EXHIBIT 10.10
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS AGREEMENT made as of the 28th day of May, 1996, by and between
COMMAND SYSTEMS INCORPORATED, a Connecticut corporation having its chief
executive office at Park View Corporate Center, 00 Xxxxxxxxx Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000 ("Debtor") and PEOPLE'S BANK, a Connecticut
banking corporation having an office at 000 Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000-0000 ("Secured Party").
WITNESSETH:
WHEREAS, Debtor and Secured Party are parties to a Loan And Security
Agreement dated November 30, 1993 (the "Loan Agreement") pursuant to which
Secured Party provided Debtor with a term loan in the amount of Five Hundred
Twenty Thousand and 00/100 Dollars ($520,000.00) (the "Term Loan") evidenced by
a Term Loan Promissory Note dated November 30, 1993, a revolver/term loan in the
amount of Eighty Thousand and 00/100 Dollars ($80,000.00)(the "Revolver/Term
Loan") evidenced by a Revolver/Term Loan Promissory Note dated November 30, 1993
and Secured Party also agreed, from time to time, in its sole discretion, to
extend commercial revolving loans in the maximum aggregate principal amount of
up to Two Hundred Thousand and 00/100 Dollars ($200,000.00) to Debtor (the "Line
of Credit Loans") evidenced by a Line of Credit Promissory Note dated November
30, 1993; and
WHEREAS, on December 21, 1994, Secured Party and Debtor modified the
terms of the Loan Agreement to provide for Line of Credit Loans in an amount not
to exceed One Million and 00/100 Dollars ($1,000,000.00) with a committed term
of April 15, 1996, and to eliminate the Term Loan and the Revolver/Term Loan.
WHEREAS, Command acknowledges and agrees that it has requested that
People's again modify the terms of the Loan Agreement to increase the
availability for Line of Credit Loans to an amount not to exceed Two Million
Five Hundred Thousand ($2,500,000.00) with a committed term of May 15, 1997.
NOW, THEREFORE, in consideration of the foregoing and in further
consideration of the mutual covenants herein contained, the parties hereto agree
as follows:
1. The Loan Agreement is hereby amended as follows:
(a) Paragraph 5 of the Loan Agreement is hereby deleted in its
entirety and the following substituted in lieu therefore:
"5. AMOUNT AND TERMS OF THE LINE OF CREDIT LOANS.
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Pursuant to the terms of this Agreement and upon the satisfaction of
the conditions precedent referred to in Paragraph 14 hereof, Secured
Party may, in the exercise of its sole discretion, make Line of
Credit Loans to Debtor upon its request, which in the aggregate do
not exceed the lesser of Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000.00) or sixty-five percent (65%) (or such greater
or lesser percentage as Secured Party may, from time to time,
determine) of Qualified Accounts less the full amount of any and all
letter of credit commitments issued by Secured Party to Debtor. The
Line of Credit Loans and each of them shall be made on the following
terms and conditions:
(a) The principal amount of the Line of Credit Loans, or such
part thereof as may be from time to time outsanding, shall be evidenced
by Debtor's Promissory Note, in the form of Exhibit 1-2 annexed hereto
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and made a part hereof (hereinafter referred to as the "Line of Credit
Note"), with appropriate insertions of names, dates and amounts, which
shall be guaranteed by Guarantor. The Line of Credit Note shall be in the
maximum aggregate principal amount which Secured Party, from time to
time, intends to lend to Debtor, notwithstanding availability of the Line
of Credit Loans which might otherwise exist because of the amount of then
Qualified Accounts. The Line of Credit Note shall be in the amount of Two
Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00). Nothing
contained in this subparagraph (a) shall be deemed to prohibit Secured
Party from lending in excess of the principal amount of the outstanding
Line of Credit Note, to delimit the definition of "Obligations" contained
herein or to consitutue a waiver, release or subordination by Secured
Party of the security interest in the Collateral herein granted by Debtor
to Secured Party as security for the Obligations.
(b) In the event Debtor desires a Line of Credit Loan it may
request the same by delivering to Secured Party a request for advance, in
the form of Exhibit J and a Borrowing Base Certificate in the form of
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Exhibit K, each annexed hereto and made a part hereof. The Line of Credit
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Loans shall be made by Secured Party depositing the proceeds thereof in
Debtor's demand deposit account maintained by it with Secured Party;
(c) The aggregate principal amount of the Line of Credit
Loans from time to time outstanding shall bear interest at a rate per
annum equal equal to one-half of one(.50) percentage point above the
Prime Rate which at the date hereof is eight and one quarter percent
(8.25%), so that the initial rate of interest payable hereunder shall be
eight and three quarters percent (8.75%); provided however, that the rate
of interest charged hereunder shall never exceed the maximum amount, if
any, allowable by law. In the event the Prime Rate is either increased or
decreased, the rate of interest on the Line of Credit Loans then
outstanding shall be adjusted on the day the Prime Rate is so changes so
as to reflect such increase or decrease in the Prime Rate. Interest shall
be payale monthly on the fifteenth day of each month and shall be charged
on the daily principal balance of the Line of Credit Loans from time to
time outstanding on the basis of a three hundred sixty (360) day year,
and the outstanding principal amount owed on the Line of Credit Loans,
together with all interest accrued thereon, shall be due and payable in
full on May 15, 1997 unless the Line of Credit is extended pursuant to
subparagraph (e) herein. Debtor hereby authorizes Secured Party to debit
Debtor's operating account with Secured Party for each monthly interest
payment owed;
(d) The Line of Credit Loans made by Secured Party to Debtor
pursuant to this Paragraph 5 shall be recorded in an account on the books
of Secured Party bearing Debtor's name ("Debtor's Account"). There shall
also be recorded in Debtor's account all payments made by Debtor on the
Line of Credit Loans, proceeds of the Collateral received by Secured
Party which are, in the exercise of Secured Party's sole discretion,
applied by Secured Party to the Line of Credit Loans, interest and
expenses and other appropriate debits and credits as heein provided.
Secured Party shall from time to time render and send to Debtor a
statement of Debtor's Account showing the outstanding aggregate principal
balance of the Line of Credit Loans, together with interest and other
appropriate debits and credits as of the date of the statement. The
statement of Debtor's Account shall be considered correct in all
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respects and accepted by and be conclusively binding upon Debtor unless
Debtor makes specific written objections thereto within fifteen (15) days
after the statement of Debtor's Account is sent;
(e) The provisions of this Paragraph 5 shall continue in
effect until May 15, 1997, and from year to year thereafter, unless
terminated as to future transactions by Secured Party giving not less
than thirty (30) days written notice of termination prior to May 15, 1997
or prior to the end of any such one (1) year period to Debtor, provided,
however, that Secured Party may also terminate the provisions of this
Paragraph 5 at any time upon the happening of any Event of Default. No
such termination shall (i) in any way affect or impair the security
interest granted to Secured Party hereunder or any other rights of
Secured party hereunder or under any other agreements, instruments or
documents required to be executed and delivered to Secured Party pursuant
to the terms of this Agreement, arising prior to any such termination or
by reason thereof, (ii) relieve Debtor of any obligation to Secured Party
under the Agreement, any such other agreement, instrument or document, or
otherwise, until all the Obligations are fully paid and performed, or
(iii) affect any right or remedy of Secured Party hereunder or under any
such other agreement, instrument or document."
(b) Paragraph 7(a) of the Loan Agreement is hereby deleted in its
entirety and the following substituted in lieu therefore:
"(a) Maintain (i) a Tangible New Worth of $1,404,000 as of
December 31, 1996 which amount shall increase by $600,000 as of the end
of Debtor's fiscal years; (ii) a Current Ratio of no less than 1.25 to
1.00; and (iii) a Debt Service Coverage Ratio of 2.00 to 1.00; (iv) a
ratio of Maximum Total Liabilities to Tangible Net Worth of 2.00 to 1.00;
and (v) Debtor's Capital Expenditures are not to exceed $300,000, and
Debtor may make Capital Expenditures of up to $300,000 only so long as
Debtor is in compliance with the Debt Service Coverage Ratio.
Tangible Net Worth shall mean total stockholder's equity less
any intangible assets, which Tangible Net Worth covenant shall be tested
annually based on the Debtor's fiscal year-end financial statements.
Current Ratio shall mean current assets divided by current liabilities,
which Current Ratio covenant shall be tested quarterly based on Debtor's
quarterly and fiscal year-end financial statements. Debt Service Coverage
shall mean Debtor's net profits after taxes plus depreciation and
interest expenses minus internally funded capital expenditures (not to
exceed $300,000 for 1996) divided by current maturities of long term debt
plus capital lease expenses and interest payments, which Debt Service
Coverage covenant shall be tested annually based on Debtor's fiscal year-
end financial statements. Maximum Total Liabilities to Tangible New Worth
shall mean Debtor's total liabilities divided by the sum of the total of
Debtor's stockholders equity less any intangible assets plus subordinated
debt, which Total Liabilities to Tangible New Worth covenant will be
tested quarterly based on Debtor's quarterly and fiscal year-end
financial statements. Capital Expenditures shall mean total capital
purchases of property, equipment and leasehold improvements. Unless
otherwise stated above compliance with each of the above referenced:
financial covenants shall be determined by generally accepted accounting
principals consistently applied from year to year."
(c) Subparagraph (e) of Paragraph 7 is hereby amended to reflect that
Debtor's annual financial statements shall be delivered to Secured Party one
hundred and twenty (120) days
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after the close of Debtor's fiscal year-end, and that the requirement for
monthly financial statements has been changed to a quarterly requirement forty
five (45) days after the close of Debtor's fiscal quarter. All other terms and
conditions of subparagraph (e) of Paragraph 7 remain unchanged.
2. Debtor represents and warrants to Secured Party that all of the
representations and warranties Debtor has set forth in the Loan Agreement, as
amended hereby, are true and correct and are hereby amended and restated.
3. Except as modified herein, all other terms, provisions, and
conditions of the Loan Agreement remain unmodified and are in full force and
effect.
4. DEBTOR ACKNOWLEDGES THAT THE TRANSACTIONS DESCRIBED HEREIN ARE
COMMERCIAL TRANSACTIONS AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER
CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY
STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGEMENT REMEDY WHICH SECURED PARTY
MAY DESIRE TO USE, AND FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR
PAYMENT, NOTICE OF NONPAYMENT, PROTEST, AND NOTICE OF PROTEST, AND NOTICE OF ANY
RENEWALS OR EXTENSIONS OF THE NOTE, AND ALL RIGHTS UNDER ANY STATUTE OF
LIMITATIONS.
5. DEBTOR HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART AND/OR
ENFORCEMENT OF ANY SECURED PARTY'S RIGHTS AND REMEDIES. DEBTOR ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement this 28th day of May, 1996.
Signed, Sealed and
Delivered in the
Presence of: COMMAND SYSTEMS INCORPORATED
-------------------------- By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
-------------------------- Its President
PEOPLE'S BANK
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Its Commercial Loan Officer
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STATE OF CONNECTICUT )
)ss. Hartford
COUNTY OF HARTFORD )
On this 28th day of May, 1996, personally appeared Xxxxxx X. Xxxxxx, as
President of COMMAND SYSTEMS INCORPORATED, signer and sealer of the foregoing
instrument, and acknowledges the same to be her free act and deed and the free
act and deed of said corporation, before me.
/s/
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Commissioner of the Superior Court
STATE OF CONNECTICUT )
)ss. Hartford
COUNTY OF HARTFORD )
On this 28th day of May, 1996, personally appeared Xxxxxxx X. Xxxxxxxx as
Commercial Loan Officer of PEOPLE'S BANK, signer and sealer of the foregoing
instrument, and acknowledged the same to be his free act and deed and the free
act and deed of said banking corporation, before me.
/s/
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Commissioner of the Superior Court
SECOND AMENDED AND RESTATED LINE OF CREDIT PROMISSORY NOTE
$2,500,000.00 Hartford, Connecticut May 28, 1996
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WHEREAS, COMMAND SYSTEMS INCORPORATED, a Connecticut corporation
("Maker"), executed a Line of Credit Promissory Note dated November 30, 1993 in
the maximum aggregate principal amount of up to Two Hundred Thousand and 00/100
Dollars ($200,000.00) (the "Note") pursuant to the terms and conditions of a
Loan and Security Agreement also dated November 30, 1993 between Maker and
People's Bank ("Holder") (as amended from time to time, the "Loan and Security
Agreement"); and
WHEREAS, Maker executed and delivered an Amended and Restated Line of
Credit Promissory Note dated December 21, 1994 (the "Amended and Restated Note")
in the maximum aggregate principal amount of $1,000,000;
WHEREAS, Maker has requested that Holder modify certain terms and
conditions of the Loan and Security Agreement, including, but not limited to,
increasing the availability of Line of Credit Loans under the Loan and Security
Agreement; and
WHEREAS, Holder has agreed to so modify the Loan and Security Agreement
on the condition, among other things, that Maker execute and deliver to Holder
this Second Amended and Restated Line of Credit Promissory Note.
NOW, THEREFORE, the Line of Credit Promissory Note dated November 30,
1993 and the Amended and Restated Line of Credit Promissory Note dated December
21, 1994 each from Maker to Holder is hereby amended and restated in its
entirety as follows:
FOR VALUE RECEIVED, MAKER promises to pay to the order of Holder at its
chief executive office at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000-0000,
or at such other place as may be designated in writing from time to time by
Holder, the maximum aggregate principal sum of up to Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00), together with interest accruing on
the unpaid balance of this Note, at a floating rate per annum equal to one-half
of one, (.50) percentage point above the Prime Rate from time to time charged by
Holder, its successors or assigns, adjusted as set forth herein. The Prime Rate
referred to herein is the index Holder uses to set interest rates on certain
types of loans, is not necessarily the lowest rate Holder charges its customers
and is increased or decreased in response to changes in money market conditions.
The Prime Rate at the date hereof is eight and a quarter percent (8.25%), so
that the initial rate of interest charged hereunder shall be eight and three
quarters percent (8.75%). In the event that the Prime Rate is increased or
decreased, the interest rate hereunder shall be adjusted accordingly on the day
of said increase or decrease. Interest shall be charged on the principal balance
from time to time outstanding on the basis of the actual number of days elapsed
computed on the basis of a three hundred sixty (360) day year. Upon the
occurrence of an Event of Default under the Loan Agreement (as hereinafter
defined), all sums outstanding hereunder shall bear interest at a rate which is
two (2) percentage points above the otherwise applicable rate hereunder.
Interest only shall be due and payable, in arrears, on the fifteenth day
of each and every month commencing June 15, 1996. The principal amount of this
Note shall be advanced pursuant to Requests for Advances and Borrowing Base
Certificates submitted by Maker pursuant to the Loan and Security Agreement, and
this Note is subject in all respects to the terms and conditions of the Loan
and Security Agreement. The outstanding principal amount owed hereunder,
together with all interest accrued thereon, shall be due and payable in full on
May 15, 1997. Advances and payments on this Note may be evidenced
EXHIBIT I-2
by an internal ledge account of Holder which shall set forth, among other
things, the principal amount of any advances and payments therefor. Maker hereby
authorizes Holder to debit Maker's operating account for each monthly payment of
principal and interest owed.
Maker further promises to pay, on demand, in addition to said principal
sum and interest, all taxes assessed upon this Note or on any collateral
securing the same, all taxes, assessments and insurance premiums upon all
property securing the payment of this Note, and all reasonable costs and
expenses, including, without limitation, attorney's fees, incurred in the
collection of this Note or in foreclosing any security interest securing the
same or in sustaining the lien of any such security interest.
In the event any installment of interest owed hereunder is paid more than
ten (10) days after its due date, without in any way affecting Holder's right,
if any, to accelerate this Note, a late charge equal to five percent (5%) of the
late installment shall be assessed against Maker.
Notwithstanding any provisions of this Note, it is the understanding and
agreement of Maker and Holder that the rate of interest to be paid by Maker to
Holder shall not exceed the highest or maximum rate of interest permissible to
be charged by a lender such as Holder to a commercial borrower such as Maker
under the laws of the State of Connecticut. Any amount paid in excess of such
rate shall be considered to have been payments in reduction of principal.
Maker hereby grants to Holder or any holder hereof a lien and right of
set-off for all of Maker's liabilities hereunder, upon and against all of
Maker's deposits, credits and other property now or hereafter in the possession
or control of Holder or any holder or in transit to it.
MAKER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTION OR
PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE
FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT OF
ANY OF HOLDER'S RIGHTS AND REMEDIES. MAKER ACKNOWLEDGES THAT IT MAKES THIS
WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
MAKER AND EACH AND ALL ENDORSERS, GUARANTORS, AND SURETIES OF THIS NOTE
ACKNOWLEDGE THAT THE LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND
WAIVE THEIR RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT
GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO USE, and further,
waive diligence, demand, presentment for payment, notice of nonpayment, protest
and notice of protest, and notice of any renewals or extensions of this Note,
and all rights under any statute of limitations, and all endorsers, guarantors
and sureties agree that the time for payment of this Note may be extended at
Holder's sole discretion, without impairing their liability thereon, and further
consent to the release of all or any part of the security for the payment
hereof, at the discretion of Holder, or the release of any party liable for
this obligation without affecting the liability of the other parties hereto.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
COMMAND SYSTEMS INCORPORATED
By: /s/
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Xxxxxx X. Xxxxxx
Its President
