Second Amendment To Loan And Security Agreement

EXECUTION
COPY


SECOND AMENDMENT, dated as of November 29, 2000 (this "Amendment") to LOAN AND SECURITY AGREEMENT dated as of November 21, 1997 (as amended through the date hereof, the "Loan Agreement") between COFFEE HOLDING CO. INC. ("Borrower") and WELLS FARGO BUSINESS CREDIT, INC., as assignee of Banc of America Commercial Finance Corporation, f/k/a NationsCredit Commercial Corporation ("Lender"). Terms which are capitalized in this Amendment and not otherwise defined shall have the meanings described to such terms in the Loan Agreement.


WHEREAS, the Borrower has requested the Lender to consider (i) extending the maturity of the credit facility established pursuant to the Loan Agreement, (ii) extending an additional Equipment Advance to the Borrower and (iii) modifying certain of the terms and provisions contained in the Loan Agreement, and the Lender is willing to agree to the foregoing, subject to the terms and conditions set forth herein;


NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:


Section One. Amendments to the Loan Agreement. Effective as of the date hereof, upon the satisfaction of the conditions precedent contained in Section Three hereof, the Loan Agreement is hereby amended as follows:


(a) Preamble. The name and address of the Lender set forth in the Preamble shall be amended to read entirely as follows:


"WELLS FARGO BUSINESS CREDIT, INC., as assignee of Banc of America
Commercial Finance Corporation, f/k/a NationsCredit Commercial
Corporation (the "Lender"), with a business address at 119 West 40th
Street, New York, New York 10018-2500"


(b) Section 1.1(a). Revolving Loans and Credit Accomodations. A new clause (iii) is added to the definition of Availability in Section 1.1(a) to read as follows, and clauses (iii), (iv) and (v) of Section 1.1(a) are renumbered (iv), (v), (vi), respectively:


"plus


(iii) an amount equal to the lesser of $250,000 and the aggregate
balance of funds in the Cash Collateral Account maintained by the
Borrower with Wells Fargo Bank as set forth in Section 14 of
Schedule A."


(c) Section 1.1(b). Term Loan. The following sentences are added to the end of Section 1.1(b):


"On the effective date of the Second Amendment to this Agreement,
dated as of November 29, 2000, (x) the Borrower warrants and
represents that the unpaid principal balance of the Term Loan equals
$192,000 and (y) the Lender shall make an additional Equipment
Advance to Borrower in the amount of $408,000. The term "Term Loan"
shall include the making of such additional Equipment Advance."


(d) Article 3. Security Interest. A new Section 3.2 shall be added to the Loan Agreement to read in its entirety as follows:


"3.2 Until all Obligations have been paid in full and the Lender's
obligation to make Loans and to provide Credit Accommodations under
the Loan Agreement have terminated, Borrower shall maintain a Cash
Collateral Account with Wells Fargo Bank, the minimum balance of
which shall at no time be less than the amount set forth in Section
14(a) of Schedule A. Such account shall earn interest at the annual
rate set forth in Section 14(c) of Schedule A."


(e) Section 5.3. Title to Collateral; Permitted Liens. Section 5.3 is amended by adding the following sentence to the end thereof:


"The Borrower will not enter into any arrangement, directly or
indirectly, with any other Person whereby the Borrower shall sell or
transfer any real or personal property, whether now owned or
hereafter acquired, and then or thereafter rent or lease as lessee
such property or any part thereof or any other property which the
Borrower intends to use for substantially the same purpose or
purposes as the property being sold or transferred."


(f) Section 5.13. Financial and Collateral Reports. Section 5.13 is amended by adding the following paragraph (h) thereto:


"(h) Personal Financial Statements. No later than April 30 of each
year, the personal financial statement, as of December 31 of the
preceding year, of each of Andrew Gordon and David Gordon, each of
which personal financial statements shall be (i) prepared based on


reasonable accounting standards consistently applied, (ii) signed by
Andrew Gordon or David Gordon, as applicable, and (iii) reflect all
assets and liabilities in reasonable detail, and the net worth, of
such applicable person."


(g) Section 5.18. Negative Covenants. Section 5.18 is amended by deleting clause (vi) thereof in its entirety and by substituting the following in lieu thereof:


"(vi) incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for
borrowed money or letters of credit issued on the Borrower's behalf
or any other indebtedness or liability evidenced by notes, bonds,
debentures or similar obligations, except (a) indebtedness arising
hereunder; (b) indebtedness of the Borrower in existence on the date
hereof and listed on Schedule 5.18 (vi); and (c) indebtedness
secured by Permitted Liens."


(h) Section 5.18. Negative Covenants. Section 5.18 is amended by deleting clause (i) thereof in its entirety and by substituting the following in lieu thereof:


"(i) merge or consolidate with another Person, acquire any interest
in any Person or from any new Subsidiary, engage in any line of
business materially different from that presently engaged in by the
Borrower, or purchase, lease or otherwise acquire assets not related
to its business"


(i) Article 5. Representations, Warranties and Covenants. Article 5 amended by adding a new Section 5.20 thereto, captured "Additional Negative Covenants, as follows:


"5.20 Negative Covenants. Borrower will not, without Lender's prior
written consent, (i) engage in any line of business materially
different from that presently engaged in by the Borrower and will
not purchase, lease or otherwise acquire assets not related to its
business; (ii) adopt any material change in accounting principles
other than as required by GAAP, and will not adopt, permit or
consent to any change in its fiscal year; (iii) adopt, create,
assume or become a party to any defined benefit pension plan, unless
previously disclosed in writing to the Lender; (iv) amend its
certificate of incorporation, articles of incorporation or bylaws;
(v) pay excessive or unreasonable salaries, bonuses, commissions,
consultant fees or other


compensation; (vi) issue or sell any stock of the Borrower so as to
change the percentage of voting and non-voting stock owned by each
of the Borrower's shareholders on November 29, 2000 and the Borrower
will not permit or suffer to occur the sale, transfer, assignment,
pledge or other disposition of any or all of the issued and
outstanding shares of stock of the Borrower.


(j) Section 7.1. Maturity Date. 7.1 is amended by deleting the first sentence thereof in its entirety, and by substituting the following in lieu thereof:


"7.1 Maturity Date. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement shall initially continue
in effect until the Initial Maturity Date set forth in Section 7 (a)
of Schedule A (the "Initial Term"); provided that such date shall
automatically be extended (the Initial Maturity Date, as it may be
so extended, being referred to as the "Maturity Date") for
successive additional terms of two years each (each a "Renewal
Term") unless one party gives written notice to the other, not less
than sixty (60) days prior to the Maturity Date, that such party
elects not to extend the Maturity Date."


(k) Schedule A of the Loan Agreement shall be amended and restated in its entirety to read as set forth in Schedule A attached hereto.


(l) Schedule B of the Loan Agreement shall be amended to add the following defined term:


"Preferred Products Account" means an Account, the Account Debtor in
respect of which is Supervalue.


Section Two. Representations and Warranties. To induce the Lender to enter into this Amendment, the Borrower warrants and represents to the Lender as follows:


(a) All of the representations and warranties contained in the Loan Agreement and each other Loan Document to which the Borrower is a party continue to be true and correct in all material respects as of the date hereof, as if repeated as of the date hereof, except for such representations and warranties which, by their terms, are only made as of a previous date;


(b) The execution, delivery and performance of this Amendment by the Borrower is within its corporate powers, has been duly authorized by all necessary corporate action, and the Borrower has received all necessary consents and approvals (if any shall be required) for the execution and delivery of this Amendment;


(c) Upon its execution, this Amendment shall constitute the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) general principles of equity;


(d) The Borrower is not in default under any indenture, mortgage, deed of trust, or other material agreement or material instrument to which it is a party or by which it may be bound. Neither the execution and delivery of this Amendment, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof will (i) violate any law or regulation applicable to it, (ii) cause a violation by the Borrower, of any order or decree of any court or government instrumentality applicable to it, (iii) conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or other material agreement or material instrument to which the Borrower is a party or by which it may be bound, (iv) result in the creation or imposition of any lien, charge, or encumbrance upon any of the property of the Borrower, except in favor of the Lender, to secure the Obligations, or (v) violate any provision of the Certificate of Incorporation, By-Laws or any capital stock provisions of the Borrower;


(e) No Event of Default has occurred and is continuing; and


(f) Since the date of the Lender's receipt of the financial statements of the Borrower for the eleven month period ended on September 30, 2000, no change or event has occurred which has had or is reasonably likely to have a material adverse effect on the Borrower's business, operations, condition (financial or otherwise) or prospects (a "Material Adverse Effect").


Section Three. Conditions Precedent. This Amendment shall become effective upon the date that the last of the following events shall have occurred:


(a) the Lender shall have received this Amendment, duly executed by the Borrower.


(b) No Default shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default upon the giving of notice or lapse of time or both, and no event or development which has had or is reasonably likely to have a Material Adverse Effect shall have occurred, in each case since the date of delivery to the Lender of the Borrower's most recent financial statement.


(c) the Lender shall have received (i) an officer's certificate, executed by the chief financial officer or chief executive officer of the Borrower, confirming the truth and accuracy of the representations and warranties contained in Section Two hereof and contained in Section Three (b) hereof, and (ii) a secretary's certificate, executed by the corporate secretary of the Borrower, in form reasonably satisfactory to the Lender.


(d) the Lender shall have received a letter agreement from each of David Gordon and Andrew Gordon, duly executed by each of them, each in the form of Exhibit A of this Agreement.


(e) the Lender shall have received a promissory note, duly executed by the Borrower, in the form of Exhibit B to this Agreement.


(f) the Lender shall have received and reviewed to its satisfaction the results of a tax, lien and judgment search report, as of a recent date, conducted against the Borrower and its properties.


(g) the Lender shall have received (i) financing statements on form UCC-1, to be filed against the Borrower, as debtor, suitable for recordation in all appropriate jurisdictions and (ii) financing statements on form UCC-3, to reflect the assignment to the Lender by Banc of America Commercial Finance Corporation of its security interests in the assets and properties of the Borrower, suitable for recordation in all appropriate jurisdictions.


(h) the Lender shall have received an amendment, duly executed by Sterling Gordon, to the Subordination Agreement dated as of August 31, 1999 executed by him in favor of Banc of America Commercial Financial Corporation, such amendment to be in the form of Exhibit C to this Agreement.


(i) the Lender shall have received a Certificate of Property Insurance evidencing the effectiveness of casualty insurance on the Borrower's assets and properties, together with a loss payable endorsement form naming the Lender as loss payee with respect thereto.


Section Four. General Provisions.


(a) Except as herein expressly amended, the Loan Agreement and all other agreements, documents, instruments and certificates executed in connection therewith, are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms.


(b) All references to "the Loan Agreement" in the Loan Agreement shall mean the Loan Agreement as amended as of the effective date hereof, and as amended hereby and as hereafter amended, supplemented and modified from time to time. All references to "the Mortgage" in the Patent, Trademark and License Mortgage made as of November 21, 1997 by Coffee Holding Co., Inc. in favor of Nationscredit Commercial Corporation shall be deemed to be references to Wells Fargo Business Credit, Inc., as assignee of Banc of America Commercial Finance Corporation, f/k/a Nationscredit Commercial Corporation.


(c) This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to the conflicts of law principles thereof.


(d) The Borrower agrees to use its reasonable best efforts to obtain from (i) each warehouseman, bailee or other Person that has possession or control from time to time of any


Inventory or Equipment of the Borrower a written acknowledgement by such Person in substantially the form of Exhibit D to this Amendment, and (ii) T & O Management Corp. a landlord's waiver in substantially the form of Exhibit E to this Amendment.


(e) Upon the effective date of this Amendment, that certain notification letter dated September 20, 2000, as amended by letter dated as of November 17, 2000, from the Borrower to the Lender, pursuant to which the Borrower notified the Lender of its intention to terminate the Loan Agreement effective December 15, 2000, is hereby deemed rescinded by the Borrower and is null and void and of no force or effect.


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered at New York, New York as of the date first above written.


COFFEE HOLDING CO. INC.


By: /s/ Andrew Gordon
------------------------------
Name: Andrew Gordon
Title: President/CEO


WELLS FARGO BUSINESS CREDIT, INC., as
assignee of Banc of America Commercial
Finance Corporation, f/k/a NationsCredit
Commercial Corporation


By: /s/ Christopher Stavrakos
------------------------------
Name: Christopher Stavrakos
Title: V.P. Div. Mgr.


Exhibit A


Form of Amendment of Guaranty


WELLS FARGO BUSINESS CREDIT, INC.
119 West 40th Street
New York, New York 10018-2500


As of November 29, 2000


Mr. Andrew Gordon 251 Meisher Avenue Staten Island, New York 10306


Mr. David Gordon 22 Barclay Road Scarsdale, New York 10538


Gentlemen:


Reference is made to the Individual Guaranty dated as of November 21, 1997 (the "Guaranty") executed by each of yo ...