Document:

Exhibit 10.1

 

EXECUTION VERSION

 

AMENDMENT NO. 12 TO
 LOAN AND SERVICING AGREEMENT

 

THIS AMENDMENT NO. 12 TO LOAN AND SERVICING AGREEMENT (the “Amendment”), dated as of June 18, 2019 (the “Amendment Effective Date”), is entered into by and among ARES CAPITAL CP FUNDING LLC, a Delaware limited liability company, as the borrower (the “Borrower”), ARES CAPITAL CORPORATION, a Maryland corporation, as the servicer (the “Servicer”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as the agent (the “Agent”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as a lender (“Wells Fargo”), BANK OF AMERICA, N.A., as a lender (“Bank of America” and, together with Wells Fargo, the “Lenders”) and U.S. BANK NATIONAL ASSOCIATION, as Trustee, Bank, and Collateral Custodian (in such capacities, “U.S. Bank”).

 

WHEREAS, the Borrower, the Agent, the Lenders, Wells Fargo Bank, National Association, as the Swingline Lender, the Servicer, U.S. Bank and each of the other lenders, are party to the Loan and Servicing Agreement, dated as of January 22, 2010 (as amended, modified, waived, supplemented, restated or replaced from time to time, prior to the date hereof, the “Loan and Servicing Agreement”); and

 

WHEREAS, the parties hereto desire to amend the Loan and Servicing Agreement in accordance with the provisions thereof and subject to the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.1.              Defined Terms.  Terms used but not defined herein have the respective meanings given to such terms in the Loan and Servicing Agreement.

 

ARTICLE II

 

Amendments to Loan and Servicing Agreement

 

 

SECTION 2.1.              As of the Amendment Effective Date, the Loan and Servicing Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bold and double-underlined text (indicated textually in the same manner as the following example: bold and double-underlined text) as set forth on the pages attached as Appendix A hereto.  A clean copy of the conformed Loan and Servicing Agreement is set forth on the pages attached as Appendix B hereto.

 

 

ARTICLE III

 

Representations and Warranties

 

SECTION 3.1.              Each of the Borrower and the Servicer hereby represents and warrants (as to itself) to the Agent that, as of the date first written above, (i) no Unmatured Event of Default, Event of Default or Servicer Termination Event has occurred and is continuing and (ii) the representations and warranties of the Borrower and the Servicer contained in the Loan and Servicing Agreement are true and correct in all material respects on and as of such day (other than any representation and warranty that is made as of a specific date).

 

ARTICLE IV

 

Conditions Precedent

 

SECTION 4.1.              This Amendment shall become effective upon:

 

(a)           the execution and delivery of this Amendment by the parties hereto;

 

(b)           the Agent’s receipt of a good standing certificate for the Borrower by the applicable office body of its jurisdiction of organization and a copy of the resolutions of the board of managers or directors (or similar items) of the Borrower approving this Amendment and the transactions contemplated hereby, certified by its secretary or assistant secretary or other authorized officer;

 

(c)           the Agent shall have received the executed legal opinion of counsel to the Borrower in form and substance acceptable to the Agent in its reasonable discretion; and

 

(d)           payment of all reasonable and invoiced fees due and owing to the Agent and Lenders on or prior to the Amendment Effective Date.

 

ARTICLE V

 

Miscellaneous

 

SECTION 5.1.              Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

SECTION 5.2.              Severability Clause.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

2

 

SECTION 5.3.              Ratification.  Except as expressly amended hereby, the Loan and  Servicing Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Amendment shall form a part of the Loan and Servicing Agreement for all purposes.

 

SECTION 5.4.              Counterparts.  The parties hereto may sign one or more copies of this Amendment in counterparts, all of which together shall constitute one and the same agreement.  Delivery of an executed signature page of this Amendment by facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof.

 

SECTION 5.5.              Headings.  The headings of the Articles and Sections in this Amendment are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

SECTION 5.6.              Direction to Execute.  The Lenders hereby authorize and direct U.S. Bank in each of its capacities to execute this Amendment.

 

[Signature Pages Follow]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

 

	
 
    	
ARES CAPITAL CP FUNDING LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joshua M. Bloomstein
    
	
 
    	
 
    	
Name:   Joshua M. Bloomstein
    
	
 
    	
 
    	
Title:   Authorized Signatory
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

	
 
    	
ARES   CAPITAL CORPORATION,   as the Servicer
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joshua M. Bloomstein
    
	
 
    	
 
    	
Name:   Joshua M. Bloomstein
    
	
 
    	
 
    	
Title:   Authorized Signatory
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

	
 
    	
WELLS FARGO BANK, NATIONAL   ASSOCIATION, as the   Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allan Schmitt
    
	
 
    	
 
    	
Name: Allan Schmitt
    
	
 
    	
 
    	
Title: Director
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

	
 
    	
WELLS FARGO BANK, NATIONAL   ASSOCIATION, as a   Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve Sebo
    
	
 
    	
 
    	
Name: Steve Sebo
    
	
 
    	
 
    	
Title: Vice President
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

	
 
    	
BANK OF AMERICA, N.A., as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen D. Shiffle
    
	
 
    	
 
    	
Name: Allen D. Shiffle
    
	
 
    	
 
    	
Title: Managing Director
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

	
 
    	
U.S. BANK NATIONAL ASSOCIATION, as Trustee, Bank and Collateral Custodian
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James H. Byrnes
    
	
 
    	
 
    	
Name: James H. Byrnes
    
	
 
    	
 
    	
Title: Vice President
    

 

[Signature Page to Amendment No. 12 to LSA]

 

 

APPENDIX A

 

 

EXECUTION COPY

Conformed through Amendment No.  1112

 

 

Up to U.S. $1,000,000,0001,275,000,000

 

LOAN AND SERVICING AGREEMENT

 

Dated as of January 22, 2010

 

Among

 

ARES CAPITAL CP FUNDING LLC,

as the Borrower

 

and

 

ARES CAPITAL CORPORATION,

as the Servicer and the Transferor

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Agent and the Swingline Lender

 

and

 

EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO,

as the Lenders

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

as the Collateral Custodian, Trustee and the Bank

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Certain Defined Terms
    	
2
    
	
Section 1.02
    	
Other   Terms
    	
52
    
	
Section 1.03
    	
Computation   of Time Periods
    	
52
    
	
Section 1.04
    	
Interpretation
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE II.
    	
THE FACILITY
    	
53
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Advances
    	
53
    
	
Section 2.02
    	
Procedure   for Advances
    	
55
    
	
Section 2.03
    	
Determination   of Yield
    	
56
    
	
Section 2.04
    	
Remittance   Procedures
    	
57
    
	
Section 2.05
    	
Instructions   to the Trustee and the Bank
    	
61
    
	
Section 2.06
    	
Borrowing   Base Deficiency Payments
    	
61
    
	
Section 2.07
    	
Substitution   and Sale of Loan Assets; Affiliate Transactions
    	
61
    
	
Section 2.08
    	
Payments   and Computations, Etc.
    	
67
    
	
Section 2.09
    	
Fees
    	
68
    
	
Section 2.10
    	
Increased   Costs; Capital Adequacy
    	
6869
    
	
Section 2.11
    	
Taxes
    	
70
    
	
Section 2.12
    	
Collateral   Assignment of Agreements
    	
73
    
	
Section 2.13
    	
Grant   of a Security Interest
    	
73
    
	
Section 2.14
    	
Evidence   of Debt
    	
74
    
	
Section 2.15
    	
Survival   of Representations and Warranties
    	
74
    
	
Section 2.16
    	
Release   of Loan Assets
    	
74
    
	
Section 2.17
    	
Treatment   of Amounts Paid by the Borrower
    	
75
    
	
Section 2.18
    	
Prepayment;   Termination
    	
75
    
	
Section 2.19
    	
Extension   of Stated Maturity Date and Reinvestment Period
    	
76
    
	
Section 2.20
    	
Collections   and Allocations
    	
76
    
	
Section 2.21
    	
Reinvestment   of Principal Collections
    	
77
    
	
Section 2.22
    	
Additional   Lenders; Increase of Commitment
    	
78
    
	
Section 2.23
    	
Defaulting   Lenders
    	
7879
    
	
Section 2.24
    	
Mitigation   Obligations; Replacement of Lenders
    	
80
    
	
Section 2.25
    	
Refunding   of Swingline Advances
    	
8182
    
	
 
    	
 
    	
 
    
	
ARTICLE III.
    	
CONDITIONS PRECEDENT
    	
8283
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Conditions   Precedent to Effectiveness
    	
8283
    
	
Section 3.02
    	
Conditions   Precedent to All Advances
    	
83
    
	
Section 3.03
    	
Advances   Do Not Constitute a Waiver
    	
8586
    
	
Section 3.04
    	
Conditions to Pledges of Loan Assets
    	
8586
    

 

i

 

	
ARTICLE IV.
    	
REPRESENTATIONS AND WARRANTIES
    	
87
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Representations   and Warranties of the Borrower
    	
87
    
	
Section 4.02
    	
Representations and Warranties of the Borrower   Relating to the Agreement   and the Collateral Portfolio
    	
95
    
	
Section 4.03
    	
Representations   and Warranties of the Servicer
    	
9697
    
	
Section 4.04
    	
Representations   and Warranties of the Trustee
    	
100101
    
	
Section 4.05
    	
Representations   and Warranties of each Lender
    	
101
    
	
Section 4.06
    	
Representations   and Warranties of the Collateral Custodian
    	
101102
    
	
 
    	
 
    	
 
    
	
ARTICLE V.
    	
GENERAL COVENANTS
    	
102
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Affirmative   Covenants of the Borrower
    	
102
    
	
Section 5.02
    	
Negative   Covenants of the Borrower
    	
109
    
	
Section 5.03
    	
Affirmative   Covenants of the Servicer
    	
112113
    
	
Section 5.04
    	
Negative   Covenants of the Servicer
    	
118
    
	
Section 5.05
    	
Affirmative   Covenants of the Trustee
    	
119
    
	
Section 5.06
    	
Negative   Covenants of the Trustee
    	
119120
    
	
Section 5.07
    	
Affirmative   Covenants of the Collateral Custodian
    	
120
    
	
Section 5.08
    	
Negative   Covenants of the Collateral Custodian
    	
120
    
	
Section 5.09
    	
Covenants of the Borrower Relating to Hedging of   Loan Assets
    	
120121
    
	
 
    	
 
    	
 
    
	
ARTICLE VI.
    	
ADMINISTRATION AND SERVICING OF CONTRACTS
    	
122
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Appointment   and Designation of the Servicer
    	
122
    
	
Section 6.02
    	
Duties   of the Servicer
    	
124
    
	
Section 6.03
    	
Authorization   of the Servicer
    	
126
    
	
Section 6.04
    	
Collection   of Payments; Accounts
    	
127
    
	
Section 6.05
    	
Realization   Upon Loan Assets
    	
128129
    
	
Section 6.06
    	
Servicing   Compensation
    	
129
    
	
Section 6.07
    	
Payment   of Certain Expenses by Servicer
    	
129
    
	
Section 6.08
    	
Reports   to the Agent; Account Statements; Servicing Information
    	
129130
    
	
Section 6.09
    	
Annual   Statement as to Compliance
    	
131132
    
	
Section 6.10
    	
Annual   Independent Public Accountant’s Servicing Reports
    	
132
    
	
Section 6.11
    	
The   Servicer Not to Resign
    	
132133
    
	
 
    	
 
    	
 
    
	
ARTICLE VII.
    	
EVENTS OF   DEFAULT
    	
133
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Events of Default
    	
133
    
	
Section 7.02
    	
Additional Remedies of the Agent
    	
136137
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII.
    	
INDEMNIFICATION
    	
140
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Indemnities   by the Borrower
    	
140
    
	
Section 8.02
    	
Indemnities   by Servicer
    	
143
    

 

ii

 

	
Section 8.03
    	
Legal   Proceedings
    	
145
    
	
Section 8.04
    	
After-Tax   Basis
    	
145146
    
	
Section 8.05
    	
Benefit   of Indemnity
    	
146
    
	
 
    	
 
    	
 
    
	
ARTICLE IX.
    	
THE AGENT
    	
146
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
The Agent
    	
146
    
	
 
    	
 
    	
 
    
	
ARTICLE X.
    	
TRUSTEE
    	
150151
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Designation   of Trustee
    	
150151
    
	
Section 10.02
    	
Duties   of Trustee
    	
151
    
	
Section 10.03
    	
Merger   or Consolidation
    	
153
    
	
Section 10.04
    	
Trustee   Compensation
    	
153
    
	
Section 10.05
    	
Trustee   Removal
    	
153
    
	
Section 10.06
    	
Limitation   on Liability
    	
153154
    
	
Section 10.07
    	
Trustee Resignation
    	
154155
    
	
 
    	
 
    	
 
    
	
ARTICLE XI.
    	
MISCELLANEOUS
    	
155
    
	
 
    	
 
    	
 
    
	
Section 11.01
    	
Amendments   and Waivers
    	
155
    
	
Section 11.02
    	
Notices,   Etc.
    	
156157
    
	
Section 11.03
    	
No   Waiver; Remedies
    	
160
    
	
Section 11.04
    	
Binding   Effect; Assignability; Multiple Lenders
    	
160
    
	
Section 11.05
    	
Term   of This Agreement
    	
161
    
	
Section 11.06
    	
GOVERNING   LAW; JURY WAIVER
    	
161162
    
	
Section 11.07
    	
Costs,   Expenses and Taxes
    	
161162
    
	
Section 11.08
    	
No   Proceedings
    	
162163
    
	
Section 11.09
    	
Recourse   Against Certain Parties
    	
163
    
	
Section 11.10
    	
Execution   in Counterparts; Severability; Integration
    	
164
    
	
Section 11.11
    	
Consent   to Jurisdiction; Service of Process
    	
164
    
	
Section 11.12
    	
Characterization of Conveyances Pursuant to the   Purchase and Sale Agreements
    	
164165
    
	
Section 11.13
    	
Confidentiality
    	
166
    
	
Section 11.14
    	
Acknowledgement and Consent to Bail-In of EEA   Financial Institutions
    	
167168
    
	
Section 11.15
    	
Waiver   of Set Off
    	
169
    
	
Section 11.16
    	
Headings   and Exhibits
    	
169
    
	
Section 11.17
    	
Ratable   Payments
    	
169
    
	
Section 11.18
    	
Breaches   of Representations, Warranties and Covenants
    	
169
    
	
Section 11.19
    	
Assignments   of Loan Assets
    	
169
    
	
Section 11.20
    	
Affirmation
    	
170
    
	
Section 11.21
    	
Covered   Transactions
    	
170
    

 

iii

 

	
ARTICLE XII.
    	
COLLATERAL CUSTODIAN
    	
170
    
	
 
    	
 
    	
 
    
	
Section 12.01
    	
Designation   of Collateral Custodian
    	
170
    
	
Section 12.02
    	
Duties   of Collateral Custodian
    	
170171
    
	
Section 12.03
    	
Merger   or Consolidation
    	
173
    
	
Section 12.04
    	
Collateral   Custodian Compensation
    	
173174
    
	
Section 12.05
    	
Collateral   Custodian Removal
    	
174
    
	
Section 12.06
    	
Limitation   on Liability
    	
174
    
	
Section 12.07
    	
Collateral   Custodian Resignation
    	
175
    
	
Section 12.08
    	
Release   of Documents
    	
175176
    
	
Section 12.09
    	
Return   of Required Loan Documents
    	
176
    
	
Section 12.10
    	
Access to Certain Documentation and Information   Regarding the Collateral   Portfolio; Audits of Servicer
    	
176177
    
	
Section 12.11
    	
Custodian   as Agent of Trustee
    	
177
    

 

iv

 

This LOAN AND SERVICING AGREEMENT (as amended, restated, supplemented or modified from time to time, the “Loan and Servicing Agreement”) is made as of January 22, 2010, among:

 

(1)                                 ARES CAPITAL CP FUNDING LLC, a Delaware limited liability company (together with its successors and assigns in such capacity, the “Borrower”);

 

(2)                                 ARES CAPITAL CORPORATION, a Maryland corporation, as the Servicer (as defined herein) and the Transferor (as defined herein);

 

(3)                                 WELLS  FARGO  BANK,  NATIONAL  ASSOCIATION,  as  agent (together with its successor and assigns in such capacity, the “Agent”) and as swingline lender (together with its successor and assigns in such capacity, the “Swingline Lender”);

 

(4)                                 EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO, as a Lender; and

 

(5)                                 U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), as the Trustee (together with its successors and assigns in such capacity, the “Trustee”), the Bank (as defined herein) and the Collateral Custodian (together with its successors and assigns in such capacity, the “Collateral Custodian”).

 

PRELIMINARY STATEMENT

 

WHEREAS, certain parties hereto were party to a Sale and Servicing Agreement, dated as of November 3, 2004, by and among the Servicer, as the servicer, the Transferor, as the originator, the Borrower, as the borrower, Ares CP Funding II LLC, as the guarantor, Variable Funding Capital Company LLC (“VFCC”), as a conduit purchaser, the Note Purchaser, as an institutional purchaser, Wells Fargo Securities, LLC (f/k/a Wachovia Capital Markets, LLC) (together with its successors and assigns, “WFS”), as the administrative agent and as the purchaser agent for VFCC, Ares Capital CP Funding II, as the guarantor (the “Guarantor”) the Trustee, as the trustee, and Lyon Financial Services, Inc. d/b/a U.S. Bank Portfolio Services (“Lyon”), as the backup servicer (as amended, restated, supplemented or modified prior to the date hereof, the “Original Agreement”);

 

WHEREAS, certain parties hereto are party to an Amended and Restated Sale and Servicing Agreement, dated as of January 22, 2010, by and among the Servicer, as the servicer, the Transferor as the originator, the Borrower, as the borrower, Wells Fargo Bank, National Association, in its individual capacity (together with its successors and assigns, “Wells Fargo”), as the note purchaser, WFS, as the administrative agent, and U.S. Bank, as the collateral custodian, trustee and bank (as amended, restated, supplemented or modified prior to the date hereof, (the “Restatement Agreement”) that amended and restated the Original Agreement;

 

 

“Acquisition Participation Interests” means the Participation Interests transferred to the Borrower in connection with the transactions contemplated by the Acquisition Agreement on the Eighth Amendment Effective Date, the seller thereof is a Seller Party or an Affiliate thereof.

 

“Action” has the meaning assigned to that term in Section 8.03.

 

“Additional Amount” has the meaning assigned to that term in Section 2.11(a).

 

“Adjusted Borrowing Value” means for any Loan Asset, for any date of determination, an amount equal to the lowest of: (i) the Outstanding Balance of such Loan Asset at such time, (ii) the initial Assigned Value of such Loan Asset, as of the applicable Advance Date, multiplied by the principal balance of such Loan Asset (exclusive of Accreted Interest) and (iii) the Assigned Value of such Loan Asset at such time multiplied by the principal balance of such Loan Asset (exclusive of Accreted Interest); provided that the parties hereby agree that the Adjusted Borrowing Value of any Loan Asset that is no longer an Eligible Loan Asset shall be zero.

 

“Advance” means each loan advanced by the Lenders (including the Swingline Lender) hereunder (including each Advance, each Swingline Advance and each loan advanced for the purpose of refunding the Swingline Lender for any Swingline Advances pursuant to Section 2.25(a) and funding the Unfunded Exposure Account pursuant to Section 2.02(f)) to the Borrower on an Advance Date pursuant to Article II.

 

“Advance Date” means, with respect to any Advance and any Swingline Advance, the date on which such Advance or such Swingline Advance is made.

 

“Advances Outstanding” means, at any time, the sum of the principal amounts of Advances loaned to the Borrower for the initial and any subsequent borrowings pursuant to Sections 2.01 and 2.02 as of such time, reduced by the aggregate Available Collections received and distributed as repayment of principal amounts of Advances outstanding pursuant to Section 2.04 at or prior to such time and any other amounts received by the Lenders to repay the principal amounts of Advances outstanding pursuant to Section 2.18 or otherwise at or prior to such time; provided that the principal amounts of Advances outstanding shall not be reduced by any Available Collections or other amounts if at any time such Available Collections or other amounts are rescinded or must be returned for any reason.

 

“Affected Party” has the meaning assigned to that term in Section 2.10.

 

“Affiliate” when used with respect to a Person, means any other Person controlling, controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to vote 20% or more of the voting securities of such Person or to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided that for purposes of determining whether any Loan Asset is an Eligible Loan Asset or for purposes of Section 5.01(b)(xix), the term Affiliate shall not include any

 

3

 

reasonable discretion of the Agent, materially and adversely affects the value of such Loan Asset;

 

(f)                                   provides additional funds to the Obligor of such Loan Asset with the intent of keeping that Loan Asset current; or

 

(g)                                  amends, waives, forbears, supplements or otherwise modifies (i) the meaning of “Senior Net Leverage Ratio”, “Net Leverage Ratio”, “Interest Coverage Ratio” or “Permitted Liens” or any respective comparable definitions in the Loan Agreement for such Loan Asset or (ii) any term or provision of such Loan Agreement referenced in or utilized in the calculation of the “Senior Net Leverage Ratio”, “Net Leverage Ratio”, “Interest Coverage Ratio” or “Permitted Liens” or any respective comparable definitions for such Loan Asset, in either case in a manner that, in the sole reasonable judgment of the Agent, is materially adverse to the Secured Parties; provided that in connection with any Revenue Recognition Implementation or any Operating Lease Implementation, the Agent (with the consent of the Servicer (such consent not to be unreasonably withheld, delayed or conditioned)) may retroactively adjust the Interest Coverage Ratio, Senior Net Leverage Ratio or Net Leverage Ratio for any Loan Asset as determined on the applicable Cut-Off Date.

 

”Maximum Facility Amount” means the aggregate Commitments of the Lenders then in effect, which amount may be up to $1,000,000,000,1,275,000,000, as such amount may vary from time to time pursuant to Section 2.18(b) or Section 2.22; provided that, at all times after the Reinvestment Period, the Maximum Facility Amount shall mean the aggregate Advances Outstanding at such time.

 

“Minimum Weighted Average Coupon” means 7.00%.

 

“Minimum Weighted Average Coupon Test” means a test that will be satisfied on any date of determination if the Weighted Average Coupon of all Loan Assets included in the Collateral Portfolio is equal to or greater than the Minimum Weighted Average Coupon.

 

“Minimum Weighted Average Spread” means 3.00%.

 

“Minimum Weighted Average Spread Test” means a test that will be satisfied on any date of determination if the Weighted Average Spread of all Loan Assets included in the Collateral Portfolio is equal to or greater than the Minimum Weighted Average Spread.

 

“Monthly Period” means, for any date of determination, the period from but excluding the immediately preceding Determination Date to and including the immediately succeeding Determination Date.

 

“Moody’s” means Moody’s Investors Service, Inc. (or its successors in interest). “Mortgage” means the mortgage, deed of trust or other instrument creating a Lien on an interest in real property securing a Loan Asset, including the assignment of leases and rents related thereto.

 

31

 

“Revenue Recognition Implementation” means the implementation by an Obligor of IFRS 15/ASC 606.

 

“Review Criteria” has the meaning assigned to that term in Section 12.02(b)(i).

 

“Revolving Loan Asset” means a Loan Asset that is a line of credit or contains an unfunded commitment arising from an extension of credit by the Transferor to an Obligor, pursuant to the terms of which amounts borrowed may be repaid and subsequently reborrowed.

 

”SBIC Subsidiary” means any direct or indirect wholly-owned Subsidiary (including such Subsidiary’s general partner or managing entity to the extent that the only material asset of such general partner or managing entity is its equity interests in the SBIC Subsidiary) of the Borrower licensed as a small business investment company under the Small Business Investment Act of 1958, as amended (or that has applied for such a license and is actively pursuing the granting thereof by appropriate proceedings promptly instituted and diligently conducted), and which is designated by the Borrower (pursuant to a certificate of a financial officer delivered to the Agent) as an SBIC Subsidiary.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (or its successors in interest)S&P Global Ratings and any successor thereto.

 

“Sanction” or “Sanctions” means, individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order; (b) the United Nations Security Council; (c) the European Union; (d) the United Kingdom; or (e) any other Governmental Authorities with jurisdiction over the Borrower, the Servicer, the Equityholder or any of their respective Subsidiaries.

 

“Sanctioned Person” means any Person that is a target of Sanctions, including without limitation, a Person that is: (a) listed on OFAC’s Specially Designated Nationals (SDN) and Blocked Persons List; (b) listed on OFAC’s Consolidated Non-SDN List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the direct or indirect ownership or control of such legal entity by Sanctioned Person(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.

 

“Scheduled Payment” means each scheduled payment of principal and/or interest required to be made by an Obligor on the related Loan Asset, as adjusted pursuant to the terms of the related Loan Agreement.

 

“Scheduled Payments” means, with respect to any Loan Asset, each required, if any, monthly, quarterly, or annual payment of principal required to be made by the Obligor thereof under the terms of such Loan Asset; in all cases, excluding any payment in the nature of, or constituting, interest.

 

43

 

Date, any Borrowing Base Deficiency exists, then the Borrower shall, within five Business Days from the date of such Borrowing Base Deficiency, eliminate such Borrowing Base Deficiency in its entirety by effecting one or more (or any combination thereof) of the following actions in order to eliminate such Borrowing Base Deficiency as of such date of determination: (i) deposit cash in United States dollars into the Principal Collection Account, (ii) repay Advances (together with any Breakage Fees, any Hedge Breakage Costs and all accrued and unpaid costs and expenses of the Agent and the Lenders, in each case in respect of the amount so prepaid), and/or (iii) subject to the approval of the Agent, in its sole discretion (and the Agent shall use reasonable efforts to give such approval in a timely fashion), Pledge additional Eligible Loan Assets.

 

(b)                                 No later than 2:00 p.m. on the Business Day prior to the proposed repayment of Advances or Pledge of additional Eligible Loan Assets pursuant to Section 2.06(a), the Borrower (or the Servicer on its behalf) shall deliver (i) to the Agent (with a copy to the Trustee and the Collateral Custodian), notice of such repayment or Pledge and a duly completed Borrowing Base Certificate, updated to the date such repayment or Pledge is being made and giving pro forma effect to such repayment or Pledge, and (ii) to the Agent, if applicable, a description of any Eligible Loan Asset and each Obligor of such Eligible Loan Asset to be Pledged and added to the updated Loan Asset Schedule. Any notice pertaining to any repayment or any Pledge pursuant to this Section 2.06 shall be irrevocable.

 

Section 2.07                             Substitution and Sale of Loan Assets; Affiliate Transactions.

 

(a)                                 Substitutions. The Borrower may, with the consent of the Agent in its sole discretion, replace any Loan Asset as a Loan Asset so long as (i) no event has occurred, or would result from such substitution, which constitutes an Event of Default and no event has occurred and is continuing, or would result from such substitution, which constitutes an Unmatured Event of Default or a Borrowing Base Deficiency; provided that the Borrower may effect a substitution as necessary to facilitate a cure of a Borrowing Base Deficiency (and any Unmatured Event of Default arising therefrom) so long as immediately after giving effect to such substitution and any other sale or transfer substantially contemporaneous therewith, such Borrowing Base Deficiency shall be cured or closer to being cured and (ii) simultaneously therewith, the Borrower Pledges (in accordance with all of the terms and provisions contained herein) a Substitute Eligible Loan Asset.

 

(b)                                 Discretionary Sales. The Borrower shall be permitted to sell Loan Assets to Persons other than the Transferor or its Affiliates from time to time; provided that (i) the proceeds of such sale shall be deposited into the Collection Account to be disbursed in accordance with Section 2.04 hereof or reinvested, prior to the end of the Reinvestment Period, in additional Eligible Loan Assets in accordance with Section 2.21 hereof, (ii) no event has occurred, or would result from such sale, which constitutes an Event of Default and no event has occurred and is continuing, or would result from such sale, which constitutes an Unmatured Event of Default or a Borrowing Base Deficiency; provided that the Borrower may sell Loan Assets as necessary to facilitate a cure of a Borrowing Base Deficiency (and any Unmatured Event of Default arising therefrom) so long as the Agent shall approve of such sale and, immediately after giving effect to such sale and any other substitution or transfer substantially contemporaneous therewith, the Borrowing Base Deficiency shall be cured or closer to being cured and (iii) the prior written consent of the Agent shall be required if suchany Loan Asset with

 

63

 

an Outstanding Balance greater than 2% of the aggregate Outstanding Balance of all Loan Assets is sold for an amount which is less than the Adjusted Borrowing Value.

 

(c)           Optional Sales. On any Optional Sale Date the Borrower shall have the right to prepay all or a portion of the Advances Outstanding in connection with the sale and assignment by the Borrower of all or a portion of the Loan Assets, as the case may be in connection with a Permitted Securitization or a Permitted Refinancing (each, an “Optional Sale”), subject to the following terms and conditions:

 

(i)            The Borrower shall have given the Agent (with a copy to the Trustee and the Collateral Custodian) at least 45 days’ prior written notice of its intent to effect an Optional Sale in connection with a Permitted Securitization or a Permitted Refinancing, and the Agent shall have delivered to the Borrower its prior written consent (in its sole discretion) to such Optional Sale, unless such 45 days’ notice requirement is waived or reduced by the Agent; provided that no such consent will be required for any Optional Sale of any Loan Asset at a price equal to or greater than the Adjusted Borrowing Value of such Loan Asset as of the date of the Optional Sale to the extent that the aggregate Outstanding Balance of all Loan Assets sold pursuant to this proviso (taking into account the proposed sale) during the 12-month period immediately preceding and including the proposed date of such sale does not exceed 15% of the highest aggregate Outstanding Balance of any month during such 12-month period;

 

(ii)           Unless an Optional Sale is to be effected on a Payment Date (in which case the relevant calculations with respect to such Optional Sale shall be reflected on the applicable Servicing Report), the Servicer shall deliver to the Agent (with a copy to the Trustee and the Collateral Custodian) a certificate and evidence to the reasonable satisfaction of the Agent (which evidence may consist solely of a certificate from the Servicer) that the Borrower shall have sufficient funds on the related Optional Sale Date to effect the contemplated Optional Sale in accordance with this Agreement. In effecting an Optional Sale, the Borrower may use the Proceeds of sales of the Loan Assets to repay all or a portion of the Obligations;

 

(iii)          no Event of Default has occurred, or would result from such Optional Sale, and no Unmatured Event of Default or Borrowing Base Deficiency exists or would result from such Optional Sale; and

 

(iv)          on the related Optional Sale Date, the Borrower shall have deposited into the Collection Account, in immediately available funds, the proceeds of such Optional Sale, which shall at least equal the aggregate Adjusted Borrowing Value of the Loan Assets being sold.

 

(d)           Lien Release Dividend. Notwithstanding any provision contained in this Agreement to the contrary, provided no Event of Default has occurred and no Unmatured Event  of Default exists, on a Lien Release Dividend Date, the Borrower may dividend to the Equityholder and the Equityholder may dividend to the Transferor a portion of those Loan Assets that were sold by the Transferor to the Equityholder and by the Equityholder to the Borrower, or portions thereof (each, a “Lien Release Dividend”), subject to the following terms and

 

64

 

aggregate Outstanding Balance of any month during such 12-month period (or such lesser number of months as shall have elapsed as of such date).

 

(ii)           The Outstanding Balance of all Loan Assets (other than Warranty Loan Assets) sold pursuant to Section 2.07(b), sold without the consent of the Agent in accordance with Section 2.07(c) (other than any Loan Asset sold without such consent due to the fact that the Outstanding Balance of such Loan Asset is less than or equal to 2% of the aggregate Outstanding Balance of all Loans Assets pursuant to Section 2.07(b)) (in each case, other than Loan Assets subject to clauses (ii), (iv) or (vi) of the definition of “Value Adjustment Event”), substituted pursuant to Section 2.07(a) or released pursuant to Section 2.07(d) during the 12-month period immediately preceding the proposed date of sale, substitution or Lien Release Dividend (or such lesser number of months as shall have elapsed as of such date) does not exceed 20% of the highest aggregate Outstanding Balance of any month during such 12-month period (or such lesser number of months as shall have elapsed as of such date).

 

(i)            Notices to Lenders.  The Agent will provide the Lenders with copies of any notices promptly upon receipt thereof and, if requested by the Lenders, other materials received by the Agent pursuant to this Section 2.07 in connection with any sale, substitution or repurchase of Loan Assets.

 

Section 2.08          Payments and Computations, Etc.

 

(a)           All amounts to be paid or deposited by the Borrower or the Servicer hereunder shall be paid or deposited in accordance with the terms hereof no later than 3:00 p.m. (New York City time) on the day when due in lawful money of the United States in immediately available funds to the Collection Account or such other account as is designated by the Agent. The Borrower or the Servicer, as applicable, shall, to the extent permitted by Applicable Law, pay to the Secured Parties interest on all amounts not paid or deposited when due (taking into account any grace period provided for herein) to any of the Secured Parties hereunder at the Default Funding Rate, payable on demand, from the date of such nonpayment until such amount is paid in full (as well after as before judgment); provided that such interest rate shall not at any time exceed the maximum rate permitted by Applicable Law. Any Obligation hereunder shall not be reduced by any distribution of any portion of Available Collections if at any time such distribution is rescinded or required to be returned by any Lender to the Borrower or any other Person for any reason. All computations of interest and all computations of Yield and other fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed, other than calculations with respect to the Base Rate, which shall be based on a year consisting of 365 or 366 days, as applicable.

 

(b)           Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of Yield or any fee payable hereunder, as the case may be.

 

(c)           If any Advance requested by the Borrower and approved by the Lenders and the Agent pursuant to Section 2.02 is not for any reason whatsoever, except as a result of the

 

69

 

(i)            all reasonable up-front expenses and fees (including legal fees and any fees required under any Lender Fee Letter and the Trustee and Collateral Custodian Fee Letter) that are invoiced at or prior to the Restatement Date shall have been paid in full;

 

(ii)           any and all information submitted to each Lender and the Agent by the Borrower, the Transferor, the Equityholder or the Servicer or any of their Affiliates is true, accurate, complete in all material respects and not misleading in any material respect;

 

(iii)          each Lender shall have received all documentation and other information requested by such Lender in its sole discretion and/or required by regulatory authorities with respect to the Borrower, the Transferor and the Servicer under applicable “know your customer” and anti-money laundering rules and regulationsAnti-Money Laundering Laws, including, without limitation, the USA PATRIOT Act, all in form and substance reasonably satisfactory to each Lender;

 

(iv)          the Agent shall have received on or before the date of such effectiveness the items listed in Schedule I hereto, each in form and substance satisfactory to the Agent and each Lender; and

 

(v)           no material adverse effect on the business, assets, financial conditions or performance of the Servicer and its subsidiaries, including the Borrower, on a consolidated basis, has occurred.

 

(b)           By its execution and delivery of this Agreement, each of the Borrower and the Servicer hereby certifies that, and the Agent hereby acknowledges that, each of the conditions precedent to the effectiveness of this Agreement set forth in this Section 3.01 have been satisfied.

 

Section 3.02          Conditions Precedent to All Advances. Each Advance (including the Initial Advance, except as explicitly set forth below) and each Swingline Advance to the Borrower from the Lenders shall be subject to the further conditions precedent that:

 

(a)           On the Advance Date of such Advance, the following statements shall be true and correct, and the Borrower by accepting any amount of such Advance shall be deemed to have certified that:

 

(i)            the Servicer (on behalf of the Borrower) shall have delivered to the Agent (with a copy to the Collateral Custodian and copies of the Notice of Borrowing and Borrowing Base Certificate to the Trustee only) no later than 3:00 p.m. on the date that is  one Business Day prior to the related Advance Date (and with respect to Swingline Advances no later than 5:00 p.m. on the related Advance Date): (A) a Notice of Borrowing, (B) a Borrowing Base Certificate, (C) a Loan Asset Schedule and (D) except with respect to an Advance under Section 2.02(f), Loan Assignments in the form of Exhibit A to the Purchase and Sale Agreements (including Schedule I thereto) and containing such additional information as may be reasonably requested by the Agent (who will provide each Lender with a copy promptly upon receipt thereof);

 

85

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	
BORROWER:
    	
ARES CAPITAL CP FUNDING LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

 

Ares CP Funding Facility

Loan and Servicing Agreement

 

 

	
TRUSTEE:
    	
U.S. BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
BANK:
    	
U.S. BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
COLLATERAL   CUSTODIAN:
    	
U.S. BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Ares CP Funding Facility

Loan and Servicing Agreement

 

 

ANNEX A

 

Commitments

 

	
Lender
    	
 
    	
Commitment
    
	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
700,000,000900,000,000
    
	
Bank of America, N.A.
    	
 
    	
$
    	
300,000,000375,000,000
    

 

Annex A- 1INCENTIVE
STOCK OPTION AWARD AGREEMENT

 

COFFEE
HOLDING CO., INC.

2013
EQUITY COMPENSATION PLAN

 

This
Stock Option Award Agreement (the “Award Agreement”) is made and entered into effective on the Date of Grant
set forth in Exhibit A (the “Date of Grant”) by and between Coffee Holding Co., Inc., a Nevada corporation
(the “Company”), and the individual named in Exhibit A hereto (the “Optionee”).

 

WHEREAS,
the Company desires to provide the Optionee an incentive to participate in the success and growth of the Company through the opportunity
to earn a proprietary interest in the Company; and

 

WHEREAS,
to give effect to the foregoing intention, the Company desires to grant the Optionee an option pursuant to the Coffee Holding
Co., Inc. 2013 Equity Compensation Plan (the “Plan”) to acquire the Company’s common stock, par value
$0.001 per share (the “Common Stock”);

 

NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and for good and valuable consideration, the parties
hereto agree as follows:

 

1.
Grant. Subject to the terms and conditions set forth herein and the provisions of the Plan, the terms of which are incorporated
herein by reference, the Company hereby grants the Optionee an Incentive Stock Option (the “Option”) to purchase
up to the number of shares of Common Stock (the “Shares”) set forth in Exhibit A hereto at the exercise
price per Share (the “Exercise Price”) set forth in Exhibit A, and pursuant to the vesting schedule
set forth in Exhibit A. Capitalized terms used but not otherwise defined in this Award Agreement shall have the meanings
as set forth in the Plan.

 

This
Option is intended to qualify as an Incentive Stock Option (“ISO”) under Section 422 of the Code. However,
notwithstanding such designation, if the Optionee becomes eligible in any given year to exercise ISOs for Shares having a Fair
Market Value in excess of $100,000, those options representing the excess shall be treated as Nonqualified Stock Options. In the
previous sentence, “ISOs” include ISOs granted under any plan of the Company or any parent or any Subsidiary of the
Company. For the purpose of deciding which options apply to Shares that “exceed” the $100,000 limit, ISOs shall be
taken into account in the same order as granted. The Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted. The Optionee hereby acknowledges that there is no assurance that the Option will, in fact,
be treated as an Incentive Stock Option under Section 422 of the Code.

 

    	 

     

    

 

2.
Exercise Period Following Termination of Continuous Service. This Option shall terminate and be canceled to the extent
not exercised, to the extent vested and exercisable pursuant to Exhibit A, within three (3) months following termination
of the Optionee’s “Continuous Service” (as defined below); provided that if such termination is due to the Optionee’s
death or permanent and total disability within the meaning of Section 22(e)(3) of the Code, this Option shall terminate and be
cancelled one (1) year from the date of termination of Optionee’s Continuous Service. Notwithstanding the foregoing, in
the event that the Optionee’s Continuous Service is terminated for “Cause” (as defined below), then the Option
shall immediately terminate on the date of such termination of Continuous Service and shall not be exercisable for any period
following such date. In no event, however, shall this Option be exercised later than the Expiration Date set forth in Exhibit
A and in no event shall this Option be exercised for more Shares than the Shares which otherwise have become exercisable as
of the date of termination. The Option shall be canceled and forfeited as of the date that Optionee’s Continuous Service
terminates if and to the extent that the Option has not vested in accordance with Exhibit A.

 

For
purposes of this Award Agreement:

 

“Continuous
Service” shall mean the absence of any interruption or termination of service as an employee, director, consultant,
advisor or other individual service provider; provided, however, that periods of absence to the extent permitted by Company policies
due to vacations, holidays, sick days, short term disability and other approved absences, will not be considered to be an interruption
or termination of service hereunder. Changes in status between service as an employee, director, consultant, advisor or other
individual service provider to the Company or any of its Subsidiaries will not constitute an interruption of service.

 

“Cause”
shall mean as determined by the Company, (i) conviction of or plea of nolo contendere to a felony by the Optionee; (ii) acts of
dishonesty by the Optionee resulting in personal gain or enrichment at the expense of the Company or its Subsidiaries or the affiliates
of the Company and its Subsidiaries; (iii) conduct by the Optionee in connection with his duties to the Company and/or its Subsidiaries
that is fraudulent, unlawful, grossly negligent, disloyal or otherwise contrary to the best interests of the Company and/or its
Subsidiaries; (iv) engaging in inappropriate personal conduct by the Optionee including, but not limited to, harassment discrimination,
or the use or possession at work of any illegal controlled substance; (v) contravention of specific lawful direction from the
Board or supervisor or continuing failure by the Optionee to perform his duties to the Company or its Subsidiaries, or (vi) breach
of any non-disclosure, non-competition, non-solicitation or other similar agreement executed by the Optionee for the benefit of
the Company or any of its Subsidiaries; provided that, at the Company’s discretion, the Optionee may have up to fifteen
(15) days after notice from the Company to cure the deficiency leading to the Cause determination (except with respect to (i)
above), if curable. A termination for “Cause” shall be effective immediately (or on such other date set forth by the
Company). Notwithstanding the foregoing, if the Optionee and the Company or any of its Subsidiaries have entered into an employment
agreement, consulting agreement, advisory agreement or other similar agreement that specifically defines “cause,”
then “Cause” shall have the meaning defined in that employment agreement, consulting agreement, advisory agreement
or other agreement.

 

    	-2-

    	 

    

 

3.
Method of Exercise. This Option, to the extent vested in accordance with Exhibit A and otherwise exercisable, is
exercisable by delivery to the Company of an exercise notice (the “Exercise Notice”) in a form satisfactory
to the Committee or by such other form or means as the Committee may permit or require. Any Exercise Notice shall state or provide
the number of Shares with respect to which the Option is being exercised (the “Exercised Shares”), and include
such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price for the Exercised Shares. As determined by the Committee,
in its sole discretion, at or after grant, payment in full or in part of the exercise price of the Option may be made: (i) in
cash; (ii) by check; (iii) in the form of shares of Common Stock that have been held by the Optionee for such period as the Committee
may deem appropriate for accounting purposes or otherwise, valued at Fair Market Value of such shares on the date of exercise;
(iv) by surrendering to the Company shares of Common Stock otherwise receivable on exercise of the Option; (v) by a cashless exercise
program implemented by the Committee in connection with the Plan; and/or (vii) by such other method as may be approved by the
Committee, provided that such form of consideration is permitted by the Plan and by Applicable Law. Upon exercise of the Option
by the Optionee and prior to the delivery of such Exercised Shares, the Company shall have the right to require the Optionee to
satisfy applicable Federal and state tax income tax withholding requirements and the Optionee’s share of applicable employment
withholding taxes in a method satisfactory to the Company. Notwithstanding the foregoing, no Exercised Shares shall be issued
unless such exercise and issuance complies with the requirements relating to the administration of stock option plans and other
applicable equity plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange
or quotation system on which the Common Stock is listed or quoted, and the applicable laws of any foreign country or jurisdiction
where stock grants or other applicable equity grants are made under the Plan; assuming such compliance, for income tax purposes
the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such
Shares.

 

4.
Covenants Agreement. This Option shall be subject to forfeiture at the election of the Company in the event that the Optionee
breaches any agreement between the Optionee and the Company with respect to noncompetition, nonsolicitation, assignment of inventions
and contributions and/or nondisclosure obligations of the Optionee.

 

5.
Taxes. By executing this Award Agreement, Optionee acknowledges and agrees that Optionee is solely responsible for the
satisfaction of any applicable taxes that may be imposed on Optionee that arise as a result of the grant, vesting or exercise
of the Option, including without limitation any taxes arising under Section 409A of the Code (regarding deferred compensation)
or Section 4999 of the Code (regarding golden parachute excise taxes), and that neither the Company nor the Committee shall have
any obligation whatsoever to pay such taxes or otherwise indemnify or hold Optionee harmless from any or all of such taxes.

 

6.
Disqualifying Disposition. If the Optionee disposes of the Shares prior to the expiration of either two (2) years from
the Date of Grant or one (1) year from the date the Shares are transferred to the Optionee pursuant to the exercise of the Option
(a “Disqualifying Disposition”), the Optionee shall notify the Company in writing within thirty (30) days after
such disposition of the date and terms of such disposition. The Optionee also agrees to provide the Company with any information
concerning any such dispositions as the Company requires for tax purposes.

 

    	-3-

    	 

    

 

7.
Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and
this Award Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

8.
Securities Matters. All Shares and Exercised Shares shall be subject to the restrictions on sale, encumbrance and other
disposition provided by Federal or state law. The Company shall not be obligated to sell or issue any Shares or Exercised Shares
pursuant to this Award Agreement unless, on the date of sale and issuance thereof, such Shares are either registered under the
Securities Act of 1933, as amended (the “Securities Act”), and all applicable state securities laws, or are
exempt from registration thereunder. Regardless of whether the offering and sale of Shares under the Plan have been registered
under the Securities Act, or have been registered or qualified under the securities laws of any state, the Company at its discretion
may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends
on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are
necessary in order to achieve compliance with the Securities Act or the securities laws of any state or any other law.

 

9.
Investment Purpose. The Optionee represents and warrants that unless the Shares are registered under the Securities Act,
any and all Shares acquired by the Optionee under this Award Agreement will be acquired for investment for the Optionee’s
own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in,
any distribution of such Shares within the meaning of the Securities Act. The Optionee agrees not to sell, transfer or otherwise
dispose of such Shares unless they are either (1) registered under the Securties Act and all applicable state securities laws,
or (2) exempt from such registration in the opinion of Company counsel.

 

10.
Other Plans. No amounts of income received by the Optionee pursuant to this Award Agreement shall be considered compensation
for purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Company or its subsidiaries,
unless otherwise expressly provided in such plan.

 

11.
No Guarantee of Continued Service. The Optionee acknowledges and agrees that the right to exercise the Option pursuant
to the exercise schedule hereof is earned only through Continuous Service and such other requirements, if any, as are set forth
in Exhibit A (and not through the act of being hired, being granted an option or purchasing shares hereunder). The Optionee further
acknowledges and agrees that (i) this Award Agreement, the transactions contemplated hereunder and the exercise schedule set forth
herein do not constitute an express or implied promise of continued employment or service for the exercise period or for any other
period, and shall not interfere with the Optionee’s right or the right of the Company or its Subsidiaries to terminate the
employment or service relationship at any time, with or without cause, subject to the terms of any written employment agreement
that the Optionee may have entered into with the Company or any of its Subsidiaries; and (ii) the Company would not have granted
this Option to the Optionee but for these acknowledgements and agreements.

 

    	-4-

    	 

    

 

12.
Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to
the Optionee’s interest except by means of a writing signed by the Company and the Optionee. In the event of any conflict
between this Award Agreement and the Plan, the Plan shall be controlling, except as otherwise specifically provided in the Plan.
This Award Agreement shall be construed under the laws of the State of Nevada, without regard to conflict of laws principles.

 

13.
Opportunity for Review. Optionee and the Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement. The Optionee has reviewed the Plan and this Award Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully understands all provisions
of the Plan and this Award Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations
of the Committee upon any questions relating to the Plan and this Award Agreement. The Optionee further agrees to notify the Company
upon any change in the residence address indicated herein.

 

14.
Section 409A. This Option is intended to be excepted from coverage under Section 409A and shall be administered, interpreted
and construed accordingly. The Company may, in its sole discretion and without the Optionee’s consent, modify or amend the
terms of this Award Agreement, impose conditions on the timing and effectiveness of the exercise of the Option by Optionee, or
take any other action it deems necessary or advisable, to cause the Option to be excepted from Section 409A (or to comply therewith
to the extent the Company determines it is not excepted).

 

15.
Recoupment. In the event the Company restates its financial statements due to material noncompliance with any financial
reporting requirements under applicable securities laws, any shares issued pursuant to this Agreement for or in respect of the
year that is restated, or the prior three years, may be recovered to the extent the shares issued exceed the number that would
have been issued based on the restatement. In addition and without limitation of the foregoing, any amounts paid hereunder shall
be subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing
regulations thereunder, any clawback policy adopted by the Company or as is otherwise required by Applicable Law or stock exchange
listing conditions.

 

    	-5-

    	 

    

 

16.
Electronic Delivery of Documents. By accepting this Award Agreement, Optionee agrees that the Company may deliver by email
or other electronic means all documents relating to the Plan or this Award Agreement (including, without limitation, Plan prospectuses)
and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual
reports and proxy statements). Optionee also agrees that the Company may deliver these documents by posting them on a website
maintained by the Company or by a third party under contract with the Company.

 

[Signature
Page Follows]

 

    	-6-

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Award Agreement as of the date set forth in Exhibit A of this Agreement.

 

	 	COFFEE HOLDING CO., INC.
	 	 	 
	 	By:	               
	 	Name:	 
	 	Title:	 
	 	 	 
	 	OPTIONEE
	 	 	           
	 	 
	 	Name:	

 

    	-7-

    	 

    

 

EXHIBIT
A

 

INCENTIVE
STOCK OPTION AWARD AGREEMENT

 

COFFEE
HOLDING CO., INC.

2013
EQUITY COMPENSATION PLAN

 

	 	(a).	Optionee’s
    Name:__________________________________
	 	 	 
	 	(b).	Date
    of Grant:________________
	 	 	 
	 	(c).	Number
    of Shares Subject to the Option:________________
	 	 	 
	 	(d).	Exercise
    Price: $______ per Share
	 	 	 
	 	(e).	Expiration
    Date:________________
	 	 	 
	 	(f).	Vesting
    Schedule: Subject to Section 2 of the Award Agreement, the Option shall vest and be exercisable with respect to one-third
    (1/3) of the Shares subject thereto on each of (i) April 18, 2020, April 18, 2021 and April 18, 2022, provided that the Optionee
    is in Continuous Service on the respective vesting date. The number of Shares with respect to which the Option becomes vested
    and exercisable on each of the foregoing vesting dates shall be cumulative. The number of Shares that become vested and exercisable
    on each of the foregoing vesting dates shall, if necessary, be rounded down to the nearest whole Share.

 

_______
(Initials)

Optionee

 

_______
(Initials)

Company
Signatory

 

    	-8-

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