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EXHIBIT 10.14
SECOND AMENDMENT
TO
THIRD AMENDED AND RESTATED CONSOLIDATED
REPLACEMENT CREDIT FACILITY AND SECURITY AGREEMENT
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THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CONSOLIDATED
REPLACEMENT CREDIT FACILITY AND SECURITY AGREEMENT (this "Agreement") dated as
of December 16, 1998, is entered into by and between INTERNATIONAL TOTAL
SERVICES, INC., an Ohio corporation ("Borrower"), and BANK ONE, NA, successor by
merger to BANK ONE, CLEVELAND, NA, a national bank (the "Bank").
WITNESSETH
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WHEREAS, the Borrower and the Bank are parties to that certain Third
Amended and Restated Consolidated Replacement Credit Facility and Security
Agreement dated as of March 31, 1997, as amended by that certain First Amendment
dated as of October 10, 1997 (the "Loan Agreement", all terms defined in said
Loan Agreement being used herein with the same meaning), pursuant to which the
Bank has agreed to make a $30,000,000 Revolving Loan to the Borrower until
September 30, 1999, evidenced by a Note dated October 10, 1997 and payable to
the Bank, such Note being payable on demand; and
WHEREAS, the Borrower and the Bank have agreed to amend the Loan
Agreement (i) to provide for a new form of Borrowing Base Certificate; and (ii)
to modify certain definitions in Section 1 of the Loan Agreement, to modify
certain provisions of Section 2 of the Loan Agreement and to modify certain
convents in Section 8 of the Loan Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Borrower and the Bank agree as follows:
AGREEMENT
Section 1. AMENDMENT OF LOAN AGREEMENT.
A. The definition of "Commitment" set forth in Section 1 of the
Agreement is, effective the Effective Date, hereby amended and restated to read
in its entirety as follows:
COMMITMENT - Lender's letter to Borrower dated March 21, 1997,
as accepted by Borrower on March 25, 1997; Lender's letter to Borrower dated
June 11, 1997, containing
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Option A and B as accepted by Borrower on June 11, 1997 as to Option B; and
Lender's letter to Borrower dated December 3, 1998, as accepted by Borrower on
December 9, 1998.
B. Subsection 2.3(A) of the Agreement is, effective the Effective Date,
amended and restated to read in its entirety as follows:
2.3 REVOLVING LOAN.
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, from and after December 16, 1998 until September 30, 1999 make
such loans to the Borrower as from time to time the Borrower requests (the
"Revolving Loan") consisting of advances made by Lender against the value of
Eligible Accounts-Domestic and Eligible Accounts-Foreign. Subject to the
provisions of Subsection (B) of this Section 2.3, the aggregate unpaid principal
of the Revolving Loan outstanding at any one time shall not exceed the lesser of
(a) the line of credit approved for Borrower, which is currently Thirty Million
Dollars ($30,000,000), less the face amount of all outstanding Letters of Credit
issued by Lender for the account of Borrower or (b) the sum of (i) eighty
percent (80%) of the unpaid face amount of Eligible Accounts-Domestic (or such
other percentages of Eligible Accounts-Domestic as may from time to time be
fixed by the Lender upon notice to the Borrower) and (ii) the lesser of fifty
percent (50%) of the unpaid face amount of Eligible Accounts-Foreign (or such
other percentages of Eligible Accounts- Foreign as may from time to time be
fixed by the Lender upon notice to the Borrower) or Three Hundred Fifteen
Thousand Dollars ($315,000) (or such other dollar amount as may from time to
time be fixed by the Lender upon notice to the Borrower) less a reserve equal to
twenty-five percent (25%) of the Borrower's accrued payroll and related expenses
account calculated at the most recent calendar month-end plus the difference
between seventy-five percent (75%) of the accrued payroll and related expense
account and forty percent (40%) of the qualified accounts receivable value (Line
8 of the Borrowing Base Certificate); provided, however, that if this figure is
zero or negative, a zero value will be added to the reserve for payroll and
related expenses account, otherwise the difference will be added to the reserve
for payroll and related expenses account; and further provided, however, the
reserve is limited to a maximum of fifty percent (50%) of the Borrower's accrued
payroll and related expenses account.
C. Subsection 8.1(O) of the Agreement is, effective the Effective Date,
hereby amended and restated to read in its entirety as follows:
(O) Maintain at all times a Tangible Net Worth equal to or
greater than Five Hundred Thousand Dollars ($500,000) commencing September 30,
1998 and thereafter, and maintain at all times Stockholder's Equity equal to or
greater than Thirty-Eight Million Dollars ($38,000,000) commencing September 30,
1998 and thereafter, such covenants to be calculated monthly in accordance with
GAAP based on Borrower's internally prepared interim financial statements.
D. Subsection 8.2(K) of the Agreement is, effective the Effective Date,
hereby amended and restated to read in its entirety as follows:
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(K) Make Capital Expenditures during any fiscal year of
Borrower which, in the aggregate, exceed Four Million Dollars ($4,000,000).
E. EXHIBIT A attached to the Loan Agreement is, effective the Effective
Date, hereby deleted and the form of Borrowing Base Certificate attached to this
Agreement as EXHIBIT A is hereby substituted therefor.
Section 2. EFFECTIVE DATE OF THE AGREEMENT.
The effective date of this Agreement ("Effective Date") shall be the
date on which all conditions precedent have been satisfied, or waived by the
Bank in writing.
Section 3. CONDITIONS PRECEDENT.
Borrower hereby acknowledges and agrees that the effectiveness of this
Agreement is conditioned upon the receipt by the Bank, on or prior to the date
hereof, in form and substance satisfactory to the Bank and its counsel, of the
following:
A. A certificate, dated as of the date hereof, signed by the Chief
Executive Officer of Borrower and to the effect that:
1) As of said date, no Event of Default has occurred and
is continuing, and no event has occurred and is
continuing that, with the giving of notice or passage
of time, or both, would be an Event of Default; and
2) The representations and warranties of Borrower set
forth in Section 7 of the Loan Agreement are true and
correct as of such date; and
3) Borrower is in compliance with all of the terms and
conditions set forth in the Loan Agreement on and as
of said date.
B. A certificate, dated as of the date hereof, signed by the Secretary
of Borrower certifying as follows:
1) Borrower's Articles of Incorporation and Code of
Regulations have not been modified or amended since
June 17, 1997 (or certifying that true, correct and
complete copies of all such modifications and
amendments are attached thereto); and
2) Copies of resolutions of Borrower's Board of
Directors are attached thereto with respect to the
approval of this Agreement and of the matters
contemplated hereby and authorizing the execution,
delivery and performance of this Agreement and each
other document, instrument, agreement or note to be
delivered pursuant hereto; and
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3) As to the incumbency and signatures of the officers
of Borrower signing this Agreement and each other
document, instrument, agreement or note to be
delivered pursuant hereto.
C. An Acknowledgement, Consent and Agreement in the form of EXHIBIT B
attached hereto, with all blanks completed, duly executed and delivered by
Transport, NBC, and the Guarantors to Bank.
D. The written opinion of counsel for Borrower as to the enforceability
of this Agreement, the Loan Agreement, Note, and each of the other Credit
Documents and covering such other issues thereunder as requested by Bank and its
counsel.
E. Such other documents, instruments, agreements and notes as the Bank
may reasonably request to implement this Agreement and the transactions
contemplated hereby and by the Loan Agreement.
SECTION 4. FEES AND EXPENSES.
Borrower shall pay all out-of-pocket fees and expenses incurred by the
Bank in connection with the preparation, negotiation, execution and delivery of
this Agreement, the promissory notes, guaranty, participation agreement, and all
the other agreements, documents or certificates required or contemplated hereby,
including, without limitation, legal fees and expenses of the Bank.
SECTION 5. REFERENCES.
On and after the effective date of this Agreement, each reference in
the Loan Agreement to "this Agreement", "hereunder", "hereof", or words of like
import referring to the Loan Agreement, and in the Note to the "Loan Agreement",
"thereof", or words of like import referring to the Loan Agreement shall mean
and refer to the Loan Agreement as previously amended and as amended hereby.
References to EXHIBIT A in the Loan Agreement shall be deemed to refer to the
form of Borrowing Base Certificate attached hereto as EXHIBIT A. The Loan
Agreement, as previously amended and as amended by this Agreement, and all
Credit Documents are and shall continue to be in full force and effect and are
hereby and in all respects ratified and confirmed. References to the Loan
Agreement in the Note shall be deemed to include all amendments to the Loan
Agreement whether specified in the Note or not.
SECTION 6. APPLICABLE LAW.
This Agreement shall be deemed to be a contract under the laws of the
State of Ohio, and for all purposes shall be construed in accordance with the
laws of the State of Ohio.
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SECTION 7. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any one
of the parties hereto may execute this Agreement by signing any such
counterpart.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed by their duly authorized officers as of the date and
year first above written.
BANK ONE, NA INTERNATIONAL TOTAL SERVICES, INC.
By /s/Xxxxx X. Xxxxxxxx By /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President Title: Chief Executive Officer
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SCHEDULE 1
List of Guarantors
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DOMESTIC
Crown Technical Systems, Inc. (Ohio)
T.I.S. Incorporated (Texas)
Certified Investigative Services, Inc. (Texas)
I.T.S. of New York, Inc. (New York)
Selective Detective Services, Inc. (New Jersey)
FOREIGN
International Total Services, Ltd. (United Kingdom)
International Transport Security, s.r.o. (Czech Republic)
International Transport Services, Ltd. (Thailand)
EXHIBIT A
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FORM OF BORROWING BASE CERTIFICATE
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EXHIBIT B
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FORM OF ACKNOWLEDGMENT, CONSENT AND AGREEMENT (GUARANTORS)
ACKNOWLEDGEMENT, CONSENT AND AGREEMENT
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The undersigned each hereby acknowledges receipt of a copy of the Second
Amendment to Third Amended and Restated Consolidated Replacement Credit Facility
and Security Agreement dated as of December 16, 1998, by and between
International Total Services, Inc. ("Borrower") and Bank One, NA, successor by
merger to Bank One, Cleveland, NA ("Bank One") and by executing this
Acknowledgment, Consent and Agreement the undersigned each hereby agrees to
remain bound by the terms and conditions of its respective Amended and Restated
Replacement Guaranty Agreement, Guaranty Agreement, Amended and Restated
Replacement Guarantor Security Agreement and Guarantor Security Agreement, as
applicable, each dated as of August 11, 1995, executed and delivered to Bank One
in connection with the Second Amended and Restated Replacement Credit Agreement
dated as of August 11, 1995, as subsequently amended, and each other document
hereafter executed in connection herewith or therewith by the undersigned.
Dated: December 16, 1998
CROWN TECHNICAL SYSTEMS, INC.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
T.I.S. INCORPORATED
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
CERTIFIED INVESTIGATIVE SERVICES,
INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
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I.T.S. OF NEW YORK, INC.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SELECTIVE DETECTIVE SERVICES, INC.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
INTERNATIONAL TOTAL SERVICES, LTD.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
INTERNATIONAL TRANSPORT SECURITY,
s.r.o.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
INTERNATIONAL TRANSPORT SERVICES,
LTD.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
