Exhibit 10.20
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BORG-WARNER SECURITY CORPORATION
SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
AND CONSENT
This SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
CONSENT (this "Amendment") is dated as of May 10, 1999 and entered into by and
among Borg-Warner Security Corporation, a Delaware corporation ("Company"), the
financial institutions listed on the signature pages hereof ("Lenders"),
Canadian Imperial Bank of Commerce, as Documentation Agent (the "Documentation
Agent"), NationsBank, N.A., as Syndication Agent (the "Syndication Agent") and
Bankers Trust Company, as Administrative Agent for Lenders ("Agent"), and, for
purposes of Section 5 hereof, the Credit Support Party (as defined in Section 5
hereof) listed on the signature pages hereof, and is made with reference to that
certain Amended and Restated Credit Agreement dated as of June 30, 1998 (as
heretofore amended, the "Credit Agreement"), by and among Company, Lenders,
Documentation Agent, Syndication Agent and Administrative Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
(i) release amounts held in a blocked account pursuant to Section 5.13 of the
Credit Agreement on the terms and conditions described herein, (ii) permit the
making of certain Restricted Junior Payments, (iii) amend certain defined terms,
(iv) amend Section 2.2A of the Credit Agreement to change the basis on which the
rate of interest payable on the Loans is determined and (v) make certain other
amendments as set forth below;
WHEREAS, Company has been released from indemnity obligations owing to
Mustang Holdings, Inc. and Company desires to exchange those certain Mustang
Holdings, Inc. promissory notes (the "Mustang Notes"), which were delivered to
the Collateral Agent to secure the Loans under the Credit Agreement, for 312,500
shares of the stock of the purchaser (the "Purchaser") of Pony Express, Inc.;
WHEREAS, Lenders desire to release without replacement the Mustang
Notes held by the Collateral Agent pursuant to the Company Pledge Agreement to
secure the Loans under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Certain Defined Terms
A. The definition of "Commitment Fee Percentage" is hereby amended by
deleting such definition in its entirety and replacing such definition with the
following:
"(Commitment Fee Percentage) means the per annum Commitment Fee
Percentage set forth in the table below opposite Company's Pro Forma
Consolidated Leverage Ratio as set forth in the Margin Determination
Certificate delivered pursuant to subsection 5.1(xvii) of the Credit
Agreement, any required adjustment to become automatically effective
on the next succeeding Business Day following receipt by the
Administrative Agent of such Margin Determination Certificate:
Pro Forma Consolidated Leverage Ratio Commitment Fee
------------------------------------- Percentage
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Equal to or greater than 3.00:1.00 0.50%
Equal to or greater than 2.50:1.00 but less than 0.375%
3.00:1.00
Equal to or greater than 2.00:1.00 but less than 0.325%
2.50:1.00
Less than 2.00:1.00 0.25%
; provided however for the period (i) from March 25, 1999 until the
Second Amendment Effective Date, the Commitment Fee Percentage shall
be the rate in effect under the Credit Agreement immediately prior to
the Second Amendment Effective Date and (ii) commencing on the Second
Amendment Effective Date through the date on which Company delivers
the first Margin Determination Certificate pursuant to subsection
5.1(xvii) of the Credit Agreement, the Commitment Fee Percentage shall
be the rate determined in accordance with the Margin Determination
Certificate delivered on the Second Amendment Effective Date.
If Company fails to deliver a Margin Determination Certificate by
the time required by subsection 5.1(xvii), from such time the Margin
Determination Certificate was required to be delivered until delivery
of such Margin Determination Certificate, the Commitment Fee
Percentage shall be automatically adjusted to the highest rate
provided in the above table."
B. Subsection 1.1 of the Credit Agreement is hereby amended by adding
the definition of "Margin Determination Certificate" in appropriate alphabetical
order as follows:
" 'Margin Determination Certificate' means a certificate substantially
in the form annexed hereto as Exhibit XV delivered to Lenders by
Company pursuant to subsection 5.1(xvii)."
C. Subsection 1.1 of the Credit Agreement is hereby amended by adding
the definition of "Pro Forma Consolidated Leverage Ratio" in appropriate
alphabetical order as follows:
" 'Pro Forma Consolidated Leverage Ratio' means the ratio of Net
Funded Debt, after giving effect to any Restricted Junior Payment
made, and any Funded Debt incurred in connection with any such
Restricted Junior Payment, pursuant to clauses (iv) or (v) of
subsection 6.5, as of the date of the Margin Determination
Certificate, to Consolidated Adjusted EBITDA as set forth in Company's
most recent Compliance Certificate."
D. Subsection 1.1 of the Credit Agreement is hereby amended by adding
the definition of "Second Amendment Effective Date" in appropriate alphabetical
order as follows:
" 'Second Amendment Effective Date' means the date the Second
Amendment to Amended and Restated Credit Agreement dated as of May 10,
1999 became effective pursuant to the terms thereunder."
1.2 Amendments to Section 2: Amounts and Terms of Commitments and
Loans; Notes; Letters of Credit
A. Subsection 2.2A of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing such subsection with the
following:
"A. Rate of Interest. Subject to the provisions of subsection 2.6,
each Loan shall bear interest on the unpaid principal amount thereof
from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the
Adjusted Eurodollar Rate; provided that nothing herein shall entitle
any Lender to charge or receive interest in excess of the maximum rate
allowed by applicable law. The applicable basis for determining the
rate of interest shall be selected by Company initially at the time a
Notice of Borrowing is given pursuant to subsection 2.1B. The basis
for determining the interest rate with respect to any Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day
a Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by
reference to the Base Rate.
On or after the Second Amendment Effective Date through maturity,
the Loans shall bear interest (except as provided for in the last
sentence of this subsection 2.2A) as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus
the applicable Base Rate margin (the "Base Rate Margin") set
forth in the table below; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the applicable Eurodollar Rate margin (the
"Eurodollar Rate Margin") set forth in the table below:
Pro Forma Consolidated Base Rate Eurodollar
Leverage Ratio Margin Rate Margin
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Equal to or greater than 3.00:1:00 1.00% 2.00%
Equal to or greater than 2.50:1.00 0.75% 1.75%
but less than 3.00:1.00
Equal to or greater than 2.00:1.00 0.50% 1.50%
but less than 2.50:1.00
Less than 2.00:1.00 0.00% 1.00%
; provided however for the period (i) from March 25, 1999 until the
Second Amendment Effective Date, the Loans shall bear interest at the
rate in effect under the Credit Agreement immediately prior to the
Second Amendment Effective Date and (ii) commencing on the Second
Amendment Effective Date through the date on which Company delivers
the first Margin Determination Certificate pursuant to subsection
5.1(xvii) of the Credit Agreement, the Loans shall bear interest
determined in accordance with the Margin Determination Certificate
delivered on the Second Amendment Effective Date.
The applicable Base Rate Margin or the applicable Eurodollar Rate
Margin shall be the Base Rate Margin or the Eurodollar Rate Margin, as
the case may be, set forth in the table above opposite Company's Pro
Forma Consolidated Leverage Ratio as set forth in the Margin
Determination Certificate delivered pursuant to subsection 5.1(xvii)
of the Credit Agreement, any required adjustment to become
automatically effective on the next succeeding Business Day following
receipt by the Administrative Agent of such Margin Determination
Certificate. If Company fails to deliver a Margin Determination
Certificate by the time required by subsection 5.1(xvii), from such
time the Margin Determination Certificate was required to be delivered
until delivery of such Margin Determination Certificate, the Base Rate
Margin and the Eurodollar Rate Margin shall automatically be adjusted
to the highest rate provided in the above table."
1.3 Amendment to Section 5: Company's Affirmative Covenants
A. Subsection 5.1 of the Credit Agreement is hereby amended by
deleting the word "and" from the end of clause (xv) thereof, by deleting the
period and adding "; and" at the end of clause (xvi) thereof, and by adding a
new clause (xvii) as follows:
"(xvii) a Margin Determination Certificate (a) together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above and (b) in the event
that Company or any of its Subsidiaries shall, directly or indirectly,
make a Restricted Junior Payment in excess of $10,000,000 pursuant to
clauses (iv) or (v) of subsection 6.5, by noon of the third succeeding
Business Day."
B. Section 5.13 of the Credit Agreement is hereby amended by deleting
such section in its entirety and by replacing such text with the phrase
"Intentionally Omitted."
1.4 Amendments to Section 6: Company's Negative Covenants
A. Subsection 6.5 of the Credit Agreement is hereby amended by
deleting the word "and" at the end of clause (iii) thereof, by adding the word
"and" at the end of clause (iv) thereof and by adding a new clause (v) as
follows:
"(v) in addition to the number of shares of Common Stock permitted to
be repurchased pursuant to subsection 6.5(ii) above, Company may make
Restricted Junior Payments to repurchase 4,350,000 shares of Common
Stock from MLCP and its affiliates at a repurchase price which does
not exceed $18.375 per share plus declared and unpaid dividends
thereon;"
B. Subsection 6.6A of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing such subsection with the
following:
"A. Interest Coverage Ratio. Company will not permit its Interest
Coverage Ratio as of the last day of each fiscal quarter for the four
consecutive preceding fiscal quarters ended on such date to be less
than 3.00:1.00."
1.5 Amendments to Exhibits: Margin Determination Certificate
A. The Credit Agreement is hereby amended by adding an Exhibit XV to
the Credit Agreement in the form of Exhibit A to this Amendment.
Section 2. CONSENT
Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Company herein contained and
notwithstanding anything to the contrary contained in subsections 6.7(iii) and
6.9 of the Credit Agreement, Lenders hereby consent to (i) the transfer of the
Mustang Notes in exchange for 312,500 shares of the Purchaser's stock and (ii)
the release without replacement of the Mustang Notes held by the
Collateral Agent pursuant to the Company Pledge Agreement to secure the Loans
under the Credit Agreement.
Section 3. CONDITIONS TO EFFECTIVENESS
Section 1 and 2 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Second
Amendment Effective Date"):
A. On or before the Second Amendment Effective Date, Company shall
deliver to Lenders (or to Administrative Agent for Lenders) the following, each,
unless otherwise noted, dated the Second Amendment Effective Date:
1. Signature and incumbency certificates of its officers executing
this Amendment;
2. Executed copies of this Amendment;
3. Executed Officers' Certificate stating that as of the Second
Amendment Effective Date and after giving effect on a pro forma
basis to (i) the repurchase of 4,350,000 shares of the Company's
Common Stock at a repurchase price of up to $18.375 per share
plus declared but unpaid dividends thereon and (ii) the tender of
all of the Company's outstanding Senior Subordinated Notes at a
tender price which does not exceed 116% of the principal amount
thereof, plus accrued and unpaid interest thereon, and in each
case, any debt incurred or fees and expenses paid in connection
therewith, the Company is in pro forma compliance with its
financial covenants;
4. A Margin Determination Certificate for the fiscal period ending
March 31, 1999;
5. Receipt by the Company of any necessary consents from the holders
of Senior Subordinated Notes that permit the repurchase of 4.35
million shares of the Company's Common Stock and Senior
Subordinated Notes; and
6. Receipt by each of the Lenders executing this Amendment of an
amendment fee in an amount equal to % of such Lender's
Commitment.
B. On or before the Second Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel
shall be satisfactory in form and substance to Administrative Agent and such
counsel, and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.
C. Requisite Lenders shall have executed and delivered copies of this
Amendment to Administrative Agent.
Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. No Conflict. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries.
D. Governmental Consents. The execution and delivery by Company of
this Amendment and the performance by Company of the Amended Agreement do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other governmental
authority or regulatory body.
E. Binding Obligation. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Second Amendment Effective Date to the same extent as
though made on and as of that date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 5. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Pledge Agreement, pursuant to which
Company has created Liens in favor of Administrative Agent on certain Collateral
to secure the Obligations. Borg-Warner Protective Services Corporation (the
"Credit Support Party") has (i) guarantied the Obligations pursuant to the Borg-
Warner Subsidiary Guaranty and (ii) pledged certain Collateral to Administrative
Agent to secure the obligations of such subsidiary under such guaranty pursuant
to the Borg-Warner Subsidiary Pledge Agreement. Company and such subsidiary are
collectively referred to herein as the "Credit Support Parties", and the Borg-
Warner Subsidiary Guaranty and/or the Borg-Warner Subsidiary Pledge Agreement
and Company Pledge Agreement are collectively referred to herein as the "Credit
Support Documents".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Second Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the Credit
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Credit Support Party to any future amendments to the Credit
Agreement.
Section 6. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Second Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring
to the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of
Administrative Agent or any Lender under, the Credit Agreement or any
of the other Loan Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 9.2 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORG-WARNER SECURITY CORPORATION
By:
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Title:
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BORG-WARNER PROTECTIVE SERVICES CORPORATION, (for
purposes of Section 5 only) as a Credit Support Party
By:
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Title:
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BANKERS TRUST COMPANY, Individually and as
Administrative Agent
By:
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Title:
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CIBC INC.,
individually and as Documentation Agent
By:
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Title:
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NATIONSBANK, N.A.,
individually and as Syndication Agent
By:
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Title:
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ABN AMRO BANK, N.V., CHICAGO BRANCH
By:
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Title:
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ARAB BANKING CORPORATION
By:
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Title:
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BANK OF HAWAII
By:
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Title:
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THE BANK OF NEW YORK
By:
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Title:
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BANQUE PARIBAS
By:
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Title:
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CREDIT AGRICOLE INDOSUEZ
By:
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Title:
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COMMERCIAL LOAN FUNDING TRUST I
By: Lehman Commercial Paper Inc., not in its
individual capacity but solely as administrative
agent.
By: ___________________________________
Name: Michele Swanson
Title: Authorized Signatory
THE FUJI BANK, LIMITED
CHICAGO BRANCH
By:
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Title:
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IMPERIAL BANK
By:
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Title:
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THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:
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Title:
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MERCANTILE BANK NATIONAL ASSOCIATION
By:
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Title:
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MERITA BANK
By:
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Title:
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UNITED WORLD CHINESE COMMERCIAL BANK, LOS ANGELES AGENCY
By:
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Title:
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TORONTO DOMINION (TEXAS), INC.
By:
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Title:
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