Exhibit 10.48
MODIFICATION AND REAFFIRMATION AGREEMENT
This agreement dated as of July 31, 2003, by and between HOST
AMERICA CORPORATION, a Colorado corporation with an office and place of
business at 0 Xxxxxxxx, Xxxxxx, Xxxxxxxxxxx ("Host"), XXXXXXX FOOD
SERVICE CORPORATION, a Connecticut corporation with an office and place
of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000
(Lindley"), SELECT FORCE, INCORPORATED ("Select" which was formerly known
as HOST MERGER CORPORATION), a Colorado corporation with an office and
place of business at Broadway Executive Five, 0000 Xxxxx Xxxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx ("Select Force") (Host, Xxxxxxx and Select Force
are hereinafter sometimes collectively referred to as "Borrowers") and
XXXXXXX BANK, a Connecticut banking corporation with an office and place
of business located at 000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (the
"Bank").
W I T N E S S E T H:
WHEREAS, Host and Xxxxxxx entered into a certain commercial loan and
security agreement with Bank dated as of July 31, 2000; and
WHEREAS, Host and Xxxxxxx executed and delivered payable to the
order of Bank a certain revolving credit note dated as of July 31, 2000,
in the original principal amount of up to $1,200,000.00 and a certain
term note dated as of July 31, 2000, in the original principal amount of
$2,500,000.00; and
WHEREAS, the term note and revolving credit note were modified and
amended to add Select as a party to the July 31, 2000 commercial loan and
security agreement as a joint and several obligor of Host and Xxxxxxx'x
indebtedness to the Bank and to increase the amount of the revolving
credit note from $1,200,000.00 to $1,500,000.00 pursuant to the terms of
a $1,500,000.00 first amended and restated revolving credit note dated
April 5, 2002 (the "Revolving Note") and to decrease the amount of the
term note from $2,500,000.00 to $1,553,333.36 pursuant to the terms of a
certain $1,553,333.36 first amended and restated term note dated April 5,
2002 (the "Term Note") and to make certain other modifications and
changes in the terms and conditions of each of the foregoing loans; and
WHEREAS, the Borrowers jointly and severally executed and delivered
various other documents and instruments in connection with the execution
of the Revolving Note and the Term Note, including a certain First
Amended and Restated Commercial Loan and Security Agreement (the
"Agreement"), all dated as of April 5, 2002, or such earlier dates as are
referenced therein (such loan documents, together with the Agreement, the
Revolving Note and the Term Note are hereinafter collectively referred to
as the "Loan Documents"); and
WHEREAS, the outstanding principal balance of the Revolving Note is
$424,889.00; and
WHEREAS, the outstanding principal balance of the Term Note is
$1,165,000.01; and
WHEREAS, the Borrowers entered into a certain agreement dated
February 28, 2003, by and between the Borrowers and the Bank wherein the
entire outstanding balance due under the Revolving Note and the Term Note
become due and payable in full on April 30, 2003; and
WHEREAS, the Borrowers have requested an extension of the maturity
date of the Revolving Note and the Term Note to July 1, 2004; and
WHEREAS, the Borrowers have agreed that there shall be no further
Availability under the Revolving Note; and
WHEREAS, the Borrowers have requested a commitment from the Bank to
make available, from time to time, standby letters of credit in an
aggregate amount not to exceed $143,550.00 (collectively the "L/Cs" and
each individually an "L/C"). The face amount of the L/Cs shall be
included within the borrowing base computation pursuant to the revised
consolidated borrowing base certificate appended hereto as Exhibit A.
Notwithstanding the elimination of any further Availability under the
Revolving Note, , L/Cs shall be issued in face amounts which at all
times shall be within the limitations set forth in Section II "Letter of
Credit Availability" on Exhibit A (the "L/C Availability") as such amount
may change from time to time as updated Borrowing Base Certificates are
filed with the Bank. Amounts drawn under any L/C shall be immediately
reimbursed by Borrowers to the Bank.
WHEREAS, the Bank has agreed to the foregoing extension of the
maturity date of the Revolving Note and the Term Note and to make
available L/Cs up to the aggregate amount of $143,550.00, all on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, the parties hereto hereby agree as follows:
1. The Preamble to this agreement is hereby incorporated in, and
made a part of the body of this agreement, as if fully set forth herein.
2. Section 1.1 of the Agreement is amended such that subsection
(A) Revolving Credit and (B) Term Loan thereof shall be amended as
follows:
(A) (i) Other than L/Cs in the aggregate face amount of up to
$143,550.00, Bank shall make no further Advances to Borrowers
under the Agreement or the Revolving Note. Pursuant to Exhibit
A for purposes of testing the Collateral Coverage Ratio in
Paragraph 4D hereafter, the Borrowing Base on Line 4 shall
equal 80% of Warranted Accounts, which are acceptable to the
Bank in its sole and absolute discretion.
(ii) At the request of the Borrowers, Bank will make available
to Borrowers L/Cs in an aggregate face amount not to exceed
$143,550.00 at any one time. Amounts drawn under any L/C shall
be immediately reimbursed by Borrowers to Bank and
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shall reduce such aggregate face amount outstanding by the
amount of such draw and reimbursement. Bank may, but shall not
be obligated, to withdraw such amounts from any account
maintained by any Borrower with the Bank. Borrower shall pay
to the Bank a fee in connection with the issuance of each L/C
hereunder. The amount of such fee shall be two (2%) percent
per annum (which fee shall be prorated if L/Cs are issued for
periods less than one year)of the face amount of each L/C and
shall be payable upon issuance. In no event shall any L/C be
issued for a period ending after July 1, 2004; and
(iii) Subsection (iii) and (iv) of Section 1.1A shall be
deleted, except that a revised borrowing base certificate in
the form appended as Exhibit A shall continue to be provided
weekly to the Bank on or before 12:00 noon on each Tuesday for
the prior week.
(B) Term Loan. The Term Note in the original principal amount of
$1,553,332.36, which now has a principal balance of $1,165,000.01 ("Term
Loan"), shall continue to be payable in equal monthly payments of
principal, each in the amount of $25,888.89, plus interest at a rate per
annum equal to one and one-half percentage points in excess of the Prime
Rate. The Borrowers' option to elect to pay interest under the Term Loan
at the LIBOR Interest Rate shall no longer be available and any and all
breakage fees associated with the current ISDA Interest Rate Swap
Agreement (the "Swap Agreement") shall be due and payable upon the
execution and delivery of this Agreement.
3. Default Interest. In the event of a default under either the
Revolving Note or the Term Note, interest on both Notes shall accrue at a
rate per annum equal to five (5%) percent greater than that accruing
prior to such default. In addition, a Late Charge equal to five (5%)
percent of any installment of principal or interest or any other amount
due the Bank not paid within ten (10) days of the due date thereof shall
be added to any overdue payments. The minimum late charge shall be
$50.00.
4. Financial Covenants. Section 2.7, of the Agreement shall be
amended such that subparagraph (A) through (E) shall be amended to
require Borrowers to maintain on a consolidated basis, calculated in
accordance with GAAP, the following covenants as shown on the financial
statements required to be submitted pursuant to Paragraph 2.6A:
(A) A ratio of Borrowers' total Indebtedness to Borrowers' Net
Worth of not more than 1.25 to 1.0 tested at September 30,
2003, and at the end of each fiscal quarter thereafter; and
(B) The ratio of Borrowers' Funded Debt to EBITDA shall be not
greater than 2.5 to 1.0 tested at Fiscal Year end; and
(C) The ratio of Borrowers' EBIDA to Debt Service
(i) of not less than 1.05 to 1.0 for the three month
period ending September 30, 2003 (EBIDA to Debt Service to
be measured for the period commencing June 30, 2003 and
ending September 30, 2003);
(ii) of not less than 1.1 to 1.0 for the six month period
ending December 31, 2003 (EBIDA to Debt Service to be
measured for the period commencing June 30, 2003 and
ending December 31, 2003); and
(iii) of not less than 1.15 to 1 for the nine month period
ending March 31, 2004 (EBIDA to Debt Service to be
measured for the period commencing June 30, 2003, and
ending March 31, 2004), and at all times thereafter.
For purpose of testing this financial covenant EBIDA shall not
include for the applicable period one time restructuring costs
recorded as Bank related fees charged for the fiscal quarter
ending September 30, 2003, and the swap breakage charge
provided for in Paragraph 1(B) above.
(D) Collateral Coverage Ratio. The Collateral Coverage Ratio
shall be not less than 1.0 to 1.0 to be tested quarterly
commencing September 30, 2003. Collateral Coverage Ratio shall
be determined by dividing line 4 on Exhibit A plus $143,550.00
by Line 5A plus line 9 on Exhibit A. The Collateral Coverage
Ratio will be tested within fifteen (15) days after the end of
each fiscal quarter. The failure to comply with Collateral
Coverage Ratio within 48 hours of testing shall constitute an
event of default hereunder; and
(E) A Current Ratio (Current Assets divided by Current
Liabilities, but excluding the balance due on the Term Note)
shall be no less than 1.0 to 1.0 at all times.
5. Financial reporting shall be consistent with requirements of
the Agreement. Borrowing Base Certificates will be required on a weekly
basis as set forth in Paragraph 2(A)iii above.
6. Within 45 days of closing, Borrowers will provide the Bank with
a satisfactory field exam. The exam will be addressed to the Bank and
conducted by a firm acceptable to the Bank. Borrowers will be
responsible for all costs associated with the exam.
7. Borrowers shall be required to continue to maintain all
operating accounts with the Bank, including the existing lockbox
arrangement for Host and Xxxxxxx.
8. The Loan Documents are hereby modified to incorporate the terms
contained in this Agreement. Any default in this Agreement shall be an
Event of Default as defined in the Agreement.
9. The Borrowers reaffirm all of the representations, warranties,
covenants (both affirmative and negative), waivers and indemnities
contained in the Loan Documents. All of the
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representations and warranties set forth in the Loan Documents are true
and correct as if made on the date hereof.
10. The Borrowers represent, acknowledge and affirm that none of
them have any claim, defense, offset or counterclaim whatsoever against
Bank with respect to the Term Note, the Revolving Note the Agreement or
any other Loan Document, or the modifications made herein, and that Bank
is relying on this representation in agreeing to said modifications. The
Borrower and Guarantors further acknowledge that Bank would not agree to
said modifications unless the Borrower and the Guarantors made the
representations contained in this paragraph and elsewhere in this
Agreement freely and willingly, after due consultation with their
attorneys. Borrower further represents that this Agreement and all of
the Loan Documents executed by it are its valid and binding obligations
and enforceable in accordance with their terms and further represents
that no Event of Default (as defined in the Loan Agreement or any Loan
Document) has occurred nor has there occurred any event or condition
which, with the giving of notice or the passage of time or both would
constitute an Event of Default.
11. In furtherance of the immediately preceding paragraph,
Borrowers hereby release, and forever discharge the Bank, its officers,
agents, successors and assigns, from any and all claims, actions, causes
of action, obligations and liabilities of any kind, known or unknown,
which the Borrowers have or may have as of the date hereof whether
relating to the Notes, any Loan Document or any of the transactions
contemplated hereby or consummated in connection herewith, or any
negotiations in connection with any of the foregoing.
12. The parties agree that nothing contained herein shall in any
way impair the Notes, the Agreement, or any other Loan Document, and the
Collateral shall remain in all respects subject to the lien, charge and
encumbrance of the Agreement. The parties further agree that nothing
contained herein or modified pursuant to this agreement shall affect or
be construed to affect the lien, charge or encumbrance of the security
interests granted by the Borrowers or the priority thereof, over other
liens, charges and encumbrances, or release or affect the liability of
any other party or parties who may now or hereafter be liable under,
pursuant to, or on account of the Notes and/or the Loan Documents.
13. Except as modified by this Agreement, the Notes, and all other
Loan Documents shall remain unchanged and in full force and effect.
Borrowers shall keep and perform all of the terms and agreements
contained therein as may be applicable to them.
14. This agreement shall be binding upon and inure to the benefit
of the parties hereto, their respective successors and assigns. This
Agreement may only be amended in writing. Any capitalized term not
otherwise defined herein shall have the same meaning as provided in the
Agreement.
15. This Agreement may be signed in one or more counterparts all of
which shall constitute one document and shall be construed under the laws
of the State of Connecticut.
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16. THE BORROWERS ACKNOWLEDGE THAT THE REVOLVING NOTE AND THE TERM
NOTE AND ALL LOAN DOCUMENTS AND THIS MODIFICATION RESULT FROM A
COMMERCIAL TRANSACTION AND THE BORROWERS HEREBY WAIVE ANY RIGHT TO NOTICE
OR HEARING UNDER THE CONSTITUTION OF THE UNITED STATES OR ANY STATE OR
FEDERAL LAW, INCLUDING CONNECTICUT GENERAL STATUTES SECTION 52-278a ET
SEQ., AS NOW OR HEREAFTER AMENDED, OR ANY SUCCESSOR ACT OR ACTS THERETO,
AND WAIVE ANY REQUIREMENTS FOR THE POSTING OF ANY BOND IN CONNECTION WITH
ANY PREJUDGMENT REMEDY SOUGHT. THE BORROWERS AUTHORIZE THE ATTORNEY FOR
ANY HOLDER OF THE NOTE TO ISSUE A WRIT FOR PREJUDGMENT REMEDY WITHOUT
COURT ORDER. BORROWERS ACKNOWLEDGE THAT THEY MAKE THIS WAIVER KNOWINGLY
AND VOLUNTARILY AFTER CONSULTATION WITH THEIR ATTORNEY.
17. THE BORROWERS WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH THE
REVOLVING NOTE OR THE TERM NOTE, AND ANY LOAN DOCUMENT, THIS AGREEMENT OR
IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT
IS A PART AND/OR THE DEFENSE OR ENFORCEMENT OF ANY OF BANK'S RIGHTS OR
REMEDIES. BORROWERS ACKNOWLEDGE THAT THEY MAKE THIS WAIVER KNOWINGLY AND
VOLUNTARILY AFTER CONSULTATION WITH THEIR ATTORNEY.
18. Borrowers will, upon demand, furnish to the Bank such further
information, and will execute and deliver such instruments or documents,
and will do all such acts as the Bank may, at any time or from time to
time, reasonably request, or as may be necessary or appropriate to
establish and maintain a valid and enforceable first security interest of
the Bank in the Collateral described in the Security Agreement.
Borrowers hereby authorize the filing by Bank of any and all financing
statements and any subsequent amendments thereto with or without the
Borrowers' signature. Bank may, in its discretion, file all such
financing statements with an "all assets of Debtor" Collateral
description.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Signed, sealed and delivered in the XXXXXXX BANK
presence of:
BY: /s/ XXXXX XXXXXX
----------------------------- ----------------------------
Xxxxx X. Xxxxxx
----------------------------- Its Vice President
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HOST AMERICA CORPORATION
/s/
-----------------------------
BY /s/ XXXXXXXX X. XXXXXX
-----------------------------
Xxxxxxxx X. Xxxxxx
/s/ XXXX XXXXXX Its Chief Executive Officer
-----------------------------
XXXXXXX FOOD SERVICE CORPORATION
/s/
-----------------------------
BY /s/ XXXXXXXX X. XXXXXX
-----------------------------
Xxxxxxxx X. Xxxxxx
/s/ XXXX XXXXXX Its Chief Executive Officer
-----------------------------
SELECT FORCE, INCORPORATED
/s/
-----------------------------
BY /s/ XXXXXXXX X. XXXXXX
-----------------------------
Xxxxxxxx X. Xxxxxx
/s/ XXXX XXXXXX Its Chief Executive Officer
-----------------------------
STATE OF CONNECTICUT )
) ss: Hamden August 1, 2003
COUNTY OF NEW HAVEN )
Personally appeared, Xxxxx X. Xxxxxx, Vice President of Xxxxxxx
Bank, signer and sealer of the foregoing instrument, who acknowledged the
same to be his free act and deed as such officer and the free act and
deed of said Xxxxxxx Bank, before me.
/s/ XXXXXX X. XXXXX
-----------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: 6/30/06
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STATE OF CONNECTICUT )
) ss: Hamden July 31, 2003
COUNTY OF NEW HAVEN )
Personally appeared, Xxxxxxxx X. Xxxxxx, Chief Executive Officer of
Host America Corporation, signer and sealer of the foregoing instrument,
who acknowledged the same to be his free act and deed as such officer and
the free act and deed of said Host America Corporation, before me.
/s/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx
Commissioner of the Superior Court
Notary Public
My Commission Expires:
STATE OF CONNECTICUT )
) ss: Hamden July 31, 2003
COUNTY OF NEW HAVEN )
Personally appeared, Xxxxxxxx X. Xxxxxx, Chief Executive Officer of
Xxxxxxx Food Service Corporation, signer and sealer of the foregoing
instrument, who acknowledged the same to be his free act and deed as such
officer and the free act and deed of said Xxxxxxx Food Service
Corporation, before me.
/s/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx
Commissioner of the Superior Court
Notary Public
My Commission Expires:
STATE OF CONNECTICUT )
) ss: Hamden July 31, 2003
COUNTY OF NEW HAVEN )
Personally appeared, Xxxxxxxx X. Xxxxxx, Chief Executive Officer of
Select Force, Incorporated, signer and sealer of the foregoing
instrument, who acknowledged the same to be his free act and deed as such
officer and the free act and deed of said Select Force, Incorporated,
before me.
/s/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx
Commissioner of the Superior Court
Notary Public
My Commission Expires:
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