Item 1.01. Entry into a Material Definitive Agreement.
Merger and Share Exchange Agreement
On September 29, 2022, Coffee Holding Co., Inc, a Nevada corporation ("JVA"),
entered into a Merger and Share Exchange Agreement (the "Merger Agreement"), by
and among JVA, Delta Corp Holdings Limited, a Cayman Islands exempted company
("Pubco"), Delta Corp Holdings Limited, a company incorporated in England and
Wales ("Delta"), CHC Merger Sub Inc., a Nevada corporation and wholly owned
subsidiary of Pubco ("Merger Sub"), and each of the holders of ordinary shares
of Delta as named therein (the "Sellers"). Upon the terms and subject to the
conditions set forth in the Merger Agreement, Merger Sub will merge with and
into JVA, with JVA surviving as a direct, wholly-owned subsidiary of Pubco (the
"Merger"). As a result of the Merger, each issued and outstanding share of JVA
common stock, $0.001 par value per share (the "JVA Common Stock"), will be
cancelled and converted for the right of the holder thereof to receive one
ordinary share, par value $0.0001 of Pubco (the "Pubco Ordinary Shares").
As a condition to the Merger, Pubco shall also acquire all of the issued and
outstanding Delta securities from the Sellers in exchange for Pubco Ordinary
Shares (the "Exchange" and, collectively with the Merger and the other
transactions contemplated by the Merger Agreement, the "Transactions"). As a
result of the Transactions, JVA and Delta will each become direct, wholly-owned
subsidiaries of Pubco, with JVA stockholders receiving approximately $31.5
million (or 4.79%) worth of Pubco Ordinary Shares (the "Merger Consideration")
and Delta stockholders receiving approximately $625 million (or 95.21%) worth of
Pubco Ordinary Shares (the "Exchange Consideration" and collectively with the
Merger Consideration, the "Business Combination Consideration"), subject to
certain adjustments, at an implied diluted value per share of $5.50. The
Business Combination Consideration may be adjusted if Delta closes certain
acquisitions prior to the closing of the Transactions. The Merger Agreement also
includes an earn-out to existing stockholders of Delta, consisting of $50
million of additional Pubco Ordinary Shares, which will be released to Delta
stockholders if and when Delta achieves $70 million or greater of net income for
fiscal year ending 2023.
At the effective time of the Merger (the "Merger Effective Time"), each award of
options to purchase JVA Common Stock (each, a "JVA Stock Option") that is
outstanding, whether vested or unvested, will be cancelled and substituted with
option(s) to purchase Pubco Ordinary Shares to be granted under the Pubco equity
plan (the "Substituted Options"). The Substituted Options will represent the
right to purchase that number of shares of Pubco Ordinary Shares equal to the
number of shares of JVA Common Stock underlying such JVA Stock Option
immediately prior to the Merger Effective Time with a per-share exercise price
of such Substituted Option equal to the exercise price per JVA Common Stock
subject to such JVA Stock Option immediately prior to the Merger Effective Time.
Prior to execution of the Merger Agreement, JVA's board of directors (the
"Board") unanimously (i) determined that the terms and provisions of the Merger
Agreement and the transactions contemplated therein, including the Merger and
Transactions, are fair, advisable to and in the best interests of JVA and its
stockholders, (ii) approved the Merger Agreement and related Transactions, (iii)
directed that the adoption of the Merger Agreement be submitted to a vote at a
meeting of the stockholders of JVA, and (iv) resolved to recommend that JVA's
stockholders adopt the Merger Agreement.
JVA, Pubco, Delta and the Sellers have made customary representations and
warranties in the Merger Agreement and have agreed to customary covenants
regarding the operation of their respective businesses prior to the closing of
the transactions contemplated thereby. Consummation of the Merger is subject to
customary closing conditions, including, without limitation, (i) approval of the
Merger Agreement and the transactions contemplated thereunder by a majority of
JVA's stockholders (the "JVA Stockholder Approval"), (ii) the absence of any law
or order that prevents or prohibits the consummation of the Transaction, (iii)
obtaining all requisite governmental authorizations, (iv) effectiveness of the
Registration Statement of Pubco on Form F-4, and (v) approval of the listing of
Pubco Ordinary Shares on the Nasdaq Capital Market.
From the date of the Merger Agreement until October 19, 2022 (the "Go-Shop
Period"), JVA shall have the right to initiate, solicit, facilitate and
encourage any inquiry or the making of any proposals or offers that constitute
an acquisition proposal involving more than fifteen percent (15%) of JVA's
assets or outstanding shares of common stock or in which the stockholders of JVA
immediately preceding the contemplated transaction would hold less than
eighty-five percent (85%) of the voting equity interest of the surviving company
(each or any combination of the foregoing, a "Takeover Proposal"), including by
way of providing access to non-public information to any third party pursuant to
a non-disclosure agreement. Following the expiration of the Go-Shop Period, JVA
will cease such activities and be subject to customary "no-shop" restrictions on
its ability to solicit a Takeover Proposal from third parties and to provide
non-public information to and engage in discussions with a third party in
relation to a Takeover Proposal, except that JVA may continue to engage in the
aforementioned activities with third parties from whom JVA has received a
Takeover Proposal that the Board has determined constitutes or is reasonably
likely to lead to a Superior Proposal (as defined below) and has determined that
the failure to take such actions would be inconsistent with the Board's
fiduciary duties.
Prior to obtaining JVA Stockholder Approval, the Board may change its
recommendation that stockholders vote to adopt the Merger Agreement (a "Change
in Recommendation") (i) in response to any material event or change in
circumstances with respect to JVA that was not actually known or reasonably
foreseeable by JVA prior to the date of the Merger Agreement (an "Intervening
Event") that the Board determines in good faith (after consultation with its
financial advisor and outside legal counsel) that the failure to change its
recommendation in such circumstances would be reasonably likely to violate its
fiduciary duties to the stockholders of JVA under applicable law or (ii) if JVA
has received a Takeover Proposal involving more than fifty percent (50%) of
JVA's assets or outstanding shares of common stock or in which the stockholders
of JVA immediately preceding the contemplated transaction would hold less than
fifty percent (50%) of the voting equity interest of the surviving company, that
the Board determines in good faith (after consultation with its financial
advisor and outside legal counsel) is reasonably likely to be consummated in
accordance with its terms and, among other things, if consummated, would be more
favorable from a financial point of view to JVA's stockholders than the
Transactions (a "Superior Proposal") (in which case JVA may also terminate the
Merger Agreement to enter into such Superior Proposal, subject to certain
conditions including payment of the JVA Termination Fee, as described below).
Before the Board may change its recommendation in connection with an Intervening
Event or a Superior Proposal, or terminate the Merger Agreement to accept a
Superior Proposal, JVA must provide Delta prompt written notice of its decision
to make a Change in Recommendation and for at least five (5) business days after
such notice, JVA will negotiate with Delta to enable Delta to revise the terms
of the Merger Agreement so that the Takeover Proposal no longer constitutes a
Superior Proposal. Each time modifications to any material term of such
alternative acquisition proposal determined to be a Superior Proposal are made,
JVA must notify Pubco of such modification and such five (5) business day period
will recommence.
The Merger Agreement may be terminated by each of Delta and of JVA under certain
circumstances, including, among others by either Delta or JVA if the Merger has
not been consummated by June 29, 2023 (the "Outside Date"). If the Merger
Agreement is terminated under certain circumstances, including, among others, as
a result of breach by either JVA or Delta of their respective representations,
warranties or covenants in the Merger Agreement, whereby JVA or Delta,
respectively, may be entitled to a termination fee in the amount of $750,000
plus disbursements of all documented, out-of-pocket expenses up to $250,000. In
addition, if JVA terminates the Merger Agreement to accept a Takeover Proposal
or the Board (i) adversely changes its recommendation to the stockholders of JVA
regarding the adoption of the Merger Agreement or (ii) supports the approval of
any JVA Takeover Proposal, then Delta shall be entitled to a termination fee of
$1.3 million and plus a disbursement of reasonable expenses up to $2 million
(the "JVA Termination Fee").
Registration Rights Agreement
The equityholders of Delta and JVA will have certain customary registration
rights with respect to the Pubco Ordinary Shares to be received in the
transaction pursuant to the terms of a registration rights agreement, dated
September 29, 2022 (the "Registration Rights Agreement").
Voting and Support Agreement
On September 29, 2022, concurrently with the entry into the Merger Agreement,
. . .
Item 8.01. Other Events.
On September 30, 2022, JVA and Delta issued a joint press release announcing the
execution of the Merger Agreement and related matters. The press release is
attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated
herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
2.1 Merger and Share Exchange Agreement, dated September 29, 2022 by
and among Coffee Holding Company, Inc, Delta Corp Holdings Limited,
Delta Corp Cayman Limited and each of the selling stockholders named
therein.*
10.1 Form of Registration Rights Agreement.
10.2 Form of Voting and Support Agreement.
99.1 Joint Press Release, dated September 30, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* We have omitted certain schedules and exhibits to this agreement in accordance
with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or
exhibit will be furnished to the SEC upon request.
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