FIRST AMENDMENT AND CONSENT TO AMENDED AND RESTATED FINANCING AGREEMENT
FIRST
AMENDMENT AND CONSENT
TO
AMENDED AND RESTATED FINANCING AGREEMENT
FIRST
AMENDMENT AND CONSENT,
dated
as of June ___, 2006 (this "Amendment"),
to
the Amended and Restated Financing Agreement referred to below, by and between
COMMAND
SECURITY CORPORATION,
a New
York corporation (the "Company"),
and
THE
CIT GROUP/BUSINESS CREDIT, INC.,
a New
York corporation ("CIT").
WHEREAS,
the Company and CIT are parties to that certain Amended and Restated Financing
Agreement dated as of March 22, 2006 (as amended, restated, supplemented,
modified or otherwise changed from time to time, the "Financing
Agreement"),
pursuant to which CIT has agreed to make revolving credit loans to the Company
from time to time in an aggregate amount at any time outstanding not to exceed
the Revolving Line of Credit (as defined in the Financing
Agreement);
WHEREAS,
the Company and Sterling Protective Group, Inc. (the "Seller")
have
entered into an Agreement for Purchase and Sale of Assets, dated June __, 2006
(the "Asset
Purchase Agreement"),
pursuant to which the Company has agreed to purchase substantially all of the
assets and properties of the Seller (the "Protective
Assets");
and
WHEREAS,
CIT is willing to enter into this Amendment in order to (i) consent to the
purchase by the Company of the Protective Assets pursuant to the Asset Purchase
Agreement and (ii) amend certain other terms and conditions of the
Financing Agreement, in each case subject to the terms and conditions set forth
in this Amendment.
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the parties hereto hereby agree as follows:
1. Definitions
in Amendment.
Any
capitalized term used herein and not defined shall have the meaning assigned
to
it in the Financing Agreement.
2. Definitions
in the Financing Agreement.
Section
1
of the
Financing Agreement is hereby amended as follows:
(a) The
definition of the term "Asset Purchase Agreement" is hereby inserted in
appropriate alphabetical order, to read in its entirety as follows:
"'Asset
Purchase Agreement'
means
that certain Agreement for Purchase and Sale of Assets, dated June __, 2006,
by
and between the Company, as buyer, and Sterling Protective Group, Inc., as
seller, pursuant to which the Company has agreed to purchase, and, on and as
of
the closing of the transactions contemplated thereby, shall purchase, the
Protective Assets from such seller."
(b) The
definition of the term "Protective Acquisition Documents" is hereby inserted
in
appropriate alphabetical order, to read in its entirety as
follows:
"'Protective
Acquisition Documents'
means
the Asset Purchase Agreement and all other agreements, promissory notes,
instruments and other documents executed or delivered in connection with the
Asset Purchase Agreement."
(c) The
definition of the term "Protective Assets" is hereby inserted in appropriate
alphabetical order, to read in its entirety as follows:
"'Protective
Assets'
means
all of the assets (tangible and intangible) purchased by the Company pursuant
to
the Asset Purchase Agreement."
(d) The
definition of the term "First Amendment" is hereby inserted
in
appropriate alphabetical order, to read in its entirety as follows:
"'First
Amendment'
means
the First Amendment and Consent to the Amended and Restated Financing Agreement
dated as of June __, 2006, by and between the Company and CIT."
(e) The
definition of the term "First Amendment Effective Date" is hereby
inserted
in
appropriate alphabetical order, to read in its entirety as follows:
"'First
Amendment Effective Date'
means
the date on which all of the conditions precedent to the effectiveness of the
First Amendment have been fulfilled or waived."
(f) The
definition of the term "Permitted Indebtedness" is hereby amended and restated
in its entirety to read as follows:
"'Permitted
Indebtedness'
shall
mean: (a) current Indebtedness maturing in less than one year and incurred
in
the ordinary course of business for raw materials, supplies, equipment,
services, Taxes or labor; (b) the Indebtedness secured by Purchase Money Liens;
(c) Indebtedness arising under this Financing Agreement; (d) deferred Taxes
and
other expenses incurred in the ordinary course of business; (e) other
Indebtedness existing on the date of execution of the Existing Financing
Agreement and listed in the most recent financial statement delivered to CIT
or
otherwise disclosed to CIT in writing prior to the Original Closing Date; and
(f) unsecured
Indebtedness owing by the Company to Sterling Protective Group, Inc. pursuant
to
the terms of the Asset Purchase Agreement (as in effect on the First Amendment
Effective Date); provided
that no
payments on such Indebtedness may be paid except in accordance with the express
terms and conditions of the Protective Acquisition Documents (as in effect
on
the First Amendment Effective Date)."
3. Amendments
to Protective Acquisition Documents.
Section
7
of the
Financing Agreement is hereby amended by inserting a new Section
7.16
immediately after Section
7.15,
which
new Section
7.16
shall
read in its entirety as follows:
"7.16. Without
the prior written consent of CIT, the Company agrees that it will not amend,
change, agree to any amendment or other change to (or make any payment
consistent with any amendment or other change to) or waive any of its rights
under any of the Protective Acquisition Documents."
4. Conditions
Precedent.
The
effectiveness of this Amendment is subject to the fulfillment, in a manner
satisfactory to CIT, of each of the following conditions precedent (the first
date upon which all such conditions shall have been fulfilled or waived being
herein called the "First
Amendment Effective Date"):
(a) Representations
and Warranties; No Event of Default.
The
representations and warranties contained herein, in Section
7
of the
Financing Agreement and in each other Loan Document and certificate or other
writing delivered to CIT pursuant hereto on or prior to the First Amendment
Effective Date shall be correct in all material respects on and as of the First
Amendment Effective Date as though made on and as of such date, except to the
extent that such representations and warranties (or any schedules related
thereto) expressly relate solely to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects on and as of such date); and no Default or Event of Default shall
have
occurred and be continuing on the First Amendment Effective Date or would result
from this Amendment becoming effective in accordance with its
terms.
(b) Delivery
of Documents.
CIT
shall have received on or before the First Amendment Effective Date the
following, each in form and substance satisfactory to CIT and, unless indicated
otherwise, dated the First Amendment Effective Date:
(i) counterparts
of this Amendment which bear the signatures of the Company and CIT;
(ii) a
certificate of an Executive Officer, certifying (A) that attached thereto are
complete and correct copies of the Asset Purchase Agreement and all other
Protective Acquisition Documents, (B) that attached thereto is a copy
of
the resolutions of the Company authorizing the execution, delivery and
performance by the Company of this Amendment, and the performance of the
Financing Agreement as amended by this Amendment, (C) the names and true
signatures of the representatives of the Company authorized to sign this
Amendment, together with evidence of the incumbency of such authorized officers,
(D) that the charter and by-laws of the Company have not been amended or
otherwise modified since the Restatement Effective Date and that the copies
thereof previously delivered to CIT are true, correct and complete, and (E)
that
all
conditions to the effectiveness of the purchase of the Protective Assets have
been satisfied;
(iii) satisfactory
evidence that no less than $105,000 in trust fund liabilities of Sterling
Heights Protection Agency, Inc. has been paid (the "Initial
Payment")
to the
Department of Treasury, Internal Revenue Service (the "IRS"),
which
Initial Payment shall partially satisfy obligations owing to the IRS totaling
approximately $188,000 as of the date hereof (the difference between the Initial
Payment and the total obligations being hereinafter referred to as the
"IRS
Balance");
(iv) satisfactory
evidence that taxes in an amount equal to no less than $150,000 upon the Seller
and payable to the State of Florida in respect of outstanding sales tax
liabilities of Seller or Sterling Heights Protection Agency for the periods
June
2004 through May 2006 have been paid;
(v) a
fully
executed copy of that certain Factoring and Security Agreement, dated on or
about the date hereof (the "New
Factoring Agreement"),
by
and between Seller and Florida Corporate Funding, Inc. (the "Factor"),
which
New Factoring Agreement shall provide, among other things, a satisfactory
collateral description;
(vi) a
copy of
that certain UCC-1 filed against the Seller and naming the Factor as the secured
party, which UCC-1 statement shall provide, among other things, a satisfactory
collateral description;
(vii) UCC
termination statements, amendments, releases of security interests and other
instruments or documentation evidencing the termination or amendment (as
applicable) of each lien described on Exhibit
A
attached
hereto; and
(viii) such
other agreements, instruments and other documents as CIT may reasonably request
from the Company.
(c) Amendment
Fee.
CIT
shall have received payment of a non-refundable amendment fee equal to $6,500,
which fee shall be fully earned when paid (it being agreed and understood that
CIT may charge the Revolving Loan Account in respect of such amendment
fee).
(d) Proceedings.
All
proceedings in connection with the transactions contemplated by this Amendment,
and all documents incidental thereto, shall be satisfactory to CIT and its
counsel, and CIT and such counsel shall have received from the Company all
such
information and such counterpart
originals or certified copies of documents, and such other agreements,
instruments, approvals, opinions and other documents, as CIT or such counsel
may
reasonably request.
(e) Consummation
of Acquisition.
(i) The
Company shall have purchased pursuant to the Asset Purchase Agreement (no
provision of which shall have been amended or otherwise modified or waived
without the prior written consent of CIT), and shall have become the owner,
free
and clear of all liens (other than (A) Permitted Encumbrances, and (B) each
lien
described on Exhibit
B
hereto),
of all of the Protective Assets and (ii) each of the Seller and the Company
shall have fully performed all of the obligations to be performed by such person
on or prior to the First Amendment Effective Date under the Asset Purchase
Agreement and the other Protective Acquisition Documents.
(f) Documentation
Fee and Out-of-Pocket-Expenses.
The
Company shall have paid to CIT, in immediately available funds, (i) a
Documentation Fee in the amount of $1,000 in consideration of the
preparation, execution
and delivery of this
Amendment by CIT’s in-house legal department, and
(ii)
an amount equal to the amount of all Out-of-Pocket-Expenses which were incurred
by CIT in connection with the preparation, execution and delivery of this
Amendment and the other related agreements, instruments and documents.
Such
Documentation
Fee
and
Out-of-Pocket-Expenses
shall be
due and payable in full on the date hereof and may, at CIT’s option, be charged
to the Company’s Revolving Loan Account.
5. Conditions
Subsequent.
The
obligation of CIT to continue to make Revolving Loans (or otherwise extend
credit under the Financing Agreement) is subject to CIT’s receipt, within 3
Business Days of the First Amendment Effective Date, of (a) an escrow agreement,
by and between CIT and Xxxxx Xxxxxx (or any designee of Xx. Xxxxxx acceptable
to
CIT), in his capacity as escrow agent, which escrow agreement shall (i) be
in
form and substance satisfactory to CIT and (ii) govern an escrow account (the
"Escrow
Account")
for
the deposit (and any subsequent disposition) of the IRS Balance (and any future
deposits for potential interest due on the IRS Balance), and (b) satisfactory
evidence that an amount equal to no less than the IRS Balance has been deposited
into the Escrow Account.
6. Representations
and Warranties.
The
Company hereby represents and warrants to CIT as follows:
(a) Representations
and Warranties; No Event of Default.
The
representations and warranties
herein,
in Section
7
of the
Financing Agreement and in each other Loan Document and certificate or other
writing delivered to CIT pursuant hereto on or prior to the First Amendment
Effective Date are correct in all material respects on and as of the First
Amendment Effective Date as though made on and as of such date, except to the
extent that such representations and warranties (or any schedules related
thereto) expressly relate solely to an earlier date (in which case such
representations and warranties are true and correct in all material respects
on
and as of such date); and no Default or Event of Default has occurred and is
continuing on the First Amendment Effective Date or would result from this
Amendment becoming effective in accordance with its terms.
(b) Organization,
Good Standing, Etc.
The
Company (i) is a corporation duly organized, validly
existing
and in good standing under the laws of the State of New York, and (ii) has
all requisite power and authority to execute, deliver and perform this
Amendment, and to perform the Financing Agreement, as amended
hereby.
(c) Authorization,
Etc.
The
execution, delivery and performance by the Company of this Amendment, and the
performance by the Company of the Financing Agreement, as amended hereby,
(i) have been duly authorized by all necessary action on the part of the
Company, (ii) do not and will not contravene the Company’s charter or
by-laws, any applicable law or any material contractual restriction binding
on
or otherwise affecting it or any of its properties, (iii) do not and will
not result in or require the creation of any lien (other than pursuant to any
Loan Document) upon or with respect to any of its properties, and (iv) do
not and will not result in any suspension, revocation, impairment, forfeiture
or
nonrenewal of any permit, license, authorization or approval applicable to
its
operations or any of its properties.
(d) Governmental
Approvals.
No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or other regulatory body is required in connection
with the due execution, delivery and performance by the
Company of
this
Amendment, or for the performance of the Financing Agreement, as amended
hereby.
(e) Enforceability
of Loan Documents.
Each of
this Amendment, the Financing Agreement, as amended hereby, and each other
Loan
Document to which the
Company
is a
party is a legal, valid and binding obligation of the
Company,
enforceable against the
Company in
accordance with its terms, except as such enforceability may be limited by
or
subject to any bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally.
(f) Protective
Acquisition Documents.
The
Company has delivered to CIT a complete and correct copy of each of the Asset
Purchase Agreement, including all schedules and exhibits thereto, and all other
Protective Acquisition Documents. The Protective Acquisition Documents set
forth
the entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby. The
Protective Acquisition Documents are the legal, valid and binding obligations
of
the Company, and to the best knowledge of the Company, each of the other parties
thereto, enforceable against the Company, and to the best knowledge of the
Company, each of the other parties thereto, in accordance with their
terms.
(g) Consummation
of Acquisition.
All
conditions precedent to the purchase of the Protective Assets by the Company
have been fulfilled or (with the written consent of CIT) waived, the Protective
Acquisition Documents have not been amended or otherwise modified, and there
has
been no breach of any term or condition of the Protective Acquisition Documents.
No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or any other person is required for such
acquisition, other than such as have been or will be obtained on or prior to
the
First Amendment Effective Date. As of the First Amendment Effective Date, the
Company has acquired pursuant to the Protective Acquisition Documents, and
has
become the owner of all of the Protective Assets, free and clear of any lien
other than (i) Permitted Encumbrances and (ii) each lien described on
Exhibit
B
hereto.
7. Consent.
Notwithstanding anything to the contrary set forth in Section 7.9(g)
of the
Financing Agreement, CIT hereby consents to the acquisition of the Protective
Assets by the Company pursuant to the Asset Purchase Agreement and agrees that
such acquisition shall be permitted for all purposes of the Financing Agreement
and the other Loan Documents. The foregoing consent shall be effective on the
First Amendment Effective Date. Notwithstanding the foregoing, (a) in no event
shall any of the Protective Assets constituting Accounts (hereinafter, the
"Protective
Accounts")
be
deemed “Eligible Accounts Receivable” and/or included in the calculation of the
Borrowing Base under the Financing Agreement until CIT shall have performed
a
field examination and valuation of the Protective Accounts, the results of
which
shall be satisfactory to CIT, and (b) CIT shall establish an Availability
Reserve in an amount equal to all Unpaid Taxes upon the Seller described on
Exhibit
C
hereto,
which Availability Reserve shall be released or otherwise adjusted from time
to
time upon delivery to CIT of (i) satisfactory evidence that such Unpaid Taxes
have been paid to the proper taxing authorities and (ii) all termination
statements, releases of security interests and other instruments or
documentation evidencing the termination of each lien described on Exhibit
B
attached
hereto. The Company hereby agrees (x) to the establishment (and any subsequent
adjustment) of the Availability Reserve established pursuant to this
Section
7,
and (y)
that upon the occurrence and during the continuance of any Event of Default,
CIT
is
hereby
authorized (but in no event obligated) in its sole discretion to pay the amount
of any Unpaid Taxes to the proper taxing authority for the Company’s account and
to charge the Revolving Loan Account therefor.
8. Miscellaneous.
(a) Continued
Effectiveness of the Financing Agreement.
Except
as otherwise expressly provided herein, the Financing Agreement and the other
Loan Documents are, and shall continue to be, in full force and effect and
are
hereby ratified and confirmed in all respects, except
that on
and
after the First Amendment Effective Date (i) all references in the Financing
Agreement to "this Agreement", "hereto", "hereof", "hereunder" or words of
like
import referring to the Financing Agreement shall mean the Financing Agreement
as amended by this Amendment, and (ii) all references in the other Loan
Documents to which the Company is a party to the "Financing Agreement",
"thereto", "thereof", "thereunder" or words of like import referring to the
Financing Agreement shall mean the Financing Agreement as amended by this
Amendment. Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as an amendment of any right,
power or remedy of CIT under the Financing Agreement or any other Loan Document,
nor constitute an amendment of any provision of the Financing Agreement or
any
other Loan Document.
(b) Counterparts.
This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery
of an executed counterpart of this Amendment by telefacsimile or electronic
mail
shall be equally effective as delivery of a manually executed
counterpart.
(c) Headings.
Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
(d) Governing
Law.
This
Amendment shall be governed by, and construed in accordance with, the law of
the
State of New York.
(e) Amendment
as Loan Document.
The
Company hereby acknowledges and agrees that this Amendment constitutes a "Loan
Document" under the Financing Agreement. Accordingly, it shall be an Event
of
Default under the Financing Agreement if any representation or warranty made
by
the Company under or in connection with this Amendment shall have been untrue,
false or misleading in any material respect when made or if the Company fails
to
perform, keep, or observe any term, provision, condition, covenant, or agreement
contained
in this
Amendment.
(f) Collateral.
It is
understood and agreed that all Collateral (including the Protective Assets)
shall secure the Obligations under the Loan Documents. In
addition, the Company confirms and agrees that to the extent that any Loan
Document purports to assign or pledge to CIT, or to grant to CIT a lien on
any
collateral as security for the Obligations of the Company from time to time
existing in respect of the Financing Agreement and the Loan Documents, such
pledge, assignment and/or grant of a lien is hereby ratified and confirmed
in
all respects.
(g) Waiver
of Jury Trial.
EACH OF
THE COMPANY AND CIT HEREBY IRREVOCABLY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON
OR ARISING OUT OF THIS AMENDMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS.
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date first above written.
Company:
COMMAND
SECURITY CORPORATION,
a
New
York corporation
By:
Name:
Title:
CIT:
THE
CIT GROUP/BUSINESS CREDIT, INC.,
a
New
York corporation
By:
Name:
Title:
