HOT MAMA'S FOODS, INC. On February 12, 2014, Lansal, Inc. entered into a First Modification of Demand Revolving Line of Credit, a First Modification of Equipment Line of Credit Note and Agreement (the Amended Equipment Loan), and a newly issued Promissory Note (the Promissory Note, and collectively with the Amended Line of Credit and the Amended Equipment Loan, the Loans) with United Bank. The Loans were each funded by United on February 14, 2014. The Amended Line of Credit is a modification of the existing Demand Line of Credit Note, dated December 28, 2012, by and between Lansal and United in the original maximum principal amount of $1,300,000.
The Amended Line of Credit increases the maximum principal amount there under to $2,500,000. The interest rate is equal to the prime rate plus 0.75%. Lansal must make monthly payments of interest only and the entire amount is due on demand by United.
The Amended Equipment Loan renews and modifies the existing Equipment Line of Credit Note and Agreement, dated December 28, 2012, in the maximum principal amount of $250,000. Under the terms of the Amended Equipment Loan, the interest rate is equal to the prime rate plus 1%, with an option to fix at the seven year Federal Home Loan Bank of Boston rate then in effect plus 2.5%. Lansal must make interest payments only until February 13, 2015, and during such period the principal is payable on demand.
After the Draw Period, the principal and interest then outstanding are repayable over seven years in monthly installments on an 84 month amortization schedule. The Promissory Note is in the principal amount of $924,000. The interest rate is equal to the prime rate plus 1%, with an option to fix at the seven year Federal Home Loan Bank of Boston rate then in effect plus 2.5%.
The Promissory Note has a term of seven years and interest and principal are payable in monthly installments based on an 84 month amortization schedule. If there a default under the terms of the Promissory Note, the balance due there under becomes immediately due and payable at the option of United. The Loans are each guaranteed, jointly and severally, by Matthew Morse, the chief executive officer of the Company, and by BML Holdings LLC, a Massachusetts limited liability company owned by Morse.
Lansal and BML are providing security interests in substantially all of their assets, including the premises located at 134 Avocado Street, Springfield, Massachusetts owned by BML, pursuant to the terms of an All-Asset Security Agreement, as modified, a first Purchase Money Security Agreement, and other documents executed in connection therewith. If the Amended Equipment Loan or Promissory Note is refinanced with a third party lending institution, Lansal will be subject to a prepayment premium of 3% of the prepaid amount during the first year of the refinancing, 2% of the prepaid amount during the second year of the refinancing, and 1% of the prepaid amount during the third year of the refinancing.
