Item
1.01
|
Entry
into a Material Definitive Agreement.
|
Loan
Agreement
On
April 25, 2017 Coffee Holding Co., Inc. (the “
Company
”) and its wholly owned subsidiary Organic Products
Trading Company LLC (“
OPTCO
,” and together with the Company “the
Borrowers
” ) entered
into an Amended and Restated Loan and Security Agreement (the “
Loan Agreement
”) with Sterling National
Bank (“
Lender
”) which consolidated that certain Loan and Security Agreement, dated February 17, 2009,
entered into by and between the Company and Lender, as amended on March 10, 2015 (the “
Company Financing
Agreement
”) and that certain Loan and Security Agreement, dated March 10, 2015, entered into by and between Lender,
OPTCO and the Company (as Entity Guarantor) (the “
OPTCO Financing Agreement
,” and together with the
Company Financing Agreement, the “
Financing Agreements
”).
Pursuant
to the Loan Agreement, the terms of each of the Company Financing Agreement and the OPTCO Financing Agreement were amended and
restated to, among other things: (i) provide for a new Maturity Date of February 28, 2018; (ii) consolidate the principal amounts
of the Financing Agreements to provide for a maximum principal amount limit of $12,000,000 (the “
Loan Facility Amount
”)
for the Borrowers, collectively,
provided that
OPTCO is limited to a $3,000,000 maximum principal amount sublimit; (iii)
expand the borrowing base to include, along with 85% of eligible accounts receivable, up to the lesser of $2,000,000 as to the
Company and $1,500,000 as to OPTCO; (iv) effective March 1, 2017, converted the interest rate on the average unpaid balance of
the Loan Facility Amount from an interest rate per annum equal to the Wall Street Journal Prime Rate to an interest rate per annum
equal to the sum of the LIBOR rate plus 2.4%; (v) require the Company and OPTCO to pay, collectively, upon the occurrence of certain
termination events, a prepayment premium of 1.0% (as opposed to the 0.5% under the OPTCO Financing Agreement) of the maximum amount
of the Loan Facility Amount in effect as of the date of the termination event; (vi) eliminate the overadvance fee; and (vii) establish
a Letter of Credit Facility (as defined in the Loan Agreement) with a maximum obligation amount of $1,000,000, and subject to
other terms and conditions described therein.
The
Loan Agreement contains covenants, subject to certain exceptions, that place restrictions on the Borrowers’ operations,
including covenants relating to indebtedness, minimum deposit restrictions, tangible net worth, leverage, employee loan restrictions,
dividend and repurchase restrictions and restrictions on intercompany transactions. The Loan Agreement also requires that the
Borrowers, on a consolidated basis, maintain a minimum working capital at all times and achieve a minimum net profit amount as
of fiscal year end during the term of the Loan Agreement.
Other
than as modified above, the terms of the Financing Agreements remain in full force and effect.
The
foregoing summary of the terms of the Loan Agreement is not intended to be complete and is qualified in its entirety by the terms
of the Loan Agreement, a copy of which is attached hereto as Exhibit 10.1.
Guaranty
Agreement
On
April 25, 2017, Sonofresco, LLC and Comfort Foods, Inc., the Company’s wholly-owned subsidiaries (the “
Guarantors
”),
entered into a Guaranty Agreement (the “
Guaranty Agreement
”) in connection with the Loan Agreement. The Guaranty
Agreement was provided as an inducement to Lender to extend credit to Borrowers in exchange for the Guarantors’ unconditional
guarantee of the payment and performance obligations of the Borrowers under the Loan Agreement, as further defined in the Guaranty
Agreement.
The
foregoing summary of the terms of the Guaranty Agreement is not intended to be complete and is qualified in its entirety by the
terms of the Guaranty Agreement, a copy of which is attached hereto as Exhibit 10.2.