ENVIRODYNE INDUSTRIES, INC.
000 XXXXXX XXXX, XXXXX 000
XXX XXXXX, XXXXXXXX 00000
July 2, 1998
TO: BT Commercial Corporation, Holders of the First Priority Senior
as Collateral Agent under Secured Notes due 2000
the Intercreditor Agreement CUSIP No. 294037 AJ5
referred to below CUSIP No. 294037 AK2
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
and
The First Priority Notes Indenture Trustee,
The Requisite First Priority Noteholders, the
Majority Noteholders, the LC Agent, the
LC Lender, the Revolving Lender, and the
Requisite Working Capital Lenders, as
defined in the Intercreditor Agreement
referred to below or as otherwise
defined below
Re: Proposed Disposition of Clear Shield National, Inc.
--------------------------------------------------
Ladies and Gentlemen:
Envirodyne Industries, Inc. (the "Company") hereby solicits (the
"Solicitation"), by this letter ("Consent"), consent from (i) the
holders (the "Holders") of First Priority Senior Secured Notes due 2000
(the "Notes") of the Company issued pursuant to an Indenture (the
"Indenture"), dated as of June 20, 1995 and amended as of October 13,
1995 and on September 2, 1997, between the Company and State Street Bank
and Trust Company of Connecticut, N.A. (formerly Fleet National Bank
Connecticut and previously Shawmut Bank Connecticut, National
Association), as trustee (the "Trustee"), to the Company's entering into
a transaction more fully described below (the "Transaction") and the use
of proceeds of the Transaction and (ii) the lenders identified in the
Amended and Restated Credit Agreement (the "Credit Agreement"), dated as
of June 1, 1998, among the Company, the lenders identified therein (the
"Lenders," and collectively with the Holders, the "Creditors") and BT
Commercial Corporation, as Agent, to the Company's entering into the
Transaction and the use of proceeds of the Transaction.
The Company hereby simultaneously solicits, by this same
Solicitation and Consent, consent from (i) the Holders to certain
amendments to, and waivers under, the Indenture and (ii) the Lenders to
certain amendments to, and waivers under, the Credit Agreement.
THIS SOLICITATION COMMENCES ON JULY 2, 1998 AND WILL EXPIRE AT 5:00
P.M., CHICAGO TIME, ON JULY 15, 1998 (THE "SOLICITATION PERIOD") UNLESS
OTHERWISE EXTENDED BY THE COMPANY. THE COMPANY RESERVES THE RIGHT TO
EXTEND THE SOLICITATION AT ANY TIME AND FROM TIME TO TIME, WHETHER OR
NOT EXECUTED COUNTERPARTS TO THIS CONSENT HAVE BEEN RECEIVED, BY WRITTEN
NOTICE TO THE CREDITORS OR BY PRESS RELEASE OR OTHER PUBLIC
ANNOUNCEMENT. IN ADDITION, THE COMPANY RESERVES THE RIGHT, IN ITS SOLE
DISCRETION, SUBJECT TO APPLICABLE LAW, TO TERMINATE THIS SOLICITATION,
BY WRITTEN NOTICE TO THE CREDITORS OR BY PRESS RELEASE OR OTHER PUBLIC
ANNOUNCEMENT, UPON FAILURE TO RECEIVE THE NECESSARY EXECUTED
COUNTERPARTS TO THIS CONSENT.
SUMMARY OF PROPOSED TRANSACTION AND RESTRICTIONS
Reference is hereby made to that certain Intercreditor and
Collateral Agency Agreement, dated as of June 20, 1995 (as may have been
heretofore amended or modified, "Intercreditor Agreement"), among BT
Commercial Corporation, in its capacities as "LC Agent," "LC Lender,"
"Collateral Agent" and "Revolving Lender" thereunder, and the Trustee.
Undefined capitalized terms which are used in this letter shall have the
meanings ascribed to such terms in the Intercreditor Agreement.
The Company has proposed to enter into a stock purchase agreement
(the "Sale Agreement") pursuant to which the Company will sell all of
the issued and outstanding capital stock of Clear Shield National, Inc.,
a California corporation ("Clear Shield"), to an unrelated third party
for cash consideration of $140,000,000, all of which would be payable to
the Company at the closing of such transaction subject to any purchase
price adjustments as provided in such Sale Agreement (the "Clear Shield
Sale"). The execution and delivery by the Company of the Sale Agreement
and the consummation of the Clear Shield Sale have been duly authorized
by a resolution of the Company's Board of Directors, subject to the
effectiveness of the waivers, approvals and authorizations set forth in
this letter. The Company intends to consummate the sale of Clear Shield
as soon as practicable following receipt of consents from the Lenders
under the Credit Agreement and Holders of a majority in aggregate
principal amount of the Notes. Of the $140,000,000 that the Company
expects to receive at the closing of the Clear Shield Sale, the Company
anticipates that its expenses, state and local taxes and Federal
alternative minimum taxes will equal approximately $7,000,000. The
remaining proceeds (approximately $133,000,000) will be used to make a
pro rata payment under the Credit Agreement and a pro rata redemption of
the outstanding Notes (such payments are collectively referred to herein
as the "Use of Proceeds"). The calculation of the pro rata amounts for
the Use of Proceeds shall be made as of the closing date of the Clear
Shield Sale, although the Company will not redeem the Notes until the
Transfer Redemption Date (the next business day following the 30th day
after the closing date of the Clear Shield Sale, as defined in the
Indenture). Upon receipt of the consideration for the Clear Shield
Sale, the Company intends to make a payment to BT Commercial Corporation
of $30,000,000 (the current amount outstanding under the Credit
Agreement) or such lesser amount then outstanding under the Credit
Agreement and will invest the remaining net proceeds of the Clear Shield
Sale in permitted Cash Equivalents until the Transfer Redemption Date.
The Company estimates that on the Transfer Redemption Date the
Noteholders will be entitled to receive approximately $112,000,000 (of
which approximately $105,000,000 will be applied to the retirement of
the principal amount of the outstanding Notes to be redeemed with the
remaining amount applied to satisfy the Yield Maintenance Amount
thereon).
The consummation of the Clear Shield Sale and the proposed Use of
Proceeds of the Clear Shield Sale would violate (a) Sections 4.06, 4.09
and 4.13 of the Indenture (the "Specified Indenture Restrictions"),
unless the Holders of a majority in aggregate principal amount of the
Notes, by notice to the Trustee, waive the Company's compliance with the
Specified Indenture Restrictions (excluding 4.06(e)(3) or any other
provision of Section 4.06, 4.09 or 4.13 that would require unanimous
written consent) with respect to the Clear Shield Sale (the "Majority
Noteholders") and (b) Sections 8.6, 8.9 and 8.13 of the Credit Agreement
(the "Specified Credit Agreement Restrictions"), unless waived in
writing by each of the sole existing LC Lender and the sole existing
Revolving Lender and the Clear Shield Sale would violate (a) Section 7
of the Company Pledge Agreement, dated as of June 20, 1995, by and
between the Company and the Collateral Agent, unless waived in writing
by the Collateral Agent (the "Specified Pledge Restriction") and (b)
Section 5(j) of the Company Security Agreement, dated as of June 20,
1995, by and between the Company and the Collateral Agent, unless waived
in writing by the Collateral Agent (the "Specified Sale Restriction").
Moreover, pursuant to the terms of Section 6 of the Intercreditor
Agreement, the Trustee is prohibited from waiving the Specified
Indenture Restrictions without the prior written consent of the
Requisite Working Capital Lenders, each of the LC Lender and the
Revolving Lender are prohibited from waiving the Specified Credit
Agreement Restrictions without the prior written consent of each of the
Requisite First Priority Noteholders and the Revolving Lender, and
pursuant to Section 2(e) of the Intercreditor Agreement, the Collateral
Agent is prohibited from waiving the Specified Pledge Restriction and
the Specified Sale Restriction without the prior written consent of the
Requisite First Priority Noteholders and the Requisite Working Capital
Lenders.
It is a condition precedent to the consummation of the Clear Shield
Sale that the capital stock and assets of Clear Shield be conveyed to
the purchaser under the Sale Agreement free and clear of all claims,
liens and security interests of the Secured Parties under the Financing
Agreements and the Collateral Documents. The outstanding capital stock
and assets of Clear Shield are currently subject to liens and security
interests in favor of the Collateral Agent pursuant to the Collateral
Documents, and the Secured Indebtedness of the Company under the
Financing Agreements is guaranteed by Clear Shield pursuant to the
Guaranty Agreement.
SUMMARY OF AMENDMENTS AND WAIVERS
The Company is considering a reorganization at Viskase Corporation,
a wholly-owned subsidiary of the Company, in which case the Company will
take a restructuring charge of approximately $25,000,000 for costs and
expenses relating thereto (the "Restructuring Charge"), and therefore
hereby seeks consent to amendments (collectively, the "Amendments") to
the terms of the Notes issued pursuant to the Indenture. The Amendments
would be effective for all purposes as of March 27,1998. A copy of the
proposed Third Supplemental Indenture is attached hereto as Attachment
B. The Company also seeks consent to amendments that are substantially
identical to the Amendments with respect to the Credit Agreement
(collectively, the "Additional Amendments").
The Amendments would modify the negative covenant in Section
4.01(b) of the Indenture to provide that the Fixed Charge Coverage Ratio
(as defined in the Indenture) may not be less than 1.35:1 for the period
from March 27, 1998 through June 30, 1999 (rather than 1.50:1 as
currently provided in the Indenture), and 1.55:1 for the period from
July 1, 1999 and thereafter. In addition, for purposes of determining
Consolidated Cash Flow (as defined in the Indenture) for the calculation
of the Fixed Charge Coverage Ratio (as defined in the Indenture) only
and notwithstanding any tax effect of such Restructuring Charge, the
Restructuring Charge will be added back to the calculation of
Consolidated Net Worth and Consolidated Net Income (as those terms are
defined in the Indenture) to the extent previously deducted therefrom.
In addition, the Amendments would modify Section 4.03(a) of the
Indenture to provide that at no time may (i) Consolidated Senior Debt
(as defined in the Indenture) be greater than 58.5% of Consolidated
Total Capitalization (as defined in the Indenture) (rather than 52.5% as
currently provided in the Indenture) or (ii) Consolidated Debt (as
defined in the Indenture) be greater than 92.5% of Consolidated Total
Capitalization (rather than 88% as currently provided in the Indenture).
The Company is also requesting that (i) Holders waive any prior
default by the Company of Section 4.01(a), 4.01(b), or 4.03(a) of the
Indenture (the "Specified Indenture Financial Covenants"), if any, and
(ii) the Revolving Lender and the LC Lender each waives any prior
default by the Company of Sections 8.1(a), 8.1(b) and 8.3 of the Credit
Agreement (the "Specified Credit Financial Covenants"), if any.
Pursuant to the terms of Section 6 of the Intercreditor Agreement,
the Trustee is prohibited from amending the Indenture or waiving the
Specified Indenture Financial Covenants without the prior written
consent of the Requisite Working Capital Lenders and each of the LC
Lender and the Revolving Lender are prohibited from amending the Credit
Agreement or waiving the Specified Credit Financial Covenants without
the prior written consent of each of the Requisite First Priority
Noteholders and the Revolving Lender.
The timing of receipt of the consents from the requisite holders
will ultimately affect the Yield Maintenance Amount on the redeemed
portion of the Notes. The Yield Maintenance Amount, assuming a constant
treasury rate, decreases approximately $0.15 per day for each $1,000 in
principal amount of outstanding Notes redeemed. Therefore, any delay in
the return of the requisite Consents reduces the overall yield on the
Notes (assuming that funds that are repaid are invested at a similar
rate of return). Please do not delay in returning your consent.
CONSENTS, WAIVERS AND AUTHORIZATIONS
The Company hereby requests and, subject to the terms and
conditions of this Consent, the parties signatory hereto respectively
agree (as applicable), that:
1. the Holders hereby (i) waive the Specified Indenture
Restrictions with respect to the Clear Shield Sale, (ii) waive the
Specified Indenture Financial Covenants and (iii) consent to the
Amendments;
2. the LC Lender and the Revolving Lender each hereby (i) waives
the Specified Credit Agreement Restrictions with respect to the Clear
Shield Sale, (ii) waives the Specified Credit Financial Covenants and
(iii) consents to the Additional Amendments;
3. the Collateral Agent hereby waives each of the Specified Pledge
Restriction and the Specified Sale Restriction with respect to the Clear
Shield Sale;
4. the Requisite Working Capital Lenders hereby consent to the
Trustee's and/or the Holders' (i) waiver of the Specified Indenture
Restrictions with respect to the Clear Shield Sale, (ii) waiver of the
Specified Indenture Financial Covenants and (iii) consent to the
Amendments;
5. the Requisite First Priority Noteholders and the Revolving
Lender each hereby consent to each of the LC Lender's and the Revolving
Lender's (i) waiver of the Specified Credit Agreement Restrictions with
respect to the Clear Shield Sale, (ii) waiver of the Specified Credit
Financial Covenants and (iii) consents to the Additional Amendments;
6. the Requisite First Priority Noteholders and the Requisite
Working Capital Lenders each hereby consent to the Collateral Agent's
waiver of the Specified Pledge Restriction and the Specified Sale
Restriction;
7. the Requisite First Priority Noteholders and the Requisite
Working Capital Lenders each hereby authorize and direct the Collateral
Agent, and the Collateral Agent simultaneously with the consummation of
the Clear Shield Sale, hereby (a) releases its security interests in and
liens securing the Secured Indebtedness on all Collateral consisting of
property or capital stock of Clear Shield, (b) releases Clear Shield
from all obligations under the Guaranty Agreement and all other
Collateral Documents to which it is a party, (c) agrees to deliver to
the Company all original stock certificates evidencing any of the
outstanding capital stock of Clear Shield and all stock powers relating
thereto, (d) agrees to execute and deliver to the Company such documents
and agreements as may be reasonably requested by the Company to fully
effectuate or evidence (of record or otherwise) such releases,
including, without limitation, UCC termination statements, mortgage
releases, intellectual property release and reconveyances, and
termination letters with respect to blocked account agreements, (e)
waives the Specified Pledge Restriction and (f) agrees to execute and
deliver this letter.
The foregoing consents, waivers, authorizations and agreements are
expressly subject to the condition precedent that counterparts of this
Consent be executed and delivered in accordance with the procedures
described in this Consent by the Company, the Collateral Agent, the
Majority Noteholders, the LC Lender, the LC Agent, the Revolving Lender,
the Requisite First Priority Noteholders, and the Requisite Working
Capital Lenders and, unless and until such parties have so executed and
delivered this Consent, this Consent shall have no force or effect.
COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and covenants to and with
the Collateral Agent and each of the Secured Parties that, as of March
26, 1998 (the most recent date on which detailed financial information
was available) and as of the date of consummation of the Clear Shield
Sale, in each case with the same effect as if made as of such date, no
Event of Default has occurred and is continuing, or will result from,
the consummation of the Clear Shield Sale. Detailed financial
information for the quarter ended June 26, 1998 is not yet available.
Additional Representations and Warranties
The undersigned further acknowledges that:
(i) except as expressly set forth above, (x) the execution and
delivery of this letter by the Collateral Agent and such other Secured
Parties shall in no way affect any of the respective rights, powers or
remedies of any of such Persons with respect to any Event of Default nor
constitute a waiver of any term or provision of any of the Financing
Agreements or Collateral Documents, and (y) all of the respective terms
and provisions of the Financing Agreements, the Collateral Documents and
all other documents, instruments, amendments and agreements executed or
delivered by the undersigned and any of the other Loan Parties pursuant
thereto or in connection therewith shall remain in full force and effect
and are hereby ratified and confirmed in all respects; and
(ii) the execution and delivery of this letter by the Collateral
Agent and such other Secured Parties shall in no way obligate the
Collateral Agent or any of such other Secured Parties, at any time
hereafter, to consent to any other modification of any term or provision
of any of the Financing Agreements or Collateral Documents, whether of
a similar or different nature.
CONSENT PROCEDURE
Only Holders of record (or their respective legal representatives)
as of June 24, 1998 (the "Record Date") may execute counterparts to this
Consent, and such Consent will be binding on all subsequent transferees
of the Notes. Any beneficial owner of Notes who is not a Holder or
record of such Notes must arrange with the person who, on the Record
Date, was the Holder of record of such Holder's assignee or nominee to
execute and deliver counterparts to this Consent on its behalf. For
purposes of this Solicitation, the term "Holder" shall be deemed to
include the participants ("DTC Participants") through which a beneficial
owner's Notes are held on the Record Date in The Depository Trust
Company ("DTC"). DTC has authorized DTC Participants to execute
counterparts to this Consent as if they were Holders.
The timing of receipt of the consents from the requisite holders
will ultimately affect the Yield Maintenance Amount on the redeemed
portion of the Notes. The Yield Maintenance Amount, assuming a constant
treasury rate, decreases approximately $0.15 per day for each thousand
dollars in principal amount of outstanding Notes redeemed. Therefore,
any delay in the return of the requisite Consents reduces the overall
yield on the Notes (assuming that funds that are repaid are invested at
a similar rate of return). Please do not delay in returning your
consent.
Each Holder that agrees with the terms and conditions of this
Consent should complete the appropriate information on Attachment A to
this Consent and return it, as soon as possible but no later than the
expiration of the Solicitation, by facsimile to Envirodyne Industries,
Inc., 000 Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Tel. No. (000) 000-0000, Facsimile No. (630)
575-2401. Each of the Collateral Agent, the LC Agent, the LC Lender and
the Revolving Lender that agrees with the terms and conditions of this
Consent should execute and deliver an executed counterpart to this
Consent to the Company at its address indicated immediately above prior
to the expiration of the Solicitation. Once a consent is delivered to
the Company, it may not be revoked.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities
and Exchange Commission (the "Commission") are hereby incorporated by
reference:
(a) the Annual Report on Form 10-K for the year ended December 25,
1997, as amended pursuant to an amendment thereto filed on
April 27, 1998; and
(b) the Quarterly Report on Form 10-Q for the quarter ended
March 26, 1998; and
(c) the Company's Report on Form 8-K dated June 16, 1998; and
(d) the Company's Report of Form 8-K dated June 25, 1998.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), subsequent to the date of this
Consent and prior to the termination thereof shall be deemed to be
incorporated by reference herein and to be a part hereof from the date
of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Consent to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Consent.
The Company will provide without charge to each Holder, including
any beneficial holder, to whom this Consent is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents relating to the Company that are incorporated herein by
reference (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Such
requests should be directed to Envirodyne Industries, Inc., 000 Xxxxxx
Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx 00000 (Tel. No. (000) 000-0000),
Attention: Xxxxxx X. Xxxxxxx.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports,
proxy statements and other information can be inspected and copied at
the Public Reference Section of the Commission located at Room 1024,
Judiciary Plaza, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000, and at
regional public reference facilities maintained by the Commission
located at Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000; and Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000. Copies of such material can be obtained from the Public
Reference Section of the Commission at prescribed rates. In addition,
the Commission maintains a World Wide Web site that contains reports,
proxy statements and other information regarding companies (including
the Company) that file electronically with the Commission. The address
of the Commission's Web site is xxxx://xxx.xxx.xxx. The Company's Common
Stock is traded in the over-the-counter market on the Nasdaq SmallCap
Market, and reports, proxy statements and other information concerning
the Company may also be inspected at the offices of The Nasdaq Stock
Market, Inc., 0000 X Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000.
QUESTIONS AND REQUESTS
Questions and requests for additional information or additional
copies of this Consent may be directed to Envirodyne Industries, Inc.,
000 Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx
X. Xxxxxxx, Tel. No. (000) 000-0000, Facsimile No. (000) 000-0000.
Very truly yours,
ENVIRODYNE INDUSTRIES, INC.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
PRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS CONSENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
SOLICITATION IS NOT BEING MADE TO, AND NO COUNTERPARTS TO THIS CONSENT
ARE BEING SOLICITED FROM, HOLDERS OF NOTES OR OTHER CREDITORS OF THE
COMPANY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
SOLICITATION OR DELIVER SUCH COUNTERPARTS. THE DELIVERY OF COUNTERPARTS
TO THIS CONSENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
ENVIRODYNE INDUSTRIES, INC.
000 XXXXXX XXXX, XXXXX 000
XXX XXXXX, XXXXXXXX 00000
Letter Agreement dated
as of July 2, 1998
Re: Consent
ATTACHMENT A
The undersigned hereby agrees with the terms and conditions of the
foregoing Letter of Consent dated July 2, 1998. THE UNDERSIGNED
UNDERSTANDS THAT ONCE A CONSENT IS DELIVERED TO THE COMPANY, IT MAY NOT
BE REVOKED.
Holder:___________________________________________________________
(Please Type or Print)
By:_______________________________________________________________
(Sign Here)
Name:_____________________________________________________________
(Please Type or Print)
Title:____________________________________________________________
Address:_________________________________________________________
(Street) (Suite)
________________________________________________________________
(City) (State) (Zip)
Telephone
No.:____________________________________________________________
Aggregate Principal Amounts* of
Note(s):__________________________________________
* Unless otherwise indicated, the Holder will be deemed to have
consented in respect of the entire principal amount of Notes
held by such Holder.
ENVIRODYNE INDUSTRIES, INC.
000 XXXXXX XXXX, XXXXX 000
XXX XXXXX, XXXXXXXX 00000
Letter Agreement dated
as of July 2, 1998
Re: Consent
Signature Counterpart
---------------------
BT COMMERCIAL CORPORATION, in its respective
capacities as Collateral Agent and LC Agent, and in its
individual capacity as the sole LC Lender and as the sole
Revolving Lender
By: ___________________________
Name: ___________________
Title: ____________________
ATTACHMENT B
THIRD SUPPLEMENTAL INDENTURE
THIS THIRD SUPPLEMENTAL INDENTURE, dated as of __________, 1998
(this "Supplemental Indenture"), between ENVIRODYNE INDUSTRIES INC., a
Delaware corporation (the "Company"), and STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, N.A. (formerly Fleet National Bank Connecticut
and previously Shawmut Bank Connecticut, National Association), as
trustee (the "Trustee"), under the Indenture, dated as of June 20, 1995
and amended by the First Supplemental Indenture, dated as of October 13,
1995, and the Second Supplemental Indenture, dated as of September 2,
1997, between the Company and the Trustee (the "Indenture").
WHEREAS, the Company has issued, the Trustee has authenticated and
there have been delivered pursuant to the Indenture $160,000,000
aggregate principal amount of the Company's First Priority Senior
Secured Notes due 2000, all of which are currently outstanding;
WHEREAS, the Company desires, by this Supplemental Indenture, to
amend the negative covenants contained in Section 4.01(b) and Section
4.03(a) of the Indenture (collectively, the "Amendment");
WHEREAS, Section 8.02 of the Indenture provides that the Company
and the Trustee may enter into a supplemental indenture, with the
consent of the holders of not less than a majority in aggregate
principal amount of the then outstanding Securities (as defined
therein), for the purpose of changing any provisions of the Indenture
except as otherwise set forth therein;
WHEREAS, pursuant to Section 5.05 of the Indenture, the holders of
not less than a majority in aggregate principal of the then outstanding
Securities, as of 5:00 p.m., New York time, on June 24, 1998, the record
date for such purposes, have waived any prior default by the Company of
Section 4.01(a), 4.01(b) or 4.03(a) of the Indenture, if any;
WHEREAS, the holders of not less than a majority in principal
amount of the Securities outstanding, as of 5:00 p.m., New York City
time, on June 24, 1998, the record date for such purpose, have consented
to the Amendment; and
WHEREAS, the Company is legally empowered and has been duly
authorized by the necessary corporate action to make, execute and
deliver this Supplemental Indenture, and all acts and things whatsoever
necessary to make this Supplemental Indenture, when executed and
delivered by the Company and the Trustee, a valid, binding and legal
instrument have been taken.
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
All terms used in this Supplemental Indenture which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE 2
AMENDMENT OF INDENTURE
2.1 Section 4.01(b) of the Indenture is amended by deleting
such section in its entirety and substituting in lieu thereof the
following:
(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 26, 1996
1.50:1 December 27, 1996 through March 26, 1998
1.35:1 March 27, 1998 through June 30, 1999
1.55:1 July 1, 1999 and thereafter
provided, however for purposes of determining Consolidated Cash Flow
for the calculation of the Fixed Charge Coverage Ratio only and
notwithstanding any tax effect of such restructuring charges,
restructuring charges in amounts not to exceed $25,000,000 shall be
added back to the calculation of the Consolidated Net Worth and
Consolidated Net Income to the extent previously deducted therefrom.
2.2 Section 4.03 (a) of the Indenture is hereby amended by
deleting the last clause of such section beginning with "provided,
however" and substituting in lieu thereof the following:
provided, however, that at no time shall (1) Consolidated Senior
-------- -------
Debt be more than 58.5% of Consolidated Total Capitalization, or
(2) Consolidated Debt be more than 92.5% of Consolidated Total
Capitalization.
ARTICLE 3
MISCELLANEOUS
3.1 This Supplemental Indenture may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of such counterparts shall together constitute one and
the same instrument.
3.2 The internal laws of the State of New York shall govern
this Supplemental Indenture without regard to principles of conflicts of
law.
3.3 All provisions of this Supplemental Indenture shall be
deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as amended and supplemented by this Supplemental Indenture,
shall be read, taken and construed as one and the same instrument.
3.4 The provisions of Section 4.01(b) and Section 4.03(a), as
amended by Article 2 of this Supplemental Indenture, shall be deemed
effective for all purposes as of March 27, 1998; provided, however, that
this Supplemental Indenture shall not become effective as of such date
until the Company has entered into amendments that are substantially
identical to the Amendment contained herein with respect to the Amended
and Restated Credit Agreement, dated as of June 1, 1998, between the
Company, the lenders identified therein and BT Commercial Corporation,
as Agent. The Company shall provide to the Trustee written notice that
it has entered into such amendments and that this Supplemental Indenture
has become effective.
3.5 The recitals to this Supplemental Indenture shall not be
construed as representations of the Trustee and the Trustee makes no
representation as to the accuracy of such recitals.
3.6 The Trustee enters into this Supplemental Indenture in its
capacity as Trustee under the Indenture and in reliance on an Opinion of
Counsel and Officers' Certificate.
IN WITNESS WHEREOF, the parties have caused this Third Supplemental
Indenture to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first above
written.
ENVIRODYNE INDUSTRIES, INC.
By: _________________________________
Xxxxxx X. Xxxxxxx
Vice President, Chief Financial
Officer and Treasurer
Attest: __________________________
Xxxxxxx X. Xxxxxxxx
Vice President and Secretary
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, N.A.
By: ________________________
Name: ________________________
Title: _______________________
Attest: ______________________
By: ______________________
Name: ______________________
Title: ______________________