EXHIBIT 10.22
August 4, 1997
The Prudential Insurance Company of America
c/o Prudential Capital Group
Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Re: Second Amendment to/Consent and Waiver under Revolving
Credit Agreement
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement
("Agreement"), dated as of June 20, 1995 and amended as of
October 13, 1995, between Envirodyne Industries, Inc.
("Envirodyne") and The Prudential Insurance Company of America
("Prudential"). Unless otherwise defined herein, terms used
herein which are defined in the Agreement shall have the meanings
as given in the Agreement.
Envirodyne has requested that Prudential amend the Agreement
and Prudential has agreed to make the amendments specified
herein. In addition, Envirodyne has requested that Prudential
waive any prior default by Envirodyne of Xxxxxxxxx 0X(x),
Xxxxxxxxx 0X(x) or Paragraph 4C(a) of the Agreement, if any.
Envirodyne and Prudential therefore agree as follows:
1. Paragraphs 4A(a)(iii),(iv) and (v) of the Agreement is
hereby amended by deleting such paragraphs in their entirety and
substituting in lieu thereof the following:
(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 $47,000,000, plus (2) 50% of
----
Consolidated Net Income for such Clause (iii) 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 (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 $47,000,000, plus (2) 50% of
----
Consolidated Net Income for such Clause (iv) 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 (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 $47,000,000,
plus (2) the greater of (X) 50% of Consolidated Net
----
Income for such Clause (v) 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 (v)
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 (v) Test Period; where "Clause
(v) Test Period" commencing on January 1, 1999 and
ending on the then most recently ended fiscal
quarter of the Company.
2. Paragraph 4A(b) of the Agreement is hereby amended by
deleting such paragraph in its entirety and substituting in lieu
thereof the following:
(b) Fixed Charge Coverage Ratio. The Company
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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 31, 1998
1:55:1 January 1, 1999 and thereafter
provided, however, for purposes of determining
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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
$3,500,000 and $1,500,000 shall be added back, each on
a one-time basis prior to December 25, 1997 and June
25, 1998, respectively, to the calculation of
Consolidated Net Income to the extent deducted
therefrom. In addition, as a condition to the
Company's request for a drawing under the Agreement,
the Company shall certify through delivery of the
Revolving Loan Request that at the time of the
request, the Fixed Charge Coverage Ratio for the
preceding twelve month period (ending on the month
ending not earlier than thirty-five (35) days prior to
the date of the Revolving Loan Request) of the Company
is at least 1.55:1.
3. Paragraph 4C(a) of the Agreement shall be amended by
deleting the last clause of such paragraph, beginning with
"provided, however" and substituting in lieu thereof the following:
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provided, however, that at no time shall (1)
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Consolidated Senior Debt be more than 52.5% of
Consolidated Total Capitalization, or (2) Consolidated
Debt be more than 88% of Consolidated Total
Capitalization.
4. Exhibit J to the Agreement is hereby amended by deleting
such Exhibit in its entirety and replacing it with the form of
Exhibit J attached hereto as Exhibit A.
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5. Prudential hereby waives any prior default by Envirodyne
of Paragraphs 4A(a), Paragraph 4A(b) or Paragraph 4C(a) of the
Agreement, if any.
The provisions of Paragraphs 4A(a)(iii),(iv) and (v),
Paragraph 4A(b) and Paragraph 4C(a) of the Agreement, as amended
by this letter, shall be deemed effective for all purposes as of
December 27, 1996, provided, however, that this letter shall not
become effective until (a) Envirodyne has entered into amendments
that are substantially identical to the amendments to the
Agreement contained herein with respect to (i) the Indenture,
dated as of June 20, 1995 and amended as of October 13, 1995,
between Envirodyne and Fleet National Bank (formerly Shawmut Bank
Connecticut, National Association) ("Indenture"), as trustee and
(ii) the Credit Agreement ("Credit Agreement"), dated as of June
20, 1995 and amended as of October 13, 1995, among Envirodyne, the
lenders identified therein and BT Commercial Corporation, as Agent
("BT"), and (b) Prudential shall have received from the Required
Holders (as defined in the Indenture) and BT written consents
satisfactory to it of the amendments of the Agreement set forth
herein. Prudential hereby consents to amendments to the Indenture
and Credit Agreement in substantially the respective forms
attached hereto as Exhibit B and Exhibit C.
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Envirodyne represents and warrants as follows: (i) it has all
necessary power and authority to execute and deliver this letter;
(ii) the execution, delivery and performance of this letter have
been duly authorized by it, (iii) this letter and the Agreement,
as amended hereby, constitute the legal, valid and binding
obligations of Envirodyne and are enforceable against Envirodyne
in accordance with their terms; (iv) the approval, execution,
delivery and performance of the terms hereof do not violate any
contractual provision to which it is a party or by which it is or
its properties are bound or any law applicable to it; and (v)
after giving effect to the amendments to the Agreement set forth
herein, no Default or Event of Default has occurred and is
continuing.
Upon the effective date of this letter, each reference in the
Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the
Agreement as amended hereby and each reference to the Agreement in
all other Transaction Documents shall mean and be a reference to
the Agreement, as amended hereby.
This letter 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.
Except as specifically amended above, the Agreement, and all
other Transaction Documents, shall remain in full force and effect
and are hereby ratified and confirmed. The execution, delivery
and effectiveness of this letter shall not, except as expressly
provided herein, operate as an amendment to any provision of the
Agreement, a waiver of any right, power or remedy of Prudential,
or constitute a waiver of, or consent to any departure from, any
provision of the Agreement or any other Transaction Document.
This letter may be executed by one or more of the parties to
this letter on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument.
Please acknowledge the foregoing and your agreement thereto
by signing the two copies of this letter agreement where indicated
below and returning one copy to me.
Very truly yours,
ENVIRODYNE INDUSTRIES, INC.
By: _____________________________
Xxxxxx X. Xxxxxxx
Vice President, Chief Financial
Officer and Treasurer
Accepted and Agreed to
as of the date written above:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: _____________________________
Title: ____________________________
