Xxxxxx Bank Ltd
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Telefax: 212-421-4420
May 9, 1997
Xxxxxx Protection Group, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Credit Agreement dated as of August 30, 1996 by and among Xxxxxx Bank
Ltd, Bank of Boston Connecticut ("the Lenders"), and Xxxxxx Protection,
Inc. and Xxxxxx Protection Group, Inc., as Amended and Restated ("Credit
Agreement") - Amendment.
Gentlemen:
We hereby amend Section 7.19 of the Credit Agreement effective as of January
1, 1997. The changes effected by this letter will be further documented by an
amendment to be prepared by legal counsel to the Agent that will reflect the
attached Schedule A.
It is the understanding of the Lenders that there is no breach of the
Financial Covenants of Section 7.19, as amended, for the quarterly period
ended March 31, 1997. This understanding relies upon the accuracy and
completeness of the financial statements of that period provided by
Xxxxxx--Protection Group, Inc. ("HPG").
HPG has represented to the Lenders that as of January 1, 1997, the effective
date of the amendment, there was no breach, nor is there currently or
prospectively, a breach of the Financial Covenants of Section 7.19, as
amended.
This amendment does not affect the rights and remedies of the Lenders, except
as specifically stated herein. The Credit Agreement is, and shall continue to
be, in full force and effect.
Sincerely,
Xxxxxx Bank Ltd Bank of Boston Connecticut
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxx
---------------------------- -----------------------
Title: Vice President Title: Director
By: /s/ Xxxx X. Xxxx Agreed and Accepted
---------------------------- Xxxxxx Protection Group, Inc.
Title: Vice President
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------
Title: V.P. - Finance
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Schedule A Original Amended
Covenant
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Maximum -Annualized quarterly -Annualized trailing 3 months
Adjusted (Total Debt/EBITDA) -Pro-forma EBITDA of acquisitions -Actual funds borrowed for recent
added to denominator for a quarter acquisitions subtracted from
-3/31/97: 1.95x numerator for 3-4 months
6/30/97: 1.50x -6/30/97 and thereafter: 3.0x
Maximum Unadjusted None -Annualized trailing
Total Debt/EBITA -3/31/97: 5.25x one month
4/30/97: 4.50x two months
5/31/97: 4.25x three months
6/30/97: 4.00x three months
All months: 4.00x annualized trailing
3 months
Maximum Total Debt/RMR -Tested quarterly -Tested monthly
-20.0x at all times -20.0x (Unchanged)
Maximum Attrition -12% p.a. -Unchanged
-calculated on two quarters
annualized starting 12/31/97
Minimum Net Worth -$56 million -$53.5 million (after $1.5 million EDS
-Tested quarterly contract cancellation charge and $1
million additional depreciation and
amortization from acquisitions)
-Tested quarterly (unchanged)
Minimum EBITDA/Interest Expense -4.0x -4.0x (Unchanged)
-Tested quarterly -Tested on trailing 3 months starting
6/30/97
Capital Expenditure Control -Maximum Total Debt/(EBITDA - CapEx) -Minimum EBITDA/ (CapEx + Cash Debt
-Annualized quarterly Service)
-3.0x starting 6/30/97 -Annualized trailing 3 months
-6/30/97: 0.5x
9/30/97: 0.7x
12/31/97: 0.8x
3/31/98: 1.0x
Maximum Capital Expenditures -$8.5 million -$11.0 million
Minimum Debt Service Effective upon Conversion Unchanged
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