SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
 
This Second Amendment to Credit and Security Agreement (this “Second
Amendment”), dated as of October 18, 2011, is made by and among COMMAND SECURITY
CORPORATION, a New York corporation (“CSC” or “Borrower”), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, acting through its Wells
Fargo Business Credit operating division (the “Lender”).
 
WITNESSETH:
 
WHEREAS, the Borrower and the Lender are parties to a certain Credit and
Security Agreement dated as of February 12, 2009 (as amended by that certain
Amendment to Credit And Security Agreement dated as of December 1, 2009 and as
further amended and in effect, the “Credit Agreement”);
 
WHEREAS, on or about December 31, 2009, three of the four entities that
constituted the “Borrower” under the Credit Agreement, Command Security
Services, Inc., Strategic Security Services, Inc. and Rodgers Police Patrol,
Inc., merged with and into the fourth “Borrower” under the Credit Agreement,
CSC, with CSC constituting the surviving legal entity, subject to the corrective
corporate compliance actions to be taken by Borrower as further described
herein; and
 
WHEREAS, the Borrower and the Lender have agreed to modify and amend certain
terms and conditions of the Credit Agreement, all as provided herein.
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
 
1. 
Defined Terms. Capitalized terms used in this Second Amendment which are defined
in the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.

 
2. 
Amendment to Preamble.  The definition of “Borrower” contained in the Preamble
to the Credit Agreement is hereby deleted in its entirety and the following
substituted in its stead:

 
““Borrower” means Command Security Corporation, a New York corporation.”
 
3. 
Amendment to Section 1.  The provisions of Section 1 of the Credit Agreement are
hereby amended as follows:

 

 
(a) 
Section 1.1(b) of the Credit Agreement is hereby amended by deleting
“February 12, 2012” and by substituting “October 18, 2016” in its stead.

 

 
(b) 
Section 1.3(a)(i) of the Credit Agreement is hereby deleted in its entirety and
the following is hereby substituted in its stead:

 
“(i)   Advances upon Borrower’s Request.  Advances may be funded upon Lead
Borrower’s request.  No request will be deemed received until Wells Fargo
acknowledges receipt, and Lead Borrower, if requested by Wells Fargo, confirms
the request in an Authenticated Record.  Borrower shall repay all Advances to
Borrower, even if the Person requesting the Advance on behalf of Borrower lacked
authorization.  If Borrower wants an Advance, Lead Borrower shall make the
request no later than 11:59 a.m. Eastern Time on the Business Day on which
Borrower wants the Advance to be funded, which request shall specify both the
principal Advance amount and Interest Period being requested.  No more than 3
separate LIBOR Advance Interest Periods may be outstanding at any time.  Each
LIBOR Advance shall be in multiples of $500,000 and in the minimum amount of at
least $500,000.  Advances shall not be available during Default Periods.”
 
 
 

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(c) 
Section 1.3(b) of the Credit Agreement is hereby amended by deleting “Base Rate
Advance” wherever it appears therein and by substituting “Advance” in its stead.

 

 
(d) 
Section 1.3A(a) of the Credit Agreement is hereby amended by deleting “for three
or six month periods” and by substituting “for one or three month periods” in
its stead.

 

 
(e) 
Section 1.3A(b) of the Credit Agreement is hereby deleted in its entirety and
the following is hereby substituted in its stead:

 

 
“(b) 
Reserved.”

 

 
(f) 
Section 1.3A(c) of the Credit Agreement is hereby amended by deleting the first
sentence thereof in its entirety.

 

 
(g) 
Section 1.3A(d) of the Credit Agreement is hereby amended by deleting “or the
conversion of a Base Rate Advance to a LIBOR Advance” where it appears therein.

 

 
(h) 
Section 1.4(c) of the Credit Agreement is hereby amended by deleting “Base Rate
Advances” where it appears therein and by substituting “Advances” in its stead.

 

 
(i) 
Section 1.5(a) of the Credit Agreement is hereby deleted in its entirety and the
following is hereby substituted in its stead:

 
“(a)  Interest Rate Applicable to Line of Credit.  Except as otherwise provided
in this Agreement, the unpaid principal amount of each Advance evidenced by the
Revolving Note shall accrue interest at an annual interest rate calculated as
follows:
 
LIBOR Advance Rate for One or Three Month Interest Periods
 
Advances = LIBOR plus the LIBOR Advance Rate Applicable Margin (the “LIBOR
Advance Rate”).”
 
 
 

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(j) 
Section 1.6(b) of the Credit Agreement is hereby amended by deleting “fifteen
one-hundredths of one percent (0.15%)” therein and by substituting “one quarter
of one percent (0.25%)” in its stead.

 

 
(k) 
Section 1.6(c) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:

 
“(c)  Collateral Exam Fees.  Borrower shall pay Wells Fargo fees in connection
with any collateral exams, audits or inspections (“Field Exams”) conducted by or
on behalf of Wells Fargo, at the current rates established from time to time by
Wells Fargo for its customers generally as its collateral exam fees (which fees
are currently $1,000.00 per each 8 hour day per collateral examiner (whether the
Field Exam shall have been conducted by a Wells Fargo employee or a third party
contractor), together with all actual out-of-pocket costs and expenses (which
may include the expenses, but no fees of any third party contractor other than
the foregoing $1,000.00 daily fee) incurred in conducting any Field Exam;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, Borrower shall not be obligated to reimburse Wells Fargo for more
than two (2) Field Exams during any calendar year; and provided further that
Borrower shall not be obligated to pay fees for Field Exams in any calendar year
in excess of $15,000.00 plus actual out-of-pocket costs and expenses incurred in
conducting any Field Exam.”
 

 
(l) 
Section 1.6(f) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:

 

 
“(f) 
Reserved.”

 

 
(m) 
Section 1.7(a) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:

 
“(a)  Interest Payments and Interest Accrual.  Interest accruing on any LIBOR
Advance shall be due and payable on the last day of the applicable Interest
Period and on the Termination Date; provided, however, for Interest Periods in
excess of one month, interest shall nevertheless be due and payable monthly on
the last day of each month, and on the last day of the Interest Period.”
 
4. 
Amendment to Section 5.  The provisions of Section 5 of the Credit Agreement are
hereby amended as follows:

 

 
(a) 
Section 5.2(c) of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:

 
“(c)  Capital Expenditures.  Borrower shall not incur or contract to incur
Capital Expenditures of more than $1,000,000 in the aggregate during any
fiscal year, or more than $250,000 in any one transaction.”
 
 
 

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(b) 
Section 5.7 of the Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead:

 
“5.7  Dividends and Distributions.  Borrower shall not declare or pay any
dividends (other than dividends payable solely in stock of Borrower) on any
class of its stock, or make any payment on account of the purchase, redemption
or retirement of any shares of its stock, or other securities or evidence of its
indebtedness or make any distribution regarding its stock, either directly or
indirectly, except as follows:
 
    (a)  Borrower may declare and pay dividends in the ordinary course of its
business with respect to its Series A Convertible Preferred Stock, provided that
(i) the aggregate amount of such dividends does not exceed in any fiscal quarter
$41,000 and (ii) immediately before and after giving effect to the making of
such dividend (A) no Event of Default shall have occurred and be continuing, and
(B) Borrower shall have at least $500,000 in availability immediately before and
after giving effect to the making of each such dividend; and
 
    (b)  Borrower may repurchase its common stock (or, in the alternative,
complete a reverse stock split) provided that (i) the amount of such repurchase
or reverse stock split does not exceed $2,000,000 in the aggregate, and (ii)
immediately before and after giving effect to such repurchase or reverse stock
split (A) no Event of Default shall have occurred and be continuing, and (B)
Borrower shall have at least $3,000,000 in availability immediately before and
after giving effect to such repurchase or reverse stock split together with all
undisputed trade payables which are more than 60 days past due or 90 days past
invoice date.”
 
(c) 
Section 5.1 of the Credit Agreement is hereby amended to add a new subsection
(q), which shall provide as follows:

 
    “(q)  Temporary Reinstatement of Command Security Services, Inc.  Wells
Fargo and the Borrower acknowledge and agree that the Borrower intends to cause
to return to existence on a temporary basis (the “De-Merger”) its former
subsidiary, Command Security Services, Inc., a New York corporation (“CSS”), and
to thereafter file or cause to be filed with the New York Department of State
(i) a Certificate of Merger providing for the merger of (A) Strategic Security
Services, Inc., formerly a California corporation (“SSS”) and (B) Rodgers Police
Patrol, Inc. (“RPP”), formerly a California corporation, each of which were
merged out of existence under California law on December 29, 2009, with and into
CSS and (ii) as soon as practicable thereafter, file or cause to be filed with
the New York Department of State a Certificate of Merger providing for the
merger of CSS with and into the Borrower.  In the event that CSS remains to
exist as a New York corporation (or as any other legal entity under the laws of
any jurisdiction) for more than two Business Days following the De-Merger, the
Borrower shall cause CSS to become a “Borrower” hereunder.”
 
 
 

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5. 
Amendments to Exhibit A.  Exhibit A of the Credit Agreement is hereby amended as
follows:

 

 
(a) 
The definitions of “Base Rate”, “Base Rate Advance”, “Prime Rate” and “Prime
Rate Applicable Margin” are hereby deleted in their entirety.

 

 
(b) 
The following new definition is hereby added to Exhibit A of the Credit
Agreement in its correct alphabetical order:

 

 
i. 
““Daily Three Month LIBOR” means, for any day, the rate of interest equal to the
LIBOR then in effect for delivery for a three (3) month period.  Each change in
the interest rate shall become effective each Business Day that Wells Fargo
determines that Daily Three Month LIBOR has changed.”

 

 
(c) 
The definition of “Base LIBOR” within the definition of “LIBOR” is hereby
deleted in its entirety and the following substituted in its stead:

 
““Base LIBOR” means the rate per annum for United States dollar deposits quoted
by Wells Fargo for the purpose of calculating the effective rate for loans
making reference to Daily Three Month LIBOR as the Inter-Bank Market Offered
Rate in effect from time to time for three (3) month delivery of funds in
amounts approximately equal to the principal amount of such loans.  Borrower
understands and agrees that Wells Fargo may base its quotation of the Inter-Bank
Market Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Wells Fargo in its discretion deems appropriate including
the rate offered for U.S. dollar deposits on the London Inter-Bank Market.”
 

 
(d) 
The definition of “Eligible Billed Accounts” is hereby amended by deleting
clause (m) thereof in its entirety and by substituting the following in its
stead:

 
“(m)  Accounts owed by an account debtor, regardless of whether otherwise
eligible, to the extent that the aggregate balance of such Accounts exceeds 20%
of the aggregate amount of all Eligible Accounts,  provided that (i) Federal
Express  may owe up to 30% of the aggregate amount of all Eligible Accounts,
(ii) United Parcel Service of America, Inc. may owe up to 25% of the aggregate
amount of all Eligible Accounts, and (iii) in the event Delta and Northwest
merge or otherwise consolidate into one Person, the surviving Person of such
merger or other consolidation may owe up to 25% of the aggregate amount of all
Eligible Accounts;”
 

 
(e) 
The definition of “Interest Period” is hereby amended by deleting “or on which a
Base Rate Advance is converted to a LIBOR Advance” where it appears therein.

 

 
(f) 
The definition of “LIBOR Advance Rate Applicable Margin” is hereby deleted in
its entirety and the following substituted in its stead:

 
 
 

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““LIBOR Advance Rate Applicable Margin” means one and three-quarters percent
(1.75%) per annum, subject to the provisions of Section 1.5(a).
 
6. 
Ratification of Loan Documents.  Except as provided for herein, all terms and
conditions of the Credit Agreement and the other Loan Documents remain in full
force and effect. Borrower hereby ratifies, confirms, and reaffirms all
representations, warranties, and covenants contained therein and acknowledges
and agrees that the Obligations, as modified hereby, are and continue to be
secured by the Collateral.  Borrower warrants and represents to the Lender that
as of the date hereof, no Event of Default has occurred and is continuing.
Borrower acknowledges and agrees that Borrower does not have any offsets,
defenses, or counterclaims against the Lender thereunder, and to the extent that
any such offsets, defenses, or counterclaims may exist, Borrower hereby WAIVES
and RELEASES the Lender therefrom.

 
7. 
Conditions Precedent. This Second Amendment shall not be effective until each of
the following conditions precedent has been fulfilled to the satisfaction of the
Lender:

 

 
(a) 
This Second Amendment shall have been duly executed and delivered by the
respective parties thereto, and shall be in full force and effect and shall be
in form and substance satisfactory to the Lender.

 

 
(b) 
The Lender shall have received the documents, instruments and agreements as the
Lender may reasonably require to effectuate this Second Amendment.

 

 
(c) 
All action on the part of the Borrower necessary for the valid execution,
delivery and performance by the Borrower of this Second Amendment shall have
been duly and effectively taken and evidence thereof satisfactory to the Lender
shall have been provided to the Lender.

 

 
(d) 
The Borrower shall have paid to the Lender all other fees and expenses then due
and owing pursuant to the Credit Agreement.

 
8. 
Miscellaneous.

 

 
(a) 
This Second Amendment may be executed in several counterparts and by each party
on a separate counterpart, each of which when so executed and delivered shall be
an original, and all of which together shall constitute one instrument.

 

 
(b) 
This Second Amendment expresses the entire understanding of the parties with
respect to the transactions contemplated hereby.  No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions hereof.

 

 
(c) 
Any determination that any provision of this Second Amendment or any application
hereof is invalid, illegal or unenforceable in any respect and in any instance
shall not affect the validity, legality, or enforceability of such provision in
any other instance, or the validity, legality or enforceability of any other
provisions of this Second Amendment.

 
 
 

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(d) 
The Borrower shall pay on demand all costs and expenses of the Lender,
including, without limitation, reasonable attorneys’ fees in connection with the
preparation, negotiation, execution and delivery of this Second Amendment.

 

 
(e) 
The Borrower warrants and represents that the Borrower has consulted with
independent legal counsel of the Borrower’s selection in connection with this
Second Amendment and is not relying on any representations or warranties of the
Lender or its counsel in entering into this Second Amendment.

 

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IN WITNESS WHEREOF, each party hereto has executed this Second Amendment as a
sealed instrument under the laws of the Commonwealth of Massachusetts through
its authorized officer as of the date set forth above.
 

 
BORROWER:
     
COMMAND SECURITY CORPORATION
     
By:        /s/ Barry I. Regenstein        
 
Name:   Barry I. Regenstein        
 
Title:     President            
             
LENDER:
     
WELLS FARGO BANK, NATIONAL
 
ASSOCIATION
     
By:        /s/ Jeffrey Giunta               
 
Name:   Jeffrey Giunta                
 
Title:     Authorized Signatory              

 
 
 
 
Signature Page to Amendment to Credit Agreement
 
 

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