the Borrower shall cause to be executed and delivered to the Collateral Agent any financing statements, Collateral Access 51 57 Agreements or other documents required by the Agent, all in form and substance satisfactory to the Agent. (c) Notice of Suits, Adverse Change in Business, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, as soon as possible, and in any event within five (5) Business Days after any Responsible Officer of such Person learns of the following, give written notice to the Agent: (a) of any material proceedings (including, without limitation, litigation, investigations, arbitration or governmental proceedings) being instituted by or against such Person in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign), (b) that such Person's operations are not in full compliance with all requirements of applicable federal, state, local or foreign law, ordinance, rule, regulation or other governmental requirement, except for notices as to matters which either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (c) that, without limiting the foregoing clause (b), such Person is subject to a material federal, state, local or foreign investigation evaluating whether any remedial action is needed to respond to the release of any hazardous or toxic waste, substance or constituent, or other substance into the environment, and (d) of any material adverse change in the business, operations, condition (financial or otherwise), properties or prospects of the Borrower and its Subsidiaries, taken as a whole. 7.4 Corporate Existence; Conduct of Business. The Borrower shall, and shall cause each of its Subsidiaries to, (a) continue to engage primarily in the material lines of business (as determined by Borrower in reasonable discretion) which the Borrower and Subsidiaries operate, respectively, as of the Closing Date, (b) preserve, renew and keep in full force and effect the corporate existence, and all material rights, privileges, franchises, permits and licenses of the Borrower and its Subsidiaries, respectively; provided, however, that (i) this clause (b) shall not prohibit a merger otherwise permitted pursuant to Section 8.5 or Section 8.6 and (ii) neither the Borrower nor any of its Subsidiaries shall be required to preserve any such right or franchise or its corporate existence if the loss thereof could not reasonably be expected to have a Material Adverse Effect. 7.5 Books and Records; Inspections. The Borrower agrees to maintain, and to cause each of its Subsidiaries to maintain, books and records pertaining to the Collateral in such detail, form and scope as is consistent with good business practice. The Borrower agrees that the Agent or its agents may enter upon the premises of the Borrower or any of its Subsidiaries at any time and from time to time, during normal business hours and upon reasonable notice under the circumstances, and at any time at all on and after the occurrence of a Default which continues beyond the expiration of any grace or cure period applicable thereto, and which has not 52 58 otherwise been waived by the Agent, for the purposes of (i) inspecting and verifying the Collateral, (ii) inspecting and/or copying (at the Borrower's expense) any and all records pertaining thereto, and (iii) discussing the affairs, finances and business of the Borrower with any officers, employees and directors of the Borrower or, in the presence of a Responsible Officer of the Borrower, with the Auditors. The Borrower agrees to pay the Expenses incurred by the Agent and its agents in connection with inspections and audits once each fiscal year of the Borrower prior to the occurrence of an Event of Default and for each such inspection and audit occurring after the occurrence and during the existence of an Event of Default. 7.6 Insurance. The Borrower shall insure and keep insured, and shall cause each Subsidiary to insure and keep insured, with financially sound and reputable insurers, so much of their respective Property and in such amounts as is usually and customarily insured by companies engaged in similar businesses with respect to Property of a similar character, and, in any event, as is required under the Collateral Documents with respect to maintenance of insurance. In the event the Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required to be maintained by any of the Collateral Documents or to pay any premium in whole or in part relating thereto, then the Agent or the Lenders, without waiving any Event of Default hereunder, may at any time (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums therefor and take any other action with respect thereto as the Agent or the Lenders deem advisable. 7.7 Taxes. The Borrower shall, and shall cause each of its Subsidiaries to, pay or cause to be paid all license fees, bonding premiums and related taxes and charges, and shall pay or cause to be paid all of such Person's real and personal property taxes, assessments and charges and all of such Person's franchise, income, unemployment, use, excise, old age benefit, withholding, sales and other taxes and other governmental charges assessed against such Person, or payable by such Person, in each case when due and in such manner as to prevent any penalty from accruing or any Lien from attaching to its property (other than Liens for taxes not yet due and payable), provided that such Person shall have the right to contest in good faith, by an appropriate proceeding promptly initiated and diligently conducted, the validity, amount or imposition of any such tax, assessment or charge, and during the pendency of such good faith contest to delay or refuse payment thereof if such Person establishes adequate reserves to cover such contested taxes, assessments or charges. 7.8 Compliance with Laws. The Borrower agrees to comply, and to cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, ordinances, rules, regulations and other requirements of Governmental Authorities (including, 53 59 without limitation, Environmental Laws and ERISA), except to the extent that noncompliance could not reasonably be expected to have a Material Adverse Effect. 7.9 Maintenance of Property. The Borrower shall, and shall cause each of its Subsidiaries to, maintain its Property in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times, provided that nothing in this Section 7.9 shall prevent the Borrower of any of its Subsidiaries from discontinuing the operation and maintenance of any of its Property if such discontinuance is desirable in the conduct of its business and not disadvantageous in any material respect to the Lenders; provided, further, that nothing in this Section shall prevent the Borrower or any of its Subsidiaries from discontinuing or disposing of any of its Property to the extent otherwise permitted by Section 8.5 or Section 8.9 hereof. 7.10 Guaranties. The Borrower covenants that, effective upon any Person becoming a Significant Domestic Subsidiary, the Borrower shall cause such Person to become a party to the Guaranty Agreement and execute and deliver a Security Agreement and all such agreements, instruments, documents, financing statements, mortgages, deeds of trust, leasehold mortgages and other written matter, and take such further action, as the Collateral Agent, the Agent or any of the Lenders may request in order to obtain a valid and perfected first priority Lien on all (or all but a de minimis amount of) such Person's Property (subject only to Permitted Liens). 7.11 Further Assurances. The Borrower shall take, and shall cause each of its Subsidiaries to take, all such further actions and execute all such further documents and instruments as the Agent may at any time reasonably determine in its sole discretion to be necessary or desirable to further carry out and consummate the transactions contemplated by the Credit Documents, to cause the execution, delivery and performance of the Credit Documents to be duly authorized and to perfect or protect the Liens (and the priority status thereof) of the Collateral Agent on the Collateral. Without limiting the foregoing, the Borrower and each Subsidiary shall, at its own expense with respect to any real propery acquired by it after the Closing Date, concurrently with such acquisition, execute, deliver and provide to the Collateral Agent such Mortgages and other documents as the Agent, the Lenders and the Collateral Agent may reasonably deem appropriate or advisable to create a first priority (subject to Permitted Liens) valid and perfected Lien in such Property in favor of the Collateral Agent. ARTICLE 8. NEGATIVE COVENANTS. 54 60 Until termination of this Credit Agreement and payment and satisfaction of all Obligations due hereunder, the Borrower shall comply with, and, where required, shall cause each of its Subsidiaries to comply with, the following covenants: 8.1 Certain Financial Covenants. (a) Consolidated Tangible Net Worth. The Borrower covenants that it will not cause or permit Consolidated Tangible Net Worth, at any time: (i) During each "Clause (i) Test Period" (as defined below) occurring during the period commencing on the Closing Date and ending on December 28, 1995, to be less than an amount (the "Clause (i) Amount") equal to (1) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (i) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Borrower or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (i) Test Period; where "Clause (i) Test Period" means, at any time, the period (taken as one accounting period) commencing on March 30, 1995 and ending on the then most recently ended fiscal quarter of the Borrower; (ii) During each "Clause (ii) Test Period" (as defined below) occurring during the period commencing on December 29, 1995 and ending on December 26, 1996, to be less than an amount (the "Clause (ii) Amount") equal to (1) the greater of (X) the Clause (i) Amount at December 28, 1995, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (ii) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Borrower or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (ii) Test Period; where "Clause (ii) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 29, 1995 and ending on the then most recently ended fiscal quarter of the Borrower; (iii) During each "Clause (iii) Test Period" (as defined below) occurring during the period commencing on December 27, 1996 and ending on December 25, 1997, to be less than an amount (the "Clause (iii) Amount") equal to (1) the greater of (X) the Clause (ii) Amount at December 26, 1996, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iii) Test Period (or zero in the case of a deficit), and (Y) $1,250,000 multiplied by the number of the Borrower's fiscal quarters that have 55 61 ended during such Clause (iii) Test Period, plus (3) the amount of any net gain realized by the Borrower or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iii) Test Period; where "Clause (iii) Test Period" means, at any time, the period (taken as a one accounting period) commencing on December 27, 1996 and ending on the then most recently ended fiscal quarter of the Borrower; (iv) During each "Clause (iv) Test Period" (as defined below) occurring during the period commencing on December 26, 1997 and ending on December 31, 1998, to be less than an amount (the "Clause (iv) Amount") equal to (1) the greater of (X) the Clause (iii) Amount at December 25, 1997, and (Y) negative $37,000,000, plus (2) the greater of (X) 50% of Consolidated Net Income for such Clause (iv) Test Period (or zero in the case of a deficit), and (Y) $2,500,000 multiplied by the number of the Borrower's fiscal quarters, at the time of determination, that have ended during such Clause (iv) Test Period, plus (3) the amount of any net gain realized by the Borrower or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (iv) Test Period; where "Clause (iv) Test Period" means, at any time, the period (taken as one accounting period) commencing on December 26, 1997 and ending on the then most recently ended fiscal quarter of the Borrower; and (v) During each "Clause (v) Test Period" (as defined below) occurring after January 1, 1999 and thereafter, to be less than an amount equal to (1) the greater of (X) the Clause (iv) Amount at December 31, 1998, and (Y) negative $37,000,000, plus (2) 50% of Consolidated Net Income for such Clause (v) Test Period (or zero in the case of a deficit), plus (3) the amount of any net gain realized by the Borrower or any of its Subsidiaries on the exchange, redemption, purchase or other acquisition of any of its debt securities (including, without limitation, the 10.25% Notes) during such Clause (v) Test Period; where "Clause (v) Test Period" means, at any time, the period (taken as one accounting period) commencing on January 1, 1999 and ending on the then most recently ended fiscal quarter of the Borrower. (b) Fixed Charge Coverage Ratio. The Borrower covenants that it will not cause or permit the ratio of (i) Consolidated Cash Flow for the twelve month period ending at the end of any fiscal quarter of the Borrower to (ii) Consolidated Fixed Charges for each such twelve month period to be less than the ratio set forth below for the period set forth below in which such fiscal quarter ends: 56 62
Ratio Period ----- ------ 1.45:1 Closing Date through December 28, 1995 1.50:1 December 29, 1995 through December 26, 1996 1.55:1 December 27, 1996 and thereafter
8.2 Limitation on Restricted Payments and Restricted Investments. (a) The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Borrower or its Subsidiaries or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Borrower or its Subsidiaries, other than dividends, distributions or payments payable or made solely in shares of Capital Stock in the Borrower of the same class held by such holders (other than Redeemable Stock) or in options, warrants or other rights to purchase such shares; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Borrower or any Subsidiary; (iii) make any principal payment on, or purchase, redeem, repurchase, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value, prior to any stated or scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory redemption payment, any Restricted Debt (the foregoing actions, set forth in clauses (i) through (iii) being referred to as "Restricted Payments"); or (iv) make any Investment (the foregoing action being referred to as a "Restricted Investment"); unless at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed Restricted Payment or proposed Restricted Investment: (1) no Default or Event of Default exists or would exist; and (2) (i) the aggregate amount expended for all Restricted Payments subsequent to March 30, 1995, plus (ii) the aggregate amount expended for all Restricted Investments made subsequent to March 30, 1995, does not exceed the sum of: (A) 50% (or minus 100% in the event of a deficit) of Consolidated Net Income calculated on a cumulative basis for the period commencing on March 31, 1995 and continuing through the last day of the Borrower's fiscal quarter immediately preceding the Borrower's fiscal quarter in which the Restricted Payment or Restricted 57 63 Investment, as the case may be, is proposed to be made; plus (B) the aggregate net cash proceeds received by the Borrower (i) from the issuance and sale (other than to a Subsidiary of the Borrower), after the Closing Date, of Capital Stock in the Borrower (other than Redeemable Stock), (ii) upon conversion after the Closing Date of any Debt of the Borrower that is, by its terms, convertible into Capital Stock (other than Redeemable Stock) in the Borrower (with the aggregate net cash proceeds being deemed to be the principal amount of the Debt so converted), or (iii) from the exercise for cash after the Closing Date of any options, warrants or other rights to acquire Capital Stock (other than Redeemable Stock) in the Borrower; plus (C) $10,000,000; provided, however, that in no event may Restricted Payments made subsequent to March 30, 1995 exceed the sum of the amounts described in clause (A) and (B) above plus $5,000,000. (b) Notwithstanding clause (a) above, the provisions of this Section shall not prohibit: (i) (A) the payment by any Subsidiary of the Borrower of dividends or other distributions to the Borrower or a Wholly Owned Subsidiary of the Borrower or the redemption or repurchase by any such Subsidiary of any Capital Stock in such Subsidiary owned by the Borrower or a Wholly Owned Subsidiary of the Borrower, or (B) the payment of pro rata dividends to holders of minority interests in the Capital Stock in a Subsidiary of the Borrower; provided, however, that, in the case of clause (B) no Default or Event or Default has occurred and is continuing or would occur as a result thereof; (ii) (A) consummation of the 10.25% Notes Exchange, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; (B) consummation of the exchange of Series B Securities for Series A Securities, and Series D Securities for Series C Securities, as contemplated by the Registration Rights Agreement; and (C) consummation of an exchange of Subsequent Second Priority Notes solely for Second Priority Notes; (iii) Investments in the amounts existing on the date hereof and specifically described on Schedule 8.2 attached hereto; (iv) Investments (subject to Section 7.10) by the Borrower in Wholly Owned Subsidiaries of the Borrower having 58 64 lines of business that are substantially similar or materially related to the Borrower's lines of business existing on the Closing Date, so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof; and (v) Investments in Cash Equivalents; (vi) the acquisition, redemption or retirement of Capital Stock of the Borrower solely in exchange for (A) Capital Stock of the Borrower of the same class as the Capital Stock that is being acquired, redeemed or retired or (B) Common Stock of the Borrower; and (vii) the acquisition, redemption or retirement of Debt of the Borrower or its Subsidiaries (A) which is subordinated in right of payment to the Obligations solely in exchange for Common Stock of the Borrower, or (B) as part of a refinancing thereof permitted by Section 8.3(a)(xi). (c) Notwithstanding clause (b) above, the payments described in clause (b)(i)(B) above shall be included in any calculation of the sum of the amount of Restricted Payments. 8.3 Limitation on Indebtedness. (a) The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly permit to exist, create, incur, issue, assume, guaranty or otherwise become liable with respect to, extend the maturity of or become responsible for the payment of, any Debt (including, without limitation, any Acquired Debt) other than: (i) Debt of the Borrower evidenced by the First Priority Notes; (ii) Debt of the Borrower evidenced by the 10.25% Notes; (iii) Debt of the Borrower evidenced by the Second Priority Notes and the Subsequent Second Priority Notes; provided, however, that: (1) the aggregate principal amount of the Second Priority Notes and the Subsequent Second Priority Notes do not at any time exceed $50,000,000, (2) such Second Priority Notes and Subsequent Second Priority Notes have terms substantially identical to the 10.25% Notes and in any event no less favorable to the Borrower than those set forth in the 10.25% Notes and the 10.25% Notes Indenture (provided, however, that the Second Priority Notes and Subsequent Second Priority Notes may be secured by Liens that are Permitted Liens described in clause (xi) of the definition of Permitted Liens and the final maturity thereof may be prior to the final maturity of the 10.25% Notes, subject to clause 59 65 (3) below), (3) the final maturity of such Second Priority Notes and Subsequent Second Priority Notes is not prior to June 15, 2000, and (4) without limiting the foregoing clause (3), such Second Priority Notes and Subsequent Second Priority Notes shall not have any scheduled principal installment or other principal payments due until after the final maturity of the First Priority Notes; (iv) Debt of the Borrower under the Prudential Revolving Credit Agreement (including any refinancings thereof), provided, that the aggregate principal amount of such Debt does not at any time exceed $35,000,000; (v) the Obligations of the Borrower under this Credit Agreement; (vi) Debt of the Borrower and certain Subsidiaries of the Borrower under the GECC Lease Documents (including any refinancings thereof) in an aggregate principal amount not to exceed the principal amount thereof outstanding as of the Closing Date less any scheduled amortization after the Closing Date of such Debt when actually paid by the Borrower or its Subsidiaries; provided, however, that no refinancing of such Debt under the GECC Lease Documents shall be permitted unless: (1) such refinancing Debt shall have an Average Life at the time such refinancing is incurred that is equal to or greater than the Average Life of the Debt to be refinanced; and (2) such refinancing Debt shall be in a principal amount not in excess of the principal amount of the Debt to be refinanced (including the amount (if any), up to $10,000,000, by which the Stipulated Loss Value exceeds the then outstanding principal amount of the Debt to be refinanced); (vii) Debt evidenced by guaranties made by the Borrower's Subsidiaries of the Debt described in clauses (i), (iii), (iv) and (v) of this Section 8.3; (viii) Debt of the Borrower or any of its Subsidiaries under Currency Agreements and Interest Rate Agreements; provided, that such Currency Agreements and Interest Rate Agreements do not increase the outstanding Debt of the Borrower other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (ix) Debt of a Wholly Owned Subsidiary of the Borrower to the Borrower or another Wholly Owned Subsidiary of the Borrower; (x) Debt of any Subsidiary of the Borrower existing on the Closing Date and described on Schedule 8.3 hereto; 60 66 (xi) other Debt of any Subsidiary of the Borrower that directly refinances any Debt of such Subsidiary described in the immediately foregoing clause (x); provided, however, that (1) the principal amount of such refinancing Debt does not exceed the principal amount of the Debt to be refinanced, (2) the terms of such refinancing Debt are, in all material respects, no less favorable to such Subsidiary than the terms of the Debt to be refinanced, and (3) without limiting the foregoing clause (2) no refinancing Debt may be secured to any greater extent than is the Debt to be refinanced; provided, further, that notwithstanding clause (1) above, the aggregate principal amount of Debt refinancing existing lines of credit of the Borrower's Subsidiaries may equal up to $10,000,000 (or the applicable foreign currency equivalent thereof (reasonably determined by the Borrower at the time any such refinancing Debt is incurred); (xii) Debt of the Borrower or any of its Subsidiaries (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business, or (B) arising under guarantees incurred in the ordinary course of business (and not in connection with the borrowing of money) with respect to suppliers, licensees, franchisees or customers of the Borrower or such Subsidiary; (xiii) other Debt of the Borrower and its Subsidiaries (including, without limitations, Purchase Money Indebtedness and Acquired Debt); provided, however, that the aggregate outstanding principal amount thereof shall at no time exceed $15,000,000 (or the applicable foreign currency equivalent thereof reasonably determined by the Borrower at the time such Debt is incurred); provided, further, that the aggregate outstanding amount of Purchase Money Indebtedness to be incurred in connection with the purchase of any Property shall not exceed 90% of the cash purchase price to be paid for such Property; and (xiv) other Debt of the Borrower (not secured by any Lien); provided, however, that at no time shall (1) Consolidated Senior Debt be more than 52.5% of Consolidated Total Capitalization, or (2) Consolidated Debt be more than 85% of Consolidated Total Capitalization. (b) For purposes of determining any particular amount of Debt under this Section, Guarantees of (or obligations with respect to letters of credit supporting) Debt otherwise included in the determination of such amount shall not also be included. 8.4 Limitation on Liens. The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, 61 67 directly or indirectly, create, incur or permit to exist any Lien of any nature whatsoever on any of its Property (including, without limitation, Capital Stock), whether owned on the Closing Date or thereafter acquired, other than Permitted Liens. 8.5 Limitation on Borrower Transfers, Mergers and Consolidations. The Borrower covenants that it shall not (a) directly or indirectly Transfer all or substantially all of its Property in a single transaction or series of transactions, or (b) merge or consolidate with any other Person unless, in the case of a merger or consolidation: (i) at the time of, and immediately after giving effect to (determined on a pro forma basis), such proposed merger or consolidation, no Default or Event of Default exists or would exist after giving effect thereto (including, without limitation, any Event of Default resulting from a Change of Control); and (ii) the Borrower has delivered to the Agent a certificate of its chief executive or chief financial officer and a legal opinion acceptable to the Agent and Lenders, each stating that such consolidation or merger complies with this Section 8.5 and that all conditions precedent herein provided for with respect thereto have been completely satisfied. 8.6 Limitation on Certain Asset Sales and Subsidiary Mergers. Without limiting Section 8.5 above, the Borrower covenants that (i) it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, Transfer any of its Property, and (ii) the Borrower shall not permit any of its Subsidiaries to merge or consolidate with any Person, except: (a) any Wholly-Owned Subsidiary of the Borrower may merge with, or sell all or substantially all of its Property to, the Borrower or another Wholly-Owned Subsidiary of the Borrower if at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed transaction no Default or Event of Default exists or would exist after giving effect thereto; (b) the Borrower may Transfer assets to the extent permitted under Section 8.5 and may issue and sell its Capital Stock subject to Section 9.1(f); (c) the Borrower or any such Subsidiary may sell inventory in the ordinary course of business and equipment that is determined to be obsolete in accordance with GAAP or concurrently replaced by equipment (not subject to any Lien other than Permitted Liens) of the same type having a fair market value at least equal to the fair market value of the equipment so replaced; 62 68 (d) the Borrower or any such Subsidiary (subject to clause (f) below) may otherwise Transfer Property (excluding Capital Stock of Material Subsidiaries), and any such Subsidiary (subject to clause (f) below) may consummate a Transfer by Merger; provided that after giving effect thereto (1) the Percentage of Total Assets Transferred in any fiscal year of the Borrower (excluding assets described in clauses (a) and (c) above) shall not exceed 10%; and (2) the Percentage of Total Assets Transferred (excluding assets described in clauses (a) and (c) above) at any time after the Closing Date on a cumulative basis shall not exceed 15%; and (e) the Borrower or any Subsidiary of the Borrower (subject to clause (f) below) may Transfer other Property (not constituting Capital Stock of any Material Subsidiary), and any Subsidiary of the Borrower (subject to clause (f) below) may consummate other Transfers by Merger if: (i) at the time of and immediately after giving effect to (determined on a pro forma basis) such proposed Transfer of Property or Transfer by Merger (as the case may be) no Default or Event of Default exists or would exist; (ii) the consideration to be paid to the Borrower or such Subsidiary (as the case may be) is at least equal to the fair market value of the assets to be Transferred (or in the case of a Transfer by Merger, the fair market value of the Subsidiary subject thereto), in each case as reasonably determined by the Board of Directors; and (iii) the proceeds from such Transfer of Property or Transfer by Merger (net of (x) reasonable expenses incurred by the Borrower or the Subsidiary (as the case may be) incidental thereto, (y) the amount of any taxes (reasonably determined by the Borrower in good faith) owing by the Borrower or such Subsidiary (as the case may be) as a result thereof, and (z) any mandatory repayment of permitted Debt (if any) secured by a Permitted Lien on the Property being Transferred that is prior to the Lien securing the Consolidated Secured Debt) are immediately applied to redeem or otherwise repay the Obligations and the other Consolidated Secured Debt outstanding at such time, such application of proceeds to be made pro rata to the holders of the Consolidated Secured Debt based on the then outstanding principal amount or outstanding amount of unpaid reimbursement obligations (with respect to draws on the Letters of Credit) of each such holder's holding of Consolidated Secured Debt (or, in the case of Prudential, the "Revolving Commitment," as defined in the Collateral Agency Agreement) in proportion to the aggregate amount of Consolidated Secured Debt then 63 69 outstanding (or, in the case of Prudential, the "Revolving Commitment," as defined in the Collateral Agency Agreement); provided, however , that such redemption or repayment pursuant to this clause (3) shall be deferred until the amount of proceeds to be so redeemed and otherwise repaid equals or exceeds $5,000,000 with any such lesser amounts not used for redemption or repayment to be aggregated with proceeds subsequently received from Transfers to be utilized for redemption or repayment at such point as such aggregate amount equals or exceeds $5,000,000. The Borrower shall make each redemption or other repayment required under Section 8.6(e)(iii) no later than the Business Day following the Transfer of Property or Transfer by Merger giving rise thereto. (f) Notwithstanding anything to the contrary in this Section 8.6, the Borrower shall not permit any Material Subsidiary, directly or indirectly, to Transfer all or substantially all of its assets in a single transaction or seies of related transactions or to merge or consolidate with any Person other than as permitted under Section 8.6(a). 8.7 Limitation on Payment Restrictions Affecting Subsidiaries. The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction which by its terms expressly restricts the ability of any Subsidiary of the Borrower to: (a) pay dividends or make any other distributions on the Capital Stock in such Subsidiary or any other interest or participation in, or measured by, its profits owned by, or pay any Debt owed to, the Borrower or any such Subsidiary, (b) make any loans or advances to the Borrower or any such Subsidiary or (c) transfer any of its Property to the Borrower or to any such Subsidiary, except for (i) such encumbrances or restrictions existing under or by reason of any encumbrance or restriction existing by reason of applicable law; (ii) such encumbrances or restrictions existing on the Closing Date and described in reasonable detail on Schedule 8.7 hereto, including, without limitation, any encumbrances or restrictions under Debt of the Borrower or any of its Subsidiaries listed on Schedule 8.3; (iii) such encumbrances or restrictions as may exist under refinancing Debt permitted under Section 8.3(a)(xi); provided, however, that any such encumbrances or restrictions are, in no material respect, any more onerous to the Borrower or such Subsidiary than the encumbrances or restrictions included in the Debt to be refinanced; (iv) such encumbrances or restrictions as may exist under any Acquired Debt at the time incurred by the Borrower or such Subsidiary; provided, however, that such encumbrances or restrictions are, in no material respect, any more onerous to the Borrower or such Subsidiary as the then existing most onerous such encumbrances and restrictions applicable to the 64 70 Borrower or such Subsidiary; (v) the provisions of any lease governing a leasehold interest or of any supply, license or other agreement entered into in the ordinary course of business of the Borrower or such Subsidiary that restrict in a customary manner transfer, subleasing or assignment; and (vi) any restrictions with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition. 8.8 Transactions with Affiliates. (a) The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, any purchase, sale or exchange of Property, the making of any Investment, the giving of any guarantee or the rendering of any service), with any Affiliate of the Borrower or of any Subsidiary of the Borrower unless the terms of such transaction or series of related transactions are no less favorable to the Borrower or such Subsidiary, as the case may be, than those that might be obtained at the time of such transaction from a Person who is not such an Affiliate; provided, however, that in addition to the foregoing, any such transaction (or series of related transactions), other than Exempted Transactions, that has a fair market value to the Borrower or such Subsidiary of $10,000,000 or more shall be deemed to be on terms no less favorable to the Borrower or such Subsidiary than those obtainable at the time of the transaction from a Person who is not such an Affiliate only if the Board of Directors of the Borrower receives and delivers to the Agent, prior to such transaction, a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Borrower or such Subsidiary from a financial point of view. (b) The provisions set forth in clause (a) above shall not apply to (i) the payment of fees, salaries or other amounts to DPK in accordance with the express terms of the Management Agreement; provided, however, that the aggregate amount of all such fees, salaries and other amounts shall not exceed $5,000,000 (determined without regard to the value of options to purchase the Borrower's Common Stock) in the aggregate in any consecutive twelve month period, (ii) any transaction between the Borrower and any of its Wholly Owned Subsidiaries, (iii) the payment of reasonable and customary fees (including options to purchase the Borrower's Common Stock) to directors of the Borrower or any of the Subsidiaries of the Borrower who are not employees of the Borrower or any Subsidiary of the Borrower as the same may be deemed advisable or appropriate by the Board of Directors, or (iv) loans or advances to officers, members of the Board of Directors and employees of the Borrower or any of its Subsidiaries for travel, entertainment or moving and other relocation expenses made in the ordinary course of 65 71 business of the Borrower and its Subsidiaries as the same may be deemed advisable or appropriate by the Board of Directors. 8.9 Limitations on the Sale of Stock and Debt of Subsidiaries. The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, sell or otherwise dispose of, or part with control of, any Capital Stock (other than directors' qualifying shares or nominee shares) or Indebtedness of any Subsidiary of the Borrower, except to the Borrower or a Wholly Owned Subsidiary of the Borrower, and except that all Capital Stock and Indebtedness of any such Subsidiary may be sold as an entirety provided that (a) at the time of such sale, such Subsidiary shall not own, directly or indirectly, any Capital Stock or Indebtedness of any other Subsidiary (unless all of the Capital Stock and Indebtedness of such other Subsidiary are simultaneously being sold), and (b) such sale would be permitted by Section 8.5 and Section 8.6; provided, further, that this Section 8.9 shall not be deemed to prohibit the Borrower or any Subsidiary of the Borrower from making any Investment (including, without limitation, Investments in a Person such that after giving effect thereto such Person may be less than a Wholly-Owned Subsidiary of the Borrower) permitted by Section 8.2. 8.10 Sale and Lease-Back Transactions. The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, enter into any arrangement with any Person providing for the leasing by the Borrower or such Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary. 8.11 Sale or Discount of Receivables. The Borrower covenants that it shall not, and shall not permit any of its Subsidiaries to, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable. 8.12 Pension Plan Funding Deficiency. The Borrower covenants that it shall not, and shall not permit any member of the Control Group to, on or after the Closing Date (a) incur or permit to exist any accumulated funding deficiency within the meaning of Section 302(a)(2) of ERISA or Section 412(a) of the Internal Revenue Code, or (b) incur any liability (other than for premiums due but not yet paid) to the Pension Benefit Guaranty Corporation, in either case in connection with any Title IV Plan which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 66 72 8.13 Limitation on Issuance and Sale of Capital Stock of Subsidiaries. The Borrower covenants that it shall not (a) permit any Subsidiary of the Borrower to issue or sell any Capital Stock in such Subsidiary other than to the Borrower or a Wholly Owned Subsidiary of the Borrower or (b) permit any Person other than the Borrower or a Wholly Owned Subsidiary of the Borrower to hold any Capital Stock issued after the Closing Date in any Subsidiary of the Borrower; provided, however, that the Borrower or any Subsidiary of the Borrower may sell Common Stock to the extent permitted under Section 8.6. 8.14 Limitation on Fiscal Year Changes. The Borrower covenants that it shall not change its fiscal year end from the last Thursday in each December of each year nor shall it make any change to its corresponding fiscal quarter end; provided, however, that the Borrower may make a one time change in its fiscal year end to December 31 of each year (a "Fiscal Year Change") so long as (a) its fiscal quarter end is concurrently changed to the last day of each calendar quarter and (ii) the Borrower gives not less than 5 Business Days prior notice thereof to the Agent. Upon and after the effectiveness of the Fiscal Year Change (if any) and as to all periods after (but not before) such Fiscal Year Change: (a) the references in Section 8.1(a) to "December 25," "December 26," "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31;" and (b) the references in Section 8.1(b) to "December 27," "December 28" and "December 29" shall automatically be deemed to be a reference to "December 31." 8.15 Limitation of Payments on First Priority Note and Subsequent First Priority Notes. The Borrower covenants that it shall not, directly or indirectly, make any principal payment on or purchase, redeem, repurchase, defease (including but limited to, in-substance or legal defeasance) or otherwise acquired or retire for value, prior to any stated or scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory redemption payment, any First Priority Notes or Subsequent First Priority Notes other than pursuant to Section 3.09 and 4.06(e)(3) of the First Priority Notes Indenture (as in effect on the Closing Date). ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES. 9.1 Events of Default. The occurrence of any of the following events shall constitute an Event of Default hereunder: (a) Failure to Pay Principal. The Borrower shall fail to make any principal payment when the same shall become payable hereunder. (b) Failure to Pay Other Obligations. The Borrower shall fail to pay any Obligation (other than principal payments) for more than five (5) days after the same shall become payable hereunder. 67 73 (c) Breach of Certain Covenants. The Borrower shall fail to comply with any covenant contained in Article 8 hereof. (d) Breach of Representation or Warranty. Any representation or warranty made by any Credit Party or by any Responsible Officer thereof in this Credit Agreement or in any other Credit Document (and in any statement or certificate given under this Credit Agreement or any other Credit Document), shall be false or misleading in any material respect when made or deemed to be made. (e) Breach of Other Covenants. Any Credit Party shall fail to comply with any covenant, condition or agreement contained in this Credit Agreement or any other Credit Document, other than as set forth in Sections 9.1(a), (b) or (c), and such failure shall continue for thirty (30) days after any Responsible Officer of the Borrower learns thereof. (f) Change of Control. A Change of Control shall occur. (g) Cross Default. The Borrower or any Subsidiary of the Borrower defaults (whether as primary obligor or as guarantor or other surety) in any payment of principal of or interest on the 10.25% Notes, the First Priority Notes, the Subsequent First Priority Notes (if any), the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), any loan under the Prudential Revolving Credit Agreement, any Capital Lease Obligation under the GECC Lease Documents or any other obligation for money borrowed (or any Capital Lease Obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or any obligation under notes payable or drafts accepted representing extensions of credit or any obligation to pay or reimburse any Person for any amount paid under any letter of credit, any proposal, bid, performance or other bond, or under any indemnity agreement) beyond any period of grace provided with respect thereto, or the Borrower or any such Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such obligation is created (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause, such obligation to become due (or to be repurchased by the Borrower or any such Subsidiary) prior to any stated maturity, provided that, except in respect of the 10.25% Notes, the First Priority Notes, the Subsequent First Priority Notes (if any), the Second Priority Notes (if any), the Subsequent Second Priority Notes (if any), the loans under the Prudential Revolving Credit Agreement and the Capital Lease Obligation under the GECC Lease Documents, the aggregate amount of all obligations as to which such a payment default shall occur and be continuing or such a failure or other event causing or permitting acceleration 68 74 (or resale to the Borrower or any Subsidiary) shall occur and be continuing exceeds $5,000,000. (h) Insolvency Event. The Borrower or any Material Subsidiary shall become the subject of an Insolvency Event. (i) Judgments. One or more judgments or orders in an aggregate amount in excess of $5,000,000 (net of cash proceeds actually received by, or paid on behalf of, the Borrower or any Material Subsidiary of the Borrower with respect to such judgments or orders) are rendered against the Borrower or any Material Subsidiary of the Borrower and, within 60 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged. (k) Defaults Under Other Credit Documents. The occurrence of any "Event of Default" (as defined in any other Credit Document) or the breach of any covenant, warranty or agreement set forth in any other Credit Document, which Event of Default or breach continues beyond any period of grace therein provided. (l) Unenforceability of Guaranty. The Guaranty Agreement shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty Agreement, or any guarantor thereunder shall fail to comply with any of the terms or provisions of the Guaranty Agreement or denies that it has any further liability under the Guaranty Agreement, or gives notice to such effect. (m) Collateral. The Collateral Agent shall cease to possess at any time a valid, first priority (subject to Permitted Liens) perfected Lien in and on any of the Collateral (other than Collateral having a de minimis value). (n) Termination Event. Any Termination Event occurs. 9.2 Acceleration, Termination of Commitments and Cash Collateralization. Upon the occurrence and during the continuance of any Event of Default, without prejudice to the rights of the Agent or any Lender to enforce its claims against the Borrower: (a) Acceleration. Upon the written request of the Majority Lenders, and by delivery of written notice to the Borrower from the Agent, all Obligations shall be immediately due and payable (except with respect to any Event of Default set forth in Section 9.1(h) hereof, in which case all Obligations shall automatically become immediately due and payable without the necessity of any request of the Majority Lenders or notice or other demand to the Borrower) without presentment, demand, protest or any other action or obligation of the Agent or any Lender. 69 75 (b) Termination of Commitments. Upon the written request of the Majority Lenders, and by delivery of written notice to the Borrower from the Agent, the Commitments shall be immediately terminated and, at all times thereafter, all Revolving Loans made by any Lender pursuant to this Credit Agreement shall be at such Lender's sole discretion, unless such Event of Default is waived in accordance with Section 11.11, in which case the Commitments shall be automatically reinstated. (c) Cash Collateralization. On demand of the Agent or the Majority Lenders, and subject to the terms of the Collateral Agency Agreement, the Borrower shall immediately deposit in the Cash Collateral Account maintained by the Collateral Agent, for each Letter of Credit then outstanding, cash or Cash Equivalents in an amount equal to 110% of the greatest amount drawable thereunder. Such deposit shall be held by the Collateral Agent and disbursed to the Agent in accordance with the terms of the Collateral Agency Agreement to reimburse the Issuing Bank for the amount of each drawing made under such Letters of Credit, as and when each such drawing is made. 9.3 Rescission of Acceleration. After acceleration of the maturity of the Obligations, if the Borrower pays all accrued interest and all principal due (other than by reason of the acceleration) and all Defaults and Events of Default are otherwise remedied or waived in accordance with Section 11.11, the Majority Lenders may elect in their sole discretion, to rescind the acceleration and direct the Collateral Agent to return any cash collateral deposited with the Collateral Agent pursuant to Section 9.2(c). (This Section is intended only to bind all of the Lenders to a decision of the Majority Lenders and not to confer any right on the Borrower, even if the described conditions for the Majority Lenders' election may be met.) 9.4 Remedies. Upon the occurrence and during the continuance of an Event of Default, upon the written request and at the direction of the Majority Lenders, the Agent may direct the Collateral Agent, in accordance with the terms of the Collateral Agency Agreement, to exercise any rights and remedies available to the Collateral Agent under applicable law (including under the Code) and under the Collateral Documents. The foregoing rights and remedies are not intended to be exhaustive and the full or partial exercise of any right or remedy shall not preclude the full or partial exercise of any other right or remedy available under this Credit Agreement, any other Credit Document, or the Collateral Agency Agreement, at equity or at law. 9.5 Right of Setoff. In addition to and not in limitation of all rights of offset that any Lender or the Issuing Bank may have under applicable law, upon the occurrence of any Event of Default, and whether or not any Lender or the Issuing Bank has made any demand or the Obligations of any Credit Party have matured, each 70 76 Lender and the Issuing Bank shall have the right, subject to the terms of the Collateral Agency Agreement, to appropriate and apply to the payment of the Obligations of such Credit Party all deposits and other obligations then or thereafter owing by such Lender or the Issuing Bank to such Credit Party. Each Lender exercising such rights shall notify the Agent thereof and any amount received as a result of the exercise of such rights shall, subject to the terms of the Collateral Agency Agreement, be shared by the Lenders in accordance with Section 3.5. 9.6 Application of Proceeds; Surplus; Deficiencies. The net cash proceeds resulting from the Collateral Agent's exercise of any of the foregoing rights against any Collateral that are disbursed to the Agent pursuant to the terms of the Collateral Agency Agreement (after deducting all of the Agent's Expenses related thereto) shall be applied by the Agent to the payment of the Obligations, whether due or to become due, in the order set forth in Section 4.10. The Borrower shall remain liable to the Agent and the Lenders for any deficiencies, and the Agent and the Lenders in turn agree to remit to the Borrower or its successors or assigns, any surplus resulting therefrom. ARTICLE 10. THE AGENT. 10.1 Appointment of Agent. (a) Each Lender and the Issuing Bank hereby designates BTCC as its Agent and irrevocably authorizes the Agent to take action on its behalf under the Credit Documents and the Collateral Agency Agreement, to exercise the powers and perform the duties described therein, and to exercise such other powers reasonably incidental thereto. The Agent may perform any of its duties through its agents or employees. (b) Other than the Borrower's rights under Section 10.8, this Article 10 is for the benefit of the Agent and the Lenders only. The Agent shall act only for the Lenders and assumes no obligation to or agency or trust relationship with any Credit Party. 10.2 Nature of Duties of Agent. The Agent has no duties or responsibilities except those expressly set forth in the Credit Documents. Neither the Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted hereunder or in connection herewith. The duties of the Agent shall be mechanical and administrative in nature. The Agent shall not have a fiduciary relationship to any Lender or any participant of any Lender. 10.3 Lack of Reliance on Agent. Independently and without reliance upon the Agent, each Lender has made and shall continue to make its own independent investigation and analysis of the content 71 77 and validity of the Credit Documents and the Collateral Agency Agreement or of the performance and creditworthiness of the Credit Parties thereunder. The Agent assumes no responsibility and undertakes no obligation to make inquiry with respect to such matters, unless specifically requested to do so in writing by a Lender. 10.4 Certain Rights of the Agent. The Agent may request instructions from the Majority Lenders at any time. If the Agent requests instructions from the Majority Lenders with respect to any action or inaction, the Agent shall be entitled to await instructions from the Majority Lenders before such action or inaction. No Lender shall have any right of action based upon the Agent's action or inaction in response to instructions from the Majority Lenders. 10.5 Reliance by Agent. The Agent may rely upon written or telephonic communication it believes to be genuine and to have been signed, sent or made by the proper person. The Agent may obtain the advice of legal counsel (including, for matters concerning the Borrower, counsel for the Borrower), independent public accountants and other experts selected by it and shall have no liability for action or inaction in good faith based upon such advice. 10.6 Indemnification of Agent. Each Lender agrees to reimburse and indemnify the Agent, to the extent of its Proportionate Share, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever (including all Expenses) which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or otherwise relating to the Credit Documents and the Collateral Agency Agreement, unless resulting from the Agent's gross negligence or willful misconduct. 10.7 BTCC in its Individual Capacity. In its individual capacity, BTCC shall have the same rights and powers hereunder as any other Lender and may exercise them as though it was not performing the duties specified herein as Agent. The terms "Lenders," "Majority Lenders," or any similar terms shall, unless the context clearly otherwise indicates, include BTCC in its individual capacity. BTCC and its Affiliates may accept deposits from, lend money to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory or other business with the Borrower or any Affiliate of the Borrower as if it were not performing the duties specified herein as Agent, and may accept fees and other consideration from the Borrower for services in connection with this Credit Agreement and otherwise without having to account for the same to the Lenders. 72 78 10.8 Successor Agent. (a) The Agent may, upon five Business Days' notice to the Lenders and the Borrower, resign by giving written notice thereof to the Lenders and the Borrower. The Agent's resignation shall be effective upon the appointment of a successor Agent. (b) Upon receipt of the Agent's resignation, the Majority Lenders may appoint a successor Agent. Unless an Event of Default shall have occurred and be continuing at the time of such appointment, the successor Agent shall be subject to approval by the Borrower, which approval shall not to be unreasonably withheld and shall be delivered to the Majority Lenders within five Business Days after the Borrower's receipt of notice of a proposed successor Agent. If a successor Agent has not accepted its appointment within fifteen Business Days, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent. (c) Upon its acceptance of the agency hereunder, a successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Credit Agreement. The retiring Agent shall continue to have the benefit of this Article 10 for any action or inaction while it was Agent. 10.9 Collateral Matters. (a) Each Lender authorizes and directs the Agent to enter into the Collateral Agency Agreement for the benefit of the Lenders. Except as otherwise set forth herein, any action or exercise of powers by the Majority Lenders under the Credit Documents and the Collateral Agency Agreement, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. Prior to an Event of Default, without notice to or consent from any Lender, the Agent may direct the Collateral Agent, in accordance with the terms of the Collateral Agency Agreement and subject to the limitations set forth therein, to take any action necessary or advisable to perfect and maintain the perfection of the Liens upon the Collateral. (b) The Agent is authorized to direct the Collateral Agent, in accordance with the terms of the Collateral Agency Agreement and subject to the limitations set forth therein, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Commitments and indefeasible payment and satisfaction of all of the Obligations, (ii) upon receipt of the proceeds of sales of the Collateral permitted hereunder or (iii) if the release can be and is approved by the Majority Lenders. The Agent may request and the Lenders will provide confirmation of the Agent's authority to direct the Collateral Agent, in accordance with the terms of the Collateral Agency Agreement and subject to 73 79 the limitations set forth therein, to release particular types or items of Collateral. (c) The Agent shall have no obligation to assure that the Collateral exists or is owned by the Borrower or any of its Subsidiaries, that such Collateral is cared for, protected or insured, or that the Liens in the Collateral have been created, perfected, or have any particular priority. With respect to the Collateral, the Agent may act in any manner it may deem appropriate, in its sole discretion, given the Agent's own interest in the Collateral as one of the Lenders, and it shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct. 10.10 Actions with Respect to Defaults. In addition to the Agent's right to take actions on its own accord as permitted under this Credit Agreement, the Agent shall take such action with respect to a Default or Event of Default as shall be directed by the Majority Lenders. Until the Agent shall have received such directions, the Agent may act (or not act) as it deems advisable and in the best interests of the Lenders. 10.11 Protection of Collateral. If the Borrower fails to (a) maintain in force and pay for any insurance policy or bond which the Borrower is required to provide pursuant to any of the Credit Documents, (b) keep the Collateral in good repair and operating condition in accordance with the provisions of any of the Credit Documents, (c) keep the Collateral free from any Liens other than Permitted Liens, (d) pay when due all taxes, levies and assessments except as otherwise provided pursuant to the terms of any of the Credit Documents, (e) make all payments and perform all acts on the part of the Borrower to be paid or performed with respect to any of the Collateral, including, without limitation, all expenses of protecting, storing, warehousing, insuring, handling and maintaining the Collateral and (f) keep fully and perform promptly any other of the obligations of the Borrower under the Credit Documents, then the Agent or the Lenders, at its or their option, may (but shall not be required to) procure and pay for such insurance policy or bond, place such Collateral in good repair and operating condition, pay, contest or settle such Liens or taxes or any judgements based thereon or otherwise make good any other such failure of the Borrower. The Borrower shall reimburse the Agent and the Lenders promptly upon demand for all sums paid or advanced on behalf of the Borrower for any such purpose, together with reasonable and/or necessary cost and expenses (including reasonable attorneys' fees) paid or incurred by the Agent in connection therewith and interest on all sums advanced from the date of advancement until repaid to the Agent at the rate specified in Section 4.4. All such sums advanced by the Agent and the Lenders, with interest thereon, immediately upon advancement thereon, shall be deemed to be part of the Obligations. 74 80 ARTICLE 11. MISCELLANEOUS. 11.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE CREDIT DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS. 11.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE BORROWER AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS. 11.3 SERVICE OF PROCESS. THE BORROWER HEREBY IRREVOCABLY AGREES THAT SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE AFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 11.7. 11.4 JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A BENCH TRIAL. 11.5 LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 75 81 11.6 Delays. No delay or omission of the Agent or the Lenders to exercise any right or remedy hereunder shall impair any such right or operate as a waiver thereof. 11.7 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 or any of the Lenders, then to BT Commercial Corporation, 233 South Wacker Drive, Chicago, Illinois 60606, Attention: Credit Department, if to the Borrower, then to Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60521, Attention: General Counsel, or by facsimile transmission, promptly confirmed in writing sent by first class mail, if to the Agent or any of the Lenders, at (312) 993-8096, and if to the Borrower, at (708) 571-0959. 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. 11.8 Assignments and Participation. (a) Borrower Assignment. The Borrower shall not assign this Credit Agreement, or any rights or obligations hereunder, without the prior written consent of the Agent and the Lenders. (b) Lender Assignments. Each Lender may assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Credit Agreement, the Revolving Notes and the other Credit Documents, with the consent of the Agent and the consent of the Borrower (which shall not be unreasonably withheld), and upon execution and delivery to the Agent, for its acceptance and recording in the Register, of an agreement in substantially the form of Exhibit L (an "Assignment and Assumption Agreement"), together with surrender of any Revolving Note or Revolving Notes subject to such assignment and a processing and recordation fee of $2,500. No such assignment shall be for less than $5,000,000 of the Commitments unless it is to another Lender. (This Section does not apply to branches and Affiliates of a Lender, it being understood that a Lender may make, carry or transfer Revolving Loans at or for the account of any of its branch offices or Affiliates without consent of the Borrower, the Agent or any other Lender.) (c) Agent's Register. The Agent shall maintain a register of the names and addresses of the Lenders, their Commitments, and the principal amount of their Revolving Loans (the "Register"). The Agent shall also maintain a copy of each Assignment and Assumption Agreement delivered to and accepted by it and modify the Register to give effect to each Assignment and Assumption Agreement. Upon 76 82 its receipt of each Assignment and Assumption Agreement and surrender of the affected Revolving Note or Revolving Notes, the Agent will give prompt notice thereof to the Borrower and deliver to the Borrower a copy of the Assignment and Assumption Agreement and the surrendered Revolving Note or Revolving Notes. Within five Business Days after its receipt of such notice, the Borrower shall execute and deliver to the Agent a new Revolving Note or Revolving Notes to the order of the assignee in the amount of the Commitment or Commitments assumed by it and to the assignor in the amount of the Commitment or Commitments retained by it, if any. Such new Revolving Note or Revolving Notes shall re-evidence the Indebtedness outstanding under the surrendered Revolving Note or Revolving Notes and shall be dated as of the Closing Date. The Agent shall be entitled to rely upon the Register exclusively for purposes of identifying the Lenders hereunder. (d) Lender Participation. Each Lender may sell a participation (without the consent of the Agent, the Borrower or any other Lender) to one or more parties in or to all or a portion of its rights and obligations under this Credit Agreement, the Revolving Notes and the other Credit Documents. Notwithstanding a Lender's sale of a participation interest, its obligations hereunder shall remain unchanged. The Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender. No participant shall have rights to approve any amendment or waiver of any provision of this Credit Agreement or any of the other Credit Documents. 11.9 Confidentiality. Each Lender agrees that it will use its reasonable best efforts not to disclose without the prior consent of the Borrower any information with respect to the Borrower or any of its Subsidiaries which is furnished or otherwise obtained by the Agent or any of the Lenders pursuant to this Credit Agreement or any of the Collateral Documents and which is clearly designated by the Borrower to the Lenders in writing as confidential; provided, that any Lender may disclose any such information (a) to its employees, auditors, or counsel, or to another Lender if the disclosing Lender or such disclosing Lender's holding or parent company in its sole discretion determines that any such party should have access to such information, (b) as has become generally available to the public, (c) as may be required or appropriate in any report, statement or testimony submitted to any Governmental Authority having or claiming to have jurisdiction over such Lender, (d) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (e) in order to comply with any Requirement of Law, and (f) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Revolving Notes or Commitments or any interest therein by such Lender. 11.10 Indemnification. The Borrower hereby indemnifies and agrees to defend and hold harmless the Agent, the Issuing Bank and 77 83 each of the Lenders and their respective directors, officers, agents, employees and counsel from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it is finally judicially determined to have resulted from their own gross negligence or willful misconduct) arising out of or by reason of (a) any litigation, investigation, claim or proceeding which arises out of or is in any way related to (i) this Credit Agreement or the transactions contemplated hereby, (ii) the issuance of the Letters of Credit, (iii) the failure of the Issuing Bank to honor a drawing under any Letter of Credit, as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority, (iv) any use of the proceeds of the Revolving Loans or (v) the Agent's or the Lenders' entering into this Credit Agreement, the other Credit Documents or any other agreements and documents relating hereto, including, without limitation, amounts paid in settlement, court costs and the fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing and (b) any remedial or other action taken by the Borrower or any of the Lenders in connection with compliance by the Borrower or any of its Subsidiaries, or any of their respective properties, with any federal, state or local environmental laws, acts, rules, regulations, orders, directions, ordinances, criteria or guidelines. 11.11 Amendments and Waivers. No amendment or waiver of any provision of this Credit Agreement or any other Credit Document shall be effective unless in writing and signed by the Majority Lenders (or by the Agent on their behalf), except that: (a) the consent of all the Lenders is required to (i) increase the Commitments, (ii) reduce the principal of, or interest on, the Revolving Notes, any Letter of Credit reimbursement obligations or any Fees hereunder (other than Fees that are exclusively for the account of the Agent or the Issuing Bank), (iii) postpone any date fixed for any payment in respect of principal of, or interest on, the Revolving Notes, any Letter of Credit reimbursement obligations or any Fees hereunder, (iv) change the percentage of the Commitments, or any minimum requirement necessary for the Lenders or the Majority Lenders to take any action hereunder, (v) amend or waive this Section 11.11(a), or change the definition of Majority Lenders or (vi) except as otherwise expressly provided in this Credit Agreement, and other than in connection with the financing, refinancing, sale or other disposition of any asset of the Borrower permitted under this Credit Agreement, direct the Collateral Agent to release any Liens in favor of the Lenders on any of the Collateral; and (b) the consent of the Agent or the Issuing Bank, as the case may be, shall be required for any amendment, waiver or consent 78 84 affecting the rights or duties of the Agent or the Issuing Bank under any Credit Document, in addition to the consent of the Lenders otherwise required by this section. The consent of the Borrower shall not be required for any amendment, modification or waiver of the provisions of Article 10 (other than Section 10.8). The Borrower and the Lenders hereby authorize the Agent to modify this Credit Agreement by unilaterally amending or supplementing Annex I to reflect assignments of the Commitments. 11.12 Counterparts and Effectiveness. This Credit Agreement and any waiver or amendment hereto may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Credit Agreement shall become effective on the date on which all of the parties hereto shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Agent pursuant to Section 11.7 or, in the case of the Lenders, shall have given to the Agent written, telecopied or telex notice (actually received) at such office that the same has been signed and mailed to it. 11.13 Severability. In case any provision in or obligation under this Credit Agreement or the Revolving Notes or the other Credit Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 11.14 Maximum Rate. Notwithstanding anything to the contrary contained elsewhere in this Credit Agreement or in any other Credit Document, the Borrower, the Agent and the Lenders hereby agree that all agreements among them under this Credit Agreement and the other Credit Documents, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to the Agent or any Lender for the use, forbearance, or detention of the money loaned to the Borrower and evidenced hereby or thereby or for the performance or payment of any covenant or obligation contained herein or therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any provisions of this Credit Agreement or any of the other Credit Documents at the time performance of such provision shall be due shall exceed the Highest Lawful Rate, then, automatically, the obligation to be fulfilled shall be modified or reduced to the extent necessary to limit such interest to the Highest Lawful Rate, and if from any such circumstance any Lender should ever receive anything of value deemed interest by applicable law which would exceed the Highest Lawful Rate, such excessive interest shall be 79 85 applied to the reduction of the principal amount then outstanding hereunder or on account of any other then outstanding Obligations and not to the payment of interest, or if such excessive interest exceeds the principal unpaid balance then outstanding hereunder and such other then outstanding Obligations, such excess shall be refunded to the Borrower. All sums paid or agreed to be paid to the Agent or any Lender for the use, forbearance, or detention of the Obligations and other Indebtedness of the Borrower to the Agent or any Lender, to the extent permitted by applicable law, shall be amortized, prorated, allocated and spread throughout the full term of such Indebtedness, until payment in full thereof, so that the actual rate of interest on account of all such Indebtedness does not exceed the Highest Lawful Rate throughout the entire term of such Indebtedness. The terms and provisions of this Section shall control over every other provision of this Credit Agreement, the other Credit Documents, and all agreements among the Borrower, the Agent and the Lenders. 11.15 Entire Agreement; Successors and Assigns. This Credit Agreement and the other Credit Documents constitute the entire agreement among the Borrower, the Agent and the Lenders, supersedes any prior agreements among them, and shall bind and benefit the Borrower, the Agent and the Lenders and their respective successors and permitted assigns. 80 86 IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be executed in Chicago, Illinois, and delivered by their proper and duly authorized officers as of the date set forth above. BORROWER: ENVIRODYNE INDUSTRIES, INC., a Delaware corporation By:_________________________ Title:_____________________ AGENT: BT COMMERCIAL CORPORATION, as Agent By:________________________ Senior Vice President LENDERS: BT COMMERCIAL CORPORATION By:________________________ Senior Vice President 81 EX-10.14 23 AGENCY AGREEMENT 1 EXHIBIT 10.14 INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT This Intercreditor and Collateral Agency Agreement (this "Agreement"), dated as of the 20th day of June, 1995, is by and among BT Commercial Corporation, a Delaware corporation (in its individual capacity, "BTCC"), in its capacity as agent (in such capacity, the "LC Agent") for itself and the other lenders from time to time under the Letter of Credit Facility Agreement (BTCC, in its capacity as such a lender, and such other lenders, collectively, the "LC Lenders"), and in its capacity as a LC Lender, The Prudential Insurance Company of America ("Prudential"), in its capacity as the lender under the Revolving Credit Agreement (in such capacity, the "Revolving Lender"), Shawmut Bank Connecticut, National Association, in its capacity as trustee under the First Priority Notes Indenture (Shawmut Bank Connecticut, National Association, in such capacity, or any successor thereto in such capacity in accordance with the First Priority Notes Indenture, herein called the "First Priority Notes Indenture Trustee"), any other LC Lender which becomes a signatory to this Agreement as provided in Section 17(a) hereof, any Refinancing Person who becomes a signatory to this Agreement as provided in Section 17(b) hereof, any Second Priority Notes Indenture Trustee which becomes a signatory to this Agreement as provided in Section 17(c) hereof, and BTCC, in its capacity as Collateral Agent. All terms used herein which are defined in Section 1 hereof or in the text of any other Section hereof shall have the meanings given therein. WITNESSETH: WHEREAS, pursuant to the Revolving Credit Agreement the Revolving Lender is making on the date hereof and may from time to time hereafter make Revolving Loans to the Company; and WHEREAS, pursuant to the First Priority Note Agreement the Company is issuing the First Priority Notes under the First Priority Notes Indenture; and WHEREAS, the Company has agreed to offer to exchange the First Priority Exchange Notes issued under the First Priority Notes Indenture for the First Priority Notes; and WHEREAS, pursuant to the Letter of Credit Facility Agreement the LC Lenders are issuing or causing to be issued on the date hereof Letters of Credit for the account of the Company and may from time to time hereafter issue or cause to be issued Letters of Credit for the account of the Company and make loans to the Company to fund the Company's reimbursement obligations to the LC Lenders with respect to draws upon such Letters of Credit; and 2 WHEREAS, the Company may hereafter issue the Second Priority Notes under the Second Priority Notes Indenture in exchange for the Company's 10.25% Notes due 2001 and, if the Second Priority Notes are issued, the Company may offer to exchange the Second Priority Exchange Notes under the Second Priority Notes Indenture for the Second Priority Notes; and WHEREAS, pursuant to the Guaranty Agreement the Guarantors have guarantied the Secured Indebtedness; and WHEREAS, pursuant to the Collateral Documents the Loan Parties are granting to the Collateral Agent, for the benefit of the Secured Parties, liens upon and security interests in the Collateral to secure the Secured Indebtedness; and WHEREAS, the LC Agent, the LC Lenders, Prudential, the First Priority Notes Indenture Trustee, any Second Priority Notes Indenture Trustee and any Refinancing Person desire to appoint BTCC as their agent with respect to Collateral and the Guaranty Agreement; and WHEREAS, the LC Agent, the LC Lenders, Prudential, the First Priority Notes Indenture Trustee, any Second Priority Notes Indenture Trustee, any Refinancing Person and the Collateral Agent desire to agree upon the priorities for the application of any proceeds from the Collateral and the Guaranty Agreement and to agree upon various other matters with respect to their respective agreements with the Loan Parties and their rights thereunder. NOW, THEREFORE, for the above reasons, in consideration of the mutual covenants herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. For the purposes of this Agreement, the following terms shall have the meanings specified with respect thereto below. Any plural term that is used herein in the singular shall be taken to mean each entity or item of the defined class and any singular term that is used herein in the plural shall be taken to mean all of the entities or items of the defined class, collectively. "AVOIDED PAYMENTS" shall mean any payment of any Secured Indebtedness made to any Secured Party hereunder that is subsequently invalidated, declared fraudulent or preferential, set aside or required to be paid to a trustee, receiver, or any other party under any bankruptcy act, state or federal law, common law or equitable cause. "CAPITAL STOCK" in any Person shall mean any and all shares, interests, participations or other equivalents in the 2 3 equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. "COLLATERAL" shall mean all property and assets, and interests in property and assets, upon or in which any Loan Party has granted a lien or security interest to the Collateral Agent to secure the Secured Indebtedness. "COLLATERAL AGENT" shall mean BTCC, in its capacity as agent for the Secured Parties pursuant to this Agreement, or any successor or replacement agent which may be appointed pursuant to this Agreement. "COLLATERAL AGENT EXPENSES" shall mean, without limitation, all costs and expenses incurred by the Collateral Agent under this Agreement when acting with a good faith belief that its actions are not contrary to the provisions of this Agreement, including in connection with the realization upon or protection of the Collateral or enforcing or defending any lien upon or security interest in the Collateral or any other action taken under or in connection with this Agreement, expenses incurred for legal counsel in connection with the foregoing, and any other costs, expenses or liabilities incurred by the Collateral Agent for which the Collateral Agent is entitled to be reimbursed or indemnified pursuant to this Agreement, any Collateral Document or the Guaranty Agreement. "COLLATERAL AGENT OBLIGATIONS" shall mean, without duplication, (a) all obligations of any and each Loan Party to pay, reimburse or indemnify the Collateral Agent for any Collateral Agent Expenses and (b) all obligations of the Guarantors to pay any amount described in clause (a) of this definition pursuant to any Guaranty Agreement. "COLLATERAL DOCUMENTS" shall mean the Security Agreements, the Pledge Agreements, the Mortgages, the other agreements, documents and instruments set forth on Annex 1 hereof, any other agreement, document or instrument in effect on the date hereof or executed by any Loan Party with the written consent of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders after the date hereof under which such Loan Party has granted a lien upon or security interest in any property or assets to the Collateral Agent to secure all or any part of the Secured Indebtedness, all financing statements, certificates, documents and instruments relating thereto or executed or provided in connection therewith, and the Guaranty Agreement, each as amended, restated, supplemented or otherwise modified from time to time. "COMPANY" shall mean Envirodyne Industries, Inc., a Delaware corporation. 3 4 "CONTROL" shall mean (except as otherwise specifically provided herein) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing. "ENFORCEMENT" shall mean (a) for any Secured Party or any holder of any Secured Note to make demand for payment of or accelerate the time for payment prior to the scheduled payment date of any Secured Note or any Letter of Credit Collateral Obligation, (b) for the Revolving Lender to terminate its commitment to make Revolving Loans pursuant to the Revolving Credit Agreement (but not including the expiration of such commitment on the Revolving Loans Termination Date or termination of such commitment upon the refinancing thereof), (c) for any LC Lender to terminate its respective commitment to issue or cause the issuance of Letters of Credit pursuant to the Letter of Credit Facility Agreement (but not including the expiration of such commitment on the Letter of Credit Facility Expiration Date or termination of such commitment upon the refinancing thereof), (d) for any Secured Party or any holder of any Secured Note to commence the judicial enforcement of any rights or remedies under or with respect to any Financing Agreement, any Secured Note or any Secured Indebtedness, or to setoff or appropriate any balances held by it for the account of any Loan Party or any other property at any time held or owing by it to or for the credit or for the account of any Loan Party, (e) for the Collateral Agent to commence the judicial enforcement of any rights or remedies under any Collateral Document (other than an action solely for the purpose of establishing or defending the lien or security interest intended to be created by any Collateral Document upon or in any Collateral as against or from claims of third parties on or in such Collateral), to setoff or appropriate any balances held by it for the account of any Loan Party or any other property at any time held or owing by it to or for the credit or for the account of any Loan Party or to otherwise take any action to realize upon the Collateral, or (f) the commencement by, against or with respect to any Loan Party of any proceeding under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law or for the appointment of a receiver for such Loan Party or its assets. "EVENT OF DEFAULT" shall mean an "Event of Default", as defined in any Financing Agreement. "FINANCING AGREEMENT" shall mean any of the Revolving Credit Agreement, the Letter of Credit Facility Agreement, the First Priority Note Agreement, the First Priority Notes Indenture, and any Second Priority Notes Indenture. 4 5 "FIRST PRIORITY EXCHANGE NOTES" shall mean any of the Company's 12% First Priority Senior Secured Notes due 2000, Series B, or Floating Rate First Priority Senior Secured Notes due 2000, Series D issued under the First Priority Notes Indenture. "FIRST PRIORITY INDEBTEDNESS" shall mean, without duplication, (a) the outstanding principal amount of the Revolving Loans, the outstanding principal amount of the First Priority Notes, the outstanding principal amount of the First Priority Exchange Notes, and all of the other present or future indebtedness, liabilities and obligations of the Company now or hereafter owed to the Revolving Lender, the holders of the Revolving Notes, the holders of the First Priority Notes, the holders of the First Priority Exchange Notes or the First Priority Notes Indenture Trustee evidenced by or arising under, by virtue or pursuant to the Revolving Credit Agreement, the First Priority Note Agreement, the First Priority Notes Indenture, the Revolving Notes, the First Priority Notes or the First Priority Exchange Notes, whether such indebtedness, liabilities and obligations are direct or indirect, joint, several or joint and several, now exist or hereafter arise, and all renewals and extensions thereof, including, without limitation, all interest on the Revolving Loans, the First Priority Notes and the First Priority Exchange Notes, any Yield-Maintenance Amounts and any Trustee Expenses of the First Priority Notes Indenture Trustee, and (b) all of the obligations of the Guarantors, and each of them, to pay any amount described in clause (a) of this definition under any Guaranty Agreement. "FIRST PRIORITY NOTES" shall mean the Company's 12% First Priority Senior Secured Notes due 2000, Series A, and Floating Rate First Priority Senior Secured Notes due 2000, Series C, issued under the First Priority Notes Indenture. "FIRST PRIORITY NOTE AGREEMENT" shall mean the Note Agreement, dated as June 20, 1995, between the Company and the purchasers identified therein pursuant to which such purchasers are purchasing the First Priority Notes, as amended, restated, supplemented or otherwise modified from time to time. "FIRST PRIORITY NOTES INDENTURE" shall mean the Indenture, dated as of June 20, 1995, between the Company and the First Priority Notes Indenture Trustee under which the First Priority Notes and the First Priority Exchange Notes are being issued, as amended, restated, supplemented or otherwise modified from time to time. "GECC INTERCREDITOR AGREEMENTS" shall mean the agreements set forth on Annex 2 hereto, in each case, dated as of June 20, 1995, between the Collateral Agent, on behalf of and for the benefit of the Secured Parties, and General Electric Capital Corporation, a New York corporation, as amended, restated, supplemented or otherwise modified from time to time. 5 6 "GUARANTORS" shall mean each of the Persons described on Annex 3 hereto, and any other Subsidiary of the Company becoming a party to the Guaranty Agreement. "GUARANTY AGREEMENT" shall mean the Guaranty Agreement, dated as of June 20, 1995, made by the Guarantors in favor of the Collateral Agent, as amended, restated, supplemented or otherwise modified from time to time. "LETTERS OF CREDIT" shall mean the letters of credit issued under the Letter of Credit Facility Agreement. "LETTER OF CREDIT COMMITMENT" shall mean the commitment of the LC Lenders to issue or cause the issuance of Letters of Credit under the Letter of Credit Facility Agreement. "LETTER OF CREDIT COLLATERAL OBLIGATIONS" shall mean, without duplication, (a) all of the obligations of the Company under Section 9.2(c) of the Letter of Credit Facility Agreement to deposit cash with the Collateral Agent with respect to Outstanding Letters of Credit Exposure, and (b) all of the obligations of the Guarantors, and each of them, to pay any amount described in clause (a) of this definition under any Guaranty Agreement. "LETTER OF CREDIT FACILITY AGREEMENT" shall mean the Credit Agreement, dated as of June 20, 1995, among the Company, the LC Agent and the LC Lenders, as amended, restated, supplemented or otherwise modified from time to time. "LETTER OF CREDIT FACILITY EXPIRATION DATE" shall mean the "Expiration Date", as defined in the Letter of Credit Facility Agreement. "LETTER OF CREDIT OBLIGATIONS" shall mean, without duplication, (a) the obligation of the Company to reimburse the LC Agent or the LC Lenders with respect to any drawing under a Letter of Credit, all loans made by the LC Lenders under the Letter of Credit Facility Agreement to fund the Company's reimbursement obligations with respect to draws under Letters of Credit, the Letter of Credit Collateral Obligations, and all of the other present or future indebtedness, liabilities and obligations of the Company now or hereafter owed to the LC Agent or the LC Lenders evidenced by or arising under, by virtue of or pursuant to the Letter of Credit Facility Agreement or any Letter of Credit, whether such indebtedness, liabilities and obligations are direct or indirect, joint, several or joint and several, or now exist or hereafter arise, and all renewals and extensions thereof, and (b) all of the obligations of the Guarantors, and each of them, to pay any amount described in clause (a) of this definition under any Guaranty Agreement. "LOAN PARTIES" shall mean the Company and the Guarantors. 6 7 "MORTGAGES" shall mean the Mortgages and Leasehold Mortgage set forth on Annex 4 hereto, each as amended, restated, supplemented or otherwise modified from time to time. "OUTSTANDING LETTERS OF CREDIT EXPOSURE" at any time shall mean the aggregate undrawn face amount of all outstanding Letters of Credit at such time. "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof. "PLEDGE AGREEMENTS" shall mean the Pledge Agreements, set forth on Annex 5 hereto, as amended, restated, supplemented or otherwise modified from time to time. "REFINANCED PERSON" shall have the meaning given in Section 17(b). "REFINANCING PERSON" shall have the meaning given in Section 17(b). "REQUIRED SECURED PARTIES" at any time shall mean both the Requisite First Priority Noteholders and the Requisite Working Capital Lenders; provided, however, that notwithstanding the foregoing, from and after the 90th day following the date upon which a Requisite Working Capital Lenders' Notice is given, the Required Secured Parties shall mean the Requisite Working Capital Lenders. "REQUISITE FIRST PRIORITY NOTEHOLDERS" at any time shall mean holders of First Priority Notes (or, without duplication, the First Priority Notes Indenture Trustee acting at the direction of holders of First Priority Notes) and holders of First Priority Exchange Notes (or, without duplication, the First Priority Notes Indenture Trustee acting at the direction of holders of First Priority Exchange Notes), representing, in the aggregate, 35% or more of the aggregate outstanding principal amount of all First Priority Notes and First Priority Exchange Notes. "REQUISITE WORKING CAPITAL LENDERS" shall mean (a) at any time when any Letter of Credit Obligations are outstanding or the Letter of Credit Commitment is in effect, the Person(s) having a majority of the aggregate of the amount of the outstanding Letter of Credit Commitment and the outstanding amount of the Letter of Credit Obligations, and (b) at any other time, the holders of more than 50% of the aggregate outstanding amount of the Revolving Loans. "REQUISITE WORKING CAPITAL LENDERS' NOTICE" shall mean a notice given hereunder, following the occurrence of a Serious Event 7 8 of Default under the Letter of Credit Facility Agreement or the Revolving Credit Agreement, as the case may be, by the Requisite Working Capital Lenders to the other Secured Parties of the intention of the Requisite Working Capital Lenders giving such notice to give a direction to the Collateral Agent hereunder. "REVOLVING COMMITMENT" shall mean the commitment of the Revolving Lender to make Revolving Loans under the Revolving Credit Agreement. "REVOLVING CREDIT AGREEMENT" shall mean the Revolving Credit Agreement, dated as of June 20, 1995, between the Company and the Revolving Lender, as amended, restated, supplemented or otherwise modified from time to time. "REVOLVING LOAN" shall mean a "Revolving Loan", as defined in the Revolving Credit Agreement. "REVOLVING LOANS TERMINATION DATE" shall mean the "Revolving Loans Termination Date", as defined in the Revolving Credit Agreement. "REVOLVING NOTE" shall mean a "REVOLVING NOTE", as defined in the Revolving Credit Agreement. "SECOND PRIORITY EXCHANGE NOTES" shall mean any of the Company's promissory notes issued under the Second Priority Notes Indenture in exchange for the Second Priority Notes as permitted by the Financing Agreements. "SECOND PRIORITY INDEBTEDNESS" shall mean, without duplication, (a) the outstanding principal amount of the Second Priority Notes, the outstanding principal amount of the Second Priority Exchange Notes, and all of the other present or future indebtedness, liabilities and obligations of the Company hereafter owed to the holders of the Second Priority Notes, the holders of the Second Priority Exchange Notes or the Second Priority Notes Indenture Trustee evidenced by or arising under, by virtue of or pursuant to the Second Priority Exchange Notes Indenture, the Second Priority Notes or the Second Priority Exchange Notes, whether such indebtedness, liabilities and obligations are direct or indirect, joint, several or joint and several, or now exist or hereafter arise, and all renewals and extensions thereof, including, without limitation, all interest on the Second Priority Notes and the Second Priority Exchange Notes, any prepayment premiums due with respect to the Second Priority Notes or the Second Priority Exchange Notes and any Trustee Expenses of the Second Priority Notes Indenture Trustee, if any, and (b) all of the obligations of the Guarantor, and each of them, to pay any amount described in clause (a) of this definition under any Guaranty Agreement. 8 9 "SECOND PRIORITY NOTES" shall mean the Company promissory notes issued under the Second Priority Notes Indenture in exchange for the Company's 10.25% Notes due 2001 as permitted by the Financing Agreements if issued. "SECOND PRIORITY NOTES INDENTURE" shall mean the indenture, between the Company and the Second Priority Notes Indenture Trustee, under which any Second Priority Notes and any Second Priority Exchange Notes are issued, as amended, restated, supplemented or otherwise modified from time to time. "SECOND PRIORITY NOTES INDENTURE TRUSTEE" shall mean the trustee under the Second Priority Notes Indenture. "SECURED NOTES" shall mean any of the Revolving Notes, the First Priority Notes, the First Priority Exchange Notes, the Second Priority Notes, the Second Priority Exchange Notes and any promissory notes evidencing all or any part of the Letter of Credit Obligations. "SECURED INDEBTEDNESS" shall mean the Collateral Agent Obligations, the Letter of Credit Obligations, the First Priority Indebtedness, the Second Priority Indebtedness, if any, and all of the other present or future indebtedness, liabilities and obligations of all and each of the Loan Parties now or hereafter owed to any Secured Party evidenced by or arising under, by virtue of or pursuant to the Financing Agreements, the Secured Notes, the Collateral Documents or the Guaranty Agreement, whether such indebtedness, liabilities and obligations are direct or indirect, joint, several or joint and several, or now exist or hereafter arise, and all renewals and extensions thereof. "SECURED PARTIES" shall mean the Revolving Lender, the LC Agent, the LC Lenders, the First Priority Notes Indenture Trustee, for itself and on behalf of the holders of the First Priority Notes and the First Priority Exchange Notes, the Second Priority Notes Indenture Trustee, if any, for itself and on behalf of the holders of the Second Priority Notes and the Second Priority Exchange Notes, and the Collateral Agent. "SECURITY AGREEMENTS" shall mean the Security Agreements and the Intellectual Property Security Agreements listed on Annex 6 hereto, as amended, restated, supplemented or otherwise modified from time to time. "SERIOUS DEFAULT" shall mean an Event of Default under the Letter of Credit Facility Agreement or the Revolving Credit Agreement as a result of (a), a default in payment of any Secured Indebtedness under the Revolving Credit Agreement or the Letter of Credit Facility Agreement, (b) a violation by the Company of a Specified Provision in the Letter of Credit Facility Agreement or the Revolving Credit Agreement, or (c) any proceeding under any 9 10 bankruptcy, reorganization, comprise of debt, arrangement, insolvency, readjustment of debt, dissolution, liquidation or similar law. "SPECIFIED PROVISIONS" shall mean (a) with respect to the Letter of Credit Facility Agreement, the amount of the Letter of Credit Commitment, the amount of the fees payable by the Company under the Letter of Credit Facility Agreement, the Letter of Credit Facility Expiration Date, and any of the following sections of the Letter of Credit Facility Agreement: Article 8 or Article 9; (b) with respect to the Revolving Credit Agreement, the amount of the Revolving Credit Commitment, the interest rate for the Revolving Notes, the maturity date of the Revolving Notes, the amount of the non-usage fees payable under the Revolving Credit Agreement, the expiration date of the Revolving Commitment, and any of the following sections of the Revolving Credit Agreement: paragraph 4 or paragraph 5; and (c) with respect to the First Priority Notes, the First Priority Exchange Notes and the First Priority Notes Indenture, the interest rate for the First Priority Notes or the First Priority Exchange Notes, the maturity date of the First Priority Notes or the First Priority Exchange Notes, the amount of the Yield- Maintenance Amount, and any provision in any of the following Articles of the First Priority Notes Indenture: Article 4 or Article 5. "SUBSIDIARY" shall mean with respect to any Person, (i) a corporation a majority of whose Voting Securities is at the time directly or indirectly owned or Controlled by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest with respect to voting in the election of directors or trustees thereof (or such other Persons performing similar functions). For purposes of this definition, any directors' qualifying shares shall be disregarded in determining the ownership of a Subsidiary. "TRUSTEE EXPENSES" shall mean all fees, charges, expenses, indemnities and other amounts owing to the First Priority Notes Indenture Trustee or the Second Priority Notes Indenture Trustee for its own account under the First Priority Notes Indenture or the Second Priority Notes Indenture, respectively. "VOTING SECURITIES" shall mean, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, under ordinary circumstances and in the absence of contingencies, to vote for members of the Board of Directors of such Person (or Persons performing functions equivalent to those of such members). 10 11 "YIELD-MAINTENANCE AMOUNT" shall mean the "Yield-Maintenance Amount" as defined in the First Priority Notes Indenture. 2. Appointment of BTCC as Collateral Agent for the Secured Parties. (a) Appointment of Collateral Agent. Subject in all respects to the terms and provisions of this Agreement, the Secured Parties hereby appoint BTCC to act as agent for the benefit of the Secured Parties with respect to the liens upon and the security interests in the Collateral and the rights and remedies granted under and pursuant to the Collateral Documents and the GECC Intercreditor Agreements, and BTCC hereby accepts such appointment and agrees to act as such agent. The appointment of the Collateral Agent pursuant to this Agreement shall be effective with respect to all financing statements filed in any UCC filing office with respect to the Loan Parties prior to the date of this Agreement on and as of the date such financing statements were signed. The agency created hereby shall in no way impair or affect any of the rights and powers of, or impart any duties or obligations upon, BTCC in its capacity as the LC Agent or in its individual capacity as a LC Lender. To the extent necessary or desirable to enable the Collateral Agent to enforce or otherwise foreclose and realize upon any of the liens or security interests in the Collateral in any legal proceeding which the Collateral Agent either commences or joins as a party in accordance with the terms hereof, each of the Secured Parties agrees to join as a party in such proceeding and take such action therein concurrently to enforce and obtain a judgment for the payment of the Secured Indebtedness held by it or as to which it is the trustee subject, in the case of the First Priority Notes Indenture Trustee and the Second Priority Notes Indenture Trustee, to its right to prior indemnity under, and other provisions granting it rights not to take action, under the First Priority Notes Indenture or the Second Priority Notes Indenture, as the case may be. (b) Duties of Collateral Agent. Subject to the Collateral Agent having been directed to take such action in accordance with the terms of this Agreement, each other Secured Party hereby irrevocably authorizes the Collateral Agent to take such action on its behalf under the provisions of the Collateral Documents, the GECC Intercreditor Agreements and any other instruments, documents and agreements referred to therein and to exercise such powers thereunder as are specifically delegated to the Collateral Agent by the terms thereof and such other powers as are reasonably incidental thereto. Subject to the provisions of Section 11 hereof, the Collateral Agent is hereby irrevocably authorized to take all actions on behalf of the Secured Parties to enforce the rights and remedies of the Collateral Agent and the Secured Parties provided for in the Collateral Documents or by applicable law with respect to the liens upon and security 11 12 interests in the Collateral granted to secure the Secured Indebtedness; provided, however, that, notwithstanding any provision to the contrary herein or in any Collateral Documents, (i) the Collateral Agent shall act at all times solely at and in accordance with the written direction of the Required Secured Parties, (ii) the Collateral Agent shall not, without the written consent of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders, release or terminate by affirmative action or consent any lien upon or security interest in any Collateral granted under any Collateral Documents or any Guarantor's obligations under the Guaranty Agreement (except (x) upon dispositions of Collateral or such Guarantor, as applicable, by the Loan Parties as permitted in accordance with the terms of the Financing Agreements prior to the occurrence of an Event of Default (and, for this purpose, the Collateral Agent (1) shall not be deemed to have knowledge of an Event of Default unless the Collateral Agent has received notice thereof, and (2) may rely, as to whether a disposition of Collateral or a Guarantor is permitted by the Financing Agreements, upon a certificate signed by the LC Agent as to the Letter of Credit Facility Agreement, a certificate signed by the Revolving Lender as to the Revolving Credit Agreement, a certificate signed by a majority of the holders of the First Priority Notes and the First Priority Exchange Notes as to the First Priority Notes Indenture, and a certificate signed by a majority of the holders of the Second Priority Notes and the Second Priority Exchange Notes as the Second Priority Notes Indenture, and any such certificate shall be full warranty by the applicable Secured Party to the Collateral Agent as to the truth of the matters certified to for any action taken by the Collateral Agent in reliance thereon), (y) sales in the ordinary course of business of a Loan Party of Collateral constituting inventory, and (z) upon disposition of such Collateral after an Event of Default pursuant to direction given under clause (i) hereof), and (iii) the Collateral Agent shall not accept any Secured Indebtedness in whole or partial consideration for the disposition of any Collateral. Notwithstanding the foregoing, the Collateral Agent shall perform any of its obligations under the GECC Intercreditor Agreements without any direction from any Secured Party. The Collateral Agent agrees to make such demands and give such notices under the Collateral Documents and the GECC Intercreditor Agreements as may be requested by, and to take such action to enforce the Collateral Documents and to foreclose upon, collect and dispose of the Collateral or any portion thereof as may be directed by, the Required Secured Parties; provided, however, that the Collateral Agent shall not be required to take any action (A) that is contrary to law or the terms of the Collateral Documents, the GECC Intercreditor Agreements or this Agreement, or (B) if the Collateral Agent determines, in good faith, that the potential Collateral Agent Expenses resulting from such action are likely to exceed the amounts available for distribution to the Collateral Agent pursuant to Section 5(a)(i) hereof, and so notifies the Secured Parties giving the Collateral Agent the direction to take 12 13 such action, unless the Collateral Agent is provided adequate security and indemnity against the Collateral Agent Expenses which may be incurred by it in taking such action and complying with any such request or direction, including such reasonable advances as may be requested by the Collateral Agent. Notwithstanding the provisions of the preceding sentence, any and all decisions to settle, compromise or dismiss any legal proceeding, with or without prejudice, which implements, approves or results in or has the effect of causing any release, change or occurrence, where such release, change or occurrence otherwise would require approval of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders pursuant to the terms of this Agreement, also shall require the approval of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders. (c) Requesting Instructions. The Collateral Agent may at any time request directions from the Secured Parties as to any course of action or other matter relating to the performance of its duties under this Agreement, the Collateral Documents or the GECC Intercreditor Agreements and the Secured Parties shall respond to such request in a reasonably prompt manner. The Collateral Agent shall have the right at any time to seek instructions concerning its obligations hereunder from any court of competent jurisdiction. (d) Emergency Actions. If the Collateral Agent has asked the Secured Parties for instructions following the receipt of any notice of an Event of Default and if the Required Secured Parties have not responded to such request within 30 days, the Collateral Agent may, but shall not be obligated to, take such actions with regard to such Event of Default which the Collateral Agent, in good faith, believes to be reasonably required to protect the Collateral from damage or destruction; provided, however, that once instructions have been received from the Required Secured Parties, the actions of the Collateral Agent shall be governed thereby and the Collateral Agent shall not take any further action which would be contrary thereto. (e) Document Amendments. An amendment, supplement, modification, restatement or waiver of any provision of any Collateral Document or any GECC Intercreditor Agreement, any consent to any departure by any Loan Party therefrom, or the execution or acceptance by the Collateral Agent of any Collateral Document not in effect on the date hereof shall be effective if, and only if, consented to in writing by the Requisite First Priority Noteholders and the Requisite Working Capital Lenders, provided, however, that, (i) no such amendment, supplement, modification, restatement, waiver, consent or such Collateral Document not in effect on the date hereof which could reasonably be expected to adversely affect any of the Collateral Agent's rights, immunities or indemnities hereunder or thereunder or which could reasonably be expected to impose any additional responsibilities upon the Collateral Agent shall be effective without the written 13 14 consent of the Collateral Agent, and (ii) no such amendment, supplement, modification, waiver or consent shall release any Collateral from the lien or security interest created by any Collateral Document not subject to the exception in Section 2(b)(ii) hereof or narrow the scope of the property or assets in which a lien or security interest is granted pursuant to any Collateral Document without the written consent of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders. (f) Administrative Actions. The Collateral Agent may, but shall not be obligated to, take such actions hereunder and under the Collateral Documents and the GECC Intercreditor Agreements, not inconsistent with the instructions of the Required Secured Parties or the terms of the Collateral Documents, the GECC Intercreditor Agreements and this Agreement, as the Collateral Agent deems necessary or appropriate to perfect or continue the perfection of the liens on the Collateral for the benefit of the Secured Parties. (g) Collateral Agent Acting Through Others. The Collateral Agent may perform any of its duties under this Agreement, the Collateral Documents and the GECC Intercreditor Agreements by or through attorneys (which attorneys may be the same attorneys who represent the LC Agent or any Secured Party), agents or other persons reasonably deemed appropriate by the Collateral Agent. In addition, the Collateral Agent may act in good faith reliance upon the opinion or advice of attorneys accountants and other experts selected by the Collateral Agent, and any action so taken in such good faith reliance shall be authorized and protected. In all cases the Collateral Agent may pay customary and reasonable compensation to all such attorneys, agents or other persons as may be employed in connection with the performance of its duties under this Agreement, the Collateral Documents and the GECC Intercreditor Agreements. (h) Resignation of Collateral Agent. (i) The Collateral Agent (A) may resign at any time upon notice to the other Secured Parties, (B) may be removed at any time upon the written request of the Required Secured Parties sent to the Collateral Agent and the other Secured Parties and (C) shall resign at any time when it may not legally act as agent for the other Secured Parties hereunder. (ii) If the Collateral Agent shall resign or be removed, the Requisite First Priority Noteholders and the Requisite Working Capital Lenders shall have the right to select and appoint a replacement Collateral Agent by notice to the Collateral Agent and the other Secured Parties. 14 15 (iii) Upon any replacement of the Collateral Agent, the Collateral Agent shall assign all of the liens upon and security interests in all Collateral under the Collateral Documents, and all right, title and interest of the Collateral Agent under all the Collateral Documents and the GECC Intercreditor Agreement, to the replacement Collateral Agent, without recourse to the Collateral Agent or any Secured Party, and transfer and pay over to the replacement Collateral Agent all moneys and other properties held by the Collateral Agent hereunder, all at the expense of the Company. (iv) No resignation or removal of the Collateral Agent shall become effective until a replacement Collateral Agent shall have been selected as provided herein and shall have assumed in writing the obligations of the Collateral Agent hereunder and under the Collateral Documents and the GECC Intercreditor Agreements. In the event that a replacement Collateral Agent shall not have been selected and appointed as provided in clause (h)(ii) and have assumed such obligations within 30 days after the resignation or removal of the Collateral Agent, then the Collateral Agent may select and appoint for and on behalf of the other Secured Parties a replacement Collateral Agent so long as such replacement Collateral Agent meets the requirements of clause (h)(v) or in its sole discretion may apply to any court of competent jurisdiction to select and appoint a successor Collateral Agent to act until such time, if any, as a successor Collateral Agent shall have been selected and appointed by the Requisite First Priority Noteholders and the Requisite Working Capital Lenders as provided in clause (h)(ii). Any successor Collateral Agent appointed by the Collateral Agent or such court as provided above shall immediately and without further act be superseded by any successor Collateral Agent appointed by the Requisite First Priority Noteholders and the Requisite Working Capital Lenders as provided in clause (h)(ii). (v) Any replacement Collateral Agent shall be a bank, trust company, or insurance company having capital, surplus and undivided profits of at least $100 million, or an affiliate thereof, the replacement of the Collateral Agent by such replacement Collateral Agent shall not violate any provision of any applicable law or create a relationship which would be in violation thereof, and, if such replacement Collateral Agent shall have been selected by the Collateral Agent pursuant to clause (h)(iv), the fees charged by such replacement Collateral Agent shall not be commercially unreasonable. 15 16 (i) Indemnification of Collateral Agent. The Loan Parties, by their consent hereto, hereby jointly and severally agree to indemnify and hold the Collateral Agent, its officers, directors, employees and agents (including, but not limited to, any attorneys acting at the direction or on behalf of the Collateral Agent) harmless against any and all costs, claims, damages, penalties, liabilities, losses and expenses (including, but not limited to, court costs and attorneys' fees) which may be incurred by or asserted against the Collateral Agent or any such officers, directors, employees and agents by reason of its status as agent hereunder or which pertain, whether directly or indirectly, to this Agreement, the Collateral Documents, the GECC Intercreditor Agreements or to any action or failure to act of the Collateral Agent as agent hereunder, except to the extent any such action or failure to act by the Collateral Agent constitutes gross negligence or willful misconduct. The obligations of the Loan Parties under this Section 2(i) shall survive the payment in full of the Secured Indebtedness and the termination of this Agreement and shall not be affected by any obligation which any Secured Party might have to provide indemnification under Section 15 hereof. (j) Liability of Collateral Agent. In the absence of gross negligence or willful misconduct, the Collateral Agent will not be liable to any Secured Party for any action or failure to act or any error of judgment, negligence, mistake or oversight on its part or on the part of any of its officers, directors, employees or agents. (k) No Reliance on Collateral Agent. Neither the Collateral Agent nor any of its officers, directors, employees or agents (including, but not limited to, any attorneys acting at the direction or on behalf of the Collateral Agent) shall be deemed to have made any representations or warranties, express or implied, with respect to, nor shall the Collateral Agent or any such officer, director, employee or agent be liable to any Secured Party or responsible for (i) any warranties or recitals made by any of the Loan Parties in the Collateral Documents or any other agreement, certificate, instrument or document executed by the Loan Parties in connection therewith, (ii) the due or proper execution or authorization of this Agreement or any Collateral Document by any party other than the Collateral Agent, or the effectiveness, enforceability, validity, genuineness or collectibility as against any Loan Party of any Collateral Document or any other agreement, certificate, instrument or document executed by any of the Loan Parties in connection therewith, (iii) the present or future solvency or financial worth of any Loan Party, or (iv) the value, condition, existence or ownership of any of the Collateral or the existence or perfection of any lien upon or security interest in the Collateral (whether now or hereafter held or granted) or the sufficiency of any action, filing, notice or other procedure taken or to be taken to perfect, attach or vest any lien or security interest in the Collateral. The Collateral Agent shall not be 16 17 required, either initially or on a continuing basis, to (A) make any inquiry, investigation, evaluation or appraisal respecting, or enforce performance by any Loan Party of, any of the covenants, agreements or obligations of any Loan Party under any Collateral Document, or (B) undertake any other actions (other than actions expressly required to be taken by it under this Agreement). Nothing in any of the Collateral Documents, expressed or implied, is intended to or shall be so construed as to impose upon the Collateral Agent any obligations, duties or responsibilities except as set forth in this Agreement and therein. The Collateral Agent shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, telecopy or other paper or document given to it by any Person reasonably and in good faith believed by it to be genuine and correct and to have been signed or sent by such Person. The Collateral Agent shall have no duty to inquire as to the performance or observance of any of the terms, covenants or conditions of any Financing Agreement. The Collateral Agent will not be required to inspect the properties or books and records of any Loan Party for any purpose, including to determine compliance by the Loan Parties with their respective covenants respecting the perfection of security interests. 3. Lien Priorities. The parties hereto expressly agree that, notwithstanding the relative priority or the time of grant, creation, attachment or perfection under applicable law of any security interests and liens, if any, of any Secured Party upon or in any of the Collateral to secure any Secured Indebtedness, whether such security interests and liens are now existing or hereafter acquired or arising and whether such security interests and liens are in or upon now existing or hereafter arising Collateral, such security interests and liens shall be first and prior security interests and liens in favor of the Collateral Agent to secure the Secured Indebtedness in the priorities set forth in Section 5 hereof. 4. Certain Notices. The Collateral Agent and each other Secured Party agrees to use its best efforts to give to the others (a) copies of any notice of the occurrence or existence of an Event of Default sent to any Loan Party, simultaneously with the sending of such notice to such Loan Party, (b) notice of the occurrence or existence of an Event of Default of which such party has knowledge, promptly after obtaining knowledge thereof, (c) notice of the refusal by the Revolving Lender to make any Revolving Loan, promptly after such refusal, (d) notice of any refusal by any LC Lender to issue or cause the issuance of any Letter of Credit, promptly after such refusal, and (e) notice of an Enforcement by such party, prior to commencing such Enforcement, but the failure to give any of the foregoing notices shall not affect the validity of such notice of an Event of Default given to a Loan Party or create a cause of action against or cause a forfeiture of any rights of the party failing to give such notice or create any claim or right on behalf of any third party. The Collateral Agent agrees 17 18 to deliver to each Secured Party a copy of each notice or other communication received by it under any Collateral Document or the GECC Intercreditor Agreements as soon as practicable after receipt thereof. 5. Distribution of Proceeds of Collateral After Enforcement. (a) On and after the occurrence of an Enforcement, all proceeds of Collateral held or received by the Collateral Agent or any other Secured Party (including, without limitation, any amount of any balances held by the Collateral Agent or any Secured Party for the account of any Loan Party or any other property held or owing by it to or for the credit or for the account of any Loan Party setoff or appropriated by it, but excluding, except as otherwise provided in paragraph (b) of this Section 5, amounts on deposit in the Special Cash Collateral Account provided for therein) and any other payments received, directly or indirectly, by the Collateral Agent or any Secured Party on or with respect to any Secured Indebtedness (including, without limitation, any payment under the Guaranty Agreement and the proceeds from any sale of any Secured Indebtedness or any interest therein to any Loan Party or any affiliate of any Loan Party but excluding, in the case of Prudential, any payments of the principal of, interest on or other amounts due with respect to the First Priority Notes or the First Priority Exchange Notes to the extent the other holders of the First Priority Notes or the First Priority Exchange Notes have received a proportional payment of such principal, interest or other amount) shall be delivered to the Collateral Agent and distributed as follows: (i) First, to the Collateral Agent in the amount of any unpaid Collateral Agent Obligations; (ii) Next, to the extent proceeds remain, to the LC Agent, for the account of the LC Agent and the LC Lenders, in the amount of any Letter of Credit Obligations (and, for this purpose, Letter of Credit Collateral Obligations shall be considered to have been paid to the extent of any amount then on deposit in the Special Cash Collateral Account provided for in paragraph (b) of this Section 5); (iii) Next, to the extent proceeds remain, to the First Priority Notes Indenture Trustee and the Second Priority Notes Indenture Trustee, if any, in the amount of any unpaid Trustee Expenses, pro rata in proportion to the respective amounts thereof; (iv) Next, to the extent proceeds remain, to any Secured Parties from which an Avoided Payment has been recovered but has not been reimbursed pursuant to 18 19 this clause (iv) in the amount of any such Avoided Payments which have not been so reimbursed, pro rata in proportion to the respective amounts thereof; (v) Next, to the extent proceeds remain, to the Revolving Lender and the First Priority Notes Indenture Trustee in the amount of any unpaid interest accrued on or constituting a part of, and any unpaid prepayment premiums (including, without limitation, any Yield-Maintenance Amounts) due with respect to or constituting a part of, the First Priority Indebtedness, pro rata in proportion to the respective amounts thereof; (vi) Next, to the extent proceeds remain, to the Revolving Lender and the First Priority Notes Indenture Trustee in the amount of any outstanding principal amount of the Revolving Loans, the First Priority Notes, the First Priority Exchange Notes, pro rata in proportion to the respective amounts thereof; (vii) Next, to the extent proceeds remain, to the Revolving Lender and the First Priority Notes Indenture Trustee in the amount of any other unpaid First Priority Indebtedness, pro rata in proportion to the respective amounts thereof; (viii) Next, to the extent proceeds remain, to the Second Priority Notes Indenture Trustee in the amount of any unpaid interest accrued on or constituting a part of, any unpaid prepayment premiums due with respect to or constituting a part of, the Second Priority Indebtedness, pro rata in proportion to respective amounts thereof; (ix) Next, to the extent proceeds remain, to the Second Priority Notes Indenture Trustee in the amount of any outstanding principal amount of the Second Priority Notes and the Second Priority Exchange Notes, pro rata in proportion to the respective amounts thereof; (x) Next, to the extent proceeds remain, to the Second Priority Indenture Trustee in the amount of any other unpaid second Priority Indebtedness, pro rata in proportion to the respective amounts thereof; and (xi) Next, to the extent proceeds remain, to the Secured Parties in the amount of any other unpaid Secured Indebtedness, pro rata in proportion to the respective amounts thereof. After the Secured Indebtedness has been finally paid in full in cash, the balance of proceeds of the Collateral, if any, 19 20 shall be paid to the Loan Parties, as applicable, or as otherwise required by law. (b) Any payment pursuant to clause (a)(ii) above with respect to Letter of Credit Collateral Obligations shall be paid to the Collateral Agent for deposit in an account (the "Special Cash Collateral Account") to be held as Collateral for the Secured Indebtedness and disposed of as provided herein. On each date after the occurrence of an Enforcement on which a payment is made to a beneficiary pursuant to a draw on a Letter of Credit, the Collateral Agent shall distribute to the Bank from the Special Cash Collateral Account for application to the payment of the reimbursement obligation due to the Bank with respect to such draw an amount equal to the lesser of (i) the amount then on deposit in the Special Cash Collateral Account, and (ii) the amount of such draw. At such time as the amount of the Outstanding Letters of Credit Exposure is reduced to zero, any amount remaining in the Special Cash Collateral Account, after the distribution therefrom as provided above, shall be distributed as provided in clauses (a)(ii) through (xi), above. (c) If, at any time prior to an Enforcement, the Company is required to make a payment pursuant to Section 4.6(a) of the Letter of Credit Facility Agreement and fails to make such payment, the Collateral Agent, upon the written request of the LC Agent, shall cause to be deposited into the Special Collateral Account, pursuant to Section 3(b) of the Security Agreements, an amount equal to such payment, provided, that the amount deposited in the Special Cash Collateral Account at any time prior to an Enforcement shall not exceed the Out of Formula Amount (as defined in the Letter of Credit Facility Agreement) at such time, and no such action by the Collateral Agent shall be considered to be an Enforcement for the purposes of this Agreement. If at any time prior to an Enforcement the Out of Formula Amount has been reduced to zero when no Event of Default is continuing, the Collateral Agent will pay the amounts on deposit in the Special Cash Collateral Account to the Borrower to the extent such payment does not cause an Out of Formula Amount to be created. (d) The distribution provisions of this Section 5 are for the purpose of determining the relative amounts of proceeds and other payments to be distributed to the Collateral Agent and the other Secured Parties and not for the purpose of creating an agreement among the parties as to the manner in which any proceeds or other payments distributed to them by the Collateral Agent are actually to be applied to pay the Secured Indebtedness. The Collateral Agent and each other Secured Party shall be free, each in its own discretion and subject to the terms of any other agreement to which it may be a party, to apply any proceeds or other payments distributed to it by the Collateral Agent hereunder to the Secured Indebtedness held by each in such order as it may determine. The Loan Parties, by their consent hereto, agrees that 20 21 in the event any payment is made with respect to any Secured Indebtedness under this Section 5, as between the Loan Parties and each Secured Party the Secured Indebtedness discharged by such payment shall be the amount or amounts of the Secured Indebtedness to which such Secured Party applies the portion of such payment distributed to it under this Section 5 as provided in the preceding sentence. Notwithstanding the foregoing, for all purposes of this Agreement the Secured Indebtedness shall be deemed paid to the same extent that proceeds and other payments are distributed with respect to it pursuant to Section 5(a) notwithstanding the actual application thereof. (e) For the purposes hereof, the interest accrued on or constituting a part of the First Priority Indebtedness or the Letter of Credit Obligations shall include interest on the First Priority Notes, the First Priority Exchange Notes and the Letter of Credit Obligations at the rate specified therein from the date of filing of any proceeding under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar laws and all Yield-Maintenance Amounts due under the provisions of the applicable Financing Agreements irrespective of whether all or any portion of any such amounts are not an allowed claim enforceable against the debtor in a case under any such law. (f) Notwithstanding any other provision of this Section 5, in the event that it is held in any proceeding under any bankruptcy, reorganization, compromise, insolvency, readjustment of debt, dissolution or liquidation or similar law involving any Loan Party that the Yield-Maintenance Amount on any of the Company's Floating Rate First Priority Senior Secured Notes due 2000, Series C or Series D, is, in whole or in part, unenforceable or otherwise not allowable as a claim against the debtor in such case, then no amounts shall, to the extent of such unenforceability or disallowance, be distributable with respect thereto under clauses (iv), (v), (vi) or (vii) of paragraph (a) of this Section 5, but distributions shall be made with respect to any such unenforceable or disallowed Yield-Maintenance Amount after all amounts described in clauses (i) through (vii) of such paragraph (a) have been paid in full and prior to any distributions being made pursuant to clause (viii) through (xi) of such paragraph (a). 6. Certain Credit Extensions and Amendments to Agreements; Actions Related to Collateral and Guaranty Agreement; Other Liens and Security Interests. (a) The LC Agent and each LC Lender agrees that, without the consent in writing of the Requisite First Priority Noteholders and the Revolving Lender, it will not (i) issue or cause to be issued any Letter of Credit if, after giving effect to such issuance, the aggregate face amount of all outstanding Letters of Credit, the aggregate amount of all unpaid reimbursement 21 22 obligations with respect to Letters of Credit and the aggregate amount of all outstanding loans made under the Letter of Credit Facility Agreement would exceed $28,000,000, (ii) amend, modify, supplement or restate, or waive any provision of, any Specified Provision in the Letter of Credit Facility Agreement as in effect on the date hereof (provided that the foregoing shall not apply to any waiver of any non-payment Event of Default resulting from the failure to comply with any covenant which covenant is not a Specified Provision in the Letter of Credit Facility Agreement), (iii) except for the Guaranty Agreement, retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to all or any part of the Secured Indebtedness, or (iv) from and after the institution of any bankruptcy or insolvency proceeding involving any Loan Party, as respects the Collateral enter into any agreement with such Loan Party with respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate protection. (b) The Revolving Lender agrees that, without the consent in writing of the Requisite First Priority Noteholders and the LC Agent, it will not (i) make any Revolving Loan in excess of an aggregate of $35,000,000 at any time outstanding, (ii) amend, modify, supplement or restate, or waive any provision of, any Specified Provision in the Revolving Credit Agreement (provided that the foregoing shall not apply to any waiver of any non-payment Event of Default resulting from the failure to comply with any covenant which covenant is not a Specified Provision in the Revolving Credit Agreement), (iii) except for the Guaranty Agreement, retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to all or any part of the Secured Indebtedness, or (iv) from and after the institution of any bankruptcy or insolvency proceeding involving any Loan Party, as respects the Collateral enter into any agreement with such Loan Party with respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate protection. (c) The First Priority Notes Indenture Trustee agrees that, without the consent in writing by the Requisite Working Capital Lenders, it will not (i) amend, modify, supplement or restate, or waive any provision of, any Specified Provision in the First Priority Notes Indenture (provided that the foregoing shall not apply to any waiver of any non-payment Event of Default resulting from the failure to comply with any covenant which covenant is not a Specified Provision in the First Priority Notes Indenture), (ii) except for the Guaranty Agreement, retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to all or any part of the Secured Indebtedness, or (iii) from or after the institution of any bankruptcy or insolvency proceeding, as respects the Collateral enter into any agreement with such Loan Party with respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate protection. 22 23 (d) The Second Priority Notes Indenture Trustee agrees that, without the consent in writing of the Requisite Working Capital Lenders and the Requisite First Priority Noteholders, it will not (i) amend, modify, supplement or restate, or waive any provision of, the interest rate on, the maturity date of or the amount of any premium payable with respect to the Second Priority Notes or the Second Priority Exchange Notes or any event of default or negative or financial covenant in the documentation relating to the Second Priority Notes or the Second Priority Exchange Notes (provided that the foregoing shall not apply to any waiver of any non-payment Event of Default resulting from the failure to comply with any covenant which covenant is not a negative or financial covenant), (ii) except for the Guaranty Agreements retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to all or any part of the Secured Indebtedness, or (iii) from or after the institution of any bankruptcy or insolvency proceeding, as respects the Collateral enter into any agreement with such Loan Party with respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate protection. (e) Each Secured Party agrees that it will have recourse to the Guaranty Agreement and the Collateral only through the Collateral Agent, that it shall have no independent recourse thereto and that it shall refrain from exercising any rights or remedies under the Collateral Documents which have or may have arisen or which may arise as a result of an Event of Default or an acceleration of the maturities of the Secured Indebtedness, except that, upon the direction of the Required Secured Parties, any Secured Party may appropriate any amount of any balances held by it for the account of any Loan Party or any other property held or owing by it to or for the credit or for the account of any Loan Party provided that the amount appropriated is delivered to the Collateral Agent for application pursuant to Section 5 hereof. Without such direction, no Secured Party shall set off or appropriate any such amount. (f) Nothing contained in this Agreement shall (i) prevent any Secured Party from imposing a default rate of interest in accordance with the applicable Financing Agreement, or prevent a Secured Party from raising any defenses in any action in which it has been made a party defendant or has been joined as a third party, except that the Collateral Agent may direct and control any defense directly relating to the Collateral or any one or more of the Collateral Documents as directed by the Required Secured Parties, which shall be governed by the provisions of this Agreement, or (ii) affect or impair the right any Secured Party may have under the terms and conditions governing the Secured Indebtedness to accelerate and demand repayment of such Secured Indebtedness. Subject only to the express limitations set forth in this Agreement, each Secured Party retains the right to freely exercise its rights and remedies as a general creditor of the Loan 23 24 Parties in accordance with applicable law and agreements with the Secured Parties, including without limitation the right to file a lawsuit and obtain a judgment therein against the Loan Parties and to enforce such judgment against any assets of the Loan Parties other than the Collateral. (g) Subject to the provisions set forth in this Agreement and the Financing Agreements, each Secured Party and its affiliates may (without having to account therefor to any Secured Party) own, sell, acquire and hold equity and debt securities of the Loan Parties and lend money to and generally engage in any kind of business with the Loan Parties (as if, in the case of BTCC, it was not acting as Collateral Agent), and subject to the provisions of this Agreement, the Secured Parties and their affiliates may accept dividends, interest, principal payments, fees and other consideration from the Loan Parties for services in connection with this Agreement or otherwise without having to account of the same to the other Secured Parties, provided that any such amounts which constitute Secured Indebtedness are provided for in the Financing Agreements. 7. Accounting; Adjustments. (a) The Collateral Agent and each other Secured Party agrees to render an accounting to any of the others of the amounts of the outstanding Secured Indebtedness, receipts of payments from the Loan Parties or from the Collateral and of other items relevant to the provisions of this Agreement upon the reasonable request from one of the others as soon as reasonably practicable after such request, giving effect to the application of payments and the proceeds of Collateral as hereinbefore provided in this Agreement. (b) Each party hereto agrees that to the extent any payment of any Secured Indebtedness made to it hereunder is in excess of the amount due to be paid to it hereunder, then it shall pay to the other parties hereto such amounts so that, after giving effect thereto, the amount received by such party is not in excess of the amount to be paid to it hereunder. Notwithstanding the foregoing, neither the First Priority Notes Indenture Trustee nor the Second Priority Notes Indenture Trustee shall be liable to return any such excess amount paid to it if such excess amount has been distributed by it to the holders of the First Priority Notes and the First Priority Exchange Notes or the holders of the Second Priority Notes and the Second Priority Exchange Notes, as the case may be, prior to the time the First Priority Notes Indenture Trustee or the Second Priority Notes Indenture Trustee, as the case may be, received notice of the payment of such excess amount; provided, however, that, in such event, no further distributions shall be made to the First Priority Notes Indenture Trustee or the Second Priority Notes Indenture Trustee, as the case may be, pursuant to Section 5 hereof (other than pursuant to clause (iii) thereof) until distributions shall thereafter have been made to the 24 25 other Secured Lenders pursuant to such Section 5 in an aggregate amount equal to such excess amount. 8. Notices. Except as otherwise expressly provided herein, any notice required or desired to be served, given or delivered hereunder shall be in writing, and shall be deemed to have been validly served, given or delivered three (3) business days after deposit in the United States mails, with proper postage prepaid, one business day after delivery to a courier for next day delivery, upon delivery by courier or upon transmission by telex, telecopy or similar electronic medium (provided that a copy of any such notice sent by such transmission is also sent by one of the other means provided hereunder within one day after the date sent by such transmission) to the addresses set forth below the signatures hereto, with a copy to any person or persons set forth below such signature shown as to receive a copy, or to such other address as any party designates to the others in the manner herein prescribed; provided, that no notice to the Collateral Agent hereunder shall be deemed to have been validly served, given or delivered until actually received by the Collateral Agent. Any party giving notice to any other party hereunder shall also give copies of such notice to all other parties. 9. Contesting Liens or Security Interests; No Partitioning or Marshalling of Collateral; Contesting Secured Indebtedness. (a) No Secured Party shall contest the validity, perfection, priority or enforceability of or seek to avoid, have declared fraudulent or have put aside any lien or security interest granted to the Collateral Agent and each party hereby agrees to cooperate in the defense of any action contesting the validity, perfection, priority or enforceability of such liens or security interests. Each party shall also use its best efforts to notify the other parties of any change in the location of any of the Collateral or the business operations of any Loan Party or of any change in law which would make it necessary or advisable to file additional financing statements in another location as against any Loan Party with respect to the liens and security interests intended to be created by the Collateral Documents, but the failure to do so shall not create a cause of action against the party failing to give such notice or create any claim or right on behalf of any other party hereto and any third party. (b) Notwithstanding anything to the contrary in this Agreement or in any Collateral Document, no Secured Party shall have the right to have any of the Collateral, or any security interest or other property being held as security for all or any part of the Secured Indebtedness by the Collateral Agent, partitioned, or to file a complaint or institute any proceeding at law or in equity to have any of the Collateral or any such security interest or other property partitioned, and each Secured Party 25 26 hereby waives any such right. The Collateral Agent and each other Secured Party hereby waive any and all rights to have the Collateral, or any part thereof, marshalled upon any foreclosure of any of the liens or security interests securing the Secured Indebtedness. (c) Neither the Collateral Agent nor any other Secured Party shall contest the validity or enforceability of or seek to avoid, have declared fraudulent or have set aside any Secured Indebtedness. Except as otherwise provided in Section 5(f), in the event any Secured Indebtedness is invalidated, avoided, declared fraudulent or set aside for the benefit of any Loan Party, the Secured Parties agree that such Secured Indebtedness shall nevertheless be considered to be outstanding for all purposes of this Agreement. 10. No Additional Rights for Loan Parties Hereunder. Each Loan Party, by its consent hereto, acknowledges that it shall have no rights under this Agreement. If the Collateral Agent or any other Secured Party shall violate the terms of this Agreement, each Loan Party agrees, by its consent hereto, that it shall not use such violation as a defense to any enforcement by any such party of any obligations of any Loan Party nor assert such violation as a counterclaim or basis for setoff or recoupment against any such party. 11. Bankruptcy Proceedings. Nothing contained herein shall limit or restrict the independent right of any Secured Party to initiate an action or actions in any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar proceeding in its individual capacity and to appear or be heard on any matter before the bankruptcy or other applicable court in any such proceeding, including, without limitation, with respect to any question concerning the post-petition usage of Collateral and post-petition financing arrangements. The Collateral Agent, acting in such capacity, is not entitled to initiate such actions on behalf of any Secured Party or to appear and be heard on any matter before the bankruptcy or other applicable court in any such proceeding as the representative of any Secured Party. The Collateral Agent is not authorized in any such proceeding to enter into any agreement for, or give any authorization or consent with respect to, the post-petition usage of Collateral, unless such agreement, authorization or consent has been approved in writing by the Required Secured Parties. This Agreement shall survive the commencement of any such bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar proceeding. 12. Independent Credit Investigation. No Secured Party, including the Collateral Agent, nor any of its respective directors, officers, agents or employees, shall be responsible to 26 27 any of the others for the solvency or financial condition of any Loan Party or the ability of any Loan Party to repay any of the Secured Indebtedness, or for the value, sufficiency, existence or ownership of any of the Collateral, the perfection or vesting of any lien or security interest, or the statements of any Loan Party, oral or written, or for the validity, sufficiency or enforceability of any of the Secured Indebtedness, any Financing Agreement, the Guaranty Agreement, any Collateral Document, any document, instrument or agreement executed or delivered in connection with or pursuant to any of the foregoing, or the liens or security interests granted by the Loan Parties to the Collateral Agent in connection therewith. Each Secured Party has entered into its respective financial agreements with the Loan Parties based upon its own independent investigation, and makes no warranty or representation to the other, nor does it rely upon any representation by any of the others, with respect to the matters identified or referred to in this Section. 13. Supervision of Obligations. Except to the extent otherwise expressly provided herein, each Secured Party shall be entitled to manage and supervise the obligations of the Loan Parties to it in accordance with applicable law and such Secured Party's practices in effect from time to time without regard to the existence of any other Secured Party. 14. Turnover of Collateral. If any Secured Party (other than the Collateral Agent) acquires custody, control or possession of any Collateral or any proceeds thereof other than pursuant to the terms of this Agreement, such Secured Party shall promptly cause such Collateral or the proceeds thereof to be delivered to or put in the custody, possession or control of the Collateral Agent for disposition and distribution in accordance with the provisions of Section 5 of this Agreement. Until such time as such Secured Party shall have complied with the provisions of the immediately preceding sentence, such Secured Party shall be deemed to hold such Collateral and the proceeds thereof in trust for the parties entitled thereto under this Agreement. 15. Special Indemnification by Working Capital Lenders. In the event that the Collateral Agent takes any action at the direction of the Requisite Working Capital Lenders which direction is given prior to the 180th day after the date upon which the Working Capital Lenders' Notice is given, then, to the extent such action is found by a court of competent jurisdiction in a final non-appealable judgment to have breached contractual duties (express or limited) or fiduciary duties owed to any Loan Party and results in any costs, claims, damages, penalties, liabilities, losses or expenses (including, but not limited to, court costs and attorneys' fees) being incurred by or asserted against the Collateral Agent, any Secured Party or any holder of Secured Indebtedness not joining in such direction or any officer, director, employee or agent of any thereof ("Indemnified Parties"), 27 28 (such costs, claim, damages, penalties, liabilities, losses or expenses, other than such out-of-pocket expenses, called the "Indemnified Expenses"), the Secured Parties joining in such direction (the "Indemnifying Secured Parties") agree to indemnity and hold harmless the Indemnified Parties for all Indemnified Expenses. If there is only one Indemnifying Secured Party, then such Indemnifying Secured Party shall be liable for all of such indemnification. If there is more than one Indemnifying Secured Party, then the obligations of such of the Indemnifying Secured Parties with respect to such indemnification shall be several, and each Indemnifying Secured Party shall be liable for a pro rata share of any Indemnified Expense in the same proportion as the aggregate amount of the original amount of the Letter of Credit Commitment or the original amount of the Revolving Commitment of such Indemnifying Secured Party (in each case whether or not either or both of such commitments shall then be in effect) bears to the aggregate amount of the original amount of the Letter of Credit Commitment and original amount of the Revolving Commitment of all Indemnifying Secured Parties (whether or not then in effect). Any such indemnification shall be paid to the Collateral Agent notwithstanding that the Collateral Agent may have been reimbursed for any amount of any Indemnified Expenses pursuant to Section 5(a)(i) hereof, in which event such amount shall be distributed by the Collateral Agent pursuant to Section 5(a) hereof as though it was proceeds of the Collateral. 16. Amendment. This Agreement and the provisions hereof may be amended, modified or waived only by a writing signed by the Collateral Agent and all of the other Secured Parties. 17. Successors and Assigns; Refinancings; Second Priority Notes Indenture Trustee. (a) This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each of the parties hereof, including subsequent holders of the Secured Indebtedness and any Person becoming an LC Lender after the date hereof, provided that (i) no Secured Party shall assign or transfer any interest in any Secured Indebtedness, nor shall the LC Agent permit any Person to become an LC Lender after the date hereof, unless such transfer or assignment is made subject to this Agreement and the applicable transferee or assignee, or such Person becoming an LC Lender, as the case may be, becomes a signatory to this Agreement and assumes the obligations of the transferor or assignor hereunder with respect to the Secured Indebtedness so assigned or the obligations of a LC Lender, as the case may be, from and after the time of such transfer or assignment, and (ii) the appointment of any replacement Collateral Agent shall be subject to the provisions of Section 2(h) hereof. (b) In the event of any refinancing of the respective extensions of credit provided by the Letter of Credit Facility 28 29 Agreement, the Revolving Credit Agreement, the First Priority Notes and First Priority Exchange Notes and the Second Priority Notes and the Second Priority Exchange Notes, then the Person or Persons providing such refinancing or a trustee therefor (the "Refinancing Person") may succeed to the rights hereunder of the Person or Persons whose credit extension is being refinanced (the "Refinanced Person") with respect to the Senior Indebtedness being refinanced, and the indebtedness being provided by such refinancing may become Secured Indebtedness entitled to the benefits of the liens and security interests in the Collateral pursuant to the Collateral Documents, subject to the provisions hereof, provided that (i) the Refinancing Person becomes a signatory to this Agreement and assumes the obligations of the Refinanced Person with respect to the Senior Indebtedness being refinanced by executing and delivering to the Secured Parties a counterpart of this Agreement, (ii) in the case of a refinancing of the extension of credit provided by the Letter of Credit Facility Agreement, without the written consent of the Revolving Lender and the Requisite First Priority Noteholders, the maximum commitment to extend credit at any time under such refinancing shall not exceed $28,000,000, (iii) in the case of a refinancing of the extension of credit provided by the Revolving Credit Agreement, without the written consent of the LC Agent and the Requisite First Priority Noteholders, the maximum commitment to extend credit at any time under such refinancing shall not exceed $35,000,000, (iv) in the case of a refinancing of the extension of credit provided by the First Priority Notes and the First Priority Exchange Notes or the Second Priority Notes and the Second Priority Exchange Notes, the principal amount of the credit available at any time under such refinancing shall not exceed the principal amount of the First Priority Notes and the First Priority Exchange Notes, or the Second Priority Notes and the Second Priority Exchange Notes, as the case may be, outstanding at the time of such refinancing, and (v) the events of default and negative and financial covenants in the documentation applicable to such refinancing shall be no more onerous than the Specified Provisions in the Secured Indebtedness being refinanced (or, in the case of a refinancing of the Second Priority Notes and the Second Priority Exchange Notes, no more onerous than the events of default and negative and financial covenants in the Second Priority Notes Indenture). In the case of any such refinancing, the parties hereto agree to execute an amendment to this Agreement to appropriately amend the definitions, sectional references and other provisions hereto so as to cause this Agreement to accommodate the terms of the documents relating to such refinancing while preserving the substance of the relationships between, and the relative priorities of, the different types of Secured Parties and different types of Secured Indebtedness established hereunder. (c) In the event of the issuance of any Second Priority Notes in a manner permitted by the Financing Agreements, the Second Priority Notes Indenture Trustee can become a signatory to this Agreement and agree to the obligations of the Second Priority Notes 29 30 Indenture Trustee hereunder by executing and delivering to the Secured Parties a counterpart of this Agreement. 18. Limitation Relative to Other Agreements. Nothing contained in this Agreement is intended to impair, as between any Secured Party and the Loan Parties, the rights of such Secured Party and the obligations of the Loan Parties under the Financing Agreements between the respective Loan Parties and such Secured Party. 19. Counterparts. This Agreement may be executed in several counterparts and by each party on a separate counterpart, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute but one and the same instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. 20. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 21. Indenture Trustee. Each of the other parties to this Agreement acknowledges that the First Priority Notes Indenture Trustee and the Second Priority Notes Indenture Trustee each enters into this Agreement in its capacity as Trustee under the First Priority Notes Indenture or the Second Priority Notes Indenture, as the case may be, and not in its individual capacity. 30 31 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. BT Commercial Corporation, in its separate capacities as LC Agent, LC Lender and Collateral Agent By:________________________________ Title:__________________________ Address for notices: 233 South Wacker Drive Suite 8400 Chicago, Illinois 60606 Attn: Credit Department Telecopier:(312) 993-8096 Telephone:__________________ The Prudential Insurance Company of America By:________________________________ Title:__________________________ Address for notices: c/o Prudential Capital Group Two Prudential Plaza Suite 5600 Chicago, Illinois 60601 Attn: Managing Director Telecopier: 312/540-4222 Telephone: 312/540-0931 Shawmut Bank Connecticut, National Association, as Trustee By:________________________________ Title:__________________________ 32 Address for notices: 777 Main Street - MSN238 Hartford, Connecticut 66115 Attn: Corporate Trust Administration Telecopier: 203/986-7920 Telephone: 203/986-4424 33 ACKNOWLEDGEMENT OF AND CONSENT AND AGREEMENT TO INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT The undersigned, the Loan Parties described in the Intercreditor and Collateral Agency Agreement set forth above, acknowledge and consent to the terms and conditions thereof. The undersigned Loan Parties do hereby further acknowledge and agree to their joint and several agreements under Sections 2(i), 5(d) and 10 of the Intercreditor and Collateral Agency Agreement and acknowledge and agree that no Loan Party is a third-party beneficiary of, or has any rights under, the Intercreditor and Collateral Agency Agreement. The undersigned Loan Parties do hereby consent to any amendment to the Intercreditor and Collateral Agency Agreement referred to in Section 17(b) thereof. In addition to all other amounts payable to BTCC, in its individual capacity and in its respective capacities as LC Agent, LC Lender and Collateral Agent, hereunder and under any of the Collateral Documents or Financing Agreements, the Company agrees to pay to BTCC a non-refundable (except as provided in the next sentence) fee for its own account, as compensation for BTCC's services as Collateral Agent under the Intercreditor and Collateral Agency Agreement and each of the Collateral Documents, at the rate of $200,000 per year, payable in advance on the date hereof and on each anniversary of the date hereof. In the event that the Collateral Agent resigns or is removed as a result of its gross negligence or wilful misconduct, a pro rata portion of such fee for the balance of the year will be refundable. The Company also agrees to pay any successor Collateral Agent such amount and at such times, or such other reasonable fee as may be charged by such successor Collateral Agent. This Acknowledgement of and Consent and Agreement to Intercreditor and Collateral Agency Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute but one and the same instrument. In proving this Acknowledgement of and Consent and Agreement to Intercreditor and Collateral Agency Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. 34 IN WITNESS WHEREOF, the parties below have caused this Acknowledgement of and Consent and Agreement to Intercreditor and Collateral Agency Agreement to be executed by their respective duly authorized officers as of June 20, 1995. Envirodyne Industries, Inc. By:___________________________________ Title:_____________________________ Sandusky Plastics, Inc. By:___________________________________ Title:_____________________________ Clear Shield National, Inc. By:___________________________________ Title:_____________________________ Sandusky Plastics of Delaware, Inc. By:___________________________________ Title:_____________________________ Viskase Corporation By:___________________________________ Title:_____________________________ Viskase Holding Corporation By:___________________________________ Title:_____________________________ Viskase Sales Corporation By:___________________________________ Title:_____________________________ 35 Annex 1 to Intercreditor and Collateral Agency Agreement Other Agreements, Documents and Instruments Included as Collateral Documents None 36 Annex 2 to Intercreditor and Collateral Agency Agreement GECC Intercreditor Agreements 1. GECC Intercreditor Agreement, dated as of June 20, 1995, among the Collateral Agent, General Electric Capital Corporation, as Owner Participant under the Lease Documents referred to therein (the "Owner Participant"), Shawmut Bank Connecticut, National Association, as Owner Trustee under the Trust Agreement referred to therein (the "Owner Trustee"), the Borrower and Viskase Corporation, a Pennsylvania corporation ("Viskase"). 2. Subordination Agreement (Mortgages), dated as of June 20, 1995, among the Collateral Agent, the Borrower and the Owner Trustee. 3. Subordination Agreement (Intellectual Property), dated as of June 20, 1995, among the Collateral Agent, the Borrower, the Owner Trustee and the Owner Participant. 4. Subordination Agreement (Certain Payments), dated as of June 20, 1995, among the Collateral Agent, the Borrower, the Owner Trustee and the Owner Participant. 37 Annex 3 to Intercreditor and Collateral Agency Agreement Guarantors 1. Sandusky Plastics, Inc., a Delaware corporation. 2. Clear Shield National, Inc., a California corporation. 3. Sandusky Plastics of Delaware, Inc., a Delaware corporation. 4. Viskase Corporation, a Pennsylvania corporation. 5. Viskase Holding Corporation, a Delaware corporation. 6. Viskase Sales Corporation, a Delaware corporation. 38 Annex 4 to Intercreditor and Collateral Agency Agreement Mortgages 1. Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 3402 Stanwood Boulevard, Huntsville, Alabama. 2. Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 2221 East State Highway 198, Osceola, Arkansas. 3. Deed of Trust, Security Agreement, Assignment of Lease and Rents in Fixture Filing made by Viskase Sales Corporation in favor of Chicago Title Company for the benefit of B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 1505 Spring Avenue, SanteFe Springs, California. 4. Revolving Credit Mortgage Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 6855 and 6733 West 65th Street, Chicago, Illinois. 5. Revolving Credit Mortgage Security Agreement and Assignment of Leases and Rents from Clear Shield National, Inc. to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 1234 Peterson Drive, Wheeling, Illinois. 6. Revolving Credit Mortgage Security Agreement and Assignment of Leases and Rents from First Chicago Trust Company of Illinois as trustee and Clear Shield National, Inc., as beneficiary to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 1175 South Wheeling Road, Wheeling Illinois. 7. Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located along Route 1, Kentland, Indiana. 8. Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 24th and O'Neal, Centerville, Iowa. 39 9. Act of Collateral Mortgage, Security Agreement and Assignment of Leases and Rents from Clear Shield National, Inc. to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 1214 Hawn Avenue, Shrieveport, Louisiana. 10. Mortgage, Security Agreement and Assignment of Leases and Rents from Clear Shield National, Inc. to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 177 Florence Street, Leominster, Massachusetts. 11. Open End Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 1450 South Chillicothe Road, Aurora, Ohio. 12. Open End Mortgage, Security Agreement and Assignment of Leases and Rents from Sandusky Plastics, Inc. to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at 400 Broadway, Sandusky, Ohio. 13. Leasehold Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at Route 3, Indian Meridian Road, Pauls Valley, Oklahoma. 14. Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located at Route 3, Indian Meridian Road, Pauls Valley, Oklahoma. 15. Open End Mortgage, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to B.T. Commercial Corporation, as collateral agent dated as of June 20, 1995 for the property located in Bensalem, Pennsylvania. 16. Deed of Trust, Security Agreement and Assignment of Leases and Rents from Viskase Sales Corporation to __________________, Trustee for the benefit of B.T. Commercial Corporation, as collateral agent, beneficiary, dated as of June 20, 1995 for the property located along U.S. Highway 11, Louden, Tennessee. 40 Annex 5 to Intercreditor and Collateral Agency Agreement Pledge Agreements 1. Company Pledge Agreement, dated as of June 20, 1995, made by the Borrower in favor of the Collateral Agent, together with the Stock Powers and Pledge Acknowledgments relating thereto. 2. Subsidiary Pledge Agreement, dated as of June 20, 1995, made by Clear Shield National, Inc. in favor of the Collateral Agent, together with the Stock Powers and Pledge Acknowledgments relating thereto. 3. Subsidiary Pledge Agreement, dated as of June 20, 1995, made by Sandusky Plastics, Inc. in favor of the Collateral Agent, together with the Stock Powers and Pledge Acknowledgments relating thereto. 4. Subsidiary Pledge Agreement, dated as of June 20, 1995, made by Viskase Corporation in favor of the Collateral Agent, together with the Stock Powers and Pledge Acknowledgments relating thereto. 5. Subsidiary Pledge Agreement, dated as of June 20, 1995, made by Viskase Holding Corporation in favor of the Collateral Agent, together with the Stock Powers and Pledge Acknowledgments relating thereto. 6. Pledge of Shares Agreement, made by Viskase Holdings Corporation in favor of the Collateral Agent, together with the Delegation and Certificate of Creation of Pledge related thereto. 41 Annex 6 to Intercreditor and Collateral Agency Agreement Security Agreements 1. Company Security Agreement, dated as of June 20, 1995, made by the Borrower in favor of the Collateral Agreement, together with the Blocked Account Letter in the form of Exhibit A thereto. 2. Subsidiary Security Agreement, dated as of June 20, 1995, made by Clear Shield National, Inc. in favor of the Collateral Agent, together with the Blocked Account Letter in the form of Exhibit A thereto. 3. Subsidiary Security Agreement, dated as of June 20, 1995, made by Sandusky Plastics, Inc. in favor of the Collateral Agent, together with the Blocked Account Letter in the form of Exhibit A thereto. 4. Subsidiary Security Agreement, dated as of June 20, 1995, made by Sandusky Plastics of Delaware, Inc. in favor of the Collateral Agent, together with the Blocked Account Letter in the form of Exhibit A thereto. 5. Subsidiary Security Agreement, dated as of June 20, 1995, made by Viskase Corporation in favor of the Collateral Agent, together with the Blocked Account Letter in form of Exhibit A thereto. 6. Subsidiary Security Agreement, dated as of June 20, 1999, made by Viskase Holding Corporation in favor of the Collateral Agent, together with the Blocked Account Letter in the form of Exhibit A thereto. 7. Subsidiary Security Agreement, dated as of June 20, 1995, made by Viskase Sales Corporation in favor of the Collateral Agent, together with the Blocked Account Letter in the form of Exhibit A thereto. 8. Intellectual Property Security Agreement, dated as of June 20, 1995, made by Clear Shield National, Inc. in favor of the Collateral Agent, together with the Assignment of Intellectual Property related thereto. 9. Intellectual Property Security Agreement, made by Sandusky Plastics, Inc. in favor of the Collateral Agent, together with the Assignment of Intellectual Property related thereto. 10. Intellectual Property Security Agreement, made by Viskase Corporation in favor of the Collateral Agent, together with the Assignment of Intellectual Property related thereto. EX-10.15 24 GECC INTERCREDITOR AGREEMENT 1 EXHIBIT 10.15 GECC INTERCREDITOR AGREEMENT This INTERCREDITOR AGREEMENT, dated as of June 20, 1995 (this "Agreement"), is among BT Commercial Corporation, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement described below (in such capacity, together with its successors and assigns, the "Collateral Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, as Owner Participant under the Lease Documents referred to herein (in such capacity, together with its successors and assigns, the "Owner Participant"), SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION (formerly, The Connecticut National Bank), not in its individual capacity but solely as Owner Trustee under the Trust Agreement referred to herein (in such capacity, together with its successors and assigns, the "Owner Trustee"), ENVIRODYNE INDUSTRIES, INC., a Delaware corporation ("Envirodyne"), and VISKASE CORPORATION, a Pennsylvania corporation ("Viskase"). RECITALS A. Envirodyne has and may hereunder enter into certain Financing Agreements (such term, and the other defined terms used in these Recitals without definition, having the meanings assigned to such terms in Schedule I hereto) under which loans, letters of credit and other financial accommodations are being and may hereafter be made to or for the account of Envirodyne. B. Certain of the subsidiaries of Envirodyne, including Viskase (collectively with Envirodyne, the "Borrowers"), have guaranteed the obligations of Envirodyne under the Financing Agreements. C. Pursuant to the Financing Agreements, the Borrowers have executed and delivered the Collateral Documents under which the Borrowers have granted to the Collateral Agent, on behalf and for the benefit of the Secured Parties under and as defined in that certain Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995 (the "Collateral Agent's Intercreditor Agreement"), liens and security interests to secure their obligations under the Financing Agreements, the Collateral Documents and the guaranties thereof. D. The Financing Agreements constitute a refinancing of the Credit Agreement dated as of December 31, 1993 among Envirodyne, certain of Envirodyne's subsidiaries and the lenders party thereto, as amended from time to time (the "Exit Financing"); the Exit Financing constituted a refinancing of the Postpetition Credit Agreement dated February 5, 1993 among Envirodyne, certain of Envirodyne's subsidiaries and the lenders party thereto (the "Postpetition Credit Agreement"); and the Postpetition Credit Agreement constituted a refinancing of the 2 Credit Agreement dated as of May 1, 1989 among Envirodyne and the lenders party thereto, as amended from time to time. E. Viskase has entered into a sale and leaseback transaction with the Owner Participant and the Owner Trustee. F. It is a condition precedent to the financial accommodations being made under the Financing Agreements that the parties hereto enter into this Agreement. G. The parties hereto desire to execute and deliver this Agreement to set forth certain agreements among them as provided below. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Certain Definitions. Capitalized terms which are used herein, shall, unless otherwise defined herein, have the meanings set forth in Schedule I hereto. 2. Acknowledgment Of Certain Rights Of Parties. (a) Each of the Collateral Agent and Envirodyne severally acknowledges that it does not have, and in the case of the Collateral Agent, that neither it nor any of the other Secured Parties has, pursuant to any Collateral Document, any mortgage, lien or other security interest in any of the Sale-Leaseback Property to secure any obligations of Envirodyne, Viskase or any other Person under the Financing Agreements or any of the Collateral Documents which have been executed and delivered in connection therewith. Notwithstanding anything herein to the contrary, the provisions of this Section 2 shall not affect any mortgage, lien, security interest or encumbrance which the Collateral Agent or Envirodyne may have on any property of Envirodyne, Viskase or any of their respective Subsidiaries other than the Sale-Leaseback Property. (b) Each of the Owner Trustee and the Owner Participant hereby acknowledges and confirms that it does not have any mortgage, lien, or security interest on any property of Envirodyne, Viskase or any of their respective Subsidiaries, to secure any obligations of any of such Persons under any of the Lease Documents, other than the Owner Trustee Security Agreement and as set forth in Articles XII, XIV, XVIII and XXI of the Lease. (c) Nothing in this Section 2 shall be deemed to constitute a representation or warranty by the Collateral Agent as to the validity of the Owner Trustee's ownership interest in any of the Plants, or a representation or warranty by either the Owner Trustee or the Owner Participant as to the validity of any mortgage, lien, security interest or other encumbrance in favor 2 3 of the Collateral Agent or any Secured Party under any of the Collateral Documents. (d) Notwithstanding the other provisions of this Agreement, upon the acquisition by Viskase, or any other Subsidiary of Envirodyne that is a party to any Collateral Document, of any Sale-Leaseback Property upon or after any release, sale, abandonment or other disposition thereof by the Owner Trustee or the Owner Participant, including, without limitation, the purchase by Viskase of any of the Plants (or any part thereof) from the Owner Trustee pursuant to Article VI of the Lease or the transfer by the Owner Trustee of any of the Plants (or any part thereof) to Viskase pursuant to Section 10.05 or 14.01 of the Lease, the after-acquired property clauses of the Collateral Documents shall thereupon, without further act or agreement of Viskase, Envirodyne or such other Subsidiary, act to grant the Collateral Agent a mortgage and lien on and security interest in such property. (e) This Section 2 shall be applicable before and after the filing of any petition by or against Envirodyne, Viskase or any Subsidiary Guarantor under Title 11 of the United States Code or any similar law of any jurisdiction. 3. Subordination Agreements. The Collateral Agent agrees to execute and deliver to the Owner Trustee and the Owner Participant, on the date hereof: (a) subordination agreements, substantially in the form set forth in Exhibit A-1 hereto, in respect of the rights of the Collateral Agent under the Mortgages (as executed, such subordination agreements are collectively referred to as the "Subordination Agreements (Mortgages)"); (b) a subordination agreement, substantially in the form set forth in Exhibit A-2 hereto, in respect of the rights of the Collateral Agent under the applicable Collateral Documents in the intellectual property covered by the License Agreement (as executed, such subordination agreement is referred to as the "Subordination Agreement (Intellectual Property)"); and (c) a subordination agreement, substantially in the form set forth in Exhibit A-3 hereto, in respect of the rights of the Collateral Agent under the applicable Collateral Documents with respect to the collateral covered by the Owner Trustee Security Agreement (as executed, such subordination agreements are collectively referred to as the "Subordination Agreements (Certain Payments)"). 4. Collateral Agent's Right to Cure Defaults under Lease Documents. The Owner Trustee and the Owner Participant each 3 4 agree that the Collateral Agent shall have the right to cure certain Events of Default as follows: (a) Each of the Owner Trustee and the Owner Participant agrees to notify the Collateral Agent in writing of the occurrence of any Event of Default as promptly as practicable after an Authorized Officer of the Owner Trustee or the Owner Participant has actual knowledge of such Event of Default; the date of receipt by the Collateral Agent of any such notification from the Owner Trustee or the Owner Participant shall herein be called the "Notification Date". (b) In the case of any default in payment of Basic Rent or Stipulated Loss Value, unless the Collateral Agent has, either (i) within the period of 14 months immediately preceding the Notification Date in respect of such Event of Default (unless within such previous 14 month period the cure by the Collateral Agent was made at a time when such Event of Default would not have occurred if the Rent Letter of Credit had not been reduced and the proceeds thereof had been used to pay the Basic Rent or Stipulated Loss Value, in which case such 14 month restriction shall be extended to 26 months), or (ii) on three or more previous occasions, exercised its right to cure a default in payment of Basic Rent or Stipulated Loss Value under this Section 4(b) by making a payment of such Basic Rent or Stipulated Loss Value, as the case may be, to the Owner Trustee, the Collateral Agent, on behalf of any or all of the other Secured Parties, shall have the right to cure such Event of Default, and neither the Owner Trustee nor the Owner Participant will exercise any of its rights or remedies under any of the Lease Documents in respect of such Event of Default (including without limitation under the Guaranty) until at least 15 days after the Notification Date in respect of such Event of Default. At any time during such 15-day period, the Collateral Agent may give notice (a "Cure Notice") to the Owner Trustee and the Owner Participant that, based on the information then available to it, the Collateral Agent believes in good faith that there is a reasonable possibility that the Collateral Agent, on behalf of any or all of the Secured Parties, will cure such Event of Default within a period of 45 days following such Notification Date; provided, however, that, after giving any Cure Notice, until the earlier of the date, if any, when such Event of Default is cured and the expiration of such 45-day period, the Collateral Agent will use its reasonable efforts from time to time to determine whether such reasonable possibility still exists and, if the Collateral Agent determines that such reasonable possibility no longer exists, it will promptly so notify the Owner Trustee and the Owner Participant. If either the Owner Trustee or the Owner Participant receives such a Cure Notice from the Collateral Agent, it will not exercise any rights or remedies under any of the Lease Documents in respect of such Event of Default (including without limitation under the Guaranty) until the 4 5 earlier of (x) the forty-fifth day following such Notification Date and (y) the date upon which the Collateral Agent provides the Owner Trustee and the Owner Participant with the notice referred to in the proviso to the next preceding sentence. (c) In the case of any Event of Default other than a default in payment of Basic Rent or Stipulated Loss Value, and other than an Event of Default under clause (f) or (g) of Article XVII of the Lease, unless the Collateral Agent has on six or more previous occasions exercised its right to cure such an Event of Default, the Collateral Agent, on behalf of any or all of the Secured Parties, shall have the right to cure such Event of Default, and neither the Owner Trustee nor the Owner Participant will exercise any of its rights or remedies under any of the Lease Documents in respect of such Event of Default (including without limitation under the Guaranty) until at least 15 days after the Notification Date in respect of such Event of Default. At any time during such 15-day period, the Collateral Agent may give a Cure Notice to the Owner Trustee and the Owner Participant to the effect that, based on the information then available to it, it believes in good faith that there is a reasonable possibility that the Collateral Agent, on behalf of any or all of the Secured Parties, will cure such Event of Default within a period of 45 days following such Notification Date; provided, however, that, after giving any Cure Notice, until the earlier of the date, if any, when such Event of Default is cured and the expiration of such 45-day period, the Collateral Agent will use its reasonable efforts from time to time to determine whether such reasonable possibility still exists and, if the Collateral Agent determines that such reasonable possibility no longer exists, it will promptly so notify the Owner Trustee and the Owner Participant. If either the Owner Trustee or the Owner Participant receives such a Cure Notice from the Collateral Agent, it will not exercise any rights or remedies under any of the Lease Documents in respect of such Event of Default (including without limitation under the Guaranty) until the earlier of (x) the forty-fifth day following such Notification Date and (y) the date upon which the Collateral Agent provides the Owner Trustee and the Owner Participant with the notice referred to in the proviso to the next preceding sentence. (d) In order for the Collateral Agent, on behalf of any or all of the Secured Parties, to cure any Event of Default arising from a failure by Viskase to pay money to the Owner Trustee or the Owner Participant, the Collateral Agent shall pay to the Owner Trustee or the Owner Participant, as the case may be, in immediately available funds at such Person's address set forth on the signature pages hereof, the amount of such defaulted payment together with interest thereon from the date on which such payment was due to the Owner Trustee or Owner Participant, as the case may be, until the date of payment by the Collateral Agent, at the Stipulated Rate. 5 6 (e) Upon payment of the amounts specified in Section 4(d) above, in the case of any Event of Default arising from the failure to pay money to the Owner Trustee or the Owner Participant, or upon the curing of any other Event of Default, such Event of Default shall cease to exist and neither the Owner Trustee nor the Owner Participant shall have any rights under any of the Lease Documents in respect thereof. (f) No notice given pursuant to this Section 4 by the Collateral Agent that it believes in good faith that there is a reasonable possibility it or any of the Secured Parties will cure any Event of Default shall obligate the Collateral Agent or any of the Secured Parties to cure such Event of Default, and neither the Collateral Agent nor any of the Secured Parties shall be liable to the Owner Trustee or the Owner Participant for any failure to cure such Event of Default unless the Collateral Agent acted in bad faith in giving any such notice. Nothing in this Agreement shall impose upon the Collateral Agent or any of the Secured Parties any obligation to ensure the performance by any Person of any of the Lease Documents or to cure any Event of Default under any of the Lease Documents. (g) Nothing in this Section 4 shall prohibit the Owner Trustee from making a drawing under the Cure Rights Letter of Credit or the Rent Letter of Credit in accordance with the terms thereof. 5. Use of Facilities to Complete Work in Process. If at any time the Owner Trustee or Owner Participant has obtained possession and control of any Plant pursuant to Article XVIII or any other provision of the Lease, it will give prompt notice of such occurrence to the Collateral Agent, and, to the extent permitted by applicable law, upon request by the Collateral Agent on behalf of some or all of the Secured Parties at any time when the Owner Trustee or the Owner Participant, or any other Person on its or their behalf, is operating such Plant, the Owner Trustee or the Owner Participant, as the case may be, shall utilize such Plant, or cause such Plant to be utilized, to finish work on any of the Collateral Agent's Collateral which is located in the same Facility as such Plant and which constitutes work in process. Neither the Owner Trustee nor the Owner Participant shall be required to use any Plant to perform any work on any part of the Collateral Agent's Collateral which constitutes raw materials, but neither the Owner Trustee nor the Owner Participant shall, without the Collateral Agent's consent, use any Collateral Agent's Collateral for any purpose, except to process work in process. The Collateral Agent shall compensate the Owner Trustee and Owner Participant for all the Owner Trustee's and Owner Participant's reasonable direct and incremental costs related to use of any Plant on behalf of the Collateral Agent, as instructed in writing by the Collateral Agent, including but not limited to incremental wage, 6 7 maintenance, utility, insurance and overhead expenses directly incident to such use. 6. Collateral Agent's Right to Remove Collateral Agent's Collateral from Facilities. If at any time the Owner Trustee or Owner Participant has obtained possession and control of any Plant pursuant to Article XVIII or any other provision of the Lease, the Owner Trustee and Owner Participant shall, upon reasonable notice from the Collateral Agent, permit the Collateral Agent to enter upon the Facility where such Plant is located, in accordance with applicable law, solely for purposes of removing the Collateral Agent's Collateral. The Collateral Agent shall compensate the Owner Trustee and the Owner Participant for any damage to such Plant caused by such removal, and shall pay the Owner Trustee and the Owner Participant for the Owner Trustee's and Owner Participant's reasonable direct and incremental costs related to the provision and supervision of such access to such Plant. 7. Insurance. Viskase has agreed to insure the Owner Trustee's interest in the Plants pursuant to the Lease, and Envirodyne and Viskase have agreed to insure the Collateral Agent's and the Secured Parties' interest in the Collateral Agent's Collateral pursuant to the Collateral Documents. To the extent that the insurance which Viskase is obligated to carry is carried under a blanket policy which insures both the Plants and the Collateral Agent's Collateral, the parties hereto agree that (i) the insurance proceeds of any loss solely involving the Collateral Agent's Collateral shall be paid directly to the Collateral Agent to the extent required to be so paid at such time pursuant to the Collateral Documents, (ii) the insurance proceeds of any loss solely involving any Plant shall be paid directly to the Owner Trustee and (iii) the insurance proceeds of any loss involving both Collateral Agent's Collateral and any Plant (a "Combined Loss") shall be paid to a mutually acceptable third party to be invested in Permitted Investments for payment to the Collateral Agent, on the one hand, and the Owner Trustee and Owner Participant on the other, pro rata according to the respective proportions which the losses to the Collateral Agent's Collateral and the Plant bear to the total of such losses, with interest earned on such invested proceeds to be allocated in the same manner as principal. The amount of such relative losses shall be determined as the Collateral Agent and the Owner Participant shall mutually agree, or, if they do not so agree, shall be determined according to the Appraisal Procedure, except that all actions which are provided in the definition of Appraisal Procedure to be taken by the Lessee shall, for purposes of this Section, be taken by the Collateral Agent. If either the Collateral Agent or the Owner Trustee or the Owner Participant pays any insurance premiums on behalf of Envirodyne or Viskase in respect of any period of time, and a Combined Loss occurs during such period under a policy for which such premiums were paid by 7 8 any of such parties, the party that paid such insurance premiums shall be reimbursed for the payment of such premiums from the insurance proceeds prior to the distribution of the balance of such proceeds pursuant to the provisions of this Section 7. 8. Notice of Termination of Guaranty. The Owner Trustee and Owner Participant hereby agree for the benefit of the Collateral Agent and the other Secured Parties that they will, upon termination of the Guaranty with respect to any Subsidiary Guarantor, or upon release of such Subsidiary Guarantor from its obligations under the Guaranty, execute and deliver such notices and releases as the Collateral Agent may reasonably request in order to confirm such release and termination. 9. Notices and Acknowledgements of Assignments. (a) Viskase and Envirodyne hereby notify the Owner Participant and the Owner Trustee that Viskase has mortgaged, assigned, transferred and conveyed to the Collateral Agent, and granted to the Collateral Agent a security interest in, all of Viskase's right, title and interest in, to and under each of the Lease Documents, including, without limitation, the Lease, the Ground Lease, the Ground Sublease and the License Agreement (subject, in the case of the Ground Lease and the License Agreement, to the extent provided in the subordination agreement referred to in Section 3(c) hereof, to the rights of the Owner Trustee under the Owner Trustee Security Agreement), pursuant to the Collateral Documents. The Owner Trustee and the Owner Participant hereby acknowledge receipt of notice of such assignments, security interests, mortgages, transfers and conveyances, and of copies of the Collateral Documents, and hereby confirm to Envirodyne, Viskase and the Collateral Agent that they consent to such assignments, security interests, mortgages, transfers and conveyances subject, to the extent provided in the aforesaid subordination agreement, to the rights of the Owner Trustee under the Owner Trustee Security Agreement (it being understood that the Collateral Agent may not transfer the interest of Viskase as lessee under the Lease, upon the enforcement of any such assignment, security interest, mortgage, transfer or conveyance, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld). Notwithstanding the foregoing, the Owner Participant and the Owner Trustee agree that neither the Collateral Agent nor any of the other Secured Parties shall in any way be responsible solely by reason of such assignments, security interest, mortgages, transfer and conveyance for the performance of any of the obligations of Envirodyne, Viskase, any Subsidiary Guarantor or any other party to any of the Lease Documents. (b) Viskase and Envirodyne hereby notify the Collateral Agent that Viskase has granted to the Owner Trustee a security 8 9 interest in, all of Viskase's right, title and interest in, to and under each of the Ground Lease and the License Agreement (subject, except to the extent provided in the subordination agreement referred to in Section 3(c) hereof, to the rights of the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, under the applicable Collateral Documents) pursuant to the Owner Trustee Security Agreement. The Collateral Agent, on its own behalf and on behalf of the other Secured Parties, hereby acknowledges receipt of notice of such pledge, assignment and security interest, and of a copy of the Owner Trustee Security Agreement, and hereby confirms to Envirodyne, Viskase, the Owner Participant and the Owner Trustee that the Collateral Agent and the other Secured Parties consent to such pledge, assignment and security interest, subject, except to the extent provided in the aforesaid subordination agreement, to the security interests of the Collateral Agent as referred to above. 10. Payment of Rents, License Fees, etc. The Owner Participant and the Owner Trustee hereby acknowledge that all rents, license fees and other amounts payable to Viskase in respect of the Ground Lease and the License Agreement have been assigned as security to the Collateral Agent (subject, to the extent provided in the subordination agreement referred to in Section 3(c) hereof, to the rights of the Owner Trustee under the Owner Trustee Security Agreement) pursuant to the applicable Collateral Documents. The Owner Trustee and the Owner Participant agree that, until they have received notice from the Collateral Agent that all obligations of Envirodyne and Viskase under the Financing Agreements and the other Loan Documents have been paid and satisfied in full, all commitments to extend credit or other financial accommodations thereunder shall have terminated and such assignment has been terminated, they will upon the request of the Collateral Agent, make all payments of rents, license fees and other amounts which are payable to Viskase under the Ground Lease and the License Agreement directly to the Collateral Agent, without setoff or counterclaim or other deduction of any kind, except for those rights of setoff, counterclaim and deduction which are expressly provided in the Owner Trustee Security Agreement, the Ground Lease or the License Agreement, in each case as in effect on the date hereof or as otherwise consented to in writing by the Collateral Agent, as the case may be, with respect to such rents or such license fees. The Collateral Agent agrees that, when it has been notified in writing by all of the Secured Parties that all obligations of Envirodyne and Viskase under the Financing Agreements and the Loan Documents have been paid and satisfied in full, all commitments to extend credit or other financial accommodations thereunder shall have terminated and the aforesaid assignment has been terminated, it will so notify the owner Participant and the Owner Trustee. 9 10 11. Restriction on Modification of Certain Provisions of Lease Documents. Each of the Owner Trustee and the Owner Participant hereby agrees that it will not, without the prior written consent of the Collateral Agent, make any amendment in violation of Paragraph 3(a) of the Subordination Agreements (Mortgages), Paragraph 3 of the Subordination Agreement (Intellectual Property) or Section 3.02 of the Subordination Agreements (Certain Payments) or agree to any amendment or modification of any provision of the Guaranty. 12. Notice of Enforcement by Collateral Agent. If at any time the Collateral Agent shall commence the exercise of remedies under the Collateral Documents as a result of an "Event of Default", as such term is defined in the Collateral Agent's Intercreditor Agreement, the Collateral Agent shall promptly so notify the Owner Trustee and the Owner Participant. 13. Representations and Warranties. (a) Envirodyne and Viskase hereby represent and warrant that all filings, recordations or other actions necessary or advisable (i) in connection with the execution, delivery and performance of the Subordination Agreements (Mortgages) and the Subordination Agreements (Certain Payments) (collectively, the "Subordination Agreements") or (ii) in order to further effectuate and give notice to third parties of the subordinations provided for thereunder, have been made or taken in each of the States of Indiana, Illinois, Arkansas and Tennessee and each of such filings, recordations and other actions is in full force and effect. (b) Each of the parties hereto hereby represent and warrant that this Agreement and each of the Subordination Agreements have been duly authorized, executed and delivered and they are the legal, valid and binding obligation of each of them, enforceable against them in accordance with their terms. 14. Conditions to Effectiveness. The provisions of the Subordination Agreements and this Agreement (together with the Subordination Agreements, the "Intercreditor Documents") shall become effective upon the satisfaction of the following conditions: (a) the closings under the Financing Agreements shall have occurred and Envirodyne shall have provided the Owner Participant with written notice of such occurrence; (b) each of the Owner Participant and the Owner Trustee shall have received counterparts of the Intercreditor Documents duly executed or acknowledged, as the case may be, by each of the parties thereto; 10 11 (c) each of the Liens granted by Envirodyne or Viskase (other than any of such liens in favor of the Owner Participant or the Owner Trustee) pursuant to mortgages, assignments, security agreements, pledge agreements, financing statements or other agreements or instruments (each of such agreements or instruments being referred to collectively as the "Old Bank Security Documents") referred to in, or contemplated by (i) the GECC Intercreditor Agreement, dated as of December 31, 1993, among Citicorp North America, Inc., Continental Bank N.A., General Electric Capital Corporation, Shawmut Bank Connecticut, National Association, Envirodyne and Viskase (the "1993 Intercreditor Agreement"), (ii) the Subordination Agreement (Certain Payments), the Subordination Agreement (Intellectual Property) and the Subordination Agreement (Mortgages), each dated as of December 31, 1993 (the "1993 Subordination Agreements") and (iii) the Credit Agreement, dated December 31, 1993, among Envirodyne, certain of its subsidiaries, Continental Bank N.A., Citibank International PLC, Citibank North America, Inc. and certain lenders party thereto (the "1993 Credit Agreement" and, together with the 1993 Intercreditor Agreement and the 1993 Subordination Agreements, the "1993 Intercreditor Documents") shall have been fully discharged, the Old Bank Security Documents shall have been terminated and the Owner Participant shall have received evidence of the foregoing satisfactory to it; (d) the 1993 Credit Agreement and the commitment to extend credit thereunder shall have been terminated and no longer be in effect and the Owner Participant shall have received evidence of the foregoing satisfactory to it; (e) all filings, recordations or other actions necessary or advisable in connection with the execution, delivery and performance of the Subordination Agreements shall have been made, taken and shall be in full force and effect in each of the States of Indiana, Illinois, Arkansas and Tennessee and the Owner Participant shall have received evidence of the foregoing satisfactory to it; (f) the Owner Participant shall have received copies of the Financing Agreements and the Collateral Documents duly executed by the parties thereto and each other document related thereto as may be requested by it; and (g) the Owner Participant and the Owner Trustee shall have received a legal opinion in form and substance satisfactory to them relating to the condition specified in clause (e) above from each of the local counsel to Viskase and Envirodyne in the States of Arkansas, Indiana, Tennessee and Illinois. 15. No Implied Waivers, etc. Except as expressly provided herein, nothing in this Agreement shall be deemed to constitute a waiver of or shall otherwise affect any of the interests, rights 11 12 or remedies which either the Collateral Agent or the Secured Parties, on the one hand, or the Owner Trustee and the Owner Participant, on the other hand, may have under the respective Financing Agreements, Collateral Documents or Lease Documents or under applicable law. 16. Amendments. This Agreement cannot be amended or modified without the written consent of the Collateral Agent, the Owner Trustee and the Owner Participant. 17. Benefit of Agreement. This Agreement is intended solely for the benefit of the Collateral Agent, the Secured Parties, the Owner Trustee and the Owner Participant and their respective successors and permitted assigns and no other Person (including, without limitation, Envirodyne, Viskase and their respective Subsidiaries) shall have any right, power, benefit, privilege, priority or interest under or through this Agreement. 18. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction the substantive laws of which are held to be applicable hereto shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute a single agreement. 20. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York. 21. Undertaking of Owner Participant. The Owner Participant shall use its best efforts to cause the Owner Trustee and any successor to the Owner Trustee to comply with the obligations of the Owner Trustee hereunder. 22. Notices. All notices and other communications provided to any party hereto under this Agreement shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth on the signature pages hereof or at such other address or facsimile number as may be designated by such party from time to time in a notice complying as to delivery with the terms of this section to the other parties. Any notice, if mailed or sent by courier or hand delivery, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when such notice is transmitted and receipt is confirmed by telephone or electronic means. 12 13 23. Headings. The various headings of this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provisions hereof. 24. Successors and Assigns. (a) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, the Secured Parties, and their respective successors and assigns. The Owner Trustee and the Owner Participant will cause any of their respective successors and assigns, replacements or any other party that succeeds to or substitutes for or otherwise acquires either the Owner Trustee's or the Owner Participant's respective rights and interest in the Plants or under any of the Lease Documents, or in any significant portion thereof, to enter into an intercreditor agreement with the other parties hereto substantially in the form of this Agreement. The Collateral Agent, Envirodyne and Viskase each agree that they will, on request of any party hereto, enter into such an intercreditor agreement. (b) The Owner Trustee and the Owner Participant agree to notify the Collateral Agent of the identities of any of their successors, assigns, replacements, transferees or substitutes with respect to any of their rights in any of the Facilities or under any of the Lease Documents, identifying in reasonable detail the nature of the rights and obligations of any of such Persons, as promptly as practicable after such Persons acquire such rights or obligations. The Collateral Agent agrees to notify the Owner Trustee (i) if it ceases to be the Collateral Agent under the Collateral Agent's Intercreditor Agreement and (ii) of the identity of its successor agent under the Collateral Agent's Intercreditor Agreement promptly upon learning of the appointment of such successor. 13 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first written above. BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement referred to herein Address: 233 South Wacker Drive By: _________________________________ Suite 8400 Name Printed: Wayne Hillock Chicago, Illinois 60606 Title: Senior Vice President Attn: Credit Department Facsimile No. 312/993-8096 GENERAL ELECTRIC CAPITAL CORPORATION, as Owner Participant Address: 1600 Summer Street By: ___________________________________ Stamford, Connecticut 06927 Name Printed:__________________________ Facsimile No.: Title:_________________________________ Attention: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement referred to herein Address: 777 Main Street By: ___________________________________ Hartford, Connecticut 06115 Name Printed:__________________________ Facsimile No.: 203/240-7920 Title:_________________________________ Attention: Corporate Trust Administration 14 15 Acknowledged and Agreed: ENVIRODYNE INDUSTRIES, INC. By: _____________________________________________ Name Printed:______________________________ Title:_____________________________________ Address: 701 Harger Road Suite 190 Oak Brook, Illinois 60521 Facsimile No.: (708) 571-0959 Attention: Mr. Gordon Donovan VISKASE CORPORATION By: _____________________________________________ Name Printed:______________________________ Title:_____________________________________ Address: 6855 West 65th Street Chicago, Illinois 60638 Facsimile No.: Attention: 15 16 SCHEDULE I TO INTERCREDITOR AGREEMENT DEFINITIONAL SUPPLEMENT TO INTERCREDITOR AGREEMENT This is Schedule I to the Intercreditor Agreement dated as of June 20, 1995 among BT Commercial Corporation, as Collateral Agent under the Collateral Agent's Intercreditor Agreement referred to therein, General Electric Capital Corporation, as Owner Participant under the Lease Documents referred to therein, Shawmut Bank, Connecticut National Association (formerly, The Connecticut National Bank), as Owner Trustee under the Trust Agreement referred to herein, Envirodyne Industries, Inc. and Viskase Corporation (as amended, supplemented or otherwise modified from time to time, the "Intercreditor Agreement"). As used in the Intercreditor Agreement (including this Schedule I): 1. The following capitalized terms shall have the meanings assigned to such terms in the Preamble, the Recitals or the respective Sections of the Intercreditor Agreement indicated below: "Agreement" - Preamble "Collateral Agent" - Preamble "Combined Loss" - Section 7 "Cure Notice" - Section 4(b) "Envirodyne" - Preamble "Notification Date" - Section 4(a) "Owner Participant" - Preamble "Owner Trustee" - Preamble "Subordination Agreement (Intellectual Property)" - Section 3(b) "Subordination Agreement (Certain Payments)" - Section 3(c) "Subordination Agreements (Mortgages)" - Section 3(a) "Viskase" - Preamble "Viskase Sales" - Recital B 17 2. The following capitalized terms shall have the meanings assigned to such terms in Appendix A to the Participation Agreement dated as of December 18, 1990 among Viskase, Envirodyne, the Owner Participant and the Owner Trustee, as in effect on the date of the Intercreditor Agreement: "Appraisal Procedure" "Authorized Officer" "Basic Rent" "Bills of Sale" "Cure Rights Letter of Credit" "Event of Default" "Facilities" "Ground Lease" "Ground Sublease" "Guaranty" "Lease" "License Agreement" "Lien" "Maximum Capacity" "Participation Agreement" "Permitted Investments" "Plants" "Rent" "Rent Letter of Credit" "Stipulated Loss Value" "Stipulated Rate" "Subsidiary Guarantors" "Trust Agreement" 2 18 3. The following capitalized terms shall have the meanings assigned to such terms in the Collateral Agent's Intercreditor Agreement: "Financing Agreements" "Person" "Secured Parties" "Subsidiary" 4. The following capitalized terms shall have the meanings set forth below: "Collateral Agent's Collateral" shall mean all the "Collateral", as such term is defined in the Collateral Agent's Intercreditor Agreement, excluding, however, any and all Sale-Leaseback Property, other than Sale-Leaseback Property which becomes subject to a mortgage, lien and security interest in favor of the Collateral Agent as described in Section 2(d) of the Intercreditor Agreement. "Collateral Documents" shall mean the Mortgages, the Intellectual Property Security Agreements and the Security Agreements in each case as such terms are defined in the Subordination Agreements (Mortgages), Subordination Agreements (Intellectual Property) and Subordination Agreements (Certain Payments). "Intercompany Security Agreement" shall mean the Intercompany Security Agreement, Financing Statement and Assignment of Patents, Trademarks and Copyrights dated as of June 1, 1989 between Viskase and certain other direct and indirect Subsidiaries of Envirodyne, as debtors, and Envirodyne, as secured party, as collaterally assigned by Envirodyne to the Collateral Agent pursuant to the Collateral Documents. "Lease Documents" shall mean the "Basic Documents", as such term is defined in Appendix A to the Participation Agreement. "Owner Trustee Security Agreement" shall mean the Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of December 18, 1990 between Viskase and the Owner Trustee, as in effect on the date of the Intercreditor Agreement. "Sale-Leaseback Property" shall mean the property listed on Exhibit A to the Lease, as well as Parts and Alterations (as such terms are defined in Appendix A to the Participation Agreement). 3 19 EXHIBIT A-1 to GECC Intercreditor Agreement SUBORDINATION AGREEMENT (MORTGAGES) This SUBORDINATION AGREEMENT (this "Agreement") is entered into as of June 20, 1995 among BT Commercial Corporation, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement described below (in such capacity together with its successors and assigns, the "Collateral Agent"), ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (together with its successors and assigns, the "Company"), SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION (formerly The Connecticut National Bank), not in its individual capacity but solely as Owner Trustee under that certain Trust Agreement, dated as of December 18, 1990, between said association and General Electric Capital Corporation (herein such Owner Trustee, together with any institution which shall act as successor Owner Trustee from time to time under said Trust Agreement, is sometimes called the "Ground Lessee"). RECITALS: A. Viskase Corporation (herein together with its successors and assigns, the "Owner") and the Ground Lessee entered into a certain Ground Lease (herein called the "Ground Lease"), dated December 18, 1990, whereby the Owner leased to the Ground Lessee the land described therein (herein called the "Land") together with all buildings, parking structures, utility sheds, workrooms, air conditioning towers, open parking areas, and other structures and improvements situated on the Land, except for any equipment owned by the Ground Lessee (herein collectively called the "Buildings"; the Buildings and the Land are collectively called the "Site"). B. Envirodyne has and may hereunder enter into certain Financing Agreements (such term, and the other defined terms used in these Recitals without definition, having the meanings assigned to such terms in Schedule I hereto) under which loans, letters of credit and other financial accommodations are being and may hereafter be made to or for the account of Envirodyne. C. Certain of the subsidiaries of Envirodyne, including Viskase (collectively with Envirodyne, the "Borrowers"), have guaranteed the obligations of Envirodyne under the Financing Agreements. D. Pursuant to the Financing Agreements, the Borrowers have executed and delivered the Collateral Documents under which the Borrowers have granted to the Collateral Agent, on behalf and for the benefit of the Secured Parties under and as defined in that certain Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995 (the "Collateral Agent's Intercreditor 20 Agreement"), liens and security interests to secure their obligations under the Financing Agreements, the Collateral Documents and the guaranties thereof. E. Pursuant to the Financing Agreements, the Owner has executed and delivered to the Collateral Agent a certain Leasehold Mortgage, Security Agreement and Assignment of Leases and Rents and (ii) a certain Mortgage, Security Agreement and Assignment of Leases and Rents, each dated as of the date hereof (collectively, as the same may be amended, modified, restated, supplemented or extended from time to time, called the "Mortgages" and each a "Mortgage"). NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Collateral Agent, the Company and the Ground Lessee hereby agree as follows: 1. The Collateral Agent and the Company hereby agree with the Ground Lessee that each Mortgage is, and shall be, subordinate and junior to the Ground Lease; provided, however, that with respect to the occurrence of any event described in Section 7 of the Intercreditor Agreement, dated as of the date hereof, among the Collateral Agent, the Company, the Ground Lessee and General Electric Capital Corporation, the provisions of such Section 7 shall prevail over any contrary provisions in the Mortgages or the Ground Lease. The Collateral Agent and the Company hereby further agree with the Ground Lessee that, without in any way limiting the generality of the foregoing, in the event any New Landlord (defined hereinafter) shall commence any proceedings to foreclose the Mortgages for any reason whatsoever or shall succeed to all or part of the right, title, and interest of the Owner by foreclosure or otherwise by, through, under, or in connection with the Mortgages, then, if and so long as, no "default" has occurred and is continuing under the Ground Lease, the Ground Lessee's use and possession of the Site, and its other rights and privileges under the Ground Lease, shall not be disturbed directly or indirectly by such New Landlord by such foreclosure under such Mortgages or by any such attempt to foreclose or to succeed to the interests of the Owner by foreclosure or otherwise by, through, under, or in connection with the Mortgages. 2. The Ground Lessee agrees that to the extent that the Collateral Agent or any purchaser at a foreclosure sale under the Mortgages or any transferee who acquires all or any part of the Owner's or the Collateral Agent's right, title and interest in and to the Site by deed in lieu of foreclosure or otherwise, and the successors and assigns of such purchaser or transferee (the Collateral Agent, and each such other transferee or purchaser is herein called a "New Landlord") succeeds to all or any part of the interest of the Owner in the Site, the Ground Lessee will 2 21 attorn to and recognize such New Landlord as its landlord for the unexpired balance of the term of the Ground Lease. 3. The Ground Lessee will not (a) amend or otherwise modify Sections 3.01 or 3.02 or Article X or the definitions of any of the following terms: "Site Fair Market Rental Value"; "Appraisal Procedure"; and "Plant Consolidated Operating Income", of the Ground Lease, in each case, without the prior written consent of the Collateral Agent or (b) assign the Ground Lease or sublet all or any part of the Site other than in accordance with the Ground Lease or the Ground Sublease referred to therein. 4. To the extent that any New Landlord (other than the Company) shall succeed to the right, title or interest of the Owner under the Ground Lease, the Ground Lessee agrees as follows: (a) Neither the Collateral Agent nor any such New Landlord shall be, except (in the case of clauses (i) and (ii)) as expressly provided in the Assignment of Leases and Rents, Security Agreement and Financing Statement, dated as of December 18, 1990, between the Owner and the Ground Lessee or in Section 3.02 of the Ground Lease, in each case as in effect on the date hereof or as consented to in writing by the Collateral Agent: (i) subject to any credits, offsets, defenses, claims or counterclaims which the Ground Lessee might have against any prior landlord (including the Owner), (ii) bound by any rent or additional rent which the Ground Lessee shall have paid more than fourteen months in advance to any prior landlord (including the Owner), or (iii) personally bound by any covenant to undertake or complete any improvement to the Site; (b) Neither the Collateral Agent nor such New Landlord shall be personally liable for any act or omission of any prior landlord (including the Owner); and (c) Neither the Collateral Agent nor any other New Landlord shall have any personal liability, directly or indirectly, under or in connection with the Ground Lease or this Agreement or any amendment or amendments to either thereof made at any time or times, heretofore or hereafter, except for its own breach of any express provision of this Agreement, and the Ground Lessee hereby forever and irrevocably waives and release any and all such personal liability. In addition, neither the Collateral Agent nor any such New Landlord shall have at any time or times hereafter any personal liability, directly or indirectly, under or in connection with or secured by any agreement, lease, instrument, encumbrance, claim or right affecting or relating to the Site or the Collateral (as defined in the Mortgages) or to which the Site or the Collateral is now or hereafter subject. The limitation of liability provided in this paragraph is in addition to, and not in limitation of, any limitation on 3 22 liability applicable to the Collateral Agent or such New Landlord provided by law or by any other contract, agreement or instrument. 5. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall be binding upon each and every New Landlord which acquires an interest in the Site by, through, or under the Mortgages. 6. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute both one and the same instrument. This Agreement shall become effective as of the date first above written when and if counterparts hereof shall have been executed by all of the parties hereto. 7. If any provision of this Agreement is void or unenforceable in any jurisdiction, such voidness or unenforceability shall not affect the enforceability of (a) such provision in any other jurisdiction or (b) any other provision of this Agreement in any jurisdiction. 4 23 IN WITNESS WHEREOF, the parties hereto have executed and delivered this document as of the date first above written. [Corporate Seal] BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the the Collateral Agent's Intercreditor Agreement referred to herein ATTEST: By: _______________________________ By: __________________________ Name: _________________________ Name: Wayne Hillock Title:_________________________ Title: Senior Vice President [Corporate Seal] ENVIRODYNE INDUSTRIES, INC. ATTEST: By: _______________________________ By: ___________________________ Name:__________________________ Name:______________________ Title:_________________________ Title:_____________________ [Corporate Seal] SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, not ATTEST: in its individual capacity but solely as Owner Trustee as aforesaid By: _______________________________ By: ___________________________ Name:__________________________ Name:______________________ Title:_________________________ Title:_____________________ This instrument was prepared by and upon recordation should be returned to: 5 24 STATE OF ________________) ) SS.: COUNTY OF _______________) I, the undersigned, a notary public in and for said County, in the state aforesaid, DO HEREBY CERTIFY THAT _________________, personally known to me to be the ___________________________ of ENVIRODYNE INDUSTRIES, INC., a Delaware corporation and ________________________, personally known to me to be the ___________ Secretary of said corporation, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and severally acknowledged that as such _____________ and ___________ Secretary, they signed and delivered the said instrument as ____________________ and ________________Secretary of said corporation, and caused the seal of said corporation to be affixed thereto, as their free and voluntary act, and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. GIVEN under my hand and notarial seal this ____ day of June, 1995. ___________________________________________ Notary Public My commission expires: ___________________________________________ (SEAL) 6 25 STATE OF ILLINOIS ) ) SS.: COUNTY OF COOK ) I, the undersigned, a notary public in and for said County, in the state aforesaid, DO HEREBY CERTIFY THAT __________________ personally known to me to be a _______________ of BT COMMERCIAL CORPORATION and __________________, personally known to me to be a _______________ of said corporation, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and severally acknowledged that as such __________________ and ___________, they signed and delivered the said instrument as ___________ and ______________ of said corporation, and caused the seal of said bank to be affixed thereto, as their free and voluntary act, and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. GIVEN under my hand and notarial seal this ____ day of June, 1995. ___________________________________________ Notary Public My commission expires: ___________________________________________ (SEAL) 7 26 STATE OF ) ) SS .: COUNTY OF ) I, the undersigned, a notary public in and for said County, in the state aforesaid, DO HEREBY CERTIFY THAT _________________, personally known to me to be the _____________ of SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, and _____________, personally known to me to be the ____________ of said association and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and severally acknowledged that as such ___________________ and ____________________, they signed and delivered the said instrument as __________________ and _______________ of said association, and caused the seal of said association to be affixed thereto, as their free and voluntary act, and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. GIVEN under my hand and notarial seal this ___ day of June, 1995. ___________________________________________ Notary Public My commission expires: ___________________________________________ (SEAL) 8 27 EXHIBIT A-2 to GECC Intercreditor Agreement SUBORDINATION AGREEMENT (INTELLECTUAL PROPERTY) This SUBORDINATION AGREEMENT (this " Agreement") is entered into as of June 20, 1995 among BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement described below (in such capacity, together with its successors and assigns, the "Collateral Agent"), ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (together with its successors and assigns, the "Company"), SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION (formerly known as The Connecticut National Bank), not in its individual capacity but solely as Owner Trustee under that certain Trust Agreement, dated as of December 18, 1990, between said association and General Electric Capital Corporation (herein such Owner Trustee, together with any institution which shall act as successor Owner Trustee from time to time under said Trust Agreement, is sometimes called the "Licensee"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (herein, together with its successors and assigns, sometimes called the "Owner Participant"). RECITALS: A. Viskase Corporation (herein, together with its successors and assigns, called the "Grantor") and the Licensee have entered into a certain License Agreement, dated December 18, 1990 (herein called the "License Agreement"), whereby the Grantor granted to the Licensee a non-exclusive license with respect to certain patents, trademarks and other intellectual property described in the License Agreement (the "Intellectual Property"). B. Envirodyne has and may hereunder enter into certain Financing Agreements (such term, and the other defined terms used in these Recitals without definition, having the meanings assigned to such terms in Schedule I hereto) under which loans, letters of credit and other financial accommodations are being and may hereafter be made to or for the account of Envirodyne. C. Certain of the subsidiaries of Envirodyne, including Viskase (collectively with Envirodyne, the "Borrowers"), have guaranteed the obligations of Envirodyne under the Financing Agreements. D. Pursuant to the Financing Agreements, the Borrowers have executed and delivered the Collateral Documents under which the Borrowers have granted to the Collateral Agent, which is acting as the Collateral Agent for the Secured Parties pursuant to the Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995 (the "Collateral Agent's Intercreditor Agreement"), liens and security interests to secure their obligations under 28 the Financing Agreements, the Collateral Documents and the guaranties thereof. E. Pursuant to the Financing Agreements, the Grantor has executed and delivered to the Collateral Agent, a certain Intellectual Property Security Agreement, dated as of the date hereof (herein, as the same may be amended, modified, restated, supplemented or extended from time to time, collectively called the "Intellectual Property Security Agreement"). NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Collateral Agent, the Company, the Licensee and the Owner Participant hereby agree as follows: 1. The Collateral Agent and the Company hereby agree with the Licensee and the Owner Participant that the Intellectual Property Security Agreement is, and shall be, subordinate and junior to the License Agreement. The Collateral Agent and the Company hereby further agree with the Licensee and the Owner Participant, without in any way limiting the generality of the foregoing, that: (a) in the event the Collateral Agent succeeds to all or any part of the right, title and interest of the Grantor in the Intellectual Property (upon enforcement of the security interest granted in favor of the Collateral Agent under the Intellectual Property Security Agreements or otherwise) then, if and for so long as no event which would entitle the Grantor to terminate the License Agreement pursuant to the first sentence of Section 9.1 thereof (hereinafter called a "Default") has occurred and is continuing, the rights and privileges of the Licensee and the Owner Participant under the License Agreement (including without limitation, use of the Intellectual Property) shall not be disturbed directly or indirectly by the Collateral Agent or by any attempt to succeed to such right, title or interest of the Grantor or otherwise; and (b) in the event all or any part of the right, title, and interest of the Grantor in the Intellectual Property is transferred by the Collateral Agent to any person or entity, by sale or other disposition under the Intellectual Property Security Agreement or otherwise, (i) if and so long as no Default has occurred and is continuing, the rights and privileges of the Licensee or the Owner Participant under the License Agreement (including, without limitation, use of the Intellectual Property) shall not be disturbed directly or indirectly by the Collateral Agent or by any attempt to transfer such right, title or interest of the Grantor or otherwise and (ii) as a condition to the effectiveness of such transfer, the transferee shall agree for the benefit of the Licensee that, if and for so long as no Default has occurred and is continuing, such transferee shall not disturb directly or indirectly the rights and privileges of the Licensee or the Owner Participant under the License Agreement (including, without limitation, use of the Intellectual Property). 2 29 2. The Licensee, for itself and its successors and assigns, agrees that to the extent that the Collateral Agent, any transferee at a sale or disposition pursuant to the Intellectual Property Security Agreement or otherwise, or any subsequent transferee thereof (such Collateral Agent or transferee, its successors and assigns, being herein called a "New Licensor") shall succeed to the right, title, and interest of the Grantor under the License Agreement, the Licensee will attorn to and recognize such New Licensor as its licensor for the unexpired balance of the term of the License Agreement. 3. The Licensee will not, without the prior written consent of the Collateral Agent, enter into any amendment of or otherwise modify any provision of Section 4.1 or 5.2 of the License Agreement. 4. To the extent that the Collateral Agent or any other New Licensor shall succeed to the right, title or interest of the Grantor under the License Agreement, each of the Licensee and the Owner Participant agrees as follows: (a) The Collateral Agent or such other New Licensor shall not be, except in the case of clauses (i) and (ii) as expressly provided in the Assignment of Leases and Rents, Security Agreement and Financing Statement, dated as of December 18, 1990, between the Grantor and the Licensee or in Section 5.2 of the License Agreement, in each case as in effect on the date hereof or as otherwise consented to in writing by the Collateral Agent: (i) subject to any credits, offsets, defenses, claims or counterclaims which the Licensee and/or Owner Participant might have against any prior licensor (including the Grantor), (ii) bound by any royalties or additional royalties which the Licensee and/or the Owner Participant shall have paid more than one month in advance to any prior licensor (including the Grantor), or (iii) personally bound by any covenant to undertake or complete any improvement or addition to the Intellectual Property; (b) Neither the Collateral Agent nor any other New Licensor shall be personally liable for any act or omission of any prior licensor (including the Grantor); and (c) Neither the Collateral Agent nor any other New Licensor shall have any personal liability, directly or indirectly, under or in connection with the License Agreement or this Agreement or any amendment or amendments to either thereof made at any time or times, heretofore or hereafter, except for its own breach of any express provision of this Agreement, and each of the Licensee and the Owner Participant hereby forever and irrevocably waives and releases any and all such personal liability. In addition, neither the Collateral Agent nor any other New Licensor shall have at any time or times hereafter any personal liability, directly or indirectly, under or in connection with or secured by 3 30 any agreement, license, instrument, encumbrance, claim or right affecting or relating to the Intellectual Property or the Intellectual Property Collateral (as defined in the Intellectual Property Security Agreement) or to which the Intellectual Property or the Intellectual Property Collateral is now or may hereafter be subject. The limitation of liability provided in this paragraph (c) is in addition to, and not in limitation of, any limitation on liability applicable to the Collateral Agent or such other New Licensor provided by law or by any other contract, agreement or instrument. 5. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 6. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute both one and the same instrument. This Agreement shall become effective as of the date first above written when and if counterparts hereof shall have been executed by all of the parties hereto. 7. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 8. If any provision of this Agreement is void or unenforceable in any jurisdiction, such voidness or unenforceability shall not affect the enforceability of (a) such provision in any other jurisdiction or (b) any other provision of this Agreement in any jurisdiction. 4 31 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement referred to herein By: ______________________________ Name:_________________________ Title:________________________ ENVIRODYNE INDUSTRIES, INC. By: ______________________________ Name:_________________________ Title:________________________ SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee as aforesaid By: ______________________________ Name:_________________________ Title:________________________ GENERAL ELECTRIC CAPITAL CORPORATION, as Owner Participant as aforesaid By: ______________________________ Name:_________________________ Title:________________________ 5 32 The undersigned hereby acknowledges receipt of a copy of the foregoing Subordination Agreement, waives notice of acceptance thereof by the Collateral Agent, and agrees to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof, and to do every other act and thing necessary or appropriate to carry out such terms and provisions. VISKASE CORPORATION By: ______________________________ Name:_________________________ Title:________________________ 6 33 EXHIBIT A-3 to GECC INTERCREDITOR AGREEMENT SUBORDINATION AGREEMENT (CERTAIN PAYMENTS) This SUBORDINATION AGREEMENT (this "Agreement") is entered into as of June 20, 1995 among BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement described below (in such capacity, together with its successors and assigns, the "Collateral Agent"), ENVIRODYNE INDUSTRIES, INC., a Delaware corporation (together with its successors and assigns, the "Company"), SHAWUMT BANK CONNECTICUT, NATIONAL ASSOCIATION (formerly known as The Connecticut National Bank), not in its individual capacity but solely as Owner Trustee under that certain Trust Agreement, dated as of December 18, 1990, between said association and General Electric Capital Corporation (herein such Owner Trustee, together with any institution which shall act as successor Owner Trustee from time to time under said Trust Agreement, is sometimes called the "Owner Trustee"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (herein, together with its successors and assigns, sometimes called the "Owner Participant"). R E C I T A L S : A. Viskase Corporation (herein, together with its successors and assigns, called the "Grantor") and the Owner Trustee have entered into (i) a certain License Agreement, dated December 18, 1990, (herein called the "License Agreement"), whereby the Grantor has granted to the Owner Trustee a non-exclusive license with respect to certain patents, trademarks and other intellectual property described in the License Agreement, and the Owner Trustee has agreed to pay certain royalties and other amounts to the Grantor ("Royalties"), and (ii) a certain Ground Lease (herein called the "Ground Lease"), dated December 18, 1990, whereby the Grantor has leased to the Owner Trustee the land described therein, together with all buildings and other structures and improvements situated on such land, and the Owner Trustee has agreed to pay certain rentals and other amounts to the Grantor ("Ground Rents"). B. The Grantor has also entered into a certain Assignment of Leases and Rents, Security Agreement and Financing Statement, dated December 18, 1990 (herein, as the same may be amended, modified, restated, supplemented or extended from time to time, called the "GECC Security Agreement") in favor of the Owner Trustee, whereby the Grantor has mortgaged and assigned to the Owner Trustee and granted to the Owner Trustee a security interest in certain rights of the Grantor under the License Agreement and the Ground Lease, including, without limitation, the Grantor's rights to receive payments of Royalties and Ground Rents thereunder. 34 C. Envirodyne has and may hereunder enter into certain Financing Agreements (such term, and the other defined terms used in these Recitals without definition, having the meanings assigned to such terms in Schedule I hereto) under which loans, letters of credit and other financial accommodations are being and may hereafter be made to or for the account of Envirodyne. D. Certain of the subsidiaries of Envirodyne, including Viskase (collectively with Envirodyne, the "Borrowers"), have guaranteed the obligations of Envirodyne under the Financing Agreements. E. Pursuant to the Financing Agreements, the Borrowers have executed and delivered the Collateral Documents under which the Borrowers have granted to the Collateral Agent, on behalf and for the benefit of the Secured Parties under and as defined in that certain Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995 (the "Collateral Agent's Intercreditor Agreement"), liens and security interests to secure their obligations under the Financing Agreements, the Collateral Documents and the guaranties thereof. F. Pursuant to the Financing Agreements, the Grantor has executed and delivered to the Collateral Agent, (i) a certain Intellectual Property Security Agreement, dated as of the date hereof (herein, as amended, modified, restated, supplemented or extended from time to time, called the "Security Agreement") and (ii) a certain Leasehold Mortgage, Security Agreement and Assignment of Leases and Rents and Mortgage, Security Agreement and Assignment of Leases and Rents, each dated as of the date hereof (herein, as amended, modified, restated, supplemented or extended from time to time, collectively called the "Mortgages"). NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1.01 Definitions. As used herein, the capitalized terms defined in the preamble and the recitals thereto shall have the meanings as so defined, and the capitalized terms listed below shall have the following meanings: "Collateral Agent Claims" means any and all indebtedness and other obligations of any kind, whether now existing or hereafter arising or acquired, which are now or hereafter become secured by the Collateral Agent Lien. "Collateral Agent Lien" means all mortgages, liens, pledges, encumbrances or other security interests of any kind in any GECC Collateral, including, without limitation, any Royalties and Ground Rents, now or hereafter existing in favor of the 2 35 Collateral Agent and its successors and assigns, under or pursuant to the Security Agreement and the Mortgages. "GECC Claims" means any and all monetary obligations of the Grantor to the Owner Trustee or the Owner Participant, whether now existing or hereafter arising, which are (or upon arising will be) secured by the GECC Security Agreement, as in effect on the date hereof. "GECC Collateral" means the "Collateral", as such term is defined in the GECC Security Agreement, and includes, without limitation, the rights of the Grantor to receive payments of Royalties and Ground Rents pursuant to the License Agreement and the Ground Lease. "GECC Lien" means all mortgages, liens, pledges, encumbrances or other security interests of any kind in any GECC Collateral, including, without limitation, any Royalties and Ground Rents, now or hereafter existing in favor of the Owner Trustee, its successors and assigns, under or pursuant to the GECC Security Agreement. "Subject Payments" means, at any time, that portion of any payments of Royalties and/or Ground Rents made or otherwise required to be made under the License Agreement or the Ground Lease, which, pursuant to the terms of Section 5.2 of the License Agreement or Section 3.02 of the Ground Lease, as the case may be, in each case as in effect on the date hereof, the Owner Trustee would at such time be entitled to set off against unpaid GECC Claims. "Transferee" means any purchaser or transferee, pursuant to any exercise of remedies following a default or event of default under the Security Agreement or Mortgages or otherwise, which acquires any of the Grantor's interest under the License Agreement or the Ground Lease, and the successors and assigns of any such purchaser or transferee. SECTION 2.01 Partial Subordination of Bank Lien. The Collateral Agent, on its own behalf and on behalf of the other Secured Parties, and the Company hereby agrees that, notwithstanding the order of recording or filing of the Security Agreement, the Mortgages and any financing statements filed in connection therewith, on the one hand, and of the GECC Security Agreement and any financing statements filed in connection therewith, on the other hand, the Collateral Agent Lien shall be subordinate and junior to the GECC Lien but solely to the following extent: (a) All GECC Claims shall be paid or satisfied in full before any payment or distribution of any kind shall be made from 3 36 any Subject Payment on account of the Collateral Agent Claims; and (b) Should any payment or distribution of any kind or character in respect of any Subject Payment be received, directly or indirectly, by the Collateral Agent or any of its nominees or agents, under circumstances where such the Collateral Agent would not be entitled to such payment or distribution by reason of the foregoing, the Collateral Agent shall immediately deliver such payments or distributions to the Owner Trustee to be held in trust toward the satisfaction of the GECC Claims. SECTION 3.01 Acknowledgements and Agreements by Owner Trustee and the Owner Participant. Each of the Owner Trustee and the Owner Participant hereby acknowledges and agrees that, except to the extent expressly set forth in Sections 2.01 hereof, the GECC Lien is and shall be subordinate and junior to the Collateral Agent Lien. Without limiting the foregoing: (a) All Collateral Agent Claims shall be paid or satisfied in full before any payment or distribution of any kind shall be made on account of the GECC Claims from any payment in respect of any GECC Collateral, including, without limitation, any Royalties or Ground Rents, other than any Subject Payment; and (b) Should any payment or distribution of any kind or character in respect of any payment in respect of any GECC Collateral, including, without limitation, any Royalties or Ground Rents, other than any Subject Payment, be received, directly or indirectly, by the Owner Trustee or the Owner Participant, or any of their respective nominees or agents, under circumstances where the Owner Trustee would not be entitled to such payment or distribution by reason of the foregoing, the Owner Trustee or the Owner Participant, as the case may be, shall immediately deliver such payments or distributions to be held as collateral for or applied to the satisfaction of, the Collateral Agent Claims. SECTION 3.02 Restriction on Amendments and Assignments. The Owner Trustee will not enter into any amendment of or otherwise modify any provision of the GECC Security Agreement without the express written consent of the Collateral Agent. SECTION 3.03 Limitation of Liability. Each of the Owner Trustee and the Owner Participant hereby agrees that, to the extent that the Collateral Agent or any other Transferee shall succeed to all or any part of the right, title 4 37 or interest of the Grantor under the License Agreement or the Ground Lease: (a) The Collateral Agent or such other Transferee shall not be, except (in the case of clauses (i) and (ii)) as expressly provided in the GECC Security Agreement and in Section 5.2 of the License Agreement or Section 3.02 of the Ground Lease, in each case as in effect on the date hereof or as otherwise consented to in writing by the Collateral Agent, or as expressly provided herein: (i) subject to any credits, offsets, defenses, claims or counterclaims which the Owner Trustee or the Owner Participant might have against any prior holder of such interest (including the Grantor), (ii) bound by any Royalties or Ground Rents or additional royalties or rents which the Owner Trustee shall have paid more than one month (or, in the case of Ground Rents, fourteen months) in advance to any prior holder of such interest (including the Grantor), or (iii) personally bound by any covenant to undertake or complete any improvement or addition to the property licensed or leased pursuant to the License Agreement or the Ground Lease, as the case may be; (b) No Transferee (including, without limitation, the Collateral Agent) shall be personally liable for any act or omission of any prior holder of such interest (including the Grantor); and (c) Neither the Collateral Agent nor or any other Transferee shall have any personal liability, directly or indirectly, under or in connection with the License Agreement, the Ground Lease, the GECC Security Agreement or this Agreement or any amendment or amendments to any thereof made at any time or times, heretofore or hereafter, except for its own breach of any express provision of this Agreement, and each of the Owner Trustee and the Owner Participant hereby forever and irrevocably waives and releases any and all such personal liability. The limitation of liability provided in this paragraph is in addition to, and not in limitation of, any limitation on liability applicable to the Collateral Agent or such other Transferee provided by law or by any other contract, agreement or instrument. SECTION 3.04 Several Obligations. The obligations of the Collateral Agent and the Company hereunder are several, and neither the Collateral Agent nor the Company shall be liable for any failure by the other such party to perform its obligations hereunder. SECTION 4.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure therefrom by any party hereto, shall in any event be effective unless the same shall be in writing and 5 38 signed by each party hereto, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 6 39 SECTION 5.01 No Waiver or Election of Remedies. No failure on the part of any party hereto to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. SECTION 5.02 Continuing Agreement. This Agreement is a continuing agreement and shall (a) remain in full force and effect until all of the GECC Claims shall have been indefeasibly paid in full and (b) be binding upon and inure to the benefit of each of the parties hereto and their respective successors, transferees and assigns. SECTION 5.03 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute both one and the same instrument. This Agreement shall become effective as of the date first above written when and if counterparts hereof shall have been executed by all of the parties hereto. SECTION 5.04 Governing Law. This Agreement shall be governed by, and construed in accordance within, the laws of the State of New York. SECTION 5.05 Severability. If any provision of this Agreement is void or unenforceable in any jurisdiction, such voidness or unenforceability shall not affect the enforceability of (a) such provision in any other jurisdiction or (b) any other provision of this Agreement in any jurisdiction. SECTION 5.06 Notices. All notices and other communications hereunder shall be in writing (which may include telex communication) and mailed or telexed or delivered to each party hereto at such party's address listed beside its signature below, or at such other address as shall be designated by any such party in a written notice to the other parties hereto. All such notices and other communications shall be effective upon dispatch. 7 40 SECTION 5.07 Headings. Section headings are included in this Agreement for convenience of reference only and shall not affect the meaning or interpretation of this Agreement or any part hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date above first written. BT COMMERCIAL CORPORATION, not in its individual capacity but solely as Collateral Agent under the Collateral Agent's Intercreditor Agreement referred to herein By: ______________________________ Name:_________________________ Its: _________________________ 233 South Wacker Drive Suite 8400 Chicago, Illinois 60606 Attn: Credit Department Facsimile No. 312/993-8096 ENVIRODYNE INDUSTRIES, INC. By: ______________________________ Name:_________________________ Its: _________________________ 701 Harger Road Suite 121 Oak Brook, Illinois 60521 Facsimile: (708) Attention: 8 41 SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement referred to above By: ______________________________ Name:_________________________ Its: _________________________ 777 Main Street - 11th Floor Hartford, Connecticut 06115 Facsimile: (203) 240-7920 Attention: GENERAL ELECTRIC CAPITAL CORPORATION, as Owner Participant under the Trust Agreement referred to above By: ______________________________ Name:_________________________ Its: _________________________ 1600 Summer Street Stamford, Connecticut 06927 Facsimile No.: Attention: 9 42 The Undersigned hereby acknowledges receipt of a copy of the foregoing Subordination Agreement, waives notice of acceptance thereof by the Collateral Agent, and agrees to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof and to do every other act and thing necessary or appropriate to carry out such terms and provisions. VISKASE CORPORATION By: ______________________________ Name:_________________________ Its: _________________________ 6855 West 65th Street Chicago, Illinois 60638 Facsimile:_____________ Attention: President 10 EX-12.1 25 COMPUTATION OF RATIOS 1 EXHIBIT 12.1 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
PRO FORMA POST-CONSUMMATION ----------------------------- ---------------------------------------- DECEMBER DECEMBER 30, 1994 TO JANUARY 1 30, 1994 TO JANUARY 1 JANUARY 1 MARCH 30, TO DECEMBER MARCH 30, TO MARCH TO DECEMBER 1995 29,1994 1995 31, 1994 29, 1994 -------------- -------------- -------------- ------------ ------------ EARNINGS (LOSS) BEFORE INCOME TAXES, REORGANIZATION ITEMS AND EXTRAORDINARY GAIN (LOSS) ($5,637) ($8,873) ($4,090) ($1,957) $1,188 --------- --------- --------- -------- ------- ADD: Outside interest expense 14,397 57,799 12,885 11,697 47,945 Portion of rents representative of interest factor 477 1,994 477 499 1,994 Amortization of debt expense 584 1,776 549 362 1,569 --------- --------- --------- -------- ------- EARNINGS BEFORE FIXED CHARGES 9,821 52,696 9,821 10,601 52,696 Outside interest expense 14,397 57,799 12,855 11,697 47,945 Portion of rents representative of interest factor 477 1,994 477 499 1,994 Amortization of debt expense 584 1,776 549 362 1,569 Capitalized interest 169 978 169 245 978 --------- --------- --------- -------- ------- Total fixed charges 15,627 62,547 14,080 12,803 52,486 RATIO OF EARNING TO FIXED CHARGES - - - - 1.00 DEFICIENCY IN THE COVERAGE OF FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES (5,806) (9,851) (4,259) (2,202)
PRE-CONSUMMATION -------------------------------------------------------- DECEMBER DECEMBER JANUARY 1 27, 1991 TO 28, 1990 TO JANUARY 1 TO DECEMBER DECEMBER DECEMBER TO DECEMBER 31, 1993 31, 1992 26, 1991 27, 1990 ------------ ------------- ------------- ------------ (IN THOUSANDS) EARNINGS (LOSS) BEFORE INCOME TAXES, REORGANIZATION ITEMS AND EXTRAORDINARY GAIN (LOSS) $18,550 ($50,996) ($40,283) ($22,174) -------- --------- --------- --------- ADD: Outside interest expense 29,242 102,727 98,853 97,926 Portion of rents representative of interest factor 1,800 1,891 1,716 1,528 Amortization of debt expense 1,948 3,795 4,068 4,408 -------- --------- --------- --------- EARNINGS BEFORE FIXED CHARGES 51,540 57,417 64,354 81,688 Outside interest expense 29,242 102,727 98,853 97,926 Portion of rents representative of interest factor 1,800 1,891 1,716 1,528 Amortization of debt expense 1,948 3,795 4,068 4,408 Capitalized interest 1,014 1,204 1,018 826 -------- --------- --------- --------- Total fixed charges 34,004 109,617 105,655 104,688 RATIO OF EARNING TO FIXED CHARGES 1.52 - - - DEFICIENCY IN THE COVERAGE OF FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES (52,200) (41,301) (23,000)
EX-21.1 26 SUBSIDIARIES 1 EXHIBIT 21.1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT The Company has the following subsidiaries, each of which is wholly owned by the Company or by a wholly-owned subsidiary of the Company. Indented names are subsidiaries of the company under which they are indented. Clear Shield National, Inc. (California) Carnival Brands, Inc. (Illinois) Envirosonics, Inc. (California) Sandusky Plastics, Inc. (Delaware) Envirodyne Subsidiary, Inc. (Delaware) Sandusky Plastics of Delaware, Inc. (Delaware) Viskase Corporation (Pennsylvania) Vaskase Holding Corporation (Delaware) Viskase Australia Limited (Delaware) Viskase Brasil Embalagens Ltda. (Brazil) Viskase de Mexico, S.A. de C.V. (Mexico) Viskase S.A. (France) Viskase GMBH (Germany) Viskase S.p.A. (Italy) Viskase Canada Inc. (Ontario) Viskase Holdings Limited (United Kingdom) Filmco International Limited (United Kingdom) Viskase Limited (United Kingdom) Viskase (U.K.) Limited (United Kingdom) Envirodyne S.A.R.L. (France) Viskase Z.A.O. (Russia) 2 Viskase de Nuevo Laredo, S.A. de C.V. (Mexico) Viskase Sales Corporation (Delaware) Viskase Puerto Rico Corporation (Delaware) WSC Corp. (Delaware) -2- EX-23.1 27 CONSENT OF COOPERS & LYBRAND L.L.P. 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS COOPERS & LYBRAND L.L.P. We consent to the inclusion in this registration statement on Form S-4 (File No., 33- ) of our report dated March 15, 1995, except for Note 20, as to which the date is July 19, 1995, on our audits of the consolidated financial statements and the financial statement schedules of Envirodyne Industries, Inc. and Subsidiaries. We also consent to the reference to our firm under the captions "Summary Historical Consolidated Financial Data," "Selected Historical Consolidated Financial Data," and "Experts." COOPERS & LYBRAND L.L.P. Chicago, Illinois July 19, 1995 EX-24.1 28 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17th day of July, 1995. Donald P. Kelly ------------------------------- Donald P. Kelly 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 12th day of July, 1995. Robert N. Dangremond ------------------------------- Robert N. Dangremond 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of July, 1995. Avram A. Glazer ------------------------------- Avram A. Glazer 4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17th day of July, 1995. F. Edward Gustafson ------------------------------- F. Edward Gustafson 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 12th day of July, 1995. Michael E. Heisley ------------------------------- Michael E. Heisley 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of July, 1995. Gregory R. Page ------------------------------- Gregory R. Page 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 12th day of July, 1995. Mark D. Senkpiel ------------------------------- Mark D. Senkpiel 8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of July, 1995. Malcolm I. Glazer ------------------------------- Malcolm I. Glazer 9 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of July, 1995. Denis H. Davidson ------------------------------- Denis H. Davidson 10 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of July, 1995. Sandra L. Musachia ------------------------------- Sandra L. Musachia 11 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 12th day of July, 1995. J. Robert Tino ------------------------------- J. Robert Tino 12 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 13th day of July, 1995. George E. Collins ------------------------------- George E. Collins 13 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17th day of July, 1995. Dean A. Mefford ------------------------------- Dean A. Mefford 14 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 12th day of July, 1995. Terry L. Wood ------------------------------- Terry L. Wood 15 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints J. S. Corcoran and Stephen M. Schuster, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities to sign a registration statement on Form S-4 relating to an exchange offer for $160,000,000 aggregate principal amount of debt securities of Envirodyne Industries, Inc. (which are guaranteed by each of Clear Shield National, Inc., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation and Viskase Sales Corporation), and any and all amendments (including post-effective amendments) to such registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any documents relating to the qualification or registration under state Blue Sky or securities laws of such securities, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes the undersigned might or could do in person, ratifying and confirming all that said attorneys-in-fact and agents or any of them, or the substitute or substitutes of said attorneys-in-fact and agents or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17th day of July, 1995. Joseph J. Schulte ------------------------------- Joseph J. Schulte EX-25 29 FORM T-1 1 EXHIBIT 25 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM T-1 ---------- STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE / / CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) Not applicable 06-0850628 (State of incorporation (I.R.S. Employer if not a national bank) Identification No.) 777 Main Street, Hartford, Connecticut 06115 (Address of principal executive offices) (Zip Code) Patricia Beaudry, 777 Main Street, Hartford, CT (203) 728-2065 (Name, address and telephone number of agent for service) ENVIRODYNE INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Delaware 95-2677354 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 701 Harger Road, Suite 190 Oakbrook, Illinois 60521 (Address of principal executive offices) (Zip Code) 12% Series B Senior Secured Notes due 2000 Floating Rate Series D Senior Secured Notes due 2000 (Title of the indenture securities) 2 Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject: The Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Boston Boston, Massachusetts Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers: The trustee is so authorized. Item 2. Affiliations with obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee; none with respect to Hartford National Corporation, Shawmut Corporation, Shawmut Service Corporation and Shawmut National Corporation (the "affiliates"). Item 16. List of exhibits. List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association and By-Laws of the trustee as now in effect. 2. A copy of the Certificate of Authority of the trustee to do Business. 3. A copy of the Certification of Fiduciary Powers of the Trustee. 4. A copy of the By-Laws of the trustee are provided in Exhibit 1 referenced above. 5. Consent of the trustee required by Section 321(b) of the Act. 6. A copy of the latest Consolidated Reports of Condition and Income of the trustee, published pursuant to law or the requirements of its supervising or examining authority. -2- 3 NOTES Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of all facts on which to base its answer to Item 2, the answer to said Item is based upon incomplete information. Said Item may, however, be considered correct unless amended by an amendment to this Form T-1. -3- 4 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Shawmut Bank Connecticut, National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hartford, and State of Connecticut, on the day of July, 1995. SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Trustee By /s/ SUSAN T. KELLER Susan T. Keller Vice President -4- 5 ARTICLES OF ASSOCIATION SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION FIRST. The title of this Association, which shall carry on the business of banking under the laws of the United States, shall be "Shawmut Bank Connecticut, National Association". SECOND. The main office of the Association shall be in Hartford, County of Hartford, State of Connecticut. The general business of the Association shall be conducted at its main office and its branches. THIRD. The board of directors of this Association shall consist of not less than five (5) nor more than twenty-five (25) shareholders, the exact number of directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the board of directors for any reason, including an increase in the number thereof, may be filled by action of the board of directors. FOURTH. The annual meeting of the shareholders for the election of directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the board of directors may designate, on the day of each year specified therefor in the bylaws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the board of directors. FIFTH. The authorized amount of capital stock of this Association shall be eight million five hundred thousand (8,500,000) shares of which three million five hundred thousand (3,500,000) shares shall be common stock with a par value of six and 25/100 dollars ($6.25) each and of which five million (5,000,000) shares without par value shall be preferred stock. The capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. No holder of shares of the capital stock of any class of the Association shall have any pre-emptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued or sold, nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and at such price as the board of directors may from time to time fix. The board of directors of the Association is authorized, subject to limitations prescribed by law and the provisions of this Article, to provide for the issuance from time to time in one or more series of any number of the preferred shares, and to establish the number of shares to be included in each such series, and to fix the designation, relative rights, preferences, qualifications and limitations of the shares of each such series. The authority of the board of directors with respect to each series shall include, but not be limited to, determination of the following: a. The number of shares constituting that series and the distinctive designation of that series; 6 b. The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and whether they shall be payable in preference to, or in another relation to, the dividends payable to any other class or classes or series of stock; c. Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; d. Whether that series shall have conversion or exchange privileges, and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the board of directors shall determine; e. Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the manner of selecting shares for redemption if less than all shares are to be redeemed, the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; f. Whether that series shall be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of that series, and, if so, the terms and amounts of such sinking fund; g. The right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Association or any subsidiary, upon the issue of any additional stock (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Association or any subsidiary of any outstanding stock of the Association; h. The right of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Association and whether such rights shall be in preference to, or in another relation to, the comparable rights of any other class or classes or series of stock; and i. Any other relative, participating, optional or other special rights, qualifications, limitations or restrictions of that series. Shares of any series of preferred stock which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes shall have the status of authorized and unissued shares of preferred stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of preferred stock to be created by resolution or resolutions of the board of directors or as part of any other series of preferred stock, all subject to the conditions and the restrictions adopted by the board of directors providing for the issue of any series of preferred stock and by the provisions of any applicable law. Subject to the provisions of any applicable law, or except as otherwise provided by the resolution or resolutions providing for the issue of any series of preferred stock, the holders of outstanding shares of common stock shall exclusively possess voting power for the election of directors and for all other purposes, each holder of record of shares of common stock being entitled to one vote for each share of common stock standing in his name on the books of the Association. -2- 7 Except as otherwise provided by the resolution or resolutions providing for the issue of any series of preferred stock, after payment shall have been made to the holders of preferred stock of the full amount of dividends to which they shall be entitled pursuant to the resolution or resolutions providing for the issue of any other series of preferred stock, the holders of common stock shall be entitled, to the exclusion of the holders of preferred stock of any and all series, to receive such dividends as from time to time may be declared by the board of directors. Except as otherwise provided by the resolution or resolutions for the issue of any series of preferred stock, in the event of any liquidation, dissolution or winding up of the Association, whether voluntary or involuntary, after payment shall have been made to the holders of preferred stock of the full amount to which they shall be entitled pursuant to the resolution or resolutions providing for the issue of any series of preferred stock the holders of common stock shall be entitled, to the exclusion of the holders of preferred stock of any and all series, to share, ratable according to the number of shares of common stock held by them, in all remaining assets of the Association available for distribution to its shareholders. The number of authorized shares of any class may be increased or decreased by the affirmative vote of the holders of a majority of the stock of the Association entitled to vote. SIXTH. The board of directors shall appoint one of its members president of this Association, who shall be chairman of the board, unless the board appoints another director to be the chairman. The board of directors shall have the power to appoint one or more vice presidents; and to appoint a secretary and such other officers and employees as may be required to transact the business of this Association. The board of directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to dismiss them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all bylaws that it may be lawful for them to make; and generally to do and perform all acts that it may be legal for a board of directors to do and perform. SEVENTH. The board of directors shall have the power to change the location of the main office to any other place within the limits of the City of Hartford, Connecticut, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. NINTH. The board of directors of this Association, or any three or more shareholders owning, in the aggregate, not less than ten percent (10%) of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place and purpose of every annual and special meeting of the shareholders shall be given by first class mail, postage prepaid, mailed at least ten (10) days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of this Association. TENTH. Any person, his heirs, executors, or administrators may be indemnified or reimbursed by the Association for reasonable expenses actually incurred in connection with any action, suit, or proceeding, civil or criminal, to which he or they shall be made a party by reason of his being or having been a director, officer, or employee of the Association or any firm, corporation, or -3- 8 organization which he served in any such capacity at the request of the Association; provided, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding as to which he shall finally be adjudged to have been guilty of or liable for gross negligence, willful misconduct or criminal acts in the performance of his duties to the Association; and, provided further, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding which has been made the subject of a compromise settlement except with the approval of a court of competent jurisdiction, or the holders of record of a majority of the outstanding shares of the Association, or the board of directors, acting by vote of directors not parties to the same or substantially the same action, suit, or proceeding, constituting a majority of the whole number of directors. The foregoing right of indemnification or reimbursement shall not be exclusive of other rights to which such person, his heirs, executors, or administrators may be entitled as a matter of law. The Association may, upon the affirmative vote of a majority of its board of directors, purchase insurance for the purpose of indemnifying its directors, officers and other employees to the extent that such indemnification is allowed in the preceding paragraph. Such insurance may, but need not, be for the benefit of all directors, officers, or employees. ELEVENTH. These articles of association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. The notice of any shareholders' meeting at which an amendment to the articles of association of this Association is to be considered shall be given as hereinabove set forth. I hereby certify that the articles of association of this Association, in their entirety, are listed above in items first through eleventh. ________________________________ Secretary/Assistant Secretary Dated at _______________________, as of _____________. Revision of March 30, 1995 -4- 9 BYLAWS OF SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION ARTICLE I MEETINGS OF SHAREHOLDERS Section 1.1 Annual Meeting. The regular annual meeting of the shareholders to elect directors and transact whatever other business may properly come before the meeting, shall be held at the main office of the association, city of Hartford, state of Connecticut or such other places as the board of directors may designate, at 1:00 o'clock, on the third Wednesday of April of each year, or if that date falls on a legal holiday in the state in which the association is located, on the next following banking day. If, for any cause, an election of directors is not made on that date, or in the event of a legal holiday, on the next following banking day, an election may be held on any subsequent day within 60 days of the date fixed, to be designated by the board directors, or, if the directors fail to fix the date, by shareholders representing two-thirds of the shares. Section 1.2. Special Meetings. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the board of directors or upon call of the Chairman or at the written request of shareholders owning, in the aggregate, not less than ten (10) percent of the stock of the association. Section 1.3. Notice of Meetings. Unless otherwise provided by the laws of the United States, a notice of the time, place and purpose of every regular annual meeting or special meeting of shareholders shall be given by first-class mail, postage prepaid, mailed at least ten (10) days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of the association. If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time or place, if the new date, time or place is announced at the meeting before adjournment, unless any additional items of business are to be considered, or the association becomes aware of an intervening event materially affecting any matter to be voted on more than 10 days prior to the date to which the meeting is adjourned. If a new record date for the adjourned meeting is fixed, however, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date. Section 1.4. Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and filed with the records of the meeting. Proxies with rubber-stamped facsimile signatures may be used and unexecuted proxies may be counted upon receipt of a confirming telegram from the shareholder. Proxies meeting the above requirements submitted at any time during a meeting shall be accepted. 10 Section 1.5. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. Section 1.6. Voting. In deciding on questions at meetings of shareholders, except in the election of directors, each shareholder shall be entitled to one vote for each share of stock held. A majority of votes cast shall decide each matter submitted to the shareholders at the meeting except in cases where by law a larger vote is required. ARTICLE II DIRECTORS Section 2.1. Board of Directors. The board of directors shall manage and administer the business and affairs of the association. Except as expressly limited by law, all corporate powers of the association shall be vested in and may be exercised by the board. Section 2.2. Number. The board shall consist of not less than five nor more than twenty-five shareholders, the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full board or by resolution of a majority of the shareholders at any meeting thereof. Section 2.3. Term. The directors of this association shall hold office for one year and until their successors are elected and have qualified. Section 2.4. Oath. Each person elected or appointed a director of this association must take the oath of such office as prescribed by the laws of the United States. No person elected or appointed a director of this association shall exercise the functions of such office until he has taken such oath. Section 2.5. Honorary Directors. There may not be more than five honorary directors of the association who shall be entitled to attend meetings of the board and take part in its proceedings but without the right to vote. Honorary directors shall be appointed at the annual meeting of the board of directors to hold office until the next annual meeting provided, however, that the board may at any regularly constituted meeting between annual meetings of the board of directors appoint honorary directors within the limitations imposed by this bylaw. Section 2.6. Vacancies. Any vacancies occurring in the board of directors for any reason, including an increase in the number thereof, may be filled, in accordance with the laws of the United States, by appointment by the remaining directors, and any director so appointed shall hold office until the next annual meeting and until his successor is elected and has qualified. -2- 11 Section 2.7. Organization Meeting. The annual meeting of the board of directors shall be held at the main office of the association to organize the new board and appoint committees of the board and officers of the association for the succeeding year, and for transacting such other business as properly may come before the meeting. Such meeting shall be held on the day of the election of directors or as soon thereafter as practicable, and, in any event, within 30 days thereof. If, at the time fixed for such meeting, there shall not be a quorum, the directors present may adjourn the meeting, from time to time, until a quorum is obtained. Section 2.8. Regular Meetings. The regular meetings of the board of directors shall be held, without notice, at the main office, or at such other place as has been duly authorized by the board, on such day and at such time as the board shall determine. When any regular meeting of the board falls upon a holiday, the meeting shall be held on the next banking business day unless the board shall designate another day. Section 2.9. Special Meetings. Special meetings of the board of directors may be called by the chairman, the president, or at the request of seven or more directors. Each member of the board of directors shall be given notice stating the time and place by telegram, letter, or in person, of each special meeting. Section 2.10. Quorum. A majority of the members of the board shall constitute a quorum at any meeting. If the number of directors is reduced below the number that would constitute a quorum, no business may be transacted, except selecting directors to fill vacancies in conformance with these bylaws. If a quorum is present, the board of directors may take action through the vote of a majority of the directors who are in attendance. Section 2.11. Record Time. The board of directors may fix a day and hour, not exceeding fifty (50) days preceding the date fixed for the payment of any dividend or for any meeting of the shareholders as a record time for the determination of shareholders entitled to receive such dividend, or as the time as of which shareholders entitled to notice of and to vote at such meeting shall be determined, as the case may be, and only shareholders of record at the time so fixed shall be entitled to receive such dividend or to notice of and to vote at such meeting. Section 2.12. Fees. All directors other than directors who are officers of the association or its affiliates shall be entitled to reasonable fees for their services as such directors and as members of committees of the board, said fees to be fixed by vote of the board. ARTICLE III COMMITTEES OF THE BOARD Section 3.1. Executive Committee. The board of directors may establish an executive committee consisting of the chairman, not less than five directors, not officers, who are appointed by the board, and such other directors as the -3- 12 board may appoint. The board shall designate the chairman thereof. The Executive Committee shall possess and may exercise such powers as are provided in these bylaws and all other delegable powers of the board and shall meet at the call of any member thereof. All action of said committee shall be reported to the board at the next regular board meeting thereafter. Four members of the Committee, of whom not less than three shall be directors who are not officers, shall be necessary to constitute a quorum. Section 3.2. Loan and Investment Committee. The board of directors shall establish a loan and investment committee consisting of the chairman, the president, not less than four directors, not officers, who are appointed by the board, and such other directors as the board may appoint. The committee shall ensure that the association's credit and investment policies are adequate and that lending and investment activities are conducted in accordance with the association's policies and with applicable laws and regulations. The committee shall exercise oversight and receive reports with respect to lending activities and credit risk management. The committee shall also exercise oversight and receive reports with respect to the association's securities portfolio and securities portfolio activities to ensure appropriate portfolio diversification, asset quality, liquidity, and profitability. The committee shall also have oversight responsibilities with respect to the association's investment policy, liquidity policy, liquidity contingency planning and interest rate risk exposure. All action by the committee shall be reported to the board at the next regular board meeting thereafter. Four members of the committee, of whom not less than two shall be directors who are not officers, shall be necessary to constitute a quorum. Section 3.3. Trust Committee. The board of directors shall establish a trust committee consisting of the president and not less than four directors, not officers, who are appointed by the board and such other directors as the board may appoint. The trust committee shall have authority, between meetings of the board, to discharge the responsibilities of the association with respect to the exercise of fiduciary powers, except as the board may by resolution or other appropriate action otherwise from time to time determine. All action by said committee shall be reported to the board at the next regular board meeting thereafter. Four members of the trust committee, of whom at least two shall be directors who are not officers, shall be necessary to constitute a quorum. Section 3.4. Audit Committee. The audit committee of Shawmut National Corporation, no member of whom is an officer of the association, is designated to oversee the audit affairs of the association. Members of the association's board of directors, none of whom may be officers of the association, may serve on the audit committee of Shawmut National Corporation. In addition, the board may, from time to time, appoint an audit committee consisting of not less than four members of the board, no one of whom shall be an executive officer of the association, to perform such audit functions as may be assigned by the board. The duty of the audit committee shall be to examine at least once during each calendar year and within 15 months of the last examination of affairs of the association or cause suitable examination to be made by auditors responsible only to the board of directors and to report the result of such examination in writing to the board at the next regular meeting -4- 13 thereafter. Such report shall state whether the association is in a sound condition, whether fiduciary powers have been administered according to law and sound fiduciary principles, whether adequate internal controls and procedures are being maintained, and shall recommend to the board of directors such changes in the manner of conducting the affairs of the association as shall be deemed advisable. Section 3.5. Community Affairs Committee. The board of directors shall establish a community affairs committee consisting of not less than four directors and such other persons as shall be appointed by the board. The community affairs committee shall oversee compliance by the association with the policies and provisions of the Community Reinvestment Act of 1978, as amended; shall establish and supervise policies relating to voluntary corporate contributions and other matters of business and community conduct, all as the board or the chairman may from time to time specify or request. All actions by said committee shall be reported to the board at the next regular board meeting thereafter. Three members of the committee, of whom at least two shall be directors who are not officers, shall be necessary to constitute a quorum. Section 3.6. Substitute Committee Members. In the case of the absence of any member of any committee of the board from any meeting of such committee, the directors who are not officers and are present at such meeting, or the senior officer present if no such directors are there, may designate a substitute to serve in lieu of such absent member. Such substitute need not be a director unless such absent member is a director, but in any case when the board of directors shall have designated one or more alternate members for such committee, the substitute shall be selected from such of said alternates as are then available. Section 3.7. Additional Committees. The board of directors may by resolution designate one or more additional committees, each consisting of two or more of the directors. Any such additional committee shall have and may exercise such powers as the board may from time to time prescribe for furthering the business and affairs of the association. ARTICLE IV WAIVER OF NOTICE; WRITTEN CONSENT; PARTICIPATION BY TELEPHONE Section 4.1. Waiver of Notice. Notice of the time, place and purpose of any regular meeting of the board of directors or a committee thereof may be waived in writing by any director or member of such committee, as the case may be, either before or after such meeting. Attendance in person at a meeting of the board of directors or a committee thereof shall be deemed to constitute a waiver of notice thereof. Section 4.2. Written Consent. Unless otherwise restricted by the articles of association or these bylaws, any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if a consent in writing, setting forth the action to so be -5- 14 taken, shall be signed before or after such action by all of the directors, or all of the members of a committee thereof, as the case may be. Such written consent shall be filed with the records of the association. Section 4.3. Participation by Telephone. One or more directors may participate in a meeting of the board of directors, of a committee of the board, or of the shareholders, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in this manner shall constitute presence in person at such meeting. ARTICLE V OFFICERS AND EMPLOYEES Section 5.1. Officers. The officers of the association shall consist of a chairman, a president, one or more vice chairmen, one or more executive vice presidents, one or more senior vice presidents, one or more vice presidents, a secretary, an auditor and such other officers as may be appropriate for the prompt and orderly transaction of the business of the association. Any officer may hold more than one office, except that the chairman and president may not also serve as secretary. The chairman, the president, any vice chairman, and the auditor shall be elected annually by the board of directors to serve for one year and until his successor is elected and qualifies. All other officers shall be appointed to hold office during the pleasure of the board, which may in its discretion delegate the authority to appoint and remove any officer or officers (other than the auditor) below the ranks of president and vice chairman. Section 5.2. Chairman. The chairman shall preside or designate the presiding officer at all meetings of the board of directors and shareholders. The chairman shall be the chief executive officer of the association unless otherwise designated by the board, and may have and exercise such further powers and duties as from time to time may be conferred upon or assigned to the chairman by the board of directors. The chairman may establish advisory committees for any branch, region, or division of the association to advise on the affairs of such branch, region, or division; provided that such advisory committee members shall not attend meetings of the board of directors or any committee thereof, and shall not participate in the management of the association. If at any time the office of chairman shall be vacant, the powers and duties of that office shall devolve upon the president; if the office of president shall be vacant, the powers and duties of that office shall devolve upon the chairman; and if the office of the chairman and president are vacant, the board shall designate one or more officers of the association to perform the duties of chairman until such time as a new chairman is appointed. Section 5.3. President. The president shall have general executive powers and may also have and exercise such further powers and duties as may be conferred upon or assigned by the board or the chairman. -6- 15 Section 5.4. Vice Chairman. Each Vice Chairman shall perform such duties as may be assigned from time to time by the board of directors or the chairman. Section 5.5. Secretary. The secretary of the association, or other designated officer of the association, shall keep accurate minutes of all meetings of the board of directors; shall attend to the giving of all notices required by these bylaws; shall be custodian of the corporate seal, records, documents and papers of the association; shall provide for the keeping of proper records of all transactions of the association; shall have and may exercise any and all other powers and duties pertaining by law, regulation or practice, or imposed by the bylaws; and shall also perform such other duties as may be assigned from time to time, by the board of directors or the chairman. Section 5.6. Auditor. The general auditor of the association, or his designee, shall be the officer in charge of auditing. Said officer shall be responsible for the conduct of a program of continuous audits of the association and all of its departments and shall make, or cause to be made, further examinations as he deems necessary or are required from time to time by the responsible audit committee or the board. Said officer shall report the results of audit activities periodically to the responsible audit committee or the board. Section 5.7. Other Officers. All other officers shall perform such duties and exercise such powers as shall pertain to their respective offices, or as shall be imposed by law, or as may be conferred upon, or assigned to them by the board of directors or the chairman. Section 5.8. Resignation. An officer may resign at any time by delivering notice to the association. A resignation is effective when the notice is given unless the notice specifies a later effective date. ARTICLE VI SIGNING AUTHORITY Section 6.1. Signing Authority. Each officer of this association, excluding the auditor and each other officer whose primary duties are auditing in nature, shall have authority for and on behalf of this association to execute, deliver, sign and endorse checks, drafts, pledges, certificates, receipts for money, warehouse receipts, bills of lading or similar documents, contracts arising in the ordinary course of the business of the association, bankers' acceptances made by the association, commercial credits of the association, securities and property received in trust or for deposit, proxies to vote stock held by the association in any capacity, petitions, foreclosures and other deeds, powers, leases, assignments, discharges, releases, extensions, purchase agreements, conveyances, and other written instruments pertaining to real estate or interest therein and, where indicated, to affix the corporate seal of the association to any of the foregoing; to guarantee and witness signatures upon securities, documents or other written -7- 16 instruments; to purchase, sell, assign, pledge or transfer funds or other securities of the association or within its control as a fiduciary; and, subject to the approval of such officer or committee as the board may designate, to accept trusts and appointments and to execute trust indentures and any other instruments establishing trusts or making appointments. Each officer at the level of senior vice president or above, shall be empowered to authorize another person or persons, whether or not such other person or persons are officers or employees of the association, to sign or endorse any of the foregoing documents on behalf of the association in a particular transaction; but such officer shall by signed entry personally note the fact of such authorization on the records of the association relating to such transaction. The officer in charge of the international division of the association, or in his absence his designee, shall be empowered to authorize another person or persons, whether or not such other person or persons are officers or employees of the association, to execute documents and do such other acts and things as may be required in connection with a particular loan or extension of credit, proceeding before a court or other judicial or administrative body, or other transaction; but such officer shall by signed entry personally note the fact of such authorization on the records of the association relating to such act or transaction. Any one officer at the level of senior vice president or above shall have authority for and on behalf of the association to borrow money. The chairman, the president, any vice chairman, any executive vice president, and the senior vice president or other officer in charge of investment administration or such other officers as may be designated by the chairman may each, acting singly, authorize borrowings and request advances from any Federal Reserve Bank or any Federal Home Loan Bank, as the case may be, and may agree with said bank upon appropriate terms and collateral for such transactions. The officers and other employees of the association shall have such further signature powers as may be specified by the board of directors or by the chairman or his designee. ARTICLE VII STOCK AND STOCK CERTIFICATES Section 7.1. Transfers. Shares of stock shall be transferable on the books of the association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall in proportion to his or her shares, succeed to all rights of the prior holder of such shares. The board of directors may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the association with respect to stock transfer, voting shareholder meetings, and related matters and to protect it against fraudulent transfer. Section 7.2. Stock Certificates. Certificates of stock shall bear the signature of the chairman or president (which may be engraved, printed or impressed), and shall be signed manually or by facsimile process by the secretary or assistant secretary, and the seal of the association shall be engraved thereon. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the association properly endorsed. -8- 17 ARTICLE VIII CORPORATE SEAL Section 8. Corporate Seal. The board of directors shall provide a seal for the association. The secretary shall have custody thereof and may designate such other officers as may have counterparts. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. Fiscal Year. The fiscal year of the association shall be the calendar year. Section 9.2. Records. The articles of association, the bylaws and the proceedings of all meetings of the shareholders, the board of directors, and standing committees of the board, shall be recorded in appropriate minute books provided for that purpose. The minutes of each meeting shall be signed by the secretary or other officer appointed to act as secretary of the meeting. ARTICLE X BYLAWS Section 10. Amendments. These bylaws may be altered, amended, or added to or repealed by a vote of a majority of the members of the board then in office at any meeting, provided that notice thereof shall have been given in the notice of such meeting. A true copy Attest: _______________________________________ Secretary/Assistant Secretary Dated at _______________________________________ , as of ______________________. Revision of January 11, 1993 -9- 18 SCHEDULE A (Attached to the Trustee's Certificates) of SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Part I. Officer of Shawmut Bank Connecticut, National Association: Name Title Signature ---- ----- --------- Arthur Blakeslee Assistant Vice President Arthur Blakeslee Michelle K. Blezard Corporate Trust Officer Michelle K. Blezard Bryan R. Calder Senior Vice President Bryan R. Calder Steven Cimalore Vice President Steven Cimalore Alan B. Coffey Assistant Vice President Alan B. Coffey Debra A. Colon Corporate Trust Officer Debra A. Colon Jacqueline Connor Corporate Trust Officer Jacqueline Connor Mari-Elna DeGuia Assistant Vice President Mari-Elna DeGuia Pablo de la Canal Corporate Trust Officer Pablo de la Canal Rinette Elovecky Vice President Rinette Elovecky Robin Bodell Fisher Vice President Robin Bodell Fisher Mark A. Forgetta Vice President Mark A. Forgetta Joseph E. Fortuna Assistant Vice President Joseph E. Fortuna Gilman N. Gauvin Vice President Gilman N. Gauvin Lynnette Hamilton Vice President Lynnette Hamilton Elizabeth C. Hammer Vice President Elizabeth C. Hammer Michael M. Hopkins Vice President Michael M. Hopkins Vito J. Iacovazzi Vice President Vito J. Iacovazzi Debra A. Johnson Corporate Trust Officer Debra A. Johnson Philip G. Kane, Jr. Vice President Philip G. Kane, Jr. Susan T. Keller Vice President Susan T. Keller Kathy A. Larimore Assistant Vice President Kathy A. Larimore Jeffrey D. Masi Assistant Vice President Jeffrey D. Masi Deborah L. McDonald Vice President Deborah L. McDonald Frank McDonald, Jr. Vice President Frank McDonald, Jr. Susan C. Merker Assistant Vice President Susan C. Merker Robert L. Reynolds Vice President Robert L. Reynolds Rockwell J. Spalding Vice President Rockwell J. Spalding Donnee C. Taylor Corporate Trust Officer Donnee C. Taylor Andrea F. Turlo Vice President Andrea F. Turlo Part II. Trustee Administrators (authorized only to attest the Seal of Shawmut Bank Connecticut, National Association and signature of any officer named in Part I hereof: Name Title Signature ---- ----- --------- Karen R. Felt Trustee Administrator Karen R. Felt Shelley Hassett Trustee Administrator Shelley Hassett Eileen D. Pepe Trustee Administrator Eileen D. Pepe Cheryl Sowers Trustee Administrator Cheryl Sowers Anna M. Vignuolo Trustee Administrator Anna M. Vignuolo 19 PART III. Authorized Persons (authorized only to attest the seal of Shawmut Bank Connecticut, National Association and the signature of any officer named in Part I hereof): Name Title Signature ---- ----- --------- DANIEL P. BROWN, JR. AUTHORIZED PERSON DANIEL P. BROWN, JR. SCOTT L. MURPHY AUTHORIZED PERSON SCOTT L. MURPHY THOMAS F. TRESSILT AUTHORIZED PERSON THOMAS F. TRESSILT WILLIAM G. ROCK AUTHORIZED PERSON WILLIAM G. ROCK DEBORAH SMITH FRISONI AUTHORIZED PERSON DEBORAH SMITH FRISONI PAUL R. PISCATELLO AUTHORIZED PERSON PAUL R. PISCATELLO LESLIE L. DAVENPORT AUTHORIZED PERSON LESLIE L. DAVENPORT THOMAS P. FLYNN AUTHORIZED PERSON THOMAS P. FLYNN CARRIE A. BRODZINSKI AUTHORIZED PERSON CARRIE A. BRODZINSKI 20 [LOGO] - -------------------------------------------------------------------------------- COMPTROLLER OF THE CURRENCY ADMINISTRATOR OF NATIONAL BANKS - -------------------------------------------------------------------------------- Washington, D.C. 20219 CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering, regulation and supervision of all National Banking Associations. 2. "Shawmut Bank Connecticut, National Association", Hartford, Connecticut, (Charter No. 1338), is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 14th day of February, 1995. /s/ EUGENE A. LUDWIG Comptroller of the Currency 21 [LOGO] - -------------------------------------------------------------------------------- COMPTROLLER OF THE CURRENCY ADMINISTRATOR OF NATIONAL BANKS - -------------------------------------------------------------------------------- Washington, D.C. 20219 Certification of Fiduciary Powers I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify the records in this Office evidence "Shawmut Bank Connecticut, National Association", Hartford, Connecticut, (Charter No. 1338), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of The Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the authority so granted remains in full force and effect. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of Office of the Comptroller of the Currency to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 14th day of February, 1995. /s/ EUGENE A. LUDWIG Comptroller of the Currency 22 EXHIBIT 5 CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE TRUST INDENTURE ACT OF 1939 The undersigned, as Trustee under the Indenture to be entered into between Envirodyne Industries, Inc. and Shawmut Bank Connecticut, National Association, Trustee, does hereby consent that, pursuant to Section 321(b) of the Trust Indenture Act of 1939, reports of examinations with respect to the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION as Trustee By /s/ SUSAN T. KELLER Susan T. Keller Vice President Dated: 23 Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number 1557-0081 FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires July 31, 1994 /1/ Please refer to page i, [FEDERAL FINANCIAL INSTITUTIONS LOGO] Table of Contents, for the required disclosure of estimated burden. CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031 (940630) REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1994 ----------- (RCRI 9999) This report is required by law: 12 U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National banks). This report form is to be filed by banks with branches and consolidated subsidiaries in U.S. territories and possessions, Edge or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or International Banking Facilities. - -------------------------------------------------------------------------------- NOTE: The Reports of Condition and Income must be signed by an authorized officer and the Report of Condition must be attested to by not less than two directors (trustees) for State nonmember banks and three directors for State member and National banks. I, Susan E. Lester, E.V.P. and C.F.O. ------------------------------------------------------- Name and Title of Officer Authorized to Sign Report of the named bank do hereby declare that these Reports of Condition and Income (including the supporting schedules) have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. /s/ SUSAN E. LESTER - ---------------------------------------------------------- Signature of Officer Authorized to Sign Report July 29, 1995 - ---------------------------------------------------------- Date of Signature - ---------------------------------------------------------- FOR BANKS SUBMITTING HARD COPY REPORT FORMS: STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal Reserve District Bank. STATE NONMEMBER BANKS: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2139 Espey Court, Crofton, MD 21114. NATIONAL BANKS: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2139 Espey Court, Crofton, MD 21114. - -------------------------------------------------------------------------------- The Reports of Condition and Income are to be prepared in accordance with Federal regulatory authority instructions. NOTE: These instructions may in some cases differ from generally accepted accounting principles. We, the undersigned directors (trustees), attest to the correctness of this Report of Condition (including the supporting schedules) and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. /s/ GUNNAR S. OVERSTROM - ---------------------------------------------------------- Director (Trustee) /s/ DAVID L. EYLES - ---------------------------------------------------------- Director (Trustee) /s/ JOEL B. ALVORD - ---------------------------------------------------------- Director (Trustee)
___ ___ FDIC Certificate Number | | | | | | | | ______________________ (RCRI 9060) Banks should affix the address label in this space. SHAWMUT BANK CONNECTICUT, NATIONAL A Legal Title of Bank (Text 8010) 777 MAIN STREET City (Test 9130) HARTFORD, CT 06115 State Abbrev. (Text ___) Zip Code (Text ___) | | --- ---
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency 24 EFIEC 031 Page 1-8 /2/ CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES TABLE OF CONTENTS
SIGNATURE PAGE Cover REPORT OF INCOME Schedule RI--Income Statement...........................................RI-1, 2, 3 Schedule RI-A--Changes in Equity Capital....................................RI-3 Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses..................................................................RI-4, 5 Schedule RI-C--Applicable Income Taxes by Taxing Authority..........................................................RI-5 Schedule RI-D--Income from International Operations..................................................RI-6 Schedule RI-E--Explanations...............................................RI-7, 8
DISCLOSURE OF ESTIMATED BURDEN The estimated average burden associated with this information collection is 30.7 hours per respondent and is estimated to vary from 15 to 200 hours per response, depending on individual circumstances. Burden estimates include the time for reviewing instructions, gathering and maintaining data in the required form, and completing the information collection, but exclude the time for compiling and maintaining business records in the normal course of a respondent's activities. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and to one of the following: Secretary Board of Governors of the Federal Reserve System Washington, D.C. 20551 Legislative and Regulatory Analysis Division Office of the Comptroller of the Currency Washington, D.C. 20219 Assistant Executive Secretary Federal Deposit Insurance Corporation Washington, D.C. 20429
REPORT OF CONDITION Schedule RC--Balance Sheet................................................RC-1, 2 Schedule RC-A--Cash and Balances Due From Depository Institutions..............................................RC-3 Schedule RC-B--Securities.................................................RC-4, 5 Schedule RC-C--Loans and Lease Financing Receivables: Part I. Loans and Leases..............................................RC-6, 7 Part II. Loans to Small Businesses and Small Farms (included in the forms for June 30 only).....................................................RC-7a, 7b Schedule RC-D--Trading Assets and Liabilities (to be completed only by selected banks)..................................RC-8 Schedule RC-E--Deposit Liabilities.......................................RC-9, 10 Schedule RC-F--Other Assets................................................RC-11 Schedule RC-G--Other Liabilities...........................................RC-11 Schedule RC-H--Selected Balance Sheet Items for Domestic Offices.........................................................RC-12 Schedule RC-I--Selected Assets and Liabilities of IBFs..................................................................RC-13 Schedule RC-K--Quarterly Averages..........................................RC-13 Schedule RC-L--Off-Balance Sheet Items..................................RC-14, 15 Schedule RC-M--Memoranda................................................RC-16, 17 Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets..............................................RC-18, 19 Schedule RC-O--Other Data for Deposit Insurance Assessments.................................................RC-20, 21 Schedule RC-R--Risk-Based Capital.......................................RC-22, 23 Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income.....................................................RC-24 Special Report (TO BE COMPLETED BY ALL BANKS) Schedule RC-J--Repricing Opportunities (sent only to and to be completed only by savings banks)
For information or assistance, national and state nonmember banks should contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their Federal Reserve District Bank. 25 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-1 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9| Consolidated Report of Income for the period January 1, 1994-June 31, 1994 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. Schedule RI--Income Statement __________ | I480 | <- ------------ -------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | |-------------------------------------------------------------------------------------------------------------------- 1. Interest income: | ////////////////// | a. Interest and fee income on loans: | ////////////////// | (1) In domestic offices: | ////////////////// | (a) Loans secured by real estate ................................................... | 4011 196,635 | 1.a.(1)(a), (b) Loans to depository institutions ............................................... | 4019 126 | 1.a.(1)(b) (c) Loans to finance agricultural production and other loans to farmers ............ | 4024 45 | 1.a.(1)(c) (d) Commercial and industrial loans ................................................ | 4012 81,941 | 1.a.(1)(d) (e) Acceptances of other banks ..................................................... | 4026 3 | 1.a.(1)(e) (f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// | (1) Credit cards and related plans ............................................. | 4054 1,399 | 1.a.(1)(f)(1) (2) Other ...................................................................... | 4055 16,286 | 1.a.(1)(f)(2) (g) Loans to foreign governments and official institutions ......................... | 4056 0 | 1.a.(1)(g) (h) Obligations (other than securities and leases) of states and political | ////////////////// | subdivisions in the U.S.: | ////////////////// | (1) Taxable obligations ........................................................ | 4503 31 | 1.a.(1)(h)(1) (2) Tax-exempt obligations ..................................................... | 4504 1,398 | 1.a.(1)(h)(2) (i) All other loans in domestic offices ............................................ | 4058 16,786 | 1.a.(1)(i) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4059 0 | 1.a.(2) b. Income from lease financing receivables: | ////////////////// | (1) Taxable leases ..................................................................... | 4505 91 | 1.b.(1) (2) Tax-exempt leases .................................................................. | 4307 0 | 1.b.(2) c. Interest income on balances due from depository institutions:(1) | ////////////////// | (1) In domestic offices ................................................................ | 4105 3 | 1.c.(1) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4106 1,917 | 1.c.(2) d. Interest and dividend income on securities: | ////////////////// | (1) U.S. Treasury securities and U.S. Government agency and corporation obligations .... | 4027 103,941 | 1.d.(1) (2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// | (a) Taxable securities ............................................................. | 4506 0 | 1.d.(2)(a) (b) Tax-exempt securities .......................................................... | 4507 9 | 1.d.(2)(b) (3) Other domestic debt securities ..................................................... | 3657 29,126 | 1.d.(3) (4) Foreign debt securities ............................................................ | 3658 94 | 1.d.(4) (5) Equity securities (including investments in mutual funds) .......................... | 3659 1,408 | 1.d.(5) e. Interest income from assets held in trading accounts ................................... | 4069 0 | 1.e. ----------------------
____________ (1) Includes interest income on time certificates of deposit not held in trading accounts. 3 26 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-2 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI--Continued ---------------- | Year-to-date | --------------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ----------------------------------------------------------------------------------- -------------- 1. Interest income (continued) | | f. Interest income on federal funds sold and securities purchased | ////////////////// | under agreements to resell in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 1,330 | 1.f. g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 452,569 | 1.g. 2. Interest expense: | ////////////////// | a. Interest on deposits: | ////////////////// | (1) Interest on deposits in domestic offices: | ////////////////// | (a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// | telephone and preauthorized transfer accounts) .............. | 4508 5,649 | 2.a.(1)(a) (b) Nontransaction accounts: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................... | 4509 7,486 | 2.a.(1)(b)(1) (2) Other savings deposits .................................. | 4511 21,212 | 2.a.(1)(b)(2) (3) Time certificates of deposit of $100,000 or more ........ | 4174 11,912 | 2.a.(1)(b)(3) (4) All other time deposits ................................. | 4512 37,615 | 2.a.(1)(b)(4) (2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// | subsidiaries, and IBFs .......................................... | 4172 2,737 | 2.a.(2) b. Expense of federal funds purchased and securities sold under | ////////////////// | agreements to repurchase in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 77,469 | 2.b. c. Interest on demand notes issued to the U.S. Treasury and on | ////////////////// | other borrowed money ................................................ | 4185 8,839 | 2.c. d. Interest on mortgage indebtedness and obligations under | ////////////////// | capitalized leases .................................................. | 4072 436 | 2.d. e. Interest on subordinated notes and debentures ....................... | 4200 0 | 2.e. f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 173,382 | 2.f. --------------------------- 3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 279,187 | 3. --------------------------- 4. Provisions: | ////////////////// | --------------------------- a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | (1,933)| 4.a. b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b. --------------------------- 5. Noninterest income: | ////////////////// | a. Income from fiduciary activities .................................... | 4070 35,011 | 5.a. b. Service charges on deposit accounts in domestic offices ............. | 4080 33,116 | 5.b. c. Trading gains (losses) and fees from foreign exchange transactions .. | 4075 (286)| 5.c. d. Other foreign transaction gains (losses) ............................ | 4076 0 | 5.d. e. Gains (losses) and fees from assets held in trading accounts ........ | 4077 1,046 | 5.e. f. Other noninterest income: | ////////////////// | (1) Other fee income................................................. | 5407 28,253 | 5.f.(1) (2) All other noninterest income ................................... | 5408 22,474 | 5.f.(2) --------------------------- g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 119,614 | 5.g. 6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 467 | 6.a. b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | (3,041)| 6.b. --------------------------- 7. Noninterest expense: | ////////////////// | a. Salaries and employee benefits ...................................... | 4135 140,465 | 7.a. b. Expenses of premises and fixed assets (net of rental income) | ////////////////// | (excluding salaries and employee benefits and mortgage interest) .... | 4217 44,063 | 7.b. c. Other noninterest expense* .......................................... | 4092 152,231 | 7.c. --------------------------- d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 336,759 | 7.d. --------------------------- 8. Income (loss) before income taxes and extraordinary items and other | ////////////////// | --------------------------- adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 61,401 | 8. 9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 19,897 | 9. --------------------------- 10. Income (loss) before extraordinary items and other adjustments | ////////////////// | --------------------------- (item 8 minus 9)........................................................ | ////////////////// | RIAD 4300 | 41,504 | 10. -------------------------------------------------
____________ *Describe on Schedule RI-E--Explanations. 4 27 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-3 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI--Continued
---------------- | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ----------------------------------------------------------------------------------- -------------- 11. Extraordinary items and other adjustments: | ////////////////// | a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a. b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b. c. Extraordinary items and other adjustments, net of income taxes | ////////////////// | (item 11.a minus 11.b) ............................................ | ////////////////// -------------------------- | ////////////////// | RIAD 4320 | 0 | 11.c. 12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 41,504 | 12. -------------------------------------------------
-------------- Memoranda | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------------------------------ -------------------- 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// | August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 5 | M.1. 2. Fee income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// | (included in Schedule RI, item 5.g) ............................................................. | 8431 670 | M.2. 3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ........ | 4309 0 | M.3. 4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary | ////////////////// | items and other adjustments" (item 8 above) ..................................................... | 1244 1,207 | M.4. 5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number | nearest whole number) ........................................................................... | 4150 5,854 | M.5.
Schedule RI-A--Changes in Equity Capital Indicate decreases and losses in parentheses.
-------- | 1483| -------------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou| - ------------------------------------------------------------------------------------------------------ -------------------- 1. Total equity capital originally reported in the December 31, 1993, Reports of Condition | ////////////////// | and Income ...................................................................................... | 3215 1,131,626 | 1. 2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,131,626 | 3. 4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 41,504 | 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5. 6. Changes incident to business combinations, net .................................................. | 4356 94,072 | 6. 7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7. 8. LESS: Cash dividends declared on common stock ................................................... | 4460 43,150 | 8. 9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// | for this schedule)............................................................................... | 4411 0 | 9. 10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10. 11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (20,830)| 11. 12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12. 13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 0 | 13. 14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// | item 28) ........................................................................................ | 3210 1,203,222 | 14. ----------------------
____________ *Describe on Schedule RI-E--Explanations. 5 28 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-4 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses Part I. Charge-offs and Recoveries on Loans and Leases Part I excludes charge-offs and recoveries through the allocated transfer risk reserve.
-------- | I486 | --------------------------------- -------- | (Column A) | (Column B) | | Charge-offs | Recoveries | -------------------- -------------------- | calendar year-to-date | ----------------------------------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------ -------------------- -------------------- 1. Loans secured by real estate: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4651 54,212 | 4661 3,354 | 1.a. b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b. 2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a. b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b. 3. Loans to finance agricultural production and other loans to farmers ...... | 4655 0 | 4665 1 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4645 9,339 | 4617 3,474 | 4.a. b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 0 | 4.b. 5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures: | ////////////////// | ////////////////// | a. Credit cards and related plans ........................................ | 4656 767 | 4666 330 | 5.a. b. Other (includes single payment, installment, and all student loans) ... | 4657 1,268 | 4667 1,903 | 5.b. 6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6. 7. All other loans .......................................................... | 4644 1,083 | 4628 164 | 7. 8. Lease financing receivables: | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ......................................... | 4658 0 | 4668 0 | 8.a. b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b. 9. Total (sum of items 1 through 8) ......................................... | 4635 66,669 | 4605 9,226 | 9. -------------------------------------------
------------------------------------------- | Cumulative | Cumulative | | Charge-offs | Recoveries | | Jan. 1, 1986 | Jan. 1, 1986 | Memoranda | through | through | Dollar Amounts in Thousands | Dec. 31, 1989 | Report Date | - ------------------------------------------------------------------------------ -------------------- -------------------- To be completed by national banks only. | RIAD Bil Mil Thou | RIAD Bil Mil Thou | -------------------- -------------------- 1. Charge-offs and recoveries of Special-Category Loans, as defined for this | ////////////////// | ////////////////// | Call Report by the Comptroller of the Currency ........................... | ////////////////// | 4784 645 | M.1. ------------------------------------------- ------------------------------------------- | (Column A) | (Column B) | Memorandum items 2 and 3 are to be completed by all banks. | Charge-offs | Recoveries | -------------------- -------------------- 2. Loans to finance commercial real estate, construction, and land | calendar year-to-date | development activities (not secured by real estate) included in ----------------------------------------- | RIAD Bil Mil Thou | RIAD Bil Mil Thou | -------------------- -------------------- Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 761 | 5410 199 | M.2. 3. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// | Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// | a. Construction and land development ..................................... | 3582 3,580 | 3583 463 | M.3.a. b. Secured by farmland ................................................... | 3584 0 | 3585 13 | M.3.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ..................... | 5411 1,307 | 5412 33 | M.3.c.(1) (2) All other loans secured by 1-4 family residential properties ...... | 5413 23,678 | 5414 848 | M.3.c.(2) d. Secured by multifamily (5 or more) residential properties ............. | 3588 2,663 | 3589 75 | M.3.d. e. Secured by nonfarm nonresidential properties .......................... | 3590 22,984 | 3591 1,922 | M.3.e. -------------------------------------------
6 29 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-5 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9| Schedule RI-B--Continued Part II. Changes in Allowance for Loan and Lease Losses and in Allocated Transfer Risk Reserve ___________________________________________ | (Column A) | (Column B) | | Allowance for | Allocated | | Loan and Lease | Transfer Risk | | Losses | Reserve | -------------------- -------------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------ -------------------- -------------------- 1. Balance originally reported in the December 31, 1993, Reports of | ////////////////// | ////////////////// | Condition and Income ..................................................... | 3124 350,900 | 3131 0 | 1. 2. Recoveries (column A must equal part I, item 9, column B above) .......... | 4605 9,226 | 3132 0 | 2. 3. LESS: Charge-offs (column A must equal part I, item 9, column A above) ... | 4635 66,669 | 3133 0 | 3. 4. Provision (column A must equal Schedule RI, item 4.a; column B must | ////////////////// | ////////////////// | equal Schedule RI, item 4.b) ............................................. | 4230 1,933 | 4243 0 | 4. 5. Adjustments* (see instructions for this schedule) ........................ | 4815 18,265 | 3134 0 | 5. 6. Balance end of current period (sum of items 1 through 5) (column A must | ////////////////// | ////////////////// | equal Schedule RC, item 4.b; column B must equal Schedule RC, | ////////////////// | ////////////////// | item 4.c) ................................................................ | 3123 309,789 | 3128 0 | 6. ------------------------------------------- ____________ *Describe on Schedule RI-E--Explanations. Schedule RI-C--Applicable Income Taxes by Taxing Authority Schedule RI-C is to be reported with the December Report of Income. ---------- | I489 | <- ------------ -------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - --------------------------------------------------------------------------------------------------- -------------------- 1. Federal ....................................................................................... | 4780 N/A | 1. 2. State and local................................................................................ | 4790 N/A | 2. 3. Foreign ....................................................................................... | 4795 N/A | 3. 4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4. ---------------------------- 5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5. --------------------------------------------------
7 30 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-6 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI-D--Income from International Operations For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations account for more than 10 percent of total revenues, total assets, or net income. Part I. Estimated Income from International Operations
__________ | I492 | <- ------ -------- | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------------------------- -------------------- 1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// | and IBFs: | ////////////////// | a. Interest income booked ................................................................... | 4837 N/A | 1.a. b. Interest expense booked .................................................................. | 4838 N/A | 1.b. c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// | (item 1.a minus 1.b)..................................................................... | 4839 N/A | 1.c. 2. Adjustments for booking location of international operations: | ////////////////// | a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a. b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b. c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c. 3. Noninterest income and expense attributable to international operations: | ////////////////// | a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a. b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b. c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c. d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// | minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d. 4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// | adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4. 5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// | the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5. 6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// | adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6. 7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7. 8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8. ----------------------
Memoranda ______________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------------------------- -------------------- 1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1. 2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2. ----------------------
Part II. Supplementary Details on Income from International Operations Required by the Departments of Commerce and Treasury for Purposes of the U.S. International Accounts and the U.S. National Income and Product Accounts
---------------- | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - ------------------------------------------------------------------------------------------------- -------------------- 1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1. 2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2. 3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs): | ////////////////// | a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a. b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b. 4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// | domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4. 5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs) ............................................................................ | 4853 N/A | 5. ----------------------
8 31 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-7 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI-E--Explanations Schedule RI-E is to be completed each quarter on a calendar year-to-date basis. Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
-------- | I495 | ------ -------- | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- 1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// | Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// | a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a. b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b. c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 5.f.(2): | ////////////////// | ------------- d. | TEXT 4461 | REIMBURSEMENT FROM AFFILIATES________________________________________________| 4461 13,983 | 1.d. ----------- e. | TEXT 4462 | | 4462 | 1.e. ----------- ------------------------------------------------------------------------------ f. | TEXT 4463 | | 4463 | 1.f. ------------------------------------------------------------------------------------------- 2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// | a. Amortization expense of intangible assets ................................................ | 4531 4,862 | 2.a. Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// | b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b. c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c. d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 7.c: | ////////////////// | ------------- e. | TEXT 4464 |_ACQUISITION COSTS____________________________________________________________| 4464 43,800 | 2.e. ----------- f. | TEXT 4467 | RESTRUCTURING CHARGES | 4467 19,800 | 2.f. ----------- ------------------------------------------------------------------------------ g. | TEXT 4468 | | 4468 | 2.g. ------------------------------------------------------------------------------------------- 3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// | applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// | all extraordinary items and other adjustments): | ////////////////// | ------------- a. (1) | TEXT 4469 | | 4469 | 3.a.(1) --------------------------------------------------------------------------------------- (2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2) ------------- ---------------------------- b. (1) | TEXT 4487 | | 4487 | 3.b.(1) --------------------------------------------------------------------------------------- (2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2) ------------- ---------------------------- c. (1) | TEXT 4489 | | 4489 | 3.c.(1) --------------------------------------------------------------------------------------- (2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2) ---------------------------- 4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// | item 2) (itemize and describe all adjustments): | ////////////////// | ------------- a. | TEXT 4492 | | 4492 | 4.a. ----------- ------------------------------------------------------------------------------ b. | TEXT 4493 | | 4493 | 4.b. ------------------------------------------------------------------------------------------- 5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// | Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// | ------------- a. | TEXT 4494 | | 4494 | 5.a. ----------- ------------------------------------------------------------------------------ b. | TEXT 4495 | | 4495 | 5.b. ------------------------------------------------------------------------------------------- 6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// | item 10) (itemize and describe all corrections): | ////////////////// | ------------- a. | TEXT 4496 | | 4496 | 6.a. ----------- ------------------------------------------------------------------------------ b. | TEXT 4497 | | 4497 | 6.b. ------------------------------------------------------------------------------------------- --------------------
9 32 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RI-8 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RI-E--Continued ---------------- | Year-to-date | ------ -------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- 7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// | (itemize and describe all such transactions): | ////////////////// | ------------- a. | TEXT 4498 | | 4498 30,000 | 7.a. ----------- ------------------------------------------------------------------------------ b. | TEXT 4499 | | 4499 | 7.b. ------------------------------------------------------------------------------------------- 8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// | item 5) (itemize and describe all adjustments): | ////////////////// | ------------- a. | TEXT 4521 | GATEWAY SAVINGS BANK POOLING | | 4521 18,265 | 8.a. ------------------------------------------------------------------------------------------- b. | TEXT 4522 | | 4522 | 8.b. ------------------------------------------------------------------------------------------- ____________________ 9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <- at its option, any other significant items affecting the Report of Income): ---------------------- No comment |X| (RIAD 4769) Other explanations (please type or print clearly): (TEXT 4769)
10 33 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-1 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9| Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1994 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet ---------- | C400 | <- ------------ -------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- ASSETS | ////////////////// | 1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// | a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 85,210 | 1.a. b. Interest-bearing balances(2) ............................................................ | 0071 145,435 | 1.b. 2. Securities: | ////////////////// | a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 3,906,126 | 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 779,309 | 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// | of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// | a. Federal funds sold ...................................................................... | 0276 231,300 | 3.a. b. Securities purchased under agreements to resell ......................................... | 0277 10 | 3.b. 4. Loans and lease financing receivables: ____________________________| ////////////////// | a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 9,146,312 | ////////////////// | 4.a. b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 309,789 | ////////////////// | 4.b. c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c. ----------------------------| | d. Loans and leases, net of unearned income, | ////////////////// | allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 8,836,523 | 4.d. 5. Assets held in trading accounts ............................................................ | 3545 0 | 5. 6. Premises and fixed assets (including capitalized leases) ................................... | 2145 178,499 | 6. 7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 32,388 | 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8. 9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 31,941 | 9. 10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 77,424 | 10. 11. Other assets (from Schedule RC-F) .......................................................... | 2160 644,600 | 11. 12. Total assets (sum of items 1 through 11) ................................................... | 2170 15,740,755 | 12. ----------------------
____________ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held in trading accounts. 11 34 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-2 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9| Schedule RC--Continued --------------------------- Dollar Amounts in Thousands | ///////// Bil Mil Thou | - ----------------------------------------------------------------------------------------------- ------------------------- LIABILITIES | /////////////////////// | 13. Deposits: | /////////////////////// | a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 9,973,814 | 13.a. ---------------------------- (1) Noninterest-bearing(1) ................................ | RCON 6631 2,762,398 | /////////////////////// | 13.a.(1) (2) Interest-bearing ...................................... | RCON 6636 7,001,416 | /////////////////////// | 13.a.(2) ---------------------------- b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// | part II) .............................................................................. | RCFN 2200 196,619 | 13.b. ---------------------------- (1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1) (2) Interest-bearing ...................................... | RCFN 6636 196,619 | /////////////////////// | 13.b.(2) ---------------------------- 14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// | a. Federal funds purchased ............................................................... | RCFD 0278 1,860,850 | 14.a. b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 1,284,572 | 14.b. 15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 447,595 | 15.a. b. Trading liabilities ................................................................... | RCFD 3548 6,575 | 15.b. 16. Other borrowed money: | /////////////////////// | a. With original maturity of one year or less ............................................ | RCFD 2332 497,414 | 16.a. b. With original maturity of more than one year .......................................... | RCFD 2333 260,803 | 16.b. 17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 9,784 | 17. 18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 31,941 | 18. 19. Subordinated notes and debentures ........................................................ | RCFD 3200 0 | 19. 20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 177,566 | 20. 21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 14,537,533 | 21. | /////////////////////// | 22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22. EQUITY CAPITAL | /////////////////////// | 23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 0 | 23. 24. Common stock ............................................................................. | RCFD 3230 19,487 | 24. 25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 926,125 | 25. 26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 275,774 | 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (18,164)| 26.b. 27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27. 28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,203,222 | 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// | and 28) .................................................................................. | RCFD 3300 15,740,755 | 29. --------------------------- Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the Number most comprehensive level of auditing work performed for the bank by independent external ------------------ auditors as of any date during 1993 .............................................................. | RCFD 6724 N/A | M.1. ------------------ 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
____________ (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 12 35 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-3 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-A--Cash and Balances Due From Depository Institutions Exclude assets held in trading accounts. ---------- | C405 | <- --------------------------------- -------- | (Column A) | (Column B) | | Consolidated | Domestic | | Bank | Offices | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | - ----------------------------------------------------------------------------- -------------------- -------------------- 1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// | coin .................................................................... | 0022 672,793 | ////////////////// | 1. a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 520,047 | 1.a. b. Currency and coin .................................................... | ////////////////// | 0080 152,746 | 1.b. 2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 133,071 | 2. a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a. b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// | in the U.S. (including their IBFs) ................................... | 0085 133,071 | ////////////////// | 2.b. 3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 136,505 | 3. a. Foreign branches of other U.S. banks ................................. | 0073 0 | ////////////////// | 3.a. b. Other banks in foreign countries and foreign central banks ........... | 0074 136,505 | ////////////////// | 3.b. 4. Balances due from Federal Reserve Banks ................................. | 0090 78,276 | 0090 78,276 | 4. 5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// | Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 1,020,645 | 0010 1,020,645 | 5. ------------------------------------------- ---------------------- Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- 1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// | column B above) .............................................................................. | 0050 132,636 | M.1. ----------------------
13 36 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-4 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-B--Securities Exclude assets held in trading accounts. --------- | C410 | ------------------------------------------------------------------------------------ | Held-to-maturity | Available-for-sale | ----------------------------------------- ----------------------------------------- | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | -------------------- -------------------- -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - -------------------------------------- -------------------- -------------------- -------------------- -------------------- 1. U.S. Treasury securities ......... | 0211 1,068,833 | 0213 1,016,552 | 1286 534,139 | 1287 515,844 | 1. 2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a. b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// | Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// | agencies(3) ................... | 1294 0 | 1295 0 | 1297 0 | 1298 0 | 2.b. 3. Securities issued by states | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and political subdivisions | ////////////////// | ////////////////// | ////////////////// | ////////////////// | in the U.S.: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. General obligations ........... | 1676 0 | 1677 0 | 1678 135 | 1679 137 | 3.a. b. Revenue obligations ........... | 1681 0 | 1686 0 | 1690 0 | 1691 0 | 3.b. c. Industrial development | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and similar obligations ....... | 1694 0 | 1695 0 | 1696 0 | 1697 0 | 3.c. 4. Mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities (MBS): | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Pass-through securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// | GNMA ...................... | 1698 0 | 1699 0 | 1701 78,175 | 1702 80,542 | 4.a.(1) (2) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and FHLMC ................. | 1703 1,752,887 | 1705 1,708,934 | 1706 0 | 1707 0 | 4.a.(2) (3) Privately-issued .......... | 1709 19,308 | 1710 18,253 | 1711 0 | 1713 0 | 4.a.(3) b. CMOs and REMICs: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and FHLMC ................. | 1714 0 | 1715 0 | 1716 0 | 1717 0 | 4.b.(1) (2) Privately-issued | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and collateralized | ////////////////// | ////////////////// | ////////////////// | ////////////////// | by MBS issued or | ////////////////// | ////////////////// | ////////////////// | ////////////////// | guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// | FNMA, FHLMC, or | ////////////////// | ////////////////// | ////////////////// | ////////////////// | GNMA ...................... | 1718 0 | 1719 0 | 1731 0 | 1732 0 | 4.b.(2) (3) All other privately- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | issued .................... | 1733 146,608 | 1734 144,265 | 1735 151,600 | 1736 139,578 | 4.b.(3) 5. Other debt securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Other domestic debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities .................... | 1737 915,240 | 1738 904,035 | 1739 0 | 1741 0 | 5.a. b. Foreign debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities .................... | 1742 3,250 | 1743 3,250 | 1744 0 | 1746 0 | 5.b. -------------------------------------------------------------------------------------
_____________ (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. (2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and Export-Import Bank participation certificates. (3) Includes obligations (other than pass-through securities, CMOs, and REMICs) issued by the Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority. 14 37 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-5 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-B--Continued
----------------------------------------------------------------------------------- | Held-to-maturity | Available-for-sale | ----------------------------------------- ----------------------------------------- | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | -------------------- -------------------- -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------ -------------------- -------------------- -------------------- -------------------- 6. Equity securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Investments in mutual | ////////////////// | ////////////////// | ////////////////// | ////////////////// | funds ....................... | ////////////////// | ////////////////// | 1747 5,016 | 1748 5,016 | 6.a. b. Other equity securities | ////////////////// | ////////////////// | ////////////////// | ////////////////// | with readily determin- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | able fair values ............ | ////////////////// | ////////////////// | 1749 0 | 1751 0 | 6.b. c. All other equity | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities(1) ............... | ////////////////// | ////////////////// | 1752 38,192 | 1753 38,192 | 6.c. 7. Total (sum of items 1 | ////////////////// | ////////////////// | ////////////////// | ////////////////// | through 6) (total of | ////////////////// | ////////////////// | ////////////////// | ////////////////// | column A must equal | ////////////////// | ////////////////// | ////////////////// | ////////////////// | Schedule RC, item 2.a) | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (total of column D must | ////////////////// | ////////////////// | ////////////////// | ////////////////// | equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | ////////////////// | item 2.b) ...................... | 1754 3,906,126 | 1771 3,795,289 | 1772 807,257 | 1773 779,309| 7. -------------------------------------------------------------------------------------
--------- Memoranda | C412 | <- ----------- --------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- 1. Pledged securities(2) ......................................................................... | 0416 2,899,544 | M.1. 2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// | a. Fixed rate debt securities with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | 0343 0 | M.2.a.(1) (2) Over three months through 12 months .................................................... | 0344 22,223 | M.2.a.(2) (3) Over one year through five years ....................................................... | 0345 2,058,261 | M.2.a.(3) (4) Over five years ........................................................................ | 0346 2,384,920 | M.2.a.(4) (5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 4,465,404 | M.2.a.(5) b. Floating rate debt securities with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently ........................................................... | 4544 6,016 | M.2.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 170,807 | M.2.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3) (4) Less frequently than every five years................................................... | 4552 0 | M.2.b.(4) (5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 176,823 | M.2.b.(5) c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// | securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// | debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 4,642,227 | M.2.c. 3. Not applicable | ////////////////// | 4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// | in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4. 5. Not applicable | ////////////////// | 6. Floating rate debt securities with a remaining maturity of one year or less(2) (included in | ////////////////// | Memorandum item 2.b.(5) above) ................................................................ | 5519 3,001 | M.6. 7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// | trading securities during the calendar year-to-date ........................................... | 1778 238 | M.7.
- --------------- 1) Includes equity securities without readily determinable fair values at historical cost in item 6. c, column 0. 2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value. 3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock. 4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J. 15 38 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-6 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-C--Loans and Lease Financing Receivables Part I. Loans and Leases
-------- | C415 | <- Do not deduct the allowance for loan and lease losses from amounts ------------------------------------------- reported in this schedule. Report total loans and leases, net of unearned | (Column A) | (Column B) | income. Exclude assets held in trading accounts. | Consolidated | Domestic | | Bank | Offices | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | - ----------------------------------------------------------------------------- -------------------- -------------------- 1. Loans secured by real estate ........................................... | 1410 5,239,388 | ////////////////// | 1. a. Construction and land development ................................... | ////////////////// | 1415 76,735 | 1.a. b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// | improvements) ....................................................... | ////////////////// | 1420 1,719 | 1.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ................... | ////////////////// | 1797 417,777 | 1.c.(1) (2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (a) Secured by first liens ...................................... | ////////////////// | 5367 3,226,287 | 1.c.(2)(a) (b) Secured by junior liens ..................................... | ////////////////// | 5368 211,935 | 1.c.(2)(b) d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 100,761 | 1.d. e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 1,204,174 | 1.e. 2. Loans to depository institutions: | ////////////////// | ////////////////// | a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 17 | 2.a. (1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1) (2) To other commercial banks in the U.S. ........................... | 1507 17 | ////////////////// | 2.a.(2) b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 0 | 2.b. c. To banks in foreign countries ....................................... | ////////////////// | 1510 0 | 2.c. (1) To foreign branches of other U.S. banks ......................... | 1513 0 | ////////////////// | 2.c.(1) (2) To other banks in foreign countries ............................. | 1516 0 | ////////////////// | 2.c.(2) 3. Loans to finance agricultural production and other loans to farmers .... | 1590 1,280 | 1590 1,280 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ....................................... | 1763 2,624,506 | 1763 2,624,506 | 4.a. b. To non-U.S. addressees (domicile) ................................... | 1764 0 | 1764 0 | 4.b. 5. Acceptances of other banks: | ////////////////// | ////////////////// | a. Of U.S. banks ....................................................... | 1756 240 | 1756 204 | 5.a. b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b. 6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 455,734 | 6. a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// | revolving credit plans) ............................................. | 2008 26,062 | ////////////////// | 6.a. b. Other (includes single payment, installment, and all student loans) . | 2011 429,672 | ////////////////// | 6.b. 7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// | foreign central banks) ................................................. | 2081 0 | 2081 0 | 7. 8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// | subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// | obligations) ........................................................... | 2107 76,157 | 2107 76,157 | 8. 9. Other loans ............................................................ | 1563 755,405 | ////////////////// | 9. a. Loans for purchasing or carrying securities (secured and unsecured) . | ////////////////// | 1545 103,947 | 9.a. b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 651,458 | 9.b. 10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 3,418 | 10. a. Of U.S. addressees (domicile) ....................................... | 2182 3,418 | ////////////////// | 10.a. b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b. 11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 9,833 | 2123 9,833 | 11. 12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// | 10 minus item 11) (total of column A must equal Schedule RC, item 4.a) . | 2122 9,146,312 | 2122 9,146,312 | 12. -------------------------------------------
16 39 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-7 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-C--Continued Part I. Continued ------------------------------------------- | (Column A) | (Column B) | | Consolidated | Domestic | Memoranda | Bank | Offices | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | - ----------------------------------------------------------------------------- -------------------- -------------------- 1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1. 2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// | (included in Schedule RC-C, part I, above): | ////////////////// | ////////////////// | a. Loans secured by real estate: | ////////////////// | ////////////////// | --------------------- (1) To U.S. addressees (domicile) ................................... | 1687 43,012 | M.2.a.(1) (2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2) b. Loans to finance agricultural production and other loans to farmers . | 1613 0 | M.2.b. c. Commercial and industrial loans: | ////////////////// | (1) To U.S. addressees (domicile) ................................... | 1758 0 | M.2.c.(1) (2) To non-U.S. addressees (domicile)................................ | 1759 0 | M.2.c.(2) d. All other loans (exclude loans to individuals for household, | ////////////////// | family, and other personal expenditures) ............................ | 1615 700 | M.2.d. e. Lease financing receivables: | ////////////////// | (1) Of U.S. addressees (domicile) ................................... | 1789 0 | M.2.e.(1) (2) Of non-U.S. addressees (domicile) ............................... | 1790 0 | M.2.e.(2) f. Total (sum of Memorandum items 2.a through 2.e) ..................... | 1616 43,712 | M.2.f. 3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// | in nonaccrual status): | ////////////////// | a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// | (1) Three months or less ............................................ | 0348 450,888 | M.3.a.(1) (2) Over three months through 12 months ............................. | 0349 81,259 | M.3.a.(2) (3) Over one year through five years ................................ | 0356 819,672 | M.3.a.(3) (4) Over five years ................................................. | 0357 2,399,164 | M.3.a.(4) (5) Total fixed rate loans and leases (sum of | ////////////////// | Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 3,750,983 | M.3.a.(5) b. Floating rate loans with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently .................................... | 4554 3,963,831 | M.3.b.(1) (2) Annually or more frequently, but less frequently than quarterly . | 4555 554,895 | M.3.b.(2) (3) Every five years or more frequently, but less frequently than | ////////////////// | annually ........................................................ | 4561 722,391 | M.3.b.(3) (4) Less frequently than every five years ........................... | 4564 3,881 | M.3.b.(4) (5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// | through 3.b.(4)) ................................................ | 4567 5,244,998 | M.3.b.(5) c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// | (must equal the sum of total loans and leases, net, from | ////////////////// | Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// | Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// | leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 8,995,981 | M.3.c. 4. Loans to finance commercial real estate, construction, and land | ////////////////// | development activities (not secured by real estate) included in | ////////////////// | Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 37,810 | M.4. 5. Loans and leases held for sale (included in Schedule RC-C, part I, above)| 5369 238,903 | M.5. 6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |-------------------- residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou | -------------------- 1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 1,470,716 | M.6. -------------------------------------------
- --------------- (1) Memorandum item 3 is not applicable to savings banks that must complete supplemental Schedule RC-J. (2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A. 17 40 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC- 7a City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-C--Continued Part II. Loans to Small Businesses and Small Farms Schedule RC-C, Part II is to be reported only with the June Report of Condition. Report the number and amount currenty outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less and farm loans with "original amounts" of $500,000 or less. The following guidelines; should be used to determine the "original amount" of a loan: (1) For loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the "original amount" is the amount currenty outstanding on the report date. (2) For loan participations and syndications, the "original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender. (3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently outstanding as of the report date, whichever is larger. Loans to Small Businesses 1. Indicate in the appropriate box at the right whether all or substantially all of the bank's "Loans secured by nonfarm nonresidential properties" in ----------------- domestic offices reported in Schedule RC-C, part I, item 1.e, column B, and | C418 | <- all or substantially all of the bank's "Commercial and industrial loans to ----------------- U.S. addressees" in domestic offices reported in Schedule RC-C, part I, | YES NO | item 4.a, column B, have original amounts of $100,000 or less (see ------------------------- instructions) ....................................................................... | 6999| | /// | X | 1. -------------------------
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5. If NO, skip items 2.a and 2.b, complete items 3 and 4 below, and go to item 5.
----------------------- | Number of Loans | ----------------------- 2. Report the total number of loans currently outstanding for each of the | RCON | /////////// | following Schedule RC-C, part I, loan categories: |-------- /////////// | a. "Loans secured by nonfarm nonresidential properties" in domestic offices | ////////////////// | reported in Schedule RC-C, part I, item 1.e, column B ...................| 5562 N/A | 2.a. b. "Commercial and industrial loans to U.S. addressees" in domestic offices | /////////////////// | reported in Schedule RC-C, part I, item 4.a, column B ...................| 5563 N/A | 2.b. ----------------------
-------------------------------------------- | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Outstanding | |--------------------|---------------------| Dollar Amounts in Thousands | RCON |/////////////| RCON Bil Mil Thou | - ----------------------------------------------------------------------------------|------------------------------------------| 3. Number and amount currently outstanding of "Loans secured by nonfarm | //////////////////////////////////////// | nonresidential properties" in domestic offices reported in Schedule RC-C, | //////////////////////////////////////// | part I, item 1.e, column B (sum of items 3.a through 3.c must be less than | //////////////////////////////////////// | or equal to Schedule RC-C, part I, item 1.e, column B): | //////////////////////////////////////// | a. With original amounts of $100,000 or less ................................| 5564 1,127 | 5565 39,831 | 3.a. b. With original amounts of more than $100,000 through $250,000..............| 5566 1,073 | 5567 131,881 | 3.b. c. With original amounts of more than $250,000 through $1,000,000............| 5568 1,131 | 5569 422,956 | 3.c. 4. Number and amount currently outstanding of "Commercial and industrial loans | //////////////////////////////////////// | to U.S. addressees" in domestic offices reported in Schedule RC-C, part I, | //////////////////////////////////////// | item 4.a, column B (sum of items 4.a through 4.c must be less than or equal | //////////////////////////////////////// | to Schedule RC-C, part I, item 4.a, column B): | //////////////////////////////////////// | a. With original amounts of $100,000 or less ................................| 5570 2,304 | 5571 49,374 | 4.a. b. With original amounts of more than $100,000 through $250,000 .............| 5572 507 | 5573 50,467 | 4.b. c. With original amounts of more than $250,000 through $1,000,000 ...........| 5574 477 | 5575 148,262 | 4.c. ------------------------------------------
17a 41 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-7a City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-C--Continued Part II. Continued Agricultural Loans to Small Farms 5. Indicate in the appropriate box at the right whether all or substantially all of the bank's "Loans secured by farmland (incuding farm residential and other improvements)" in domestic offices reported in Schedule RC-C, part I, item 1.b, column B, and all or substantially all of the bank's "Loans to finance agricultural production and other loans to farmers" in domestic Yes No offices reported in Schedule RC-C, part I, item 3, column B, have original ------------------- amounts of $100,000 or less (see instructions) ................................................... | 6860 | |///| X | 5. -------------------
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8. If NO, skip items 6.a and 6.b and complete items 7 and 8 below.
---------------------- | Number of Loans | |----------------------| 6. Report the total number of loans currently outstanding for each of the | RCON |////////////// | following Schedule RC-C, part I, loan categories: |------| | a. "Loans secured by farmland (including farm residential and other | //////////////////// | improvements)" in domestic offices reported in Schedule RC-C, part I, | //////////////////// | item 1.b, column B ...................................................... | 5576 N/A | 6.a. b. "Loans to finance agricultural production and other loans to farmers" | //////////////////// | in domestic offices reported in Schedule RC-C, part I, item 3, column B.. | 5577 N/A | 6.b. ----------------------
-------------------------------------------- | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Outstanding | |----------------------|-------------------| Dollar Amounts in Thousands | RCON |///////////////| RCON Bil Mil Thou | - ----------------------------------------------------------------------------------|------------------------------------------| 7. Number and amount currently outstanding of "Loans secured by farmland | //////////////////////////////////////// | (including farm residential and other improvements)" in domestic offices | //////////////////////////////////////// | reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | //////////////////////////////////////// | through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | //////////////////////////////////////// | column B): | //////////////////////////////////////// | a. With original amounts of $100,000 or less................................ | 5578 3 | 5579 98 | 7.a. b. With original amounts of more than $100,000 through $250,000............. | 5580 2 | 5581 312 | 7.b. c. With original amounts of more than $250,000 through $500,000............. | 5582 4 | 5583 579 | 7.c. 8. Number and amount currently outstanding of "Loans to finance agricultural | //////////////////////////////////////// | production and other loans to farmers" in domestic offices reported in | //////////////////////////////////////// | Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c must | //////////////////////////////////////// | be less than or equal to Schedule RC-C, part I, item 3, column B): | //////////////////////////////////////// | a. With original amounts of $100,000 or less................................. | 5584 23 | 5585 480 | 8.a. b. With original amounts of more than $100,000 through $250,000.............. | 5586 2 | 5587 233 | 8.b. c. With original amounts of more than $250,000 through $500,000.............. | 5588 2 | 5589 567 | 8.c. --------------------------------------------
17b 42 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-8 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-D--Trading Assets and Liabilities Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional amount of interest rate, foreign exchange rate, and other commodity and equity contracts (as reported in Schedule RC-L, items 11, 12, and 13).
-------- | C420 | <- ----------------- -------- Dollar Amounts in Thousands | ///////// Bil Mil Thou | - -------------------------------------------------------------------------------------------------- ------------------------- ASSETS | /////////////////////// | 1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1. 2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// | backed securities) .......................................................................... | RCON 3532 0 | 2. 3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3. 4. Mortgage-backed securities in domestic offices: | /////////////////////// | a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a. b. CMOs and REMICs issued by FNMA or FHLMC .................................................. | RCON 3535 0 | 4.b. c. All other ................................................................................ | RCON 3536 0 | 4.c. 5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5. 6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6. 7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7. 8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8. 9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9. 10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10. 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts: | /////////////////////// | a. In domestic offices ...................................................................... | RCON 3543 11,350 | 11.a. b. In foreign offices ....................................................................... | RCFN 3544 0 | 11.b. 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 11,350 | 12. --------------------------- | ///////// Bil Mil Thou | LIABILITIES --------------------------- 13. Liability for short positions ............................................................... | RCFD 3546 0 | 13. 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts ................................................................................... | RCFD 3547 6,575 | 14. 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 6,575 | 15. ---------------------------
18 43 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-9 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-E--Deposit Liabilities Part I. Deposits in Domestic Offices
---------- | C425 | ------------------------------------------------------ -------- | | Nontransaction | | Transaction Accounts | Accounts | ----------------------------------------- -------------------- | (Column A) | (Column B) | (Column C) | | Total transaction | Memo: Total | Total | | accounts (including| demand deposits | nontransaction | | total demand | (included in | accounts | | deposits) | column A) | (including MMDAs) | -------------------- -------------------- -------------------- Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou | - ---------------------------------------------------------- -------------------- -------------------- -------------------- Deposits of: | ////////////////// | ////////////////// | ////////////////// | 1. Individuals, partnerships, and corporations .......... | 2201 3,339,818 | 2240 2,308,854 | 2346 5,743,349 | 1. 2. U.S. Government ...................................... | 2202 59,873 | 2280 59,873 | 2520 0 | 2. 3. States and political subdivisions in the U.S. ........ | 2203 156,286 | 2290 134,195 | 2530 203,512 | 3. 4. Commercial banks in the U.S. ......................... | 2206 106,373 | 2310 106,373 | ////////////////// | 4. a. U.S. branches and agencies of foreign banks ....... | ////////////////// | ////////////////// | 2347 0 | 4.a. b. Other commercial banks in the U.S. ................ | ////////////////// | ////////////////// | 2348 1,500 | 4.b. 5. Other depository institutions in the U.S. ............ | 2207 92,936 | 2312 92,936 | 2349 0 | 5. 6. Banks in foreign countries ........................... | 2213 2,164 | 2320 2,164 | ////////////////// | 6. a. Foreign branches of other U.S. banks .............. | ////////////////// | ////////////////// | 2367 0 | 6.a. b. Other banks in foreign countries .................. | ////////////////// | ////////////////// | 2373 0 | 6.b. 7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// | (including foreign central banks) .................... | 2216 289 | 2300 289 | 2377 0 | 7. 8. Certified and official checks ........................ | 2330 57,714 | 2330 57,714 | ////////////////// | 8. 9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// | columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | item 13.a) ........................................... | 2215 3,815,453 | 2210 2,762,398 | 2385 5,948,361 | 9. ----------------------------------------------------------------
---------------------- Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou | - ---------------------------------------------------------------------------------------------------- -------------------- 1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// | a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 931,299 | M.1.a. b. Total brokered deposits ..................................................................... | 2365 464,856 | M.1.b. c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// | (1) Issued in denominations of less than $100,000 ........................................... | 2343 48 | M.1.c.(1) (2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// | and participated out by the broker in shares of $100,000 or less ........................ | 2344 458,356 | M.1.c.(2) d. Total deposits denominated in foreign currencies ............................................ | 3776 0 | M.1.d. e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// | reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 359,797 | M.1.e. 2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// | equal item 9, column C above): | ////////////////// | a. Savings deposits: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................................................... | 6810 837,541 | M.2.a.(1) (2) Other savings deposits (excludes MMDAs) ................................................. | 0352 2,372,564 | M.2.a.(2) b. Total time deposits of less than $100,000 ................................................... | 6648 1,923,177 | M.2.b. c. Time certificates of deposit of $100,000 or more ............................................ | 6645 815,079 | M.2.c. d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d. 3. All NOW accounts (included in column A above) .................................................. | 2398 1,053,054 | M.3. ----------------------
19 44 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-10 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-E--Continued Part I. Continued
Memoranda (continued) - --------------------------------------------------------------------------------------------------------------------------------- | Deposit Totals for FDIC Insurance Assessments(1) -------------------- | | Dollar Amounts in Thousands | RCON Bil Mil Thou | | -------------------------------------------------------------------------------------------------- -------------------- | 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) |/////////////////// | | | (must equal Schedule RC, item 13.a) ......................................................... | 2200 9,763,814 | M.4. | | | ////////////////// | | | a. Total demand deposits (must equal item 9, column B) ...................................... | 2210 2,762,393 | M.4.a.| | b. Total time and savings deposits(2) (must equal item 9, column A plus item 9, column C | ////////////////// | | | minus item 9, column B) .................................................................. | 2350 7,001,416 | M.4.b.| ----------------------
___________ | (1) An amended Certified Statement should be submitted to the FDIC if the | deposit totals reported in this item are amended after the semiannual | Certified Statement originally covering this report date has been | filed with the FDIC. | (2) For FDIC insurance assessment purposes, "total time and savings deposits" | consists of nontransaction accounts and all transaction accounts other | than demand deposits. | - -------------------------------------------------------------------------------
-------------------- Dollar Amounts in Thousands | RCON Bil Mil Thou | - --------------------------------------------------------------------------------------------------- -------------------- 5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more | ////////////////// | (included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing | ////////////////// | frequency of:(1) | ////////////////// | a. Three months or less ....................................................................... | 0359 572,417 | M.5.a. b. Over three months through 12 months (but not over 12 months) ............................... | 3644 718,973 | M.5.b. 6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) | ////////////////// | a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | 2761 223,575 | M.6.a.(1) (2) Over three months through 12 months .................................................... | 2762 223,827 | M.6.a.(2) (3) Over one year through five years ....................................................... | 2763 363,434 | M.6.a.(3) (4) Over five years ........................................................................ | 2765 4,243 | M.6.a.(4) (5) Total fixed rate time certificates of deposit of $100,000 or more (sum of | ////////////////// | Memorandum items 6.a.(1) through 6.a.(4)).............................................. | 2767 815,079 | M.6.a.(5) b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of:| ////////////////// | (1) Quarterly or more frequently ........................................................... | 4568 0 | M.6.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | 4569 0 | M.6.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | 4571 0 | M.6.b.(3) (4) Less frequently than every five years .................................................. | 4572 0 | M.6.b.(4) (5) Total floating rate time certificates of deposit of $100,000 or more (sum of | ////////////////// | Memorandum items 6.b.(1) through 6.b.(4)) .............................................. | 4573 0 | M.6.b.(5) c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) | ////////////////// | and 6.b.(5)) (must equal Memorandum item 2.c. above) ....................................... | 6645 815,079 | M.6.c. ----------------------
_____________ (1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J. 20 45 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-11 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-E--Continued Part II. Deposits in Foreign Offices (including Edge and Agreement subsidiaries and IBFs) -------------------- Dollar Amounts in Thousands | RCFN Bil Mil Thou | - --------------------------------------------------------------------------------------------------- -------------------- Deposits of: | ////////////////// | 1. Individuals, partnerships, and corporations ................................................... | 2621 196,619 | 1. 2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2. 3. Foreign banks (including U.S. branches and | ////////////////// | agencies of foreign banks, including their IBFs) .............................................. | 2625 0 | 3. 4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4. 5. Certified and official checks ................................................................. | 2330 0 | 5. 6. All other deposits ............................................................................ | 2668 0 | 6. 7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 196,619 | 7. ----------------------
Schedule RC-F--Other Assets ---------- | C430 | <- ----------------- -------- Dollar Amounts in Thousands | ////////// Bil Mil Thou | - -------------------------------------------------------------------------------------------------- ------------------------- 1. Income earned, not collected on loans ........................................................ | RCFD 2164 47,928 | 1. 2. Net deferred tax assets(1) ................................................................... | RCFD 2148 128,218 | 2. 3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 34,070 | 3. 4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2168 434,384 | 4. ------------- --------------------------- a. | TEXT 3549 | | RCFD 3549 | | /////////////////////// | 4.a. ----------- ---------------------------------------------------- b. | TEXT 3550 | | RCFD 3550 | | /////////////////////// | 4.b. ----------- ---------------------------------------------------- c. | TEXT 3551 | | RCFD 3551 | | /////////////////////// | 4.c. -------------------------------------------------------------------------------------------- --------------------------- 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 644,600 | 5. --------------------------- Memorandum --------------------------- Dollar Amounts in Thousands | ////////// Bil Mil Thou | - -------------------------------------------------------------------------------------------------- ------------------------- 1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 30,674 | M.1. ---------------------------
Schedule RC-G--Other Liabilities
---------- | C435 | <- ----------------- -------- Dollar Amounts in Thousands | ////////// Bil Mil Thou | - -------------------------------------------------------------------------------------------------- ------------------------- 1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 13,800 | 1.a. b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 55,957 | 1.b. 2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 0 | 2. 3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3. 4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2938 107,809 | 4. ------------- --------------------------- a. | TEXT 3552 | | RCFD 3552 | 52,593 | /////////////////////// | 4.a. ----------- ---------------------------------------------------- b. | TEXT 3553 | | RCFD 3553 | | /////////////////////// | 4.b. ----------- ---------------------------------------------------- c. | TEXT 3554 | | RCFD 3554 | | /////////////////////// | 4.c. -------------------------------------------------------------------------------------------- --------------------------- 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 177,566 | 5. ---------------------------
____________ (1) See discussion of deferred income taxes in Glossary entry on "income taxes." (2) For savings banks, include "dividends" accrued and unpaid on deposits. 21 46 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-12 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices ---------- | C440 | <- ------------ -------- | Domestic Offices | -------------------- Dollar Amounts in Thousands | RCON Bil Mil Thou | - ----------------------------------------------------------------------------------------------------- -------------------- 1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 31,941 | 1. 2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 31,941 | 2. 3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 233,300 | 3. 4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 3,145,422 | 4. 5. Other borrowed money ............................................................................ | 2850 758,217 | 5. EITHER | ////////////////// | 6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6. OR | ////////////////// | 7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 51,619 | 7. 8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 15,595,754 | 8. 9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 14,340,911 | 9. ---------------------- Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. -------------------- | RCON Bil Mil Thou | -------------------- 10. U.S. Treasury securities ....................................................................... | 1779 1,728,780 | 10. 11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// | securities) .................................................................................... | 1785 0 | 11. 12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 49 | 12. 13. Mortgage-backed securities: | ////////////////// | a. Pass-through securities: | ////////////////// | (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 1,699,839 | 13.a.(1) (2) Privately-issued ........................................................................ | 1869 17,122 | 13.a.(2) b. CMOs and REMICs: | ////////////////// | (1) Issued by FNMA and FHLMC ................................................................ | 1877 85,184 | 13.b.(1) (2) Privately-issued ........................................................................ | 2253 349,185 | 13.b.(2) 14. Other domestic debt securities ................................................................. | 3159 857,162 | 14. 15. Foreign debt securities ........................................................................ | 3160 2,900 | 15. 16. Equity securities: | ////////////////// | a. Investments in mutual funds ................................................................. | 3161 5,892 | 16.a. b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b. c. All other equity securities ................................................................. | 3169 65,788 | 16.c. 17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 4,811,901 | 17. ----------------------
Memorandum (to be completed only by banks with IBFs and other "foreign" offices) -------------------- Dollar Amounts in Thousands | RCON Bil Mil Thou | - ----------------------------------------------------------------------------------------------------- -------------------- EITHER | ////////////////// | 1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1. OR | ////////////////// | 2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2. ----------------------
22 47 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 06/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-13 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. -------- | C445 | <- ------------ -------- Dollar Amounts in Thousands | RCFN Bil Mil Thou | - ----------------------------------------------------------------------------------------------------- -------------------- 1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1. 2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// | column A) ...................................................................................... | 2076 N/A | 2. 3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3. 4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4. 5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// | part II, items 2 and 3) ........................................................................ | 2379 N/A | 5. 6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6. ----------------------
Schedule RC-K--Quarterly Averages (1) ---------- | C455 | <- ----------------- -------- Dollar Amounts in Thousands | ///////// Bil Mil Thou | - ----------------------------------------------------------------------------------------------- ------------------------- ASSETS | /////////////////////// | 1. Interest-bearing balances due from depository institutions ............................... | RCFD 3381 113,132 | 1. 2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ....... | RCFD 3382 3,557,492 | 2. 3. Securities issued by states and political subdivisions in the U.S.(2) .................... | RCFD 3383 408 | 3. 4. a. Other debt securities(2) .............................................................. | RCFD 3647 1,099,528 | 4.a. b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) . | RCFD 3648 47,593 | 4.b. 5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////////// | of the bank and of its Edge and Agreement subsidiaries, and in IBFs ...................... | RCFD 3365 86,013 | 5. 6. Loans: | /////////////////////// | a. Loans in domestic offices: | /////////////////////// | (1) Total loans ....................................................................... | RCON 3360 9,223,155 | 6.a.(1) (2) Loans secured by real estate ...................................................... | RCON 3385 5,209,698 | 6.a.(2) (3) Loans to finance agricultural production and other loans to farmers ............... | RCON 3386 1,094 | 6.a.(3) (4) Commercial and industrial loans ................................................... | RCON 3387 2,806,178 | 6.a.(4) (5) Loans to individuals for household, family, and other personal expenditures ....... | RCON 3388 436,911 | 6.a.(5) (6) Obligations (other than securities and leases) of states and political subdivisions | /////////////////////// | in the U.S. ....................................................................... | RCON 3389 52,626 | 6.a.(6) b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. | RCFN 3360 0 | 6.b. 7. Assets held in trading accounts .......................................................... | RCFD 3301 0 | 7. 8. Lease financing receivables (net of unearned income) ..................................... | RCFD 3484 2,938 | 8. 9. Total assets ............................................................................. | RCFD 3368 15,427,856 | 9. LIABILITIES | /////////////////////// | 10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// | and telephone and preauthorized transfer accounts) (exclude demand deposits) ............. | RCON 3485 1,052,580 | 10. 11. Nontransaction accounts in domestic offices: | /////////////////////// | a. Money market deposit accounts (MMDAs) ................................................. | RCON 3486 674,355 | 11.a. b. Other savings deposits ................................................................ | RCON 3487 2,337,570 | 11.b. c. Time certificates of deposit of $100,000 or more ...................................... | RCON 3345 654,640 | 11.c. d. All other time deposits ............................................................... | RCON 3469 1,817,001 | 11.d. 12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs .. | RCFN 3404 166,104 | 12. 13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs .............. | RCFD 3353 4,145,690 | 13. 14. Other borrowed money ..................................................................... | RCFD 3355 559,025 | 14. ---------------------------
_____________ (1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or (2) an average of weekly figures (i.e., the Wednesday of each week of the quarter). (2) Quarterly averages for all debt securities should be based on amortized cost. (3) Quarterly averages for all equity securities should be based on historical cost. 23 48 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 06/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-14 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L--Off-Balance Sheet Items Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
-------- | C460 | <- ------------ -------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - ---------------------------------------------------------------------------------------------------- -------------------- 1. Unused commitments: | ////////////////// | a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// | equity lines ............................................................................... | 3814 434,131 | 1.a. b. Credit card lines .......................................................................... | 3815 0 | 1.b. c. Commercial real estate, construction, and land development: | ////////////////// | (1) Commitments to fund loans secured by real estate ....................................... | 3816 64,337 | 1.c.(1) (2) Commitments to fund loans not secured by real estate ................................... | 6550 19,581 | 1.c.(2) d. Securities underwriting .................................................................... | 3817 0 | 1.d. e. Other unused commitments ................................................................... | 3818 4,646,357 | 1.e. 2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 717,700 | 2. --------------------------- a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 1,464 | ////////////////// | 2.a. --------------------------- 3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 52,474 | 3. a. Amount of performance standby letters of credit conveyed to | ////////////////// | --------------------------- others .......................................................... | RCFD 3822 | 0 | ////////////////// | 3.a. --------------------------- 4. Commercial and similar letters of credit ...................................................... | 3411 8,082 | 4. 5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// | the reporting bank ............................................................................ | 3428 0 | 5. 6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// | (nonaccepting) bank ........................................................................... | 3429 0 | 6. 7. Securities borrowed ........................................................................... | 3432 0 | 7. 8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// | against loss by the reporting bank) ........................................................... | 3433 0 | 8. 9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold | ////////////////// | for Call Report purposes: | ////////////////// | a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 135,753 | 9.a.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 135,753 | 9.a.(2) b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 0 | 9.b.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 0 | 9.b.(2) c. Farmer Mac agricultural mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2) 10. When-issued securities: | ////////////////// | a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a. b. Gross commitments to sell .................................................................. | 3435 0 | 10.b. 11. Interest rate contracts (exclude when-issued securities): | ////////////////// | a. Notional value of interest rate swaps ...................................................... | 3450 2,353,000 | 11.a. b. Futures and forward contracts .............................................................. | 3823 1,617,000 | 11.b. c. Option contracts (e.g., options on Treasuries): | ////////////////// | (1) Written option contracts ............................................................... | 3824 542,750 | 11.c.(1) (2) Purchased option contracts ............................................................. | 3825 1,317,750 | 11.c.(2) 12. Foreign exchange rate contracts: | ////////////////// | a. Notional value of exchange swaps (e.g., cross-currency swaps)............................... | 3826 0 | 12.a. b. Commitments to purchase foreign currencies and U.S. dollar exchange (spot, forward, | ////////////////// | and futures)................................................................................ | 3415 6,636,878 | 12.b. c. Option contracts (e.g., options on foreign currency): | ////////////////// | (1) Written option contracts................................................................ | 3827 0 | 12.c.(1) (2) Purchased otion contracts............................................................... | 3828 0 | 12.c.(2)
24 49 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 06/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-15 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L--Continued
-------- | C461 | <- ---------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - ---------------------------------------------------------------------------------------------------- --------------------- 13. Contracts on other commodities and equities: | ////////////////// | a. Notional value of other swaps (e.g., oil swaps) ............................................ | 3829 0 | 13.a b. Futures and forward contracts (e.g., stock index and commodity--precious metals, | ////////////////// | wheat, cotton, livestock--contracts) ....................................................... | 3830 0 | 13.b. c. Option contracts (e.g., options on commodities, individual stocks and stock indexes): | ////////////////// | (1) Written option contracts................................................................ | 3831 0 | 13.c.(1) (2) Purchased option contracts ............................................................. | 3832 0 | 13.c.(2) 14. All other off-balance sheet liabilities (itemize and describe each component of this item | ////////////////// | over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 3430 0 | 14. --------------- ----------------------------- a. | TEXT 3555 | | RCFD 3555 | | ////////////////// | 14.a. --------------------------------------------------------------------------------------------- b. | TEXT 3556 | | RCFD 3556 | | ////////////////// | 14.b. ---------------------------------------------------------------------------------------------- c. | TEXT 3557 | | RCFD 3557 | | ////////////////// | 14.c. ---------------------------------------------------------------------------------------------- d. | TEXT 3558 | | RCFD 3558 | | ////////////////// | 14.d. ---------------------------------------------------------------------------------------------- 15. All other off-balance sheet assets (itemize and describe each component of this item | ////////////////// | over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 5591 0 | 15. --------------- ----------------------------- a. | TEXT 5592 | | RCFD 5592 | | ////////////////// | 15.a. --------------------------------------------------------------------------------------------- b. | TEXT 5593 | | RCFD 5593 | | ////////////////// | 15.b. ---------------------------------------------------------------------------------------------- c. | TEXT 5594 | | RCFD 5594 | | ////////////////// | 15.c. ---------------------------------------------------------------------------------------------- d. | TEXT 5595 | | RCFD 5595 | | ////////////////// | 15.d. ----------------------------------------------------------------------------------------------
Memoranda ---------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - ---------------------------------------------------------------------------------------------------- --------------------- 1. Not applicable | ////////////////// | 2. Not applicable | ////////////////// | 3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// | Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// | that are fee paid or otherwise legally binding) ............................................... | 3833 2,816,829 | M.3. a. Participations in commitments with an original maturity ---------------------| exceeding one year conveyed to others ............................... | RCFD 3834 | 19,202 | ////////////////// | M.3.a. --------------------- 4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// | to non-U.S. addresses (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 247,737 | M.4. 5. To be completed for the September report only: | ////////////////// | Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// | have been securitized and sold without recourse (with servicing retained), amounts | ////////////////// | outstanding by type of loan: | ////////////////// | a. Loans to purchase private passenger automobiles ............................................ | 2741 N/A | M.5.a. b. Credit cards and related plans ............................................................. | 2742 N/A | M.5.b. c. All other consumer installment credit (including mobile home loans) ........................ | 2743 N/A | M.5.c. ----------------------
25 50 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 06/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-16 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Memoranda
-------- | C460 | <- ----------- --------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | - ------------------------------------------------------------------------------------------------------- -------------------- 1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// | shareholders, and their related interests as of the report date: | ////////////////// | a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// | shareholders, and their related interests .................................................... | 6164 2,850 | 1.a. b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// | extensions of credit by the reporting bank (Including extensions of credit to | ////////////////// | related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// | 1.b. -------------------------- of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 6 | ////////////////// | -------------------------- 2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// | and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2. 3. Not applicable. | ////////////////// | 4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// | (include both retained servicing and purchased servicing): | ////////////////// | a. Mortgages serviced under a GNMA contract ...................................................... | 5500 25,771 | 4.a. b. Mortgages serviced under a FHLMC contract: | ////////////////// | (1) Serviced with recourse to servicer ........................................................ | 5501 79,375 | 4.b.(1) (2) Serviced without recourse to servicer ..................................................... | 5502 772,633 | 4.b.(2) c. Mortgages serviced under a FNMA contract: | ////////////////// | (1) Serviced under a regular option contract .................................................. | 5503 56,379 | 4.c.(1) (2) Serviced under a special option contract .................................................. | 5504 2,531,783 | 4.c.(2) d. Mortgages serviced under other servicing contracts ............................................ | 5505 4,598,318 | 4.d. 5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// | equal Schedule RC, item 9): | ////////////////// | a. U.S. addressees (domicile) .................................................................... | 2103 31,941 | 5.a. b. Non-U.S. addressees (domicile) ................................................................ | 2104 0 | 5.b. 6. Intangible assets: | ////////////////// | a. Mortgage servicing rights ..................................................................... | 3164 17,632 | 6.a. b. Other identifiable intangible assets: | ////////////////// | (1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1) (2) All other identifiable intangible assets .................................................. | 5507 4,262 | 6.b.(2) c. Goodwill ...................................................................................... | 3163 55,530 | 6.c. d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 77,424 | 6.d. e. Intangible assets that have been grandfathered for regulatory capital purposes ................ | 6442 0 | 6.e. YES NO -------------------- 7. Does your bank have any mandatory convertible debt that is part of yor Tier 2 capital? ........... | 6167 |///| X | 7. -------------------- If yes, complete items 7.a throught 7.e: | RCFD Bil Mil Thou | -------------------- a. Total equity contract notes, gross ............................................................ | 3290 N/A | 7.a. b. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3291 N/A | 7.b. c. Total equity commitment notes, gross .......................................................... | 3293 N/A | 7.c. d. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3294 N/A | 7.d. e. Total (item 7.a minus 7.b plus 7.c minus 7.d) ................................................. | 3295 N/A | 7.e. -------------------- - --------------
(1) Do not report federal funds sold and securities purchased under agreements to resell with other commercial banks in the U.S. in this item. 26 51 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-17 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M --Continued
------------------------- Dollar Amounts in Thousands | ///////// Bil Mil Thou | - --------------------------------------------------------------------------------------------- ------------------------- 8. a. Other real estate owned: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1) (2) All other real estate owned: | /////////////////////// | (a) Construction and land development in domestic offices ....................... | RCON 5508 6,966 | 8.a.(2)(a) (b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b) (c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 6,043 | 8.a.(2)(c) (d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 927 | 8.a.(2)(d) (e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 18,452 | 8.a.(2)(e) (f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f) (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 32,388 | 8.a.(3) b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1) (2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2) (3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3) c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c. 9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// | item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 0 | 9. 10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// | proprietary, private label, and third party mutual funds): | /////////////////////// | a. Money market funds .................................................................. | RCON 6441 39,322 | 10.a. b. Equity securities funds ............................................................. | RCON 8427 4,703 | 10.b. c. Debt securities funds ............................................................... | RCON 8428 3,190 | 10.c. d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d. e. Annuities ........................................................................... | RCON 8430 0 | 10.e. ---------------------------
---------------------- |Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | ------------------------------------------------------------------------------------------------- -------------------- 1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. ---------------------- - ---------------------------------------------------------------------------------------------------------------------------------
27 52 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-18 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2 through 4, column A, as confidential.
| C470 | <- --------------------------------------------------------------- | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | | accruing | accruing | | -------------------- -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------------------------ -------------------- -------------------- -------------------- 1. Loans secured by real estate: | C | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | | 1246 20,512 | 1247 129,736 | 1.a. b. To non-U.S. addressees (domicile) ............ | O | 1249 0 | 1250 0 | 1.b. 2. Loans to depository institutions and | | ////////////////// | ////////////////// | acceptances of other banks: | N | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository | | ////////////////// | ////////////////// | institutions ................................. | F | 5378 0 | 5379 0 | 2.a. b. To foreign banks ............................. | | 5381 0 | 5382 0 | 2.b. 3. Loans to finance agricultural production and | I | ////////////////// | ////////////////// | other loans to farmers .......................... | | 1597 0 | 1583 117 | 3. 4. Commercial and industrial loans: | D | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | | 1252 1,695 | 1253 24,247 | 4.a. b. To non-U.S. addressees (domicile) ............ | E | 1255 0 | 1256 0 | 4.b. 5. Loans to individuals for household, family, and | | ////////////////// | ////////////////// | other personal expenditures: | N | ////////////////// | ///////////////// | a. Credit cards and related plans ............... | | 5384 117 | 5385 266 | 5.a. b. Other (includes single payment, installment, | T | ////////////////// | ////////////////// | and all student loans) ....................... | | 5387 230 | 5388 5,636 | 5.b. 6. Loans to foreign governments and official | I | ////////////////// | ////////////////// | institutions .................................... | | 5390 0 | 5391 0 | 6. 7. All other loans ................................. | A | 5460 191 | 5461 162 | 7. 8. Lease financing receivables: | | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ................ | L | 1258 0 | 1259 0 | 8.a. b. Of non-U.S. addressees (domicile) ............ | | 1272 0 | 1791 0 | 8.b. 9. Debt securities and other assets (exclude other | | ////////////////// | ////////////////// | real estate owned and other repossessed assets) . | | 3506 0 | 3507 0 | 9. ----------------------------------------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8.
---------------------------------------------------------------- | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | -------------------- -------------------- -------------------- 10. Loans and leases reported in items 1 through 8 above which are wholly or partially | ////////////////// | ////////////////// | ////////////////// | guaranteed by the U.S. Government ............... | 5612 807 | 5613 229 | 5614 187 | 10. a. Guaranteed portion of loans and leases | ////////////////// | ////////////////// | ////////////////// | included in item 10 above .................... | 5615 703 | 5616 229 | 5617 179 | 10.a. ----------------------------------------------------------------
28 53 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-19 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-N--Continued ---------- | C473 | <- ------------------------------------------------------ -------- | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | Memoranda | accruing | accruing | | -------------------- -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------------------------ -------------------- -------------------- -------------------- 1. Restructured loans and leases included in | | | Schedule RC-N, items 1 through 8, above ......... | | | M.1. 2. Loans to finance commercial real estate, | | C O N F I D E N T I A L | construction, and land development activities | C | | (not secured by real estate) included in | O | | Schedule RC-N, items 4 and 7, above ............. | N | | M.2. F -------------------- -------------------- 3. Loans secured by real estate in domestic offices | I | RCON Bil Mil Thou | RCON Bil Mil Thou | D -------------------- -------------------- (included in Schedule RC-N, item 1, above): | E | ////////////////// | ////////////////// | a. Construction and land development ............ | N | 2769 6,083 | 3492 16,905 | M.3.a. b. Secured by farmland .......................... | T | 3494 0 | 3495 379 | M.3.b. c. Secured by 1-4 family residential properties: | I | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by | A | ////////////////// | ////////////////// | 1-4 family residential properties and | L | ////////////////// | ////////////////// | extended under lines of credit ........... | | 5399 65 | 5400 2,248 | M.3.c.(1) (2) All other loans secured by 1-4 family | | ////////////////// | ////////////////// | residential properties ................... | | 5402 6,173 | 5403 26,957 | M.3.c.(2) d. Secured by multifamily (5 or more) | | ////////////////// | ////////////////// | residential properties ....................... | | 3500 160 | 3501 1,769 | M.3.d. e. Secured by nonfarm nonresidential properties . | | 3503 8,031 | 3504 76,078 | M.3.e. ----------------------------------------------------------------
------------------------------------------- | (Column A) | (Column B) | | Past due 30 | Past due 90 | | through 89 days | days or more | -------------------- -------------------- | RCFD Bil Mil Thou | RCFD Bil Mil Thou | -------------------- -------------------- 4. Interest rate, foreign exchange rate, and other | | ////////////////// | commodity and equity contracts: | | ////////////////// | a. Book value of amounts carried as assets ...... | CONFIDENTIAL | 3528 0 | M.4.a. b. Replacement cost of contracts with a | | ////////////////// | positive replacement cost .................... | | 3530 0 | M.4.b. -------------------------------------------
29 54 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-20 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-O--Other Data for Deposit Insurance Assessments An amended Certified Statement should be submitted to the FDIC if the amounts reported in items 1 through 10 of this schedule are amended after the semiannual Certified Statement originally covering this report date has been filed with the FDIC.
---------- ------------| C475 | Dollar Amounts in Thousands | RCON Bil Mil Thou | - --------------------------------------------------------------------------------------------------- -------------------- 1. Unposted debits (see instructions): | ////////////////// | a. Actual amount of all unposted debits ...................................................... | 0030 N/A | 1.a. OR | ////////////////// | b. Separate amount of unposted debits: | ////////////////// | (1) Actual amount of unposted debits to demand deposits ................................... | 0031 0 | 1.b.(1) (2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 0 | 1.b.(2) 2. Unposted credits (see instructions): | ////////////////// | a. Actual amount of all unposted credits ..................................................... | 3510 N/A | 2.a. OR | ////////////////// | b. Separate amount of unposted credits: | ////////////////// | (1) Actual amount of unposted credits to demand deposits .................................. | 3512 110,947 | 2.b.(1) (2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 0 | 2.b.(2) 3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// | deposits in domestic offices) ................................................................ | 3520 0 | 3. 4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// | Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// | a. Demand deposits of consolidated subsidiaries .............................................. | 2211 13,275 | 4.a. b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 0 | 4.b. c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 0 | 4.c. 5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// | a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a. b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b. c. Interest accrued and unpaid on deposits in insured branches | ////////////////// | (included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c. ---------------------- ---------------------- Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// | Federal Reserve to act as pass-through correspondents. | ////////////////// | 6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// | behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// | of the reporting bank: | ////////////////// | a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, | ////////////////// | Memorandum item 4.a) ...................................................................... | 2314 0 | 6.a. b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// | Memorandum item 4.b) ...................................................................... | 2315 0 | 6.b. 7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// | a. Unamortized premiums ...................................................................... | 5516 0 | 7.a. b. Unamortized discounts ..................................................................... | 5517 0 | 7.b. ---------------------- - ------------------------------------------------------------------------------------------------------------------------------- | | |8. To be completed by banks with "Oakar deposits." | | ---------------------- | | Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | | | the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 242,934 | 8. | | ---------------------- | | | - ------------------------------------------------------------------------------------------------------------------------------- ______________________ 9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9. 10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// | deposits in domestic offices) ................................................................ | 8432 0 | 10. ----------------------
______________ (1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits. 30 55 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-21 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-O--Continued
Memoranda (to be completed each quarter except as noted) ---------------------- Dollar Amounts in Thousands | RCON Bil Mil Thou | - -------------------------------------------------------------------------------------------------- -------------------- 1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) | ////////////////// | must equal Schedule RC, item 13.a): | ////////////////// | a. Deposit accounts of $100,000 or less: | ////////////////// | (1) Amount of deposit accounts of $100,000 or less ........................................ | 2702 5,837,328 | M.1.a.(1) (2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// | --------------------------- completed for the June report only) ........................ | RCON 3779 | 214,627 | ////////////////// | M.1.a.(2) --------------------------- b. Deposit accounts of more than $100,000: | ////////////////// | (1) Amount of deposit accounts of more than $100,000 ........... Number | 2710 3,926,486 | M.1.b.(1) --------------------------- (2) Number of deposit accounts of more than $100,000 ........... | RCON 2722 | 7,236 | ////////////////// | M.1.b.(2) ------------------------------------------------- 2. Estimated amount of uninsured deposits in domestic offices of the bank: a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by $100,000 and subtracting the result from the amount of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(1) above. Indicate in the appropriate box at the right whether your bank has a method or procedure for YES NO ---------------------- determining a better estimate of uninsured deposits than the estimate described above ..... | 6861| |///| X | M.2.a. -------------------- b. If the box marked YES has been checked, report the estimate of uninsured deposits | RCON Bil Mil Thou | -------------------- determined by using your bank's method or procedure ....................................... | 5597 N/A | M.2.b. ---------------------- - ----------------------------------------------------------------------------------------------------------------------------- | C477 | <- Person to whom questions about the Reports of Condition and Income should be directed: ----------
ROBERT DUFF, ASSISTANT VICE PRESIDENT (203) 986-2474 - --------------------------------------- -------------------------------------- Name and Title (TEXT 8901) Area code and phone number (TEXT 8902) 31 56 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-22 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9| Schedule RC-R--Risk-Based Capital This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1993, must complete items 2 through 9 and Memorandum item 1. Banks with assets of less than $1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below. 1. Test for determining the extent to which Schedule RC-R must be completed. To be completed ------------ only by banks with total assets of less than $1 billion. Indicate in the appropriate | C480 | <- ----- ---------- box at the right whether the bank has total capital greater than or equal to eight percent | YES NO | ------------ --------------- of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1. ----------------------------- For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions). If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has been checked, the bank must complete the remainder of this schedule. A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent or that the bank is not in compliance with the risk-based capital guidelines. ------------------------------------------ | (Column A) | (Column B) | |Subordinated Debt(1)| Other | | and Intermediate | Limited- | Items 2 and 3 are to be completed by all banks. | Term Preferred | Life Capital | | Stock | Instruments | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------------------------------------------------ -------------------- -------------------- 2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// | weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// | maturity of: | ////////////////// | ////////////////// | a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a. b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b. c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c. d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d. e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e. f. Over five years ....................................................... | 3785 0 | 3791 0 | 2.f. ------------------------------------------- --------------------- 3. Total qualifying capital (i.e., Tier 1 and Tier 2 capital) allowable under the risk-based | RCFD Bil Mil Thou | -------------------- capital guidelines ......................................................................... | 3792 1,315,830 | 3. ---------------------- ------------------------------------------ | (Column A) | (Column B) | Items 4-9 and Memorandum item 1 are to be completed | Assets | Credit Equiv- | by banks that answered NO to item 1 above and | Recorded | alent Amount | by banks with total assets of $1 billion or more. | on the | of Off-Balance | | Balance Sheet | Sheet Items(2) | -------------------- -------------------- 4. Assets and credit equivalent amounts of off-balance sheet items assigned | RCFD Bil Mil Thou | RCFD Bil Mil Thou | -------------------- -------------------- to the Zero percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// | guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// | OECD central governments .......................................... | 3794 1,682,256 | ////////////////// | 4.a.(1) (2) All other ......................................................... | 3795 257,131 | ////////////////// | 4.a.(2) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b. -------------------------------------------
______________ (1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.e, "Total." (2) Do not report in column B the risk-weighted amount of assets reported in column A. 32 57 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 6/30/94 ST-BK: 09-0590 FFIEC 031 Address: 777 MAIN STREET Page RC-23 City, State Zip: HARTFORD, CT 06115 FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-R--Continued
------------------------------------------- | (Column A) | (Column B) | | Assets | Credit Equiv- | | Recorded | alent Amount | | on the | of Off-Balance | | Balance Sheet | Sheet Items(1) | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------------------------------------------------ -------------------- -------------------- 5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 20 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// | agencies and other OECD central governments ....................... | 3798 28,703 | ////////////////// | 5.a.(1) (2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// | ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// | securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// | by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2) (3) All other ......................................................... | 3800 2,841,097 | ////////////////// | 5.a.(3) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 206,582 | 5.b. 6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 50 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3802 3,482,611 | ////////////////// | 6.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 224,752 | 6.b. 7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 100 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3804 7,786,693 | ////////////////// | 7.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 2,142,903 | 7.b. 8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// | risk-based capital ratio(2) .............................................. | 3806 (27,947)| ////////////////// | 8. 9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// | items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// | item 12 plus items 4.b and 4.c) .......................................... | 3807 16,050,544 | ////////////////// | 9. -------------------------------------------
------------------------------------------ | (Column A) | (Column B) | | Notional | Replacement | | Principal | Cost | Memorandum | Value | (Market Value) | -------------------- -------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | - ------------------------------------------------------------------------------ -------------------- -------------------- 1. Notional principal value and replacement cost of interest rate and | ////////////////// | ////////////////// | foreign exchange rate contracts (in column B, report only those | ////////////////// | ////////////////// | contracts with a positive replacement cost): | ////////////////// | ////////////////// | a. Interest rate contracts (exclude futures contracts) ................... | ////////////////// | 3808 24,909 | M.1.a. (1) With a remaining maturity of one year or less ..................... | 3809 900,000 | ////////////////// | M.1.a.(1) (2) With a remaining maturity of over one year ........................ | 3812 2,770,750 | ////////////////// | M.1.a.(2) b. Foreign exchange rate contracts (exclude contracts with an original | ////////////////// | ////////////////// | maturity of 14 days or less and futures contracts) .................... | ////////////////// | 3811 182,605 | M.1.b. (1) With a remaining maturity of one year or less ..................... | 3812 6,314,817 | ////////////////// | M.1.b.(1) (2) With a remaining maturity of over one year ........................ | 3813 0 | ////////////////// | M.1.b.(2) -------------------------------------------
- --------------- (1) Do not report in column B the risk-weighted amount of assets reported in column A. (2) Until a final rule on the regulatory capital treatment of net unrealized holding gains (losses) on available-for-sale securities that is applicable to the reporting bank has taken effect, a bank that has adopted FASB Statement No. 115 should include the difference between the fair value and the amortized cost of its available-for-sale securities in item 8 and report the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g., futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital. 33 58 Legal Title of Bank: SHAWMUT BANK CONNECTICUT, Call Date: 6/30/94 NATIONAL ASSOCIATION ST-BK: 09-0590 Address: 777 MAIN STREET FFIEC 031 City, State Zip: HARTFORD, CT, 06115 Page RC-24 FDIC Certificate No.: 02499 OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS REPORTED IN THE REPORTS OF CONDITION AND INCOME at close of business on June 30, 1994 SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION HARTFORD , Connecticut - ---------------------------------------------- ----------- ----------- Legal Title of Bank City State The management of the reporting bank may, if it wishes, submit a brief narrative statement on the amounts reported in the Reports of Condition and Income. This optional statement will be made available to the public, along with the publicly available data in the Reports of Condition and Income, in response to any request for individual bank report data. However, the information reported in column A and in all of Memorandum item 1 of Schedule RC-N is regarded as confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a statement may check the "No comment" box below and should make no entries of any kind in the space provided for the narrative statement; i.e., DO NOT enter in this space such phrases as "No statement," "Not applicable," "N/A," "No comment," and "None." The optional statement must be entered on this sheet. The statement should not exceed 100 words. Further, regardless of the number of words, the statement must not exceed 750 characters, including punctuation, identation, and standard spacing between words and sentences. If any submission should exceed 750 characters, as defined, it will be truncated at 750 characters with no notice to the submitting bank and the truncated statement will appear as the bank's statement both on agency computerized records and in computer-file releases to the public. All information furnished by the bank in the narrative statement must be accurate and not misleading. Appropriate efforts shall be taken by the submitting bank to ensure the statement's accuracy. The statement must be signed, in the space provided below, by a senior officer of the bank who thereby attests to its accuracy. If, subsequent to the original submission, material changes are submitted for the data reported in the Reports of Condition and Income, the existing narrative statement will be deleted from the files, and from disclosure; the bank, at its option, may replace it with a statement, under signature, appropriate to the amended data. The optional narrative statement will appear in agency records and in release to the public exactly as submitted (or amended as described in the preceding paragraph) by the management of the bank (except for the truncation of statements exceeding the 750-character limit described above). THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK. - ------------------------------------------------------------------------------- No comment /X/ (RCON 6979) C471 C472 BANK MANAGEMENT STATEMENT (please type or print clearly): (TEXT 6980) [signature] JULY 29, 1994 ---------------------- ------------- Signature of Executive Date of Officer of Bank Signature 34 EX-99.1 30 LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 p.m., NEW YORK CITY TIME, ON __________, 1995 (AS SUCH DATE AND TIME MAY BE EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION, THE "EXPIRATION DATE"). ENVIRODYNE INDUSTRIES, INC. 12% Series A Senior Secured Notes due 2000 and Floating Rate Series C Senior Secured Notes due 2000 PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS If you desire to accept the Exchange Offer, this Letter of Transmittal should be completed, signed, and submitted to: By Overnight Carrier: By Facsimile: Shawmut Bank Connecticut, N.A. Shawmut Bank Connecticut, N.A. Corporate Trust Operations, MSN 224 Attn: Patricia Williams 777 Main Street, Lower Level (203) 986-7908 Hartford, Connecticut 06115 Attn: Patricia Williams DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THAT SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. The undersigned hereby acknowledges receipt of the Prospectus dated _____________, 1995 (the "Prospectus") of Envirodyne Industries, Inc., a Delaware corporation ("Envirodyne" or the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"), that together constitute Envirodyne's offer (the "Exchange Offer") to exchange (i) $1,000 principal amount of its new 12% Series B Senior Secured Notes due 2000 (the "New Series B Notes") for each $1,000 principal amount of its outstanding 12% Series A Senior Secured Notes due 2000 (the "Old Series A Notes"), and (ii) $1,000 principal amount of its new Floating Rate Series D Senior Secured Notes due 2000 (the "New Series D Notes" and collectively with the New Series B Notes, the "New Notes") for each $1,000 principal amount of its outstanding Floating Rate Series C Senior Secured Notes due 2000 (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus. The undersigned hereby tenders the Old Notes described in Box 1 below (the "Tendered Old Notes") pursuant to the terms and conditions described in the Prospectus and this Letter of Transmittal. The undersigned is the registered owner of all the Tendered Old Notes and the undersigned represents that it has received from each beneficial owner of Tendered Old Notes ("Beneficial Owners") a duly completed and executed form of "Instruction to Registered Holder from Beneficial Owner" accompanying 2 this Letter of Transmittal, instructing the undersigned to take the action described in this Letter of Transmittal. This Letter of Transmittal is to be used whether the Old Notes are to be physically delivered herewith, or whether guaranteed delivery procedures or book-entry delivery procedures are being used, pursuant to the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Procedures for Tendering." If delivery of Tendered Old Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company ("DTC"), this Letter of Transmittal need not be manually executed; provided, however, that tenders of Old Notes must be effected in accordance with the procedures mandated by DTC's Automated Tender Offer Program ("ATOP") and the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Exchanging Book Entry Old Notes." If a registered holder desires to tender Old Notes and such Old Notes are not immediately available or time will not permit all documents required by the Exchange Offer to reach the Exchange Agent (or such registered holder is unable to complete the procedure for book-entry transfer on a timely basis) prior to the Expiration Date, a tender may be effected in accordance with the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See instruction 2. Subject to, and effective upon, the acceptance for exchange of the Tendered Old Notes, the undersigned hereby exchanges, assigns, and transfers to, or upon the order of, Envirodyne all right, title, and interest in, to, and under the Tendered Old Notes. Please issue the New Notes exchanged for Tendered Old Notes in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions" below (Box 3), please send or cause to be sent the certificates for New Notes (and accompanying documents, as appropriate) to the undersigned at the address shown below in Box 1. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney in fact of the undersigned with respect to the Tendered Old Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver the Tendered Old Notes to the Company or cause ownership of the Tendered Old Notes to be transferred to, or upon the order of, the Company, on the books of the registrar for the Old Notes and deliver all accompanying evidences of transfer and authenticity to, or transfer ownership of such Old Notes on the account books maintained by DTC to, or upon the order of, the Company upon receipt by the Exchange Agent, as the undersigned's agent, of the New Notes to which the undersigned is entitled upon the acceptance by the Company of the Tendered Old Notes pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise exercise all rights of beneficial ownership of the Tendered Old Notes, all in accordance with the terms of the Exchange Offer. The undersigned understands that tenders of Old Notes pursuant to the procedures described under the caption "The Exchange Offer -- Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and Envirodyne upon the terms and subject to the conditions of the Exchange Offer, subject only to withdrawal of such tenders on the terms set forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal of Tenders." All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any Beneficial Owner(s), and every obligation of the undersigned or any Beneficial Owners hereunder shall be binding upon the heirs, representatives, successors, and assigns of the undersigned and such Beneficial Owner(s). -2- 3 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign, and transfer the Tendered Old Notes and that Envirodyne will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, and adverse claims when the Tendered Old Notes are acquired by Envirodyne as contemplated herein. The undersigned and each Beneficial Owner will, upon request, execute and deliver any additional documents reasonably requested by the Company as necessary or desirable to complete and give effect to the transactions contemplated hereby. The undersigned hereby represents and warrants that the information set forth in Box 2 is true and correct. By accepting the Exchange Offer, the undersigned hereby represents and warrants that (i) the New Notes to be acquired by the undersigned and any Beneficial Owner(s) in connection with the Exchange Offer are being acquired by the undersigned and any Beneficial Owner(s) in the ordinary course of business of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each Beneficial Owner are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the New Notes, and (iii) the undersigned and each Beneficial Owner acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes must comply with the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the "Securities Act"), in connection with a secondary resale transaction of the New Notes acquired by such person and cannot rely on the position of the Staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters that are discussed in the section of the Prospectus entitled "The Exchange Offer--Resales of the New Notes." The undersigned and each Beneficial Owner understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the Commission. Except as otherwise disclosed to the Company in writing, the undersigned hereby represents and warrants that neither it nor any Beneficial Owner(s) is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. If the undersigned or any Beneficial Owner(s) is a "broker" or "dealer" registered under the Exchange Act, the undersigned understands and acknowledges that it and any such Beneficial Owner(s) may be deemed to be an "underwriter" within the meaning of the Securities Act and, therefore, must deliver a prospectus relating to the New Notes in connection with any resales by it or any Beneficial Owner(s) of New Notes acquired for its own account or the account of any Beneficial Owner(s) in the Exchange Offer. If the undersigned or any Beneficial Owner(s) is a "broker" or "dealer" that acquired Old Notes for its own account pursuant to its market-making or other trading activities (other than Old Notes acquired directly from the Company), the undersigned and any Beneficial Owner(s) may use the Prospectus to satisfy the prospectus delivery requirements of the Securities Act. Notwithstanding the foregoing, the undersigned does not thereby admit that it or any Beneficial Owner(s) is an "underwriter" within the meaning of the Securities Act. -3- 4 PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE BOXES BOX 1 DESCRIPTION OF OLD NOTES TENDERED (ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
Aggregate Principal Name(s) and address(es) of Registered Old Note Series of Amount Aggregate Holder(s), exactly as name(s) appear(s) on Old Note Old Notes Certificate Represented Principal Certificate(s) (Series A or Number(s) by Amount (Please fill in, if blank) Series C) of Old Notes Certificate(s) Tendered*
* The minimum permitted tender is $1,000 in principal amount of Old Notes. All other tenders must be in integral multiples of $1,000 of principal amount. Unless otherwise indicated in this column, the principal amount of all Old Note Certificates identified in this Box 1 or delivered to the Exchange Agent herewith shall be deemed tendered. See Instruction 4. BOX 2 BENEFICIAL OWNER(S)
State of Principal Residence of Each Beneficial Owner of Principal Amount of Tendered Old Notes Held for Account Tendered Old Notes of Beneficial Owner
If delivery of Old Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC, then tenders of Old Notes must be effected in accordance with the procedures mandated by DTC's Automated Tender Offer Program and the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Exchanging Book Entry Old Notes." -4- 5 BOX 3 SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5, 6 AND 7) To be completed ONLY if the New Notes exchanged for the Old Notes and untendered Old Notes are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown above. Mail New Note(s) and any untendered Old Notes to: Name(s): ________________________________________________________________________________ (please print) Address: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (include Zip Code) Tax Identification or Social Security No.: BOX 4 USE OF GUARANTEED DELIVERY [ ] CHECK HERE ONLY IF OLD NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF GUARANTEED DELIVERY. See Instruction 2. If this box is checked, please provide the following information: Name(s) of Registered Holder(s): ______________________________________________ _______________________________________________________________________________ Date of Execution of Notice of Guaranteed Delivery: ___________________________ Name of Institution which Guaranteed Delivery: ________________________________ -5- 6 BOX 5 TENDERING HOLDER SIGNATURE (SEE INSTRUCTIONS 1 AND 5) IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 X _________________________________________ Signature Guarantee (If required by Instruction 5) X _________________________________________ Authorized Signature (Signature of Registerd Holder(s) or Authorized Signatory) X _____________________________________ Note: Note: The above lines must be signed by the Name: _________________________________ registered holder(s) of Old Notes as their name(s) (please print) appear(s) on the Old Notes or by person(s) authorized to become registered holder(s) (which must be transmitted Title: __________________________________ with this Letter of Transmittal). If signature is by a trustee, executor, administrator, guardian, attorney- Name of Firm: __________________________ in-fact officer, or other person acting in a fiduciary (Must be an Eligible Institution or representative capacity, such person must set as defined in Instruction 2) forth his or her full title below. See Instruction 5. Address: _______________________________ Name(s): ______________________________________ _______________________________ ______________________________________ _______________________________ Capacity: _____________________________________ (include Zip Code) _____________________________________ Street Address: _______________________________ Area Code and Telephone Number: __________________________________ _______________________________ __________________________________ (include Zip Code) _______________________________ Area Code and Telephone Number: __________________________________ Dated: _______________________________ Tax Identification of Social Security Number: __________________________________
-6- 7 397 4-94 1041-15 SUBSTITUTE FORM W-9 (REV. MARCH 1994) REQUEST FOR TAXPAYER GIVE FORM TO THE Department of the Treasury IDENTIFICATION NUMBER AND CERTIFICATION REQUESTER. DO NOT Internal Revenue Service SEND TO THE IRS. - ------------------------------------------------------------------------------------------------------------------------------------ PLEASE PRINT OR TYPE Name (if joint names, list first and circle the name of the person or entity whose number you enter in Part I below. See instructions on Page 2 if your name has changed.) - ------------------------------------------------------------------------------------------------------------------------------------ Business name (Sale proprietors see instructions on page 2.) - ------------------------------------------------------------------------------------------------------------------------------------ Please check appropriate box: / / Individual Sale proprietor / / Corporation / / Partnership / / Other ____________________ - ------------------------------------------------------------------------------------------------------------------------------------ Address (number, street, and apt. or suite no.) Requestor's name and address (optional) - ---------------------------------------------------------------- City, State, and ZIP code - ------------------------------------------------------------------------------------------------------------------------------------ PART I TAXPAYER IDENTIFICATION NUMBER (TIN) List account number(s) here (optional) - ------------------------------------------------------------------------------ Enter your TIN in the appropriate box. For Social Security Number individuals, this is your social security number _____-____-________ (SSN). For sole proprietors, see the enclosed guidelines. For other entities, it is your OR ------------------------------------------------------ employer identification number (EIN). If you do PART II For Payees Exempt From Backup not have a number, see How To Get a TIN below. Employer identification Withholding (See the enclosed guidelines number on page 2) NOTE: If the account is in more than one name, _____-____-________ ------------------------------------------------------ see the chart on the enclosed guidelines on whose number to enter. - ------------------------------------------------------------------------------------------------------------------------------------ PART III CERTIFICATION - ------------------------------------------------------------------------------------------------------------------------------------ Under penalties of perjury, I certify that: 1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and 2. I am not subject to the backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS. -- You must cross out Item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. For real estate transactions, Item 2 does not apply. For mortgage interest paid, the acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct TIN. (Also see Part III Instructions on page 2.) - ------------------------------------------------------------------------------------------------------------------------------------ Sign Here Signature Date - ------------------------------------------------------------------------------------------------------------------------------------
-7- 8 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Old Notes. The Tendered Old Notes, as well as a properly completed and duly executed copy of this Letter of Transmittal, a Substitute Form W-9 (or facsimile thereof) and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date; provided, however that book-entry transfers of Old Notes may be effected in accordance with the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Exchanging Book-Entry Old Notes." The method of delivery of certificates for Old Notes and all other required documents is at the election and risk of the tendering holder and delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. Neither Envirodyne nor the Exchange Agent is under any obligation to notify any tendering holder of the Company's acceptance of Tendered Old Notes prior to the Closing of the Exchange Offer. 2. Guaranteed Delivery Procedures. Holders who wish to tender their Old Notes but whose Old Notes are not immediately available and who cannot deliver their Old Notes, Letter of Transmittal and any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth below, including completion of Box 4. Pursuant to such procedures: (i) such tender must be made by or through a firm which is a member of one of the following signature guarantee programs: the Securities Transfer Agents Medallion Program (STAMP), the New York Stock Exchange Medallion Signature Program (MSP) and the Stock Exchange Medallion Program (SEMP) (an "Eligible Institution") and the Notice of Guaranteed Delivery must be signed by the holder; (ii) prior to the Expiration Date, the Exchange Agent must have received from the holder and the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail, or hand delivery setting forth the name and address of the holder, the certificate number or numbers of the Tendered Old Notes (except in the case of book-entry tenders), and the principal amount of Tendered Old Notes, stating that the tender is being made thereby and guaranteeing that, within five business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof), together with the Tendered Old Notes and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed documents required by this Letter of Transmittal and the Tendered Old Notes in proper form for transfer (or a Book-Entry Confirmation with respect to such Old Notes) must be received by the Exchange Agent within five business days after the Expiration Date. Any holder who wishes to tender Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery relating to such Old Notes prior to the Expiration Date. Failure to complete the guaranteed delivery procedures outlined above will not, of itself, affect the validity or effect a revocation of any Letter of Transmittal form properly completed and executed by an Eligible Holder who attempted to use the guaranteed delivery process. 3. Beneficial Owner Instructions to Registered Holders. Only a holder in whose name the Old Notes are registered on the books of the registrar (or the legal representative or attorney-in-fact of such registered holder) may execute and deliver this Letter of Transmittal. Any Beneficial Owner of Old -8- 9 Notes who is not the registered holder must arrange promptly with the registered holder to execute and deliver this Letter of Transmittal on his or her behalf through the execution and delivery to the registered holder of the Instructions to Registered Holder from Beneficial Owner form accompanying this Letter of Transmittal. 4. Partial Tenders. Tenders of Old Notes will be accepted only in integral multiples of $1,000 in principal amount. If less than the entire principal amount of Old Notes is tendered, the tendering holder should fill in the principal amount tendered in the column labeled "Aggregate Principal Amount Tendered" of the box entitled "Description of Old Notes Tendered" (Box 1) above. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Old Notes is not tendered, Old Notes for the principal amount of Old Notes not tendered and New Notes exchanged for any Old Notes tendered will be sent to the holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal, as soon as practicable following the Expiration Date. 5. Signatures on the Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed by the registered holder(s) of the Tendered Old Notes, the signature must correspond with the name(s) as written on the face of the Tendered Old Notes without alteration, enlargement, or any change whatsoever. If any of the Tendered Old Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any Tendered Old Notes are held in different names on several Old Notes, it will be necessary to complete, sign, and submit as many separate copies of the Letter of Transmittal documents as there are names in which Tendered Old Notes are held. If this Letter of Transmittal is signed by the registered holder(s) of Tendered Old Notes tendered and New Notes are to be issued and any untendered principal amount of Old Notes is to be reissued to the registered holder(s), the registered holder(s) need not and should not endorse any Tendered Old Notes nor provide a separate bond power. In any other case, such registered holder(s) must either properly endorse the Old Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signature(s) on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the Registered Holder(s) of any Old Notes, the Tendered Old Notes must be endorsed or accompanied by appropriate bond powers, in each case, signed as the name of the registered holder(s) appears on the Old Notes, with the signature on the endorsement or bond power guaranteed by an Eligible Institution along with the other documents required upon transfer by the Purchase Agreements. If this Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with this Letter of Transmittal. Endorsements on Old Notes or signatures on bond powers required by this Instruction 5 must be guaranteed by an Eligible Institution. -9- 10 Signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution unless the Tendered Old Notes are tendered (i) by a Registered Holder who has not completed the box set forth herein entitled "Special Delivery Instructions" (Box 3) or (ii) by an Eligible Institution. 6. Special Delivery Instructions. Tendering Eligible Holders should indicate, in the applicable box (Box 3), the name and address to which the New Notes and/or substitute Old Notes for principal amounts not tendered or not accepted for exchange are to be sent, if different from the name and address of the person signing this Letter of Transmittal. 7. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the sale and transfer of Old Notes to the Company pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the transfer and sale of Old Notes to the Company pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or on any other person) will be payable by the tendering holder and billed directly to such tendering holder. The Company will not bill a holder for any transfer taxes if satisfactory evidence of payment of such taxes or exemption from taxes is submitted with this Letter of Transmittal. With respect to transfer taxes payable by the Company, as provided in this Instruction 7, it will not be necessary for transfer tax stamps to be affixed to the Old Notes listed in this Letter of Transmittal. 8. Tax Identification Number. Federal income tax law requires that a holder of Old Notes or New Notes must provide Envirodyne (as payor) with its correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual, is his or her social security number. If Envirodyne is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service. To prevent backup withholding with respect to payments of interest on the New Notes, each tendering holder must provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that (i) the holder is exempt from backup withholding, or (ii) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends, or (iii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the New Notes will be registered in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for information on which TIN to report. Certain holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. Envirodyne reserves the right in its sole discretion to take whatever steps are necessary to comply with Envirodyne's obligation regarding backup withholding. Any amount paid as backup withholding will be creditable against a holder's tax liability. 9. Validity of Tenders. All questions as to the validity, form, eligibility (including time of receipt), and acceptance of Tendered Old Notes will be determined by Envirodyne in its sole discretion, which determination will be final and binding. Envirodyne reserves the right to reject any and all Old Notes not validly tendered or any Old Notes Envirodyne's acceptance of which would, in the opinion of Envirodyne or its counsel, be unlawful. Envirodyne also reserves the right to waive any conditions of the Exchange Offer or defects or irregularities in tenders of Old Notes as to any ineligibility of any -10- 11 holder who seeks to tender Old Notes in the Exchange Offer. The interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) by Envirodyne shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as Envirodyne shall determine. Envirodyne will use reasonable efforts to give notification of defects or irregularities with respect to tenders of Old Notes, but shall not incur any liability for failure to give such notification. 10. Waiver of Conditions. Envirodyne reserves the absolute right to amend, waive, or modify specified conditions in the Exchange Offer in the case of any Tendered Old Notes. 11. No Conditional Tender. No alternative, conditional, irregular, or contingent tender of Old Notes or transmittal of this Letter of Transmittal will be accepted. 12. Mutilated, Lost, Stolen, or Destroyed Old Notes. Any tendering holder whose Old Notes have been mutilated, lost, stolen, or destroyed should contact the Exchange Agent at the address indicated above for further instruction. 13. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus may be directed to the Exchange Agent at the address and telephone number specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company, or other nominee for assistance concerning the Exchange Offer. 14. Acceptance of Tendered Old Notes and Issuance of New Notes; Return of Old Notes. Subject to the terms and conditions of the Exchange Offer, Envirodyne will accept for exchange all validly tendered Old Notes as soon as practicable after the Expiration Date and will issue New Notes therefor as soon as practicable thereafter. For purposes of the Exchange Offer, Envirodyne shall be deemed to have accepted tendered Old Notes when, as and if Envirodyne has given written or oral notice thereof to the Exchange Agent. If any Tendered Old Notes are not exchanged pursuant to the Exchange Offer for any reason, such unexchanged Old Notes will be returned, without expense, to the undersigned at the address shown below or at a different address as may be indicted herein under "Special Delivery Instructions." 15. Withdrawal. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders". -11- 12 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. - --Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification number have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
Give the SOCIAL Give the EMPLOYER For this type of account SECURITY number of -- For this type of account IDENTIFICATION number of-- 1. Individual The individual 5. Sole proprietorship The Owner3 account 2. Two or more individuals The actual owner of the 6. A valid trust, estate, Legal entity (Do not (joint account) account or, if combined or pension furnish the identifying funds, the first trust number of the personal individual on the representative or trustee account1 unless the legal entity itself is not designated in the account title.)4 3. Custodian account of a The minor2 7. Corporate The Corporation minor (Uniform Gift to Minors Act) 4. a. The usual revocable The grantor-trustee1 8. Association, club, The organization savings trust account religious, charitable, (grantor is also trustee) educational, or other tax-exempt organization b. So-called trust account The actual owner 1 that is not a legal or valid trust under State law 9. Partnership The partnership 10. A broker or registered The broker or nominee nominee 11. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or person) that receives agricultural program payments
1 List first and circle the name of the person whose number you furnish. 2 Circle the minor's name and furnish the minor's social security number. 3 You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your SSN or EIN. 4 List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name issued. -12- 13 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5. Application or a Social Security Number Card, for Form SS-4. Application for Employer identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding Payees specifically exempted from backup withholding on most payments include the following: - - A Corporation - - A financial institution - - An organization exempt from tax under Section 501(a), or, an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a). - - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payment of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt interest dividends under section 852). - - Payments described in section 6049(b)(5) to nonresident aliens. - - Payments on tax free covenant bonds under section 1451. - - Payments made by certain foreign organizations. Exempt payee described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PENALTIES FAILURE TO FURNISH TIN. --If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. --If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. CRIMINAL PENALTY FOR FALSIFYING INFORMATION. --Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. MISUSE OF TINS. --If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. PRIVACY ACT NOTICE. --Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. -13- EX-99.2 31 NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF 12% SERIES A SENIOR SECURED NOTES DUE 2000 AND FLOATING RATE SERIES C SENIOR SECURED NOTES DUE 2000 OF ENVIRODYNE INDUSTRIES, INC. As set forth in the Exchange Offer (as defined below), this form or one substantially equivalent hereto or the electronic form used by The Depository Trust Company for this purpose must be used to accept the Offer (as defined below) if certificates for (i) 12% Series A Senior Secured Notes due 2000 (the "Old Series A Notes") or (ii) Floating Rate Series C Senior Secured Notes due 2000 (the "Old Series C Notes") of Envirodyne Industries, Inc. (the "Company") are not immediately available or if a holder of the Old Notes is unable to complete the procedure for book entry transfer on a timely basis, or if time will not permit all required documents to reach the Exchange Agent prior to 5:00 p.m. New York City time on ___________, 1995 unless extended (the "Expiration Date"). This form or a facsimile hereof may be delivered by hand or sent by telegram, facsimile transmission or mail to the Exchange Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to them in the Exchange Offer. The Exchange Agent is: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION By Overnight Carrier: By Facsimile: Shawmut Bank Connecticut, N.A. Shawmut Bank Connecticut, N.A. Corporate Trust Operations, MSN 224 Attn: Patricia Williams 777 Main Street, Lower Level (203) 986-7908 Hartford, Connecticut 06115 Attn: Patricia Williams For information with respect to the Offer call the Corporate Trust Department of the Exchange Agent Phone No. (203) 986-1271 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution (as defined therein) under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders the Old Notes indicated below pursuant to the guaranteed delivery procedures set forth in the accompanying Prospectus dated __________, 1995 (the "Prospectus") and in the related Letter of Transmittal (which together with the Prospectus constitute the "Exchange Offer"), receipt of which is hereby acknowledged. 2 The undersigned hereby represents and warrants that the undersigned accepts the terms and conditions of the Exchange Offer, has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby, and that when the same are accepted for exchange by the Company, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be reasonably necessary or desirable to complete the sale, assignment and transfer of the Old Notes tendered hereby. The undersigned acknowledges that this Exchange Offer is being made in reliance on an interpretation by the staff of the Securities and Exchange Commission that the New Notes issued pursuant to the terms of the Prospectus in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the company within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), or a "broker" or "dealer" registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distribution of such New Notes. The undersigned represents that (i) the New Notes acquired pursuant to the Offer are being obtained in the ordinary course of such holder's business, (ii) such holder is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of such New Notes, and (iii) such holder is not an "affiliate," as defined under Rule 405 of the Securities Act, of the Company or, if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker or dealer registered under the Exchange Act that acquired Old Notes for its own account pursuant to its market-making or other trading activities (other than Old Notes acquired directly from the Company), the undersigned understands and acknowledges that it may be deemed to be an "underwriter" within the meaning of the Securities Act and, therefore, must deliver a prospectus relating to the New Notes in connection with any resales by it of New Notes acquired for its own account in the Exchange Offer. Notwithstanding the foregoing, the undesigned does not thereby admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned understands and acknowledges that the Company reserves in its sole discretion to purchase or make offers for any Old Notes that remain outstanding subsequent to the Expiration Date or, as set forth in the Prospectus under the caption "The Exchange Offer - Conditions of the Exchange Offer," to terminate the Exchange Offer and, to the extent permitted by applicable law, purchase Old Notes in the open market in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offer. THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE RIGHT NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS. Names(s) of Record Holder(s): __________________________________________________ ________________________________________________________________________________ Please Print Address(es): ___________________________________________________________________ ________________________________________________________________________________ -2- 3 Area Code and Tel. No(s): ______________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Signature(s)
Certificate No(s) Principal Amount (if available) Tendered ----------------- ---------------- _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________
GUARANTEE (Not to be used for signature guarantee) The undersigned, a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, hereby guarantees delivery to the Exchange Agent of certificates for the Old Notes tendered hereby, in proper form for transfer with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal, all within five (5) business days after the Expiration Date. The undersigned acknowledges that it must communicate the guarantee to the Exchange Agent and must deliver the Letter of Transmittal and certificates for Old Notes to the Exchange Agent within the time period shown hereon. Failure to do so could result in a financial loss to the undersigned. _____________________________________________ _____________________________________________ Firm Authorized Signature _____________________________________________ Name ________________________________________ Address (Please Type or Print) _____________________________________________ Title _______________________________________ Zip Code Dated ___________________________________, 1994 Area Code and Tel. No. _____________________________________________
DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM -- THEY SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL. -3- EX-99.3 32 FORM OF LETTER TO CLIENTS 1 EXHIBIT 99.3 ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% SERIES B SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE 12% SERIES A SENIOR SECURED NOTES DUE 2000 AND ITS FLOATING RATE SERIES D SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE FLOATING RATE SERIES C SENIOR SECURED NOTES DUE 2000 To Our Clients: Enclosed for your consideration are the Prospectus, dated __________, 1995 (the "Prospectus") and the related Letter of Transmittal (which together with the Prospectus constitute the "Offer") in connection with the offer by Envirodyne Industries, Inc., a Delaware corporation (the "Company"), to exchange its (i) 12% Series B Senior Secured Notes due 2000 ( the "New Series B Notes") for any and all of the outstanding 12% Series A Senior Secured Notes due 2000 (the "Old Series A Notes"), and (ii) Floating Rate Series D Senior Secured Notes due 2000 (the "New Series D Notes" and collectively with the New Series B Notes, the "New Notes") for any and all outstanding Floating Rate Series C Senior Secured Notes due 2000 (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"), upon the terms and subject to the conditions set forth in the Offer. We are the Registered Holders of Old Notes held for your account. An exchange of the Old Notes can be made only by us as the Registered Holders and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to exchange the Old Notes held by us for your account. The Offer provides a procedure for holders to tender by means of guaranteed delivery. We request information as to whether you wish us to exchange any or all of the Old Notes held by us for your account upon the terms and subject to the conditions of the Offer. Your attention is directed to the following: 1. The New Notes will be exchanged for the Old Notes at the rate of $1,000 principal amount of New Notes in a series for each $1,000 principal amount of Old Notes of the series. Interest will accrue from the last June 15 or December 15 on which interest was paid on the Old Notes, or, if no interest has been paid on the Old Notes, from June 20, 1995. The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes (which they replace) except that the New Notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"). 2. Based on an interpretation by the staff of the Securities and Exchange Commission (the "SEC"), New Notes issued pursuant to the Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or a "broker" or "dealer" registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) without compliance with the registration and prospectus 2 delivery provisions of the Securities Act provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distribution of such New Notes. See "Shearman & Sterling," SEC No-Action Letter (available July 2, 1993), "Morgan Stanley & Co., Inc.," SEC No-Action Letter (available June 5, 1991) and "Exxon Capital Holdings Corporation," SEC No-Action Letter (available May 13, 1988). 3. The Offer is not conditioned on any minimum principal amount of Old Notes being tendered except that Old Notes may be tendered only in integral multiples of $1,000. 4. Notwithstanding any other term of the Offer, the Company will not be required to accept for exchange, or exchange New Notes for, any Old Notes not theretofore accepted for exchange, and may terminate or amend the Offer as provided herein before the acceptance of such Old Notes, if any of the conditions described in the Prospectus under "The Exchange Offer -- Conditions of the Exchange Offer" exist. 5. Tendered Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on ___________, 1995 if such Old Notes have not previously been accepted for exchange pursuant to the Offer. 6. Any transfer taxes applicable to the exchange of the Old Notes pursuant to the Offer will be paid by the Company, except as otherwise provided in Instruction 7 of the Letter of Transmittal. If you wish to have us tender any or all of your Old Notes, please so instruct us by completing, detaching and returning to us the instruction form attached hereto. An envelope to return your instructions is enclosed. If you authorize a tender of your Old Notes, the entire principal amount at maturity of Old Notes held for your account will be tendered unless otherwise specified on the instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF THE OLD NOTES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY PROVISION OF ANY APPLICABLE SECURITY LAW. -2- 3 ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% SERIES B SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE 12% SERIES A SENIOR SECURED NOTES DUE 2000 AND ITS FLOATING RATE SERIES D SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE FLOATING RATE SERIES C SENIOR SECURED NOTES DUE 2000 The undersigned acknowledge(s) receipt of your letter and the enclosed Prospectus and the related Letter of Transmittal, in connection with the offer by the Company to purchase the Old Notes. This will instruct you to tender the principal amount of Old Notes indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal. The undersigned represents that (i) the New Notes acquired pursuant to the Offer are being obtained in the ordinary course of such holder's business, (ii) such holder is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of such New Notes, and (iii) such holder is not an "affiliate," as defined under Rule 405 of the Securities Act, of the Company or, if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a "broker" or "dealer" registered under the Exchange Act that acquired Old Notes for its own account pursuant to its market-making or other trading activities (other than Old Notes acquired directly from the Company), the undersigned understands and acknowledges that it may be deemed to be an "underwriter" within the meaning of the Securities Act and, therefore, must deliver a prospectus relating to the New Notes in connection with any resales by it of New Notes acquired for its own account in the Exchange Offer. Notwithstanding the foregoing, the undersigned does not thereby admit that it is an "underwriter" within the meaning of the Securities Act. Sign Here ................................... Signature(s) -3- EX-99.4 33 FORM OF LETTER TO BROKERS, DEALERS 1 EXHIBIT 99.4 ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% SERIES B SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE 12% SERIES A SENIOR SECURED NOTES DUE 2000 AND ITS FLOATING RATE SERIES D SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE FLOATING RATE SERIES C SENIOR SECURED NOTES DUE 2000 __________, 1995 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing herewith an offer by Envirodyne Industries, Inc., a Delaware corporation (the "Company"), to exchange its (i) 12% Series B Senior secured Notes due 2000 (the "New Series B Notes") for any and all of the outstanding 12% Series A Senior Secured Notes due 2000 (the "Old Series A Notes"), and (ii) Floating Rate Series D Senior Secured Notes due 2000 (the "New Series D Notes" and collectively with the New Series B Note, the "New Notes") for any and all outstanding Floating Rate Series C Senior Secured Notes due 2000 (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"), upon the terms and subject to the conditions set forth in the accompanying Prospectus, dated __________, 1995 (the "Prospectus"), and related Letter of Transmittal (which together with the Prospectus constitutes the "Offer"). The Offer provides a procedure for holders to tender the Old Notes by means of guaranteed delivery. The Offer will expire at 5:00 p.m., New York City time, on ___________, 1995, unless extended (the "Expiration Date"). Tendered Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, if such Old Notes have not previously been accepted for exchange pursuant to the Offer. Based on an interpretation by the staff of the Securities and Exchange Commission (the "SEC"), New Notes issued pursuant to the Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company with the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act") or a "broker" or "dealer" registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such New Notes are acquired in the ordinary course of such holder's business and such holders have no arrangement with any person to participate in the distribution of such New Notes. See "Shearman & Sterling," SEC No- Action Letter (available July 2, 1993), "Morgan Stanley & Co., Inc.," SEC No-Action Letter (available June 5, 1991) and "Exxon Capital Holding Corporation," SEC No-Action Letter (available May 13, 1988). The Offer is not conditioned on any minimum principal amount of Old Notes being tendered except that Old Notes may be tendered only in integral multiples of $1,000. Notwithstanding any other term of the Offer, the Company will not be required to accept for exchange, or exchange New Notes for, any Old Notes not theretofore accepted for exchange, and may terminate or amend the 2 Offer as provided herein before the acceptance of such Old Notes, if any of the conditions described in the Prospectus under "The Exchange Offer - Conditions of the Exchange Offer" exist. THE COMPANY RESERVES THE RIGHT NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS. For your information and for forwarding to your clients for whom you hold Old Notes registered in your name or in the name of your nominee, we are enclosing the following documents: 1. A Prospectus, dated __________, 1995. 2. A Letter of Transmittal for your use and for the information of your clients. 3. A printed form of letter which may be sent to your clients for whose accounts you hold Old Notes registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 4. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 of the Internal Revenue Service (included in Letter of Transmittal instruction number 8). 3 ENVIRODYNE INDUSTRIES, INC. OFFER TO EXCHANGE ITS 12% SERIES B SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE 12% SERIES A SENIOR SECURED NOTES DUE 2000 AND ITS FLOATING RATE SERIES D SENIOR SECURED NOTES DUE 2000 FOR ANY AND ALL OF THE FLOATING RATE SERIES C SENIOR SECURED NOTES DUE 2000 __________, 1995 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing herewith an offer by Envirodyne Industries, Inc., a Delaware corporation (the "Company"), to exchange its (i) 12% Series B Senior secured Notes due 2000 (the "New Series B Notes") for any and all of the outstanding 12% Series A Senior Secured Notes due 2000 (the "Old Series A Notes"), and (ii) Floating Rate Series D Senior Secured Notes due 2000 (the "New Series D Notes" and collectively with the New Series B Note, the "New Notes") for any and all outstanding Floating Rate Series C Senior Secured Notes due 2000 (the "Old Series C Notes" and collectively with the Old Series A Notes, the "Old Notes"), upon the terms and subject to the conditions set forth in the accompanying Prospectus, dated __________, 1995 (the "Prospectus"), and related Letter of Transmittal (which together with the Prospectus constitutes the "Offer"). The Offer provides a procedure for holders to tender the Old Notes by means of guaranteed delivery. The Offer will expire at 5:00 p.m., New York City time, on ___________, 1995, unless extended (the "Expiration Date"). Tendered Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, if such Old Notes have not previously been accepted for exchange pursuant to the Offer. Based on an interpretation by the staff of the Securities and Exchange Commission (the "SEC"), New Notes issued pursuant to the Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company with the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act") or a "broker" or "dealer" registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such New Notes are acquired in the ordinary course of such holder's business and such holders have no arrangement with any person to participate in the distribution of such New Notes. See "Shearman & Sterling," SEC No-Action Letter (available July 2, 1993), "Morgan Stanley & Co., Inc.," SEC No-Action Letter (available June 5, 1991) and "Exxon Capital Holding Corporation," SEC No-Action Letter (available May 13, 1988). The Offer is not conditioned on any minimum principal amount of Old Notes being tendered except that Old Notes may be tendered only in integral multiples of $1,000. Notwithstanding any other term of the Offer, the Company will not be required to accept for exchange, or exchange New Notes for, any Old Notes not theretofore accepted for exchange, and may terminate or amend the 4 Offer as provided herein before the acceptance of such Old Notes, if any of the conditions described in the Prospectus under "The Exchange Offer - Conditions of the Exchange Offer" exist. THE COMPANY RESERVES THE RIGHT NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS. For your information and for forwarding to your clients for whom you hold Old Notes registered in your name or in the name of your nominee, we are enclosing the following documents: 1. A Prospectus, dated __________, 1995. 2. A Letter of Transmittal for your use and for the information of your clients. 3. A printed form of letter which may be sent to your clients for whose accounts you hold Old Notes registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 4. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 of the Internal Revenue Service (included in Letter of Transmittal instruction number 8). WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. Any inquiries you may have with respect to the Offer may be addressed to, and additional copies of the enclosed materials may be obtained from the Corporate Trust and Agency Department of the Exchange Agent at the following telephone number: (202) 986-1271. Very truly yours, ENVIRODYNE INDUSTRIES, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU AS THE AGENT OF THE COMPANY, THE EXCHANGE AGENT OR ANY OTHER PERSON, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. -2- -----END PRIVACY-ENHANCED MESSAGE-----