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EXHIBIT 10.2
AMENDMENT TO LOAN AGREEMENT
THE XXXXX-X'XXXX COMPANY, X'XXXX - XXXX & XXXXXXXXXX ARMORING COMPANY,
KROLL HOLDINGS, INC., and XXXXX ASSOCIATES, INC. (individually and collectively
the "Borrower"), and KEYBANK NATIONAL ASSOCIATION ("Lender"), hereby agree as
follows:
1. RECITALS.
1.1 On October 30, 1998, Borrower and Lender entered into an
Amended and Restated Loan Agreement (the "Loan Agreement").
Capitalized terms used herein and not otherwise defined will
have the meanings given such terms in the Loan Agreement.
1.2 Borrower and Lender desire to enter into a new Revolving
Credit Note dated of even date herewith (the "Revolving Credit
Note") to provide Borrower with funds for general corporate
purposes in the amount of $25,000,000.
1.3 Borrower and Lender desire to amend the Loan Agreement
pursuant to this Amendment to Loan Agreement (the
"Amendment").
2. AMENDMENT.
2.1 Section 3.1.1 is amended to provide as follows:
TOTAL FACILITY. Lender will make available to Borrower a
revolving credit facility of up to $25,000,000 ("Total
Facility"), subject to the terms and conditions and made upon
the representations and warranties of Borrower set forth in
this Agreement. Amounts outstanding under the revolving credit
facility from time to time will be referred to as the
"Revolving Credit Loan". The Revolving Credit Loan will be
represented by the promissory note of Borrower of even date
with the Amendment to Loan Agreement and all amendments,
extensions and renewals thereto and restatements and
replacements thereof ("Revolving Credit Note"). The Revolving
Credit Loan will bear interest and will be payable in the
manner set forth in the Revolving Credit Note, the terms of
which are incorporated herein by reference.
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2.2 Section 3.1.4 of the Loan Agreement is amended to provide as
follows:
COMMITMENT FEE. Borrower will pay to Lender a commitment fee
from the date on which all of the conditions precedent set
forth in Section 9.1, below are satisfied, computed at the
Applicable Rate per annum set forth below, on the average
daily difference between: (i) the outstanding amount of the
Note and (ii) the Total Facility, such Commitment Fee to be
payable quarterly in arrears on the last day of each
September, December, March and June and upon the maturity date
of the Note and/or the date this Agreement is terminated:
FUNDED DEBT TO EBITDA APPLICABLE RATE
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If less than 2.0 to 1.0 0.125%
If greater than or equal to 2.0 to 1.0 0.25%
The Applicable Rate will be adjusted by Lender as necessary on
the first Business Day of the calendar month following
submission to Lender of the Borrower's quarterly financial
statements.
2.3 Section 5.2 of the Loan Agreement is hereby amended as
follows:
LATEST FINANCIALS. Its Current Financial Statements dated
March 31, 1999 as delivered to Lender are true, complete and
accurate in all material respects and fairly present its
financial condition, assets and liabilities, whether accrued,
absolute, contingent or otherwise and the results of its
operations for the periods specified therein. The annual
financial statements of all business entities included in the
Current Financial Statements have been prepared in accordance
with generally accepted accounting principles applied
consistently with preceding periods subject to any comments
and notes contained therein.
2.4 Section 7.4 is hereby amended as follows:
GUARANTEES. Other than (i) with respect to the Senior Notes
and (ii) guarantees by one or more of the Persons constituting
Borrower of the obligations of one or more other Persons
constituting Borrower or (iii) guarantees by one or more of
the Persons constituting Borrower of the obligations of any
Guarantor or (iv) guarantees by one or more of the Persons
constituting Borrower of the obligations of a subsidiary,
guarantee, endorse or become contingently liable for the
obligations of any person, firm or corporation, except in
connection with the endorsement and deposit of checks in the
ordinary course of business for collection or accounts payable
incurred by Subsidiaries in the ordinary course of business.
2.5 Section 7.5 of the Loan Agreement (Fixed Charge Coverage) is
hereby deleted and replaced with the following:
INTEREST COVERAGE RATIO. Permit the ratio of Borrower's
consolidated earnings before interest and taxes divided by the
interest expenses to be less than 2.5 to 1, measured quarterly
on a rolling four quarter basis.
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2.6 Section 7.6 of the Loan Agreement is amended to provide as
follows:
NET WORTH MAINTENANCE. Fail to maintain at all times a minimum
consolidated Net Worth of not less than $126,985,500.00 as of
December 31, 1998 to be increased by 65% of net income,
calculated at the end of each quarter thereafter. The amount
of Intangible Assets included in Net Worth shall at no time
exceed 60% of consolidated Net Worth from closing through
December 30, 2000 and shall at no time thereafter exceed 55%
of consolidated Net Worth; however, should Borrower purchase
intangible assets after closing for which Borrower tenders new
common stock as consideration for the purchase price, Lender
will reduce Borrower's Intangible Assets figure as shown on
its post-closing balance sheet by the corresponding amount of
such common stock for purposes of calculating compliance with
their covenants.
For purposes of this Agreement, "Intangible Assets"
shall mean the sum total shown on Borrower's balance sheet
under the line item entitled "Costs in Excess of Assets
Acquired and other Intangible Assets" as such intangible
assets are required to be classified by generally accepted
accounting principles, and other such assets that may be
deemed to be "Intangible Assets" by Lender in its sole
discretion.
2.7 Section 7.7 of the Loan Agreement (Debt to Capitalization) is
hereby deleted.
2.8 Subsection 7.8.1 of Section 7.8 of the Loan Agreement (Capital
Expenditures) is hereby amended to provide as follows:
7.8.1 Make capital expenditures or acquisitions, including the
capitalized value of any leases in the aggregate, which, when
calculated in accordance with generally accepted accounting
principles, would exceed the $8,000,000.00 in any fiscal year.
2.9 Subsection 7.8.2 of Section 7.8 of the Loan Agreement (Capital
Expenditures) is hereby deleted.
2.10 Section 7.9 of the Loan Agreement is amended to provide as
follows:
FUNDED DEBT TO EBITDA. Permit the ratio of Consolidated Funded
Debt to Consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA"), to exceed 3.0 to
1.0, measured quarterly on a rolling four quarter basis.
2.11 Section 7.10 of the Loan Agreement is amended to provide as
follows:
CASH BALANCES HELD BY SUBSIDIARIES. Permit the TKOGC
Subsidiaries, other than OGHEAC and KAI, to hold cash balances
for any reason other than to fund working capital and other
general corporate purposes in the ordinary course; provided
however that the Borrower may, with Lender's prior written
consent
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which will not be unreasonably withheld, permit any foreign
subsidiary, created solely for the purpose of minimizing tax
liability, to hold cash balances.
2.12 Section 7.11 of the Loan Agreement is hereby amended as
follows:
REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
value, directly or indirectly, any shares of its capital stock
now or hereafter outstanding, except as part of a stock option
plan, a stock buy back plan or stock distribution plan that
may be approved by the Board of Directors of Borrower,
provided, however, that the value of such purchase,
retirement, redemption or acquisition does not exceed 5% of
Borrower's consolidated Net Worth.
2.13 Section 7.12 is hereby deleted in its entirety and replaced
with the following:
7.12 INVESTMENTS. The Borrower will not, and will not
permit any TKOGC Subsidiaries to, at any time make or
permit to exist any Investment except:
7.12.1 Property to be used in the ordinary course
of business of the Borrower and the TKOGC
Subsidiaries;
7.12.2 Current assets arising from the sale or
goods and services in the ordinary course of
business of the Borrower and the TKOGC
Subsidiaries;
7.12.3 Investments in one or more subsidiaries or
in any Person that concurrently with such
Investment becomes a subsidiary; provided
that such Investments are in compliance with
Section 7.10, above and as to an Investment
in foreign subsidiaries (other than a
Borrower or any Guarantor), such Investments
do not exceed $1,000,000 in the aggregate in
any fiscal year;
7.12.4 Investments existing as of May 30, 1997 and
more particularly set forth in Schedule
10.10 of the Note Purchase Agreement dated
May 30, 1997;
7.12.5 Investments in United States Governmental
Securities, provided that such obligations
mature within 365 days from the date of
acquisition thereof;
7.12.6 Investments in securities issued by Federal
Farm Credit Bank, Federal National Mortgage
Association, Federal Home Loan Mortgage
Corp., Federal Home Loan Bank, Student Loan
Marketing Association, and Tennessee Valley
Authority, provided that such obligations
mature within 365 days from the date of
acquisition thereof;
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7.12.7 Investments in certificates of deposit,
banker's acceptances or accounts issued or
held by an Acceptable Bank, provided that
such obligations mature within 365 days from
the date of acquisition thereof;
7.12.8 Investments in accounts held by a
Non-Qualifying Bank, provided that the
amount held in accounts by all
Non-Qualifying Banks for the benefit of
Borrower or any TKOGC Subsidiary will not
exceed the amount of working capital
required by Borrower; or such TKOGC
Subsidiary in the ordinary course of
business;
7.12.9 Investments in variable rate tax exempt
bonds, notes or funds given either of the
two highest ratings by a credit rating
agency of recognized national standing, or
if payment thereunder may be made by drawing
on letters of credit issued by Acceptable
Banks, so long as the Investments in such
bonds, notes or funds mature within one year
of the date of acquisition thereof;
7.12.10 Investments in commercial paper given either
of the two highest ratings by a credit
rating agency of recognized national
standing and maturing not more than 270 days
from the date of creation thereof; and
7.12.11 Investments in money market mutual funds
that invest solely in so-called "money
market" instruments maturing not more than
one year after the acquisition thereof,
which funds have assets in excess of
$500,000,000.
7.12.12 Investments not otherwise included in
Section 7.12.1 through 7.12.11, provided
that at the time any such investment is made
and immediately after giving effect thereto,
the aggregate amount of all such investments
would not exceed 12.5% of Consolidated Net
Worth.
As used in this Section:
"ACCEPTABLE BANK" means any bank or trust company (i)
which is organized under the laws of the United States of
America or any state thereof, (ii) which has capital, surplus
and undivided profits aggregating at least $500,000,000 and
(iii) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding
company owning all of the Capital Stock of such bank or trust
company) shall have been given a rating of "A" or better by
Standard and Poor's Ratings Group, "A2" or better by Xxxxx'x
Investors Service, Inc. or an equivalent rating by any other
credit rating agency of recognized national standing.
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"INVESTMENT" means any investment, made in cash or by
delivery of property, by Borrower or any Subsidiary in any
Person, whether by acquisition, of capital stock, debt or
other obligation or security, or by loan, guaranty, advance,
capital contribution or otherwise.
"NON-QUALIFYING BANK" means any bank or trust
company, other than an Acceptable Bank, which has capital,
surplus and undivided profits aggregating at least
$100,000,000 (or the equivalent in a foreign currency).
"UNITED STATES GOVERNMENTAL SECURITY" means any
direct obligation of, or obligation guaranteed by, the United
States of America, or any agency controlled or supervised by
or acting as an instrumentality of the United States of
America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or
guarantee shall have the benefit of the full faith and credit
of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United
States of America.
2.14 Section 14.21 of the Loan Agreement is amended to provide the
following:
"Funded Debt" will mean all Indebtedness on a consolidated
basis, including any amount which may be considered the
current portion of such Indebtedness.
2.15 Section 14.23 of the Loan Agreement is amended to provide as
follows:
"Guarantor(s)" will mean any persons or entities that now or
in the future deliver one or more Guarantees to Lender,
including but not limited to Kroll Associates, Inc., Kroll
Holding, Inc., Kroll Information Services, Inc., Kroll
International, Inc., Background America, Inc., Xxxxx-X'Xxxx
Information Security Group, Inc., Schiff & Associates, Inc.,
Xxxxxxxxx Xxxx XxxXxxxxx Xxxxxxxxxxx, Inc., Laboratory
Specialists, Inc. and Inphoto Surveillance, Inc.
2.16 Section 14.25 of the Loan Agreement is hereby amended as
follows:
"Indebtedness" will mean, without duplication: (i) all
obligations (including capitalized lease obligations) which in
accordance with generally accepted accounting principles would
be shown on a balance sheet as a liability; (ii) all
obligations for borrowed money or for the deferred purchase
price of property or services; (iii) all guarantees,
reimbursement, payment or similar obligations, absolute,
contingent or otherwise, under acceptance, letter of credit or
similar facilities, and (iv) all obligations for any Swap. For
the purposes of this Section, "Swap" shall mean, with respect
to any Person, payment obligations with respect to interest
rate swaps, currency swaps and similar obligations obligating
such Person making payments, whether periodically or upon the
happening of a contingency. The amount of the obligation under
any Swap shall be the amount determined by Lender in its
reasonable calculation to be that portion of the Swap
obligation that represents the credit risk of such Person
under the Swap.
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2.17 Section 5.16 is hereby added to the Loan Agreement to provide
as follows:
YEAR 2000 COMPLIANCE. Borrower has (i) undertaken a detailed
review and assessment of all areas within its business that
could be adversely affected by the failure of the Borrower to
be Year 2000 Compliant (as herein defined) on a timely basis,
(ii) developed a plan and time line for becoming Year 2000
Compliant on a timely basis, and (iii) to date, implemented
that plan in accordance with the specified time line in all
material respects.
As of January 1, 2000, all of Borrower's computer
hardware and software provides the following functions:
(1) consistently handle date information before,
during and after January 1, 2000, including,
but not limited to, accepting date input,
providing date output and performing
calculations on dates or portions of dates;
(2) function accurately in accordance with the
specifications of such computer hardware or
software and without interruption before,
during and after January 1, 2000, without
any change in operations associated with the
advent of the new century;
(3) respond to two-digit date input in a way
that resolves any ambiguity as to century in
a disclosed, defined and predetermined
manner; and
(4) store and provide output of date information
in ways that are unambiguous as to century.
As used herein, "Year 2000 Compliant" shall mean that
all software, embedded microchips and other processing
capabilities utilized by the Borrower will correctly process,
sequence, and calculate, without interruption, all date and
date related data for all dates to, through and after January
1, 2000, including leap year calculations, and shall
recognize, store and transmit date data in a format which
clearly indicates the correct century.
3. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Amendment, Borrower represents and warrants as follows:
3.1 Except as amended above in 2.3 above and provided below, the
representations and warranties of Borrower contained in
Section 5 of the Loan Agreement are deemed to have been made
again on and as of the date of execution of this Amendment and
will apply to this Amendment and the Revolving Credit Note.
3.1.1 As to Section 5.2 as amended, the Borrower and Lender
recognize that the Current Financial Statements do
not account for the June 16, 1999 acquisition of
Background America, Inc.
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3.2 No Event of Default (as such term is defined in Section 8 of
the Loan Agreement) or event or condition which with the lapse
of time or giving of notice or both would constitute an Event
of Default exists on the date hereof.
3.3 The person executing this Amendment and the loan documents to
be executed in connection herewith is a duly elected and
acting officer of Borrower and is duly authorized by the Board
of Directors of Borrower to execute and deliver such documents
on behalf of Borrower.
4. CONDITIONS. Lender's consent to this Amendment is subject to the
following conditions:
4.1 Borrower will have executed and delivered to Lender the
Revolving Credit Note.
4.2 Lender will have been furnished copies, certified by the
Secretary or Assistant Secretary of Borrower, of resolutions
of the Board of Directors of Borrower authorizing the
execution of this Amendment, the Exhibits hereto and all other
documents executed in connection herewith.
4.3 Background America, Inc., Xxxxx-X'Xxxx Information Security
Group, Inc., Schiff & Associates, Inc., Xxxxxxxxx Xxxx
XxxXxxxxx Xxxxxxxxxxx, Inc., Laboratory Specialists, Inc. and
Inphoto Surveillance, Inc. (individually and collectively, the
"Guarantor") will have executed and delivered to Lender the
Guarantee dated of even date herewith (the "Guarantee").
4.4 Borrower will provide to Lender within 90 days of the date
hereof appropriate documentation evidencing the change of
Financial Research, Inc. to Xxxxxxxxx Xxxx XxxXxxxxx
Xxxxxxxxxxx, Inc., and the change of Securify, Inc. to
Xxxxx-X'Xxxx Information Security Group, Inc.
4.5 For each Guarantor, Lender will have been furnished copies,
certified by the Secretary or assistant Secretary of each
Guarantor, of resolutions of the Board of Directors of each
Guarantor authorizing the execution of the Guarantee.
4.6 Borrower will have delivered to Lender copies of its Year 2000
plan and time line, which shall reasonably specify the
method(s) to be used by the Borrower to become Year 2000
Compliant.
4.7 The representations and warranties of Borrower in Section 3
herein will be true.
4.8 Borrower shall pay all expenses and attorneys' fees incurred
by Lender in connection with the preparation, execution, and
delivery of this Amendment and related documents. Such fees
may be deducted by Lender from the Revolving Credit Note.
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5. GENERAL.
5.1 Except as expressly modified herein, the Loan Agreement, as
amended, is and remains in full force and effect.
5.2 Nothing contained herein will be construed as waiving any
default or Event of Default under the Loan Agreement or will
affect or impair any right, power or remedy of Lender under or
with respect to the Loan, the Loan Agreement, as amended, the
Revolving Credit Note or any agreement or instrument
guaranteeing, securing or otherwise relating to any of the
Loan.
5.3 This Amendment will be binding upon and inure to the benefit
of Borrower and Lender and their respective successors and
assigns.
5.4 All representations, warranties and covenants made by Borrower
herein will survive the execution and delivery of this
Amendment.
5.5 This Amendment will in all respects be governed and construed
in accordance with the laws of the State of Ohio.
[SIGNATURES ON NEXT PAGE]
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Signed on June 25, 1999.
THE XXXXX-X'XXXX COMPANY
By: /s/ XXXXX XXXXX
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Print Name: Xxxxx Xxxxx
Title: Chairman and CEO
Date: June 25, 1999
THE XXXXX-X'XXXX COMPANY
By: /s/ XXXXX X. XXXXXX
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Print Name: Xxxxx X. Xxxxxx
Title: Vice President
Date: June 25, 1999
X'XXXX-XXXX & XXXXXXXXXX
ARMORING COMPANY
By: /s/ XXXXX X. XXXXXX
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Print Name: Xxxxx X. Xxxxxx
Title: Vice President
Date: June 25, 1999
KROLL HOLDINGS, INC.
By: /s/ XXXXX X. XXXXXX
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Print Name: Xxxxx X. Xxxxxx
Title: Vice President
Date: June 25, 1999
KROLL ASSOCIATES, INC.
By: /s/ XXXXX X. XXXXXX
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Print Name: Xxxxx X. Xxxxxx
Title: Vice President
Date: June 25, 1999
KEYBANK NATIONAL ASSOCIATION
By: /s/ XXXXXX X. XXXXXXX
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Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Date: June 25, 1999
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