NationsCredit Commercial Funding
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (as it may be amended, this "Agreement")
is entered into on November 21, 1997, between NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION ("Lender"),
having an address at 1177 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ and COFFEE HOLDING CO., INC. ("Borrower"), whose chief executive
office is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
("Borrower's Address"). The Schedules to this Agreement are an integral part
of this Agreement and are incorporated herein by reference. Terms used, but
not defined elsewhere, in this Agreement are defined in ScheduleáB.
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 Amount. Subject to the terms and conditions contained in this
Agreement, Lender will:
(a) Revolving Loans and Credit Accommodations. From time to
time during the Term at Borrower's request, make revolving loans to Borrower
("Revolving Loans"), and make letters of credit, bankers acceptances and other
credit accommodations ("Credit Accommodations") available to Borrower in each
case to the extent that there is sufficient Availability at the time of such
request to cover, dollar for dollar, the requested Revolving Loan or Credit
Accommodation; provided, that after giving effect to such Revolving Loan or
Credit Accommodation, (x) the outstanding balance of all monetary Obligations
(including the principal balance of any Term Loan and, solely for the purpose
of determining compliance with this provision, the Credit Accommodation
Balance) will not exceed the Maximum Facility Amount set forth in Section 1(a)
of Schedule A and (y) none of the other Loan Limits set forth in Section 1 of
Schedule A will be exceeded. For this purpose, "Availability" means:
(i) the aggregate amount of Eligible Accounts (less maximum
existing or asserted taxes, discounts, credits and allowances) multiplied by
the Accounts Advance Rate set forth in Section l(b)(i) of Schedule A but not
to exceed the Accounts Sublimit set forth in Section l(c) of Schedule A,
plus
(ii) the lower of cost or market value of Eligible Inventory
multiplied by the Inventory Advance Rate(s) set forth in Section l(b)(ii) of
Schedule A, but not to exceed the Inventory Sublimit(s) set forth in Section
1(d) of Schedule A;
minus
(iii) all Reserves which Lender has established pursuant to
Section 1.2 (including those to be established in connection with the
requested Revolving Loan or Credit Accommodation);
minus
(iv) the outstanding balance of all of the monetary Obligations
(excluding the Credit Accommodation Balance and the principal balance of the
Term Loan); and
plus
(v) the Overadvance Amount, if any, set forth in Section l(g) of
Schedule A.
(b) Term Loan. On the date of this Agreement, make (i) an
advance to Borrower computed with respect to the value of Borrower's Eligible
Equipment (the ("Equipment Advance") in the principal amount, if any, set
forth in Section 2(a)(i) of Schedule A, and (ii) an advance to Borrower
computed with respect to the value of Borrower's Eligible Real Property (the
"Real Property Advance") in the principal amount, if any, set forth in Section
2(a)(ii) of Schedule A. The Equipment Advance and the Real Property Advance
are collectively referred to as the "Term Loan."
1.2 Reserves. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion ("Reserves") to
reflect (i) events, conditions, contingencies or risks which affect or may
affect (A) the Collateral or its value, or the security interests and other
rights of Lender in the Collateral or (B) the assets, business or prospects of
Borrower or any Obligor, (ii) Lender's good faith concern that any Collateral
report or financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading in
any material respect, (iii) any fact or circumstance which Lender determines
in good faith constitutes, or could constitute, a Default or Event of Default
or (iv) any other events or circumstances which Lender determines in good
faith make the establishment or revision of a Reserve prudent. Without
limiting the foregoing, Lender shall (x) in the case of each Credit
Accommodation issued for the purchase of Inventory (a) which meets the
criteria for Eligible Inventory set forth in clauses (i), (ii), (iii), (v) and
(vi) of the definition of Eligible Inventory, (b) which is or will be in
transit to one of the locations set forth in Section 9(d) of Schedule A, (c)
which is fully insured in a manner satisfactory to Lender and (d)áwith
respect to which Lender is in possession of all bills of lading and all other
documentation which Lender has requested, all in form and substance
satisfactory to Lender in its sole discretion, establish a Reserve equal to
the cost of such Inventory (plus all duties, freight, taxes, insurance, costs
and other charges and expenses relating to such Credit Accommodation or such
Eligible Inventory) multiplied by a percentage equal to 100% minus the
Inventory Advance Rate applicable to Eligible Inventory and (y) in the case of
any other Credit Accommodation issued for any purpose, establish a Reserve
equal to the full amount of such Credit Accommodation plus all costs and other
charges and expenses relating to such Credit Accommodation. In addition, (x)
Lender shall establish a permanent Reserve in the amount set forth in Section
l(f) of Schedule A, and (y) if the outstanding principal balance of the Term
Loan advance with respect to Eligible Equipment exceeds the percentage set
forth in Section 2(a)(i) of Schedule A of the appraised value of such Eligible
Equipment, Lender may establish an additional Reserve in the amount of such
excess (and, for this purpose, if payments of principal on the Term Loan
advances against Eligible Equipment and Real Property are not calculated
separately, payments of principal of the Term Loan made by Borrower shall be
deemed to apply to the Term Loan advance with respect to Eligible Equipment
and Real Property, respectively, in proportion to the original principal
amounts of such advances). Lender may, in its discretion, establish and
revise Reserves by deducting them in determining Availability or by
reclassifying Eligible Accounts or Eligible Inventory as ineligible. In no
event shall the establishment of a Reserve in respect of a particular actual
or contingent liability obligate Lender to make advances hereunder to pay such
liability or otherwise obligate Lender with respect thereto.
1.3 Other Provisions Applicable to Credit Accommodations. Lender
may, in its sole discretion and on terms and conditions acceptable to Lender,
make Credit Accommodations available to Borrower either by issuing them, or by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; provided, that after giving effect to each Credit
Accommodation, the Credit Accommodation Balance will not exceed the Credit
Accommodation Limit set forth in Section 1(e) of Schedule A. Any amounts paid
by Lender in respect of a Credit Accommodation will be treated for all
purposes as a Revolving Loan which shall be secured by the Collateral and bear
interest, and be payable, in the same manner as a Revolving Loan. Borrower
agrees to execute all documentation required by Lender or the issuer of any
Credit Accommodation in connection with any such Credit Accommodation.
1.4 Repayment. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term Loan shall be
repaid as set forth in Section 2(b) of Schedule A. If at any time any of the
Loan Limits are exceeded, Borrower will immediately pay to Lender such amounts
(or provide cash collateral to Lender with respect to the Credit Accommodation
Balance in the manner set forth in Section 7.3), as shall cause Borrower to be
in full compliance with all of the Loan Limits. Notwithstanding the foregoing
Lender may, in its sole discretion, make or permit Revolving Loans, the Term
Loan, any Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; provided, that Borrower shall, upon Lender's
demand, pay to Lender such amounts as shall cause Borrower to be in full
compliance with all of the Loan Limits. All unpaid monetary Obligations shall
be payable in full on the Maturity Date (as defined in Section 7.1) or, if
earlier, the date of any early termination pursuant to Section 7.2.
1.5 Minimum Borrowing. Subject to the terms and conditions of this
Agreement, Borrower agrees to (i) borrow sufficient amounts to cause the
outstanding principal balance of the Loans to equal or exceed, at all times
prior to the Maturity Date, the Minimum Loan Amount set forth in Section 4 of
Schedule A and (ii) maintain Availability sufficient to enable Borrower to do
so. However, Lender shall not be obligated to loan Borrower the Minimum Loan
Amount other than in accordance with all of the terms and conditions of this
Agreement.
2. INTEREST AND FEES.
2.1 Interest. All Loans and other monetary Obligations shall bear
interest at the Interest Rate(s) set forth in Section 3 of Schedule A, except
where expressly set forth to the contrary in this Agreement or another Loan
Document; provided, that after the occurrence of an Event of Default, all
Loans and other monetary Obligations shall, at Lender's option, bear interest
at a rate per annum equal to two percent (2%) in excess of the rate otherwise
applicable thereto (the "Default Rate") until paid in full (notwithstanding
the entry of any judgment against Borrower or the exercise of any other right
or remedy by Lender), and all such interest shall be payable on demand.
Changes in the Interest Rate shall be effective as of the date of any change
in the Prime Rate. Notwithstanding anything to the contrary contained in this
Agreement, the aggregate of all amounts deemed to be interest hereunder and
charged or collected by Lender is not intended to exceed the highest rate
permissible under any applicable law, but if it should, such interest shall
automatically be reduced to the extent necessary to comply with applicable law
and Lender will refund to Borrower any such excess interest received by
Lender.
2.2 Fees and Warrants. Borrower shall pay Lender the following fees,
and issue Lender the following warrants, which are in addition to all interest
and other sums payable by Borrower to Lender under this Agreement, and are not
refundable:
(a) Closing Fee. A closing fee in the amount set forth in Section
6(a) of Schedule A, which shall be deemed to be fully earned as of, and
payable on, the date hereof.
(b) Facility Fees. A facility fee for the Initial Term in the
amount set forth in Section 6(b)(i) of Schedule A (which shall be fully earned
as of the date of this Agreement and shall be payable in equal installments
due, respectively, on the date of this Agreement and on each anniversary
thereof during the Initial Term), and a facility fee for each Renewal Term in
the amount set forth in Section 6(b)(ii) of Schedule A (which shall be fully
earned as of the first day of such Renewal Term and shall be payable in equal
installments due, respectively, on the first day of such Renewal Term and on
each anniversary thereof during such Renewal Term).
(c) Servicing Fee. A monthly servicing fee in the amount set
forth in Section 6(c) of Schedule A, in consideration of Lender's
administration and other services for each month (or part thereof), which
shall be fully earned as of, and payable in advance on, the date of this
Agreement and on the first date of each month thereafter so long as any of the
Obligations are outstanding.
(d) Unused Line Fee. An unused line fee at a rate equal to the
percentage per annum set forth in Section 6(d) of Schedule A of the amount by
which the Maximum Facility Amount exceeds the average dally outstanding
principal balance of the Loans and the Credit Accommodation Balance during the
immediately preceding month (or part thereof), which fee shall be payable, in
arrears, on the first day of each month so long as any of the Obligations are
outstanding and on the Maturity Date.
(e) Minimum Borrowing Fee. A minimum borrowing fee equal to the
excess, if any, of (i) interest which would have been payable in respect of
each period set forth in Section 6(e)(i) of Schedule A if, at all times during
such period, the principal balance of the Loans was equal to the Minimum Loan
Amount over (ii) the actual interest payable in respect of such period, which
fee shall be fully earned as of the last day of such period and payable on the
date set forth in Section 6(e)(ii) of Schedule A and on the Maturity Date,
commencing with the immediately following period.
(f) Success Fee. A success fee in the amount set forth in
Section 6(f) of Schedule A, which shall be fully earned as of the date of this
Agreement and payable as set forth in Section 6(f) of Schedule A.
(g) Warrants. Warrants to acquire the capital stock of
Borrower, as summarized in Section 6(g) of Schedule A and as more fully set
forth in a separate warrant agreement executed by Borrower contemporaneously
with this Agreement.
(h) Credit Accommodation Fees. All of the fees relating to
Credit Accommodations set forth in Section 6(i) of Schedule A.
2.3 Computation of Interest and Fees. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the
actual number of days elapsed in a year of 360 days. For purposes of
calculating interest and fees, if the outstanding daily principal balance of
the Revolving Loans is a credit balance, such balance shall be deemed to be
zero.
2.4 Loan Account; Monthly Accountings. Lender shall maintain a loan
account for Borrower reflecting all advances, charges, expenses and payments
made pursuant to this Agreement (the "Loan Account"), and shall provide
Borrower with a monthly accounting reflecting the activity in the Loan
Account. Each accounting shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Lender), unless Borrower
notifies Lender in writing to the contrary within sixty days after such
account is rendered, describing the nature of any alleged errors or
admissions. However, Lender's failure to maintain the Loan Account or to
provide any such accounting shall not affect the legality or binding nature
of the Obligations. Interest, fees and other monetary Obligations due and
owing under this Agreement (including fees and other amounts paid by Lender to
issuers of Credit Accommodations) may, in Lender's discretion, be charged to
the Loan Account, and will thereafter be deemed to be Revolving Loans and will
bear interest at the same rate as other Revolving Loans.
3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the
Obligations, Borrower hereby grants to Lender a continuing security interest
in all of Borrower's property and interests in property, whether tangible or
intangible, now owned or in existence or hereafter acquired or arising,
wherever located, including Borrower's interest in all of the following,
whether or not eligible for lending purposes: (i) all Accounts, Chattel Paper,
Instruments, Documents, Goods (including Inventory, Equipment, farm products
and consumer goods), Investment Property, General Intangibles, Deposit
Accounts and money, (ii) all proceeds and products of all of the foregoing
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties for loss or any destruction of any of the foregoing) and
(iii) all books and records relating to any of the foregoing.
4. ADMINISTRATION.
4.1 Lock Boxes and Blocked Accounts. Borrower will, at its expense,
establish (and revise from time to time as Lender may require) collection
procedures acceptable to Lender, in Lender's sole discretion, for the
collection of checks, wire transfers and other proceeds of Accounts ("Account
Proceeds"), which may include (i) directing all Account Debtors to send all
such proceeds directly to a post office box designated by Lender either in the
name of Borrower (but as to which Lender has exclusive access) or, at Lender's
option, in the name of Lender (a "Lock Box") or (ii) depositing all Account
Proceeds received by Borrower into one or more bank accounts maintained in
Borrower's name (each, a "Blocked Account"), under an arrangement acceptable
to Lender with a depository bank acceptable to Lender, pursuant to which all
funds deposited into each Blocked Account are to be transferred to Lender in
such manner, and with such frequency, as Lender shall specify or (iii) a
combination of the foregoing. Borrower agrees to execute, and to cause its
depository banks to execute, such Lock Box and Blocked Account agreements and
other documentation as Lender shall require from time to time in connection
with the foregoing. On the date of this Agreement, Borrower will execute and
deliver to Lender a Blocked Account agreement, in form and substance
satisfactory to Lender.
4.2 Remittance of Proceeds. Except as provided in Section 4.1, all
proceeds arising from the sale or other disposition of any Collateral shall be
delivered, in kind, by Borrower to Lender in the original form in which
received by Borrower not later than the following Business Day after receipt
by Borrower. Until so delivered to Lender, Borrower shall hold such proceeds
separate and apart from Borrower's other funds and property in an express
trust for Lender. Nothing in this Section 4.2 shall limit the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.
4.3 Application of Payments. Lender may, in its sole discretion,
apply, reverse and re-apply all cash and non-cash proceeds of Collateral or
other payments received with respect to the Obligations, in such order and
manner as Lender shall determine, whether or not the Obligations are due, and
whether before or after the occurrence of a Default or an Event of Default.
For purposes of determining Availability, such amounts will be credited to the
Loan Account and the Collateral balances to which they relate upon Lender's
receipt of advice from Lender's Bank (set forth in Section 11 of Schedule A)
that such items have been credited to Lender's account at Lender's Bank (or
upon Lender's deposit thereof at Lender's Bank in the case of payments
received by Lender in kind), in each case subject to final payment and
collection. However, for purposes of computing interest on the Obligations,
such items shall be deemed applied by Lender three Business Days after
Lender's receipt of advice of deposit thereof at Lender's Bank.
4.4 Notification; Verification. Lender or its designee may, from
time to time, whether or not a Default or Event of Default has occurred: (i)
verify directly with the Account Debtors the validity, amount and other
matters relating to the Accounts and Chattel Paper, by means of mail,
telephone or otherwise, either in the name of Borrower or Lender or such other
name as Lender may choose; and (ii) notify Account Debtors that Lender has a
security interest in the Accounts and that payment thereof is to be made
directly to Lender. Upon the occurrence of a Default or Event of Default,
Lender or its designee may, from time to time, demand, collect or enforce
payment of any Accounts and Chattel Paper (but without any duty to do so).
4.5 Power of Attorney. Borrower hereby grants to Lender an
irrevocable power of attorney, coupled with an interest, authorizing and
permitting Lender (acting through any of its officers, employees, attorneys or
agents), at any time (whether or not a Default or Event of Default has
occurred and is continuing, except as expressly provided below), at Lender's
option, but without obligation, with or without notice to Borrower, and at
Borrower's expense, to do any or all of the following, in Borrower's name or
otherwise: (i) execute on behalf of Borrower any documents that Lender may, in
its sole discretion, deem advisable in order to perfect and maintain Lender's
security interests in the Collateral, to exercise a right of Borrower or
Lender, or to fully consummate all the transactions contemplated by this
Agreement and the other Loan Documents (including such financing statements
and continuation financing statements, and amendments thereto, as Lender shall
deem necessary or appropriate) and to file as a financing statement any copy
of this Agreement or any financing statement signed by Borrower; (ii) execute
on behalf of Borrower any document exercising, transferring or assigning any
option to purchase, sell or otherwise dispose of or lease (as lessor or
lessee) any real or personal property which is part of the Collateral or in
which Lender has an interest; (iii) execute on behalf of Borrower any invoices
relating to any Accounts, any draft against any Account Debtor, any proof of
claim in bankruptcy, any notice of Lien or claim, and any assignment or
satisfaction of mechanic's, materialman's or other Lien; (iv) execute on
behalf of Borrower any notice to any Account Debtor; (v) receive and otherwise
take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; (vi) endorse Borrower's name on all checks and other
forms of remittances received by Lender; (vii) pay contest or settle any Lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (viii) after the occurrence of a Default or
Event of Default, grant extensions of time to pay, compromise claims relating
to, and settle Accounts, Chattel Paper and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (ix) pay any sums required on account of Borrower's taxes or to
secure the release of any Liens therefor; (x) pay any amounts necessary to
obtain, or maintain in effect, any of the insurance described in Section 5.12;
(xi) settle and adjust, and give releases of, any insurance claim that relates
to any of the Collateral and obtain payment therefor; (xii) instruct any third
party having custody or control of any Collateral or books or records
belonging to, or relating to, Borrower to give Lender the same rights of
access and other rights with respect thereto as Lender has under this
Agreement; and (xiii) after the occurrence of a Default or Event of Default,
change the address for delivery of Borrower's mail and receive and open all
mail addressed to Borrower. Any and all sums paid, and any and all costs,
expenses, liabilities, obligations and reasonable attorneys' fees incurred, by
Lender with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
Borrower agrees that Lender's rights under the foregoing power of attorney or
any of Lender's other rights under this Agreement or the other Loan Documents
shall not be construed to indicate that Lender is in control of the business,
management or properties of Borrower.
4.6 Disputes. Borrower shall promptly notify Lender of all disputes
or claims relating to Accounts and Chattel Paper. Borrower will not, without
Lender's prior written consent, compromise or settle any Account or Chattel
Paper for less than the full amount thereof, grant any extension of time of
payment of any Account or Chattel Paper, release (in whole or in part) any
Account Debtor or other person liable for the payment of any Account or
Chattel Paper or grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any Account or Chattel Paper;
except that prior to the occurrence of an Event of Default, Borrower may take
any of such actions in the ordinary course of its business, provided that
Borrower promptly reports the same to Lender.
4.7 Invoices. At Lender's request, Borrower will cause all invoices
and statements which it sends to Account Debtors or other third parties to be
marked, in a manner satisfactory, to Lender, to reflect Lender's security
interest therein.
4.8 Inventory.
(a) Returns. Provided that no Event of Default has occurred and
is continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower will promptly determine the reason
for such return and promptly issue a credit memorandum to the Account Debtor
in the appropriate amount (sending a copy to Lender). After the occurrence of
an Event of Default, Borrower will (i) hold the returned Inventory in trust
for Lender; (ii) segregate all returned Inventory from all of Borrower's other
property; (iii) conspicuously label the returned Inventory as Lender's
property; and (iv) immediately notify Lender of the return of such Inventory,
specifying the reason for such return, the location and condition of the
returned Inventory and, at Lender's request, deliver such returned Inventory
to Lender at an address specified by Lender.
(b) Other Covenants. Borrower will not, without Lender's prior
written consent, (i) store any Inventory with any warehouseman or other third
party other than as set forth in Section 9(d) of Schedule A and on Schedule
4.8 hereto; provided, that the Inventory stored at the locations listed on
Scehdule 4.8 hereto must not exceed, in the aggregate, 20% of Borrower's total
Inventory at any one time, or (ii) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis. All of the Inventory
has been produced only in accordance with the Fair Labor Standards Act of 1938
and all rules, regulations and orders promulgated thereunder, if applicable.
4.9 Access to Collateral, Books and Records. At reasonable times,
and on one Business Day's notice, prior to the occurrence of a Default or an
Event of Default, and at any time and with or without notice after the
occurrence of a Default or an Event of Default, Lender or its agents shall
have the right to inspect the Collateral, and the right to examine and copy
Borrower's books and records. Lender shall take reasonable steps to keep
confidential all information obtained in any such inspection or examination,
but Lender shall have the right to disclose any such information to its
auditors, regulatory agencies, attorneys and participants, and pursuant to any
subpoena or other legal process. Borrower agrees to give Lender access to any
or all of Borrower's premises to enable Lender to conduct such inspections and
examinations. Such inspections and examinations shall be at Borrower's
expense and the charge therefor shall be $750 per person per day (or such
higher amount as shall represent Lender's then current standard charge), plus
reasonable out-of-pocket expenses. Lender may, at Borrower's expense, use
Borrower's personnel, computer and other equipment, programs, printed output
and computer readable media, supplies and premises for the collection, sale or
other disposition of Collateral to the extent Lender, in its sole discretion,
deems appropriate. Borrower hereby irrevocably authorizes all accountants and
third parties to disclose and deliver to Lender, at Borrower's expense, all
financial information, books and records, work papers, management reports and
other information in their possession regarding Borrower. Borrower will not
enter into any agreement with any accounting firm, service bureau or third
party to store Borrower's books or records at any location other than
Borrower's Address without first obtaining Lender's written consent (which
consent may be conditioned upon such accounting firm, service bureau or other
third party agreeing to give Lender the same rights with respect to access to
books and records and related rights as Lender has under this Agreement).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be
affected by any knowledge of, or any investigation by, Lender, and (ii) the
accuracy of each such representation, warranty and covenant will be a
condition to each Loan and Credit Accommodation):
5.1 Existence and Authority. Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or formation. Borrower is qualified and licensed to do
business in all jurisdictions in which any failure to do so would have a
material adverse effect on Borrower. The execution, delivery and performance
by Borrower of this Agreement and all of the other Loan Documents have been
duly and validly authorized, do not violate Borrower's articles or certificate
of incorporation, by-laws or other organizational documents, or any law or any
agreement or instrument or any court order which is binding upon Borrower or
its property, do not constitute grounds for acceleration of any indebtedness
or obligation under any agreement or instrument which is binding upon Borrower
or its property, and, except as set forth on Schedule 5.1 hereto, do not
require the consent of any Person. This Agreement and such other Loan
Documents have been duly executed and delivered by, and are enforceable
against, Borrower, and all other Obligors who have signed them, in accordance
with their respective terms (except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or limiting creditors' rights or by equitable principles generally (regardless
of whether enforcement is sought in equity or at law)). Sections 9(g) and
9(h) of Schedule A set forth the ownership of Borrower and the names and
ownership of Borrower's Subsidiaries as of the date of this Agreement.
5.2 Name; Trade Names and Styles. The name of Borrower set forth in
the heading to this Agreement is its correct and complete legal name as of the
date hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Lender at least thirty days' prior written notice before
changing its name or doing business under any other name. Borrower has
complied with all laws relating to the conduct of business under a fictitious
business name. Borrower represents and warrants that (i) each trade name does
not refer to another corporation or other legal entity; (ii) all Accounts
invoiced under any such trade names are owned exclusively by Borrower and are
subject to the security interest of Lender and the other terms of this
Agreement; and (iii) all schedules of Accounts, including any sales made or
services rendered using any trade name shall show Borrower's name as assignor.
5.3 Title to Collateral; Permitted Liens. Borrower has good and
marketable title to, or a valid leasehold interest in, the Collateral. All
Equipment leased by Borrower is listed on Schedule 5.3 hereto, which Schedule
5.3 sets forth a complete description of such leased Equipment. The
Collateral now is and will remain free and clear of any and all liens,
charges, security interests, encumbrances and adverse claims, except for
Permitted Liens. Lender now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral, subject
only to the Permitted Liens, and Borrower will at all times defend Lender and
the Collateral against all claims of others. None of the Collateral which is
Equipment is or will be affixed to any real property in such a manner, or with
such intent, as to become a fixture. Except for leases or subleases as to
which Borrower has delivered to Lender a landlord's waiver in form and
substance satisfactory to Lender, Borrower is not a lessee or sublessee under
any real property, lease or sublease pursuant to which the lessor or sublessor
may obtain any rights in any of the Collateral, and no such lease or sublease
now prohibits, restrains, impairs or conditions, or will prohibit, restrain,
impair or condition, Borrower's right to remove any Collateral from the
premises. Whenever any Collateral is located upon premises in which any third
party has an interest (whether as owner, mortgagee, beneficiary under a deed
of trust, lien or otherwise), Borrower shall, whenever requested by Lender,
cause each such third party to execute and deliver to Lender, in form and
substance acceptable to Lender, such waivers and subordinations as Lender
shall specify, so as to ensure that Lender's rights in the Collateral are, and
will continue to be, superior to the rights of any such third party. Borrower
will keep in full force and effect, and will comply with all the terms of, any
lease of real property where any of the Collateral now or in the future may be
located.
5.4 Accounts and Chattel Paper. As of each date reported by
Borrower, all Accounts which Borrower has reported to Lender as being Eligible
Accounts comply in all respects with the criteria for eligibility established
by Lender and in effect at such time. All Accounts and Chattel Paper are
genuine and in all respects what they purport to be, arise out of a completed,
bona fide and unconditional and non-contingent sale and delivery of goods or
rendition of services by Borrower in the ordinary course of its business and
in accordance with the terms and conditions of all purchase orders, contracts
or other documents relating thereto, each Account Debtor thereunder had the
capacity to contract at the time any contract or other document giving rise to
such Accounts and Chattel Paper were executed, and the transactions giving
rise to such Accounts and Chattel Paper comply with all applicable laws and
governmental rules and regulations.
5.5 Investment Property. Borrower will take any and all actions
required or requested by Lender, from time to time, to (i) cause Lender to
obtain exclusive control of any Investment Property in a manner acceptable to
Lender and (ii) obtain from any issuers of Investment Property and such other
Persons as Lender shall specify, for the benefit of Lender, written
confirmation of Lender's exclusive control over such Investment Property and
take such other actions as Lender may request to perfect Lender's security
interest in such Investment Property. For purposes of this Section 5.5,
Lender shall have exclusive control of Investment Property if (A) such
Investment Property consists of certificated securities and Borrower delivers
such certificated securities to Lender (with appropriate endorsements if such
certificated securities are in registered form); (B) such Investment Property
consists of uncertificated securities and either (x) Borrower delivers such
uncertificated securities to Lender or (y) the issuer thereof agrees, pursuant
to documentation in form and substance satisfactory to Lender, that it will
comply with instructions originated by Lender without further consent by
Borrower; and (C) such Investment Property consists of security entitlements
and either (x) Lender becomes the entitlement holder thereof or the
appropriate securities intermediary agrees, pursuant to documentation in form
and substance satisfactory to Lender, that it will comply with entitlement
orders originated by Lender without further consent by Borrower.
5.6 Place of Business; Location of Collateral. Borrower's Address is
Borrower's chief executive office and the location of its books and records. In
addition, except as provided in the immediately following sentence, Borrower
has places of business and Collateral located only at the locations set forth
on Sections 9(d) and 9(e) of Schedule A. Borrower will give Lender at least
thirty days' prior written notice before opening any additional place of
business, changing its chief executive office or the location of its books and
records, or moving any of the Collateral to a location other than Borrower's
Address or one of the locations set forth in Sections 9(d) and 9(e) of
Schedule A, and will execute and deliver all financing statements and other
agreements, instruments and documents which Lender shall require as a result
thereof.
5.7 Financial Condition, Statements and Reports. All financial
statements delivered to Lender by or on behalf of Borrower have been prepared
in conformity with GAAP and completely and fairly reflect the financial
condition of Borrower, at the times and for the periods therein stated.
Between the last date covered by any such financial statement provided to
Lender and the date hereof (or, with respect to the remaking of this
representation in connection with the making of any Loan or the providing of
any Credit Accommodation, the date such Loan is made or such Credit
Accommodation is provided), there has been no material adverse change in the
financial condition or business of Borrower. Borrower is solvent and able to
pay its debts as they come due, and has sufficient capital to carry on its
business as now conducted and as proposed to be conducted. All schedules,
reports and other information and documentation delivered by Borrower to
Lender with respect to the Collateral are, or will be, when delivered, true,
correct and complete as of the date delivered or the date specified therein.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has
timely filed all tax returns and reports required by applicable law, has
timely paid all applicable taxes, assessments, deposits and contributions
owing by Borrower and will timely pay all such items in the future as they
became due and payable. Borrower may, however, defer payment of any contested
taxes; provided, that Borrower (i) in good faith contests Borrower's
obligation to such taxes by appropriate proceedings promptly and
diligently instituted and conducted; (ii)ánotifies Lender in writing
of the commencement of, and any material development in, the proceedings;
(iii) posts bonds or takes any other steps required to keep the contested
taxes from becoming a Lien upon any of the Collateral and (iv) maintains
adequate reserves therefor in conformity with GAAP. Borrower is unaware of
any claims or adjustments proposed for any of Borrower's prior tax years which
could result in additional taxes becoming due and payable by Borrower.
Borrower has paid, and shall continue to pay all amounts necessary to fund all
present and future pension, profit sharing and deferred compensation plans in
accordance with their terms, and Borrower has not withdrawn from participation
in, permitted partial or complete termination of, or permitted the occurrence
of any other event with respect to, any such plan which could result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or any other governmental agency.
5.9 Compliance with Laws. Borrower has complied in all material
respects with all provisions of all applicable laws and regulations, including
those relating to Borrower's ownership of real or personal property, the
conduct and licensing of Borrower's business, the payment and withholding of
taxes, ERISA and other employee matters, safety and environmental matters.
5.10 Litigation. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of
Borrower's knowledge) threatened against Borrower. There is no claim, suit,
litigation, proceeding or investigation pending or (to the best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or
before any governmental agency (or any basis therefor known to Borrower) which
may result, either separately or in the aggregate, in any material adverse
change in the financial condition or business of Borrower, or in any material
impairment in the ability of Borrower to carry on its business in
substantially the same manner as it is now being conducted. Borrower will
promptly inform Lender in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against Borrower.
5.11 Use of Proceeds. All proceeds of all Loans will be used solely
for lawful business purposes.
5.12 Insurance. Borrower will at all times carry property, liability
and other insurance, with insurers acceptable to Lender, in such form and
amounts, and with such deductibles and other provisions, as Lender shall
require, and Borrower will provide evidence of such insurance to Lender, so
that Lender is satisfied that such insurance is, at all times, in full force
and effect. Each property insurance policy shall name Lender as loss payee
and shall contain a lender's loss payable endorsement in form acceptable to
Lender, each liability insurance policy shall name Lender as an additional
insured, and each business interruption insurance policy shall be collaterally
assigned to Lender, all in form and substance satisfactory to Lender. All
policies of insurance shall provide that they may not be cancelled or changed
without at least thirty days' prior written notice to Lender, shall contain
breach of warranty coverage, and shall otherwise be in form and substance
satisfactory to Lender. Upon receipt of the proceeds of any such insurance,
Lender shall apply such proceeds in reduction of the Obligations as Lender
shall determine in its sole discretion. Borrower will promptly deliver to
Lender copies of all reports made to insurance companies.
5.13 Financial and Collateral Reports. Borrower has kept and will
keep adequate records and books of account with respect to its business
activities and the Collateral in which proper entries are made in accordance
with GAAP reflecting all its financial transactions, and will cause to be
prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP, unless Borrower's certified public accountants concur in
any change therein and such change is disclosed to Lender):
(a) Collateral Reports. On or before the fifteenth day of each
month, an aging of Borrower's Accounts, Chattel Paper and notes receivable,
and monthly Inventory reports, all in such form, and together with such
additional certificates, schedules and other information with respect to the
Collateral or the business of Borrower or any Obligor, as Lender shall
request; provided, that Borrower's failure to execute and deliver the same
shall not affect or limit Lender's security interests and other rights in any
of the Accounts, nor shall Lender's failure to advance or lend against a
specific Account affect or limit Lender's security interest and other rights
therein. Together with each such schedule, Borrower shall furnish Lender with
copies (or, at Lender's request, originals) of all contracts, orders,
invoices, and other similar documents, and all original shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any
goods the sale or disposition of which gave rise to such Accounts, and
Borrower warrants the genuineness of all of the foregoing. In addition,
Borrower shall deliver to Lender the originals of all Instruments, Chattel Paper
, security agreements, guaranties and other documents and property evidencing
or securing any Accounts, immediately upon receipt thereof and in the same
form as received, with all necessary endorsements. Lender may destroy or
otherwise dispose of all documents, schedules and other papers delivered to
Lender pursuant to this Agreement (other than originals of Instruments,
Chattel Paper, security agreements, guaranties and other documents and
property, evidencing or securing any Accounts) six months after Lender
receives them, unless Borrower requests their return in writing in advance and
arranges for their return to Borrower at Borrower's expense.
(b) Annual Statements. Not later than ninety days after the
close of each fiscal year of Borrower, unqualified (except for a qualification
for a change in accounting principles with which the accountant concurs)
audited financial statements of Borrower and its Subsidiaries as of the end of
such year, on a consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing selected by
Borrower but acceptable to Lender, together with a copy of any management
letter issued in connection therewith and a letter from such accountants
acknowledging that Lender is relying on such financial statements;
(c) Interim Statements. Not later than twenty days after the
end of each month hereafter, and sixty days after the last month of Borrower's
fiscal year, unaudited interim financial statements of Borrower and its
Subsidiaries as of the end of such month and of the portion of Borrower's
fiscal year then elapsed, on a consolidated and consolidating basis, certified
by the principal financial officer of Borrower as prepared in accordance with
GAAP and fairly presenting the consolidated financial position and results of
operations of Borrower and its Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that such
statements need not contain notes;
(d) Projections, Etc. Such business projections, Availability
projections, business plans, budgets and cash flow statements for Borrower and
its Subsidiaries as Lender shall request from time to time;
(e) Shareholder Reports, Etc. Promptly after the sending or
filing thereof, as the case may be, copies of any proxy, statements, financial
statements or reports which Borrower has made available to its shareholders
and copies of any regular, periodic and special reports or registration
statements which Borrower files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or any national
securities exchange;
(f) ERISA Reports. Upon request by Lender, copies of any annual
report to be filed pursuant to the requirements of ERISA in connection with
each plan subject thereto, and
(g) Other Information. Such other data and information
(financial and otherwise) as Lender, from time to time, may reasonably
request, bearing upon or related to the Collateral or Borrower's and each of
its Subsidiary's financial condition or results of operations.
5.14 Litigation Cooperation. Should any third-party suit or
proceeding be instituted by or against Lender with respect to any Collateral
or in any manner relating to Borrower, Borrower shall, without expense to
Lender, make available Borrower and its officers, employees and agents, and
Borrower's books and records, without charge, to the extent that Lender may
deem them reasonably necessary in order to prosecute or defend any such suit
or proceeding.
5.15 Maintenance of Collateral, Etc. Borrower will maintain all of
its Equipment in good working condition, ordinary wear and tear excepted, and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim
relating to the Collateral or which may result in an adverse impact upon
Borrower's business, assets or financial condition.
5.16 Notification of Changes. Borrower will promptly notify Lender
in writing of any change in its officers or directors, the opening of any new
bank account or other deposit account, or any material adverse change in the
business or financial affairs of Borrower or the existence of any circumstance
which would make any representation or warranty of Borrower untrue in any
material respect or constitute a material breach of any covenant of Borrower.
5.17 Further Assurances. Borrower agrees at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords, mortgagees
and processors and other bailees, subordination and intercreditor agreements
and other agreements, instruments and documents as Lender may request from
time to time to perfect and maintain Lender's security interests in the
Collateral and to fully effectuate the transactions contemplated by this
Agreement.
5.18 Negative Covenants. Except as set forth in Section 13 of
Schedule A, Borrower will not, without Lender's prior written consent, (i)
merge or consolidate with another Person, form any new Subsidiary or
acquire any interest in any Person; (ii) acquire any assets except in the
ordinary course of business and as otherwise permitted by this Agreement and
the other Loan Documents; (iii) enter into any transaction outside the
ordinary course of business; (iv) sell or transfer any Collateral or other
assets, except that Borrower may sell finished goods Inventory in the ordinary
course of its business; (v) make any loans to, or investments in, any
Affiliate or other Person in the form of money or other assets; (vi) incur any
debt outside the ordinary course of business; (vii) guaranty or otherwise
become liable with respect to the obligations of another party or entity;
(viii) pay or declare any dividends or other distributions on Borrower's
stock, if Borrower is a corporation (except for dividends payable solely in
capital stock of Borrower) or with respect to any equity interests, if
Borrower is not a corporation; (ix)áredeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's capital stock or
other equity interests; (x) make any change in Borrower's capital structure;
(xi)ádissolve or elect to dissolve; (xii) pay any principal or interest
on any indebtedness owing to an Affiliate; (xiii) enter into any transaction
with an Affiliate other than on arms-length terms; or (xiv) agree to do any of
the foregoing.
5.19 Financial Covenants.
(a) Capital Expenditures. Borrower will not expend or commit to
expend, directly or indirectly, for capital expenditures (including capital
lease obligations) in excess of the amount set forth in Section 8(a) of
Schedule A as the Capital Expenditure Limitation in any fiscal year.
(b) Net Worth. Borrower will at all times maintain a net worth
of at least the amount set forth in Section 8(b) of Schedule A.
(c) Tangible Net Worth. Borrower will at all times maintain a
minimum tangible net worth of at least the amount set forth in Section 8(c) of
Schedule A.
(d) Working Capital. Borrower will at all times maintain
working capital of at least the amount set forth in Section 8(d) of Schedule
A.
(e) Net Losses. Borrower will not permit its cumulative net
loss to exceed the amount set forth in Section 8(e) of Schedule A.
(f) Net Income. Borrower will not permit its cumulative net
income to be less than the amount set forth in Section 8(f) of Schedule A.
(g) Leverage. Borrower will not permit the ratio of its total
liabilities to its net worth to exceed, at any time, the ratio set forth in
Section 8(g) of Schedule A.
(h) Other Financial Covenants. Borrower will comply with any
additional financial covenants set forth in Section 8(j) of Schedule A.
6. RELEASE AND INDEMNITY.
6.1 Release. Borrower hereby releases Lender and its Affiliates and
their respective directors, officers, employees, attorneys and agents and any
other Person affiliated with or representing Lender (the "Released Parties")
from any and all liability arising from acts or omissions under or pursuant to
this Agreement, whether based on errors of judgment or mistake of law or fact,
except for those arising from willful misconduct. However, in no circumstance
will any of the Released Parties be liable for lost profits or other
special or consequential damages. Such release is made on the date hereof
and remade upon each request for a Loan or Credit Accommodation by Borrower.
Without limiting the foregoing:
(a) Lender shall not be liable for (i) any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gave rise to an Account; (ii) any error, act,
omission, or delay of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account; (iii) settling any Account in
good faith for less than the full amount thereof; or (iv) any of Borrower's
obligations under any contract or agreement giving rise to an Account; and
(b) In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity of any goods
to the documents presented, the validity or genuineness of any documents,
delay, default or fraud by Borrower, shippers and/or any other Person.
Borrower agrees that any action taken by Lender, if taken in good faith, or
any action taken by an issuer of any Credit Accommodation, under or in
connection with any Credit Accommodation, shall be binding on Borrower and
shall not create any resulting liability to Lender. In furtherance thereof,
Lender shall have the full right and authority to clear and resolve any
questions of non-compliance of documents, to give any instructions as to
acceptance or rejection of any documents or goods, to execute for Borrower's
account any and all applications for steamship or airway guaranties,
indemnities or delivery orders, to grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances or
documents, and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of
any of the Credit Accommodations or applications and other documentation
pertaining thereto.
6.2 Indemnity. Borrower hereby agrees to indemnify the Released
Parties and hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including attorneys fees), of every nature, character and
description, which the Released Parties may sustain or incur based upon or
arising out of any of the transactions contemplated by this Agreement or the
other Loan Documents or any of the Obligations, including any transactions or
occurrences relating to the issuance of any Credit Accommodation, the
Collateral relating thereto, any drafts thereunder and any errors or omissions
relating thereto (including any loss or claim due to any action or inaction
taken by the issuer of any Credit Accommodation) (and for this purpose any
charges to Lender by any issuer of Credit Accommodations shall be conclusive
as to their appropriateness and may be charged to the Loan Account), or any
other matter, cause or thing whatsoever occurred, done, omitted or suffered to
be done by Lender relating to Borrower or the Obligations (except any such
amounts sustained or incurred as the result of the willful misconduct of the
Released Parties). Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement.
7. TERM.
7.1 Maturity Date. Lender's obligation 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 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 three years each (each a
"Renewal Term"), unless one party gives written notice to the other, not less
than sixty days prior to the Maturity Date, that such party elects not to
extend the Maturity Date. This Agreement and the other Loan Documents and
Lender's security interests in and Liens upon the Collateral, and all
representations, warranties and covenants of Borrower contained herein and
therein, shall remain in full force and effect after the Maturity Date until
all of the monetary Obligations are indefeasibly paid in full.
7.2 Early Termination. Lender's obligation to make Loans and to
provide Credit Accommodations under this Agreement may be terminated prior to
the Maturity Date as follows: (i) by Borrower, effective thirty business days
after written notice of termination is given to Lender or (ii) by Lender at
any time after the occurrence of an Event of Default, without notice,
effective immediately; provided, that if any Affiliate of Borrower is also a
party to a financing arrangement with Lender, no such early termination under
clause (i) above shall be effective unless such Affiliate simultaneously
terminates its financing arrangement with Lender. If so terminated under this
Section 7.2, Borrower shall pay to Lender (i) an early termination fee (the
"Early Termination Fee") in the amount set forth in Section 6(h) of Schedule A
plus (ii) any earned but unpaid Facility Fee. Such fee shall be due and
payable on the effective date of termination and thereafter shall bear
interest at a rate equal to the highest rate applicable to any of the
Obligations. In addition, if Borrower so terminates and repays the
Obligations without having provided Lender with at least thirty days' prior
written notice thereof, an additional amount equal to thirty days of interest
at the applicable Interest Rate(s), based on the average outstanding amount of
the Obligations for the six month period immediately preceding the date of
termination.
7.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay in full all Obligations,
whether or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if, on the
Maturity Date or on any earlier effective date of termination, there are any
outstanding Credit Accommodations, then on such date Borrower shall provide to
Lender cash collateral in an amount equal to 110% of the Credit Accommodation
Balance to secure all of the Obligations (including estimated attorneys' fees
and other expenses) relating to said Credit Accommodations or such greater
percentage or amount as Lender reasonably deems appropriate, pursuant to a
cash pledge agreement in form and substance satisfactory to Lender.
7.4 Effect of Termination. No termination shall affect or impair any
right or remedy of Lender or relieve Borrower of any of the Obligations until
all of the monetary Obligations have been indefeasibly and irrevocably paid in
full. Upon indefeasible and irrevocable payment and performance in full of
all of the monetary Obligations (and the provision of cash collateral with
respect to any Credit Accommodation Balance as required by Section 7.3) and
termination of this Agreement, Lender shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents as
may be reasonably required to terminate Lender's security interests in the
Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Lender immediate written notice thereof: (i) if any warranty,
representation, statement, report or certificate made or delivered to Lender
by Borrower or any of Borrower's officers, employees or agents is untrue or
misleading; (ii) if Borrower fails to pay when due any principal or interest
on any Loan or any other monetary Obligation; (iii) if Borrower breaches any
covenant or obligation contained in (a) any of the first sentence of Section
5.1, Section 5.5, Section 5.8, clauses (b), (c), (d) or (f) of Section 5.13 or
Section 5.14 of this Agreement and such breach has not been cured to Lender's
satisfaction within 10 days' of the occurrence thereof or (b) any Section of
this Agreement, other than those listed in clause (a), or any other Loan
Document or fails to perform any other non-monetary Obligation; (iv) if any
levy, assessment, attachment, seizure, lien or encumbrance (other than a
Permitted Lien) is made or permitted to exist on all or any part of the
Collateral; (v) if one or more judgments aggregating in excess of $25,000, or
any injunction or attachment, is obtained against Borrower or any Obligor
which remains unstayed for more than ten days or is enforced; (vi) the
occurrence of any default under any financing agreement, security agreement or
other agreement, instrument or document executed and delivered by (A) Borrower
with, or in favor of, any Person other than Lender or (B) Borrower or any
Affiliate of Borrower with, or in favor of, Lender or any Affiliate of Lender;
(vii) the dissolution, death, termination of existence in good standing,
insolvency or business failure or suspension or cessation of business as usual
of Borrower or any Obligor (or of any general partner of Borrower or any
Obligor if it is a partnership) or the appointment of a receiver, trustee or
custodian for all or any part of the property of, or an assignment for the
benefit of creditors by Borrower or any Obligor, or the commencement of any
proceeding by Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect, or if Borrower
makes or sends a notice of a bulk transfer or calls a meeting of its
creditors; provided that in the event of the death or bankruptcy of any
Obligor, Borrower shall have thirty days from the date of such occurrence to
replace such Obligor with a Person acceptable to Lender; (viii) the
commencement of any proceeding against Borrower or any Obligor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; (ix) the actual or attempted revocation or termination of,
or limitation or denial of liability upon, any guaranty of the Obligations, or
any security document securing the Obligations, by any Obligor; (x) if
Borrower makes any payment on account of any indebtedness or obligation which
has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
indebtedness or obligations attempts to limit or terminate its subordination
agreement; (xi) if there is any actual or threatened indictment of Borrower or
any Obligor under any criminal statute or commencement or threatened
commencement of criminal or civil proceedings against Borrower or any Obligor,
pursuant to which the potential penalties or remedies sought or available
include forfeiture of any property of Borrower or such Obligor; (xii) if there
is a change in the record or beneficial ownership of an aggregate of more than
49% of the outstanding shares of stock of Borrower (or partnership or
membership interests if it is a partnership or limited liability company), in
one or more transactions, compared to the ownership of outstanding shares of
stock (or partnership or membership interests) of Borrower as of the date
hereof, without the prior written consent of Lender, which consent shall not
be unreasonably withheld; (xiii) if there is any change in the chief executive
officer, chief operating officer or chief financial officer of Borrower;
(xiv)áif an Event of Default occurs under any Loan and Security
Agreement between Lender and an Affiliate of Borrower; or (xv) if Lender
determines in good faith that the Collateral is insufficient to fully secure
the Obligations or that the prospect of payment of performance of the
Obligations is impaired.
8.2 Remedies. Upon the occurrence of any Default, and at any time
thereafter, Lender, at its option, may cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan Document.
Upon the occurrence of any Event of Default, and at any time thereafter,
Lender, at its option, and without notice or demand of any kind (all of which
are hereby expressly waived by Borrower), may do any one or more of the
following: (i) cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other Loan Document; (ii) accelerate and declare
all or any part of the Obligations to be immediately due, payable and
performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any of the Obligations; (iii) take
possession of any or all of the Collateral wherever it may be found, and for
that purpose Borrower hereby authorizes Lender, without judicial process, to
enter onto any of Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain (or
cause a custodian to remain) on the premises in exclusive control thereof,
without charge for so long as Lender deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, that if Lender seeks to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives (A)áany
bond and any surety, or security relating thereto required by law as an
incident to such possession, (B) any demand for possession prior to the
commencement of any suit or action to recover possession thereof and (C) any
requirement that Lender retain possession of, and not dispose of any such
Collateral until after trial or final judgment; (iv) require Borrower to
assemble any or all of the Collateral and make it available to Lender at one
or more places designated by Lender which are reasonably convenient to Lender
and Borrower, and to remove the Collateral to such locations as Lender may
deem advisable; (v) complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Lender shall have the right to use Borrower's premises,
vehicles and other Equipment and all other property without charge; (vi) sell,
lease or otherwise dispose of any of the Collateral, in its condition at the
time Lender obtains possession of it or after further manufacturing,
processing or repair, at one or more public or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit (a "Sale"), and to
adjourn any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection therewith, (A)
Lender shall have the right to conduct such Sale on Borrower's premises
without charge, for such times as Lender deems reasonable, on Lender's
premises, or elsewhere, and the Collateral need not be located at the place of
Sale; (B) Lender may directly or through any of its Affiliates purchase or
lease any of the Collateral at any such public disposition, and if permissible
under applicable law, at any private disposition and (C)áany Sale of
Collateral shall not relieve Borrower of any liability Borrower may have if
any Collateral is defective as to title, physical condition or otherwise at
the time of sale); (vii) demand payment of and collect any Accounts, Chattel
Paper, Instruments and General Intangibles included in the Collateral and, in
connection therewith, Borrower irrevocably authorizes Lender to endorse or
sign Borrower's name on all collections, receipts, Instruments and other
documents, to take possession of and open mail addressed to Borrower and
remove therefrom payments made with respect to any item of Collateral or
proceeds thereof and, in Lender's sole discretion, to grant extensions of time
to pay, compromise claims and settle Accounts, General Intangibles and the
like for less than face value; and (viii) demand and receive possession of any
of Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or relating thereto. In addition to the
foregoing remedies, upon the occurrence of any Event of Default resulting from
a breach of any of the financial covenants set forth in Section 5.19, Lender
may, at its option, upon not less than ten days' prior notice to Borrower,
reduce any or all of the Advance Rates set forth in Section 1(b) of Schedule A
to the extent Lender, in its sole discretion, deems appropriate. In addition
to the rights and remedies set forth above, Lender shall have all the other
rights and remedies accorded a secured party after default under the UCC and
under all other applicable laws, and under any other Loan Document, and all of
such rights and remedies are cumulative and non-exclusive. Exercise or
partial exercise by Lender of one or more of its rights or remedies shall not
be deemed an election or bar Lender from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Lender to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed. If notice of any sale or
other disposition of Collateral is required by law, notice at least seven days
prior to the sale designating the time and place of sale in the case of a
public sale or the time after which any private sale or other disposition is
to be made shall be deemed to be reasonable notice, and Borrower waives any
other notice. If any Collateral is sold or leased by Lender on credit terms
or for future delivery, the Obligations shall not be reduced as a result
thereof until payment is collected by Lender.
8.3 Application of Proceeds. Subject to any application required by
law, all proceeds realized as the result of any Sale shall be applied by
Lender to the Obligations in such order as Lender shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other persons legally,
entitled thereto; but Borrower shall remain liable to Lender for any
deficiency. If Lender, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
Sale, Lender shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Lender of the cash therefor.
9. GENERAL PROVISIONS.
9.1 Notices. All notices to be given under this Agreement shall be
in writing and shall be given either personally, by reputable private delivery
service, by regular first-class mail or certified mail return receipt
requested, addressed to Lender or Borrower at the address shown in the heading
to this Agreement, or by facsimile to the facsimile number shown in Section
9(i) of Schedule A, or at any other address (or to any other facsimile number)
designated in writing by one party to the other party in the manner prescribed
in this Section 9.1. All notices shall be deemed to have been given when
received or when delivery is refused by the recipient.
9.2 Severability. If any provision of this Agreement, or the
application thereof to or circumstance, is held to be void or unenforceable by
any, court of competent jurisdiction, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.
9.3 Integration. This Agreement and the other Loan Documents
represent the final, entire and complete agreement between Borrower and
Lender and supersede all prior and contemporaneous negotiations, oral
representations and agreements, all of which are merged and integrated into
this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR
AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS.
9.4 Waivers. The failure of Lender at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or
any other Loan Documents shall not waive or diminish any right of Lender later
to demand and receive strict compliance therewith. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent, and
whether or not similar. None of the provisions of this Agreement or any other
Loan Document shall be deemed to have been waived by any act or knowledge of
Lender or its agents or employees, but only by a specific written waiver
signed by an authorized officer of Lender and delivered to Borrower. Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension
or renewal of any commercial paper, Instrument, Account, General Intangible,
Document, Chattel Paper, Investment Property or guaranty at any time held by
Lender on which Borrower is or may in any way be liable, and notice of any
action taken by Lender, unless expressly required by this Agreement, and
notice of acceptance hereof.
9.5 Amendment. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and a duly
authorized officer of Lender.
9.6 Time of Essence. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement and the other Loan
Documents.
9.7 Attorneys Fees and Costs. Borrower shall reimburse Lender for
all reasonable attorneys' and paralegals' fees (including in-house attorneys
and paralegals employed by Lender) and all filing, recording, search, title
insurance, appraisal, audit, and other costs incurred by Lender, pursuant to,
in connection with, or relating to this Agreement, including all reasonable
attorneys' fees and costs Lender incurs to prepare and negotiate this
Agreement and the other Loan Documents; to obtain legal advice in connection
with this Agreement and the other Loan Documents or Borrower or any Obligor;
to administer this Agreement and the other Loan Documents (including the cost
of periodic financing statement, tax lien and other searches conducted by
Lender); to enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; to commence, intervene in, or
defend any action or proceeding; to initiate any complaint to be relieved of
the automatic stay in bankruptcy; to file or prosecute any probate claim,
bankruptcy claim, third-party claim, or other claim; to examine, audit, copy,
and inspect any of the Collateral or any of Borrower's books and records; to
protect, obtain possession of, lease, dispose of, or otherwise enforce
Lender's security interests in, the Collateral, and to otherwise represent
Lender in any litigation relating to Borrower. If either Lender or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its
reasonable costs and attorneys' fees, including reasonable attorneys' fees and
costs incurred in the enforcement of, execution upon or defense of any order,
decree, award or judgment. All attorneys' fees and costs to which Lender may
be entitled pursuant to this Section shall immediately become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations.
9.8 Benefit of Agreement; Assignability. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of Borrower and
Lender; provided, that Borrower may not assign or transfer any of its rights
under this Agreement without the prior written consent of Lender, and any
prohibited assignment shall be void. No consent by Lender to any assignment
shall release Borrower from its liability for any of the Obligations. Lender
shall have the right to assign all or any of its rights and obligations under
the Loan Documents, and to sell participating interests therein, to one or
more other Persons, and Borrower agrees to execute all agreements, instruments
and documents requested by Lender in connection with each such assignment and
participation.
9.9 Headings; Construction. Section and subsection headings are used
in this Agreement only for convenience. Borrower and Lender acknowledge that
the headings may not describe completely the subject matter of the applicable
Sections or subsections, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and
no uncertainty or ambiguity in any term or provision of this Agreement shall
be construed strictly against Lender or Borrower under any rule of
construction or otherwise.
9.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY IN SUCH STATE. BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE
AND FEDERAL COURTS IN NEW YORK, NEW YORK OR THE STATE IN WHICH ANY OF THE
COLLATERAL IS LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND WAIVES ANY OBJECTION WHICH BORROWER HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY
BORROWER AGAINST LENDER PURSUANT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR
ANY MATTER ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT EXCLUSIVELY IN THE ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇.
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER AND SHALL BE
DEEMED RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE EXTENT
PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
9.11 WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO
TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR OMISSIONS
OF LENDER OR BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR
BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; (ii) THE RIGHT TO
INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY
ACTION OR PROCEEDING INSTITUTED BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS
OR ANY MATTER RELATING THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii)
NOTICE PRIOR TO LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER
TO EXERCISE ANY OF LENDER'S REMEDIES AND (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND
THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of
the date set forth in the heading.
Borrower: Lender:
COFFEE HOLDING CO., INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT FUNDING
DIVISION
By By
Name Its Authorized Signatory
Title
Schedule A
Description of Certain Terms
This Schedule is an integral part of the Loan and Security Agreement
between COFFEE HOLDING CO., INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the "Agreement").
1. Loan Limits for Revolving Loans:
(a) Maximum Facility Amount:
$5,000,000
(b) Advance Rates:
(i) Accounts
Advance Rate:
85%; provided, that if the Dilution Percentage exceeds 4%, such advance rate
will be reduced by the number of full or partial percentage points of such
excess
(ii) Inventory
Advance
Rate(s):
(A) Finished
goods:
60%
(B) Raw
materials:
60%
(C) Work in
process:
Not Applicable
(c) Accounts Sublimit: Not Applicable
(d) Inventory
Sublimit(s):
(i) Overall sublimit on advances against Eligible Inventory
$750,000 or, if less, the aggregate advances against Accounts at any time of
determination
(ii) Sublimit on advances against finished goods Not
Applicable
(iii) Sublimit on advances against raw materials Not
Applicable
(e) Credit Accommodation Limit: $500,000
(f) Permanent Reserve Amount: Not Applicable
(g) Overadvance Amount: Not Applicable
2. Loan Limits for Term Loan:
(a) Principal Amount:
(i) Equipment Advance: The lesser of $500,000 and 80% of the
appraised auction sale value of Borrower's Eligible Equipment
(ii) Real Property Advance: Not Applicable
(b) Repayment Schedule:
(i) Equipment Advance: The Equipment Advance shall be repaid in
equal consecutive monthly installments amortized over 60 months payable on the
first day of each calendar month commencing January 1, 1998, with the entire
unpaid balance due and payable on the Maturity Date
(ii) Real Property Advance: Not Applicable
3. Interest Rates:
(a) Revolving Loans: 1% per annum in excess of the Prime
Rate
(b) Term Loan: 1% per annum in excess of the Prime Rate
4. Minimum Loan Amount:
$2,750,000
5. Maximum Days:
(a) Maximum days after original invoice date for Eligible
Accounts:
90 days
(b) Maximum days after original invoice date due date for Eligible
Accounts:
60 days
6. Fees:
(a) Closing Fee: Not Applicable
(b) Facility Fee:
(i) Initial Term: $50,000
(ii) Renewal Term(s)
$75,000
(c) Servicing Fee: $300 per month
(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
(f) Success Fee: Not Applicable
(g) Warrants: Not Applicable
(h) Early Termination Fee: 3% of the Maximum Facility Amount if
terminated during the first year of the Term, 2% of the Maximum Facility
Amount if terminated during the second year of the Term, and 1% of the Maximum
Facility Amount if terminated thereafter 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 NationsCredit Commercial Corporation or NationsBank, N.A.
(i) Fees for letters of credit and other Credit Accommodations (or
guaranties thereof by Lender):
1% per annum of the face amount of each open Credit
Accommodation, plus all costs and fees charged by the issuer
7. Initial Maturity Date: November 20, 2000
8. Financial Covenants:
(a) Capital Expenditure Limitation:
Not Applicable
(b) Minimum Net Worth Requirement:
Not Applicable
(c) Minimum Tangible Net Worth:
Not Applicable
(d) Minimum Working Capital:
Not Applicable
(e) Maximum Cumulative Net Loss: Not Applicable
(f) Minimum Cumulative Net Income: Not Applicable
(g) Maximum Leverage Ratio: Not Applicable
(i) Limitation on
Equipment Leases:
Not Applicable
(h) Limitation on Purchase Money Security Interests: Not
Applicable
Not Applicable
(j) Additional Financial Covenants: Not Applicable
9. Borrower Information:
(a) Prior Names of Borrower: None
(b) Prior Trade Names of Borrower: None
(c) Existing Trade Names of Borrower: None
(d) Inventory Locations: Continental Terminals, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(e) Other Locations: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(f) Litigation: Borrower is currently involved in a workmen's
compensation claim which is not material to the financial condition or
operation of the business of Borrower
(g) Ownership of Borrower: ▇▇▇▇▇▇ ▇▇▇▇▇▇ - 21%
▇▇▇▇▇ ▇▇▇▇▇▇ - 21%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - 58%
Grantor Retained
Annuity Trust
(h) Subsidiaries (and ownership thereof): None
(i) Facsimile Numbers:
Borrower: ▇▇▇-▇▇▇-▇▇▇▇
Lender: ▇▇▇-▇▇▇-▇▇▇▇
10. Description of Real Property: None
11. Lender's Bank: First Chicago NBD
12. Other Covenants: None
13. Exceptions to Negative Covenants: None
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A
as of the date set forth in the heading to the Agreement.
Borrower: Lender:
COFFEE HOLDING CO., INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By
By
Name Its Authorized Signatory
Title
Schedule B
Definitions
This Schedule is an integral part of the Loan and Security
Agreement between COFFEE HOLDING CO., INC. and NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the
"Agreement").
As used in the Agreement. the following terms have the following
meanings:
"Account" means any right to payment for Goods sold or leased or for
services rendered which is not evidenced by an Instrument or Chattel Paper;
whether or not it has been earned by performance.
"Account Debtor" means the obligor on an Account or Chattel Paper.
"Account Proceeds" has the meaning set forth in Section 4.1.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, member, manager, director, officer, or employee of such Person,
any parent or subsidiary of such Person, or any Person controlling, controlled
by or under common control with such Person or any other Person affiliated,
directly or indirectly, by virtue of family membership, ownership, management
or otherwise.
"Agreement" and "this Agreement" mean the Loan and Security
Agreement of which this Schedule B is a part and the Schedules thereto.
"Availability" has the meaning set forth in Section 1.1(a).
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
ºá101 et seq.), as the same may be amended from time to time.
"Blocked Account" has the meaning set forth in Section 4.1.
"Borrower" has the meaning set forth in the heading to the
Agreement.
"Borrower's Address" has the meaning set forth in the heading to the
Agreement.
"Business Day" means a day other than a Saturday or Sunday or any
other day on which Lender or banks in New York are authorized to close.
"Chattel Paper" has the meaning set forth in the UCC.
"Collateral" means all property and interests in property, in or
upon which a security interest or other Lien is granted pursuant to this
Agreement or the other Loan Documents.
"Credit Accommodation" has the meaning set forth in Section 1.1(a).
"Credit Accommodation Balance" means the sum of (i) the aggregate
undrawn face amount of all outstanding Credit Accommodations and (ii) all
interest, fees and costs due or, in Lender's estimation, likely to become due
in connection therewith.
"Default" means any event which with notice or passage of time, or
both, would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.1.
"Deposit Account" has the meaning set forth in the UCC.
"Dilution Percentage" means the gross amount of all returns,
allowances, discounts, credits, write-offs and similar items relating to
Borrower's Accounts computed as a percentage of Borrower's gross sales,
calculated on a ninety (90) day rolling average.
"Document" has the meaning set forth in the UCC.
"Early Termination Fee" has the meaning set forth in Section 7.2.
"Eligible Account" means, at any time of determination, an Account
which satisfies the general criteria set forth below and which is otherwise
acceptable to Lender (provided, that Lender may, in its sole discretion,
change the general criteria for acceptability of Eligible Accounts upon at
least fifteen days' prior notice to Borrower). An Account shall be deemed to
meet the current general criteria if (1) neither the Account Debtor nor any of
its Affiliates is an Affiliate, creditor or supplier of Borrower; (ii) it does
not remain unpaid more than the earlier to occur of (A) the number of days
after the official invoice date set forth in Section 5(a) of Schedule A or (B)
the number of days after the original invoice due date set forth in Section
5(b) of Schedule A; (iii) the Account Debtor or its Affiliates are not past
due on other Accounts owing to Borrower comprising more than 50% of all of the
Accounts owing to Borrower by such Account Debtor or its Affiliates; (iv) all
Accounts owing by the Account Debtor or its Affiliates do not represent more
than 20% of all otherwise Eligible Accounts (except in the case of the
Preferred Products Account, which Account may represent up to 25% of all
otherwise Eligible Accounts) (provided, that Accounts which are deemed to be
ineligible solely by reason of this clause (iv)áshall be considered
Eligible Accounts to the extent of the amount thereof which does not exceed
20% of all otherwise Eligible Accounts); (v) no covenant, representation or
warranty contained in this Agreement with respect to such Account (including
any of the representations set forth in Section 5.4) has been breached; (vi)
the Account is not subject to any contra relationship, counterclaim, dispute
or set-off (provided, that Accounts which are deemed to be ineligible solely
by reason of this clause (vi) shall be considered Eligible Accounts to the
extent of the amount thereof which is not affected by such contra
relationships, counterclaims, disputes or set-offs); (vii) the Account
Debtor's chief executive office or principal place of business is located in
the United States or Provinces of Canada which have adopted the Personal
Property Security Act or a similar act, unless (A) the sale is fully backed by
a letter of credit, guaranty or acceptance acceptable to Lender in its sole
discretion, and if backed by a letter of credit, such letter of credit has
been issued or confined by a bank satisfactory to Lender, is sufficient to
cover such Account, and if required by Lender, the original of such letter of
credit has been delivered to Lender or Lender's agent and the issuer thereof
notified of the assignment of the proceeds of such letter of credit to Lender
or (B) such Account is subject to credit insurance payable to Lender issued by
an insurer and on terms and in an amount acceptable to Lender; (viii) it is
absolutely owing to Borrower and does not arise from a sale on a
▇▇▇▇-and-hold, guarantied sale, sale-or-return, sale-on-approval, consignment,
retainage or any other repurchase or return basis or consist of progress
▇▇▇▇▇▇▇▇; (ix) Lender shall have verified the Account in a manner satisfactory
to Lender; (x) the Account Debtor is not the United States of America or any
state or political subdivision (or any department, agency or instrumentality
thereof unless Borrower has compiled with the Assignment of Claims Act of 1940
(31 U.S.C. ºá203 et seq.) or other applicable similar state or
local law in a manner satisfaction, to Lender; (xi) it is at all times subject
to Lender's duly perfected, first priority security interest and to no other
Lien that is not a Permitted Lien, and the goods giving rise to such Account
(A) were not, at the time of sale, subject to any Lien except Permitted Liens
and (B) have been delivered to and accepted by the Account Debtor, or the
services giving rise to such Account have been performed by Borrower and
accepted by the Account Debtor; (xii) the Account is not evidenced by Chattel
Paper or an Instrument of any kind and has not been reduced to judgment;
(xiii) the Account Debtor's total indebtedness to Borrower does not exceed
the amount of any credit limit established by Borrower or Lender and the
Account Debtor is otherwise deemed to be creditworthy by Lender (provided,
that Accounts which are deemed to be ineligible solely by reason of this
clause (xiii) shall be considered Eligible Accounts to the extent the amount
of such Accounts does not exceed the lower of such credit limits); (xiv) there
are no facts or circumstances existing, or which could reasonably be
anticipated to occur, which might result in any adverse change in the Account
Debtor's financial condition or impair or delay the collectibility of all or
any portion of such Account; (xv) Lender has been furnished with all documents
and other information pertaining to such Account which Lender has requested,
or which Borrower is obligated to deliver to Lender, pursuant to this
Agreement; (xvi) Borrower has not made an agreement with the Account Debtor to
extend the time of payment thereof beyond the time periods set forth in clause
(ii) above without the prior written consent of Lender; and (xvii) Borrower
has not posted a surety or other bond in respect of the contract under which
such Account arose.
"Eligible Equipment" means, at any time of determination, Equipment
owned by Borrower which Lender, in its sole discretion, deems to be eligible
for borrowing purposes.
"Eligible Inventory" means, at any time of determination, Inventory
(other than packaging materials and supplies) which satisfies the general
criteria set forth below and which is otherwise acceptable to Lender
(provided, that Lender may, in its sole discretion, change the general
criteria for acceptability of Eligible Inventory upon at least fifteen days'
prior written notice to Borrower). Inventory shall be deemed to meet the
current general criteria if (i) it consists of raw materials or finished
goods, or work-in-process that is readily marketable in its current form; (ii)
it is in good, new and saleable condition; (iii) it is not slow-moving
obsolete, unmerchantable, returned or repossessed; (iv) it is not in the
possession of a processor, consignee or bailee, or located on premises leased
or subleased to Borrower, or on premises subject to a mortgage in favor of a
Person other than Lender, unless such processor, consignee, bailee or
mortgagee or the lessor or sublessor of such premises, as the case may be, has
executed and delivered all documentation which Lender shall require to
evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and Lender's right to gain
access thereto; (v) it meets all standards imposed by any governmental agency
or authority; (vi) it conforms in all respects to any covenants, warranties
and representations set forth in the Agreement; (vii) it is at all times
subject to Lender's duly perfected, first priority security, interest and no
other Lien except a Permitted Lien; and (viii)áit is situated at an
Inventory Location listed in Section 9(d) of Schedule A or other location of
which Lender has been notified as required by Section 5.6.
"Eligible Real Property" means, at any time of determination, Real
Property owned by Borrower which Lender, in its sole discretion, deems to be
eligible for borrowing purposes.
"Equipment" means all Goods which are used or bought for use
primarily in business (including farming or a profession) or by a Person who
is a non-profit organization or governmental subdivision or agency, and which
are not Inventory, farm products or consumer goods, including all machinery,
molds, machine tools, motors, furniture, equipment, furnishings, fixtures,
trade fixtures, motor vehicles, tools, parts, dies and jigs, and all
attachments, accessories, accessions, replacements, substitutions, additions
or improvements to, or spare parts for, any of the foregoing.
"Equipment Advance" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974
and all rules, regulations and orders promulgated thereunder.
"Event of Default" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles as in effect
from time to time, consistently applied.
"General Intangibles" has the meaning set forth in the UCC, and
includes all books and records pertaining to the Collateral and other business
and financial records in the possession of Borrower or any other Person,
inventions, designs, drawings, blueprints, patents, patent applications,
trademarks, trademark applications (other than "intent to use" applications
until a verified statement of use is filed with respect to such applications)
and the goodwill of the business symbolized thereby, names, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises, customer
lists, security and other deposits, causes of action and other rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, rights to purchase or sell real or personal property rights
licensor or licensee of any kind, telephone numbers, internet addresses,
proprietary, information, purchase orders, and all insurance policies and
claims (including life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and
claims, letters of credit, banker's acceptances and guaranties, computer
programs, discs, tapes and tape files in the possession of Borrower or any
other Person, claims under guaranties, security interests or other security
held by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature.
"Goods" means all things which are movable at the time the security
interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property Accounts, Chattel Paper, General Intangibles,
or minerals or the like (including oil and gas) before extraction), including
standing timber which is to be cut and removed under a conveyance or contract
for sale, the unborn young of animals, and growing crops.
"Initial Term" has the meaning set forth in Section 7.1.
"Instrument" has the meaning set forth in the UCC.
"Inventory" means all Goods held for sale or lease or furnished or
to be furnished under contracts of service, including all raw materials, work
in process, finished goods, goods in transit and materials and supplies which
are or might be used or consumed in a business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such
Goods, and all products of the foregoing, and shall include interests in goods
represented by Accounts, returned, reclaimed or repossessed goods and rights
as an unpaid vendor.
"Investment Property" shall mean all of Borrower's securities,
whether certificated or uncertificated, securities entitlements, securities
accounts, commodity contracts and commodity accounts.
"Lender" has the meaning set forth in the heading to the Agreement.
"Lien" means any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract, including rights of
sellers under conditional sales contracts or title retention agreements and
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting property. For the purpose of this Agreement, Borrower shall be
deemed to be the owner of any property which it has acquired or holds subject
to a conditional sale agreement or other arrangement pursuant to which title
to the property has been retained by or vested in some other Person for
security purposes.
"Loan Account" has the meaning set forth in Section 2.4.
"Loan Documents" means the Agreement and all notes, guaranties,
security agreements, certificates, landlord's agreements, Lock Box and Blocked
Account agreements and all other agreements, documents and instruments now or
hereafter executed or delivered by Borrower or any Obligor in connection with,
or to evidence the transactions contemplated by this Agreement.
"Loan Limits" means, collectively, the Availability limits and all
other limits on the amount of Loans and Credit Accommodations set forth in
this Agreement.
"Loans" means, collectively, the Revolving Loans and any Term Loan.
"Lock Box" has the meaning set forth in Section 4.1.
"Maturity Date" has the meaning set forth in Section 7.1.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at
any time owing by Borrower to Lender, whether evidenced by this Agreement or
any other Loan Document, whether arising from an extension of credit, opening
of a Credit Accommodation, guaranty, indemnification or otherwise (including
all fees, costs and other amounts which may be owing to issuers of Credit
Accommodations and all taxes, duties, freight, insurance, costs and other
expenses, costs or amounts payable in connection with Credit Accommodations or
the underlying goods), whether direct or indirect (including those acquired by
assignment and any participation by Lender in Borrower's indebtedness owing to
others), whether absolute or contingent, whether due or to become due, and
whether arising before or after the commencement of a proceeding under the
Bankruptcy Code or any similar statute, including all interest, charges,
expenses, fees, attorney's fees, expert witness fees, audit fees, letter of
credit fees, loan fees, Early Termination Fees, Minimum Borrowing Fees and any
other sums chargeable to Borrower under this Agreement or under any other Loan
Document.
"Obligor" means any guarantor, endorser, acceptor, surety or other
person liable on, or with respect to, the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
"Permitted Liens" means: (i) purchase money security interests in
specific items of Equipment in an aggregate amount not to exceed the limit set
forth in Section 8(h) of Schedule A; (ii) leases of specific items of
Equipment in an aggregate amount not to exceed the limit set forth in Section
8(i) of Schedule A; (iii) Liens for taxes not yet due and payable;
(iv)áadditional Liens which are fully subordinate to the security
interests of Lender and are consented to in writing by Lender; (v) security
interests being terminated concurrently with the execution of this Agreement;
(vi) Liens of materialmen, mechanics, warehousemen or carriers arising in the
ordinary course of business and securing obligations which are not delinquent;
(vii) Liens incurred in connection with the extension, renewal or refinancing
of the indebtedness secured by Liens of the type described in clause (i) or
(ii) above; provided, that any extension, renewal or replacement Lien is
limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase; (viii)áLiens in favor of customs and revenue authorities
which secure payment of customs duties in connection with the importation of
goods; (ix) security deposits posted in connection with real property, leases
or subleases; and (x) Liens existing on the date of this Agreement which are
listed, and the property subject thereto described, in Schedule C but only to
the respective date, if any, set forth in such Schedule C for the removal and
termination of any such Liens. Lender will have the right to require, as a
condition to its consent under clause (iv) above, that the holder of the
additional Lien sign an intercreditor agreement in form and substance
satisfactory to Lender, in its sole discretion, acknowledging that the Lien is
subordinate to the security interests of Lender, and agreeing not to take any
action to enforce its subordinate Lien so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any
obligation secured by the subordinate Lien shall also constitute an Event of
Default under this Agreement.
"Person" means an, individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"Prime Rate" means, at any given time, the prime rate as quoted in
The Wall Street Journal as the base rate on corporate loans posted as of such
time by at least 75% of the nation's 30 largest banks (which rate is not
necessarily the lowest rate offered by such banks).
"Real Property" means the real property described in Section 10 of
Schedule A.
"Real Property Advance" has the meaning set forth in Section 1.1(b).
"Released Parties" has the meaning set forth in Section 6.1.
"Renewal Term" has the meaning set forth in Section 7.1.
"Reserves" has the meaning set forth in Section 1.2.
"Revolving Loans" has the meaning set forth in Section 1.1(a).
"Sale" has the meaning set forth in Section 8.2.
"Subsidiary" means any corporation or other entity of which a Person
owns, directly or indirectly, through one or more intermediaries, more than
50% of the capital stock or other equity interest at the time of
determination.
"Term" means the period commencing on the date of this Agreement and
ending on the Maturity Date.
"Term Loan" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as
adopted and in effect at such time in the State of New York.
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All
other terms contained in this Agreement, unless otherwise indicated, shall
have the meanings provided by the UCC, to the extent such terms are defined
therein. The term "including," whenever used in this Agreement, shall mean
"including but not limited to." The singular form of any term shall include
the plural form, and vice versa, when the context so requires. References to
Sections, subsections and Schedules are to Sections and subsections of, and
Schedules to, this Agreement. All references to agreements and statutes shall
include all amendments thereto and successor statutes in the case of statutes.
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule B
as of the date set forth in the heading to the Agreement.
Borrower: Lender:
COFFEE HOLDING CO., INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By _________________________ By___________________________
Name Its Authorized Signatory
Title
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule C
as of the date set forth in the heading to the Agreement.
Borrower: Lender:
COFFEE HOLDING CO., INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By
By
Name Its Authorized Signatory
Title