Exhibit 10.7
EXECUTION
COPY
THIRD AMENDMENT, dated as of October 1, 2002 (this "Amendment"), to LOAN
AND SECURITY AGREEMENT, dated as of November 21, 1997 (as amended, modified or
supplemented through the date hereof, the "Loan Agreement"), by and between
COFFEE HOLDING CO. INC. ("Borrower") and XXXXX FARGO BUSINESS CREDIT, INC., as
assignee of Banc of America Commercial Finance Corporation, f/k/a NationsCredit
Commercial Corporation ("Lender"). Terms which are capitalized in this Amendment
and not otherwise defined shall have the meanings given such terms in the Loan
Agreement.
WHEREAS, the Borrower has requested the Lender to consider (i) extending
the maturity date of the credit facility established pursuant to the Loan
Agreement and (ii) modifying certain of the terms and provisions contained in
the Loan Agreement, and the Lender is willing to agree to the foregoing, subject
to the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
Section One. Amendment to Loan Agreement. On the Third Amendment Effective
Date, the Loan Agreement is hereby amended as follows:
(a) Section 2.2(b) Facility Fees. Section 2.2(b) of the Loan Agreement is
amended by deleting it in its entirety and substituting in lieu thereof the
following:
"(b) Facility Fees. In addition to any facility fee previously paid
to the Lender, a facility fee for the Initial Term in the amount set
forth in Section 6(b)(i) of Schedule A (which fee shall be fully
earned as of the Third Amendment Effective Date and shall be payable
in two installments, the first of which shall be in the amount set
forth in Section 6 (b)(i)(A) of Schedule A, and shall be payable on
November 20, 2002, and the second of which shall be in the amount
set forth in Section 6(b)(i)(B) of Schedule A, and shall be payable
on November 20, 2003), and a facility fee for each Renewal Term in
the amount set forth in Section 6(b)(ii) of Schedule A (which fee
shall be fully earned as of the first day of the Renewal Term and
shall be payable in equal installments on the first day of the
Renewal Term and on the one-year anniversary thereof); provided,
that if the Loan Agreement is terminated, or the maturity of the
Loans is accelerated in accordance with the terms of Section 8.2, in
either case (x) before the last day of the Initial Term, then the
entire unpaid balance of the facility fee for the Initial Term shall
be due and payable in
full upon such termination or acceleration, or (y) before the last
day of the applicable Renewal Term, then the unpaid balance of the
facility fee for such Renewal Period shall be due and payable in
full upon such termination or acceleration."
(b) Section 4.1. Section 4.1 of the Loan Agreement is amended by deleting
the last sentence thereof and replacing it with the following sentence:
"However, for purposes of computing interest on the Obligations,
such items shall be deemed applied by Lender two Business Days after
Lender's receipt of advice of deposit thereof at Lender's Bank."
(c) Section 7.1. Section 7.1 of the Loan Agreement is amended by deleting
the fist sentence thereof in its entirety, and by substituting the following in
lieu thereof:
"7.1 Maturity Date. Lender's Obligations to make Loans, and to
provide Credit Accommodations under this Agreement shall initially
continue in effect until the Initial Maturity Date set forth in
Section 7(a) of Schedule A (the "Initial Term"); provided, that such
date shall automatically be extended (the Initial Maturity Date, as
it may be so extended, being referred to as the "Maturity Date") for
successive additional terms of two years (each a "Renewal Term")
unless one party gives written notice to the other, not less than
sixty (60) days prior to the Maturity Date that such party elects
not to extend the Maturity Date."
(d) Schedule A of the Loan Agreement shall be amended and restated in its
entirety to read as set forth in Schedule A attached hereto.
(e) Schedule B of the Loan Agreement shall be amended by adding the
following defined terms in the appropriate place in alphabetical order:
"Third Amendment" means the Third Amendment to this Agreement, dated
as of October 1, 2002"
"Third Amendment Effective Date" means the date on which all of the
conditions precedent to the effectiveness of the Third Amendment
shall have been satisfied or waived in writing by the Lender."
Section Two. Representations and Warranties. To induce the Lender to enter
into this Amendment, the Borrower warrants and represents to the Lender as
follows:
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(a) All of the representations and warranties contained in the Loan
Agreement and each other Loan Document to which the Borrower is a party continue
to be true and correct in all material respects as of the Third Amendment
Effective Date, as if repeated as of the Third Amendment Effective Date, except
for such representations and warranties which, by their terms, are only made as
of a previous date;
(b) The execution, delivery and performance of this Amendment by the
Borrower are within its corporate powers, have been duly authorized by all
necessary corporate action, and the Borrower has received all necessary consents
and approvals (if any shall be required) for the execution and delivery of this
Amendment;
(c) Upon its execution, this Amendment shall constitute the legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) general principles of equity;
(d) The Borrower is not in default under any indenture, mortgage, deed of
trust, or other material agreement or material instrument to which it is a party
or by which it may be bound. Neither the execution and delivery of this
Amendment, nor the consummation of the transactions contemplated herein, nor
compliance with the provisions hereof will (i) violate any law or regulation
applicable to it, (ii) cause a violation by the Borrower of any order or decree
of any court or government instrumentality applicable to it, (iii) conflict
with, or result in the breach of or constitute a default under, any indenture,
mortgage, deed of trust, or other material agreement or material instrument to
which the Borrower is a party or by which it may be bound, (iv) result in the
creation or imposition of any lien, charge, or encumbrance upon any of the
property of the Borrower, except in favor of the Lender, to secure the
Obligations, or (v) violate any provision of the Certificate of Incorporation,
By-Laws or any capital stock provisions of the Borrower;
(e) No Event of Default has occurred and is continuing; and
(f) Since the date of the Lender's receipt of the financial statements of
the Borrower for the six-month period ended on April 30, 2002, no change or
event has occurred which has had or is reasonably likely to have a material
adverse effect on the Borrower's business, operations, condition (financial or
otherwise) or prospects (a "Material Adverse Effect").
Section Three. Conditions Precedent. This Amendment shall become effective
upon the date that the last of the following events shall have occurred or been
waived in writing by the Lender (the "Third Amendment Effective Date"):
(a) The Lender shall have received this Amendment, duly executed by the
Borrower.
(b) No Default shall have occurred and be continuing which constitutes an
Event of Default or would constitute an Event of Default upon the giving of
notice or lapse of time or both, and no event or development which has had or is
reasonably likely
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to have a Material Adverse Effect shall have occurred, in each case since the
date of delivery to the Lender of the Borrower's most recent financial
statements.
(c) The Lender shall have received (i) an officer's certificate, executed
by the chief financial officer or chief executive officer of the Borrower,
confirming the truth and accuracy of the representations and warranties
contained in Section Two and Section Three (b) hereof, and (ii) a secretary's
certificate, executed by the corporate secretary of the Borrower, in form
reasonably satisfactory to the Lender.
(d) The Lender shall have received a confirmation of Guaranty from each of
Xxxxx Xxxxxx and Xxxxxx Xxxxxx, duly executed by each of them, in the form of
Exhibit A to this Agreement.
Section Four. General Provisions.
(a) Upon the Lender's receipt and satisfactory review of the appraisal of
the Borrower's Equipment currently being performed (the "Appraisal"), and the
satisfaction of the condition precedent hereinafter described, so long as no
Event of Default shall have occurred and shall then be continuing, Lender shall
make an Equipment Advance to the Borrower in an amount equal to the lesser of
$750,000 and 85% of the appraised auction sale value of the Borrowers' Eligible
Equipment, based on the Appraisal, minus the unpaid principal balance of the
Term Loan then outstanding. Upon the making of such Equipment Advance, the term
"Term Loan", as used in the Loan Agreement, shall include the principal amount
of such Equipment Advance. As a condition precedent to the making of such
Equipment Advance, the Borrower shall have executed and delivered to the Lender
a promissory note in the form of Exhibit B attached hereto, with all blank
spaces duly and accurately completed, and Lender shall promptly xxxx the
promissory note evidencing the Term Loan, dated as of November 29, 2000, in the
principal amount of $600,000 "canceled", and return it to the Borrower.
(b) Except as herein expressly amended, the Loan Agreement and all other
agreements, documents, instruments and certificates executed in connection
therewith, are ratified and confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.
(c) All references to "the Loan Agreement" in the Loan Agreement shall
mean the Loan Agreement as amended as of the Third Amendment Effective Date, and
as amended hereby and as hereafter amended, supplemented and modified from time
to time.
(d) This Amendment shall be governed by and construed in accordance with
the internal laws of The State of New York, without regard to the conflicts of
law principles thereof.
(e) To the extent not already obtained, the Borrower agrees to use its
reasonable best efforts to obtain from (i) each warehouseman, bailee or other
Person that has possession or control from time to time of any Inventory or
Equipment of the Borrower a written acknowledgement by such Person of the
Lender's security interest
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therein and right to obtain access thereto and (ii) T & O Management Corp. a
landlord's waiver of lien in favor of the Lender, containing such other terms
and conditions as the Lender may reasonably require.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered at
New York, New York as of the date first above written.
COFFEE HOLDING CO. INC.
By: _____________________________________
Name:
Title:
XXXXX FARGO BUSINESS CREDIT, INC., as
assignee of Banc of America Commercial
Finance Corporation, f/k/a NationsCredit
Commercial Corporation
By: _____________________________________
Name:
Title:
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Schedule A
Description of Certain Terms
This Schedule is an integral part of the Loan and Security Agreement dated
as of November 21, 1997 (as amended through the date hereof, the "Agreement"),
between COFFEE HOLDING CO., INC (the "Borrower") and XXXXX FARGO BUSINESS
CREDIT, INC. (as assignee of Banc of America Commercial Finance Corporation,
f/k/a NationsCredit Commercial Corporation, in such capacity, the "Lender").
1. Loan Limits for Revolving Loans:
(a) Maximum Facility Amount: $5,000,000
(b) Advance Rates:
(i) Accounts 85%; provided, that if the
Advance Rate: Dilution Percentage exceeds
4%, such advance rate will be
reduced by the number of full
or partial percentage points
of such excess
(ii) Inventory
Advice
Rate(s):
(A) Finished goods: 60%
(B) Raw materials: 60%
(C) Work in process: Not Applicable
(iii) Cash Collateral Not Applicable
(c) Accounts Sublimit Not Applicable
(d) Inventory Sublimit(s):
(i) Overall sublimit on $1,000,000 or, if less, the
advance against Eligible aggregate advances against
Inventory Accounts at any time of
determination
(ii) Sublimit on advances Not Applicable
against finished goods
(iii) Sublimit on advances Not Applicable
against raw materials
(e) Credit $500,000
Accommodation
Limit:
(f) Permanent Reserve Amount: Not Applicable
(g) Overadvance Amount: Not Applicable
2. Loan Limits for Term Loan:
(a) Principal Amount:
(i) Equipment The lesser of $750,000 and
Advance 85% of the appraised auction
sale value of Borrower's
Eligible Equipment, as of the
most recent appraisal
performed subsequent to the
Third Amendment Effective
Date
(iv) Real Property Not Available
Advance:
(b) Repayment Schedule:
(i) Equipment The Equipment Advance shall
Advance: be repaidconsisting based on
an amortization schedule of
60 months, in equal
consecutive monthly
installments, payable on the
first day of each calendar
month, commencing November 1,
2002, with the entire unpaid
balance due and payable on
the Maturity Date
(ii)
(iii)
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(iv) Real Property Not Applicable
Advance:
3. Interest Rates:
(a) (i) Revolving Loans: 0.25% per annum in excess of
the Prime Rate
(b) Term Loan: 0.50% per annum in excess of
the Prime Rate
4. Minimum Loan Amount: $2,000,000
5. Maximum Days: the lesser of
(a) Maximum days after original 60 days
due date for Eligible Accounts:
(b) Maximum days after original 90 days
invoice date for Eligible
Accounts:
6. Fees:
(a) Closing Fee: N/A
(b) Facility Fee:
(i) Initial Term: $18,500
(A) $10,000
(B) $8,500
(ii) Renewal Term $18,500
(c) Service Fee: Not Applicable
(d) Unused Line Fee: Not Applicable
(e) Minimum Borrowing Fee:
(i) Applicable Period: Each Year
(ii) Date payable: Each anniversary of the date
of the Agreement
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(f) Success Fee: Not Applicable
(g) Warrants: Not Applicable
(h) Early Termination 3% of the Maximum Facility
Amount if terminated on or
prior to the one-year
anniversary of the Third
Amendment Effective Date; 2%
of the Maximum Facility
Amount if terminated after
the one-year anniversary of
the Third Amendment Effective
Date and on or prior to the
two-year anniversary of the
Third Amendment Effective
Date and 1% of the Maximum
Facility Amount if terminated
at any time after the
two-year anniversary of the
Third Amendment Effective
Date and prior to the
Maturity Date; provided that
the Early Termination Fee
will be waived by Lender if
Borrower transfers the Loans
and all of its other
Obligations hereunder to
another division of Xxxxx
Fargo Bank.
(i) Fees for letters of credit 1 % per annum of the face
and other Credit Accommodations amount of each open Credit
(or guaranties thereof Accommodation, plus all costs
by Lender): and fees charged by the
issuer
(j) Field Exam Fee: $750 per day per person plus
all out-of-pocket expenses,
provided, that if no Event of
Default has occurred during
any consecutive 365 day
period commencing on November
20 of each year, then the
maximum amount of the field
exam fees for which the
Borrower shall be obligated
to pay the Lender during such
period shall not exceed
$10,000.
7. Maturity Date:
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(a) Initial Maturity Date: November 20, 2004
8. Financial Covenants:
(a) Capital Expenditure Not Applicable
Limitation:
(b) Minimum Net Worth Not Applicable
Requirement:
(c) Minimum Tangible Not Applicable
Net Worth:
(d) Minimum Working Not Applicable
Capital:
(e) Maximum Cumulative Not Applicable
Net Loss:
(f) Minimum Cumulative -for the fiscal quarter
Net Income: ending January 31 of each
fiscal year, commencing with
January 31, 2003; -for the
period of two fiscal quarters
ending April 30 of each
fiscal year, commencing with
April 30, 2003; -for the
period of three fiscal
quarters ending July 31 of
each fiscal year, commencing
with July 31, 2002; and -for
the period of four fiscal
quarters ending October 31 of
each fiscal year, commencing
with October 31, 2002, the
Borrower shall be required to
maintain a minimum cumulative
net income in an amount
mutually agreed upon with the
Lender, but in no event less
than 67% of the cumulative
net income projected by the
Borrower for each such
period, as reflected in its
forecasted income statement
for the fiscal year ending
October 31
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of each year, commencing with
October 31, 2002.
(g) Maximum Leverage Ratio: Not Applicable
(h) Limitation on Equipment Not Applicable
Leases:
(i) Limitation on Purchase Not Applicable
Money Security Interests:
(j) Additional Financial Not Applicable
Covenants:
9. Borrower Information:
(a) Prior Name of Borrower: None
(b) Prior Trade Names of Borrower None
(c) Existing Trade Names None
of Borrower:
(d) Inventory Locations: Continental Terminals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
(e) Other Locations: 0000x Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
00 X Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxxx, XX 00000
(f) Litigation: None
(g) Ownership of Xxxxxx Xxxxxx - 32.5%
Borrower Xxxxx Xxxxxx - 32.5%
Mr. and Xxx. Xxxxxxxx Xxxxxx
- 15.0%
Other - 20.0%
(h) Subsidiaries (and) ownership None
thereof):
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(i) Facsimile Numbers:
Borrower: 000-000-0000
Lender: 000-000-0000
10. Description of Real Property None
11. Lender's Bank: Xxxxx Fargo Bank
12. Other Covenants: None
13. Exceptions to Negative Covenants: None
14. Cash Collateral: None
15. Guaranties:
(a) Guarantors: Xxxxxx Xxxxxx
Xxxxx Xxxxxx
(b) Amount: Each in the amount of
$500,000
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IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as of
the date set forth in the Third Amendment to which this Schedule is attached.
Borrower: Lender:
COFFEE HOLDING CO., INC. XXXXX FARGO BUSINESS CREDIT, INC., (as
assignee of Banc of America Commercial
Finance Corporation, f/k/a NationsCredit
Commercial Corporation)
By: ________________________________ By: ____________________________________
Name: Name:
Title: Title:
