Waiver, Direction, and Amendment No. 1 to $40,000,000 Second Amended and Restated Loan Agreement between The Kroll-O'Gara Company and KeyBank National Association

Summary

This agreement is between The Kroll-O'Gara Company (and related entities) and KeyBank National Association. It amends their $40 million loan agreement to allow the sale of certain company stock to Armor Holdings, Inc. and Bengal Acquisition Corp. The bank agrees to waive specific default rights related to this sale, release certain collateral, and adjust the loan's interest rate. These changes are conditional on the company making required loan prepayments and completing the stock sale by a set deadline. All other terms of the original loan agreement remain in effect.

EX-10.19 12 l87296aex10-19.txt EXHIBIT 10.19 1 Exhibit 10.19 WAIVER, DIRECTION AND AMENDMENT NUMBER ONE RE: THE KROLL-O'GARA COMPANY, O'GARA-HESS & EISENHARDT ARMORING COMPANY, KROLL HOLDINGS, INC and KROLL ASSOCIATES, INC. $40,000,000 SECOND AMENDED AND RESTATED LOAN AGREEMENT DATED AS OF MARCH 30, 2001 Dated as of April 20, 2001 THE KROLL-O'GARA COMPANY 9113 LeSaint Drive Fairfield, Ohio 45014 To: KeyBank National Association Ladies and Gentlemen: Reference is made to the Second Amended and Restated Revolving Credit Note (the "NOTE") of The Kroll-O'Gara Company, O'Gara-Hess & Eisenhardt Armoring Company, Kroll Holdings, Inc and Kroll Associates, Inc. (together with their successors and assigns, the "COMPANY"), in the aggregate principal amount of $40,000,000 outstanding under the Second Amended and Restated Loan Agreement dated as of March 30, 2001 (collectively, the "LOAN AGREEMENT"), between the Company and KeyBank National Association (the "BANK"). All terms not otherwise defined herein are used with the same meaning as set forth in the Loan Agreement. Pursuant to a Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT") in the form attached hereto as ANNEX 1, the Company intends to consummate a transaction (the "STOCK SALE") whereby the Company will sell, and Armor Holdings, Inc., and Bengal Acquisition Corp will purchase, the Securities (as described in the Stock Purchase Agreement) of the Company. The Company hereby requests that the Bank waive certain rights under the Loan Agreement and instruct the Collateral Agent to release certain collateral, all as more particularly set forth herein. 1. WAIVER AND DIRECTION. Subject to the terms and conditions set forth in Section 3 hereof, and based upon information furnished by the Company to the Bank, the Bank hereby (a) agrees to waive its rights to take any action under the Loan Agreement as a result of any Event of Default resulting from the Company's failure to comply with Section 7.13 of the Loan Agreement due solely to the Stock Sale and (b) instructs the Collateral Agent to release its Lien on the assets and stock of the corporations whose stock is which are the subject of the Stock Sale contemporaneously with the closing of the Stock Sale. 2. AMENDMENT TO INTEREST RATE. (a) Effective April 20, 2001, the Rate of interest payable under the Note will be the Note Interest Rate. As used herein, "NOTE INTEREST RATE" means, as of any date of determination, a rate per annum equal to (a) if such date is prior to April 20, 2001, the greater of: (i) 8.56% or (ii) the Prime Rate plus one and one-half percent (1.50%) and (b) if such date is on or after April 20, 2001, the greater of: (i) 8.56% or (ii) the lesser of (A) the highest interest rate allowed by applicable law on the Note and (B) the Prime Rate PLUS one and one-half of one percent (1.50%) plus the Applicable Adjustment Margin as of such date." 1 2 (b) Effective April 20, 2001, Section 14 of the Loan Agreement is hereby amended by adding the following definition in appropriate alphabetical order: "APPLICABLE ADJUSTMENT MARGIN - means, as of any date of determination, an amount equal to the product of (a) one-half of one percent (0.50%) TIMES (b) the number of complete 30 consecutive day periods which shall have expired since April 20, 2001 as of such date of determination." 3. EFFECTIVENESS OF WAIVER AND DIRECTION; EFFECT UPON OTHER PROVISIONS OF THE LOAN AGREEMENT AND THE NOTE. (a) The waiver and direction set forth in Section 1 above is subject to satisfaction of each of the following conditions: (i) the full execution and the delivery of this letter agreement by the Company and the Bank; (ii) contemporaneously with the closing of the Stock Sale, the Company shall prepay, pursuant to the Loan Agreement, the Note in an aggregate principal amount of not less than the greater of (A) $19,876,500 and (B) and amount equal to 56.79% of: (1) the cash portion of the purchase price actually received at the closing by the Seller (as defined in the Stock Purchase Agreement) under the Stock Purchase Agreement minus (2) $3,000,000; (iii) the execution, delivery and effectiveness of an agreement, signed by Noteholders under the Note Purchase Agreement in form and substance acceptable to the Bank containing (A) a waiver on behalf of the Noteholders, identical in substance to the waiver set forth in Section 1 hereof, with respect to Section 8.19 of the Note Purchase Agreement and (B) a direction to the Collateral Agent identical in substance to the direction set forth in Section 1 hereof; (iv) the warranties and representations contained in Section 4 hereof being true on and as of the date hereof.; (v) any and all shares of capital stock of Armor Holdings, Inc. ("AHI") or any other Person received by the Company or any of its Affiliates in connection with the Stock Sale shall have been pledged to the Collateral Agent pursuant to a pledge agreement in form and substance reasonably satisfactory to the Noteholders and the Bank and such shares will be released by the Collateral Agent upon sales by the Company pursuant to the terms of the Purchase Agreement; and (vi) the closing of the Stock Sale shall have been completed on or before the Termination (as such term is defined in the Stock Purchase Agreement). 2 3 (b) The Company agrees that the waiver set forth in Section 1(a) shall remain in effect if and so long as the Company (i) prepays, pursuant to the provisions of Section 3 of the Note, the following principal amounts of Note: (A) upon receipt by the Company of any proceeds from the sale of shares of capital stock of AHI or payments made by AHI as Tranche One Deficit or Tranche One Excess amounts pursuant to the provisions of Section 3 of Schedule 2.6 of the Stock Purchase Agreement, in each case received as consideration by it in connection with the Stock Sale a principal amount of the Note equal to 56.79% of such proceeds or amounts as the case may be, and (B) within sixty (60) days of the closing of the Stock Sale, a principal amount of Note equal to the difference (if a positive number) between (1) $8,518,500 and (2) an amount equal to 56.79% of the aggregate proceeds received by the Company from each sale of one or more shares of such capital stock of AHI within the sixty (60) day period immediately following the closing of the Stock Sale and paid by the Company pursuant to clause (A) above; (ii) On or before sixty (60) days immediately following the closing of the Stock Sale the Company pays in full the entire outstanding principal amount of the Note together with interest thereon. (c) It is further agreed and understood that (i) the amounts contemplated to be so paid shall be considered due and payable on each of such dates and (ii) the failure of the Company to pay the amounts due on the Note as provided in clause (b) above shall constitute an immediate Event of Default. (d) The execution, delivery and effectiveness of this letter agreement shall not be deemed, except as expressly provided herein, (i) to operate as a waiver of any right, power or remedy of the Bank under the Loan Agreement or the Note, nor constitute a waiver of any provision thereunder, or (ii) to prejudice any rights which the Bank now has or may have in the future under or in connection with the Loan Agreement, the Note or any other documents referred to therein. Except as specifically set forth above, all terms and conditions of the Loan Agreement shall remain unchanged and in full force and effect. 4. WARRANTIES AND REPRESENTATIONS. To induce you to enter into this letter agreement, the Company warrants and represents, as of the date hereof, as follows: (a) No Default or Event of Default has occurred or is continuing (other than the Event of Default which will be waived by the execution, delivery and effectiveness of this letter agreement and the agreements described in Section 3 hereof), nor does any event or condition exist that, upon the execution, delivery and effectiveness of this letter agreement, would constitute a Default or an Event of Default; and (b) Except for an amendment to the interest rate in the Note Purchase Agreement 3 4 which is the same as the amendment set forth in Section 2 above, the Noteholders will not receive, directly or indirectly, any fee, interest rate adjustment or other remuneration for the waiver or direction under the agreement described in Section 3(a)(iii) hereof. (c) The assets of the corporations whose stock is the subject of the Stock Purchase Agreement are the assets (other than the Excluded Assets) of the Company's Security Products and Services Group described in the Company's Preliminary Proxy Statement filed September 19, 2000 with the Securities and Exchange Commission. Excluded Assets means the assets and capital stock of Securify, Inc., O'Gara Laura Automotive Group, O'Gara Security Systems, O'Gara-Hess & Eisenhardt CIS and certain other entities that have no assets or business operations. 5. PAYMENT OF FEES AND EXPENSES. In accordance with Section 11 of the Loan Agreement, the Company shall pay or, if paid by the Bank, reimburse the Bank for, all out-of-pocket fees, costs and expenses paid or incurred by the Bank in connection with the negotiation, preparation, drafting, implementation, actual or proposed amendment or modification, administration and enforcement of this letter agreement, the Loan Agreement and the Note. 6. COUNTERPARTS. This letter agreement and all acceptances hereof may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 4 5 Very truly yours, THE KROLL-O'GARA COMPANY By: ---------------------------- Name: Title: ACCEPTED AND AGREED: KEYBANK NATIONAL ASSOCIATION By: --------------------------- Name: Title: Annex 1-1 6 ANNEX 1 ASSET PURCHASE AGREEMENT ------------------------ Annex 1-2