Exhibit 10.1

 

FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

AND DEMAND SECURED PROMISSORY NOTE

 

THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND DEMAND SECURED
PROMISSORY NOTE (this "Amendment") is made and entered into this 18th day of
August, 2015, by and between Janel Corporation, formerly known as Janel World
Trade, Ltd., a Nevada corporation, and Janel Group, Inc. formerly known as The
Janel Group of New York, a New York corporation, and The Janel Group of
Illinois, an Illinois corporation, and The Janel Group of Georgia, a Georgia
corporation, and The Janel Group of Los Angeles, a California corporation, and
Janel Ferrara Logistics, LLC, a New Jersey limited liability company, and Alpha
International, LP, a New York limited partnership, and PCL Transport, LLC, a New
Jersey limited liability company (individually, jointly and severally, the
"Borrower" or “Obligor”) with its chief executive office and principal place of
business at 303 Merrick Road, Suite 400, Lynbrook, NY 11563, and Presidential
Financial Corporation, a Georgia corporation (hereinafter referred to as
"Lender") with an office at 3460 Preston Ridge Road, Suite 550, Alpharetta,
Georgia, 30005.

 

Recitals:

 

Lender and Borrower are parties to a certain Loan and Security Agreement dated
March 27, 2014 (as at any time amended, the "Loan Agreement") pursuant to which
Lender has made and may from time to time hereafter make loans and other
financial accommodations to Borrower. All Advances under the Loan Agreement are
evidenced by, and are repayable with interest as provided in, the Demand Secured
Promissory Note made by Borrower to the order of Lender and dated March 27, 2014
(as at any time amended, the "Note").

 

WHEREAS, on September 19, 2014 The Janel Group of New York, Inc. amended its
Articles of Incorporation to change the name of the corporation to Janel Group,
Inc. and filed a Certificate of Amendment with the New York Department of State
to reflect its name change. Such Borrower has requested that Lender amend the
Loan Documents to reflect its name change, and

 

WHEREAS, on February 27, 2015 Janel World Trade, Ltd. amended its Articles of
Incorporation to change the name of the corporation to Janel Corporation and
filed a Certificate of Amendment with the Nevada Secretary of State to reflect
its name change. Such Borrower has requested that Lender amend the Loan
Documents to reflect its name change, and

 

WHEREAS, Janel Corporation has entered into that certain Stock Purchase
Agreement to purchase all of the issued and outstanding shares of Liberty
International, Inc., a Rhode Island corporation, and who wishes to become an
additional Borrower under the Loan Agreement in order to avail itself of the
financial accommodations available to Borrower, to which Lender hereby consents
to the purchase of Liberty International, Inc., and

 

WHEREAS, the parties further desire to increase the line of credit available to
the Borrower under the Loan Documents to Ten Million and No/100 Dollars
($10,000,000.00) from Seven Million and No/100 Dollars ($7,000,000.00), amend
the Interest Rate and financial covenants and hereby agree to amend the Loan
Agreement and the Note as hereinafter set forth.

 

 

 

 

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

 

1.          Definitions. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.

 

2.          Amendments to Loan Agreement. The Loan Agreement is hereby amended
as follows:

 

(a)All references to the term “Borrower” shall mean Janel Corporation and Janel
Group, Inc. and The Janel Group of Illinois, Inc. and The Janel Group of
Georgia, Inc. and The Janel Group of Los Angeles, Inc. and Janel Ferrara
Logistics, LLC and Alpha International, LP and PCL Transport, LLC and Liberty
International, Inc., individually and collectively, jointly and severally, as
the context shall require.

 

(b)Grant of Security Interest. Liberty International, Inc. hereby grants a
security interest in certain of its assets as fully described in Section 3. of
the Loan Agreement: all Accounts, Accounts and Securities, Chattel Paper,
Furniture, Fixtures and Equipment, Instruments, Investment Property, General
Intangibles, Deposit Accounts, Supporting Obligations, Inventory, Other
Property, all Proceeds and products of all of the foregoing (including proceeds
of any insurance policies and claims against third parties for loss or any
destruction of any of the foregoing), and all books and records relating to any
of the foregoing.

 

(c)By striking the definition of "Maximum Loan Amount" in Schedule A and by
substituting in lieu thereof the following:

 

“Maximum Loan Amount” means Ten Million and No/100 Dollars ($10,000,000.00).

 

(d)Financial Covenants. The parties agree to reset the financial covenants, as
fully described in Schedule E, and hereby delete Schedule E in its entirety and
replace it with the revised Schedule E attached hereto.

 

(e)Term Extension. The parties agree to extend the term of the line of credit
available to the Borrower for a minimum period of twelve (12) months from the
end of the Initial Term (Initial Term expires March 27, 2017), and hereby strike
Section 9.3 and by substituting in lieu thereof the following:

 

9.3            Early Termination Fee

 

If this Agreement is terminated by Borrower or automatically on the commencement
of an Insolvency Proceeding by Borrower (and whether such termination occurs on
an Anniversary Date or otherwise), or by Lender after the occurrence of an Event
of Default, Lender will be entitled to a termination fee (the "Early Termination
Fee"), as liquidated damages for its loss of the benefit of the bargain and not
as a penalty (the parties acknowledging that the termination fee is a reasonable
calculation of Lender's loss of the benefit of the bargain from any such
termination). The Early Termination Fee, calculated as follows, 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:

 

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1.          Two percent (2%) of the Maximum Loan Amount, if terminated prior to
March 27, 2017;

 

2.          One percent (1%) of the Maximum Loan Amount, if terminated on or
after March 27, 2017, but prior to March 27, 2018 or if a Renewal Term is in
effect, if terminated prior to the Anniversary Date of the then current Renewal
Term;

 

3.          Amendments and Restatement of the Note. Concurrently with Borrower’s
execution of this Amendment, Borrower shall execute and deliver to Lender an
Amended and Restated Demand Secured Promissory Note (the “Restated Note”) to
amend and restate the Note that is referred to in Section 1.4 of the Loan
Agreement. All references in the Loan Agreement to the Note shall be understood
to mean and refer to the Restated Note, as the same may hereafter be modified,
amended or restated.

 

4.          Amendment Fee. In consideration of Lender's willingness to enter
into this Amendment as set forth herein, Borrower agrees to pay to Lender an
amendment fee in the amount of $20,000.00 in immediately available funds on the
date hereof. Additionally, Borrower agrees to pay, on demand, all costs and
expenses incurred by Lender in connection with the preparation, negotiation and
execution of this Amendment and any other Loan Documents executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of Lender's legal counsel and
any taxes, filing fees and other expenses associated with or incurred in
connection with the execution, delivery or filing of any instrument or agreement
referred to herein or contemplated hereby.

 

5.          Documentation Fee. A loan documentation fee of $1,000.00 (“Loan
Documentation Fee”), for the negotiation and preparation of this Agreement, will
be charged to the Borrower’s loan account upon receipt of a fully executed copy
of this Agreement.

 

6.          Name Change. Each Borrower acknowledges that the name change of
Borrower Janel World Trade, Ltd. to Janel Corporation, and the name change of
Borrower The Janel Group of New York, Inc. to Janel Group, Inc. was not intended
to, and did not extinguish, release or discharge or constitute, create or affect
a novation of, or an agreement to extinguish (a) any of the obligations,
indebtedness and liabilities of the Obligors, or any other party under the
provisions of the Loan Agreement, the Note, and such other Loan Documents, or
(b) any assignment or pledge to the Lender of, or any security interest or lien
granted to the Lender in, or on, any Collateral and security for such
obligations, indebtedness, and liabilities.

 

7.          Ratification and Reaffirmation. Borrower hereby ratifies and
reaffirms the Obligations, each of the Loan Documents, and all of Borrower's
covenants, duties, indebtedness and liabilities under the Loan Documents.

 

8.          Acknowledgments and Stipulations. Borrower acknowledges and
stipulates that each of the Loan Documents executed by Borrower creates legal,
valid and binding obligations of Borrower that are enforceable against Borrower
in accordance with the terms thereof; all of the Obligations are owing and
payable on demand without defense, offset or counterclaim (and to the extent
there exists any such defense, offset or counterclaim on the date hereof, the
same is hereby knowingly and voluntarily waived by Borrower); the security
interests and liens granted by Borrower in favor of Lender are duly perfected,
first priority security interests and liens; and the unpaid principal amount
outstanding as of the close of business on August 17, 2015, totaled
$3,943,482.91.

 

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9.          Representations and Warranties. Borrower represents and warrants to
Lender, to induce Lender to enter into this Amendment, that no Default or Event
of Default exists on the date hereof; the execution, delivery and performance of
this Amendment have been duly authorized by all requisite corporate action on
the part of Borrower and this Amendment has been duly executed and delivered by
Borrower; and except as may have been disclosed in writing by Borrower to Lender
prior to the date hereof, all of the representations and warranties made by
Borrower in the Loan Agreement are true and correct on and as of the date
hereof.

 

10.         Reference to Loan Agreement. Upon the effectiveness of this
Amendment, each reference in any Loan Document to "this Agreement" or "this
Note" or to the words "hereunder" or "herein" or words of like import shall mean
and be a reference to such Loan Document, as and to the extent amended by this
Amendment.

 

11.         Breach of Amendment. A breach of any representation, warranty or
covenant herein shall constitute an Event of Default.

 

12.         Release of Claims. To induce Lender to enter into this Amendment,
Borrower hereby releases, acquits and forever discharges Lender, and all
officers, directors, agents, employees, successors and assigns of Lender, from
any and all liabilities, claims, demands, actions or causes of action of any
kind or nature (if there be any), whether absolute or contingent, disputed or
undisputed, at law or in equity, or known or unknown, that Borrower now has or
ever had against Lender arising under or in connection with any of the Loan
Documents or otherwise. Borrower represents and warrants to Lender that Borrower
has not transferred or assigned to any Person any claim that Borrower ever had
or claimed to have against Lender.

 

13.         Effectiveness; Governing Law. This Amendment shall be effective upon
acceptance by Lender in Alpharetta, Georgia (notice of which acceptance is
hereby waived), whereupon the same shall be governed by and construed in
accordance with the internal laws of the State of Georgia.

 

14.         No Novation, Etc. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement, the Note or any of the other Loan Documents, each of which
shall remain in full force and effect. This Amendment is not intended to be, nor
shall it be construed to create, a novation or accord and satisfaction, and the
Loan Agreement as herein modified shall continue in full force and effect.

 

15.         Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

 

16.         Further Assurances. Borrower agrees to take such further actions as
Lender shall reasonably request from time to time in connection herewith to
evidence or give effect to the amendments set forth herein or any of the
transactions contemplated hereby.

 

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17.         Miscellaneous. This Amendment may be executed in any number of
counterparts and by different parties to this Amendment on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any manually
executed signature page to this Amendment delivered by a party by facsimile or
other electronic transmission shall be deemed to be an original signature
hereto. Section titles and references used in this Amendment shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreements among the parties hereto. This Amendment expresses the entire
understanding of the parties with respect to the subject matter hereof and may
not be amended except in a writing signed by the parties.

 

18.         Waiver of Jury Trial. To the fullest extent permitted by applicable
law, each party hereby waives the right to trial by jury in any action, suit,
counterclaim or proceeding arising out of or related to this Amendment.

 

BALANCE OF PAGE INTENTIONALLY LEFT BLANK

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers on the date
first written above.

 

BORROWERS:

 

JANEL CORPORATION   THE JANEL GROUP OF LOS ANGELES, INC.           By: /s/
Brendan J. Killackey   By: /s/ Brendan J. Killackey   Brendan J. Killackey, CEO
    Brendan J. Killackey, CEO       JANEL GROUP, INC.   JANEL FERRARA LOGISTICS,
LLC           By: /s/ Brendan J. Killackey   By: /s/ Brendan J. Killackey  
Brendan J. Killackey, CEO     Brendan J. Killackey, CEO       THE JANEL GROUP OF
ILLINOIS, INC.   ALPHA INTERNATIONAL, LP       By: Janel Alpha GP LLC, G.P. By:
/s/ Brendan J. Killackey By: Janel Corporation   Brendan J. Killackey, CEO      
    By: /s/ Brendan J. Killackey       Brendan J. Killackey, CEO THE JANEL GROUP
OF GEORGIA, INC.           PCL TRANSPORT, LLC By: /s/ Brendan J. Killackey   By:
Janel Corporation, Managing Member   Brendan J. Killackey, CEO           By: /s/
Brendan J. Killackey       Brendan J. Killackey, CEO           LIBERTY
INTERNATIONAL, INC.             By: /s/ Brendan J. Killackey       Brendan J.
Killackey,       Executive Vice President

 

STATE OF ____________

COUNTY OF ___________

 

Personally appeared before me, the undersigned attesting officer duly authorized
to administer oaths, Brendan J. Killackey, who, having satisfactorily proved
himself to be the person who signed the within and foregoing Amendment, stated
that he did so as his free and voluntary act and deed, this _19th_ day of
August, 2015.

 

      /s/                                         ___________

Notary Public                           Seal

My Commission Expires: ______________

 

  Accepted:       Presidential Financial Corporation   ("Lender")         By:
/s/ Frank Palmieri     Frank Palmieri, First Vice President

 

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SCHEDULE E

 

Financial and Other Covenants

 

This Schedule is an integral part and is incorporated into the Loan and Security
Agreement dated as of March 27, 2014, as amended, between JANEL CORPORATION and
JANEL GROUP, INC. and THE JANEL GROUP OF ILLINOIS, INC. and THE JANEL GROUP OF
GEORGIA, INC. and THE JANEL GROUP OF LOS ANGELES, INC. and JANEL FERRARA
LOGISTICS, LLC and ALPHA INTERNATIONAL, LP, and PCL TRANSPORT, LLC and LIBERTY
INTERNATIONAL, INC. and PRESIDENTIAL FINANCIAL CORPORATION (collectively with
this and every other Schedule and Exhibit, the "Agreement").

 

1.          Tangible Net Worth. Borrower and its consolidated Subsidiaries, on a
consolidated basis, shall maintain a minimum Tangible Net Worth as of each of
the fiscal month-end test dates set forth below in an amount equal to or greater
than the amount corresponding to such test date:

 

Fiscal Month-End Test Dates  Tangible Net Worth  Beginning July 31, 2015; 
$(3,900,000) August 31, 2015;  $(6,300,000) September through December, 2015; 
$(6,200,000) January 31 and February 29, 2016;  $(6,375,000) March 31 through
May 31, 2016;  $(6,150,000) June 30, 2016;  $(6,000,000) July 31, 2016; 
$(5,800,000) August 31, 2016; and  $(5,650,000) September 30, 2016 and each
fiscal month-end thereafter  $(5,500,000)

 

The minimum Tangible Net Worth covenant may be reset for fiscal 2017 based on
Borrower’s 2016 fiscal year-end audited financial statements and 2017 fiscal
year-end monthly financial projections.

 

 

 

 

SCHEDULE E (Continued)

 

2.          Minimum Fixed Charge Coverage Ratio. Borrower and its consolidated
Subsidiaries, on a consolidated basis, shall maintain a Minimum Fixed Charge
Coverage Ratio for each test period set forth below of not less than the ratio
corresponding to such test period, based on the trailing 12 months:

 

Test Periods   Minimum Fixed Charge Coverage Ratio For the fiscal month ending
July 31, 2015,   .75 to 1 For the fiscal month ending August 31, 2015 and for
each fiscal month ending thereafter.   1.1 to 1

 

For purposes of the covenants set forth in this Schedule E, the terms listed
below shall have the following meanings:

 

"EBITDAR" means for Borrower in the period measured and calculated in accordance
with GAAP, the sum of Borrower’s net income (or loss) for such period plus (a)
the following to the extent deducted in calculating such net income (or loss),
but without duplication: (i) any provision for taxes during such period, plus
(ii) interest expense (including the interest portion of Capitalized Leases) for
such period, plus (iii) depreciation and amortization expense for such period,
including all amortization of Capitalized Leases, plus (iv) management, advisory
or other like fee expense (if any) for such period to the extent not in
violation of the Agreement, plus (v) office rent expense, plus (vi) any
extraordinary one-time expenses, all non-cash charges and non-cash losses for
such period, all of which are subject to the prior approval of Lender; minus (b)
the following to the extent included in calculating such net income (or loss),
but without duplication: (i) any gains from extraordinary items or other
one-time income for such period, subject to the prior approval of Lender, plus
(ii) any gain from the disposition of capital assets not in the ordinary course
of business for such period, plus (iii) all non-cash items increasing net income
(or reducing net loss) during such period. All of the items in the preceding
clauses (a) and (b) are in accordance with GAAP.

 

"Capital Expenditures" means, for any period, the aggregate capital expenditures
made or liabilities incurred by Borrower in conformity with GAAP, including
charges in respect of Capitalized Lease obligations (exclusive of imputed
interest), but excluding those capital expenditures made with
insurance/condemnation proceeds, or proceeds from asset sales permitted under
the Agreement.

 

"Capitalized Leases" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, is or should be accounted for as a capital
lease on the balance sheet of the lessee.

 

"Fixed Charge Coverage Ratio" means, for any period, the ratio of EBITDAR for
such period to the sum of (a) income taxes paid by Borrower during such period,
plus (b) Unfinanced Capital Expenditures made by Borrower during such period,
plus (c) interest paid by Borrower during such period, plus (d) principal
payments made on all funded debt of Borrower by Borrower during such period,
plus (e) management, advisory or other like fees paid by Borrower during such
period, plus (f) office rent paid by Borrower during such period, plus (g)
dividends and distributions paid by Borrower during such period.

 

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SCHEDULE E (Continued)

 

 

"Intangible Assets" means, with respect to any Person, all intangible assets of
such Person, determined in accordance with GAAP, including all unamortized debt
discount and expense, unamortized research and development expense, unamortized
deferred charges, goodwill, patents, trademarks, software, service marks, trade
names, copyrights, and unamortized excess cost of investment in Subsidiaries
over equity at dates of acquisition.

 

"Tangible Net Worth" means, at any date of determination thereof, the book net
worth of Borrower as shown on Borrower's financial statements prepared in
accordance with GAAP plus Subordinated Debt less the sum of (i) any Intangible
Assets reflected on such financial statements, plus (ii) any amounts now or
hereafter directly or indirectly owed to Borrower by any officers, shareholders,
employees or Affiliates of Borrower or any other Obligor, plus (iii) investments
in subsidiaries of Borrower, plus (iv) intercompany receivables owed to Borrower
by any officer, director, equity security holder or Affiliate of Borrower, plus
(v) any other non-current assets (excluding real estate and Equipment).

 

"Unfinanced Capital Expenditures" means, for any period of Borrower, Capital
Expenditures made from Borrower's own funds and not contributed equity or
purchase money or other financing or lease transactions (whether or not such
transactions are permitted under the Agreement).

 

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